Exhibit 10.50

LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

 

This License, Development and Commercialization Agreement (“Agreement”) is made
and entered into as of June 28, 2019 (the “Effective Date”) by and between Abuse
Deterrent Pharmaceuticals, LLC, with offices at 333 E. Main Street, Suite 220,
Louisville, Kentucky 40202 (“AD Pharma”), and Acura Pharmaceuticals, Inc., with
offices at 616 N. North Court, Palatine IL 60067 (“Acura”). AD Pharma and Acura
each are referred to herein as a “Party” and collectively as the “Parties.”

 

WITNESSETH:

 

WHEREAS, Acura has developed LIMITx™ Technology intended to retard the release
of drug from tablets when multiple tablets are ingested;

 

WHEREAS, AD Pharma and its Affiliates have substantial expertise in the
distribution, sales and marketing of healthcare products;

 

WHEREAS, Acura wishes to grant to AD Pharma, and AD Pharma wishes to obtain, the
rights to the LIMITx™ Technology to develop and commercialize the Product in the
Territory (each as herein defined);

 

NOW THEREFORE, in consideration of the foregoing premises and the mutual
promises, covenants and conditions contained in this Agreement, the Parties
agree as follows:

 

Article I
DEFINITIONS

 

1.1              “Acura Indemnitees” is defined in Section 5.3

 

1.2              “Affiliate” means any corporation or other entity, which
directly or indirectly controls, is controlled by or is under common control
with a Party. A corporation or other entity shall be regarded as in control of
another corporation or entity if it owns or directly or indirectly controls more
than Fifty Percent (50%) of the voting stock or other ownership interest of the
other corporation or entity, or if it possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of the
corporation or other entity or the power to elect or appoint more than Fifty
Percent (50%) of the members of the governing body of the corporation or other
entity. Notwithstanding the foregoing, a private equity or venture capital firm
with an ownership interest in an entity shall not be an Affiliate by reason of
such ownership and portfolio companies of a private equity firm or a venture
capital firm shall not be Affiliates or a Party by virtue of the private equity
firm or venture capital firm being Affiliates of a Party.

 

1.3              “[*****] Product” means an immediate release pharmaceutical
product containing [*****] as its sole active ingredient and utilizing the
LIMITX™ Technology in [*****] dosage strengths.

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

   

 

 

 

1.4              “Applicable Law” means, with respect to any Person, any
domestic or foreign, federal, state or local statute, treaty, law, ordinance,
rule, regulation, administrative interpretation, order, writ, injunction,
judicial decision, decree or other requirement of any governmental authority,
including any rules, regulations or other requirements of the Regulatory
Authorities in the Territory, applicable to such Person or any of such Person’s
respective properties, assets, officers, directors, employees, consultants or
agents.

 

1.5              “Bankrupt Party” is defined in Section 10.2.1.

 

1.6              “Claims” is defined in Section 5.2.

 

1.7              “Commercially Reasonable Efforts” means the efforts and
resources which would be used (including the promptness in which such efforts
and resources would be applied) by a Party consistent with its normal business
practices and in compliance with Applicable Law and the exercise of prudent
scientific and business judgment, which in no event shall be less than the level
of efforts and resources standard in the pharmaceutical industry for a company
similar in size and scope to such Party, with respect to a product or potential
product at a similar stage in its development and with similar market potential
or product life cycle taking into account efficacy, safety, commercial value,
the competitiveness of alternative products of Third Parties that are in the
marketplace, and the Patent Rights and other proprietary position of such
product.

 

1.8              “Confidential Information” is defined in Section 4.1 below.

 

1.9              “Competing Product” means a prescription product that contains
hydrocodone and acetaminophen in a solid, oral dosage form, other than the
Product or Product Line Extension.

 

1.10          “Control” means, with respect to Intellectual Property Rights,
ownership or the possession of the ability by license or otherwise to assign or
grant a license or sublicense to or disclose such Intellectual Property Rights
without violating the terms of any agreement or other arrangement, express or
implied, with any Third Party.

 

1.11          “Effective Date” has the meaning set forth above.

 

1.12          “FD&C Act” means that federal statute entitled the Federal Food,
Drug, and Cosmetic Act and enacted in 1938 as Public Law 75-717, as such may
have been amended, and which is contained in Title 21 of the C.F.R. Section 301
et seq.

 

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

 

1.14          “Field” means prescription (“Rx”) products.

 

1.15          “GAAP” means generally accepted accounting principles in effect in
the United States from time to time applied on a consistent basis.

 

1.16          “Gross Sales” means the U.S. Dollar value (with sales in foreign
currency converted as per Section 3.7) of all consideration to which AD Pharma,
its Affiliates and licensees is entitled for the sale of the Product and Product
Line Extension. In the event AD Pharma sells the Product or Product Line
Extension for less than fair market value, the fair market value of such Product
or Product Line Extension (as if there had been a sale for fair market value to
a Third Party) shall be included in Gross Sales.

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 2 

 

 

1.17          “Indemnified Party” is defined in Section 5.4(a)

 

1.18          “Indemnifying Party” is defined in Section 5.4(a).

 

1.19          “Intellectual Property Rights” means Know-How, registered
trademarks, trademark applications, unregistered trademarks, trade dress,
copyrights, and Patent Rights.

 

1.20          “Know-How” means information Controlled by Acura and related to
retarding the release of active ingredients from pharmaceutical product when
multiple dosages are ingested and encompassing manufacturing techniques,
process, quality information, batch records (un-redacted master and executed),
formulation composition and excipient specifications, formation development
reports; batch summaries, and analytical methods and development/validation.

 

1.21          “LIMITx™ Regulatory Application Submission Timeline” is defined in
Section 3.1.4.

 

1.22          “LIMITx™ Patent Rights” means the Patent Rights set forth on
Exhibit A, that disclose or claim Acura’s LIMITx™ Technology and that are
Controlled by Acura or its Affiliates during the Term, including issued patents
resulting from such applications, and all divisionals, continuations,
continuations-in-part, substitutions, reissues, reexaminations, extensions,
registrations, patents and applications to which priority is claimed, patent
term extensions and renewals of the foregoing, including foreign counterparts
thereof.

 

1.23          “LIMITx™ Technology” means the technology for retarding the
release of active ingredients from pharmaceutical product when multiple dosages
are ingested as reflected in the LIMITX™ Patent Rights and any related Know-How
that is Controlled by Acura as of the Effective Date or at any time during the
Term, including any technology retarding the release of active ingredients from
pharmaceutical product when multiple dosages are ingested Controlled by Acura
during the Term that would infringe the LIMITx™ Patent Rights if utilized by a
third party.

 

1.24          “Losses” is defined in Section 5.2.

 

1.25          “AD Pharma Indemnitees” is defined in Section 5.2.

 

1.26          “Milestone Payments” is defined in Section 3.4.

 

1.27          “Net Sales” means the Gross Sales reduced by deductions, without
duplication, for each of the following to the extent actually incurred, allowed
or accrued, and without duplication (a) returns, (b) cash discounts, (c)
coupons, (d) listing fees, (e) credits, (f) trade rebates, (g) shipping costs,
(h) sales and excise taxes, other consumption taxes, and (i) other governmental
charges. Net Sales, as set forth in this definition, shall be calculated
applying, in accordance with GAAP, AD Pharma's standard accounting practices for
selling AD Pharma's other products.

 

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 3 

 

 

1.28          “Nexafed® Agreement” is defined in Section 3.12.

 

1.29          “Paragraph IV Certification” means a certification under and
pursuant to 21 U.S.C. Section 355(j)(2)(A)(vii)(IV) of the FD&C Act or pursuant
to 21 U.S.C. Section 355(b)(2) (A)(iv) of the FD&C Act.

 

1.30          “Party” means AD Pharma and Acura individually or jointly as
“Parties”.

 

1.31          “Patent Challenge” is defined in Section 9.4.

 

1.32          “Patent Rights” means patents and patent applications, and all
divisionals, continuations, continuations-in-part, substitutions, reissues,
reexaminations, extensions, registrations, supplementary protection
certificates, patents and applications to which priority is claimed, patent term
extensions and renewals of the foregoing, including foreign counterparts
thereof.

 

1.33          “Person” means an individual, a corporation, a general
partnership, a limited partnership, a limited liability company, a limited
liability partnership, an association, a trust or any other entity or
organization.

 

1.34          “Product” means a pharmaceutical product containing the
immediate-release combination of hydrocodone bitartrate and acetaminophen
utilizing the LIMITX™ Technology in the 5/325mg, 7.5/325mg and 10/325mg dosage
strengths.

 

1.35          “Product Line Extension” means any product containing the
combination of hydrocodone bitartrate and acetaminophen utilizing the LIMITx™
Technology that contains dosage strengths other than those contained in the
Product but excludes any additional active ingredients.

 

1.36          “Qualified Settlement Offer” is defined in Section 5.4(b).

 

1.37          “Regulatory Approval” means the license or final FDA, or
equivalent foreign governmental authority, marketing approval necessary as a
prerequisite for marketing a Product in a country in the Territory.

 

1.38          “Regulatory Approval Application” means shall mean any filing(s)
made with the Regulatory Authority in any country in the Territory for
Regulatory Approval of the marketing, manufacture and sale (and pricing when
applicable) of a Product in such country.

 

1.39          “Regulatory Authority” means the FDA in the U.S., and any health
regulatory authority(ies) in any other country in the Territory that is a
counterpart to the FDA and has responsibility for granting regulatory approval
for the marketing, manufacture, and sale of a Product in such country,
including, but not limited to, pricing and reimbursement approvals, and any
successor(s) thereto, as well as any state or local health regulatory
authorities having jurisdiction over any activities contemplated by the Parties.

 

1.40          “Regulatory Materials” is defined in Section 2.6.

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 4 

 

 

1.41          “Related LIMITX™ Technology Product” is defined in Section 7.7(a).

 

1.42          “Royalty Payment” is defined in Section 3.2.1.

 

1.43          “Royalty Report” is defined in Section 3.4.

 

1.44          “Royalty Term” shall be on a Product-by-Product, Product Line
Extension by Product Line Extension, and country-by-country basis and, with
respect to each country, will begin on the Effective Date and will expire on the
later of the date that (i) the LIMITx™ Patent Rights in such country are not
Valid; or (ii) is the scheduled expiration of the Royalty Term for the United
States for a country in which there are not any LIMITx™ Patent Rights, provided
that all Royalty Terms shall terminate upon termination of this Agreement
pursuant to Section 9.2.

 

1.45          “Term” has the meaning set forth in Section 9.1.

 

1.46          “Territory” means the United States, its territories and
possessions.

 

1.47          “Third Party” means any entity other than Acura and its Affiliates
and AD Pharma and its Affiliates.

 

1.48          “Title 11” is defined in Section 10.2.1.

 

1.49          “Valid” means, with respect to a LIMITx™ Patent Rights in a
particular country, such LIMITx™ Patent Rights have not (A) expired or been
cancelled, (B) been declared invalid or unenforceable by a decision of a court
or other appropriate body of competent jurisdiction, from which no appeal is or
can be taken, (C) been admitted to be invalid or unenforceable through reissue,
disclaimer or otherwise, or (D) been abandoned or disclaimed either
affirmatively or by operation of law.

