Exhibit 10.1

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***],
HAS BEEN OMITTED BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE
COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED

FUNDING AGREEMENT
This Funding Agreement (this “Agreement”) is entered into as of June 2, 2019
(the “Effective Date”), between Brickell Biotech, Inc., a Delaware corporation
with a principal place of business at 5777 Central Avenue, Suite 102, Boulder,
Colorado 80301 (“Company”) and NovaQuest Co-Investment Fund X, L.P., a Delaware
limited partnership,with a place of business at 4208 Six Forks Road, Suite 920
Raleigh, NC 27609 (“NovaQuest”). Company and NovaQuest are each referred to
herein by name or, individually, as a “Party” or, collectively, as “Parties.”
INTRODUCTION
A.    Company is dedicated to the research, development, and commercialization
of products for the treatment of human diseases, disorders, and conditions.
B.    Company currently has certain pharmaceutical products under development
and desires to enter into an agreement to receive funding to develop and
commercialize the Product (as defined below).
C.    NovaQuest and Company desire for NovaQuest to provide funding for
Company’s development of the Product (as defined below) up to the maximum amount
specified herein and for Company to make certain payments to NovaQuest as set
forth herein, all subject to the terms and conditions of this Agreement.
D.    As a condition to Closing and as a material inducement for NovaQuest’s
entry into this Agreement, NovaQuest and Company will enter into a security
agreement pursuant to which Company will grant to NovaQuest a first priority
security interest in the Product Assets and the proceeds thereof in the form and
substance as set forth on Exhibit A (the “Security Agreement”).
E.     As a condition to Closing and as a material inducement for NovaQuest’s
entry into this Agreement, Company will cause Vical to execute and deliver a
warrant in the form and substance as set forth on Exhibit B (the “Warrant
Agreement”).
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
below, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I

DEFINITIONS
1.1    When used and capitalized in this Agreement (other than the headings of
the Articles and Sections), including the foregoing recitals, exhibits and
schedules hereto, the following terms shall have the meanings assigned to them
in this Article and include the plural as well as the singular and include all
participles of each such term, as applicable.

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“AAA” has the meaning set forth in Section 11.2(b).
“AAA Rules” has the meaning set forth in Section 11.2(b).
“Act” shall mean, collectively, the United States Federal Food, Drug, and
Cosmetic Act of 1938, including any amendments thereto, and all regulations
promulgated thereunder and any successor laws.
“Affiliate” means, with respect to an entity, any business entity controlling,
controlled by, or under common control with, such entity, but only for so long
as such control exists. For the purposes of this definition, “controlling,”
“controlled,” and “control” mean the possession, directly (or indirectly through
one or more intermediary entities), of the power to direct the management or
policies of an entity, including through ownership of fifty percent (50%) or
more of the voting securities of such entity (or, in the case of an entity that
is not a corporation, ownership of fifty percent (50%) or more of the
corresponding interest for the election of the entity’s managing authority).
“Agreement” has the meaning set forth in the preamble hereto.
“Anticipated Closing Date” has the meaning set forth in Section 3.1(c)(i).
“Applicable Law” means any applicable law, rule, or regulation of any
Governmental Authority, or judgment, order, writ, decree, permit, or license of
any Governmental Authority.
“Arbitration” has the meaning set forth in Section 11.2(b).
“Arbitrator” has the meaning set forth in Section 11.2(c).
“Business Day” means any day other than Saturday, Sunday, or any day on which
banking institutions located in the State of New York are permitted or obligated
by law to close.
“Closing” has the meaning set forth in Section 2.3.
“Closing Date” means the date on which the Closing actually occurs.
“Commercially Reasonable Efforts” means, with respect to the Product, (i) before
receipt of U.S. Approval, the level of effort and resources commonly dedicated
in the pharmaceutical industry by a Permitted Company to the development of a
product of similar commercial potential at a similar stage in its lifecycle to
the Product, taking into account the CRE Considerations and (ii) after receipt
of U.S. Approval, the level of effort and resources commonly dedicated in the
pharmaceutical industry by a Permitted Company to manufacturing and
commercialization of a product of similar commercial potential as determined on
a market-by-market basis, taking into account the CRE Considerations but without
regard to the particular circumstances of Company or any other Responsible
Party, any other product opportunities of Company or any other Responsible
Party, or any payments due to NovaQuest. Without limiting or derogating from the
generality of the foregoing, Commercially Reasonable Efforts requires Company
and each other Responsible Party to, as applicable: (a) timely assign
responsibility for all Development and Commercialization activities to specific
employees who are held accountable for progress; (b) monitor the progress of
such employees on an on-going basis; (c) set and consistently seek to achieve
specific and meaningful

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objectives and timelines for carrying out such Development (including in
accordance with the Development Plan) and Commercialization activities; (d)
consistently make and implement decisions and allocate and spend sufficient
resources designed to advance progress with respect to such objectives and
timelines; (e) employ compensation systems for its sales representatives and
other employees and agents that are not materially less favorable than the
compensation systems that Company and its Affiliates apply to their other
comparable development and commercialization programs, in order to reasonably
incentivize such sales representatives and other employees and agents to achieve
such objectives and timelines; and (f) use reasonable care in (A) selecting any
Third Party to whom it may grant any rights (by license or otherwise) to Develop
or Commercialize the Product and (B) negotiating and enforcing the terms of any
agreement entered into with respect thereto. “Commercially Reasonable” shall
have a corresponding meaning.
“Commercialize” or “Commercialization” means any and all activities directed to
marketing, promoting, distributing, importing, exporting, offering to sell, or
selling the Product, including commercial manufacturing activities.
“Company” has the meaning set forth in the preamble hereto.
“Competing Product” means any anticholinergic for the topical treatment of
axillary hyperhidrosis.
“Confidential Information” has the meaning set forth in Section 6.1.
“Cover” means that the use, manufacture, sale, offer for sale, development,
commercialization, or importation of the subject matter in question by an
unlicensed entity would infringe a claim of a Patent.
“CRE Considerations” means issues, considerations, and matters relating to
safety, efficacy, the regulatory environment, and other relevant scientific and
technical factors, all without regard to any payments owed to NovaQuest.
“Develop” or “Developing” means engaging in manufacturing, preclinical,
clinical, or other research and development activities (including manufacturing
activities related thereto) directed towards obtaining U.S. Approval.
“Development” means the process of Developing.
“Development Budget” means the budget included in the Development Plan for the
performance of the Development Plan setting forth the estimated expenses
associated with Developing the Product, as amended from time to time in
accordance with the terms of this Agreement.
“Development Invoice” means, with respect to a particular Fiscal Quarter during
the Product Funding Period, an invoice that sets forth: (i) the Development
Payment invoiced to NovaQuest for such Fiscal Quarter; (ii) Company’s reasonable
and good faith estimate of anticipated expenses to carry out the Product
Development Activities for such Fiscal Quarter; (iii) the Eligible Expenses for
the preceding Fiscal Quarter; and (iv) a calculation made in accordance with the
requirements set forth in Section 3.1(c) to support the Development Payment
invoiced to NovaQuest for such Fiscal Quarter.
“Development Obligations” has the meaning set forth in Section 3.2(a)(i).

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“Development Payment” has the meaning set forth in Section 3.1(a).
“Development Plan” means the plan attached hereto as Exhibit C, setting forth,
in reasonable detail, the Product Development Activities, as amended from time
to time in accordance with the terms of this Agreement.
“Dispute” has the meaning set forth in Section 11.2(a).
“Dispute Notice” has the meaning set forth in Section 11.2(a).
“Effective Date” has the meaning set forth in the preamble hereto.
“Eligible Expenses” means the reasonable and documented expenses actually
incurred by Company on or after the Effective Date solely in connection with the
Product Development Activities during the Product Funding Period.
“Encumbrance” means any lien, charge, security interest, mortgage, option,
privilege, pledge, right of first refusal, hypothecation, adverse ownership
interest, charge, trust or deemed trust (whether contractual, statutory, or
otherwise arising), or any other encumbrance, or similar right, or claim of any
other Person of any kind whatsoever whether choate or inchoate. “Encumber” means
to impose, suffer, or otherwise create any Encumbrance.
“Excluded Taxes” means federal withholding Taxes imposed by the U.S. federal
government pursuant to the U.S. Internal Revenue Code of 1986, as amended, on
amounts payable to or for the account of NovaQuest.
“FDA” means the United States Food and Drug Administration, or any successor
agency thereto.
“First Commercial Sale” means the first commercial sale of the Product by a
Responsible Party in the Territory in exchange for cash, or another form of
consideration to which value can be ascribed and ascertained, that falls within
the meaning of Net Sales herein.
“Fiscal Quarter” means each of the following three (3) month periods during each
Fiscal Year: January 1 through March 31; April 1 through June 30; July 1 through
September 30; and October 1 through December 31.
“Fiscal Year” means the twelve (12) month period from January 1 through December
31.
“GAAP” means U.S. generally accepted accounting principles, as in effect on the
date or for the period with respect to which such standards are applied.
“Governmental Authority” means any national, supra-national (e.g., the European
Commission or the Council of the European Union), federal, state, local, or
foreign court or governmental agency, authority, instrumentality, regulatory
body, department, bureau, political subdivision, or other governmental entity
(including the FDA) or any arbitrational tribunal, in each case of a competent
jurisdiction, including any such authority that is responsible for issuing
approvals, licenses, registrations, or authorizations necessary for the
manufacture, import, sale, pricing, and/or use of the Product for human
therapeutic use in any applicable regulatory jurisdiction.

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“Hercules” means Hercules Technology Growth Capital, Inc.
“Hercules Loan” means that certain Loan and Security Agreement entered into by
Company and Hercules, dated as of February 18, 2016 and as amended from time to
time, including pursuant to that certain First Amendment to Loan and Security
Agreement dated as of December 14, 2017, that certain Second Amendment to Loan
and Security Agreement dated as of March 30, 2018 and that certain Third
Amendment to Loan and Security Agreement dated as of July 30, 2018.
“Indemnified Party” has the meaning set forth in Section 10.2(a).
“Indemnifying Party” has the meaning set forth in Section 10.2(a).
“Investment Schedule” means the anticipated schedule of Development Payments,
listed on a Fiscal Quarter-by-Fiscal Quarter basis on Exhibit D.
“Joint Steering Committee” has the meaning set forth in Section 5.3(a).
“JSC Member” has the meaning set forth in Section 5.3(b).
“Liabilities” means any and all indebtedness, liabilities, and obligations,
whether accrued, fixed, or contingent, mature or inchoate, known or unknown,
reflected on a balance sheet or otherwise, including those arising under any law
or judgment of any court of any kind or any award of any arbitrator of any kind,
and those arising under any contract, commitment, or undertaking.
“License” means a grant of any rights in, to, or under any Product IP Rights or
Regulatory Approvals associated with or Covering the Product in the Territory,
including a grant of rights to market, sell, distribute, or otherwise
Commercialize the Product in the Territory; provided, however, that none of the
following, alone, shall constitute a “License” within the meaning hereof: (i)
any implied license granted to a Person by virtue of a sale of a product to such
Person or by virtue of any service performed by such Person at the request of
another Person; or (ii) any license granted to any Person in connection with
such Person’s performance of contract research services or contract
manufacturing services.
“Licensee” means a Third Party or an Affiliate of Company that is granted a
License, regardless of whether such License is granted by Company, an Affiliate
of Company, or another Licensee.
“Loss” has the meaning set forth in Section 10.1.
“Material Adverse Effect” means any of the following: (a) a material adverse
effect on the validity or enforceability of this Agreement; (b) a material
adverse effect on the ability of Company or any other Responsible Party to
perform any of Company’s material obligations under this Agreement; (c) a
material adverse effect on Development or Commercialization; (d) the inability
of Company to make a payment required by this Agreement, or (e) a material
adverse effect on the sales or potential sales of the Product; provided,
however, that in determining whether there has been a Material Adverse Effect or
whether a Material Adverse Effect could or would reasonably be expected to occur
pursuant to any of clause (a), (b), or (c) of this definition, any change,
event, circumstance, or occurrence solely attributable to an Uncured NovaQuest
Funding Breach shall be disregarded.

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“Material Adverse Event” means any of the following: (a) any Governmental
Authority has imposed, or communicated its intent to, impose a suspension,
clinical hold, or other adverse regulatory action regarding the Development Plan
or the Product where such action has had or would reasonably be expected to have
a Material Adverse Effect; (b) Company or any other Responsible Party terminates
a material clinical study involving the Product; (c) the occurrence of any event
that would reasonably be expected to result in at least a [***]-month delay of
either (i) a Responsible Party’s receipt of U.S. Approval for the Product by the
Target U.S. Approval Date or (ii) the anticipated date of First Commercial Sale
set forth in the Development Plan; (d) the occurrence of any of the events set
forth in subsections (a), (b), or (c) of the definition of “Technical Failure”;
(e) Company materially amends the Phase III Study Protocol without the prior
written consent of NovaQuest, which consent may not be unreasonably withheld;
(f) either (i) [***] or (ii) any [***] members of Company’s senior executives
(other than [***]) cease to provide the same or substantially similar services
to Company as of the Effective Date through the end of the Product Funding
Period for any reason, provided, however, that (x) if [***]’s cessation of
services is a result of either his disability that substantially adversely
affects his ability to work or his death, then such cessation of services shall
not be deemed a Material Adverse Event and (y) if the Company hires a
replacement for [***], or such [***] other senior executives, as applicable,
within [***] calendar days after such individual(s)’ employment with the Company
terminates, or as otherwise agreed to with NovaQuest, and such replacement(s)
are reasonably acceptable to NovaQuest, then such cessation of services shall
not be deemed a Material Adverse Event; or (g) the existence or occurrence of a
Material Adverse Effect.
“Material Contract” means (a) any agreement related to the Development,
marketing, promotion, manufacture, Commercialization, or distribution of the
Product or (b) any other agreement for which breach, non-performance, or failure
to renew by Company could reasonably be expected to result in a Material Adverse
Event.
“Milestone Date” means the date on which a Responsible Party receives U.S.
Approval. For the sake of clarity, the Milestone Date shall occur only once.
“Milestone Installment Payments” means installments of the Milestone Payment
Obligation pursuant to Section 4.1(a).
“Milestone Payment Obligation” means Thirty-Seven Million, Five Hundred Thousand
Dollars ($37,500,000).
“NDA” means a new drug application (as defined in Title 21 of the U.S. Code of
Federal Regulations, as amended from time to time) submitted to the FDA seeking
approval to introduce, distribute, sell, or market a drug product for human
therapeutic use in the U.S. (including a new drug application submitted under
Section 505(b)(2) of the Act).
“Net Sales” means the gross amount invoiced by Company, its Affiliates, and any
Licensees, to Third Parties for sales or other dispositions of the Product in
the Territory, less the sum of the following items to the extent such deductions
are commercially reasonable and directly and solely related to the sale of the
Product in the Territory:
(a)    Trade, quantity, and cash discounts or rebates, credits or refunds
allowed and actually taken or accrued for sales of the Product;

