EXHIBIT 10.3

 

ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT (this “Agreement”) dated as of February 1, 2019
(the “Effective Date”), is entered into between Elle Pharmaceutical, LLC, a
Delaware limited liability company (“Elle”), with a place of business at, and
HARROW HEALTH, INC., a Delaware corporation (“Harrow”), with a place of business
at 12264 El Camino Real, Suite 350, San Diego, California 92130. The parties
hereby agree as follows:

 

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

 

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

 

1.2 “Assets” means, collectively, (a) the Technology; (b) all discoveries,
inventions, technology, compositions, formulations, samples, components,
processes, standards, methods, inventories, supplies, equipment, procedures and
techniques relating thereto; (c) all formulae, data, information, results of
experimentation and testing, and other know-how, whether or not patentable or
copyrightable, relating thereto; (d) all product registrations and applications
therefor relating thereto; and (e) all intellectual property rights and other
assets relating thereto (including without limitation the Assigned Patent Rights
and Assigned Know-How Rights).

 

1.3 “Assigned Know-How Rights” means all trade secret and other know-how rights
related to the Technology or which are necessary or useful to make, use,
develop, sell or seek regulatory approval to market a composition, or to
practice any method or process, at any time claimed or disclosed in any issued
patent or pending patent application within the Assigned Patent Rights, whether
existing as of the Effective or hereinafter developed or acquired.

 

1.4 “Assigned Patent Rights” means, collectively, (a) all patents and patent
applications (including provisional patent applications) in any jurisdiction
that claim the Technology (whether existing before or after the Effective Date),
including those listed on Schedule 1 to Exhibit A, together with all
divisionals, continuations and continuations-in-part that claim priority to, or
common priority with, the foregoing; (b) all patents issuing therefrom
(including utility models and design patents and certificates of invention); (c)
all reissues, reexaminations, inter partes reviews, renewals, restorations,
extensions and supplementary protection certificates of any of the foregoing
patent applications or patents; (d) all confirmation patents, registration
patents or patents of addition based on any of the foregoing patents; and (e)
all foreign counterparts of any of the foregoing, or as applicable portions
thereof.

 

 

 

 

1.5 “Contract” or “Contracts” means any mortgage, indenture, lease, contract,
covenant, arrangement, agreement, instrument, commitment, purchase order or
license.

 

1.6 “Dyspareunia Product” means any product, in any gel-based form or
formulation, containing lidocaine as an active pharmaceutical ingredient with a
concentration in the range of 3.18% - 4.40% for the treatment of dyspareunia.

 

1.7 “Encumbrance” or “Encumbrances” means any encumbrance, lien, charge,
hypothecation, pledge, mortgage, adverse claim, option, preemptive right, or
other security interest of any nature, or any Contract to create any of the
foregoing entered into by Elle on or before the Effective Date.

 

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

 

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

 

1.10 “Improvement Patent Rights” means, collectively, (a) all patent
applications hereafter filed anywhere in the world, together with all
divisionals, continuations and continuations-in-part that claim priority to, or
common priority with, the foregoing; (b) all patents issuing therefrom
(including utility models and design patents and certificates of invention); (c)
all reissues, reexaminations, inter partes reviews, renewals, restorations,
extensions and supplementary protection certificates of any of the foregoing
patent applications or patents; (d) all confirmation patents, registration
patents or patents of addition based on any of the foregoing patents; and (e)
all foreign counterparts of any of the foregoing, or as applicable portions
thereof; in each case (i) that have an earliest priority date that is after the
Effective Date and before the effective date of termination pursuant to Section
9.2, (ii) that claim the Dyspareunia Product or the manufacture or use thereof,
and (iii) in which and only to the extent that Harrow has a licensable interest
exercisable without violating the terms of any agreement or other arrangement
with any Third Party or incurring any additional royalty, fee or other charge;
provided, however, that Improvement Patent Rights shall exclude the Assigned
Patent Rights.

 

1.11 “Knowledge of Elle” or “Elle’s Knowledge” means the actual knowledge of any
director, officer, member or employee of Elle and the Knowledge such individuals
would reasonably be expected to obtain in the course of diligently performing
his or her duties for Elle and/or making a reasonable inquiry into the matters
contemplated by this Agreement.

 

1.12 “Licensee” means a Third Party to whom Harrow or its Affiliate has granted
a license, immunity or other right under the Assigned Patent Rights to offer to
sell, sell or otherwise commercialize one or more Products, provided such
license has not expired or been terminated.