 

Article II
LICENSE AND COMMERCIALIZATION

 

2.1              License.

 

2.1.1        Acura hereby grants AD Pharma an exclusive (even as to Acura),
sub-licensable (subject to Section 2.10), royalty-bearing right and license
under the LIMITx™ Technology to develop, manufacture, have manufactured,
distribute, have distributed, sell, have sold, market, have marketed,
commercialize and have commercialized the Product and Product Line Extensions in
the Field in the Territory.

 

2.1.2        Acura hereby licenses to AD Pharma, on a non-exclusive basis the
use of the mark LIMITx™ in the Field and Territory solely for the
commercialization of the Product and Product Line Extension.

 

2.1.3        The licenses granted herein shall expire upon termination of this
Agreement but shall survive expiration of this Agreement.

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 5 

 

 

2.1.4        If Acura decides to accept an unsolicited offer from a Third Party
or determines it will solicit an agreement to license, in any European Union
country, the United Kingdom, Japan, or Australia, any right(s) to develop,
manufacture, have manufactured, distribute, have distributed, sell, have sold,
market, have marketed, commercialize and/or have commercialized the Product and
any Product Line Extension, Acura will immediately deliver notice to AD Pharma
of such offer or determination to solicit. Such notice shall be in writing and
specify the action Acura has decided to pursue including any offeror(s), if
applicable, and the terms and conditions of any license being considered by
Acura (the “Foreign License Notice”). The Foreign License Notice must be
delivered to AD Pharma prior to Acura considering the execution of any document
(including without limitation agreements, Memoranda of Understanding or Letters
of Intent) related to the subject matter of the Foreign License Notice. Acura’s
acceptance of such unsolicited offer or implementation of its determination to
solicit shall be subject to the following conditions:

 

(a)AD Pharma shall have forty-five (45) days from receipt of the Foreign License
Notice in which to notify Acura that it elects to exercise any of the following
rights, for which any period of negotiation shall be for ninety (90) days
following AD Pharma’s delivery of a Request Following Unsolicited Offer or
Request Following Determination to Solicit, as defined in this Section:

 

(i) if the action specified in the Foreign License Notice involves receipt of an
unsolicited offer from a Third Party for an exclusive license involving the
Product or any Product Line Extension, AD Pharma shall have the right to accept
a license upon the same terms and conditions as set forth in the unsolicited
offer described in the Foreign License Notice, and its acceptance shall be made
in writing;

 

(ii) if the action specified in the Foreign License Notice involves receipt of
an unsolicited offer from a Third Party for a non-exclusive license involving
the Product or any Product Line Extension, AD Pharma shall have the right either
to accept a license upon the same terms and conditions as set forth in the
unsolicited offer described in the Foreign License Notice, or to request Acura
to negotiate in good faith and on an exclusive basis to agree upon terms and
conditions for an exclusive license (the “Request Following Unsolicited Offer”)
granting AD Pharma the exclusive right to develop, manufacture, have
manufactured, distribute, have distributed, sell, have sold, market, have
marketed, commercialize and have commercialized the Product and any Product Line
Extension in the same countries as set forth in such unsolicited offer described
in the Foreign License Notice, and AD Pharma’s acceptance of license or Request
Following Unsolicited Offer hereunder (as the case may be) shall be made in
writing;

 

(iii) if the action specified in the Foreign License Notice involves a
determination that Acura will solicit an agreement granting a license involving
the Product or any Product Line Extension in any European Union country, the
United Kingdom, Japan, or Australia, AD Pharma shall have the right to negotiate
with Acura in good faith and on an exclusive basis to agree upon terms and
conditions for an exclusive or non-exclusive license in the same country or
countries (the “Request Following Determination to Solicit”), and the Request
Following Determination to Solicit shall be made in writing.

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 6 

 

 

(b)After ninety (90) days from delivery of a Request Following Unsolicited Offer
or Request Following Determination to Solicit, if the Parties have not executed
a definitive agreement (in the form of either an amendment to this Agreement or
a new agreement) then Acura shall not enter into an agreement with a Third Party
to license, in any European Union country, the United Kingdom, Japan, or
Australia, any right(s) to develop, manufacture, have manufactured, distribute,
have distributed, sell, have sold, market, have marketed, commercialize and/or
have commercialized the Product and any Product Line Extension on terms (when
taken as a whole) that are less favorable to Acura than the terms of the last
proposal rejected by either of the Parties without first providing to AD Pharma
a written copy of such terms, and AD Pharma shall have forty-five (45) days to
accept a license upon the same terms and conditions.

 

2.2              No Other Rights and Retained Rights.

 

This Agreement confers no right, license or interest by implication, estoppel,
or otherwise under any Patent Rights, Confidential Information, Know-How or
other Intellectual Property Rights (including but not limited to trade secrets,
formulations, manufacturing processes, data) that was owned by a Party prior to
signing the Agreement except as expressly set forth in this Article II. Each
Party hereby expressly retains and reserves all rights and interests with
respect to patents, Confidential Information, technology or other Intellectual
Property Rights not expressly granted to the other Party hereunder.

 

2.3              AD Pharma to use CRE. AD Pharma shall use Commercially
Reasonable Efforts to market and sell the Product in the Territory upon
Regulatory Approval and introduce the Product into interstate commerce within
180 days of such Regulatory Approval. AD Pharma shall use Commercially
Reasonable Efforts to file with the FDA the Regulatory Approval Application for
the Product and to gain Regulatory Approval for such Product.

AD Pharma shall use Commercially Reasonable Efforts to develop, obtain any
necessary Regulatory Approval and commercialize a Product Line Extension in the
Territory, provided such decision to advance Product Line Extension(s) shall be
the sole responsibility of AD Pharma. AD Pharma shall comply with all Applicable
Laws in the development, commercialization (including, without limitation,
packaging, sale, distribution, advertising, disposition and marketing of the
Product and Product Line Extension, and product packaging) and AD Pharma shall
use all legends, notices, and markings as required by Applicable Law.

 

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 7 

 

 

Acura to use CRE. Acura shall use Commercially Reasonable Efforts to develop the
Product in the United States, provided however, that any obligation of Acura to
develop the [*****] Product will be subject to a separate development agreement
to be negotiated between the Parties. Acura shall comply with all Applicable
Laws in the development of the Product.

 

2.4              AD Pharma Responsibility for All Commercialization Costs and
Expenses. During the Term, AD Pharma shall have the sole obligation and
responsibility, and at its sole cost and expense, for all aspects of
manufacturing and commercializing, including without limitation, scale up and
validation of the production process, testing packaging and labelling the
Product and Product Line Extension, and any costs associated with storage,
release and Third Party logistics. As part of such responsibilities, AD Pharma
shall have the sole responsibility to obtain or to coordinate with and provide
to its contract manufacturer such information and materials as shall be
reasonably necessary to obtain sufficient quota for active pharmaceutical
ingredients from the Drug Enforcement Administration, and similar foreign
agencies.

 

2.5              AD Pharma Responsible for Product Development Costs and
Expenses. During the Term, AD Pharma shall pay for or reimburse Acura to the
extent Acura pay’s for all out-of-pocket Product development expenses (excluding
any Product Line Extension). The Parties shall be responsible for maintaining
and paying for their own internal staff and infrastructure related to Product
development.

 

2.6              Regulatory Approvals and Fees.

 

2.6.1        AD Pharma shall be the sole owner of the Product Regulatory
Application and Regulatory Approval thereof, registration materials, clinical
documentation, and any and all country specific dossiers for the Product and
Product Line Extension in the Territory (the “Regulatory Materials”). AD Pharma
shall be responsible for maintaining the Product and Product Line Extension
Regulatory Approvals, and pay any and all fees and expenses in connection
therewith including, without limitation, any filing fees, establishment fees,
annual product fees, active pharmaceutical supplier fees, post-approval studies
and any fees associated with the amendment of a Regulatory Approval, any costs
and expenses associated with regulatory changes requested by a Regulatory
Authority relating to a Product, Product Line Extension, or Regulatory
Approvals, subject to Section 2.7.2. Notwithstanding the foregoing, AD Pharma
may, in its sole discretion, transfer, sell or convey the Regulatory Materials,
in whole or in part, to a third-party provided that: (a) such third-party agrees
to be bound by the terms of this Agreement governing the Regulatory Materials,
(b) AD Pharma remains fully responsible for the compliance by such third party
with the terms and conditions of this Agreement, including without limitation
the non-compete provisions of Section 2.9, (c) any and all rights to the
Regulatory Materials retained by AD Pharma are fully assignable to Acura in the
event of termination or expiration of this Agreement.

 

2.7              Coordination of Efforts. Acura and AD Pharma will form a joint
steering committee to coordinate the strategies, activities, timelines and
budgets for the development and commercialization of the Product and Product
Line Extension, if any. In the course of such meetings, each Party shall have
one vote on any matter before the committee, except, however, the Party
responsible for any budgetary item as determined by this Agreement shall have
sole decision making authority with regard to that budget and the underlying
activities. In the event said committee is unable to decide any matter, the
matter will promptly be referred to dispute resolution in Section 10.1.

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 8 

 

 

2.8              Right of Reference.

 

2.8.1        Acura grants AD Pharma a right of reference to preclinical and
clinical data and reports, and any adverse event reports regarding the Products
and all other necessary data, reports and information, in each case Controlled
by Acura for the purpose of obtaining, and/or maintaining Regulatory Approval
of, or commercializing or manufacturing a Product or Product Line Extension,
without any additional compensation.

 

2.8.2        AD Pharma grants Acura a perpetual right of reference to
preclinical and clinical data and reports, any adverse event reports regarding
the Product and Product Line Extension and such other data, reports and
information, in each case Controlled by AD Pharma for the purpose of obtaining
and/or maintaining Regulatory Approval of products utilizing the LIMITx™
Technology without any additional compensation.

 

2.9              Non-Compete. AD Pharma, its Affiliates, and sublicensees will
not develop, file a Regulatory Approval Application or seek Regulatory Approval
of or launch, market or sell or assist a Third Party in the development of,
launch, market or sale of a Competing Product in the Territory during the
Royalty Term.

 

2.10          Sublicenses. AD Pharma may grant sublicenses through multiple
tiers, under any or all of the rights granted in Section 2.1, to its Affiliates
and to Third Parties. Each agreement in which AD Pharma grants a sublicense
under Section 2.1 shall be consistent with the relevant terms and conditions of
this Agreement. AD Pharma shall provide notice to Acura of the proposed
sublicense prior to execution thereof which notice shall state the subject of
the sublicense (including the portion of the Territory and products being
sublicensed) and AD Pharma shall provide Acura a copy of such sublicense, with
suitable redaction of confidential information contained therein, within thirty
(30) days after execution thereof. AD Pharma shall be and remain fully
responsible for the compliance by sublicensees with the terms and conditions of
this Agreement, including without limitation and non-compete provisions of
Section 2.9.

 

2.11          Technology Transfer. LIMITx™ Technology. Acura shall provide AD
Pharma with a technology transfer which shall consist of the manufacturing
Know-How encompassed in the LIMITx™ Technology relating to the Product. Such
transfer shall be at least as comprehensive as any technology transfer actually
provided by Acura to any Third Party related to the manufacture of the Product.
Acura hereby authorizes any Third Party with whom it has contracted for the
manufacture of the Product at any scale to release to AD Pharma any and all
information disclosed by Acura to the Third Party, and such authorization
applies regardless of any designations (e.g., Confidential, Proprietary, Trade
Secret, and the like) placed upon such disclosed information.