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(b)    Discounts, refunds, rebates (including wholesaler inventory management
fees), credits, cost of samples and free goods, returns, chargebacks, and
retroactive price adjustments actually taken or accrued for sales of the
Product, which effectively reduce the net selling price;
(c)    Price reductions, chargebacks or rebates, retroactive or otherwise,
imposed by or negotiated with any Governmental Authority in a jurisdiction with
regard to sales of the Product in such jurisdiction;
(d)    Transportation, importation, shipping, insurance, and other handling
expenses directly chargeable to sales of the Product, but only to the extent set
forth separately in the invoice, and in no event shall a reduction under this
clause (d) exceed [***] of the applicable Fiscal Quarter gross amount invoiced
for sales of the Product;
(e)    Taxes imposed on the production, sale, or delivery of the Product in a
jurisdiction, including sales, use, excise, turnover, inventory, or value added
Taxes (but excluding income Taxes and similar Taxes), but only to the extent set
forth separately in the applicable invoices; and
(f)    Bad debts, but in no event shall a reduction under this clause (f) exceed
[***] of the applicable Fiscal Quarter gross amount invoiced for sales of the
Product; provided that the amount of any bad debts deducted pursuant to this
exception and actually collected in a subsequent Fiscal Quarter shall be
included in Net Sales for such subsequent Fiscal Quarter.
Net Sales shall not include sales or other dispositions of the Product by
Company, an Affiliate thereof, or a Licensee to Company, an Affiliate thereof,
or a Licensee for purposes of resale thereby; provided, however, that such
Person’s commercial resale of such Product shall be counted in determining Net
Sales subject to Revenue Share Payments pursuant to this Agreement. Further,
use, supply or donation of the Product by Company, its Affiliates or any
Licensee for no profit (i) in connection with patient assistance programs, (ii)
for charitable or promotional purposes, (iii) for preclinical, clinical,
regulatory or governmental purposes, or compassionate use or other similar
programs, or (iv) for tests or studies reasonably necessary to comply with any
Applicable Law, or request by a Governmental Authority shall not, in each case,
be deemed sales of such Product for purposes of this definition of “Net Sales.”
With respect to any sale of the Product for consideration other than monetary
consideration on arm’s length terms, which non-monetary or non-arm’s length
consideration has the effect of reducing the invoiced amount below what it would
have been in the absence of such non-monetary or non-arm’s length consideration,
for purposes of calculating the Net Sales under this Agreement, the Product in
such sale shall be deemed to be sold for cash exclusively and at the average Net
Sales price charged to Third Parties for cash sales in arm’s length transactions
during the applicable reporting period (or if there were only de minimus cash
sales, then at the fair market value as determined by comparable markets).
Any recovery, damages, or amounts in settlement received by any Responsible
Party with respect to the alleged, actual, or potential infringement of the
Product IP Rights in the Territory or any settlement agreement entered into with
respect thereto shall be deemed to be Net Sales.
Net Sales shall be determined from the books and records of Company, its
Affiliates, and Licensees, as applicable, maintained in accordance with GAAP as
regularly and consistently employed by Company, its Affiliates, and Licensees,
as applicable.

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“Non-Technical Termination Payment” means a payment to NovaQuest in an amount
equal to Twenty-Five Million Dollars ($25,000,000), plus [***].
“NovaQuest Indemnitees” has the meaning set forth in Section 10.1.
“NovaQuest” has the meaning set forth in the preamble hereto.
“Party” has the meaning set forth in the preamble hereto.
“Patents” means all patents (including all reissues, extensions, substitutions,
confirmations, re-registrations, re-examinations, revalidations, supplementary
protection certificates, and patents of addition) and patent applications
(including all provisional applications, continuations, continuations-in-part,
and divisions) and all counterparts and equivalents of any of the foregoing in
any country or jurisdiction.
“Payment Report” has the meaning set forth in Section 4.1(c).
“Permitted Company” means a pharmaceutical and/or biologics company with either
(a) global annual revenue for its most recently completed Fiscal Year that is
equal to or greater than [***], based on most recent data collected or compiled
by Evaluate Pharma (or a similar company to the extent Evaluate Pharma’s data is
not available) or (b) a market capitalization that is equal to or greater than
[***].
“Person” means any natural person, corporation, trust, joint venture,
association, unincorporated organization, cooperative, company, partnership,
trust, limited liability company, government (domestic or foreign), and any
agency or instrumentality thereof, or any other entity recognized by law.
“Phase III Studies” means the human clinical trials of the Product described in
the Development Plan that are designed to ascertain efficacy and safety of the
Product, for the purpose of enabling the preparation and submission of a NDA or
a foreign equivalent thereof in the Territory.
“Phase III Study Protocol” means that certain protocol for the Phase III Studies
attached hereto as Exhibit E.
“Post-Phase III Termination Payment” means a payment to NovaQuest in an amount
equal to Twenty-Five Million Dollars ($25,000,000), plus [***].
“Prime Rate” has the meaning set forth in Section 4.4.
“Prior-Quarter Development Payment Excess” means, for a particular Fiscal
Quarter, an amount equal to the difference of (a) the Scheduled Payment for the
immediately preceding Fiscal Quarter minus (b) [***] of the Eligible Expenses
actually incurred for such immediately preceding Fiscal Quarter. If the
foregoing calculation results in a number that is less than zero (0), then the
Prior-Quarter Development Payment Excess shall be deemed to be zero (0).
“Product” means any product that contains Sofpironium Bromide.
“Product Assets” means all assets (i) of the Company and any of Company’s
Affiliates that are engaged in the Development or Commercialization of the
Product in the Territory or (ii) of a

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Licensee, excluding, for the purpose of clause (ii), assets owned or controlled
by such Licensee prior to the date on which it is granted a License, that are,
in the case of clause (i) and clause (ii), material to, or reasonably necessary
for, the Commercialization or Development of the Product in the Territory,
including, for the avoidance of doubt, the following assets: Product IP Rights,
Product IP Agreements, all Regulatory Filings, product packaging, product
inserts, product labels, Regulatory Approval applications, Regulatory Approvals,
regulatory exclusivity, copies of correspondence with regulatory authorities,
copies of pre-clinical and clinical data, pharmacology and biology data,
Material Contracts, and inventory.
“Product Development Activities” means all activities conducted by or on behalf
of Company or any other Responsible Party, including efforts undertaken,
services performed, and goods purchased, in connection with the Development of
the Product, in each case that are included in the Development Plan.
“Product Funding Period” means, with respect to the Program, the period
commencing on the Closing Date and ending on the earliest to occur of (a) the
last day of the Fiscal Quarter in which the Total Funding Commitment is met; (b)
U.S. Approval; (c) termination of the Program; or (d) [***].
“Product IP Agreement” means any contract pursuant to which a Responsible Party
has been granted, assigned or otherwise conveyed any right, title or interest in
or to any Product IP Rights by a Third Party.
“Product IP Rights” means all intellectual property relating to the Product
owned or licensed (i) by the Company or by any of Company’s Affiliates that are
engaged in the Development or Commercialization of the Product in the Territory
or (ii) by a Licensee, excluding, for the purpose of clause (ii), intellectual
property rights owned or controlled by such Licensee prior to the date on which
it is granted a License, that are, in the case of clause (i) and clause (ii),
reasonably necessary for the Commercialization or Development of the Product in
the Territory, including, for the avoidance of doubt, the following intellectual
property: (a) the Product Know-How; (b) all Patents Covering the Product
(including, without limitation, its composition, formulation, delivery,
manufacture, or use); (c) all trademarks, service marks, trade names, and works
protectable under copyright laws, relating to the Product; and (d) all copies
and tangible embodiments of any of the foregoing (in whatever form or medium);
provided, that trademarks, service marks, and trade names that relate generally
to the Company or the Company's Affiliates, and not to the Product, shall not be
included in clauses (c) or (d) of this definition.
“Product Know-How” means, with respect to the Product, all conceptions, ideas,
reductions-to-practice, innovations, inventions, trade secrets, technology,
processes, practices, formulae, instructions, procedures, assembly procedures,
results (including biological, chemical, pharmacological, toxicological,
pharmaceutical, physical and analytical, preclinical, clinical, safety,
manufacturing and quality control data, including study designs and protocols),
machines, equipment, compositions of matter, compounds, formulations, genetic
material, improvements, enhancements, modifications, technological developments,
know-how, methods, treatments, techniques, systems, designs, artwork, drawings,
plans, specifications, documentation, data and information, customer lists,
lists and identities of key opinion leaders in each case whether or not
confidential, proprietary, patentable, copyrightable, or susceptible to any
other form of legal protection, in written, electronic or any other form.

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“Program” means Developing the Product in compliance in all respects with the
Development Plan and the Development Budget and in a manner that ensures that a
Responsible Party is reasonably likely to receive U.S. Approval on or before the
Target U.S. Approval Date.
“Quarterly Report” means a report submitted by Company to NovaQuest in
accordance with the provisions of Section 3.1(b), in the form and substance as
set forth on Exhibit F and that contains the following information with respect
to the applicable Fiscal Quarter: (a) a reasonably detailed clinical update,
regulatory update, and commercial update regarding the Product; (b) a reasonably
detailed summary of any legal action brought by Company during the most recently
completed Fiscal Quarter against a Third Party for such Third Party’s
infringement of any Patents Covering the Product; (c) a complete, accurate and
detailed list of all Eligible Expenses incurred during the most recently
completed Fiscal Quarter and a comparison of such Eligible Expenses to the
Development Budget, and any applicable Quarterly Invoice for such recently
completed Fiscal Quarter; and (d) Company’s reasonable and good faith estimate
of the anticipated expenses to carry out the Product Development Activities for
the current Fiscal Quarter and for each subsequent Fiscal Quarter of the
Program. All amounts in each Quarterly Report shall be denominated in U.S.
Dollars.
“Recordkeeping Period” has the meaning set forth in Section 5.2(a).
“Regulatory Approval” means, with respect to the Product, in respect of a
particular jurisdiction, all approvals (including supplements, amendments, pre-
and post-approvals), licenses, registrations, or authorizations of any
Governmental Authority that are necessary for the manufacture, distribution,
use, sale, marketing, or other Commercialization of the Product for human
therapeutics purposes in such jurisdiction.
“Regulatory Filing” means any applications, filings, or submission required by
or provided to a Governmental Authority relating to the Development,
manufacture, Commercialization, pricing, or other exploitation of the Product,
including any supporting documentation, correspondence, meeting minutes,
amendments, supplements, registrations, licenses, regulatory drug lists,
advertising and promotion documents, adverse event files, complaint files, and
manufacturing, shipping, or storage records with respect to any of the
foregoing, including an NDA, drug master filing, clinical trial application, and
any counterparts or equivalents of any of the foregoing.
“Report Update” has the meaning set forth in Section 3.3(d).
“Responsible Party” means (a) each of Company and its Affiliates and (b) each
Licensee.
“Resumption Notice” has the meaning set forth in Section 3.3(d).
“Revenue Share Payment” has the meaning set forth in Section 4.1(b).
“Revenue Share Rate” has the meaning set forth in Section 4.1(b).
“Scheduled Payment” means, for a particular Fiscal Quarter, the Development
Payment set forth in the Investment Schedule for such Fiscal Quarter.
“Security Agreement” has the meaning set forth in the Introduction hereto.

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“Senior Officer” means (a) in the case of NovaQuest, its managing partner and
(b) in the case of Company, its chief executive officer.
“Sofpironium Bromide” means that certain molecule that is more particularly
described in Exhibit G.
“Successful Completion” means, with respect to the Phase III Studies, the
achievement of any primary clinical endpoint identified in Phase III Study
Protocol.
“Target U.S. Approval Date” means June 30, 2022.
“Tax” means any present or future tax, levy, impost, duty, assessment, charge,
fee, deduction, or withholding of any nature and whatever called (including
interest and penalties thereon) by any Governmental Authority, on whomever and
wherever imposed, levied, collected, withheld, or assessed.
“Technical Failure” means any of the following:
(a)    a reasonable and good faith determination by Company that the Product
presents risk of death, a life-threatening condition, or a serious safety or
health concern to patients such that, based on then-available data, no
Responsible Party can ethically and in good faith administer the Product to
patients;
(b)     the Product fails to achieve each of the primary endpoints for the Phase
III Studies conducted in compliance with Phase III Study Protocol (as may be
amended in accordance with this Agreement), as reviewed by FDA, such that the
Product is not reasonably likely to receive U.S. Approval; or
(c)    Company receives either (i) a final unconditional non-approval letter
from the FDA with respect to the Product or (ii) an equivalent notice from the
European Medicines Agency that, in either the case of (i) or (ii), renders the
receipt of U.S. Approval not reasonably likely.
For the avoidance of doubt, if any of the foregoing (a) through (c) of this
definition is caused in whole or in part by the gross negligence or willful
misconduct by a Responsible Party, then a “Technical Failure” shall be deemed
not to have occurred.
“Technical Failure Termination Notice” has the meaning set forth in Section
3.3(a).
“Term” has the meaning set forth in Section 9.1.
“Territory” means worldwide, but not the following countries: Japan, China
(including Hong Kong), South Korea, Taiwan, Malaysia, Cambodia, Singapore,
Thailand, Indonesia, or Vietnam. “Territory” also does not include any country
in which Regulatory Approval is obtained without use of, or reference to, any
data obtained in the Phase III Studies.
“Third Party” means any Person, including a Governmental Authority, other than
Company, NovaQuest, and each of their respective Affiliates.
“Third Party Claim” has the meaning set forth in Section 10.1.

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“Total Funding Commitment” means Twenty-Five Million Dollars ($25,000,000).
“Uncured NovaQuest Funding Breach” means NovaQuest’s breach of its obligation to
pay any Development Payment in accordance with this Agreement and NovaQuest’s
subsequent failure to cure such breach within sixty (60) calendar days after
receiving written notice of such breach from Company.
“United States” or “U.S.” means the United States of America, including its
territories and possessions.
“U.S. Approval” means the receipt of Regulatory Approval in the United States
from the FDA.
“Vical Transaction” means that certain transaction pursuant to which Merger Sub
merges with and into Company pursuant to the Vical Merger Agreement.
“Vical Merger Agreement” means, (i) that certain Agreement and Plan of Merger
and Reorganization by and among Vical Incorporated, a Delaware corporation
(“Vical”), Victory Subsidiary, Inc., a Delaware corporation and wholly owned
subsidiary of Vical (“Merger Sub”), and Company, dated as of June 2, 2019.
“Warrant Agreement” has the meaning set forth in the Introduction hereto.
ARTICLE II

SCOPE OF AGREEMENT
2.1    General Agreement. Subject to the terms and conditions hereof, and
provided that Company is Developing the Product in accordance with this
Agreement (including, for the avoidance of doubt, in accordance with the
Development Plan and the Development Budget), NovaQuest shall make the payments
as set forth in Section 3.1 up to an aggregate maximum amount equal to the Total
Funding Commitment in exchange for the right to receive payments from Company as
set forth in, and subject to, ARTICLE IV.
2.2    Limitations. Company accepts, acknowledges, and agrees that NovaQuest is
agreeing, on the terms and conditions set forth in this Agreement, only to
satisfy the funding obligations set forth in Section 3.1 and its other
obligations expressly set forth herein and is not assuming any Liability of
Company, of whatever nature, whether presently in existence or arising or
asserted hereafter.
2.3    Closing. The effectiveness of the transactions contemplated by this
Agreement (the “Closing”) will occur immediately following the closing of the
Vical Transaction, subject to the satisfaction of the conditions set forth in
Section 2.4. For clarity, NovaQuest will have no obligations to fund any
Development Payments until the Closing Date, and Company shall have no
obligations under ARTICLE IV until the Closing Date.