 

 

 

 

1.13 “Net Sales” means, with respect to any Product, the gross sales price of
such Product invoiced by Harrow, its Licensees, and its and their respective
Affiliates to customers who are not Affiliates (or are Affiliates but are the
end users of such Product), less: (a) credits, allowances, discounts and rebates
to, and chargebacks from the account of, such customers; (b) freight and
insurance costs in transporting Product; (c) cash, quantity and trade discounts,
rebates and other price reductions for Product; (d) sales, use, value-added and
other direct taxes; (e) customs duties, tariffs, surcharges and other
governmental charges incurred in exporting or importing Product; (f) an
allowance for uncollectible or bad debts determined in accordance with GAAP not
to exceed three percent (3%) of Net Sales of such Product for the applicable
quarterly reporting period before giving effect to this subsection (f); and (g)
the fully-burdened cost of goods sold determined in accordance with GAAP.

 

1.14 “Other Product” means any product in any gel-based form or formulation, the
manufacture, use, sale, offer for sale, lease or importation of which would
constitute an infringement, an inducement to infringe or contributory
infringement of any Valid Claim (if such Valid Claim were in an issued patent
not owned by or licensed to Harrow) but is not a Dyspareunia Product.

 

1.15 “Payment Period” means, on a Product-by-Product and country-by-country
basis, the period of time beginning on the date of the First Commercial Sale of
such Product in such country and continuing during the term for which a Valid
Claim (if such Valid Claim were in an issued patent) in such country remains in
effect and would be infringed (if such Valid Claim were in an issued patent not
owned by or licensed to Harrow) by the manufacture, use, offer for sale, sale or
import of such Product in such country.

 

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

 

1.17 “Product” means a Dyspareunia Product or an Other Product.

 

1.18 “Tax” or “Taxes” means any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities,
including taxes based upon or measured by gross receipts, income, profits,
sales, use and occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, excise and property taxes as well
as public imposts, fees and social security charges (including but not limited
to health, unemployment and pension insurance), together with all interest,
penalties and additions imposed with respect to such amounts and any obligation
under any agreement or arrangement with any other Person with respect to such
amounts and including any liability for taxes of a predecessor entity.

 

1.19 “Technology” means, collectively, (a) Dyspareunia Product, (b) all
compositions, components and formulations thereof, and (c) any and all methods
of manufacture and uses of the foregoing.

 

1.20 “Third Party” means any Person other than Harrow, Elle or their respective
Affiliates.

 

 

 

 

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

 

2. Purchase and Sale of the Assets.

 

2.1 Assets. Subject to the terms and conditions of this Agreement, Harrow hereby
agrees to, and hereby does, purchase from Elle, and Elle hereby agrees to, and
hereby does, sell, convey, transfer and assign to Harrow, on the Effective Date,
all of Elle’s right, title and interest in and to the Assets, including without
limitation all those assets described on Schedule 1 of the Patent Assignment
attached hereto as Exhibit A. Concurrently with the execution of this Agreement,
Elle shall deliver all required consents to Material Contracts (as defined
below) as set forth on Schedule 3.7 hereof. To the extent necessary to comply
with applicable privacy laws, Elle shall have the right to redact patient
identifying information from any data or information transferred to Harrow.

 

2.2 No Assumption of Liabilities. Harrow shall not be obligated to assume or
perform and is not assuming or performing any liabilities or obligations of Elle
which relate to Elle’s ownership of the Assets prior to the Effective Date,
whether known or unknown, fixed or contingent, certain or uncertain, and
regardless of when they are or were asserted, and Elle shall remain responsible
for and shall promptly pay such liabilities.

 

2.3 Transfer Documents. The sale, conveyance, transfer and assignment of the
Assets may be further evidenced by the due execution and delivery by the parties
of any additional bills of sale, assignment or other title transfer documents
and instruments as reasonably requested by Harrow. Without limiting the
generality of the foregoing, (a) on the Effective Date, Elle shall duly execute
and deliver to Harrow the patent assignment in the form attached as Exhibit A
(the “Patent Assignment”) evidencing the sale, conveyance, transfer and
assignment of the Assigned Patent Rights from Elle to Harrow in accordance with
this Agreement, and (b) at such time as reasonably requested by Harrow on or
after the Effective Date, Elle shall duly execute and deliver to Harrow such
additional bills of sale, assignment or other title transfer documents and
instruments as reasonably requested by Harrow evidencing the sale, conveyance,
transfer and assignment of the Assets in accordance with this Agreement.