 

2.12          Complaints; Recalls. Each of AD Pharma and Acura shall inform the
other Party as promptly as practicable of any Product and Product Line Extension
complaints. All communications relating to the performance or condition of the
Product or Product Line Extension, and all communications relating to adverse
experiences in association with, but not necessarily due to, the Product or
Product Line Extension which are received by Acura or AD Pharma shall be
forwarded to the other Party. In the event of any recall of or field
notification after the Effective Date with respect to any Product or Product
Line Extension, each of AD Pharma and Acura shall make available to the other
Party during normal business hours and upon reasonable advance notice such
records and other information as reasonably requested by such other Party in
connection with any recall. AD Pharma shall be solely responsible at its cost
and expense for any recalls or withdrawals of Product or Product Line Extension
sold by it. AD Pharma shall be responsible for all required regulatory
activities in the Territory.

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 9 

 

 

2.13          Trademarks; Logos.

 

2.13.1    AD Pharma shall assume full responsibility, at its sole cost and
expense for prosecuting or litigating any infringement of the LIMITx™ trademark
and shall be entitled to retain all recoveries in connection therewith except it
shall remit to Acura 15% of such recoveries after deduction from such recoveries
of fees and expenses in enforcing such trademark rights.

 

2.13.2    AD Pharma hereby acknowledges the exclusive ownership by Acura of the
LIMITx trademark furnished by Acura for use in connection with the Product and
Product Line Extension. AD Pharma shall not, during the Term or thereafter,
register, use, or attempt to obtain any right in and to the LIMITx trademark or
in and to any name, logo or trademark confusingly similar thereto. Acura will
use Commercially Reasonable Efforts to obtain formal registration of the LIMITx
trademark in the United States in advance of the commercial use of such
trademark by AD Pharma.

 

2.13.3    Acura shall have the right to exercise quality control over AD
Pharma's use of the LIMITx trademark to a degree reasonably necessary to
maintain the validity of the trademark and to protect the goodwill associated
therewith.

 

2.13.4    AD Pharma shall, in its packaging, sale, marketing, advertising,
disposition and distribution of any Product, Product Line Extension and product
packaging adhere to a level of quality regarding the maintenance of the validity
of the LIMITx trademark and the protection of the goodwill associated therewith
consistent with the reasonable standards of quality otherwise set by Acura.

 

Article III
PAYMENTS AND ROYALTIES

 

3.1              Pre-FDA Application Payments by AD Pharma.

 

3.1.1        In an aggregate amount not to exceed Six Million Three Hundred
Thousand Dollars ($6,300,000)(the “Maximum Pre-Regulatory Application Submission
Payment”), each month AD Pharma shall pay Acura Three Hundred Fifty Thousand
Dollars ($350,000) in non-refundable, non-creditable payments to Acura in
immediately available funds, with such payments to begin within Five (5) days of
the Effective Date, and continuing on the monthly anniversary of the Effective
Date until the earlier of eighteen (18) such monthly payments have occurred or
the Maximum Pre-Regulatory Application Submission Payment is reached (as the
timing of the latter, but not the amount, may be adjusted in accordance with
Section 3.1.2).

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 10 

 

 

3.1.2        If Acura succeeds in gaining filing acceptance by the FDA of a
Regulatory Approval Application for the Product before the Maximum
Pre-Regulatory Application Submission Payment is reached based on monthly
payments of Three Hundred Fifty Thousand Dollars under Section 3.1.1, then AD
Pharma shall cease making such monthly payments; provided, however that AD
Pharma shall in this case make a one-time payment to Acura within thirty (30)
days of such filing acceptance by the FDA, with such one-time payment calculated
by subtracting the sum of all such monthly payments actually made from the
Maximum Pre-Regulatory Application Submission Payment.

 

3.1.3        If Acura fails to gain filing acceptance by the FDA of a Regulatory
Approval Application for the Product before the end of the LIMITx™ Regulatory
Application Submission Timeline, as defined in Section 3.1.4, then AD Pharma (i)
is not obligated to continue such monthly payments thereafter, and (ii) may
terminate this Agreement for breach by providing written notice specifying the
breach as the failure by Acura to gain filing acceptance by the FDA of a
Regulatory Approval Application for the Product within the LIMITx™ Regulatory
Application Submission Timeline, provided that for such termination under this
(ii) to be effective, it must occur before FDA has accepted the Regulatory
Approval Application for the Product. In the event this Agreement terminates for
Acura’s failure to gain filing acceptance by the FDA of a Regulatory Approval
Application for the Product within the LIMITx™ Regulatory Application Submission
Timeline:

 

(a)The provision in Section 9.2 allowing a period of time (i.e., thirty (30)
days) to remedy the breach shall not apply; and

 

(b)Notwithstanding any other provision(s) herein, Acura’s ownership of the
LIMITx™ Patent Rights shall transfer automatically to AD Pharma without payment
of any further consideration. Contingent upon termination of this Agreement
under Section 3.1.3, Acura hereby assigns and transfers its entire right, title
and interest in the LIMITx™ Patent Rights to AD Pharma, and Acura agrees to
execute or procure any further necessary assurance of the title to said LIMITx™
Patent Rights at any time, upon request and at the expense of AD Pharma,
including but not limited to the delivery of any testimony in any legal
proceedings and the execution of all papers that may be necessary or desirable
to perfect the title to said LIMITx™ Patent Rights in the name of AD Pharma, or
such other party as AD Pharma designates.

 

3.1.4        If at any time in AD Pharma’s sole discretion, Acura fails to
adhere to the LIMITx™ Regulatory Application Submission Timeline then AD Pharma
may terminate this Agreement under either or both of Section 9.2 for breach, or
Section 9.3 for convenience. The “LIMITx™ Regulatory Application Submission
Timeline” means the completion by Acura of all activities set forth in Schedule
1, on or before the deadline identified for each activity. For the avoidance of
doubt, a missed deadline for any one or more of the deadlines set forth in
Schedule 1 shall constitute a failure to adhere to the LIMITx™ Regulatory
Application Submission Timeline. Also, based on the frequency of monthly
payments by AD Pharma set forth in Section 3.1.1, and unless adjustment is made
under Section 3.1.2, the LIMITx™ Regulatory Application Submission Timeline can
last no longer than the last day of the calendar month that occurs seventeen
(17) months after the Effective Date.

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 11 

 

 

3.2              Consents of AD Pharma.

 

3.2.1        Any transfer by Acura of the LIMITx™ Patent Rights to a Third Party
for indications outside the scope of the Product and Product Line Extension
(including without limitation a license, assignment, security interest, or
otherwise) shall be subject to AD Pharma’s written consent, which shall not be
unreasonably withheld or delayed. AD Pharma acknowledges that any such transfer
of rights under this Section to which it has consented shall survive any
transfer of the LIMITx™ Patent Rights under Section 3.1.3(b).

 

3.2.2        At any time prior to FDA acceptance of the Regulatory Approval
Application for the Product, in the event Acura has a bona fide offer for
financing for Acura, AD Pharma consents that it will negotiate in good faith any
amendments to this Agreement required by such third-party financer, provided
that AD Pharma will be under no obligation to enter into such amendments.

 

3.3              Royalties. The following payments shall be payable by AD Pharma
to Acura for sales made during each calendar quarter and payment will be
remitted within forty-five (45) days after the end of the quarter to which it
relates.

 

3.3.1        Royalty Payment. For each Product and Product Line Extension in the
Territory during the Royalty Term for a country in the Territory, AD Pharma
shall pay to Acura a royalty of [*****] Percent ([*****]% [*****]) on all Net
Sales in the Territory on the first $[*****] ([*****]) US Dollars in Net Sales
in a calendar year and [*****] Percent ([*****]%) on Net Sales in excess of
[*****]US Dollars. Such royalty shall be payable for sales made during each
calendar quarter, and while the Royalty Term for the United States is in effect,
be no less than [*****] Dollars ($[*****]) for each such calendar quarter (which
shall accrue on a daily basis during a quarter), and payment will be remitted
within forty-five (45) days after the end of the quarter to which it relates.
The royalty payment under this Section 3.2.1 is referred to as the “Royalty
Payment.” Notwithstanding the foregoing, should the FDA approved label for the
Product not include a description of the pharmacokinetic profile, clinical
results or benefits, or other marketable feature of the LIMITx Technology, then
the minimum royalty payment in each quarter shall be [*****] dollars ($[*****])
until such information is included in the label.

 

3.4              Sales Milestone Payments. AD Pharma shall make the following
one-time, non-refundable, non-creditable payments within forty-five (45) days
after the end of the year to Acura based on the attainment of the Net Sales in
such calendar year for all Products and Product Line Extensions in the Territory
(the “Milestone Payments”):

 

3.4.1        AD Pharma shall pay Acura [*****]dollars ($[*****]) the first time
aggregate Net Sales in a given calendar year exceeds [*****] dollars ($[*****]);
and

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 12 

 

  

3.4.2        AD Pharma shall pay Acura [*****] dollars ($[*****]) the first time
aggregate Net Sales in a given calendar year exceeds [*****]dollars ($[*****]).

 

3.5              Royalty Reports. AD Pharma shall prepare in respect of each
calendar quarter a report (“Royalty Report”) that shows for that calendar
quarter the Net Sales of Product and Product Line Extension by country and
detailing the calculation of Gross Sales and deductions from Gross Sales in
arriving at Net Sales. AD Pharma shall submit such statement to Acura within
forty-five (45) days of the end of the calendar quarter to which it relates,
together with its remittance for Royalty Payments in respect of that quarter.
The Royalty Report shall be in the form of Exhibit B.

 

3.6              Records. During the Term and for two (2) years thereafter, each
Party shall keep all usual and proper records and books of account and all usual
and proper entries relating to the Product and Product Line Extension. AD Pharma
shall maintain (electronically or otherwise) such records and books of account
containing all necessary data for the calculation of Royalty Payments due under
this Agreement.

 

3.7              Audits. AD Pharma and its Affiliates and Sublicensees shall
maintain complete and accurate records in reasonably sufficient detail to permit
Acura to confirm the accuracy of the calculation of royalty payments. Upon
reasonable prior notice, such records shall be available during regular business
hours for a period of three (3) years from the end of the calendar year to which
they pertain for examination, not more often than once each calendar year, by an
independent certified public accountant selected by Acura and reasonably
acceptable to AD Pharma, for the sole purpose of verifying the accuracy of the
financial reports furnished by AD Pharma pursuant to this Agreement. Any such
auditor shall enter into a confidentiality agreement with AD Pharma and shall
not disclose AD Pharma's Confidential Information, except to the extent such
disclosure is necessary to verify the accuracy of the financial reports
furnished by AD Pharma or the amount of payments due from AD Pharma to Acura
under this Agreement. Any amounts shown to be owed but unpaid shall be paid, and
any amounts showed to be overpaid will be refunded, within forty-five (45) days
from the accountant's report. Acura shall bear the full cost of such audit
unless such audit discloses an underpayment to Acura of more than $10,000, in
which case AD Pharma shall bear the full cost of such audit. Amounts shall be
deemed due on the original due date (e.g., when Royalty Payment was originally
due) and interest shall be applied as set forth in Section 3.10.

 

3.8              Pricing. AD Pharma shall have sole discretion to determine the
price, terms and conditions of sales of the Product and Product Line Extension
to AD Pharma's customers. AD Pharma shall not price the Product and Product Line
Extension in any country for any transaction as part of a bundle that provides
greater discounts for the Product and Product Line Extension as compared to any
other product in the bundle or otherwise disadvantage the selling price of the
Product and Product Line Extension in favor of its products. AD Pharma will not
allow any Product or Product Line Extension to serve as a loss leader to induce
the sale of other products.