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2.4    Effectiveness Conditions.
(a)    Company Effectiveness Conditions. Company’s obligation to consummate the
transactions under this Agreement as contemplated shall be subject to the
satisfaction or waiver by Company of the following conditions:
(i)    NovaQuest shall have delivered a certificate, executed by an authorized
officer of NovaQuest, certifying that the representations and warranties set
forth in Section 7.2 are true and correct in all material respects as of the
Closing Date (except with respect to representations and warranties qualified by
the term “material,” which representations and warranties shall be true and
correct in all respects as of the Closing Date);
(ii)    NovaQuest shall have executed and delivered the Security Agreement; and
(iii)    The “Closing” of the Vical Transaction (as defined in Section 1.3 of
the Vical Merger Agreement) shall have occurred.
(b)    NovaQuest Effectiveness Conditions. NovaQuest’s obligation to consummate
the transactions under this Agreement as contemplated at Closing shall be
subject to the satisfaction or waiver by NovaQuest of the following conditions:
(i)    Company shall have delivered a certificate, executed by an authorized
officer of Company, certifying that (A) the representations and warranties set
forth in Section 7.1 are true and correct in all respects as of the Closing Date
except, in each case, or in the aggregate, where the failure to be true and
correct would not reasonably be expected to have a Company Material Adverse
Effect or a Parent Material Adverse Effect (both as defined in the Vical Merger
Agreement and taken together, as a whole) (without giving effect to any Material
Adverse Effect or other materiality qualifiers therein) and (B) Company has
complied in all material respects with the covenants set forth in Section 8.5;
(ii)    Company shall have executed and delivered the Security Agreement;
(iii)    Company shall have delivered a duly executed payoff letter in a form
and substance reasonably acceptable to NovaQuest (“Payoff Letter”) setting forth
the payoff amount and a per diem amount, and which confirms that upon repayment
in full of all outstanding amounts under the Hercules Loan, all commitments
under the Hercules Loan will be terminated and all Encumbrances upon any of the
property of the Company constituting collateral under the Hercules Loan will be
released;
(iv)    Company shall have caused Vical to execute and deliver the Warrant
Agreement to become effective at the Closing Date.
(v)    The “Closing” (as defined in Section 1.3 of the Vical Merger Agreement)
of the Vical Transaction shall have occurred in accordance with the terms
thereof; and
(vi)    Company shall have delivered a copy of its bank statements and a closing
certificate, executed by an authorized officer of the Company and certifying
that (A) the bank statement copy delivered to NovaQuest is true, complete, and
correct and (B) the Parent Net Cash (as defined in the Vical Merger Agreement)
is at least [***].

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ARTICLE III

DEVELOPMENT AND COMMERCIALIZATION
3.1    Product Development Funding.
(a)    General Commitments. For each Fiscal Quarter during the Product Funding
Period in which Company submits a Development Invoice and a Quarterly Report to
NovaQuest, NovaQuest shall, subject to the Total Funding Commitment and the
other terms of this Agreement, advance funds to Company as invoiced for up to
[***] of the expenses to carry out the Product Development Activities for each
such Fiscal Quarter (each such payment a “Development Payment”). Company shall
use Development Payments solely to fund Product Development Activities.
(b)    Quarterly Reports. Beginning with the first Fiscal Quarter that commences
after the Effective Date and for each subsequent Fiscal Quarter during the
Product Funding Period, Company shall submit a complete and correct Quarterly
Report to NovaQuest within ten (10) Business Days following the first Business
Day of each such Fiscal Quarter.
(c)    Development Invoices and Development Payments.
(i)    Company shall provide NovaQuest with at least fifteen (15) Business Days’
prior written notice of the date on which the Closing is reasonably anticipated
to occur (such date, the “Anticipated Closing Date”). On the later of (A) the
Anticipated Closing Date or (B) the Closing Date, NovaQuest shall pay Company a
Development Payment equal to the Scheduled Payment for the period from the
Closing Date through the end of the Fiscal Quarter in which the Closing Date
occurs, which, for the avoidance of doubt, is the Scheduled Payment shown in the
column titled “Q3 2019” in the Investment Schedule. Thereafter, beginning with
the first Fiscal Quarter that commences after the Effective Date and for each
subsequent Fiscal Quarter during the Product Funding Period, Company shall
submit a complete and correct Development Invoice to NovaQuest within ten (10)
Business Days following the first Business Day of each such Fiscal Quarter. The
first Development Invoice shall require NovaQuest to pay Company an amount equal
to the Scheduled Payment for such Fiscal Quarter. All subsequent Development
Invoices shall calculate the Development Payment for a given Fiscal Quarter as
follows:  
Development Payment = Scheduled Payment – Prior Quarter Development Payment
Excess.
(ii)    If, with respect to a particular Fiscal Quarter, NovaQuest receives a
Quarterly Report within the timeframe set forth in Section 3.1(b) and a
Development Invoice within the timeframe set forth in this Section 3.1(c) and
such Quarterly Report and Development Invoice are complete and accurate in all
material respects, then, subject to the Total Funding Commitment, NovaQuest
shall pay Company a Development Payment in an amount equal to the amount set
forth on the Development Invoice for such Fiscal Quarter within thirty (30)
Business Days following NovaQuest’s receipt of the aforementioned Quarterly
Report and Development Invoice.
(d)    Miscellaneous. Each payment under this Section 3.1 will be made in U.S.
Dollars by electronic wire transfer in immediately available funds to the bank
account set forth in Exhibit H or such other account designated by Company in
writing. Notwithstanding anything to the contrary

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herein, NovaQuest’s aggregate payment obligations under this Section 3.1 shall
not exceed the Total Funding Commitment.
3.2    Diligence.
(a)    Development.
(i)    Company shall, and shall ensure that each applicable Responsible Party
shall (A) use Commercially Reasonable Efforts to perform all activities
described in the Development Plan in accordance with the timelines set forth in
the Development Plan and in compliance in all respects with the Development
Budget and (B) otherwise Develop the Product in a manner that is reasonably
likely to result in U.S. Approval no later than the Target U.S. Approval Date
(the “Development Obligations”). Company agrees to timely and promptly pay and
fund all Product Development Activities that exceed NovaQuest’s payment
obligations set forth in Section 3.1.
(ii)    The Development Plan shall not be amended in any material respect
without the prior written consent of NovaQuest, which consent shall be not
unreasonably withheld, conditioned or delayed.
(iii)    Upon and following Successful Completion, Company shall (A) within nine
(9) months after Successful Completion, prepare, complete, and submit to the FDA
all Regulatory Filings necessary to obtain U.S. Approval and (B) use
Commercially Reasonable Efforts to obtain U.S. Approval on or before the Target
U.S. Approval Date.
(b)    Commercialization Diligence. Company shall, and shall ensure that each
applicable Responsible Party shall, use Commercially Reasonable Efforts to
launch, market, promote, sell, and otherwise Commercialize the Product in the
United States from and after the receipt of U.S. Approval for each indication
that is a subject of such U.S. Approval and in each jurisdiction in the
Territory for which Regulatory Approval is received. Company shall, and shall
ensure that each applicable Responsible Party shall, use Commercially Reasonable
Efforts to manufacture or have manufactured the Product in sufficient quantities
and of adequate quality to satisfy forecasted wholesaler and direct buyer demand
in the Territory after the receipt of Regulatory Approval in any jurisdiction in
the Territory.
3.3    Program Termination.
(a)    Right to Terminate for Technical Failure. Company shall not, and shall
ensure that no Responsible Party shall, suspend or terminate the Program prior
to U.S. Approval for any reason (even a Commercially Reasonable reason), except
that (i) Company may terminate the Program in its entirety upon the occurrence
of a Technical Failure and then only in accordance with this Section 3.3(a) and
(ii) Company may terminate the Program in accordance with Section 3.3(b) or in
accordance with Article IX termination provisions. If Company reasonably and in
good faith determines that a Technical Failure may have occurred, then Company
shall provide NovaQuest, within three (3) Business Days of such determination,
written notice thereof and the details and evidence of such failure (a
“Technical Failure Termination Notice”). The Parties (including each Party’s
Senior Officer and JSC Members) shall meet in person as promptly as possible to
review and discuss the purported Technical Failure and the possible termination
of the Program. Company will reasonably consider NovaQuest’s feedback with
respect to the purported Technical Failure and keep NovaQuest fully informed on
a timely basis regarding the details of any discussions or

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correspondence with Third Parties regarding any termination of the Program for
Technical Failure. If Company decides, after reasonably considering NovaQuest’s
feedback, to terminate the Program for Technical Failure, then Company shall
immediately deliver written notice of the same to NovaQuest. Company shall not
delay its decision to terminate the Program for Technical Failure to obtain
additional payments from NovaQuest under Section 3.1.
(b)    Post-Phase III Termination. If, after the completion of the Phase III
Studies, the FDA requires, as a condition of receiving its Regulatory Approval,
an additional study or additional Development work beyond that which is
contained in the Development Plan that would, in the reasonable determination of
Company, be reasonably expected to either (i) take Company, using Commercially
Reasonable Efforts, longer than [***]months to complete or (ii) cost, in the
aggregate, more than [***], then Company may terminate the Program by providing
to NovaQuest: (A) written notice of such termination; (B) a true and complete
copy of FDA correspondence relating to the additional Development requirements;
and (C) the Post-Phase III Termination Payment. Company shall not be permitted
to effect a termination of the Program pursuant to this Section 3.3(b) unless it
provides NovaQuest with the items described in (A), (B), and (C) of this Section
3.3(b) within thirty (30) Business Days of Company’s receipt of notice from the
FDA of the additional Development requirements.
(c)    Non-Technical Termination. Company shall become obligated to pay
NovaQuest the Non-Technical Termination Payment if either of the following
events occur:
(i)    a Responsible Party terminates the Program in any material respect for
any reason other than (A) Technical Failure pursuant to Section 3.3(a), or (B)
pursuant to Section 3.3(b); or
(ii)    the Responsible Parties fail, for three (3) consecutive months or
longer, to actively and materially engage in the Development of the Product in a
manner that is reasonably likely to result in U.S. Approval on or before the
Target U.S. Approval Date; provided, however, that such failure by the
Responsible Parties is not a direct result of an Uncured NovaQuest Funding
Breach.
For the avoidance of doubt, NovaQuest’s exercise of its rights under Section
3.3(e) does not, and will not, constitute an Uncured NovaQuest Funding Breach.
(d)    Consequences of Program Termination. If Company terminates the Program
for any reason, then (in addition to any other applicable terms and provisions
of this Section 3.3):
(i)    Company’s obligations set forth in Section 3.2 of this Agreement shall
terminate;
(ii)    NovaQuest’s obligations under this Agreement to make any additional
Development Payments will terminate immediately;
(iii)    Company shall refund to NovaQuest any unspent or uncommitted portion of
any Development Payment paid by NovaQuest within ten (10) Business Days of the
termination of the Program;

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(iv)    Company shall remain obligated to make payments to NovaQuest pursuant
and subject to ARTICLE IV, with any Post-Phase III Termination Payment or
Non-Technical Termination Payment paid to NovaQuest to be credited against
Company’s future payment obligations under ARTICLE IV; and
(v)    if Company or any other Responsible Party subsequently resumes conduct of
the Program (or is be deemed to have resumed conduct of the Program as set forth
below), then Company shall provide NovaQuest with (A) prompt written notice
thereof (but in any event within thirty (30) Business Days of such resumption)
(a “Resumption Notice”) and (B) as promptly as practicable thereafter, a
complete and accurate report summarizing the information that is new or material
to the Program as of the date such report is provided (the “Report Update”).
Within thirty (30) Business Days of Company providing the Report Update to
NovaQuest, NovaQuest shall have the right (but not the obligation), upon written
notice to Company, to resume making any remaining Development Payments in
accordance with Section 3.1 hereof. For the purposes of this Agreement, Company
will be deemed to have resumed conduct of the Program if Company or any other
Responsible Party engages in any material Development or Commercialization of
the Product. For the avoidance of doubt, Company’s obligations to make payments
to NovaQuest pursuant and subject to ARTICLE IV shall survive termination of the
Program for Technical Failure under Section 3.3(a) or otherwise pursuant to
Section 3.3(b) or Section 3.3(c).
(e)    NovaQuest’s Right to Suspend Payments. Without limiting any of
NovaQuest’s rights or remedies, if NovaQuest reasonably and in good faith
determines that a Material Adverse Event has occurred, then, anything to the
contrary in this Agreement notwithstanding, NovaQuest shall have the right, in
its sole discretion, to suspend paying any further Development Payments.
NovaQuest shall provide Company with written notice thereof within three (3)
Business Days of such determination. NovaQuest’s obligation to pay any further
Development Payments shall resume upon Company’s receipt of written notice from
NovaQuest that the Material Adverse Event has been resolved or cured to
NovaQuest’s reasonable satisfaction. Concurrently with any such notice,
NovaQuest shall pay the Company an amount equal to the aggregate amount of
Scheduled Payments that were not paid during such suspension. If NovaQuest
elects to suspend its obligation to pay Development Payments and the applicable
Material Adverse Event is not resolved or cured to NovaQuest’s reasonable
satisfaction within twelve (12) months, then NovaQuest may, in its sole
discretion, terminate its obligation to pay any further Development Payments.
ARTICLE I

PAYMENTS TO NOVAQUEST

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4.1    Payments and Reports.
(a)    Milestone Payment Obligation. Company’s obligation to pay the Milestone
Payment Obligation shall accrue, and be irrevocably earned by NovaQuest, on the
Milestone Date, and Company shall pay the Milestone Payment Obligation in two
installments as described in the remainder of this Section 4.1(a).
(i)    Company shall pay NovaQuest [***] within five (5) Business Days after the
Milestone Date.
(ii)    Company shall pay NovaQuest [***] on or before the second (2nd)
anniversary of the Milestone Date.
(b)    Revenue Share Payments. Commencing with the Fiscal Quarter that begins
immediately following the second (2nd) anniversary of the date on which the
First Commercial Sale occurs and continuing for each subsequent Fiscal Quarter
during the Term, Company shall pay to NovaQuest a payment in an amount equal to
the product of (i) the applicable percentage in the column labeled “Revenue
Share Rate” in the table set forth below (each such percentage, a “Revenue Share
Rate”) multiplied by (ii) the aggregate total of the Net Sales for such Fiscal
Quarter (each such payment, a “Revenue Share Payment”). Company shall pay
NovaQuest a Revenue Share Payment within forty-five (45) calendar days after the
end of each Fiscal Quarter during which any Net Sales occur.
Tier
Revenue Share Rate
Net Sales Range
1
[***]
Net Sales in a Fiscal Year are less than or equal to [***].
2
[***]
Net Sales in a Fiscal Year are greater than [***] and less than or equal to
[***].
3
[***]
Net Sales in a Fiscal Year are greater than [***].

