EXHIBIT 10.4

 

LICENSE AGREEMENT

 

THIS LICENSE AGREEMENT (this “Agreement”) dated as of July 29, 2019 (the
“Effective Date”), is entered into between TGV-Health, LLC, a Delaware limited
liability company (“TGV-H”) and TGV-Ophthalnix, LLC, a Delaware limited
liability company (“TGV- O”), each with a place of business at 101 Avenue of the
Americas, New York, New York 10013 (TGV-O together with TGV-H, collectively
“TGV”), on the one hand, and Stowe Pharmaceuticals, Inc., a Delaware corporation
(“Stowe”), with a place of business at 12264 El Camino Real, Suite 350, San
Diego, California 92130, on the other. The parties hereby agree as follows:

 

1. Definitions. For the purposes of this Agreement, the following terms shall
have the respective meanings set forth below, and grammatical variations of such
terms shall have corresponding meanings:

 

1.1 “Act” means the United States Federal Food, Drug and Cosmetic Act, as
amended from time to time, and the regulations promulgated thereunder.

 

1.2 “Affiliate” means, with respect to any Person, any other Person which
directly or indirectly controls, is controlled by, or is under common control
with, such Person. A Person shall be regarded as in control of another Person if
it owns, or directly or indirectly controls, more than fifty percent (50%) of
the voting stock or other ownership interest of the other Person, or if it
directly or indirectly possesses the power to direct or cause the direction of
the management and policies of the other Person by any means whatsoever.
Notwithstanding the foregoing, for purposes of this Agreement, neither Stowe nor
Harrow Health, Inc. shall be Affiliates of the other or of the other’s
Affiliates.

 

1.3 “Applicable Percentage” means, with respect to a particular time, the
percentage represented by (a) the number of Stowe Shares at such time (as
reflected by any new, substituted or additional securities issued in respect of
the Stowe Shares upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar events), divided by (b) the total number of
fully-diluted shares of capital stock outstanding (on an as-converted basis) as
of such time.

 

1.4 “cGMP” means those current Good Manufacturing Practices required by the FDA
to be followed in connection with the manufacture, handling, storage and control
of pharmaceutical products in the United States, as set forth in the Act and any
regulations related thereto.

 

1.5 “Commercially Reasonable Efforts” means, with respect to any objective
regarding a Product and at any particular time, that degree of effort, expertise
and financial resources commonly used in the pharmaceutical industry by a
company of a similar size as Stowe is at such time to achieve such objective for
a product that has a clinical indication and market potential similar to such
Product which is at a similar stage in development or product life as such
Product taking into account, without limitation, commercial, legal and
regulatory factors, target product profiles, product labeling, the regulatory
environment and competitive market conditions and the efficacy of the Product.

 

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1.6 “Dental Field” means the prevention, diagnosis or treatment of dental
disease, state or condition (whether acute or chronic).

 

1.7 “Derived” or “derived” means acquired, obtained, conceived, reduced to
practice, developed, created, synthesized, designed, derived or resulting from,
based upon or otherwise generated (whether directly or indirectly, or solely or
jointly with others, or in whole or in part).

 

1.8 “Development Costs” means the fully-burdened costs to Stowe and its
Affiliates incurred or accrued in connection with the research, development,
pre-clinical and clinical studies, production and regulatory approval through
submission of the first NDA for Product.

 

1.9 “Diligence Period” means, on a Product-by-Product basis, the period
beginning on the Effective Date and ending on the earlier of (a) the last day of
the twelve (12)- month period that the weighted average Net Sales price for such
Product in the United States is less than fifty percent (50%) of the weighted
average Net Sales price for such Product in the United States during the twelve
(12)-month period immediately following the First Commercial Sale of such
Product in the United States and (b) the date a generic product that is
bioequivalent of such Product obtains the same or greater market share in the
United States as such Product for treatment of any indication.

 

1.10 “Exclusive Sublicensee” means the Third Party sublicensee described in the
first sentence of Section 4.7.

 

1.11 “FDA” means the Food and Drug Administration of the United States, or any
successor thereto.

 

1.12 “Field of Use” means the Ophthalmic Field and, if the option under Section
4.8 is exercised, the Otic Field, but excluding (a) non-ophthalmic and non-otic
surgical methods of treatment, (b) all diseases, states or conditions other than
those set forth above and (c) the Dental Field, the Gynecology Field and the
Wound Field.

 

1.13 “Field-Specific Patent Rights” means (a) all patents and patent
applications within the Licensed Patent Rights that solely claim specific
formulations of Mul- 1867 (but not solely Mul-1867), methods or uses, in each
case, in the Field of Use; (b) all patents issuing therefrom (including utility
models and design patents and certificates of invention); (c) all reissues,
reexaminations, inter partes reviews, renewals, restorations, extensions and
supplementary protection certificates of any of the foregoing patent
applications or patents; (d) all confirmation patents, registration patents or
patents of addition based on any of the foregoing patents; and (e) all foreign
counterparts of any of the foregoing, or as applicable portions thereof.

 

1.14 “First Commercial Sale” means, with respect to any Product, the first sale
of such Product by Stowe, its Sublicensees or its or their respective Affiliates
after all applicable marketing and pricing approvals (if any) have been granted
by the applicable governing health authority.

 

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1.15 “GAAP” means United States generally accepted accounting principles.

 

1.16 “Gynecology Field” means the prevention, diagnosis or treatment of any
gynecological disease, state or condition (whether acute or chronic and
regardless of delivery system or means of application) including without
limitation caused by infections or inflammation.

 

1.17 “Improvement Data” means IND-enabling data and results (a) from toxicology
and/or pharmacokinetics studies performed by or on behalf of Stowe; (b) that are
specific to active pharmaceutical ingredient synthesis for Mul-1867 prepared by
or on behalf of Stowe.

 

1.18 “Improvement Patent Rights” means, collectively, (a) all patents and patent
applications hereafter owned by Stowe, a Sublicensee, or its or their respective
Affiliates (including provisional patent applications), together with all
divisionals, continuations and continuations-in-part that claim priority to, or
common priority with, the foregoing; (b) all patents issuing therefrom
(including utility models and design patents and certificates of invention); (c)
all reissues, reexaminations, inter partes reviews, renewals, restorations,
extensions and supplementary protection certificates of any of the foregoing
patent applications or patents; (d) all confirmation patents, registration
patents or patents of addition based on any of the foregoing patents; and (e)
all foreign counterparts of any of the foregoing, or as applicable portions
thereof; in each case, (i) that use or are supported by data and information
derived from the use of Mul-1867 (sub)licensed hereunder and (ii) only to the
extent they relate to Mul-1867 or its manufacture or use; but excluding the
Licensed Patent Rights.

 

1.19 “IND” means an Investigational New Drug application required to commence
human clinical testing of a product submitted to the FDA.

 

1.20 “Initial Capital Investment” means Stowe’s receipt of aggregate proceeds
(including both cash and conversion and/or cancellation of outstanding
indebtedness or convertible securities) from the sale of Stowe’s securities in
one or more transactions following the Effective Date of not less than ten
million dollars ($10,000,000) within twenty-four (24) months after the Effective
Date at a pre-money valuation of Stowe equal to or greater than eighteen million
dollars ($18,000,000); provided however up to three million dollars ($3,000,000)
of such amount may be raised at a pre-money valuation that is less than eighteen
million dollars ($18,000,000) as follows: the first four hundred thousand
dollars ($400,000) at a pre-money valuation of at least eleven million seven
hundred thousand dollars ($11,700,000) and up to an additional two million six
hundred thousand dollars ($2,600,000) at a pre-money valuation of at least nine
million dollars ($9,000,000).