 

3.9              Currency. All payments required under this Agreement shall be
made in U.S. dollars, regardless of the country(ies) in which sales are made or
expenses are incurred, via wire transfer of immediately available funds to an
account designated in writing by Acura. Whenever, for the purpose of calculating
any sums due under this Agreement, conversion from any foreign currency shall be
required, such conversion shall be made as follows: the amounts shall be
converted into United States dollars using the average rate of exchange for such
currencies for the relevant period, such exchange rate shall be the exchange
rate taken from The Wall Street Journal as published on the last day of the
relevant period for which payments are due, or such other publication as may be
agreed between the Parties from time to time.

 

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 13 

 

 

3.10          Late Payments. All amounts payable under this Agreement and not
paid within thirty (30) days of when due in accordance with the provisions
hereof shall bear interest from the due date until paid at the rate equal to the
lower of (i) three percent (3%) over the prime rate of interest reported in the
East Coast Addition of The Wall Street Journal for the date such amount was due,
per annum and (ii) the maximum rate allowed by law. Unless otherwise stated all
dollar amounts in this Agreement are in United States dollars.

 

3.11          Taxes.

 

3.11.1    In the event that a Party is mandated under the laws of a country to
withhold any tax to the tax or revenue authorities in such country in connection
with any payment to the other Party, such amount shall be deducted from the
payment to be made by such withholding Party, provided, however, that the
withholding Party shall take reasonable and lawful actions, at the other Party’s
sole cost, to avoid and minimize such withholding and promptly notify the other
Party so that the other Party may take lawful actions to avoid and minimize such
withholding. The withholding Party shall promptly furnish the other Party with
copies of any tax certificate or other documentation evidencing such withholding
as necessary to satisfy the requirements of the United States Internal Revenue
Service related to any application by such other Party for foreign tax credit
for such payment. Each Party agrees to cooperate with the other Party in
claiming exemptions from such deductions or withholdings under any agreement or
treaty from time to time in effect.

 

3.12          Option under Nexafed® Agreement. The Nexafed® Agreement means that
certain License, Commercialization and Option Agreement entered into as of March
16, 2017, by and between Acura and MainPointe Pharmaceuticals, LLC
(“MainPointe”). Acura authorizes MainPointe to assign to AD Pharma the option
and the right to add, as an Option Product to the Nexafed® Agreement, a Nexafed®
12-hour dosage (an extended-release pseudoephedrine hydrochloride product
utilizing the IMPEDE® Technology in 120mg dosage strength); provided, however,
that for valuable consideration from AD Pharma to Acura, the receipt of which is
fully acknowledged by Acura, AD Pharma and Acura agree that the payment
requirements of Section 2.3.1 of the Nexafed® Agreement are waived if exercised
within a period of five (5) years from the Effective Date of this Agreement with
respect to such Option Product, and AD Pharma shall not be obligated to remit to
Acura any payment in order to exercise the option to add Nexafed® 12-hour dosage
as an Option Product under the Nexafed® Agreement. Upon execution of the
aforementioned option for Nexafed 12-hour dosage, Acura agrees to negotiate in
good faith a development Agreement as may be requested by AD Pharma.

 

3.13          Option for license to [*****] Product. If, within Five (5) Years
of the Effective Date, AD Pharma provides written notice to Acura of its desire
to add the [*****] Product as an additional licensed product under this
Agreement, Acura shall then be obligated to negotiate exclusively with AD Pharma
for the grant of a license, which shall be (unless mutually agreed by the
Parties) an exclusive (even as to Acura, unless already licensed to a Third
Party under Section 3.13.2), sub-licensable (subject to Section 2.10),
royalty-bearing right and license under the LIMITx™ Technology to develop,
manufacture, have manufactured, distribute, have distributed, sell, have sold,
market, have marketed, commercialize and have commercialized the [*****] Product
in the Field in the Territory.

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 14 

 

 

Article IV
CONFIDENTIALITY AND LIMITATIONS ON USE

 

4.1              Confidentiality. Each Party agrees that, during the Term and
for a period of ten (10) years thereafter (and indefinitely for trade secrets)
it shall keep confidential and shall not publish or otherwise disclose and shall
not use for any purpose other than as provided for in this Agreement (which
includes the exercise of any rights or the performance of any obligations
hereunder) any Confidential Information furnished to it by the other Party
pursuant to this Agreement, except to the extent expressly authorized by this
Agreement or otherwise agreed in writing by the Parties. “Confidential
Information” means information that the disclosing Party considers confidential
and discloses to the receiving Party for the purpose of this Agreement.
Confidential Information must be marked or otherwise identified as confidential
or proprietary or, under the circumstances surrounding the disclosure, ought in
good faith to be treated as confidential or proprietary. Confidential
Information may be conveyed in written, graphical, physical or oral form.
Confidential Information may include, without limitation, information concerning
the study, discovery, design, research, development, manufacture, formulation,
extraction, compounding, mixing, processing, testing, control, preservation,
storage, finishing, packing, packaging, use, administration, distribution, sale,
reimbursement and/or marketing of pharmaceutical products or compounds and
potential products or compounds, data from and methodology of pre-clinical and
clinical studies, the contents of any submissions to the U.S. Food and Drug
Administration (together with any successor agency), marketing plans or computer
hardware and software systems and designs and plans for same. Confidential
Information may include confidential or proprietary information of a third party
that is in the possession of a disclosing Party. The foregoing confidentiality
and non-use obligations shall not apply to any portion of the other Party’s
Confidential Information that the receiving Party can demonstrate by competent
written proof:

 

(a)was already known to the receiving Party or its Affiliate, other than under
an obligation of confidentiality, at the time of disclosure by the other Party;

 

(b)was generally available to the public or otherwise part of the public domain
at the time of its disclosure to the receiving Party;

 

(c)became generally available to the public or otherwise part of the public
domain after its disclosure and other than through any act or omission of the
receiving Party in breach of this Agreement;

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 15 

 

 

(d)was disclosed to the receiving Party or its Affiliate by a Third Party who
has a legal right to make such disclosure and who did not obtain such
information directly or indirectly from the other Party; or

 

(e)was independently discovered or developed by the receiving Party or its
Affiliate without access to or aid, application or use of the other Party’s
Confidential Information, as evidenced by a contemporaneous writing.

 

4.2              Authorized Disclosure. Notwithstanding the obligations set
forth in Section 4.1, a Party may disclose the other Party’s Confidential
Information and the terms of this Agreement to the extent:

 

(a)such disclosure is reasonably necessary to its employees, agents,
consultants, contractors, licensees or Sublicensees on a need-to-know basis for
the sole purpose of performing its obligations or exercising its rights under
this Agreement; provided that in each case, the disclosees are bound by written
obligations of confidentiality and non-use consistent with those contained in
this Agreement; or

 

(b)such disclosure is reasonably necessary to comply with Applicable Laws,
including regulations promulgated by the U.S. Securities and Exchange
Commission, applicable security exchanges, court order, administrative subpoena
or order; provided that the Party subject to such Applicable Laws shall promptly
notify the other Party of such required disclosure and shall use reasonable
efforts to obtain, or to assist the other Party in obtaining, a protective order
preventing or limiting the required disclosure.

 

4.3              Publicity

 

(a)The Parties agree that the material terms of this Agreement are the
Confidential Information of both Parties, subject to the special authorized
disclosure provisions set forth in this Section 4.3 or Section 4.2. In addition,
a Party may disclose such terms to the extent reasonably necessary to be
disclosed to any bona fide potential or actual investor, lender, acquiror, or
merger partner for the sole purpose of evaluating an actual or potential
investment, acquisition or merger; provided that in connection with such
disclosure, such Party shall inform each disclosee of the confidential nature of
such Confidential Information and ensure that each such disclosee is
contractually obligated to treat such Confidential Information as confidential
on terms at least as restrictive as those contained in this Article IV.

 

(b)The Parties shall make a joint public announcement of the execution of this
Agreement in the form attached as Exhibit C, which shall be issued at a mutually
agreed time after the Effective Date.

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 16 

 

 

(c)After release of such press release, if either Party desires to make a public
announcement concerning the material terms of this Agreement or any activities
hereunder, such Party shall give reasonable prior advance notice of the proposed
text of such announcement to the other Party for its prior review.

 

(d)The Parties acknowledge that either or both Parties may be obligated to file
under Applicable Laws a copy of this Agreement with the U.S. Securities and
Exchange Commission or other governmental authorities. Each Party may make such
a required filing, provided that it requests confidential treatment of the
commercial terms and sensitive technical terms hereof and thereof to the extent
such confidential treatment is reasonably available to such Party. In the event
of any such filing, each Party will provide the other Party with a copy of this
Agreement marked to show provisions for which such Party intends to seek
confidential treatment and shall reasonably consider and incorporate the other
Party’s reasonable comments thereon to the extent consistent with the legal
requirements, with respect to the filing Party, governing disclosure of material
agreements and material information that must be publicly filed.

 

Article V
LIABILITY AND INDEMNIFICATION

 

5.1              Maximum Liability. Other than a Party’s indemnification
obligations, breach of the confidentiality provisions and non-compete provisions
of Section 2.9, each Party’s maximum liability to the other Party for any claim
arising from this Agreement for any reason whatsoever (excluding monetary
consideration for this Agreement, such as Royalty Payments, Milestone Payments
and out-of-pocket costs and expenses) will not exceed the Royalty Payments and
Milestone Payments made by AD Pharma to Acura during the twelve (12) month
period preceding the date upon which the applicable claim arose .

 

5.2              Indemnification by Acura. Acura shall defend, indemnify, and
hold AD Pharma and its Affiliates and their respective officers, directors and
employees (the “AD Pharma Indemnitees”) harmless from and against any and all
damages, losses, liabilities costs or expenses (including reasonable attorneys’
fees) (“Losses”) incurred or sustained by such AD Pharma Indemnitees resulting
from any claims, suits, proceedings or causes of action brought by a Third Party
(collectively, “Claims”) against such AD Pharma Indemnitee to the extent arising
from or based on or arising from (a) Acura’s development of the Product limited
to exposure to the Product prior to Regulatory Approval (b) Acura’s breach of
any of its obligations under this Agreement; (c) the gross negligence or
intentional misconduct of Acura; or (d) Acura’s breach of any representation or
warranty made or given in this Agreement, in each case except for any Claim
which arises from or is based on any activity set forth in Section 5.3 for which
AD Pharma is obligated to indemnify the Acura Indemnitees under Section 5.3.

 

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 17 

 

 

5.3              Indemnification by AD Pharma. AD Pharma shall defend,
indemnify, and hold Acura and its Affiliates and their respective officers,
directors and employees (the “Acura Indemnitees”) harmless from and against any
and all Losses incurred or sustained by such Acura Indemnitees resulting from
any Claims against such Acura Indemnitee brought by a Third Party to the extent
arising from or based on or arising from (a) AD Pharma's breach of any of its
obligations under this Agreement; (b) any claims arising out of the
manufacturing or commercialization of Products or Product Line Extensions; (c)
the development of any Product Line Extension; (d) the gross negligence or
intentional misconduct of AD Pharma; (e) AD Pharma's breach of any
representation or warranty made or given by AD Pharma in this Agreement; (f) as
provided in Article VIII; or (g) any actual or alleged infringement of any Third
Party copyright, trademark or trade dress rights arising from materials,
labeling, marketing or advertising of the Product or Product Line Extension, in
each case except to the extent any Claim arises from or is based on any activity
set forth in Section 5.2 for which Acura is obligated to indemnify the AD Pharma
Indemnitees under Section 5.2.