Revenue Share Payments for a Fiscal Quarter are due and payable within
forty-five (45) calendar days after the end of each Fiscal Quarter. Company
shall submit a Payment Report simultaneously with its payment of each Revenue
Share Payment.
(c)    Payment Reports. Commencing with the Fiscal Quarter during which the
First Commercial Sale occurs and for each Fiscal Quarter thereafter, within
forty-five (45) calendar days after the end of each such Fiscal Quarter, Company
shall prepare and deliver a written report to NovaQuest showing an accurate
calculation of Net Sales for such Fiscal Quarter, including the specific
jurisdictions in which such Net Sales were invoiced and the deductions taken to
make the calculation of each Revenue Share Payment owed for that Fiscal Quarter
(such written report, a “Payment Report”). For the avoidance of doubt, Company
shall provide NovaQuest with a Payment Report pursuant to this Section 4.1(c)
even if no Revenue Share Payment is owed for a given Fiscal Quarter.
4.2    NovaQuest’s Account. All payments under this Agreement to NovaQuest shall
be made in U.S. Dollars by wire transfer in immediately available funds to such
accounts as NovaQuest designates in writing from time to time. With respect to
Net Sales invoiced in a currency other than U.S. Dollars, such Net Sales will be
converted into the U.S. Dollar equivalent using the conversion

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rate existing in the United States (as reported in The Wall Street Journal, New
York edition) for the applicable currency on the last Business Day of the
applicable Fiscal Quarter. If The Wall Street Journal ceases to publish such
exchange rate, then the rate of exchange to be used shall be that reported in
such other business publication of national circulation in the United States on
which the Parties reasonably agree.
4.3    Taxes.  If any Governmental Authority requires Company to deduct or
withhold any amount from, or NovaQuest to pay any present or future Tax,
assessment, or other governmental charge on, any payment by Company to NovaQuest
hereunder (a “Withholding Payment” ), then Company shall, in addition to paying
NovaQuest the amount reduced by such Withholding Payment, simultaneously pay
NovaQuest an additional amount such that NovaQuest receives the full contractual
amount of the applicable payment as if no such Withholding Payment had occurred.
Notwithstanding the foregoing, Company shall not be required to pay any such
additional amount to NovaQuest to the extent that a Withholding Payment is
attributable to Excluded Taxes.
4.4    Interest. If any payment required to be paid by Company to NovaQuest
under this Agreement is not made when due, then such outstanding payment will
accrue interest, beginning on the date when the payment was due, at a rate equal
to [***] plus the Prime Rate, subject to any limitation under Applicable Law.
Such rate will be compounded every ninety (90) calendar days, commencing on the
date on which such payment was due. Payment of accrued interest will accompany
payment of the outstanding payment. “Prime Rate” means the prime rate as
reported in The Wall Street Journal, New York edition, on the date such payment
is due.
ARTICLE V

INFORMATION RIGHTS; RECORD KEEPING; JOINT STEERING COMMITTEE
5.1    Information Rights.
(a)    In addition to Company’s other reporting and disclosure obligations
contained in this Agreement, but subject to the remaining provisions of this
Section 5.1(a) from and after the Closing Date, Company shall, and shall cause
all other Responsible Parties to, promptly prepare and provide NovaQuest with
reasonable notice and information regarding each of the following matters
relating to the Product and to promptly respond to NovaQuest’s reasonable
inquiries with respect thereto and promptly provide, upon NovaQuest’s reasonable
request, information and documents related to each of the following matters:
(i)    general Development and commercial readiness overview and updates,
including any issues regarding manufacturing of the Product;
(ii)    notification of scheduled meetings, including teleconferences, with a
Governmental Authority;
(iii)    finalized briefing packages and minutes from meetings with a
Governmental Authority, notifications, letters, and other communications with a
Governmental Authority;
(iv)    material Regulatory Filings, including any NDA;

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(v)    safety update reports provided to a Governmental Authority and any actual
or anticipated issues with the supply of the Product;
(vi)    any matters arising from Patents Covering the Product and other
intellectual property rights protecting the Product, including intellectual
property rights owned or controlled by Third Parties, that might adversely
impact the Program;
(vii)    any decision or anticipated decision to cease Developing, marketing,
selling, or otherwise Commercializing the Product;
(viii)    anticipated expenses related to Development and Commercialization
scale-up and budgets associated therewith;
(ix)    clinical trial protocols, statistical analysis plans, final clinical
study reports, and equivalent documents from pre-clinical trials;
(x)    clinical trial enrollment, progress, and results of the Phase III Studies
and general progress of the Development Plan;
(xi)    receipt of Regulatory Approval;
(xii)    the marketing, promotion, and other Commercialization activities on
behalf of the Product, including forecasts of Net Sales and marketing plans; and
(xiii)    each forecast to be provided pursuant to Section 5.1(c).
Company may reasonably select the means and format of communication for delivery
of such information, including via summaries, reports, and presentations made
during meetings of the Joint Steering Committee; provided, however, that upon
NovaQuest’s reasonable request, Company promptly shall provide complete and
accurate copies of, or provide reasonable access to, any material information
and documents related to the information provided by Company pursuant to this
Section 5.1(a) and to the individuals responsible for generating, maintaining,
or carrying out the activities relating to such information.
(b)    Promptly following database lock with respect to any human clinical trial
for the Product, Company shall deliver to NovaQuest complete and correct copies
of all draft tables, graphs, and data listings arising from internal analyses
(including any analysis performed by any contract research organization on a
Responsible Party’s behalf) of the data from such clinical trial.
(c)    Company shall, and shall ensure that each other applicable Responsible
Party shall, forecast and track orders for the Product in the Territory for each
Fiscal Quarter. No later than thirty (30) calendar days prior to the anticipated
date of the First Commercial Sale in the Territory, Company will provide
NovaQuest with a copy of Company’s good faith forecasted wholesaler and direct
buyer unit demand for the Product in the Territory for the then-current Fiscal
Year and will then provide such a forecast for each subsequent Fiscal Year to
NovaQuest no later than thirty (30) calendar days prior to the start of each
such Fiscal Year. Each such forecast shall take into account the forecasts
provided by Responsible Parties. NovaQuest agrees and acknowledges, with respect
to all forecasts provided under this Section 5.1(c), that (i) such forecasts
shall be Company’s Confidential Information and, without limitation, NovaQuest
shall not disclose, or permit the

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disclosure, of such forecasts in any manner that specifically identifies, or
permits the specific identification of, the source of the forecasted amounts
deriving therefrom; (ii) no such forecasts are intended to be predictive of
actual Net Sales or other amounts and are subjective in many respects; (iii)
such forecasts should not be construed as financial guidance, and should not be
relied on by any Person as such; and (iv) Company will not be subject to any
liability to NovaQuest, its Affiliates, or any Third Party in respect of such
forecasts, including in relation to use thereof by NovaQuest or its Affiliates
or any of their agents, consultants, accountants, counsel or other
representatives in connection with preparing projections, forecasts, financial
statements or other information or the dissemination thereof to NovaQuest’s
shareholders, investors or other Persons.
5.2    Company’s Record Keeping; NovaQuest’s Audit Rights.
(a)    Records. Company shall, and shall ensure that the applicable Responsible
Parties shall keep and maintain for a period of at least three (3) years from
the end of any Fiscal Quarter (except as otherwise provided herein) accounts and
records of all data reasonably required to verify:
(i)    any and all information required to be provided to NovaQuest under this
Agreement, including pursuant to Section 5.1; and
(ii)    (A) the gross amount invoiced by any Responsible Party to Third Parties
for sales of the Product in the Territory and (B) the calculations of (y) Net
Sales and (z) the Revenue Share Payments.
Company’s and the Responsible Parties’ recordkeeping obligations under this
Section 5.2 shall survive the termination of this Agreement until the date that
is three (3) years following the last day on which a payment is due under this
Agreement (the “Recordkeeping Period”).
(b)    Audit. From the Effective Date until the expiration of the Recordkeeping
Period, upon prior written notice to Company, NovaQuest shall have the right to
review and audit, through an independent certified public accountant selected by
NovaQuest, those accounts and records of Company and the other Responsible
Parties as NovaQuest determines is reasonably necessary to verify Company’s and
Responsible Parties’ compliance with this Agreement. Such review and audits
shall occur during normal business hours and not more than once per year.
NovaQuest shall be solely responsible for all of the expenses of any such audit,
unless the independent certified public accountant’s report shows, in respect of
any Fiscal Year then being reviewed, an underpayment of amounts due to NovaQuest
hereunder for such Fiscal Year by more than [***], in which case Company shall
be responsible for the reasonable expenses incurred by NovaQuest for the
independent certified public accountant’s services. If the report shows an
underpayment of amounts due to NovaQuest hereunder, then Company will pay
NovaQuest an amount equal to such underpayment, plus interest on such amounts in
accordance with Section 4.4, within thirty (30) calendar days after receipt of
notice of such underpayment and copy of the relevant portion of the audit
report.
5.3    Joint Steering Committee.
(a)    Establishment. To provide periodic communication of progress against the
Development Plan and Company’s Commercialization efforts, Company and NovaQuest
shall form a joint steering committee (the “Joint Steering Committee”). The
Joint Steering Committee shall be the primary forum for the Parties to: (i)
exchange information regarding the Program and the

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Product; (ii) review and comment on the Development and Commercialization of the
Product; (iii) discuss potential material amendments to the Development Plan
(including any potential amendment to the Development Budget) and clinical trial
protocols; (iv) review clinical study reports and Commercialization plans; and
(v) discuss any matters, issues, or problems relating to the foregoing. Company
will reasonably consider comments from NovaQuest’s JSC Members regarding the
matters described in this Section 5.3(a).
(b)    Membership. The Joint Steering Committee shall consist of two (2) senior
executives of Company appointed by Company and two (2) senior executives of, or
consultants to, NovaQuest appointed by NovaQuest (each member of the Joint
Steering Committee, a “JSC Member”); provided, however, that any consultant
appointed by NovaQuest shall execute and deliver to Company a confidentiality
agreement containing confidentiality and non-disclosure obligations no less
stringent than those set forth in ARTICLE VI hereof. Upon reasonable request of
a Party, other representatives of such Party may attend meetings of the Joint
Steering Committee. A Party may change either or both of its JSC Members at any
time but shall give notice to the other Party of any such change as soon as
reasonably practical.
(c)    Meetings. The Joint Steering Committee shall meet within thirty (30)
calendar days after the Closing Date and then at least one time every four (4)
months thereafter until the earlier of a termination of the Program or U.S.
Approval. Following U.S. Approval, the Joint Steering Committee shall meet at
least two (2) times each Fiscal Year, but no less than one time every six (6)
months. Such meetings shall be conducted either in person at a mutually agreed
upon location, or by telephone or videoconference, as the Parties agree (and if
the Parties do not agree, then it shall be held by telephone on the tenth (10th)
Business Day of the next Fiscal Quarter at 9:00 AM Eastern Time).
Notwithstanding the foregoing, the Joint Steering Committee shall meet in person
at least once per Fiscal Year. Reasonably in advance of each such meeting,
Company shall deliver to NovaQuest’s JSC Members an agenda of the meeting and
any background materials to be discussed. Finally, if at any time during the
Term, a material development occurs regarding the Product, including any matter
described in Section 5.4 below, then either Company or NovaQuest may request a
special meeting of the Joint Steering Committee, and the JSC Members will use
commercially reasonable efforts to convene such special meeting as quickly as
practicable, but no later than ten (10) Business Days after such request.
5.4    Notice of Certain Events. Company will notify NovaQuest in writing with
respect to the following matters promptly upon Company’s or a Responsible
Party’s knowledge thereof (and Company shall be responsible for ensuring that
each Responsible Party notifies Company of such matters upon such Responsible
Party becoming aware thereof):
(a)    the occurrence of any Material Adverse Event;
(b)    any decision, material contemplation, or discussion by Company or any
other Responsible Party to cease the Development or Commercialization of the
Product in the Territory;
(c)    the actual or threatened revocation, withdrawal, suspension,
cancellation, termination, or material modification of any approvals or
authorizations, including any Regulatory Approval, from any Governmental
Authority with respect to the Product;

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(d)    Company’s or any other Responsible Party’s being debarred, excluded,
suspended, or otherwise ineligible to participate in government health care
programs;
(e)    Company’s or any other Responsible Party’s becoming a party to a
settlement, consent, or similar agreement with any Governmental Authority
regarding the Product;
(f)    Company’s or any other Responsible Party’s being charged with, or
convicted of, violating any Applicable Law regarding the Product;
(g)    any recall, suspension, market withdrawal, seizure, warning letter, other
written communication asserting lack of compliance with any Applicable Law in
any material respect, or any serious adverse event with respect to the Product;
(h)    any clinical trial of the Product being suspended, put on hold, or
terminated prior to completion as a result of any action by the FDA or other
Governmental Authority or as a result of a Responsible Party’s voluntary
decision; and
(i)    the receipt by Company or any other Responsible Party of any adverse
written notice from any Governmental Authority regarding the approvability or
approval of the Product.
Any notice provided pursuant to this Section 5.4 shall include a reasonably
detailed description of the event giving rise to the requirement to provide such
notice, along with complete and correct copies of all material documentation
related thereto.
5.5    Data Room. Within two (2) Business Days after the Effective Date, Company
shall deliver to NovaQuest on one or more USBs, an electronic copy of all the
documents and information contained in the virtual online data room hosted on
behalf of Company by VENUE in the online workspace captioned Project Sweat on
the Effective Date, together with a written certification from any authorized
officer of Company to verify the completeness and accuracy of all such documents
so delivered.  
ARTICLE VI

CONFIDENTIAL INFORMATION
6.1    Definition of Confidential Information. For purposes of this Agreement,
the term “Confidential Information” of a Party means the terms of this Agreement
and any information or materials furnished by or on behalf of such Party or its
Affiliates (the “Disclosing Party”) to another Party or its Affiliates (the
“Receiving Party”) pursuant to this Agreement or learned through observation
during visit(s) to any facility of the Disclosing Party or its Affiliates, in
each case which information (a) is of a nature that is commonly known to be of a
confidential, (b) if disclosed in tangible form, is marked “Confidential” or
with other similar designation to indicate its confidential or proprietary
nature or (c) if disclosed orally, is indicated orally to be confidential or
proprietary at the time of such disclosure. Notwithstanding the foregoing,
Confidential Information shall not include information that, in each case as
demonstrated by written documentation or other competent evidence:
(a)    was already known to the Receiving Party, other than under an obligation
of confidentiality, at the time it was disclosed to or learned by the Receiving
Party hereunder;

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(b)    was generally available to the public or otherwise part of the public
domain at the time it was disclosed to or learned by the Receiving Party
hereunder;
(c)    became generally available to the public or otherwise part of the public
domain after it was disclosed to or learned by the Receiving Party hereunder,
other than through any act or omission of the Receiving Party in breach of this
Agreement;
(d)    was lawfully disclosed to the Receiving Party after it was disclosed to
or learned by the Receiving Party hereunder, by a Third Party that, to the
Receiving Party’s knowledge, is not bound by any obligation of confidentiality
with respect to such information; or
(e)    is independently developed by the Receiving Party without the benefit or
use of the Confidential Information of the Disclosing Party.
6.2    Obligations. Except as authorized in this Agreement or except upon the
Disclosing Party’s prior written consent, Receiving Party agrees that for the
Term and for five (5) years thereafter, it will:
(a)    maintain in confidence, and not disclose to any Person or entity, the
Disclosing Party’s Confidential Information;
(b)    not use the Disclosing Party’s Confidential Information for any purpose,
except for performing Receiving Party’s obligations and exercising its rights
and remedies under this Agreement; and
(c)    protect the Disclosing Party’s Confidential Information in its possession
by using substantially the same or higher degree of care as it uses to protect
its own Confidential Information (but no less than a reasonable degree of care);
provided, however, that the foregoing obligations of confidentiality,
non-disclosure and non-use with respect to any Confidential Information
constituting a trade secret will extend for so long as any such Confidential
Information remains a trade secret under Applicable Law.
Notwithstanding anything to the contrary in this Agreement, the Disclosing Party
is entitled to seek injunctive relief to restrain the breach or threatened
breach by the Receiving Party of this ARTICLE VI without having to prove actual
damages or threatened irreparable harm or post any bond. Such injunctive relief
will be in addition to any rights and remedies available to the Disclosing Party
at law, in equity, and under this Agreement for such breach or threatened
breach.
6.3    Permitted Disclosures.
(a)    Permitted Persons. The Receiving Party may disclose the Disclosing
Party’s Confidential Information, without the Disclosing Party’s prior written
permission, to:
(i)    its Affiliates and Receiving Party’s and its Affiliates’ limited
partners, members, managers, directors and individuals or bodies responsible for
governance of Receiving Party (including, with respect to NovaQuest, NovaQuest’s
investment committee and limited partner advisory committee), employees, agents,
consultants, attorneys, accountants, banks and other actual or potential
financing sources, and actual or potential permitted assignees, purchasers,
transferees, or successors-in-interest under Section 11.6 and, in the case of
the Company, Licensees or potential