 

1.21 “Knowledge of TGV” or “TGV’s Knowledge” means the actual knowledge of any
director, officer, member or employee of TGV.

 

1.22 “Licensed IP Rights” means the Licensed Patent Rights, the Licensed
Know-How Rights and all other intellectual property rights related to the
Technology owned by, or licensed to (with the right to grant sublicenses), TGV
or any of its Affiliates, whether existing as of the Effective Date or derived
at any time after the Effective Date.

 

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1.23 “Licensed Know-How Rights” means all trade secret and other know-how rights
related to the Technology owned by, or licensed to (with the right to grant
sublicenses), TGV or any of its Affiliates, whether existing as of the Effective
Date or derived at any time after the Effective Date.

 

1.24 “Licensed Patent Rights” means, collectively, (a) all patents and patent
applications owned by, or licensed to (with the right to grant sublicenses), TGV
or any of its Affiliates (including provisional patent applications) in any
jurisdiction that claim or cover the Technology (whether existing on or any time
after the Effective Date), including those listed on Exhibit A, together with
all divisionals, continuations and continuations-in-part that claim priority to,
or common priority with, the foregoing; (b) all patents issuing therefrom
(including utility models and design patents and certificates of invention); (c)
all reissues, reexaminations, inter partes reviews, renewals, restorations,
extensions and supplementary protection certificates of any of the foregoing
patent applications or patents; (d) all confirmation patents, registration
patents or patents of addition based on any of the foregoing patents; and (e)
all foreign counterparts of any of the foregoing, or as applicable portions
thereof.

 

1.25 “Mul-1867” means the composition referred to by TGV as “Mul-1867” and is
more specifically described in the patents and patent applications listed on
Exhibit A, together with all modifications, improvements and components thereof,
whether existing as of the Effective Date or derived after the Effective Date.

 

1.26 “NDA” means a New Drug Application submitted to the FDA for marketing
approval of a Product for use in the Field of Use.

 

1.27 “Net Sales” means, with respect to any Product, the gross sales price of
such Product invoiced by Stowe, its Sublicensees, and its and their respective
Affiliates (collectively, the “Stowe Group”) to customers who are not Affiliates
(or are Affiliates but are the end users of such Product), less: (a) credits,
allowances, discounts and rebates to, and chargebacks from the account of, such
customers actually granted in the ordinary course of business; (b) freight and
insurance costs in transporting Product in the ordinary course of business; (c)
cash, quantity and trade discounts, rebates and other price reductions for
Product; (d) sales, use, value-added and other direct Taxes if separately
charged or invoiced (but not including Taxes based on the Stowe Group’s
profits); (e) customs duties, tariffs, surcharges and other governmental charges
incurred in exporting or importing Product if separately invoiced; and (f) an
allowance for uncollectible or bad debts determined in accordance with GAAP not
to exceed three percent (3%) of Net Sales of such Product for the applicable
quarterly reporting period prior to giving effect to this subsection (f). No
deductions shall be made for commissions paid to individuals, whether they be
with independent or affiliated sale agencies or regularly employed by the Stowe
Group, and on its payroll, or for the cost of collections.

 

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1.28 “Non-Royalty Sublicense Income” means the cash consideration amounts
received by Stowe or its Affiliate from an Exclusive Sublicensee in
consideration for the grant of an exclusive sublicense described in the first
sentence of Section 4.7; provided, however, that Non-Royalty Sublicense Income
excludes amounts received: (a) as bona fide reimbursement (i) for out of pocket
costs incurred to prosecute and maintain the Licensed IP Rights or (ii) for
fully-burdened costs incurred that are attributable to the research and/or
development of the subject matter of the Licensed IP Rights and/or Products; (b)
as bona fide loans (unless forgiven); (c) for securities sold to the Exclusive
Sublicensee at fair market value; and (d) as running royalties (including any
amounts paid based upon sales or profits from the sales of Product). To the
extent that Non-Royalty Sublicense Income represents an unallocated combined
payment for both a sublicense of Licensed IP Rights as well as other
intellectual property, undertakings or subject matter, for purposes of
calculating payments due to TGV, Non- Royalty Sublicense Income shall be
reasonably allocated by mutual written agreement of the parties between the
Licensed IP Rights and such other intellectual property, undertakings or subject
matter, based on their relative value.

 

1.29 “Ophthalmic Field” means the prevention, diagnosis or treatment of any
ophthalmic or eye-related disease, state or condition (whether acute or
chronic).

 

1.30 “Otic Field” means the prevention, diagnosis or treatment of any otic or
ear-related disease, state or condition (whether acute or chronic).

 

1.31 “Person” means any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity, as well as any syndicate or
group of any of the foregoing.

 

1.32 “Phase I Clinical Trial” means a human clinical trial conducted on a
limited number of study subjects for the purpose of gaining evidence of the
safety and tolerability of, and information regarding, pharmacokinetics and
potential pharmacological activity for a product or compound, as described in 21
C.F.R. § 312.21(a).

 

1.33 “Phase II Clinical Trial” means a human clinical trial conducted on study
subjects with the disease or condition being studied for the principal purpose
of achieving a preliminary determination of efficacy or appropriate dosage
ranges, as further described in 21 C.F.R. § 312.21(b).

 

1.34 “Phase III Clinical Trial” means a pivotal human clinical trial the results
of which could be used to establish safety and efficacy of a product as a basis
for an NDA or that would otherwise satisfy requirements of 21 CFR 312.21(c).

 

1.35 “Product” means any product, in any form or formulation, comprising
Mul-1867 that is useful in the Field of Use.

 

1.36 “Respiratory Field” means the use of Mul-1867 to treat respiratory diseases
including, but not limited to cystic fibrosis, or any use of Mul-1867 in an
inhalation dosage form.

 

1.37 “Stock Issuance Agreement” means the stock issuance agreement between the
parties dated on the Effective Date.

 

1.38 “Stowe Shares” means the combined shares of common stock of Stowe issued to
TGV-H or TGV-O pursuant to, and on the terms of, the Stock Issuance Agreement,
and the shares of common stock of Stowe issued to Zvi Ben-Zvi on the same date
as the Stock Issuance Agreement.

 

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1.39 “Sublicensee” means a Third Party to whom Stowe or its Affiliate has
granted a sublicense, immunity or other right under the Licensed Patent Rights
to offer to sell, sell or otherwise commercialize one or more Products, provided
such sublicense has not expired or been terminated.

 

1.40 “Successful Completion” means, with respect to a clinical trial for a
Product for the treatment of an indication, completion of all patient
enrollment, treatment and testing for such clinical trial in accordance with its
applicable processes and delivery to the sponsor of the final report(s) for such
clinical trial, where the results of such clinical trial are reasonably
determined by the sponsor to be sufficient to progress such Product for the next
phase of clinical testing in humans for such indication.

 

1.41 “Tax” or “Taxes” means any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities
that are specific to the sale of the Products, including taxes based upon or
measured by gross receipts, income, profits, sales, use and occupation, and
value added, ad valorem, transfer, franchise, and property taxes together with
all interest, penalties and additions imposed with respect to such amounts.

 

1.42 “Technology” means Mul-1867 and Product, together with all compositions,
components and formulations thereof and all uses and methods of manufacture of
the foregoing, whether existing as of the Effective Date or derived at any time
after the Effective Date.