 

5.4              Indemnification Procedures.

 

(a)The Party claiming indemnity under this Article V (the “Indemnified Party”)
shall give written notice to the Party from whom indemnity is being sought (the
“Indemnifying Party”) promptly after learning of such Claim. The failure to give
such prompt written notice shall not, however, relieve the Indemnifying Party of
its indemnification obligations, except and only to the extent that the
Indemnifying Party forfeits rights or defenses by reason of such failure. The
Indemnifying Party shall have the right to participate in, or by giving written
notice to the Indemnified Party within 30 days of receipt of written notice of
the Claim, to assume the defense of any Claim at the Indemnifying Party’s
expense and by the Indemnifying Party’s own counsel, and the Indemnified Party
shall cooperate in good faith in such defense; provided, however, that the
Indemnifying Party’s right to assume the defense of any Claim shall be subject
to the Indemnifying Party acknowledging in writing to the Indemnified Party that
the Indemnifying Party is liable under this Article V to provide
indemnification. In the event that the Indemnifying Party assumes the defense of
any Claim, subject to Section 5.4(b), it shall have the right to take such
action as it deems necessary to avoid, dispute, defend, appeal or make
counterclaims pertaining to any such Claim in the name and on behalf of the
Indemnified Party; provided, that the Indemnified Party shall have the right, at
its own cost and expense, to participate in the defense of any such Claim with
counsel selected by it subject to the Indemnifying Party’s right to control the
defense thereof. If the Indemnifying Party elects not to compromise or defend
such Claim or fails to notify the Indemnified Party in writing of its election
to defend as provided in this Agreement, the Indemnified Party may, subject to
Section 5.4(b), pay, compromise, defend such Claim and seek indemnification for
any and all Losses based upon, arising from or relating to such Claim. Acura and
AD Pharma shall cooperate with each other in all reasonable respects in
connection with the defense of any Claim for which indemnification is sought
under this Article V, including making available (subject to the provisions of
Article IV) records relating to such Claim and furnishing, without expense
(other than reimbursement of actual out-of-pocket expenses) to the defending
Party, management employees of the non-defending Party as may be reasonably
necessary for the preparation of the defense of such Claim.

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 18 

 

 

(b)The Indemnifying Party shall not enter into settlement of any Claim without
the prior written consent of the Indemnified Party (which consent shall not be
unreasonably withheld or delayed), except as provided in this Section 5.4(b). If
a firm offer is made to settle a Claim without leading to liability or the
creation of a financial or other non-financial obligation on the part of the
Indemnified Party and provides, in customary form, for the unconditional release
of each Indemnified Party from all liabilities and obligations in connection
with such Claim (a “Qualified Settlement Offer”) and the Indemnifying Party
desires to accept and agree to such Qualified Settlement Offer, the Indemnifying
Party shall give written notice to that effect to the Indemnified Party. If the
Indemnified Party fails to consent to such Qualified Settlement Offer within ten
days after its receipt of such notice, the Indemnified Party may continue to
contest or defend such Claim and in such event, the maximum liability of the
Indemnifying Party as to such Claim shall not exceed the amount of such
settlement Qualified Settlement Offer. If the Indemnified Party fails to consent
to such Qualified Settlement Offer and also fails to assume defense of such
Claim, the Indemnifying Party may settle the Claim upon the terms set forth in
such Qualified Settlement Offer to settle such Claim. If the Indemnified Party
has assumed the defense pursuant to Section 5.4(b), it shall not agree to any
settlement without the written consent of the Indemnifying Party (which consent
shall not be unreasonably withheld or delayed).

 

(c)The procedures set forth in Article VII shall supersede the provisions of
this Section 5.4, with respect to matters addressed therein.

 

5.5              Consequential Damages. Except for breaches of the
confidentiality provisions, and breach of the non-compete provision of Section
2.9, under no circumstances whatsoever will either Party be liable to the other
in contract, tort, negligence, breach of statutory duty, or otherwise for (i)
any (direct or indirect) loss of profits, of production, of anticipated savings,
of business, or goodwill or (ii) for any other liability, damage, costs, or
expense of any kind incurred by the other Party of an indirect or consequential
nature, regardless of any notice of the possibility of these damages.

 

Article VI
NOTICES

 

6.1              Notices. Any notice or request to be given or furnished under
this Agreement by any Party to the other shall be in writing and shall be
delivered personally or registered or certified mail, postage prepaid, or by
overnight delivery service to the following:

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 19 

 

 

TO ACURA: Acura Pharmaceuticals, Inc.   616 N. North Court   Palatine, IL 60067
  Attn: Robert B. Jones Telephone No. 847-705-7709     Copy To: S. Jason Teele  
Sills Cummis & Gross P.C.   One Riverfront Plaza   Newark, NJ 07102   Telephone
No. 973-643-4779         TO AD Pharma: Abuse Deterrent Pharmaceuticals, LLC  
333 E. Main Street, Suite220   Louisville, KY 40202   Attn: John L. Schutte  
Telephone No. [*****]     Copy To: Frost Brown Todd Attorneys, LLC   400 West
Market St., 3200   Louisville, KY 40202   Attn: William G. Strench   Telephone
No. 502-589-5400

 

 

6.2              Receipt of Notice. All notices and other communications given
to any Party in accordance with the provisions of this Agreement shall be deemed
to have been given on the date of receipt if delivered by hand or overnight
courier services or sent by telecopy, or on the date five (5) business days
after dispatch by certified or registered mail (postage prepaid) if mailed, in
each case delivered, sent or mailed (properly addressed) to such Party as
provided in this Article VI, or in accordance with the latest unrevoked
direction from such Party given in accordance with this Article VI.

 

Article VII
PATENT PROSECUTION, INFRINGEMENT

 

7.1              Ownership of Intellectual Property Rights. Acura shall own all
Intellectual Property Rights (including all Know-How and Patent Rights) in the
LIMITx™ Technology, provided that if AD Pharma makes any improvements to the
LIMITx™ Technology, then AD Pharma shall own such improvements provided that it
shall inform Acura of such improvements, and hereby grants Acura a royalty-free,
perpetual, sublicensable, non-exclusive license to such improvements to develop,
manufacture and commercialize products other than the Products. AD Pharma owns
all trademarks and goodwill associated with the marketing and commercialization
of the Product and Product Line Extension in the Territory, with the exception
of any mark incorporating Acura’s corporate name, LIMITx™, or any mark
incorporating LIMITx™, which shall be owned by Acura.

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 20 

 

 

7.2              Patent Prosecution and Maintenance. Acura is responsible for
the prosecution and maintenance of the LIMITx™ Patent Rights in its sole
discretion and at its own cost and expense. Acura shall provide AD Pharma a
reasonable opportunity to review and comment on such prosecution and maintenance
efforts regarding LIMITx™ Patent Rights in the Territory that may claim the
Product or Product Line Extension, or the making or the use thereof. Acura shall
provide AD Pharma with a copy of material communications from any patent
authority in the Territory regarding such LIMITx™ Patent Rights within a
reasonable time after receipt of such communications and shall provide drafts of
any material filings or responses to be made to such patent authorities in a
reasonable amount of time in advance of submitting such filings or responses for
AD Pharma's review and comment. Acura shall reasonably consider such comments by
AD Pharma in connection with the prosecution and maintenance of the LIMITx™
Patent Rights. If Acura decides to cease the prosecution or maintenance of any
LIMITx™ Patent Rights that claim a Product or Product Line Extension after it
has commenced prosecution of such LIMITx™ Patent Rights in the Territory, Acura
shall notify AD Pharma in writing so that AD Pharma may, at its discretion,
assume the responsibility for the prosecution or maintenance of such LIMITx™
Patent Rights in the Territory, provided Acura shall own all such resulting
patents.

 

7.3              Infringement of LIMITx™ Patent Rights. Each of AD Pharma and
Acura will notify the other Party within five (5) days upon learning of any
possible infringement by a Third Party of the LIMITx™ Patent Rights, which
infringement may reasonably be expected to affect the commercialization of the
Product or Product Line Extension. AD Pharma has the exclusive right (after
consultation with Acura), but not the obligation, at AD Pharma's own cost, to
take all steps, including legal action, it deems necessary or advisable to
eliminate or minimize the effect on the development, manufacture and
commercialization of the Product or Product Line Extension of such possible
infringement. Acura agrees to cooperate, upon reasonable request of AD Pharma
and at AD Pharma's cost, in such steps or legal proceeding. All proceeds
realized upon any judgement or settlement in AD Pharma's favor regarding such
steps or legal action, net of direct out-of-pocket expenses of the Parties
relating thereto, shall be for the benefit of AD Pharma provided AD Pharma shall
pay Acura the same royalty on the excess as it is required to pay on Net Sales.
Notwithstanding the foregoing, Acura’s consent (which shall not be unreasonably
withheld, delayed or conditioned) shall be required for any settlement that
entails any license or covenant not to sue, relating to the LIMITx™ Patent
Rights, or dedication to the public, admission of invalidity or
unenforceability, or abandonment of any LIMITx™ Patent Rights.

 

7.4              Notice by AD Pharma of Intent to Assert; Acura’s Right to
Assert.

 

(a)No later than five (5) business days after learning or being notified of any
possible infringement by a Third Party of the LIMITx™ Patent Rights, which
infringement may reasonably be expected to affect the commercialization of a
Product or Line Extension, AD Pharma shall provide written notice to Acura as to
whether AD Pharma will exercise its rights conferred in Section 7.3.

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 21 

 

 

(b)If AD Pharma does not provide Acura with such written notice within twenty
(20) business days or within such time provides notice to Acura electing not to
exercise its rights conferred in Section 7.3, then at any time Acura may, but
shall not be obligated, to provide AD Pharma written notice as to whether Acura
will take steps to eliminate or minimize the consequences of such possible
infringement to the commercialization of the Product or Product Line Extension.

 

(c)If Acura elects, pursuant to Section 7.4(b), to take steps to eliminate or
minimize the consequences of such possible infringement to the commercialization
of a Product or Product Line Extension, the following shall apply: Acura shall
have the exclusive right, at Acura’s own cost and expense, to take such steps as
it shall determine, including legal action, to eliminate or minimize the
consequences of such possible infringement to the commercialization of the
Product or Product Line Extension. Acura shall be entitled to any judgement or
settlement relating to such action. AD Pharma agrees to join as a named party
and cooperate, upon reasonable request of Acura and at Acura’s cost and expense,
in any such steps or legal proceeding.