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Licensees, in each case, who need to know such Confidential Information
(including to provide financing to Receiving Party, to assist Receiving Party in
evaluating the transactions contemplated hereby, or in fulfilling its
obligations or exploiting its rights hereunder (or to determine their interest
in providing such financing or assistance)) and who are, prior to receiving such
disclosure, bound by customary written contractual or professional
confidentiality and non-use obligations no less stringent than those contained
herein;
(ii)    other Persons who are (A) investors or potential investors (or advisors
or fiduciaries (including trustees) or underwriters or placement agents to such
Persons) in connection with a private placement or other equity, debt, or other
investment or potential investment transaction in or with Receiving Party
(including, with respect to NovaQuest, an investment or potential investment in
or with a NovaQuest Affiliate to which NovaQuest has, consistent with
Section 11.6, assigned or otherwise sold, transferred, pledged, or contributed
its rights to receive payment under this Agreement), who need to know such
Confidential Information in connection with such equity, debt, or other
investment or potential investment transaction or (B) in the case of NovaQuest,
potential investment targets (provided, however, that, (y) for the purpose of
this Section 6.3(a)(ii), Receiving Party may disclose only Confidential
Information of Disclosing Party pertinent to the investment or potential
investment transaction and may make such disclosures only in anticipation, and
during the period, of such investment or potential investment transaction and
(z) for the purpose of clause (B) of this Section 6.3(a)(ii), NovaQuest may
disclose the identity of Company, the Product that is the subject of this
Agreement, and the fact that this Agreement provides for Milestone Installment
Payments and Revenue Share Payments to Persons who are, prior to receiving such
disclosure, bound by customary contractual or professional confidentiality and
non-use obligations; and
(iii)    officers, employees, or advisors of any Governmental Authorities for
the purpose of performing Product Development Activities, submitting Regulatory
Filings for the Product, and obtaining Regulatory Approval.
The Receiving Party shall be responsible for any breach of this ARTICLE VI by
any of the Third Parties described in this Section 6.3(a) to which it discloses
Confidential Information (as if such Third Party was bound by the terms of this
ARTICLE VI) and shall take all reasonably necessary measures to restrain such
Third Parties from unauthorized disclosure or use of the Confidential
Information.
(b)    Legally Required. The Receiving Party may disclose the Disclosing Party’s
Confidential Information, without the Disclosing Party’s prior written
permission, to any Person to the extent such disclosure is necessary to comply
with Applicable Law, applicable stock exchange or market requirements or an
order or subpoena from a court of competent jurisdiction; provided, however,
that the Receiving Party, to the extent it may legally do so, shall give
reasonable advance notice to the Disclosing Party of such disclosure and, at the
Disclosing Party’s reasonable request and expense, the Receiving Party shall use
its reasonable efforts to secure confidential treatment of such Confidential
Information prior to its disclosure (whether through protective orders or
otherwise). However, if the Receiving Party receives a request from an
authorized representative of a U.S. or foreign Tax authority for a copy of this
Agreement, then the Receiving Party may provide a copy of this Agreement to such
Tax authority representative without advance notice to, or the permission or
cooperation of, the Disclosing Party, but the Receiving Party shall notify the
Disclosing Party of the disclosure as soon as reasonably practical.

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(c)    NovaQuest Consent. Notwithstanding anything to the contrary in this
Section 6.3, Company shall not, and Company agrees to ensure that Responsible
Parties shall not, without the prior written consent of NovaQuest, disclose to a
Third Party any (i) information regarding NovaQuest’s or its Affiliates’ limited
partners; (ii) financial information regarding NovaQuest or its Affiliates; or
(iii) information regarding NovaQuest’s or its Affiliates’ transactions with
Third Parties.
6.4    Terms of Agreement. The Parties agree that they will each treat the
existence, contents and terms of this Agreement as confidential, and neither
Party shall make any press release or other public disclosure that discloses or
otherwise concerns this Agreement or any terms hereof, without the prior written
consent of the other Party, except to the extent permitted under Section 6.3 or
as otherwise permitted in accordance with this Section 6.4 or Section 6.5.
Consistent with Section 6.3(b), the Parties agree to use reasonable efforts to
provide the other with a copy of any filing required by a securities agency or
the rules of a nationally recognized stock exchange on which the securities of
the Disclosing Party are listed regarding this Agreement or its terms to review
prior to filing and to consider any comments of the other Party in good faith,
and to the extent either Party is required to file or disclose this Agreement
with a securities agency or a nationally recognized stock exchange on which the
securities of the Disclosing Party are listed, such Party shall consider in good
faith the other Party’s comments with respect to confidential treatment of this
Agreement’s terms and shall redact this Agreement in a manner allowed by such
securities agency or nationally recognized stock exchange to protect sensitive
terms, and shall be permitted to file this Agreement, as so redacted, with such
securities agency or nationally recognized stock exchange. For purposes of
clarity, each Party is free to discuss with Third Parties the information
regarding this Agreement and the Parties’ relationship disclosed in such
securities filings and any other authorized public announcements.
6.5    Use of Names. Neither Party shall mention or otherwise use the name,
insignia, symbol, trademark, trade name or logotype of the other Party or its
Affiliates (or any abbreviation or adaptation thereof) in any publication, press
release, publicly available promotional material, or other form of publicity
without the prior written approval of such other Party in each instance.
Notwithstanding the foregoing, the restrictions imposed by this Section 6.5
shall not prohibit a Receiving Party from making any disclosure identifying any
such Person to the extent required by Applicable Law or the rules of a stock
exchange on which the securities of the Disclosing Party are listed (or to which
an application for listing has been submitted); provided that the Receiving
Party shall provide the Disclosing Party with prior written notice of such
disclosure and an opportunity to comment on, and propose edits to, such
disclosure. Further, notwithstanding the foregoing, the Parties agree that
NovaQuest shall have the right to publicly disclose the existence of this
Agreement as a funding agreement with Milestone Installment Payments and
payments based on Net Sales, the name of Company, the name and a description of
the Product, and the amount of the Total Funding Commitment.
ARTICLE VII

REPRESENTATIONS AND WARRANTIES; LIMITATION OF LIABILITY
7.1    Company’s Representations and Warranties. Company represents and warrants
to NovaQuest as of the Effective Date, the Closing Date, and the date of each
Development Payment by NovaQuest under Section 3.1(c), subject to disclosure
schedules from the Company that provide

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updates to the covered representations and warranties hereunder that have
occurred only since the Closing Date, as follows. For the sake of clarity, no
disclosure schedule provided by the Company shall (i) have the effect of curing
any breach of a covenant under this Agreement or (ii) limit any rights NovaQuest
may have under this Agreement in the event that such disclosure schedule
discloses the occurrence of a Material Adverse Event.
(a)    Organization. Company is a corporation duly incorporated, validly
existing, and in good standing under the laws of the State of Delaware and is
qualified to do business and legally permitted to perform its obligations under
this Agreement in each jurisdiction where failure to be so qualified could
reasonably be expected to have a Material Adverse Event.
(b)    Authorization. Company has all necessary corporate or other power, right,
and authority to carry on its business as it is presently carried on by Company
and as contemplated by this Agreement, to enter into, to execute and to deliver
this Agreement, and to perform all of the covenants, agreements, and obligations
to be performed by Company hereunder. This Agreement has been duly executed and
delivered by Company and, when executed and delivered by NovaQuest, constitutes
Company’s valid and binding obligation, enforceable against Company in
accordance with its terms, subject to bankruptcy, insolvency, reorganization, or
similar laws affecting the rights of creditors generally and equitable
principles.
(c)    No Conflicts. The execution and delivery of this Agreement by Company and
the performance by Company of its obligations hereunder does not and will not:
(i) violate any provision of the organizational documents of Company; (ii)
conflict with or violate any Applicable Law that applies to Company or its
assets or properties; (iii) require any permit, authorization, consent,
approval, exemption, or other action by, notice to, or filing with any entity or
Governmental Authority (other than as expressly contemplated hereby); (iv)
violate, conflict with, result in a material breach of, or constitute (with or
without notice or lapse of time or both) a material default under, or an event
that would give rise to any right of notice, modification, acceleration,
payment, cancellation or termination under, or in any manner release any party
thereto from any obligation under, any permit or contract to which Company is a
party or by which any of its properties or assets are bound; or (v) result in
the creation or imposition of any Encumbrance on any part of the properties or
assets of Company (including the Product Assets).
(d)    No Consent. No consent, approval, license, order, authorization,
registration, declaration, or filing with or of any Person, other than
Regulatory Approvals required with respect to the Product, is required by
Company in connection with the execution and delivery by Company of this
Agreement, the performance by Company of its obligations under this Agreement,
or the consummation of any of the transactions contemplated hereby.
(e)    Product Property. Company has good and valid title to, or a valid license
or other right to use, (i) all Patents listed on Schedule 7.1(e) hereto, (ii)
all data, trade secrets, Product Know-How, and other intellectual property
rights used by it in the research, Development, and manufacture of Product; and
(iii) all other Product Assets. Company has no payment obligation, whether
secured or unsecured, that is senior to, pari passu with, or has priority over
Company’s payment obligations to NovaQuest under this Agreement. All of the
Patents listed on Schedule 7.1(e) hereto are (A) in full force and effect and
have not lapsed, expired, or otherwise terminated and (B) are, as of the
Effective Date, the only Patents owned or controlled by Company that claim or
Cover the Development, manufacture, use, or Commercialization of the Product. To
the Company’s

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knowledge, no Person claims to be an inventor under any of the Patents listed on
Schedule 7.1(e) hereto who is not a named inventor thereof.
(f)    Litigation. To the Company’s knowledge, there is no action, suit, claim,
proceeding, interference, reexamination, opposition, post-grant review, or
investigation pending or threatened against Company or its Affiliates, at law or
in equity, arbitration proceeding to which Company or any Affiliate of Company
is a party or subject, or Governmental Authority inquiry pending or threatened
against Company or its Affiliates, that, if adversely determined, would: (i)
question or defeat the validity or enforceability of any Product IP Rights; (ii)
prevent, interfere with, or delay the consummation of the transactions
contemplated by this Agreement; (iii) otherwise adversely affect the Product or
NovaQuest’s rights under this Agreement; or (iv) have, or reasonably be expected
to result in, a Material Adverse Event.
(g)    Infringement and Intellectual Property. To the Company’s knowledge, the
making, use, sale, offer for sale, or import of the Product by Company and its
Affiliates, Licensees, or sublicensees does not, and will not, during the Term,
infringe any Patent claim of any Third Party or misappropriate or make any
unauthorized use of any other intellectual property or proprietary asset of any
Third Party. To the knowledge of Company, the Patents Covering the Product are
valid and enforceable and, to the Company’s knowledge, no Third Party is
infringing, misappropriating, or making any unauthorized use of a Patent
Covering the Product or Product Know-How. None of the Patents Covering the
Product or Product Know-How is subject to any outstanding decree, order,
judgment, or stipulation restricting in any manner the use or licensing thereof
by Company.
(h)    Material Contracts; Other Agreements. All Material Contracts to which
each Responsible Party is a party as of the Effective Date are listed in
Schedule 7.1(h) and are enforceable and in full force and effect. Company has
provided correct and complete copies of all such Material Contracts to
NovaQuest. Each Responsible Party is in compliance with and has not materially
breached, materially violated, or materially defaulted under, or received
written notice that it has materially breached, violated, or defaulted under any
of the terms or conditions of any such Material Contract. Company is not aware
of any event that has occurred or circumstance or condition that exists that
would, or would reasonably be expected to, constitute such a material breach,
material violation, or material default with the lapse of time, giving of
notice, or both. To the knowledge of Company, the counterparty of each such
Material Contract is in compliance in all material respects with the terms and
conditions of such Material Contract. Other than any such Material Contract,
there are no contracts, agreements, commitments, or undertakings pursuant to
which any Responsible Party in-licenses or otherwise has rights under any Patent
or intellectual property rights of any Third Party that are material to the
Development or Commercialization of the Product. Except pursuant to the Hercules
Loan, Company has not granted an Encumbrance on any of the Product Assets or
Company’s payments to NovaQuest under this Agreement. Except as set forth on
Schedule 7.1(h), as of the Effective Date Company has not granted any Licenses.
(i)    Certain Regulatory Matters.
(i)    Company holds all applicable approvals and authorizations from
Governmental Authorities necessary for Company to conduct its business in the
manner in which such business is being conducted and as contemplated hereunder
with respect to the Product in the Territory, including the Development,
manufacture, and testing of the Product, and all such approvals and
authorizations are in good standing and in full force and effect. Company has
not received any

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notice or any other communication from any Governmental Authority regarding any
actual or possible revocation, withdrawal, suspension, cancellation,
termination, or material modification of any such approvals or authorizations.
(ii)    Company has not, with respect to the Product, knowingly made any untrue
statement of a material fact or fraudulent statement to the FDA or any other
Governmental Authority, failed to disclose a material fact required to be
disclosed to the FDA or other Governmental Authority, or committed an act, made
a statement or failed to make a statement, that provides or could reasonably be
expected to provide a basis for the FDA or other Governmental Authority to
invoke the FDA’s policy respecting “Fraud, Untrue Statements of Material Facts,
Bribery, and Illegal Gratuities” set forth in 56 Fed. Reg. 46191 (September 10,
1991) or any similar policy of any other Governmental Authority.
(iii)    Company is not and has never been: (A) debarred by a Governmental
Authority; (B) a party to a settlement, consent, or similar agreement with a
Governmental Authority regarding the Product; or (C) charged with, or convicted
of, violating Applicable Law regarding the Product.
(iv)    The Product is being and at all times has been (as applicable)
developed, tested, manufactured, labeled, stored, distributed, promoted,
marketed, and otherwise Commercialized in compliance in all material respects
with all Applicable Laws, including, as applicable, with respect to
investigational use, good clinical practices, good laboratory practices, good
manufacturing practices, record keeping, security, and filing of reports.
(v)    The Product has not been the subject of or subject to (as applicable) any
recall, suspension, market withdrawal, seizure, warning letter, other written
communication asserting lack of compliance with any Applicable Law in any
material respect, or serious adverse event. No clinical trial of the Product has
been suspended, put on hold, or terminated prior to completion as a result of
any action by the FDA or other Governmental Authority or voluntarily. To the
knowledge of Company, no event has occurred or circumstance exists that is
reasonably likely to give rise to, or serve as a basis for, any of the foregoing
events.
(vi)    Company has, with respect to the Product and Program, provided to
NovaQuest true and complete copies of all pre-clinical and clinical data,
reports and analysis, all material correspondence with the FDA and other
Governmental Authorities, interim analysis from ongoing trials, tables from
recently completed clinical trials where no clinical study report is available,
and any other information that is material to the development of the Product
pursuant to the Program.
(vii)    Neither Company nor its Affiliates have received any adverse written
notice from any Governmental Authority regarding the approvability or approval
of the Product.
(j)    Financial Condition. Company’s audited financial statements for the year
ended December 31, 2018 delivered to NovaQuest fairly present, in conformity
with GAAP, in all material respects Company’s financial condition and Company’s
results of operations for the periods covered thereby. There has not been any
material deterioration in Company’s financial condition since the date of the
most recent financial statements and projections delivered to NovaQuest.