 

2.4 Consideration. The consideration for the sale to Harrow of the Assets under
this Agreement shall consist of the following (collectively, the “Purchase
Price”):

 

2.4.1 Twenty-Five Thousand Dollars ($25,000), payable within thirty (30) days
after the Effective Date; and

 

2.4.2 the Net Sales Payment Consideration (as defined below).

 

 

 

 

2.5 Allocation of Purchase Price. The Purchase Price shall be allocated, if an
allocation is required, by Harrow within sixty (60) days following a
determination that such allocation is required. After the Effective Date, Harrow
and Elle shall make consistent use of any allocation required under Section 1060
of the Internal Revenue Code for all Tax purposes and in all filings,
declarations and reports with the Internal Revenue Service or any other
applicable taxing authority in respect thereof. In any and all actions, suits,
proceedings, arbitration, or governmental or regulatory investigations or audits
related to the determination of any Tax, neither Harrow nor Elle shall contend
or represent that such allocation is not a correct allocation.

 

3. Representations and Warranties of Elle. Elle hereby represents and warrants
to Harrow, except as indicated on the disclosure schedules, if any, attached to
this Agreement, as follows:

 

3.1 Authority and Binding Effect. Elle has the full power and authority to
execute and deliver this Agreement, the Patent Assignment and other documents
and instruments contemplated hereby. This Agreement, the Patent Assignment and
other documents and instruments contemplated hereby, and the consummation by
Elle of its obligations contained herein and therein, have been duly authorized
by all necessary actions of Elle, and this Agreement, the Patent Assignment and
other documents and instruments contemplated hereby have been duly executed and
delivered by Elle. This Agreement, the Patent Assignment and other documents and
instruments contemplated hereby are valid and binding agreements of Elle,
enforceable against Elle in accordance with their respective terms.

 

3.2 Organization and Standing. Elle is duly organized, validly existing and in
good standing under the laws of the State of Delaware. Elle is qualified to do
business in each jurisdiction where such qualification is necessary. Elle has
the requisite corporate power and authority to conduct its business as now
conducted, to own the Assets and to use such Assets in the conduct of its
business.

 

3.3 Intellectual Property.

 

3.3.1 All Assigned Patent Rights as of the Effective Date are listed in Schedule
1 of the Patent Assignment attached hereto as Exhibit A.

 

3.3.2 Elle has good and marketable title to each of the Assets, and each of the
Assets is held or controlled by Elle free and clear of any Encumbrances
(including without limitation any distribution rights and royalty rights).
Except as provided in the Material Contracts, all Assets will be fully
transferable, alienable or licensable by Harrow without restriction and without
payment of any kind to any Third Party.

 

3.3.3 All Assets (including without limitation the Assigned Patent Rights) are
currently in compliance with applicable legal requirements (including payment of
filing, examination and maintenance fees and proofs of use), and are not subject
to any unpaid maintenance fees or taxes or actions falling due within ten (10)
days after the Effective Date.

 

3.3.4 To the extent that any Assets were originally owned or created by or for
any Person other than Elle, (a) Elle has obtained or will procure the complete,
unencumbered and unrestricted right to effect the transfer of the Assets from
Elle to Harrow and confirms that such transfer does not violate any such right
to transfer; (b) no Third Parties have retained or otherwise have any rights or
licenses with respect to the Assets; and (c) to the Knowledge of Elle, no valid
basis exists for any such Person to challenge or object to this Agreement or the
transactions contemplated herein.

 

 

 

 

3.3.5 To Elle’s Knowledge, Elle has not transferred ownership of, or granted any
license of or right to use, or authorized the retention of any rights to use, to
any Person any Assets.

 

3.3.6 To Elle’s Knowledge, Elle is not required to make or accrue any royalty,
milestone or other similar payment to any Third Party in connection with any of
the Assets.

 

3.3.7 To Elle’s Knowledge as of the Effective Date, none of the Assets
transferred hereunder infringe upon or misappropriate the intellectual property
of any Third Party.