 

7.5              Third Party Challenges to LIMITx™ Patent Rights.
Notwithstanding Section 7.3, each of AD Pharma and Acura shall notify the other
Party no later than five (5) business days after receiving a Paragraph IV
Certification, an Inter Parties or Post Grant review petition, or any other
challenge that a LIMITx™ Patent Right is invalid or unenforceable, if such
LIMITx™ Patent Right claims the Product or Product Line Extension, or the
manufacture, or use thereof. AD Pharma has the right (after consultation with
Acura), but not the obligation, at AD Pharma's own cost, to exclusively pursue
any negotiations with such Third Party and exclusively control the enforcement
or defense of any legal proceeding regarding such challenge. Acura agrees to
cooperate, upon reasonable request of AD Pharma and at AD Pharma's cost, in such
negotiations or legal proceeding. All proceeds realized upon any judgement or
settlement in AD Pharma's favor regarding such negotiations or legal proceeding,
net of direct out-of-pocket expenses of the Parties relating thereto, shall be
for the benefit of AD Pharma, provided AD Pharma shall pay Acura the same
royalty on the excess as it is required to pay on Net Sales. Notwithstanding the
foregoing, Acura’s consent (which shall not be unreasonably withheld, delayed or
conditioned) shall be required for any settlement that entails any license or
covenant not to sue, relating to the LIMITx™ Patent Rights, or dedication to the
public, admission of invalidity or unenforceability, or abandonment of the
LIMITx™ Patent Rights.

 

7.6              Notice by AD Pharma to Defend; Acura’s Right to Defend.

 

(a)Notwithstanding Section 7.4, no later than five (5) business days after AD
Pharma learns of a Paragraph IV Certification, an Inter Parties or Post Grant
review petition, or any other challenge that an LIMITx™ Patent Right is invalid
or unenforceable, which LIMITx™ Patent Right claims a Product or Product Line
Extension, or the manufacture, or use thereof, AD Pharma shall provide written
notice to Acura as to whether AD Pharma will exercise its rights conferred in
Section 7.5.

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 22 

 

 

(b)If AD Pharma does not provide Acura with such written notice within its ten
(10) business day period of Section 7.6(a) or within such time provided notice
to Acura electing not to exercise its rights conferred in Section 7.5, then
Acura may at its option, but shall not be obligated to, notify AD Pharma in
writing at any time thereafter whether Acura will undertake the enforcement or
defense of any legal proceeding.

 

(c)If Acura undertakes such defense or enforcement pursuant to Section 7.6(b),
the following paragraph shall apply: Acura shall be entitled, at Acura’s own
cost and expense, to exclusively pursue any negotiations with such Third Party
and exclusively control the enforcement or defense of any legal proceeding
regarding such challenge. If Acura undertakes the defense or enforcement, Acura
shall be entitled to any judgement or settlement relating to such action. AD
Pharma agrees to join as a named party and cooperate, upon reasonable request of
Acura and at AD Pharma's cost and expense, in any such steps or legal
proceeding. Notwithstanding the foregoing, AD Pharma's consent (which shall not
be unreasonably withheld, delayed or conditioned) shall be required for any
settlement that would limit or restrict AD Pharma's rights conferred by this
Agreement.

 

7.7              Allegations of Infringement by Third Parties.

 

(a)Each of AD Pharma and Acura will forthwith notify the other Party upon
learning of any allegation by a Third Party that (i) a Product or Product Line
Extension may infringe Third Party intellectual property rights, or (ii) any
product that includes the LIMITx™ Technology other than a Product or Product
Line Extension (a “Related LIMITx™ Technology Product”) may infringe Third Party
intellectual property rights and the Parties shall in that event consult with
each other, including a possible defense strategy.

 

(b)If the infringement allegation against a Product or Product Line Extension is
due to the LIMITx™ Technology, AD Pharma has the obligation to pursue any
negotiations with the claimant and to control the defense of any legal
proceeding regarding such infringement allegation against the Product at its own
cost and expense (including the cost of defense, judgments, damages and
settlements) and shall indemnify and hold Acura harmless from same. Acura shall,
at AD Pharma's expense, reasonably collaborate with AD Pharma and render any
reasonable assistance to AD Pharma in AD Pharma's negotiations with the claimant
and defense of any such legal proceeding regarding such allegation of
infringement.

 

(c)If the infringement allegation is against a Related LIMITx™ Technology
Product, Acura reserves the limited right to negotiate with the claimant solely
in its own name and on its own behalf relating to the Related LIMITx™ Technology
Product and defend only itself in any legal proceeding regarding such allegation
of infringement as it may relate to the Related LIMITx™ Technology Product at
its own cost and expense (including the cost of defense, judgments, damages, and
settlements). AD Pharma shall, at AD Pharma's expense, reasonably collaborate
with Acura and render any reasonable assistance to Acura in Acura’s negotiations
with the claimant and Acura’s defense of any legal proceeding regarding such
allegation of infringement as it may relate to the Related LIMITx™ Technology
Product. If Acura elects to undertake negotiation or defense pursuant to this
section, Acura is neither authorized nor obligated to negotiate on behalf of or
defend AD Pharma.

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 23 

 

 

7.8              Settlement of Allegations of Infringement. For purposes of
Sections 7.7 and 7.8, the Party negotiating with the claimant or defending the
legal proceeding is referred to as the “Defending Party” and the other Party is
referred to as the “non-Defending Party.” The Defending Party shall have the
right to exclusively control and manage such claim of infringement (including
without limitation, control over the settlement of such action), provided,
however, that any such settlement shall also release the non-Defending Party
from the claims relating to the claim of infringement (provided that the
non-Defending Party executes a mutual release in favor of the party releasing
the non-Defending Party). The written consent of the non-Defending Party to the
settlement is required if the settlement obligates the non-Defending Party to
take or forgo any action (which consent shall not be unreasonably withheld,
delayed or conditioned). Without limiting the foregoing, Acura’s consent (which
shall not be unreasonably withheld, delayed or conditioned) shall be required
for any settlement that entails any license, covenant not to sue relating to,
dedication to the public, admission of non-infringement, invalidity or
unenforceability or abandonment of Acura’s Intellectual Property Rights,
including without limitation the LIMITx™ Technology, and AD Pharma's consent
(which shall not be unreasonably withheld, delayed or conditioned) shall be
required for any settlement that that would limit or restrict the ability of AD
Pharma to have made, use, offer for sale, sell or otherwise commercialize the
Product or Product Line Extension in the Field in the Territory

 

Article VIII
REPRESENTATIONS, WARRANTIES AND COVENANTS

 

8.1              Cooperation. From time to time, as and when requested by either
party hereto, the other party shall execute and deliver, or cause to be executed
and delivered, all such documents and instruments and shall take, or cause to be
taken, all such further or other actions, as such other Party may reasonably
deem necessary or desirable to consummate the transactions contemplated by this
Agreement.

 

8.2              Mutual Representations, Warranties and covenants. Each Party
represents and warrants that

 

(i)it has the full right, power and authority to enter into this Agreement;

 

 

 

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 24 

 

 

 

(ii)that entering into and performing its obligations set forth in this
Agreement does not conflict with any other agreement to which it is a party;

 

(iii)as at the Effective Date, there are no claims, judgments, litigations,
suits, actions, disputes, arbitration, judicial or legal, administrative or
other proceedings or governmental investigations pending or, to such Party’s
knowledge, threatened against such Party or any of its Affiliates, and neither
such Party nor its Affiliates is a party to any settlement agreement, which
would be reasonably expected to materially affect or restrict the ability of
such Party to consummate the transactions contemplated under this Agreement and
to perform its obligations under this Agreement; and

 

(iv)neither Party has used or shall use any employee or consultant who has been
debarred by any Regulatory Authority or, to such Party’s knowledge, is or has
been the subject of debarment proceedings by a Regulatory Authority. Each Party
shall notify the other Party promptly upon becoming aware that any of its
employees or consultants has been debarred or is the subject of debarment
proceedings by any Regulatory Authority.

 

8.3              Acura Representations, Warranties. Acura represents and
warrants that: (i) it has all rights necessary to validly grant the licenses set
forth in Section 2; (ii) the Patent Rights included in the LIMITx™ Technology
and set forth on Exhibit A have not expired and any maintenance fees have been
paid when due or within any permitted extension; (iii) it is not subject to any
court proceedings, judgment or order related to the subject matter of this
Agreement; (iv) it has not received any written claim or allegation of
infringement from a Third Party for the infringement of Third Party intellectual
property rights based on the making, using, or selling of the Product; (v) it
has not assigned and/or granted licenses, nor shall it assign and/or grant
licenses, to the LIMITx™ Technology to any Third Party that would restrict or
impair the rights granted hereunder, and it has not granted to anyone any rights
that cover the Product or Product Line Extension in the Territory; (vi) the
LIMITx™ Patent Rights are the only Patent Rights Controlled by Acura relating to
Products or Product Line Extensions; (vii) to its actual knowledge the LIMITx™
Technology (a) does not infringe any valid claim in a granted patent known to
Acura as of the Effective Date owned by a Third Party and (b) has not been
misappropriated from a Third Party; (viii) the Nexafed® Agreement has not been
terminated or cancelled; and (ix) Acura reaffirms that all Acura Representations
and Warranties set forth in the Nexafed® Agreement are true and correct as of
the Effective Date of this Agreement to the same degree and with the same force
and effect as if they were on the date hereof.

 

8.4              AD Pharma’s Representations Warranties and Covenants. AD Pharma
represents, warrants and covenants that (i) it shall develop, manufacture and
commercialize the Product and Product Line Extension in accordance with
Applicable Law and (ii) neither AD Pharma nor its Affiliates shall engage in a
Patent Challenge, or knowingly assist any Third Party to engage in a Patent
Challenge with respect to any of the LIMITx™ Patent Rights or intentionally or
willfully infringe the LIMITx™ Patent Rights.

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 25 

 

 

8.5              Disclaimers. EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, NO
REPRESENTATIONS OR WARRANTIES WHATSOEVER, WHETHER EXPRESS OR IMPLIED, INCLUDING
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT, OR NON-MISAPPROPRIATION OF THIRD PARTY INTELLECTUAL PROPERTY
RIGHTS, ARE MADE OR GIVEN BY OR ON BEHALF OF A PARTY, AND ALL REPRESENTATIONS
AND WARRANTIES, WHETHER ARISING BY OPERATION OF LAW OR OTHERWISE, ARE HEREBY
EXPRESSLY EXCLUDED.

 

Article IX
TERM AND TERMINATION

 

9.1              Term and Expiration. The “Term” of this Agreement shall be from
the Effective Date until the earlier of (i) termination of this Agreement
pursuant to Section 9.2, 9.3, or 9.4, or (ii) the last to expire Royalty Term.

 

9.2              Termination for Breach.

 

Either Party may terminate the Agreement in its entirety by giving written
notice of termination at any time, if the other Party fails to fulfill or
breaches any material term or condition of this Agreement, and does not remedy
the failure or breach within thirty (30) days of receipt of written notice
specifying such failure or breach given by the other Party.

 

9.3              Termination for Convenience. At any time after the Effective
Date, AD Pharma may terminate this Agreement in its entirety either with or
without cause by providing thirty (30) days advance written notice to Acura.

 

9.4              Termination for Patent Challenge.

 

Acura will be permitted to terminate this Agreement by written notice effective
upon receipt if AD Pharma or its Affiliates, directly or indirectly through
assistance granted to a Third Party, commence any interference or opposition
proceeding, challenge in a legal or administrative proceeding the validity or
enforceability of, or oppose in a legal or administrative proceeding any
extension of or the grant of a supplementary protection certificate with respect
to (i) any Patent Rights licensed hereunder (except as a defense against a
patent infringement action initiated by Acura or its Affiliates or licensees
against AD Pharma or its Affiliates) (each such action, a “Patent Challenge”).