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(k)    Full Disclosure. Company has delivered or provided to NovaQuest and
included in the data room described in Section 5.5, true and complete copies of
each agreement, contract, other document, or information that is included or
referred to therein or in this Agreement or that has been requested by
NovaQuest. All written statements and other writings furnished pursuant hereto,
or in connection with this Agreement or the transactions contemplated hereby,
are complete and accurate in all material respects. No representation or
warranty by Company contained in this Agreement contains any untrue statement of
a material fact or omits to state any material fact necessary in order to make
any statement contained herein not misleading. To the knowledge of Company,
there is no fact, event, or condition that materially adversely affects the
Product that has not been set forth in this Agreement and the Schedules hereto.
7.2    NovaQuest’s Representations, Warranties, and Covenants. NovaQuest
represents, warrants, and covenants to Company as of the Effective Date:
(a)    Organization. NovaQuest is a Delaware limited partnership duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization.
(b)    Authorization. NovaQuest has all necessary power, right, and authority to
carry on its business as it is presently carried on by NovaQuest, to enter into,
execute, and deliver this Agreement and perform all of the covenants,
agreements, and obligations to be performed by NovaQuest hereunder. This
Agreement has been duly executed and delivered by NovaQuest and constitutes,
when executed and delivered by Company, NovaQuest’s valid and binding
obligation, enforceable against NovaQuest in accordance with its terms, subject
to bankruptcy, insolvency, reorganization, or similar laws affecting the rights
of creditors generally and equitable principles.
(c)    No Conflict. Neither the execution and delivery of this Agreement nor the
performance or consummation of it or the transactions contemplated hereby will
(i) conflict with any Applicable Law; (ii) in any material respect, violate,
conflict with, result in a material breach or violation of, or constitute a
material default under any material contract, agreement, commitment, or
instrument to which NovaQuest is a party or by which NovaQuest or any of its
assets are bound or committed; or (iii) violate the applicable formation
documents for NovaQuest.
(d)    No Consent. No consent, approval, license, order, authorization,
registration, declaration, or filing with or of any Person is required by
NovaQuest in connection with the execution and delivery by NovaQuest of this
Agreement, the performance by it of its obligations under this Agreement, or the
consummation by it of any of the transactions contemplated hereby or thereby.
(e)    Availability of Funds. NovaQuest has, and shall have at all times during
the Product Funding Period, the financial ability to timely satisfy its
obligations to make Development Payments hereunder.
7.3    Survival of Representations and Warranties. All representations and
warranties of the Parties hereunder shall survive the applicable dates referred
to in the first sentence of Section 7.1 and the first sentence of Section 7.2
for the Term plus a period of five (5) years thereafter.
7.4    Limitation of Liability; Special, Indirect and Other Losses. NEITHER
PARTY WILL BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL,
CONSEQUENTIAL, EXEMPLARY, PUNITIVE, OR SPECIAL DAMAGES OF ANY KIND OR ANY LOST
PROFITS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT,

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HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (WHETHER IN CONTRACT, TORT
(INCLUDING NEGLIGENCE), STRICT LIABILITY, OR OTHERWISE), EVEN IF SUCH PARTY WAS
ADVISED OR OTHERWISE AWARE OF THE LIKELIHOOD OF SUCH DAMAGES AND REGARDLESS OF
ANY NOTICE OF THE POSSIBILITY OF SUCH DAMAGES. THE FOREGOING LIMITATION OF
LIABILITY WILL NOT APPLY TO BREACHES OF ARTICLE VI OR LIMIT OR MODIFY IN ANY WAY
COMPANY’S INDEMNIFICATION OBLIGATIONS UNDER THIS AGREEMENT.
7.5    Liquidated Damages. COMPANY ACKNOWLEDGES THAT, WITH RESPECT TO A
TERMINATION OF THE PROGRAM FOR ANY REASON OTHER THAN TECHNICAL FAILURE,
NOVAQUEST’S ACTUAL DAMAGES RESULTING FROM EACH SUCH EVENT ARE DIFFICULT TO
ESTIMATE AND MAY BE DIFFICULT FOR NOVAQUEST TO PROVE. ACCORDINGLY, THERE MAY BE
NO ADEQUATE REMEDY AT LAW TO FULLY COMPENSATE NOVAQUEST. THEREFORE, ANY
NON-TECHNICAL TERMINATION PAYMENT OR POST-PHASE III TERMINATION PAYMENT OWED BY
COMPANY RESULTING FROM ITS TERMINATION OF THE PROGRAM FOR ANY REASON OTHER THAN
TECHNICAL FAILURE SHALL BE DEEMED, SOLELY IN RESPECT THEREOF, LIQUIDATED DAMAGES
AND NOT A PENALTY. EACH PARTY ACKNOWLEDGES THAT THE AMOUNT OF SUCH LIQUIDATED
DAMAGES REPRESENTS A FAIR, REASONABLE, AND APPROPRIATE ESTIMATE OF NOVAQUEST’S
ACTUAL DIRECT DAMAGES.
ARTICLE VIII
COVENANTS
8.1
Notifications.

(a)    Defaults, Termination and Litigation.
(i)    Company shall promptly (but no later than within five (5) Business Days)
notify NovaQuest in writing and with reasonable detail of any actual or
threatened (or any receipt of notice of any actual or threatened): (A) default
or breach or anticipated default or anticipated breach by Company under this
Agreement (including the failure or likely failure to pay any Milestone
Installment Payment or Revenue Share Payment when due) or under any agreement
related to the Program or the Commercialization of the Product; (B) suspension
of compliance or performance by Company under this Agreement; or (C) termination
or expiration (in part or in whole) or any material waiver or amendment of or
under any contract, license, or other agreement material to the Development,
manufacture, or Commercialization of the Product in the Territory.
(ii)    Company shall promptly (but no later than within ten (10) Business Days)
notify NovaQuest in writing and with reasonable detail of the actual or, to the
Company’s knowledge, threatened commencement of (or receipt of notice of the
actual or threatened commencement of) any dispute, claim, suit, litigation,
injunction, or arbitration proceeding related to (A) the Product or Product
Assets or (B) contracts, licenses, or agreements material to the Development,
manufacture, or Commercialization of the Product, including those disputes,
claims, suits, litigation, or arbitration proceedings alleging a Third Party’s
infringement or misappropriation of any of the Product IP Rights owned or
licensed by a Responsible Party and those alleging a Responsible Party’s (or any
of their respective Affiliates’, licensees’, or sublicensees’) infringement or
misappropriation

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of a Third Party’s intellectual property in the making, use, sale, offer for
sale, or importation of the Product, which in the case of each of clause (A) and
(B) above could reasonably be expected to result in a Material Adverse Effect.
Each such notification shall contain a reasonably detailed summary of the event
described therein. At the request of NovaQuest, Company shall promptly discuss
with NovaQuest, or provide in writing to NovaQuest, full particulars of the
applicable matter.
(b)    Intellectual Property Updates.
(i)    Promptly after receipt by a Responsible Party of any notice with respect
to any Governmental Authority taking final patent office action that cannot be
appealed as part of the patent prosecution process under relevant patent office
procedures relating to the status, validity, or change thereto, of any Patents
Covering the Product, Company shall provide a complete and correct copy of each
such notice to NovaQuest.
(ii)    Company shall also keep NovaQuest reasonably informed, in accordance
with its obligations under ARTICLE V and at other times upon reasonable request
by NovaQuest, with regard to all material developments in the status, validity,
prosecution efforts, or change thereto, of any of the Product IP Rights owned,
licensed, or sublicensed by a Responsible Party.
8.2    No Disposition of Rights. Notwithstanding anything to the contrary
herein, without NovaQuest’s prior written consent, which shall not be
unreasonably withheld or delayed, Company shall not and shall ensure that
Responsible Parties do not, sell, transfer, assign, grant any License, otherwise
dispose of or grant any Encumbrance in, to or under any Product Assets that are
necessary or useful to the Development or Commercialization of the Product in
the Territory, provided, however, that the foregoing shall not preclude or limit
Company or its Affiliates from, without NovaQuest’s consent, (i) effecting any
such sale, transfer, assignment, or other disposition as part of any sale of all
or substantially all of the Product Assets to a Permitted Company that assumes
all of Company’s obligations under this Agreement pursuant to a written
assumption agreement in a form and substance acceptable to NovaQuest in its sole
discretion, including by asset sale, merger, combination, sale of securities or
otherwise, directly or indirectly, (ii) using, selling, or otherwise disposing
of inventories of the Product in the ordinary course of business in connection
with the Development or Commercialization of the Product, (iii) granting
Licenses to Affiliates or Responsible Parties in the Territory or other licenses
or sublicenses or other rights outside the Territory under Product Assets.
8.3    Company IP Obligations. Company shall (and shall cause each Responsible
Party to):
(a)    prosecute and maintain in full force and effect all Patents Covering the
Product owned or controlled by it on or after the Effective Date and all
Regulatory Approvals necessary for the Development, Commercialization or
manufacture of the Product in the Territory;
(b)    maintain, keep in full force and effect, and seek available patent term
extensions for any such Patents referred to in Section 8.3(a);
(c)    defend any challenge to the validity, patentability, enforceability,
and/or non-infringement of any such Patents referred to in Section 8.3(a), or
any opposition to any such Patents referred to in Section 8.3(a);

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(d)    if a Third Party is infringing such Patents referred to in Section
8.3(a), cause such infringement to cease, including by initiating legal
proceedings against any Third Party infringer;
(e)    promptly provide NovaQuest with written notice of any (i) action or
settlement discussions relating to any alleged, actual, or potential
infringement of the Product IP Rights and (ii) damages award or settlement with
respect thereto; and
(f)    maintain all material and confidential Product Know-How in confidence.
8.4    Additional Covenants and Agreements of Company.
(a)    Compliance with Law. With respect to the performance of this Agreement
and the activities contemplated by this Agreement, Company shall comply, and
shall cause each Responsible Party to comply, with all Applicable Laws.
(b)    Noncontravention. During the Term, Company shall not grant any right to
any Affiliate or Third Party that would conflict with the rights granted to
NovaQuest hereunder or enter into any agreement that would impair Company’s
ability to perform its obligations under this Agreement.
(c)    Material Contracts and Licenses. Company shall comply with all terms and
conditions of, and fulfill all of its obligations under, all of the Material
Contracts, except for such noncompliance that could not reasonably be expected
to result in a Material Adverse Event. Company shall use commercially reasonable
efforts to enforce against the other party(ies) to each Material Contract all
material terms and conditions thereunder except where the failure to do so could
not reasonably be expected to result in a Material Adverse Effect. Company shall
not amend any Material Contract in any material respect or issue any waivers or
consents or other approvals under any Material Contract without the prior
written consent of NovaQuest (not to be unreasonably withheld or delayed),
except where such amendment, waiver, or consent could not reasonably be expected
to result in a Material Adverse Event. Company shall ensure that all Licenses
granted after the Effective Date contain provisions that require the Licensees
to notify Company of any Material Adverse Event and that allow Company to share
information pertaining to the Development and Commercialization of the Product
to NovaQuest as contemplated by this Agreement.
(d)    Minimum Cash Balance. Until the earlier of (i) the date on which Company
has paid NovaQuest all payments due and owing under Section 4.1(a) or (ii) the
date on which the sum of all payments paid by Company to NovaQuest equal [***]
of the Total Funding Commitment, Company shall not permit its minimum cash
balance to fall below the levels set forth below for more than thirty (30)
Business Days:
(i)    [***] until the date that is six (6) months following the date on which
Company submits an NDA to the FDA for the Product; and
(ii)    [***] at all times on and after the date that is six (6) months
following the date on which Company submits an NDA to the FDA for the Product.
(e)    Competing Products.

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(i)    During the Term, Company and its Affiliates shall not, and shall ensure
that each Responsible Party shall not, directly or indirectly, at any time
research, develop, market, promote, distribute, import, export, offer to sell,
or sell any Competing Product.
(ii)    During the Term, NovaQuest shall not, directly or indirectly, develop or
commercialize a Competing Product or provide any debt, equity, or other
financing to a Third Party for the specific purpose of developing or
commercializing a Competing Product. For the avoidance of doubt, NovaQuest may,
without violating this Section 8.4(e)(ii):
(A)    make or hold investments in any Third Party that, at the time of such
investment, is actively engaging in the development or commercialization of a
Competing Product if either: (I) NovaQuest has no contractual rights to receive
specific information regarding such Competing Product or participate in the
decision making with respect to such Competing Product or (II) the proceeds of
NovaQuest’s investment are not contractually directed toward the development or
commercialization of a Competing Product; and
(B)    exercise any rights and perform any obligations under any contractual
arrangement with a Third Party that was in existence on or before the Closing
Date.
8.5    Interim Covenants. Except as otherwise contemplated by this Agreement,
including the consummation of the transactions contemplated under the Vical
Transaction, between the Effective Date and the Closing Date, unless NovaQuest
otherwise provides its prior written consent, Company (a) shall conduct its
operations in the ordinary course in all material respects and in a manner that
will not impair its ability to perform its obligations under this Agreement; (b)
shall not, without NovaQuest’s written consent, not to be unreasonably withheld,
conditioned or delayed, by its own action, amend in any material respect, or
waive any material right of the Company under, the Vical Merger Agreement.
8.6    Repayment of Hercules Loan. Company shall have repaid in full all
outstanding amounts under the Hercules Loan in accordance with the Payoff
Letter, no later than three (3) Business Days after the Closing Date.
8.7     Taxes.    
(a)    Tax Treatment. The Parties agree to treat this Agreement (but for
clarity, not the Warrant Agreement) for all U.S. federal and applicable state
and local tax purposes as a single financial contract that is neither debt of
the Company nor equity in the Company. The Parties shall file all tax and
information returns consistent with the treatment set forth in this Section
8.7(a) and shall not take any position inconsistent with such treatment, except
as otherwise required pursuant to a final determination within the meaning of
section 1313 of the Internal Revenue Code of 1986, as amended.
(b)    Allocation of Development Payments. The Parties agree to treat [***] of
the Development Payments as paid in exchange for the Warrant Agreement.
ARTICLE IX