 

1.43 “Third Party” means any Person other than Stowe, TGV or their respective
Affiliates.

 

1.44 “Valid Claim” means either (a) a claim of an issued and unexpired patent
included within the Licensed Patent Rights, which has not been held permanently
revoked, unenforceable or invalid by a decision of a court or other governmental
agency of competent jurisdiction, unappealable or unappealed within the time
allowed for appeal, and which has not been admitted to be invalid or
unenforceable through reissue or disclaimer or otherwise, or (b) a claim of a
pending patent application included within the Licensed Patent Rights, which
claim was filed in good faith, has not been pending for more than ten (10) years
from the filing date from which such claim takes priority and has not been
abandoned or finally disallowed without the possibility of appeal or refiling of
such application.

 

1.45 “Wound Field” means the treatment of, break or injury of the soft tissue
and the skin.

 

2. Representations and Warranties.

 

2.1 Mutual Representations and Warranties. Each party represents and warrants to
the other party as follows:

 

2.1.1 Organization. Such party is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized.

 

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2.1.2 Authorization and Enforcement of Obligations. Such party (a) has the
requisite power and authority and the legal right to enter into this Agreement
and to perform its obligations hereunder; and (b) has taken all requisite action
on its part to authorize the execution and delivery of this Agreement and the
performance of its obligations hereunder. This Agreement has been duly executed
and delivered on behalf of such party, and constitutes a legal, valid, binding
obligation, enforceable against such party in accordance with its terms.

 

2.1.3 Consents. All necessary consents, approvals and authorizations of all
governmental authorities and other persons or entities required to be obtained
by such party in connection with this Agreement have been obtained.

 

2.1.4 No Conflict. The execution and delivery of this Agreement and the
performance of such party’s obligations hereunder (a) do not and will not
conflict with or violate any requirement of applicable laws, regulations or
orders of governmental bodies; and (b) do not and will not conflict with, or
constitute a default under, any contractual obligation of such party.

 

2.2 TGV Representations and Warranties. TGV hereby represents, warrants and
covenants to Stowe as follows: (a) TGV-H is the sole owner of the Licensed IP
Rights; (b) TGV has the right to grant the licenses and other rights purported
to be granted herein and has not granted to any Third Party any license or other
interest in the Licensed IP Rights within the Field of Use; (c) neither TGV-O
nor TGV-H shall transfer, convey or assign any of the Licensed IP Rights useful
within the Field of Use to any Person unless such Person agrees in writing to
the applicable terms and conditions of this Agreement; (d) TGV shall promptly
notify Stowe in writing of any transfer, conveyance or assignment of any of the
Licensed IP Rights; (e) to the best of each of TGV-H’s and TGV-O’s respective
knowledge, neither TGV-H nor TGV-O is aware of any Third Party patent, patent
application or other intellectual property rights that would be infringed (i) by
practicing any process or method or by making, using or selling any composition
which is claimed or disclosed in the Licensed Patent Rights or which constitutes
Licensed Know-How Rights within the Field of Use, or (ii) by making, using or
selling Product in the Field of Use; (f) neither TGV-H nor TGV-O is aware of any
infringement or misappropriation by a Third Party of any Licensed IP Rights
within the Field of Use; (g) all data and information provided by TGV hereunder
shall be complete and accurate; and (h) all personnel (employees, consultants,
contractors, etc.) involved in the research, development or commercialization of
the Technology have entered into, or prior to commencing such involvement, will
enter into, valid and enforceable intellectual property assignment agreements
with TGV related to the Technology, and, to the extent ownership does not vest
originally in TGV by operation of law, such personnel irrevocably assign to TGV
all of their respective right, title and interest in and to the Technology, all
associated records, and all intellectual property rights in and to the
foregoing.

 

2.3 Stowe Warranties. Stowe warrants that it shall undertake its development
(i.e., research, clinical and regulatory) and commercialization (i.e.,
manufacturing, distribution and marketing) obligations in compliance with all
applicable laws and regulations (including but not limited to, and to the extent
applicable, the Act and the Drug Supply Chain Security Act).

 

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3. License Grant/Obligations.

 

3.1 License to Stowe. Subject to the terms and conditions of this Agreement, and
subject to Stowe’s achievement of the Initial Capital Investment , TGV hereby
grants to Stowe an exclusive (including with respect to TGV), non-transferable
(except in connection with a permitted assignment of this Agreement), worldwide
license under the Licensed IP Rights to develop, make, have made, use, offer for
sale, sell and import Products for use in the Field of Use. Stowe shall have the
right to grant sublicenses within the Field of Use, through multiple tiers, to
Third Parties and Affiliates.

 

3.2 Availability of Technology and Licensed IP Rights. TGV shall provide Stowe
(and its permitted designees) with a copy of all data and information available
to TGV relating to the Technology and/or Licensed IP Rights. TGV shall provide
Stowe, free of charge, based on TGV’s current knowledge, such technical
assistance as may be reasonably necessary or useful for Stowe to exploit such
data and information, including without limitation (a) consulting services
reasonably necessary to transfer the Mul-1867 molecule chemistry to an active
pharmaceutical ingredient manufacturing entity and (b) consulting services
reasonably necessary to transfer the formulation of a Mul-1867 topical
formulation used to produce the pre-clinical data for Mul-1867 in the Field of
Use.

 

3.3 Technical Assistance. During the term of this Agreement and in addition to
the technical assistance described in Section 3.2, TGV shall provide such
technical assistance to Stowe as Stowe reasonably requests regarding the
Technology and/or Licensed IP Rights pursuant to and on the terms of a separate
consulting agreement between Stowe and either TGV, Victor Tets and/or Georgy
Tets (the “Consulting Agreement”).

 

3.4 Improvements.

 

3.4.1 Improvement Patent Rights. Subject to the terms and conditions of this
Agreement, Stowe hereby grants to TGV a non-exclusive, worldwide, perpetual
license under the Improvement Patent Rights for all uses other than to develop,
make, have made, use, offer for sale, sell and import Products within the Field
of Use. TGV shall have the right to grant sublicenses outside of the Field of
Use, through multiple tiers, to other licensees (whether Third Parties or
Affiliates) of the Licensed Patent Rights. The foregoing license is conditioned
on TGV obtaining similar grantback licenses (together with the right to
sublicense to Stowe) from any and all Affiliates and Third Parties (together
with their respective sublicensees and their sublicensees’ respective
Affiliates) that enter into an agreement with TGV for rights under the Licensed
Patent Rights or to develop and commercialize products comprising Mul-1867, and
if TGV fails to obtain all such grantback licenses, then the foregoing license
(together with any sublicenses granted by TGV) shall be void.

 

3.4.2 Improvement Data. Subject to the terms and conditions of this Agreement,
subject to the payment provisions of this Section 3.4.2, Stowe hereby grants to
TGV a non-exclusive, worldwide, perpetual license to use and incorporate
Improvement Data solely into an IND for development of products comprising
Mul-1867 outside of the Field of Use. TGV shall have the right to grant
sublicenses to other licensees (whether Third Parties or Affiliates) of the
Licensed Patent Rights. TGV shall provide prompt written notice to Stowe of any
decision to incorporate such Improvement Data into any such IND (whether by TGV,
an Affiliate of TGV or any Third Party). Thereafter, Stowe shall provide TGV
with a statement of its to-date Development Costs, and TGV shall pay Stowe an
amount equal to fifty percent (50%) thereof within fifty (50) days after
initiating a Phase III Clinical Trial (by administering product to a first human
subject) under such IND outside the Field of Use.