 

AD Pharma will include provisions in all agreements granting sublicenses of AD
Pharma's rights hereunder (other than agreements with manufacturers, services
providers, distributors and other agents) providing that if the sublicensee or
its Affiliates undertake a Patent Challenge with respect to any Patent Rights
licensed hereunder under which the sublicensee is sublicensed, AD Pharma will be
permitted to terminate such sublicense agreement. If a sublicensee of AD Pharma
(or an Affiliate of such sublicensee) undertakes a Patent Challenge of any such
Patent Right under which such sublicensee is sublicensed (other than
sublicensees that are manufacturers, services providers, distributors and other
agents), then AD Pharma upon receipt of notice from Acura of such Patent
Challenge will terminate the applicable sublicense agreement. If AD Pharma fails
to so terminate such sublicense agreement, Acura may terminate AD Pharma's right
to sublicense in the country(ies) covered by such sublicense agreement and any
sublicenses previously granted in such country(ies) shall automatically
terminate. In connection with such sublicense termination, AD Pharma shall
cooperate with Acura’s reasonable requests to cause such a terminated
sublicensee to discontinue activities with respect to the Product and Product
Line Extension in such country(ies).

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 26 

 

 

9.5              Consequences of Expiration and Termination.

 

9.5.1        Upon expiration of this Agreement with respect to a country, AD
Pharma shall retain a non-exclusive, perpetual, irrevocable, fully paid-up and
royalty-free license to, develop, have made, sell, promote, or otherwise exploit
the Product and Product Line Extension in such country. AD Pharma shall be
required to at all times post-expiration of the Agreement with respect to a
country either maintain the Regulatory Approvals for the Products or transfer
such Regulatory Approvals and associated Regulatory Documentation back to Acura
(unless Acura declines such transfer in writing).

 

9.5.2        Upon termination of this Agreement: (i) all of AD Pharma's licenses
with respect to Acura’s trademarks and the LIMITx™ Technology shall terminate;
(ii) AD Pharma's non-compete contained in Section 2.9 shall terminate
immediately; and (iii) all Regulatory Approvals, Regulatory Documentation and
regulatory filings shall be transferred back to Acura; (iv) AD Pharma shall
transfer to Acura the trademarks associated with Products and Product Line
Extensions; and (v) at Acura’s request AD Pharma and Acura shall use
Commercially Reasonable Efforts to transition the commercialization of the
Product; and any Product Line Extension back to Acura so that, among other
things, sales of the Product and Product Line Extension are not interrupted and
which may include, by way of examples, assignment of any manufacturing and
supply agreements to Acura or its designee and providing sales and marketing
materials, inventory reports, regulatory communication and health care provider
prescribers.

 

Termination, relinquishment or expiration of this Agreement for any reason shall
be without prejudice to any rights that shall have accrued to the benefit of
either Party prior to such termination, relinquishment or expiration. Such
termination, relinquishment or expiration shall not relieve either Party from
obligations that are expressly indicated to survive termination or expiration of
this Agreement.

 

9.5.3        All of the Parties’ rights and obligations under Sections 2.9,
2.13, 3.2, 3.3, 3.4, 3.6, 3.8,3.9, 3.10, 3.12, 3.13 and Articles 4, 5, 6, 7, 9,
and 10, shall survive termination or expiration of this Agreement (unless such
Section specifically states that it shall only survive expiration but not
termination, in which case it shall survive as set forth therein), and all other
provisions reasonably construed to survive shall also survive termination or
expiration. Where a provision specifies a survival period, such provision shall
survive only during such survival period.

 

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 27 

 

 

Article X
MISCELLANEOUS

 

10.1          Dispute Resolution. AD Pharma and Acura agree to use good faith
efforts to resolve any and all disputes arising out of or relating to this
Agreement. If any dispute amongst the Parties remains unresolved after ten (10)
business days, the chief executive officers of the Parties will meet to address
the matter. If the chief executive officers cannot resolve the dispute after
forty five (45) days following receipt of notice by one Party from the other of
a dispute under this Agreement, then the matter shall by fully and finally
resolved by arbitration. A Party that desires to arbitrate a dispute shall serve
a written notice upon another requesting arbitration of a dispute pursuant to
this Section 10.1. Any such arbitration shall be submitted to final and binding
arbitration under the then current commercial arbitration rules of the American
Arbitration Association (the “AAA”) in accordance with this Section 10.1. The
place of arbitration of any dispute shall be New York, New York. Such
arbitration shall be conducted by one (1) arbitrator mutually agreed by the
Parties but if such agreement cannot be reached within ten (10) days of the
commencement of the arbitration, then an arbitrator appointed by the AAA. The
arbitrator shall be a person with relevant experience in the pharmaceutical
industry. The arbitration proceeding shall be held as soon as practicable but in
any event within ninety (90) days of appointment of the arbitrator. Any award
rendered by the arbitrators shall be final and binding upon the Parties.
Judgment upon any award rendered may be entered in any court having
jurisdiction, or application may be made to such court for a judicial acceptance
of the award and an order of enforcement, as the case may be. The arbitrator
shall render a formal, binding, non-appealable resolution and award as
expeditiously as possible, but not more than forty-five (45) days after the
hearing. Each Party shall pay its own expenses of arbitration, and the expenses
of the arbitrator shall be equally shared between the Parties unless the
arbitrators assess as part of their award all or any part of the arbitration
expenses of a Party (including reasonable attorneys’ fees) against the other
Party. A Party may make application to the Arbitrator for the award and recovery
of its fees and expenses (including reasonable attorneys’ fees). This Section
10.1 shall not prohibit a Party from seeking injunctive relief from a court of
competent jurisdiction in the event of a breach or prospective breach of this
Agreement by any other Party which would cause irreparable harm to the first
Party.

 

10.2          Rights in Bankruptcy.

 

10.2.1    All rights and licenses granted under or pursuant to this Agreement by
one Party to the other are, for all purposes of Title 11 of the United States
Code (“Title 11”), licenses of rights to “intellectual property” as defined in
Title 11, and, in the event that a case under Title 11 is commenced by or
against either Party (the “Bankrupt Party”), the other Party shall have all of
the rights set forth in Section 365(n) of Title 11 to the maximum extent
permitted thereby. During the Term, each Party shall create and maintain current
copies to the extent practicable of all such intellectual property. Without
limiting the Parties’ rights under Section 365(n) of Title 11, if a case under
Title 11 is commenced by or against the Bankrupt Party, the other Party shall be
entitled to a copy of any and all such intellectual property and all embodiments
of such intellectual property, and the same, if not in the possession of such
other Party, shall be promptly delivered to it (i) before this Agreement is
rejected by or on behalf of the Bankrupt Party, within thirty (30) days after
the other Party’s written request, unless the Bankrupt Party, or its trustee or
receiver, elects within thirty (30) days to continue to perform all of its
obligations under this Agreement, or (ii) after any rejection of this Agreement
by or on behalf of the Bankrupt Party, if not previously delivered as provided
under clause (i) above. All rights of the Parties under this Section 10.2 and
under Section 365(n) of Title 11 are in addition to and not in substitution of
any and all other rights, powers, and remedies that each party may have under
this Agreement, Title 11, and any other Applicable Laws. The non-Bankrupt Party
may perform the obligations of the Bankrupt Party hereunder with respect to such
intellectual property, but neither such provision nor such performance by the
non-Bankrupt Party shall release the Bankrupt Party from any such obligation or
liability for failing to perform it.

 

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 28 

 

 

(b)       The Parties agree that they intend the foregoing non-Bankrupt Party
rights to extend to the maximum extent permitted by law and any provisions of
applicable contracts with Third Parties, including for purposes of Title 11, (i)
the right of access to any intellectual property (including all embodiments
thereof) of the Bankrupt Party or any Third Party with whom the Bankrupt Party
contracts to perform an obligation of the Bankrupt Party under this Agreement,
and, in the case of the Third Party, which is necessary for the development,
Regulatory Approval and manufacture of Products and (ii) the right to contract
directly with any Third Party described in (i) in this sentence to complete the
contracted work.

 

(c)       Any intellectual property provided pursuant to the provisions of this
Section 10.2 shall be subject to the licenses set forth elsewhere in this
Agreement and the payment obligations of this Agreement, which shall be deemed
to be royalties for purposes of Title 11.

 

10.3          No Set-off. Except as expressly set forth in this Agreement,
neither Party may set-off or recoup against a payment owed to the other Party,
without the consent of the other Party.

 

10.4          Waivers; Amendment. The failure of either Party to insist, in any
one or more instances, upon the performance of any of the terms, covenants or
conditions of this Agreement or to exercise any right hereunder, shall not be
construed as a waiver or relinquishment of the future performance of any such
term, covenant or conditions or the future exercise of such right, and the
obligation of the other Party with respect to such future performance shall
continue in full force and effect. No item or provision of this Agreement may be
altered, amended or waived except by a writing signed by both Parties.

 

10.5          Assignment. Neither Party shall assign any of its rights or
obligations under this Agreement, in whole or in part to any person, firm,
partnership, or other entity, except to an Affiliate, without the prior written
consent of the other Party, which consent shall not be unreasonably withheld,
delayed or conditioned. Notwithstanding the foregoing, a Party may assign this
Agreement in connection with (i) the transfer of all or substantially all of its
assets or its LIMITx™ Technology assets (by merger, sale of assets or otherwise)
to the transferee thereof or (ii) the sale of its line of business to which this
Agreement relates; provided in each instance the transferee agrees to be bound
by all obligations of the transferring Party to the other Party hereunder.

 

10.6          Covenant of Further Assurances. AD Pharma and Acura covenant and
agree that subsequent to the execution and delivery of this Agreement and
without any additional consideration, each of AD Pharma and Acura shall execute
and deliver any further legal instruments and perform such acts which are or may
become necessary to effectuate the purposes of this Agreement.

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 29 

 

 

10.7          Headings. The heading of the Articles and Sections used in this
Agreement are included for convenience only and are not to be used in construing
or interpreting this Agreement.

 

10.8          Governing Law. Unless any competent governmental entity or any
other applicable laws and regulations require otherwise, this Agreement shall be
governed by and construed under the laws of the State of New York as applied to
agreements executed and performed solely in New York, without regard to
choice-of-law principles thereof.

 

10.9          Severability. The provisions of this Agreement shall be deemed
separate. Accordingly, the invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions, and this
Agreement shall be construed in all respects as if such invalid or unenforceable
provision were omitted, except in cases where such unenforceable provision is a
basic prerequisite of any Party or both Parties to enter into this Agreement.
The Parties shall in such an instance use their best efforts to replace the
unenforceable provision(s) with valid, legal and enforceable provision(s) which,
insofar as practical, implement the purposes of this Agreement.

 

10.10      Entire Agreement. This Agreement including all Exhibits and Schedules
attached hereto constitutes the entire Agreement between AD Pharma and Acura
with respect to the subject matter addressed herein and this Agreement
supersedes all prior understandings and agreements, whether oral or written,
between the AD Pharma and Acura with respect thereto. Any amendment to any
provisions set forth in the Agreement must be in writing, signed by both AD
Pharma and Acura and specifically state that it is an amendment.

 

10.11      Counterparts; Facsimile Signatures. This Agreement may be executed in
multiple counterparts, each of which shall be deemed to be an original and of
equal force and effect, but all of which taken together shall constitute one and
the same instrument. A facsimile, digital, PDF, e-mail or other electronic copy
hereof shall suffice as an original Agreement.