 

3.4 Conflicts; Consents. The execution and delivery by Elle of this Agreement
and the Patent Assignment, and the consummation of the transactions contemplated
hereby, will not conflict with (i) any provision of the certificate of
incorporation or bylaws of Elle, each as amended to date; (ii) Contracts to
which Elle or any of its properties or assets (including intangible assets) is
subject; or (iii) any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Elle or any of its properties or assets (tangible and
intangible). Except as disclosed in Schedule 3.7, it is not necessary for Elle
to take any action or to obtain any approval, consent or release by or from any
Third Party, governmental or other, to enable Elle to enter into or perform its
obligations under this Agreement and the Patent Assignment.

 

3.5 Litigation and Proceedings. There is no claim, action, suit, proceeding or
investigation (or any counter or cross-claim in an action brought by or on
behalf of Elle), whether at law or in equity, or before or by any governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind, that is pending or, to Elle’s
Knowledge, threatened, against Elle, which (i) could reasonably be expected to
adversely affect Elle’s ability to perform its obligations under this Agreement
or the Patent Assignment or complete any of the transactions contemplated
hereby; or (ii) involves the possibility of any judgment or liability, or which
may become a claim, against the Assets, Harrow or its business. Elle is not
subject to any judgment, order, writ, injunction, decree or award of any court,
arbitrator or governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over Elle or any of the Assets that affects,
involves or relates to the Assets.

 

3.6 Compliance with Law/Permits. Elle is in compliance with all, and is not in
violation of any, law, ordinance, order, decree, rule or regulation of any
governmental agency or authority, the violation of or noncompliance with which
could have a material adverse effect on Elle. No unresolved (i) charges of
violations of laws or regulations relating to Elle’s business have been made or
threatened; (ii) proceedings or investigations relating to Elle’s business are
pending or have been threatened; and (iii) citations or notices of deficiency
have been issued or have been threatened, against Elle relating to or arising
out of its business by any governmental authorities.

 

 

 

 

3.7 Contracts. Schedule 3.7 lists the Contracts to which Elle is a party as of
the date hereof which arise out of or relate to the Assets by which any of the
Assets are currently bound (the “Material Contracts”). Elle is not in violation
of or in default under (nor is there existing conditions which with either the
passage of time or giving of notice or both would cause such a violation or
default under) any such Material Contract. Each such Material Contract is in
full force and effect, and has a legal, valid and binding obligation Elle, and
to Knowledge of Elle, each of the other parties thereto, and is enforceable in
accordance with its terms. Elle has not received notice that it is in violation
or breach of or in default under any such Material Contract. Except as set forth
in Schedule 3.7, no such Material Contract has a provision that would require
consent, notice or the payment of money or transfer of property as a result of
the transactions contemplated herein.

 

3.8 Full Disclosure. The representations and warranties made by Elle in this
Agreement and the schedules to be delivered pursuant to this Agreement do not
contain any untrue statement of material fact or omit to state a material fact
necessary to make any of them in the light of the circumstances in which they
were made, not misleading.

 

3.9 No Broker. Elle has not retained or used the services of an agent, finder,
or broker in connection with the transactions contemplated by this Agreement

 

4. Representations and Warranties of Harrow. Harrow represents and warrants to
Elle as follows:

 

4.1 Authority and Binding Effect. Harrow has the full corporate power and
authority to execute and deliver this Agreement and the Patent Assignment. This
Agreement and the Patent Assignment, and the consummation by Harrow of its
obligations contained herein and therein, have been duly authorized by all
necessary corporate actions of Harrow, and this Agreement and the Patent
Assignment have been duly executed and delivered by Harrow. This Agreement and
the Patent Assignment are valid and binding agreements of Harrow, enforceable
against Harrow in accordance with their respective terms.

 

4.2 Organization and Standing. Harrow is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and
Harrow is qualified to do business in each jurisdiction where such qualification
is necessary and where the failure to be so qualified would have a material
adverse effect on Harrow. Harrow has the requisite corporate power and authority
to conduct its business as now conducted.

 

4.3 Conflicts; Consents. The execution and delivery by Harrow of this Agreement
and the Patent Assignment, and the consummation of the transactions contemplated
hereby, will not give rise to a Conflict with respect to (i) any provision of
the certificate of incorporation or bylaws of Harrow, each as amended to date;
(ii) Contracts to which Harrow or any of its properties or assets (including
intangible assets) is subject; or (iii) any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Harrow or any of its properties
or assets (tangible and intangible), except in any such case where it would not
have a material adverse effect on Elle’s rights under the Assets. It is not
necessary for Harrow to take any action or to obtain any approval, consent, or
release by or from any Third Party, governmental or other, to enable Harrow to
enter into or perform its obligations under this Agreement and the Patent
Assignment.