 

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3.5 No Implied Licenses. Only licenses and rights expressly granted herein shall
be of legal force and effect. No license or other right shall be created
hereunder by implication, estoppel, or otherwise.

 

3.6 Stowe Diligence. Stowe shall use Commercially Reasonable Efforts (whether
alone or with or through its Sublicensees and its or their respective
Affiliates) to research, develop and commercialize one or more Products in the
United States at all times during the Diligence Period for such Product. In
addition, the parties shall meet and confer, either in person or by
teleconference or videoconference, quarterly to discuss the development and
commercialization of Product. Subject to the terms and conditions of this
Agreement, Stowe shall not prohibit any contract manufacturing organization that
it engages to produce an active pharmaceutical ingredient of Mul-1867 for a
Product (“CMO”) from being similarly engaged by TGV for production of an active
pharmaceutical ingredient of Mul-1867 for a product (other than a Product),
subject to the confidentiality and other terms between Stowe and such CMO.

 

3.7 Allocation of Responsibilities.

 

3.7.1 Product Development. As between the parties, Stowe shall be solely
responsible, including financially responsible, for developing a Product
suitable for submission as an IND within the Field of Use. TGV will provide
technical assistance as set forth in Section 3.3 above.

 

3.7.2 Pre-Clinical and Clinical Responsibility. As between the parties, Stowe
shall be solely responsible, including financially responsible, for conducting
the pre- clinical IND studies, Phase I Clinical Trials, Phase II Clinical Trials
and Phase III Clinical Trials, in each case, for Product within the Field of
Use.

 

3.7.3 Regulatory Responsibility. As between the parties, Stowe shall be solely
responsible for all regulatory filings and all costs associated with regulatory
responsibilities for Product within the Field of Use, including preparation of
the regulatory filings, the application filing fees for the IND and NDA (and
foreign regulatory filings), site facility fees and periodic updates as is
required by the relevant regulatory authority. In addition, as between the
parties, Stowe shall be solely responsible for the handling of all post approval
matters including adverse events and pharmacovigilance matters to the extent
solely related to Product within the Field of Use. Upon either party’s request,
the parties shall negotiate and enter into a pharmacovigilance agreement
regarding Mul-1867 consistent with industry practices, and TGV shall require all
other licensees of rights to develop and commercialize products comprising
Mul-1867 to enter into substantially similar pharmacovigilance agreements.

 

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3.7.4 Manufacturing. As between the parties, Stowe shall be solely responsible
for the manufacturing of the Products for use within the Field of Use, including
qualification of the active pharmaceutical ingredient, the manufacturing
facility, all associated methods and testing required for release,
manufacturing, packaging and tracking of the Products for use within the Field
of Use. Products released by Stowe shall not be adulterated or misbranded within
the meaning of the Act and, as between the parties, Stowe shall be solely
responsible for handling any recalls of Product released by Stowe.

 

3.7.5 Marketing and Distribution. As between the parties, Stowe shall be solely
responsible for distribution, marketing and promotion of the Products within the
Field of Use. Stowe shall have sole discretion on determining the selling price
of the Products within the Field of Use. All promotion of the Products shall
strictly be within the Field of Use.

 

4. Financial Terms.

 

4.1 Stock Issuance. On the Effective Date, Stowe shall issue to TGV certain
shares of common stock of Stowe pursuant to, and on the terms and conditions of,
the Stock Issuance Agreement.

 

4.2 Milestone Payments. Within the dates as set forth in the below table,
following the first achievement of each of the following milestone events, Stowe
shall give written notice thereof to TGV and shall pay to TGV the corresponding
non-refundable and noncreditable one-time milestone payments:

 

Milestone Event  Milestone Payment  Payment Date Effective Date  $170,000 (for
reimbursement of patent expenses)  Within thirty
(30) days of the Effective Date Completion of enrollment of subjects for the
first Phase I Clinical Trial intended to support a Product in the Ophthalmic
Field of Use by Stowe, a Sublicensee, or one of their respective Affiliates 
$400,000  Within fifty (50) days of achievement

 

4.3 Royalty. Subject to the terms and conditions of this Agreement, on a
Product-by-Product and country-by-country basis, Stowe shall pay to TGV, on a
quarterly basis, a royalty of three percent (3%) of Net Sales of any Product
during the term of this Agreement (the “Royalty”); provided, however, that if
the manufacture, use, offer for sale, sale, or import of a particular Product in
a particular country would not infringe a Valid Claim (if such Valid Claim were
in an issued patent and not licensed to Stowe) or is not subject to a period of
regulatory exclusivity, or if the Product is subject to generic competition
(i.e., same active ingredient, same dosage form, same strength and same
indication) in such particularly country then the applicable Royalty with
respect to such Product in such country shall be reduced by one-half (½) to one
and one half percent (1½%) of Net Sales.

 

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4.4 Royalty Reports and Payments. Within thirty (30) days after the end of each
calendar quarter during the term of this Agreement, or, after the earlier of (i)
the first sale of common stock of Stowe to the general public pursuant to a
registration statement filed with and declared effective by the Securities and
Exchange Commission under the Securities Act of 1933 (as amended) and (ii) Stowe
first becoming subject to the reporting obligations under the Securities and
Exchange Act of 1934 (as amended), within forty-five (45) days after the end of
each calendar quarter during the term of this Agreement, Stowe shall deliver to
TGV a report setting forth for such calendar quarter (a) the calculation of the
applicable Royalty; (b) the payments due under this Agreement for the sale of
each Product; and (c) the applicable exchange rate as determined below. Stowe
shall remit the total payments due for the sale of Products during such calendar
quarter at the time such report is made. No such reports or payments shall be
due for any Product prior to the First Commercial Sale of such Product. With
respect to Net Sales received in United States dollars, all amounts shall be
expressed in United States dollars. With respect to Net Sales received in a
currency other than United States dollars, all amounts shall be expressed both
in the currency in which the amount is invoiced (or received as applicable) and
in the United States dollar equivalent. The United States dollar equivalent
shall be calculated using the average of the exchange rate (local currency per
US$1) published in The Wall Street Journal, Western Edition, under the heading
“Currency Trading” on the last business day of each month during the applicable
calendar quarter. All amounts paid to TGV shall be in United States dollars.

 

4.5 Payment Provisions.

 

4.5.1 Payment Terms. The Royalty shown to have accrued by each report provided
for under Section 4.4 shall be due on the date such report is due. Payment of
the Royalty in whole or in part may be made in advance of such due date.

 

4.5.2 Exchange Control. If at any time legal restrictions prevent the prompt
remittance of part or all of the Royalty with respect to any country in which a
Product is sold, Stowe shall have the right, in its sole discretion, to make
such payments by depositing the amount thereof in local currency to TGV’s
account in a bank or other depository institution in such country. If the
payment rate specified in this Agreement should exceed the permissible rate
established in any country, the payment rate for sales in such country shall be
adjusted to the highest legally permissible or government-approved rate.