TERM AND TERMINATION

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9.1    Term of Agreement. The term of this Agreement shall commence as of the
Effective Date and continue until terminated in accordance with this ARTICLE IX
(the “Term”).
9.2    Material Breaches. The occurrence of any of the following events,
actions, or omissions shall constitute a material breach of this Agreement by
Company:
(a)    Company breaches any material representation or warranty under this
Agreement or the Security Agreement between the Parties and, to the extent
curable, does not cure such breach within thirty (30) calendar days after the
earlier of (i) NovaQuest’s provision of notice to Company of such breach or (ii)
Company’s becoming aware of such breach;
(b)    Company materially breaches any agreement, covenant, or obligation in
this Agreement or the Security Agreement between the Parties, or a Responsible
Party other than Company materially breaches any agreement, covenant, or
obligation in this Agreement applicable to Responsible Parties, and, to the
extent curable, does not cure such breach within thirty (30) calendar days after
the earlier of (i) NovaQuest’s provision of notice to Company of such breach or
(ii) Company’s becoming aware of such breach;
(c)    a Responsible Party terminates the Program in any material respect for
any reason other than Technical Failure;
(d)    Company or any Affiliate of Company that is materially involved in the
Development or Commercialization of the Product in the Territory (i) files a
petition seeking to take advantage of any laws relating to bankruptcy,
insolvency, reorganization, winding up, or composition for adjustment of debts;
(ii) consents to, or fails to contest within sixty (60) calendar days and in
appropriate manner, any petition filed against it in an involuntary case under
such bankruptcy laws or other laws; (iii) applies for, consents to, or fails to
contest within sixty (60) calendar days and in appropriate manner the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
or liquidator of itself or of a substantial part of its property; (iv) admits in
writing its inability to pay its debts as they become due; (v) makes a general
assignment for the benefit of creditors; or (vi) takes any corporate action for
the purpose of authorizing any of the foregoing; or
(e)    a case or other proceeding is commenced against the Company or any
Affiliate of Company that is materially involved in the Development or
Commercialization of the Product in the Territory in any court of competent
jurisdiction seeking (i) relief under any laws relating to bankruptcy,
insolvency, reorganization, winding up, or adjustment of debts or (ii) the
appointment of a trustee, receiver, custodian, liquidator, or the like for a
Responsible Party for all or any substantial part of its assets; and under
either clause (i) or (ii) of this 9.2(d), such case or proceeding has continued
without dismissal or stay for a period of sixty (60) consecutive calendar days,
or an order granting the relief requested in such case or proceeding (including
an order for relief under such federal bankruptcy laws) is entered.
9.3    Consequences of Material Breach and Uncured NovaQuest Funding Breach.
(a)    Upon the occurrence of any material breach of this Agreement by Company,
including a material breach that is not cured as set forth in Section 9.2(b),
NovaQuest may, without limiting any of its rights or remedies, terminate all of
its remaining payment obligations under this Agreement immediately upon written
notice to Company. Notwithstanding such termination by NovaQuest of its
remaining payment obligations hereunder, Company’s payment obligations under

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ARTICLE IV shall survive until they are fully and completely satisfied, except
if and when termination should occur prior to the Closing Date. If NovaQuest
provides Company such written notice of termination of its remaining payment
obligations, all terms of this Agreement shall terminate except as provided in
this Section 9.3 and Section 9.5.
(b)    Upon the occurrence of an Uncured NovaQuest Funding Breach, Company may,
without limiting any of its rights or remedies, terminate this Agreement
immediately upon written notice to NovaQuest.
9.4    Termination for Delay of Closing. Either Party may terminate this
Agreement in its entirety upon written notice to the other Party if the Closing
has not occurred on or before the End Date, as defined in Section 9.1 of the
Vical Merger Agreement.
9.5    Survival. Notwithstanding anything to the contrary contained in this
Agreement, ARTICLE IV (except in the case of a termination by the Company
pursuant to Section 9.3(b) or 9.4), Section 5.2, ARTICLE VI, ARTICLE VII,
Section 9.3, this Section 9.5, ARTICLE X, and ARTICLE XI shall survive the
termination of this Agreement in accordance with their respective terms for any
reason other than an automatic termination pursuant to Section 9.4.
ARTICLE X

INDEMNIFICATION
10.1    General Obligations. Company hereby agrees to indemnify, defend, hold
harmless, and reimburse NovaQuest and its Affiliates and their respective
managers, directors, officers, employees, agents, and its and their respective
successors, heirs, and assigns (collectively, the “NovaQuest Indemnitees”) from
and against any losses, costs, claims, damages, Liabilities, or expenses
(including reasonable attorneys’ and professional fees and other expenses of
litigation) (each, a “Loss” and collectively, “Losses”) actually incurred by
NovaQuest Indemnitees arising out of claims, suits, actions, or demands, in each
case brought by a Third Party, or settlements or judgments arising therefrom
(including personal injury, products liability, and intellectual property
infringement or misappropriation claims) (each a “Third Party Claim”) as a
result or arising out of:
(a)    a Responsible Party’s, or its or their respective agent’s or contractor’s
Development, promotion, marketing, handling, manufacture, Commercialization,
packaging, labeling, storage, distribution, pricing, reimbursement, transport,
use, sale, or other disposition of the Product;
(b)    any material breach by a Responsible Party of a representation or
warranty of a Responsible Party contained in this Agreement or in any other
agreement between the Parties or the breach or default in any material respect
by a Responsible Party of any covenant, agreement, or obligation of Company
contained in this Agreement or in any other agreement between the Parties;
(c)    a Responsible Party’s failure to comply with Applicable Law; or
(d)    the negligence or willful misconduct related to this Agreement of a
Responsible Party, or contractors or any of their respective directors,
employees, or agents.

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10.2    Procedures.
(a)    Notice. A NovaQuest Indemnitee seeking indemnification (the “Indemnified
Party”) under Section 10.1 shall give prompt written notice to Company (the
“Indemnifying Party”) of the assertion of any claim in respect of which
indemnity may be sought hereunder. Such notice shall include a description of
the claim and the nature and amount of the applicable Loss, to the extent known
at such time. The failure of an Indemnified Party to notify the Indemnifying
Party on a timely basis or provide such information as set forth above will not
relieve the Indemnifying Party of any liability that it may have to the
Indemnified Party unless the Indemnifying Party demonstrates that the defense of
such action is materially prejudiced by the Indemnified Party’s failure to give
such notice and then solely to the extent thereof. The Indemnified Party shall
provide the Indemnifying Party with complete and correct copies of all papers
and official documents received in connection with any Third Party Claims for
which indemnity is sought hereunder and such other information with respect
thereto as the Indemnifying Party may reasonably request. The Parties shall keep
each other reasonably informed of any facts or circumstances that may be of
material relevance in connection with the Loss for which indemnification is
sought.
(b)    In General. The Indemnifying Party may assume the defense of any Third
Party Claim for which indemnity is sought hereunder by giving written notice
thereof to the Indemnified Party within thirty (30) calendar days after the
Indemnifying Party’s receipt of a notice provided pursuant to Section 10.2(a).
Upon assuming the defense of a Third Party Claim, the Indemnifying Party may
appoint as lead counsel in the defense of the Third Party Claim any legal
counsel selected by the Indemnifying Party and reasonably acceptable to the
Indemnified Party. If the Indemnifying Party assumes the defense of a Third
Party Claim, then the Indemnified Party shall promptly deliver to the
Indemnifying Party all original notices and documents (including court papers)
received by the Indemnified Party in connection with the Third Party Claim.
(c)    Right to Participate in Defense. Without limiting Section 10.2(b), any
Indemnified Party shall be entitled to participate in, but not control, the
defense of such Third Party Claim assumed by the Indemnifying Party and to
employ counsel of its choice for such purpose. However, such employment shall be
at the Indemnified Party’s own expense unless (i) the employment thereof has
been specifically authorized by the Indemnifying Party in writing; (ii) the
Indemnifying Party has failed to assume the defense and employ counsel in
accordance with Section 10.2(b) (in which case the Indemnified Party may control
the defense); or (iii) the interests of the Indemnified Party and the
Indemnifying Party with respect to such Third Party Claim are sufficiently
adverse to prohibit the representation by the same counsel of both Parties under
Applicable Laws, ethical rules, or equitable principles.
(d)    Settlement. With respect to any Third Party Claim, the Indemnifying Party
shall have the right to consent to the entry of any judgment or enter into any
settlement with respect to such Third Party Claim, only with the prior written
consent of the Indemnified Party.
(e)    Cooperation. Regardless of whether the Indemnifying Party chooses to
defend or prosecute any Third Party Claim in respect of which indemnity is
sought hereunder, the Indemnified Party shall, and shall cause each of its
indemnitees to, reasonably cooperate in the defense or prosecution thereof, and
the Indemnifying Party shall reimburse the Indemnified Party for all its
reasonable out-of-pocket expenses in connection therewith. If the Indemnifying
Party chooses not to defend any Third Party Claim in respect of which indemnity
is sought hereunder, then the

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Indemnifying Party shall cooperate with the Indemnified Party in the defense or
prosecution thereof, including by furnishing such records, information, and
testimony, providing such witnesses and attending such conferences, discovery
proceedings, hearings, trials, and appeals as may be reasonably requested in
connection therewith. Such cooperation shall include access during normal
business hours afforded to the Indemnified Party to, and reasonable retention by
the Indemnifying Party of, records and information that are reasonably relevant
to such Third Party Claim, and making Indemnifying Parties and other employees
and agents available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.
(f)    Breach by the Indemnifying Party of its Obligations. If the Indemnifying
Party fails to timely (and in any event within thirty (30) calendar days) assume
and diligently conduct the defense of any such Third Party Claim, then its right
to defend that Third Party Claim shall terminate and the Indemnified Party may
assume the defense of, and settle, such claim with counsel of its own choice and
on such terms as it deems appropriate, without any obligation to obtain the
consent of the Indemnifying Party.
ARTICLE XI

MISCELLANEOUS
11.1    Governing Law. This Agreement shall be governed by and construed,
interpreted, and enforced in accordance with the laws of the State of New York,
as applied to agreements executed and performed entirely in the State of New
York, without giving effect to the principles of conflicts of law thereof.
11.2    Dispute Resolution.
(a)    Subject to Section 11.3, prior to the initiation of any Arbitration
between the Parties, any dispute, controversy, or claim arising under, out of,
or in connection with this Agreement, including any subsequent amendments,
regarding the validity, enforceability, construction, performance, or breach
hereof (a “Dispute”) shall be first addressed between the Parties’ Senior
Officers. Either Party shall have the right to refer a Dispute to the Parties’
Senior Officers for attempted resolution by sending a written notice to the
other Party requesting the same (the “Dispute Notice”). If either Party provides
a Dispute Notice, then the Senior Officer (or his or her designee) from each
Party shall, by phone or in-person, discuss the Dispute in good faith,
commencing within fourteen (14) calendar days after the delivery of the Dispute
Notice and continuing until at least twenty-eight (28) calendar days after the
delivery of the Dispute Notice.
(b)    If the two Senior Officers (or their designees) have not reached a
mutually acceptable resolution to the Dispute within twenty-eight (28) calendar
days after the delivery of the Dispute Notice, then the Dispute shall be
resolved by final, binding arbitration conducted under the rules (the “AAA
Rules”) of the American Arbitration Association (the “AAA”), as amended from
time to time, except as provided in this Section 11.2 (“Arbitration”).
(c)    Selection of Arbitrators. The Arbitration tribunal shall consist of three
(3) arbitrators, which shall be selected as follows: (i) one (1) arbitrator
shall be selected by Company; (ii) one (1) arbitrator shall be selected by
NovaQuest; and (iii) one (1) arbitrator shall be selected by the two (2)
foregoing arbitrators (each such arbitrator, an “Arbitrator”). Each of the
Arbitrators shall have

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prior experience in the biopharmaceutical industry. No Arbitrator shall be a
current or former employee, shareholder, officer, or director of, or consultant,
or advisor to, or other representative of, either Party. If (A) either Party
fails to select an Arbitrator within thirty (30) calendar days of the
Arbitration Notice or (B) the two (2) Arbitrators selected by the Parties fail
to select the third (3rd) Arbitrator within fifteen (15) calendar days after the
selection of the first two (2) Arbitrators by the Parties, then, at the request
of either Party, the AAA shall make such selection(s) on behalf of the Parties
in accordance with the AAA Rules.
(d)    Venue and Language. The venue of the Arbitration shall be New York, New
York. The Arbitration shall be conducted in English, and all foreign language
documents shall be submitted in the original language and shall be accompanied
by a translation into English.
(e)    Time Periods. Upon the written mutual agreement of both Parties, any time
period specified in this Section 11.2 or the AAA Rules shall be extended or
accelerated according to the Parties’ written mutual agreement. The Arbitrators
shall take into account both the desirability of making discovery efficient and
cost-effective and the needs of the Parties for an understanding of any
legitimate issue raised in the Arbitration.
(f)    Consolidation of Disputes. In order to facilitate the comprehensive
resolution of related disputes, and upon request of any Party to the Arbitration
proceeding, the Arbitrators may consolidate the Arbitration proceeding with any
other Arbitration proceeding relating to this Agreement. The Arbitrators shall
not consolidate such Arbitrations unless they determine that (i) there are
issues of fact or law common to the proceedings so that a consolidated
proceeding would be more efficient than separate proceedings, and (ii) no Party
would be prejudiced as a result of such consolidation through undue delay or
otherwise.
(g)    Costs. The costs of the Arbitration, including reasonable fees plus
expenses to be paid to the Arbitrator(s) and the reasonable out-of-pocket costs
(including the costs incurred for translation of the documents into English,
reasonable attorneys’ and expert witness fees, and reasonable travel expenses)
of the prevailing Party shall be borne by (i) the losing Party, if the
Arbitrator(s) rule in favor of one Party on all disputed issues in the
Arbitration and (ii) by the Parties, as allocated in writing by the
Arbitrator(s) in a manner with a reasonable relationship to the outcome of the
Arbitration, if the Arbitrator(s) rule in favor of one Party with respect to
some issues and in favor of the other Party with respect to other issues and, in
either case ((i) or (ii)), paid within thirty (30) calendar days from the final
decision by the Arbitrator.
(h)    Decision to be Binding. The decision by the Arbitrators shall be final
and binding on the Parties, non-reviewable and non-appealable, and judgment upon
any arbitral award may be entered and enforced by any court or other judicial
authority of competent jurisdiction.
(i)    Confidentiality. All Disputes under this Agreement shall be kept
confidential. In any Arbitration proceeding, the Arbitrator(s) shall take all
measures necessary for the protection of Confidential Information and the
Product. All settlement negotiations, proceedings, and any award and any
information obtained from the other Party in connection with the Arbitration
shall be deemed Confidential Information subject to ARTICLE VI; provided,
however, that the Parties further agree that such Confidential Information may
be disclosed to the extent necessary to enforce any award or enforce this
Agreement to arbitrate.