 

10.12      Waiver of Rule of Construction. Each Party has had the opportunity to
consult with counsel in connection with the review, drafting and negotiation of
this Agreement. Accordingly, the rule of construction that any ambiguity in this
Agreement shall be construed against the drafting Party shall not apply.

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 30 

 

 

 

IN WITNESS WHEREOF, AD Pharma and Acura have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.

 

ACURA PHARMACEUTICALS, INC.   ABUSE DETERRENT PHARMA, LLC                    
By: /s/ Robert B. Jones   By: /s/ John L. Schutte           Name: Robert B.
Jones   Name: John L. Schutte           Title: President & CEO   Title: Manager
          Date: June 28, 2019   Date: June 28, 2019

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 31 

 

 

SCHEDULE 1

 

LIMITx™ Regulatory Application Submission Timeline

 

The following comprise the LIMITx™ Regulatory Application Submission Timeline:

 

1. By July 30, 2019 or before, Acura shall identify a contract research
organization (“CRO”) to prepare and test batches of the Product as needed for
FDA Regulatory Approval Application of the Product. AD Pharma has the right to
approve or disapprove the CRO.

 

2. By September 30, 2019 or before, Acura shall have entered into a CRO
Agreement with the CRO identified and approved as set forth above, including a
research protocol providing for preparation and testing of the Product necessary
to gain timely filing acceptance by the FDA of a Regulatory Approval Application
for the Product. AD Pharma has the right to approve or disapprove such Agreement
and research protocol.

 

3. By the last day of the calendar month when the last of the monthly payments
for the Maximum Pre-Regulatory Application Submission Payment has occurred, or
before, Acura must gain filing acceptance by the FDA of a Regulatory Approval
Application for the Product.

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 32 

 

 

 

Exhibit A

 

ACURA PHARMACEUTICALS, INC.

LIMITx™ Patent Summary as of Effective Date

 

 

 

Case Patent File/Issue/Expire Primary Subject Status 5018-00 US 9,101,636

F-11/27/2013

I-8/11/2015
E-11/27/2033

Drug+acid soluble cationic copolymer+buffering agent to retard release >3 tabs
(buffer limited)   5018-01 US 9,320,796

F-7/2/2015

I-4/26/2016
E-11/27/2033

Drug+acid soluble cationic copolymer+buffering agent to retard release >3 tabs
(polymer limited)   5018-02 US 9,662,393 F-3/18/2016
I-5/30/2017
E-11/27/2033 Drug+acid soluble+buffering agent to retard release >3 tabs (buffer
limited)   5018-03 15/588,982 F-5/8/2017 Drug+acid soluble+buffer to retard
release >3 tabs – Broad claims Notice of Allowance mailed June 3, 2019

 

Patents and applications summarized in Exhibit A include all types of patents
and applications set forth in the defined term, “Patent Rights”.

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 33 

 

 

 

 

 

Exhibit B

Form of Royalty Report.

 

ROYALTY REPORT Quarter Reported _________________ Licensee Name:   Property:  
Territory:   Address:   Contact:   Phone Number:   Fax Number:   CURRENT QUARTER
    Less:         Territory or Territories Gross Sales Deductions/ Returns*
Discounts Net Sales Royalty Rate % Royalty   $ - $ - $ - $ - % $ -   $ - $ - $ -
$ - % $ -   $ - $ - $ - $ - % $ - Total $ - $ - $ - $ - % $ -

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 34 

 

 

Exhibit C

 

 

 

Acura Pharmaceuticals Licenses LIMITx™ LTX-03

Agreement Provides For Completion of Development and Commercialization

Transaction Valued at up to $21.3 Million, not including Royalties

 

PALATINE, IL, July 1, 2019: Acura Pharmaceuticals, Inc. (OTC Pink: ACUR) today
announced a License, Development and Commercialization Agreement (the
"Agreement") with Abuse Deterrent Pharmaceuticals, LLC (“AD Pharma”), a special
purpose company representing a consortium of investors that will finance Acura’s
operations and completion of development of LTX-03 (hydrocodone bitartrate with
acetaminophen) immediate-release tablets utilizing Acura’s patented LIMITx™
technology which addresses the consequences of excess oral administration of
opioid tablets, the most prevalent route of opioid overdose and abuse. AD Pharma
retains commercialization rights from which Acura will receive royalties and
potential sales related milestones.

 

LTX-03 (hydrocodone with acetaminophen)

Recent reports suggest growing numbers of legitimate pain patients are going
undertreated as they can no longer find doctors willing to treat them due to new
prescribing guidelines associated with the opioid epidemic. Suicide is
increasingly seen as the only remedy for some of these patients through opioid
overdose. Our goal with LIMITx is to develop a treatment for effective pain
relief at a one or two tablet dose while providing overdose protection by
limiting high peak levels of drug in the bloodstream (Cmax) that can lead to
respiratory depression and death when more than the recommended dose is
ingested. LIMITx works by neutralizing stomach acid with buffering ingredients
as increasing numbers of tablets are swallowed thereby reducing the stomach acid
available to cause the release and subsequent systemic absorption of the active
ingredient from micro-particles contained in the LIMITx tablets. In a human
clinical study, formulations of LTX-03 demonstrated, under fasted conditions,
analgesic levels of hydrocodone in the blood when taken at a recommended one or
two tablet dose but reduced the maximum blood level (Cmax) up to 34% when
subjects were exposed to higher buffer ingredient levels. Hydrocodone with
acetaminophen remains the single largest prescribed opioid in the U.S. with
excess oral ingestion as the most prevalent method of misuse. Clinical studies
with hydromorphone (LTX-04) demonstrated reductions in Cmax of up to 65% when up
to 8 tablets were ingested. Analysis of forensic data associated with
hydrocodone overdose death suggests a typical consumption of approximately 16
immediate-release tablets, well within the number of tablets in an average
filled opioid prescription. The Company intends to demonstrate that a meaningful
reduction in Cmax associated with oral overdose can mitigate the risk of
respiratory depression and death. LTX-03 may offer safety advantages over
existing opioid therapies consistent with the Food and Drug Administration’s
(FDA) recently proposed new standards for the approval of opioid products.

 

Financial Terms

The Agreement grants AD Pharma exclusive commercialization rights in the United
States to LTX-03. Financial arrangements include:

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 35 

 

 

·Monthly license payments by AD Pharma of $350,000 up to the earlier of 18
months or FDA’s acceptance of a New Drug Application (“NDA”) for LTX-03;

·Reimbursement by AP Pharma of Acura’s LTX-03 outside development expenses;

·A $6 million loan which consolidates $5.25 million in prior loans from Mr. John
Schutte plus an additional $750 thousand loan upon execution of the Agreement.
Terms of the consolidated loan are amended to provide for a July 1, 2023
maturity date, interest at 7.5% with all payments of principle and interest
deferred to maturity, conversion rights into Acura common stock at $0.16, the
issuance of a warrant to AD Pharma to purchase 10 million shares of the
Company’s common stock at a price of $0.01 per shares and a security interest in
all Acura assets;

·Upon commercialization of LTX-03, Acura receives stepped royalties on sales and
is eligible for certain sales related milestones; and

·Acura authorizes MainPointe to assign to AD Pharma the option and the right to
add, as an Option Product to the Nexafed® Agreement, a Nexafed® 12-hour dosage
(an extended-release pseudoephedrine hydrochloride product utilizing the IMPEDE®
Technology in 120mg dosage strength);

 

AD Pharma may terminate the Agreement at any time. Additionally, if the NDA for
LTX-03 is not accepted by the FDA within 18 months, AD Pharma may terminate the
Agreement and take ownership of the intellectual property.

 

About Acura Pharmaceuticals

Acura Pharmaceuticals is a specialty pharmaceutical company engaged in the
research, development and commercialization of technologies and product
candidates intended to mitigate the risk of outcomes associated with product
misuse. The Company has three proprietary technologies: LIMITx™, AVERSION® and
IMPEDE®.

 

LIMITx utilizes acid neutralizing ingredients to precisely control gastric
acidity that limits the release of drug from tablets and its subsequent systemic
absorption when multiple tablets are ingested. LIMITx is useful with products
whose side effect risks can be mitigated by limiting exposure to a drug in
overdose situations.

 

AVERSION, used in the FDA approved drug OXAYDO® (oxycodone HCl) marketed by
Egalet Corporation, utilizes polymers designed to limit the abuse of the product
by nasal snorting and injection. AVERSION is also licensed to Kempharm for use
in certain of their products.

 

IMPEDE, used in NEXAFED® (pseudoephedrine HCl) and NEXAFED® Sinus
(pseudoephedrine HCl/acetaminophen) marketed by MainPointe Pharmaceuticals,
utilizes polymers and other ingredients to disrupt the extraction and processing
of pseudoephedrine from the tablets into methamphetamine.

 

Forward-Looking Statements

Certain statements in this press release constitute “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause our actual results, performance or achievements to
be materially different from any future results, performance, or achievements
expressed or implied by such forward-looking statements. Forward-looking
statements may include, but are not limited to:

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 36 

 

 

·our ability to fund or obtain funding for our continuing operations, including
the development of our products utilizing our LIMITx and IMPEDE technologies;

·whether our licensees will terminate the license prior to commercialization;

·the expected results of clinical studies relating to LTX-03, IMPEDE ER or any
successor product candidate, the date by which such studies will complete and
the results will be available and whether any product candidate will ultimately
receive FDA approval;

·the ability of LTX-03 single tablets to achieve bioequivalence or to
demonstrate efficacy in a clinical study;

·whether our licensing partners will exercise their options to additional
products;

·whether LIMITx will retard the release of opioid active ingredients as dose
levels increase;

·whether the extent to which products formulated with the LIMITx technology
mitigate respiratory depression risk will be determined sufficient by the FDA;

·our and our licensee’s ability to successfully launch and commercialize our
products and technologies;

·our and our licensee’s ability to obtain necessary regulatory approvals and
commercialize products utilizing our technologies;

·the market acceptance of, timing of commercial launch and competitive
environment for any of our products;

·our ability to develop and enter into additional license agreements for our
product candidates using our technologies;

·the ability to avoid infringement of patents, trademarks and other proprietary
rights of third parties;

·the ability of our patents to protect our products from generic competition and
our ability to protect and enforce our patent rights in any paragraph IV patent
infringement litigation;

·the adequacy of the development program for our product candidates, including
whether additional clinical studies will be required to support an NDA and FDA
approval of our product candidates;

·changes in regulatory requirements;

·adverse safety findings relating to our commercialized products or product
candidates in development;

·whether or when we are able to obtain FDA approval of labeling for our product
candidates for the proposed indications and whether we will be able to promote
the features of our technologies; and

·whether our product candidates will ultimately perform as intended in
commercial settings.

 

In some cases, you can identify forward- looking statements by terms such as
"may," “will”, "should," "could," "would," "expects," "plans," "anticipates,"
"believes," "estimates," “indicates”, "projects," “predicts," "potential" and
similar expressions intended to identify forward-looking statements. These
statements reflect our current views with respect to future events and are based
on assumptions and subject to risks and uncertainties. Given these
uncertainties, you should not place undue reliance on these forward-looking
statements. We discuss many of these risks in greater detail in our filings with
the Securities and Exchange Commission.

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

 37 

 

 

 

Contact:

for Acura Investor Relations

investors@acurapharm.com

847-705-7709

 

 

 

 

 

 

 

 

 

 

 

 

 

 

***** Portions of this information have been redacted pursuant to Reg S-K, items
601(b)(10)

 

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