 

4.5.3 Withholding Taxes. Stowe shall be entitled to deduct the amount of any
withholding Taxes, value-added Taxes or other Taxes, levies or charges with
respect to such amounts, other than United States taxes, payable by Stowe, its
Sublicensees or its or their respective Affiliates, or any Taxes required to be
withheld by Stowe, its Sublicensees or its or their respective Affiliates, to
the extent Stowe, its Sublicensees or its or their respective Affiliates pay to
the appropriate governmental authority on behalf of TGV such Taxes, levies or
charges. Stowe shall use reasonable efforts to minimize any such Taxes, levies
or charges required to be withheld on behalf of TGV by Stowe, its Sublicensees
or its or their respective Affiliates. Stowe promptly shall deliver to TGV proof
of payment of all such Taxes, levies and other charges, together with copies of
all communications from or with such governmental authority with respect
thereto.

 

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4.6 Audits. Upon the written request of TGV and not more than once in each
calendar year except if a prior audit in such calendar year revealed an
Underpayment (as defined below), Stowe shall permit an independent certified
public accounting firm of nationally recognized standing selected by TGV and
reasonably acceptable to Stowe, at TGV’s expense, to have access during normal
business hours to such of the financial records of Stowe as may be reasonably
necessary to verify the accuracy of the Royalty reports hereunder for the eight
(8) calendar quarters immediately prior to the date of such request (other than
records for which TGV has already conducted an audit under this Section), which
shall include, but not be limited to, review of fair market value calculations
of bundled products,. If such accounting firm concludes that additional amounts
were owed during the audited period, Stowe shall pay such additional amounts
within thirty (30) days after the date TGV delivers to Stowe such accounting
firm’s written report so concluding. The fees charged by such accounting firm
shall be paid by TGV; provided, however, if the audit discloses that the Royalty
payable by Stowe for such period is more than one hundred ten percent (110%) of
the Royalty actually paid for such period (an “Underpayment”), then Stowe shall
pay the reasonable fees and expenses charged by such accounting firm. TGV shall
cause its accounting firm to retain all financial information subject to review
under this Section 4.6 in strict confidence; provided, however, that Stowe shall
have the right to require that such accounting firm, prior to conducting such
audit, enter into an appropriate non-disclosure agreement with Stowe regarding
such financial information. The accounting firm shall disclose to TGV only
whether the reports are correct or not and the amount of any discrepancy. No
other information shall be shared. TGV shall treat all such financial
information as Stowe’s confidential information, and shall not disclose such
financial information to any Third Party or use it for any purpose other than as
specified in this Section 4.6.

 

4.7 Non-Royalty Sublicense Income. If Stowe enters into any agreement with a
Third Party that includes a worldwide, exclusive (including with respect to
Stowe) sublicense (“Worldwide Sublicense”) under all or substantially all of the
Licensed IP Rights to develop, make, have made, use, offer for sale, sell and
import all Products for use in the Field of Use, Stowe shall give prompt written
notice to TGV thereof. Within thirty (30) days after receipt of such written
notice from Stowe, TGV shall have the right, at its option but only in the event
permitted by applicable law or regulation, to exchange the Stowe Shares for an
additional sublicense royalty stream as set forth below by giving express
written notice to Stowe thereof. If TGV timely exercises its such option as set
forth above, then (a) within ten (10) days after the date of such notice, TGV
shall duly convey, transfer and assign to Stowe all right, title and interest in
and to shares of common stock of Stowe equal to the number of the Stowe Shares
(together with any and all new, substituted or additional securities issued in
respect of the Stowe Shares upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar events), free and clear of
all encumbrances, liens and claims, including by duly executing and delivery
such assignments and other instruments and agreements as reasonably requested by
Stowe, and (b) Stowe shall, within fifty (50) days after the receipt of any
Non-Royalty Sublicense Income, provide written notice thereof to TGV and remit
to TGV an amount equal to the Applicable Percentage multiplied by such
Non-Royalty Sublicense Income. For purposes of this Section 4.7, the term
“Worldwide Sublicense” shall mean an exclusive sublicense or series of exclusive
sublicenses executed on the same date with the same Third Party where the United
States is included within the sublicensed territory. TGV shall have the right to
audit the records of Stowe to confirm the accuracy of the amount of the
Non-Royalty Sublicense Income pursuant to the terms of Section 4.6.

 

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4.8 Option to the Otic Field.

 

4.8.1 Option. Within five (5) days after the Effective Date, Stowe shall pay to
TGV fifty thousand dollars ($50,000) (the “Option Fee”). Stowe shall have the
exclusive option to expand the Field of Use to include the Otic Field (such
option, the “Option”). The Option shall be exercisable by Stowe delivering to
TGV, prior to the second (2nd) anniversary of the Effective Date, written notice
of Stowe’s election to exercise the Option and a development plan to develop a
Product for use in the Otic Field reasonably acceptable to TGV (the “Development
Plan”). TGV shall have the right to approve such Development Plan, and such
approval shall not be unreasonably withheld, conditioned or delayed. If Stowe
fails to timely exercise the Option, then Stowe shall have no further rights to
expand the Stowe Field to include the Otic Field hereunder.

 

4.8.2 Exclusivity. Prior to the expiration of the Option, TGV (a) shall not (and
shall cause its Affiliates not to) exploit the Technology or the Licensed IP
Rights in the Otic Field, (b) shall not enter into any agreement or grant any
license or other right to any Third Party to exploit the Technology or the
Licensed IP Rights in the Otic Field, and (c) shall not solicit, initiate or
encourage submission of proposals or offers from any Third Party for a license
or other grant of rights to exploit the Technology or the Licensed IP Rights in
the Otic Field.

 

5. Indemnification.

 

5.1 Indemnification by TGV. Subject to the provisions of this Section 5, TGV
shall indemnify, defend and hold harmless Stowe, its Affiliates, and its and
their respective officers, directors, agents, stockholders and representatives,
from and against any and all losses, liabilities, damages and expenses
(including without limitation reasonable attorneys’ fees and costs)
(collectively, “Losses”) resulting from any claim, demand, action or proceeding
by any Third Party (each a “Claim”) the extent resulting from or arising out of:

 

5.1.1 the actual or alleged breach of any representations, warranties or
covenants of TGV in this Agreement; or

 

5.1.2 the actual or alleged negligence, gross negligence or willful misconduct
of TGV, its Affiliates or their respective agents or representatives.

 

5.2 Indemnification by Stowe. Subject to the provisions of this Section 5, Stowe
shall indemnify and hold harmless TGV, its Affiliates, and its and their
respective officers, directors, agents, stockholders and representatives, from
and against any and all Losses resulting from any Claim to the extent resulting
from or arising out of:

 

5.2.1 the actual or alleged breach of any representations, warranties or
covenants of Stowe in this Agreement;

 

5.2.2 the actual or alleged negligence, gross negligence or willful misconduct
of Stowe, its Affiliates or their respective agents or representatives; or

 

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5.2.3 the development or exploitation of Product by or on behalf of Stowe, its
Sublicensees or their respective Affiliates, customers or end-users.

 

5.3 Procedure. A party seeking indemnification (the “Indemnitee”) shall promptly
notify the other party (the “Indemnifying Party”) in writing of a claim or suit;
provided that an Indemnitee’s failure to give such notice or delay in giving
such notice shall not affect such Indemnitee’s right to indemnification under
this Section 5 except to the extent that the Indemnifying Party has been
prejudiced by such failure or delay. The Indemnifying Party shall have the right
to control the defense of all indemnification claims hereunder. The Indemnitee
shall have the right to participate at its own expense in the claim or suit with
counsel of its own choosing. The Indemnifying Party shall consult with the
Indemnitee in good faith with respect to all non-privileged aspects of the
defense strategy. The Indemnitee shall cooperate with the Indemnifying Party as
reasonably requested, at the Indemnifying Party’s sole cost and expense. The
Indemnifying Party shall not settle any claim or suit without the Indemnitee’s
prior written consent, which consent shall not be unreasonably withheld.