 

 

 

 

4.4 Compliance with Law/Permits. Harrow is in compliance with all, and is not in
violation of any, law, ordinance, order, decree, rule or regulation of any
governmental agency or authority, the violation of or noncompliance with which
could have a material adverse effect on Harrow. No unresolved (i) charges of
violations of laws or regulations relating to Harrow’ business have been made or
threatened; (ii) proceedings or investigations relating to Harrow’ business are
pending or have been threatened; and (iii) citations or notices of deficiency
have been issued or have been threatened, against Harrow relating to or arising
out of its business by any governmental authorities, which have had or could
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on Harrow.

 

4.5 No Broker. Harrow has not retained or used the services of an agent, finder,
or broker in connection with the transactions contemplated by this Agreement.

 

5. Net Sales Payments.

 

5.1 Net Sales Payment Amounts.

 

5.1.1 Net Sales Payment Consideration. Subject to the provisions in this Section
5.1, on a Product-by-Product and country-by-country basis, Harrow shall pay to
Elle, on a quarterly basis, seven and one-half percent (7½%) of Net Sales of any
Dyspareunia Product during the applicable Payment Period and three and one-half
percent (3½%) of Net Sales of any Other Product during the applicable Payment
Period (the “Net Sales Payment Consideration”).

 

5.1.2 Combination/Bundled Products. In the event that a Product is sold by
Harrow, its Licensees or their respective Affiliates in combination with one or
more products which is itself not a Product, then Net Sales shall be calculated
by multiplying the sales price of such combination sale by the fraction A/(A+B)
where A is the fair market value of the Product(s) and B is the fair market
value of the other product(s) in the combination sale, each as reasonably
determined by Harrow.

 

5.2 Reports and Net Sales Payments. Within seventy-five (75) days after the end
of each calendar quarter during the applicable Payment Period, Harrow shall
deliver to Elle a report setting forth for such calendar quarter (a) the
calculation of the applicable Net Sales Payment Consideration; (b) the payments
due under this Agreement for the sale of each Product; and (c) the applicable
exchange rate as determined below. Harrow shall remit the total payments due for
the sale of Products during such calendar quarter at the time such report is
made. No such reports or payments shall be due for any Product before the First
Commercial Sale of such Product. With respect to Net Sales received in United
States dollars, all amounts shall be expressed in United States dollars. With
respect to Net Sales received in a currency other than United States dollars,
all amounts shall be expressed both in the currency in which the amount is
invoiced (or received as applicable) and in the United States dollar equivalent.
The United States dollar equivalent shall be calculated using the average of the
exchange rate (local currency per US$1) published in The Wall Street Journal,
Western Edition, under the heading “Currency Trading” on the last business day
of each month during the applicable calendar quarter.

 

 

 

 

5.3 Payment Provisions.

 

5.3.1 Payment Terms. The Net Sales Payment Consideration shown to have accrued
by each report provided for under Section 5.2 shall be due on the date such
report is due. Payment of Net Sales Payment Consideration in whole or in part
may be made in advance of such due date.

 

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

 

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

 

5.4 Audits. Upon the written request of Elle and not more than once in each
calendar year, Harrow shall permit an independent certified public accounting
firm of nationally recognized standing selected by Elle and reasonably
acceptable to Harrow, at Elle’s expense, to have access during normal business
hours to such of the financial records of Harrow as may be reasonably necessary
to verify the accuracy of the Net Sales Payment Consideration reports hereunder
for the eight (8) calendar quarters immediately prior to the date of such
request (other than records for which Elle has already conducted an audit under
this Section. If such accounting firm concludes that additional amounts were
owed during the audited period, Harrow shall pay such additional amounts within
thirty (30) days after the date Elle delivers to Harrow such accounting firm’s
written report so concluding. The fees charged by such accounting firm shall be
paid by Elle; provided, however, if the audit discloses that the Net Sales
Payment Consideration payable by Harrow for such period are more than one
hundred ten percent (110%) of the Net Sales Payment Consideration actually paid
for such period, then Harrow shall pay the reasonable fees and expenses charged
by such accounting firm. Elle shall cause its accounting firm to retain all
financial information subject to review under this Section 5.4 in strict
confidence; provided, however, that Harrow shall have the right to require that
such accounting firm, prior to conducting such audit, enter into an appropriate
non-disclosure agreement with Harrow regarding such financial information. The
accounting firm shall disclose to Elle only whether the reports are correct or
not and the amount of any discrepancy. No other information shall be shared.
Elle shall treat all such financial information as Harrow’ confidential
information, and shall not disclose such financial information to any Third
Party or use it for any purpose other than as specified in this Section 5.4.