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11.3    Equitable Relief. Each of the Parties hereto acknowledges that the other
Party may have no adequate remedy at law if it fails to perform any of its
obligations under ARTICLE VI of this Agreement. In such event, each of the
Parties agrees that the other Party shall have the right, in addition to any
other rights it may have (whether at law or in equity), to pursue equitable
remedies such as injunction and specific performance for the breach or
threatened breach of any provision of such ARTICLE VI from any court of
competent jurisdiction.
11.4    Expenses. Except as expressly set forth herein, each Party shall be
responsible for and bear all of its own costs and expenses (including any legal
fees, any accountants’ fees, and any brokers’, finders’, or investment banking
fees or any prior commitment in respect thereof) with regard to the negotiation
and consummation of the transactions contemplated by this Agreement.
Notwithstanding the foregoing, each Party represents and warrants to the other
that the other Party will not be liable for any brokerage commission, finder’s
fee, or other like payment in connection with the transactions contemplated
hereby because of any action taken by, or agreement or understanding reached by,
that Party.
11.5    Relationship of the Parties. Nothing in this Agreement is intended to be
construed so as to suggest that either Party (except as expressly set forth
herein) is obligated to provide, directly or indirectly, any advice,
consultations, or other services to the other Party. Neither Party shall have
any responsibility for the hiring, termination, or compensation of the other
Party’s employees or for any employee benefits of such employee. No employee or
representative of a Party shall have any authority to bind or obligate the other
Party to this Agreement for any sum or in any manner whatsoever or to create or
impose any contractual or other liability on the other Party without such
Party’s approval. For all purposes and notwithstanding any other provision of
this Agreement to the contrary, each Party’s legal relationship under this
Agreement to the other Party shall be that of independent contractor. This
Agreement is not a partnership agreement, and nothing in this Agreement shall be
construed to establish a relationship of co-partners or joint venturers between
the Parties.
11.6    Successors and Assigns. Neither this Agreement nor any rights or
obligations hereunder may be assigned in whole or in part by either Party, by
operation of law or otherwise, without the prior written consent of the other
Party; provided, however, that (i) NovaQuest may, without such consent, (a)
assign or otherwise transfer this Agreement to an Affiliate of NovaQuest and (b)
assign, sell, pledge, contribute, or otherwise transfer, in whole or in part,
its rights to receive any payments under this Agreement, its rights to enforce
such payment rights, and its rights to conduct audits or receive information and
audit findings under ARTICLE V to any Person, and such Person(ii) Company may,
without such consent, assign, sell, pledge, contribute or otherwise transfer
this Agreement, including all of its rights and obligations to a Permitted
Company in connection with a transaction, or series of related transactions, of
the nature described in clause (i) of Section 8.2. This Agreement shall be
binding upon, and subject to the terms of the foregoing sentence, inure to the
benefit of the Parties hereto, their permitted successors, legal representatives
and assigns. Any assignment or attempted assignment not in accordance with this
Section 11.6 shall be null and void.
11.7    Notices. All notices, consents, waivers, requests, and other
communications hereunder shall be in writing and shall be delivered in person,
sent by confirmed electronic mail, sent by overnight courier (e.g., Federal
Express), confirmed facsimile transmission or posted by

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registered or certified mail, return receipt requested, with postage prepaid, to
following addresses of the Parties:
If to Company:
Brickell Biotech, Inc.
5777 Central Avenue, Suite 102
Boulder, CO 80301
Attention: Andy Sklawer
Telephone: 305-582-4657
E-mail: asklawer@brickellbio.com

with a copy to:

Mayer Brown LLP
1221 Avenue of the Americas
New York, NY 10020
Attention: Anna T. Pinedo
Telephone: 212-506-2275
E-mail: apinedo@mayerbrown.com

If to NovaQuest:
NovaQuest Co-Investment Fund X
4208 Six Forks Road, Suite 920
Raleigh, NC 27609
Attention: Jonathan Tunnicliffe
Telephone:
E-mail: jonathan.tunnicliffe@nqcapital.com

with a copy to:

Wyrick Robbins Yates & Ponton LLP
4101 Lake Boone Trail, Suite 300
Raleigh, North Carolina 27607
Attn: Daniel S. Porper
Telephone: 919-781-4000
E-mail: dporper@wyrick.com

or to such other address or addresses as NovaQuest or Company may from time to
time designate by notice as provided herein. Any such notice shall be deemed
given (a) when actually received when so delivered personally or by overnight
courier; (b) if mailed, other than during a period of general discontinuance or
disruption of postal service due to strike, lockout or otherwise, on the fifth
(5th) calendar day after its postmarked date thereof; or (c) if sent by e-mail
with acknowledgement of receipt, transmission on the date sent if such day is a
Business Day or the next following Business Day if such day is not a Business
Day.

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11.8    Severability. If any provision hereof should be held invalid, illegal,
or unenforceable in any jurisdiction, then the Parties shall negotiate in good
faith a valid, legal, and enforceable substitute provision that most nearly
reflects the original intent of the Parties. All other provisions hereof shall
remain in full force and effect in such jurisdiction and shall be liberally
construed in order to carry out the intentions of the Parties as nearly as may
be possible. Such invalidity, illegality, or unenforceability shall not affect
the validity, legality, or enforceability of such provision in any other
jurisdiction. Nothing in this Agreement shall be interpreted so as to require a
Party to violate any Applicable Law.
11.9    Waiver. Any term or condition of this Agreement may be waived at any
time by the Party that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly executed by or
on behalf of the Party waiving such term or condition. No waiver by any Party of
any term or condition of this Agreement, in any one or more instances, shall be
deemed to be, or construed as, a waiver of the same or any other term or
condition of this Agreement on any future occasion.
11.10    Entire Agreement. This Agreement (including the Exhibits and Schedules
hereto) and the Security Agreement set forth all of the covenants, promises,
agreements, warranties, representations, conditions, and understandings between
the Parties relating to the subject matter hereof and thereof and supersedes and
terminates all prior agreements and understandings between the Parties. There
are no covenants, promises, agreements, warranties, representations, conditions,
or understandings, either oral or written, between the Parties relating to the
subject matter hereof other than as set forth in this Agreement (including the
Exhibits and Schedules hereto) and the Security Agreement. The Parties
acknowledge and agree that the Parties’ respective rights and obligations with
regard to the subject matter herein are enshrined in this Agreement and the
Security Agreement. Any conflict or inconsistency between the main body of this
Agreement, the Exhibits or Schedules and/or any other documents to be delivered
pursuant hereto shall be resolved in accordance with the following order of
priority: (a) main body of this Agreement; (b) Exhibits and Schedules; and (c)
other documents.
11.11    Third Party Beneficiaries. Except with regard to the NovaQuest
Indemnitees under ARTICLE X, all rights, benefits, and remedies under this
Agreement are solely intended for the benefit of the Parties (including their
permitted successors and assigns), and no Third Party (except the NovaQuest
Indemnitees with regard to their rights, benefits, and remedies under ARTICLE X
of this Agreement and except for the Parties’ permitted successors and assigns)
shall have any rights whatsoever to (a) enforce any obligation contained in this
Agreement; (b) seek a benefit or remedy for any breach of this Agreement; or
(c) take any other action relating to this Agreement under any legal theory,
including actions in contract, tort (including negligence, gross negligence and
strict liability), or as a defense, setoff, or counterclaim to any action or
claim brought or made by the Parties (or any of their permitted successors and
assigns).
11.12    Interpretation. When a reference is made in this Agreement to Articles,
Sections, Schedules, or Exhibits, such reference shall be to an Article,
Section, Schedule, or Exhibit to this Agreement unless otherwise indicated. The
words “include,” “includes,” and “including” when used herein shall be deemed in
each case to be followed by the words “without limitation” and shall not be
construed to limit any general statement that it follows to the specific or
similar items or matters immediately following it. The headings and captions in
this Agreement are for convenience and reference purposes only and shall not be
considered a part of or affect the construction or

42

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interpretation of any provision of this Agreement. Unless specified otherwise,
all statements of, or references to, monetary amounts in this Agreement are to
U.S. Dollars. Each accounting term used herein that is not specifically defined
herein shall have the meaning given to it under GAAP, but only to the extent
consistent with its usage and the other definitions in this Agreement.
Provisions that require that a Party or the Parties “agree,” “consent,”
“approve” or the like shall require that such agreement, consent, or approval be
specific and in writing, whether by written agreement, letter, approved minutes,
or otherwise. Words of any gender include the other gender, and words using the
singular or plural number also include the plural or singular number,
respectively. Neither Party hereto shall be deemed to be the drafter of this
Agreement for the purposes of construing this Agreement against one Party or the
other. If any notice or other action or omission is required to be taken by a
Party under this Agreement on a day that is not a Business Day, then such notice
or other action or omission shall be deemed to require to be taken on the next
occurring Business Day.
11.13    Amendments. This Agreement, including any attachments or Exhibits
hereto, may be amended, modified, or supplemented only by a written amendment or
agreement signed by an authorized officer of both NovaQuest and Company.
11.14    No Implied Licenses. Each Party acknowledges that the rights granted in
this Agreement are limited to the scope expressly granted, and all other rights
to each Party’s respective technologies and intellectual property rights are
expressly reserved to the Party owning or controlling such technologies and
intellectual property rights.
11.15    Time. Time is of the essence with respect to this Agreement and each of
its provisions.
11.16    Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if each of the Parties hereto had signed
the same document. All counterparts shall be construed together and shall
constitute one agreement. This Agreement, to the extent signed and delivered by
means of a facsimile machine or via e-mail in .pdf file format, shall be treated
in all manner and respects as an original agreement or instrument and shall be
considered to have the same binding legal effect as if it were the original
signed version thereof delivered in person.
11.17    Further Assurances. Each of the Parties hereto shall execute and
deliver such additional documents, certificates, and instruments and shall
perform such additional acts as may be reasonably requested and necessary or
appropriate to carry out the purposes and intent of all of the provisions of
this Agreement and to consummate all of the transactions contemplated by this
Agreement.
11.18    Remedies. Neither the failure nor any delay by any Party in exercising
any right, power, or privilege under this Agreement will operate as a waiver of
such right, power, or privilege, and no single or partial exercise of such
right, power, or privilege will preclude any other or further exercise of such
right, power, or privilege or the exercise of any other right, power, or
privilege. Unless specifically and expressly stated in this Agreement as
exclusive, each remedy of the Parties specified in this Agreement is not
exclusive, and, subject to the terms of this Agreement, is cumulative. The
Parties shall be entitled to pursue any available legal or equitable remedy for
breach of this Agreement or any provision hereof.
[Signature Page Follows]

43

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IN WITNESS WHEREOF, the Parties have executed this Funding Agreement in
duplicate originals by their duly authorized representatives as of the Effective
Date.
Brickell Biotech, Inc.
 
 
 
By:
/s/ Robert B. Brown
Name:
Robert B. Brown
Title:
Chief Executive Officer

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Parties have executed this Funding Agreement in
duplicate originals by their duly authorized representatives as of the Effective
Date.

NovaQuest Co-Investment Fund X, L.P.

 
 
By:
NQ POF V GP, LTD., its general partner
 
 
 
 
 
 
 
By:
/s/ John L. Bradley, Jr.
 
Name:
John L. Bradley, Jr.
 
Title:
Director
 

45

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Exhibit A

U.S. Security Agreement

[See Exhibit 10.17]

46

--------------------------------------------------------------------------------

Exhibit B

Form of Warrant Agreement

[See Exhibit 4.1]

--------------------------------------------------------------------------------

Exhibit C

Development Plan

[***]

--------------------------------------------------------------------------------

Exhibit D

Investment Schedule

[***]

--------------------------------------------------------------------------------

Exhibit E

Phase III Study Protocol

[***]

--------------------------------------------------------------------------------

Exhibit F

Form of Quarterly Report

Report Date:
Quarter/Year:
Prepared by:
 
Clinical Update:  

 
Regulatory Update:

 
Commercial Update:

 
Legal Actions:

 
Description of Eligible Expenses
Eligible Expenses
(Incurred)
Eligible Expenses
(Development Budget)
Eligible Expenses
(Per Prior Quarterly Invoice)
Eligible Expenses
(Current Quarter Forecast)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

--------------------------------------------------------------------------------

 
Estimated Eligible Expenses (Per Quarter for Remainder of Development Plan)
Quarter:

Amount:
Quarter:

Amount:
Quarter:

Amount:
Quarter:

Amount:
Quarter:

Amount:
Quarter:

Amount:
Quarter:

Amount:
Quarter:

Amount:
Quarter:

Amount:
Quarter:

Amount:
Quarter:

Amount:
Quarter:

Amount:
Quarter:

Amount:
Quarter:

Amount:
Quarter:

Amount:

--------------------------------------------------------------------------------

Exhibit G

Sofpironium Bromide

[***]

 

--------------------------------------------------------------------------------

Exhibit H

Company Bank Account Information

[***]

--------------------------------------------------------------------------------

FIRST AMENDMENT TO FUNDING AGREEMENT

This First Amendment to Funding Agreement (this “Amendment”) is made as of
August 30, 2019 (the “Effective Date”), between Brickell Biotech, Inc., a
Delaware corporation with a principal place of business at 5777 Central Avenue,
Suite 102, Boulder, Colorado 80301 (“Company”) and NovaQuest Co-Investment Fund
X, L.P., a Delaware limited partnership, with a place of business at 4208 Six
Forks Road, Suite 920 Raleigh, NC 27609 (“NovaQuest”). Company and NovaQuest are
each referred to herein by name or, individually, as a “Party” or, collectively,
as “Parties.”
INTRODUCTION
A.    The Parties entered into that certain Funding Agreement, dated as of June
2, 2019 (the “Agreement”).
B.    The Parties wish to amend the Agreement as more particularly set forth
below.
NOW, THEREFORE, in consideration of the premises and mutual covenants herein and
in the Agreement below, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as
follows:
1.Allocation of Development Payments. Section 8.7(b) of the Agreement shall be
deleted in its entirety and replaced with the following:
“(b)    Allocation of Development Payments. The Parties agree to treat [***] of
the Development Payments as paid in exchange for the Warrant Agreement.”
2.    Defined Terms; Section References. Capitalized terms used herein and not
otherwise defined herein have the meanings (as such meaning may be modified
herein, if applicable) ascribed to such terms in the Agreement. Any reference
made in this Amendment to an Article, Section, clause, Exhibit or Schedule shall
be to an Article, Section, clause, Exhibit or Schedule to the Agreement unless
otherwise specifically indicated.
3.    Survival. To the extent not expressly amended or waived herein, the
Parties hereto acknowledge and agree that the Agreement remains unchanged and in
full force and effect in its entirety, which such terms are hereby ratified and
confirmed.
4.    Governing Law. This Amendment shall be governed by and construed,
interpreted, and enforced in accordance with the laws of the State of New York,
as applied to agreements executed and performed entirely in the State of New
York, without giving effect to the principles of conflicts of law thereof.
5.    Effect of Amendment. Whenever the Agreement is referred to in the
Agreement or in any other agreements, documents and instruments, such reference
shall be deemed to be to the Agreement as amended by this Amendment.

--------------------------------------------------------------------------------

6.    Counterparts. This Amendment may be executed in counterparts (including by
electronic transmission, including “.PDF”), each of which shall be an original
and all of which taken together shall constitute one instrument.
[Signature Pages Follow]

2

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Parties have executed this Amendment in duplicate
originals by their duly authorized representatives as of the Effective Date.
Brickell Biotech, Inc.
 
 
By:
/s/ Robert B. Brown
Name:
Robert B. Brown
Title:
Chief Executive Officer

[Signature Page to First Amendment to Funding Agreement]

--------------------------------------------------------------------------------

NovaQuest Co-Investment Fund X, L.P.

 
 
 
 
By:
NQ POF V GP, LTD., its general partner
 
 
 
 
By:
/s/ Ronald J. Wooten
Name:
Ronald J. Wooten
Title:
Director

[Signature Page to First Amendment to Funding Agreement]