 

6. Confidentiality.

 

6.1 Confidential Information. During the term of this Agreement, and for a
period of five (5) years following the expiration or earlier termination hereof,
each party shall maintain in confidence all information of the other party that
is disclosed by the other party and identified as, or acknowledged to be,
confidential at the time of disclosure (the “Confidential Information”), and
shall not use, disclose or grant the use of the Confidential Information except
on a need-to-know basis to those directors, officers, affiliates, employees,
permitted actual or prospective licensees, permitted actual or prospective
assignees and agents, consultants, clinical investigators or contractors, to the
extent such disclosure is reasonably necessary in connection with performing its
obligations or exercising its rights under this Agreement. For purposes of this
Section, all Technology shall constitute the Confidential Information of both
parties. To the extent that disclosure is authorized by this Agreement, prior to
disclosure, the disclosing party shall obtain agreement of any such Person to
hold in confidence and not make use of the Confidential Information for any
purpose other than those permitted by this Agreement. Each party shall notify
the other promptly upon discovery of any unauthorized use or disclosure of the
other party’s Confidential Information.

 

6.2 Terms of this Agreement. Except as otherwise provided in this Section 6,
neither party shall disclose any terms or conditions of this Agreement to any
Third Party without the prior consent of the other party; provided, however,
that a party may disclose the terms or conditions of this Agreement, (a) on a
need-to-know basis to its legal and financial advisors to the extent such
disclosure is reasonably necessary, and (b) to a Third Party in connection with
(i) an equity investment in such party, (ii) a merger, consolidation or similar
transaction by such party, (iii) a permitted (sub)license under this Agreement,
or (iv) the sale of all or substantially all of the assets of such party.
Notwithstanding the foregoing, prior to execution of this Agreement, the parties
have agreed upon the substance of information that can be used to describe the
terms of this transaction, and each party may disclose such information, as
modified by mutual agreement from time to time, without the other party’s
consent.

 

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6.3 Permitted Disclosures. The confidentiality obligations contained in this
Section 6 shall not apply to the extent that (a) a party is required (i) in the
reasonable opinion of such party’s legal counsel, to disclose information by
applicable law, regulation, rule (including rule of a stock exchange or
automated quotation system), order of a governmental agency or a court of
competent jurisdiction or legal process, including tax authorities, or (ii) to
disclose information to any governmental agency for purposes of obtaining
approval to test or market a product, provided in either case that, to the
extent practicable, such party shall provide written notice thereof to the other
party and sufficient opportunity to object to any such disclosure or to request
confidential treatment thereof; or (b) a party can demonstrate that (i) the
information was or became public knowledge, other than as a result of actions of
such party in violation hereof; or (ii) the information was disclosed to the
recipient on an unrestricted basis from a source unrelated to any party to this
Agreement and not under a duty of confidentiality to the other party.
Notwithstanding anything to the contrary herein, Stowe may disclose the terms
and conditions of this Agreement to any Person with whom Stowe has, or is
proposing to enter into, a business relationship, as long as such Person has
entered into a confidentiality agreement with Stowe.

 

6.4 Injunctive Relief. Each party acknowledges that it will be impossible to
measure in money the damage to the other party if such party fails to comply
with the obligations imposed by this Section 6, and that, in the event of any
such failure, the other party may not have an adequate remedy at law or in
damages. Accordingly, each party agrees that injunctive relief or other
equitable remedy, in addition to remedies at law or damages, is an appropriate
remedy for any such failure and shall not oppose the granting of such relief on
the basis that the disclosing party has an adequate remedy at law. Each party
agrees that it shall not seek, and agrees to waive any requirement for, the
securing or posting of a bond in connection with the other party seeking or
obtaining such equitable relief.

 

7. Patents.

 

7.1 Patent Prosecution and Maintenance.

 

7.1.1 Prosecution by TGV. As between the parties, TGV shall control, at its own
expense, the preparation, filing, prosecution and maintenance of the Licensed
Patent Rights consistent with prudent business practices and shall consider in
good faith the interests of Stowe and its Affiliates and Sublicensees. With
respect to each patent application and patent within the Field-Specific Patent
Rights, TGV shall (a) provide Stowe with each patent application to be filed by
TGV reasonably in advance of filing and incorporate reasonable comments by Stowe
thereon; (b) provide Stowe with a copy of any patent application filed by TGV
promptly after such filing; (c) coordinate with Stowe regarding patent strategy,
provide Stowe with copies of all correspondence and communications received
regarding such patent applications and patents and implement reasonable comments
by Stowe in connection therewith; (d) provide Stowe with copies of all
correspondence and communications sent regarding such patents and patent
applications; and (e) notify Stowe of any interference, opposition,
reexamination request, nullity proceeding, appeal or other similar action
regarding such patents and patent applications, review it with Stowe as
reasonably requested, and implement reasonable comments by Stowe thereon. TGV
shall determine in what countries the Field-Specific Patent Rights will be filed
and shall notify Stowe of such countries. In the event that Stowe wishes for TGV
to file in additional countries, TGV shall have thirty (30) days to decide on
whether to add such countries as its responsibility (and at its cost) and if it
declines to do so, it shall notify Stowe and TGV shall file such applications,
but (i) Stowe shall reimburse TGV for the costs associated with the additional
country filings, (ii) TGV shall assign to Stowe all right, title and interest in
and to such patent or patent application, (iii) such patent or patent
application shall no longer be within the Licensed Patent Rights and (iv) TGV
shall assist Stowe, upon request and to the extent commercially reasonable, in
connection with the continued prosecution and maintenance thereof, at the sole
expense of Stowe. With respect to each patent application and patent within the
Licensed Patent Rights that are not Field-Specific Patent Rights but can be
exploited in the Field of Use, TGV shall deliver to Stowe reasonably complete
drafts of all material submissions, correspondence, filings and responses to
patent authorities related to such Licensed Patent Rights, including without
limitation patent applications and amendments, give Stowe a reasonable
opportunity to comment thereon prior to their submission, and consider in good
faith such comments.

 

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7.1.2 Abandonment. TGV shall not abandon any patent or patent application within
the Field-Specific Patent Rights without providing to Stowe written notice
thereof reasonably in advance of any such abandonment. If TGV decides to abandon
any such patent or patent application, then TGV shall provide reasonable prior
written notice to Stowe thereof. Stowe shall have the right to assume control of
such patent or patent application at its sole expense by providing TGV written
notice thereof within thirty (30) days after receipt of the notice to abandon,
whereupon (a) TGV shall assign to Stowe all right, title and interest in and to
such patent or patent application, (b) such patent or patent application shall
no longer be within the Licensed Patent Rights and (c) TGV shall assist Stowe,
upon request and to the extent commercially reasonable, in connection with the
continued prosecution and maintenance thereof, at the sole expense of Stowe.

 

7.1.3 Transfer of Improvement Patents. Stowe shall not enter into any agreement
with a Third Party that is not a Sublicensee or permitted assignee described in
Section 9.3 (such Third Party, an “Unaffiliated Third Party”) to sell, convey,
transfer or assign the Improvement Patent Rights without first giving to TGV the
first right to negotiate with Stowe for the purchase of such Improvement Patent
Rights on the terms of this Section 7.1.3. If Stowe desires to sell, convey,
transfer or assign such Improvement Patent Rights to an Unaffiliated Third
Party, then Stowe shall provide prompt written notice thereof to TGV. If, within
thirty (30) days after receipt of such notice, TGV provides written notice to
Stowe of its exercise of such right of first negotiation, then the parties shall
negotiate in good faith, for a period not to exceed sixty (60) days, regarding
terms and conditions of a mutually acceptable agreement therefor. If TGV fails
to provide Stowe timely written notice of its exercise of such right of first
negotiation, or if the parties fail to reach mutual agreement and enter into a
written agreement to sell, convey, transfer and assign such Improvement Patent
Rights to TGV prior to the expiration of such sixty (60)-day period, then
thereafter Stowe shall have the right to enter into any agreement with any
Unaffiliated Third Party, and TGV shall have no rights, regarding the sale,
conveyance, transfer and/or assignment of such Improvement Patent Rights.

 

7.2 Notification of Infringement. Each shall promptly notify the other party of
any substantial and continuing infringement known to such party of any Licensed
Patent Rights in the Field of Use and shall provide the other party with the
available evidence, if any, of such infringement.

 

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7.3 Enforcement and Defense of Patent Rights in the Field of Use.

 

7.3.1 Field-Specific Patent Rights. As between the parties, Stowe shall have the
sole right, at its expense and in its sole discretion, to control the
enforcement and defense of the Field-Specific Patent Rights. TGV shall
reasonably assist Stowe, upon request and at Stowe’s sole expense, in connection
therewith.

 

7.3.2 Other Licensed Patent Rights. Except as set forth otherwise in this
Agreement, as between the parties, TGV shall have the sole right, at its expense
and in its sole discretion, to control the enforcement and defense of the
Licensed Patent Rights other than the Field-Specific Patent Rights (“Other
Licensed Patent Rights”). Stowe shall reasonably assist TGV, upon request and at
TGV’s sole expense, in connection therewith. In the event of any substantial and
continuing infringement of such Licensed Patent Rights in a country by a Third
Party in the Field of Use, if TGV fails to abate such infringement or to file an
action to abate such infringement within ninety (90) days after a written
request from Stowe to do so, or if TGV discontinues the prosecution of any such
action after filing without abating such infringement, then until such time as
such infringement is abated, the royalty rate in such country shall be reduced
to zero.

 

7.3.3 Combined Patent Rights. Subject to this Section 7.3.3, in the event of
litigation that will involve both Field-Specific Patent Rights and Other
Licensed Patent Rights, the parties shall work together to develop the strategy
for the litigation. In the event of a litigation that results from a generic
filing (either ANDA or 505(b)(2) filing) seeking approval of a generic product
for the same indication as the Stowe commercially marketed Product (“Hatch-
Waxman Litigation”), regardless of the Licensed Patent Rights involved in such
litigation, Stowe shall have the sole right, at its expense and in its sole
discretion, to control the litigation (including without limitation the
enforcement and defense of any of the Licensed Patent Rights), but shall not
stipulate to the invalidity or unenforceability of the Other Licensed Patent
Rights without obtaining TGV’s prior written consent. If the litigation involves
both Field-Specific Patent Rights and Other Licensed Patent Rights but is not
Hatch-Waxman Litigation, as between the parties Stowe shall be responsible for
and shall have the sole right to control the litigation.

 

7.4 Recoveries. With respect to any action to enforce the Licensed Patent Rights
to abate any infringement of the Licensed Patent Rights in the Field of Use or
in any Hatch-Waxman Litigation, all monies recovered upon the final judgment or
settlement of any such action shall be applied as follows: (a) first, to
reimburse the costs and expenses (including reasonable attorneys’ fees and
costs) of Stowe and TGV; (b) second (to the extent that damages are awarded for
lost sales or lost profits from the sale of Products), to Stowe and TGV in
shares that reflect the damages incurred by each party; and (c) the remainder to
the account of Stowe.

 

8. Term and Termination.

 

8.1 Term. The term of this Agreement shall continue until expiration of all
payment obligations hereunder.

 

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8.2 Termination by Stowe. Stowe may terminate this Agreement, in its sole
discretion, upon thirty (30) days prior written notice of termination to TGV.

 

8.3 Termination for Cause or Financial Hardship.

 

8.3.1 Cause. TGV may terminate this Agreement upon or after the material breach
of this Agreement by Stowe if Stowe has not cured such breach within ninety (90)
days after receipt of express written notice thereof by TGV; provided, however,
if any default is not capable of being cured within such ninety (90) day period
and Stowe is diligently undertaking to cure such default as soon as commercially
feasible thereafter under the circumstances, TGV shall have no right to
terminate this Agreement under this provision. Stowe may terminate this
Agreement upon or after the material breach of this Agreement by TGV if TGV has
not cured such breach within ninety (90) days after receipt of express written
notice thereof by Stowe; provided, however, if any default is not capable of
being cured within such ninety (90) day period and TGV is diligently undertaking
to cure such default as soon as commercially feasible thereafter under the
circumstances, Stowe shall have no right to terminate this Agreement under this
provision.

 

8.3.2 Financial Hardship. If either party applies for or consents to the
appointment of a receiver, trustee or liquidator for all or a substantial part
of its assets; admits in writing its inability to pay its debts generally as
they mature; makes a general assignment for the benefit of creditors; is
adjudicated as bankrupt; submits a petition or an answer seeking an arrangement
with creditors; takes advantage of any insolvency law except as a creditor;
submits an answer admitting the material allegations of a petition in bankruptcy
or insolvency proceeding; has an order, judgment or decree entered by any court
of competent jurisdiction approving a petition seeking reorganization of such
party or appointing a receiver, trustee or liquidator for such party, or for all
or a substantial part of any of its assets and such order, judgment or decree
shall continue unstayed and in effect for a period of ninety (90) consecutive
days; files a voluntary petition of bankruptcy or fails to remove an involuntary
petition in bankruptcy filed against it within ninety (90) days of the filing
thereof, the other party may terminate this Agreement immediately upon providing
written notice to the first party.

 

8.4 Termination if an IND is not Filed within 48 Months. TGV may terminate this
agreement in the event that an IND for a Product has not been filed within
forty-eight (48) months after the Effective Date.

 

8.5 Termination for Lack of Minimum Annual Royalty. In the event that,
commencing with the date that is two years after the First Commercial Sale of
the first Product in the United States and ending with the date when there is a
generic version of the Product available in the United States, the annual
royalties paid by Stowe is less than fifty thousand dollars ($50,000), TGV shall
have the right to terminate this Agreement by providing sixty (60) days’ prior
written notice of termination to Stowe unless Stowe pays TGV within such sixty
(60)-day period the difference between fifty thousand dollars ($50,000) and the
amount of royalties actually paid for such year.

 

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8.6 Effect of Expiration or Termination. Expiration or termination of this
Agreement shall not relieve the parties of any obligation accruing prior to such
expiration or termination, and the provisions of Sections 3.4, 4.2 (to the
extent that a milestone has been achieved prior to termination), 5, 6, this 8.6
and 9 survive the expiration or termination of this Agreement. Upon any
termination of this Agreement, TGV shall grant a direct license to any
Sublicensee of Stowe hereunder having the same scope as such sublicense and on
terms and conditions no less favorable to such Sublicensee than the terms and
conditions of this Agreement, provided that such Sublicensee is not in default
of any applicable obligations under this Agreement and agrees in writing to be
bound by the terms and conditions of such direct license and provided that such
Sublicensee is not a direct competitor of TGV.

 

8.7 Effect of Termination Except for Breach by TGV. In the event that this
Agreement is terminated by Stowe pursuant to Section 8.2 or by TGV pursuant to
Section 8.3 or 8.4, Stowe shall assign to TGV all of its rights in and to (a)
all compositions, samples, data and information specific to the Technology
derived by Stowe hereunder, (b) all results of experimentation and testing and
other know-how specific to the Technology derived by Stowe hereunder, (c) all
Improvement Patent Rights owned by Stowe that are specific to the Technology,
and (d) all regulatory filings, regulatory applications and regulatory approval
for Mul-1867 owned by Stowe. Such assignment is subject to TGV agreeing to pay
Stowe an amount equal to one and one-half percent (1½%) of net sales (determined
using a definition equivalent to “Net Sales” hereunder) of products comprising
Mul-1867, until such payments total the full amount of Stowe’s Development
Costs. Payment from TGV to Stowe shall occur within thirty (30) days after the
end of each calendar quarter for which TGV achieves such net sales, and TGV
shall deliver to Stowe together with such payment a report equivalent to the
royalty report under Section 4.4. Stowe shall have a right to audit TGV
equivalent to TGV’s right to audit Stowe under Section 4.6. In addition, in the
event that termination occurs while a Phase I Clinical Trial, Phase II Clinical
Trial or Phase III Clinical Trial is ongoing, TGV shall have the right, but not
the obligation to accept assignment of the associated clinical study agreement.
If TGV declines to accept assignment of the clinical study agreement, as between
the parties, Stowe shall be responsible for any provisions in the clinical study
agreement relating to termination of the study, including payment of all amounts
required for termination.

 

8.8 Effect of Termination for Breach by TGV. In the event that this Agreement is
terminated by Stowe pursuant to Section 8.3, the provisions of Section 3.1
through 3.3 shall additionally survive such termination, except that the rights
and licenses granted to Stowe hereunder shall become fully paid-up and royalty
free.

 

9. Miscellaneous.

 

9.1 Public Announcements. Neither party shall make any public announcements
concerning matters concerning this Agreement or the negotiation thereof without
the prior written consent of the other party unless such disclosure is required
by law, in which case the announcing party shall provide the other party with
reasonable notice of such disclosure.

 

9.2 No Consequential Damages. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN,
EXCEPT WITH RESPECT TO A BREACH OF SECTION 6 OR WITH RESPECT TO A PARTY’S
OBLIGATIONS TO INDEMNIFY, DEFEND AND HOLD HARMLESS PURSUANT TO SECTION 5,
NEITHER PARTY SHALL BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, WHETHER FORESEEABLE OR NOT, ARISING OUT OF THIS AGREEMENT
OR THE EXERCISE OF ITS RIGHTS HEREUNDER, REGARDLESS OF ANY NOTICE OF SUCH
DAMAGES.

 

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9.3 Assignment. Neither party shall assign its rights or obligations under this
Agreement without the prior written consent of the other party; provided,
however, that a party may, without such consent, assign this Agreement and its
rights and obligations hereunder (a) to any Affiliate, or (b) in connection with
the transfer or sale of all or substantially all of its business to which this
Agreement relates, or in the event of its merger, consolidation, change in
control or similar transaction. Any permitted assignee shall assume all
obligations of its assignor under this Agreement. Any purported assignment in
violation of this Section 9.3 shall be void.

 

9.4 Severability. Any provision of this Agreement which is illegal, invalid or
unenforceable shall be ineffective to the extent of such illegality, invalidity
or unenforceability, without affecting in any way the remaining provisions
hereof.

 

9.5 Relationship of the Parties. For all purposes of this Agreement, TGV and
Stowe shall be deemed to be independent entities and anything in this Agreement
to the contrary notwithstanding, nothing herein shall be deemed to constitute
TGV and Stowe as partners, joint ventures, co-owners, an association or any
entity separate and apart from each party itself, nor shall this Agreement
constitute any party hereto an employee or agent, legal or otherwise, of the
other party for any purposes whatsoever. Neither party is authorized to make any
statements nor representations on behalf of the other party or in any way
obligate the other party, except as expressly authorized in writing by the other
party. Anything in this Agreement to the contrary notwithstanding, no party
hereto shall assume nor shall be liable for any liabilities or obligations of
the other party, whether past, present or future.

 

9.6 Headings. The headings set forth at the beginning of the various Articles of
this Agreement are for reference and convenience and shall not affect the
meanings of the provisions of this Agreement.

 

9.7 Governing Law; Exclusive Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without
regard to the conflicts of law principles thereof. Each of the parties hereto
irrevocably consents to the exclusive jurisdiction and venue of any federal
court located in the District of the State of Delaware or state court in
Wilmington, Delaware having jurisdiction, in connection with any matter based
upon or arising out of this Agreement or the matters contemplated herein, agrees
that process may be served upon them in any manner authorized by laws of the
State of Delaware for such persons and waives and covenants not to assert or
plead any objection which they might otherwise have to such jurisdiction, venue
and such process.

 

9.8 Entire Agreement; Amendment. This Agreement, together with the Exhibits
hereto, and each additional document, instrument or other agreement to be
executed and delivered pursuant hereto, including the Stock Issuance Agreement
and the Consulting Agreement constitute all of the agreements of the parties
with respect to, and supersede all prior agreements and understandings relating
to the subject matter of, this Agreement or the transactions contemplated by
this Agreement. This Agreement may not be modified or amended except by a
written instrument specifically referring to this Agreement signed by the
parties hereto.

 

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9.9 Waiver. No waiver by one party of the other party’s obligations, or of any
breach or default hereunder by any other party, shall be valid or effective,
unless such waiver is set forth in writing and is signed by the party giving
such waiver; and no such waiver shall be deemed a waiver of any subsequent
breach or default of the same or similar nature or any other breach or default
by such other party.

 

9.10 Notices. Any consent, notice or report required or permitted to be given or
made under this Agreement by a party to the other party shall be in writing,
delivered by any lawful means to such other party at its address indicated
below, or to such other address as the addressee shall have last furnished in
writing to the addressor and (except as otherwise provided in this Agreement)
shall be effective upon receipt by the addressee.

 

If to TGV: TGV-Health, LLC

101 Avenue of the Americas

New York, New York 10013

Attention: President/Chief Executive Officer

      and      

TGV-Ophthalnix, LLC101

Avenue of the Americas
New York, New York 10013

Attention: President/Chief Executive Officer

    With a copy to:

Polsinelli

100 S. Fourth Street, Suite 1000
St. Louis, MO 63102

Attention: Kathryn J. Doty, Esq.

    If to Stowe:

Stowe Pharmaceuticals, Inc.

12264 El Camino Real, Suite 350
San Diego, California 92130

Attention: Chief Executive Officer

 

9.11 Counterparts. This Agreement may be executed in separate counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

 

[SIGNATURE PAGE FOLLOWS.]

 

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IN WITNESS WHEREOF, each party has caused a duly authorized representative to
execute and deliver this License Agreement as of the Effective Date.

 

TGV-Health, LLC       By: /s/ George Tets   Name: George Tets   Title: Chief
Executive Officer  

 

TGV-Ophthalnix, LLC       By: /s/ George Tets   Name: George Tets   Title: Chief
Executive Officer  

 

Stowe Pharmaceuticals, Inc.       By: /s/ Mark Baum   Name: Mark Baum   Title:
Executive Director

 

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