 

 

 

 

6. Post-Effective Date Covenants.

 

6.1 Harrow Diligence.

 

6.1.1 Harrow shall use commercially reasonable efforts (whether alone or with or
through its Affiliates or Third Parties) to commercialize a Product.

 

6.1.2 As between the parties, Harrow shall control, at its sole expense, the
preparation, filing, prosecution, maintenance and enforcement of the Assigned
Patent Rights consistent with prudent business practices, and shall consider in
good faith the interests of Elle.

 

6.2 Technology Transfer. Within thirty (30) days after the Effective Date, Elle
shall transfer to Harrow all Assets, including without limitation all items
described on Exhibit B.

 

6.3 Further Assistance.

 

6.3.1 Elle shall provide all cooperation reasonably requested by Harrow in
connection with any effort by Harrow to establish, perfect, defend, or enforce
its rights in or to the Assets (including without limitation the Assigned Patent
Rights). Such cooperation shall include, without limitation, (a) executing such
further assignments, transfers, licenses, releases and consents, and (b)
providing such data and information, consulting with Harrow and executing and
delivering all such further documents and instruments, in each case as requested
by Harrow regarding the Assets (including without limitation the Assigned Patent
Rights).

 

6.3.2 To the extent Elle cannot transfer and assign any of the Assigned Patent
Rights, or any portion thereof, as of the Effective Date, then Elle shall assign
and transfer the same at the first opportunity to do so. To the extent further
transfer or assignment of any patents rights is required and Elle has not,
within fifteen (15) days after the delivery of such assignment to Elle, (a)
executed and returned to Harrow the form of assignment reasonably requested by
Harrow, or (b) delivered to Harrow a written objection to Harrow’ request, then
Elle hereby irrevocably appoints Harrow as its attorney-in-fact with the right,
authority, and ability to execute and enter into such assignment on behalf of
Elle, subject to Section 9.2.3. Elle stipulates and agrees that such appointment
is a right coupled with an interest and shall survive the incapacity or
unavailability of Elle at any future time. To the extent that any of the
Assigned Patent Rights cannot be assigned and transferred by Elle, then Elle
hereby grants Harrow an irrevocable, worldwide, fully-paid up, royalty-free,
exclusive license, with the right to sublicense through multiple tiers, under
the Assigned Patent Rights for all purposes.

 

6.3.3 Elle shall provide all cooperation reasonably requested by Harrow, and
shall provide all technical assistance and to support reasonably requested by
Harrow, regarding (a) the exploitation of the Technology (including without
limitation the research, development and production of any Product), and (b)
applying for, obtaining and maintaining any and all approvals, licenses,
registrations or authorizations necessary or desirable to test, market or
commercialize the Technology (including without limitation any Product). Such
cooperation shall include, without limitation, providing such data and
information, consulting with Harrow and executing and delivering all such
further documents and instruments, in each case as requested by Harrow regarding
the Technology.

 

 

 

 

6.3.4 Harrow shall own, and Elle hereby assigns to Harrow, all right title and
interest in and to all results and other work product resulting from the
activities described in this Section 6.3, together with all patent rights and
other intellectual property rights therein and thereto; provided that any such
assignment shall be subject to Section 9.2.3.

 

7. Indemnification.

 

7.1 Indemnification by Elle. Subject to the provisions of this Section 7, Elle
shall indemnify, defend and hold harmless Harrow, its officers, directors,
affiliates, agents, stockholders and representatives (collectively, the “Harrow
Indemnitees”), from and against any and all losses, liabilities, damages and
expenses (including without limitation reasonable expenses of investigation and
attorneys’ and consultants’ fees and expenses in connection with any claim,
demand, action or proceeding or settlement of any of any of the foregoing)
(collectively, “Losses”) incurred or suffered by an Harrow Indemnitee to the
extent arising out of:

 

7.1.1 any breach of the representations and warranties of Elle set forth in this
Agreement;

 

7.1.2 any breach of any covenant or agreement of Elle set forth in this
Agreement or in any certificate, instrument, or other document delivered
pursuant to this Agreement; and

 

7.1.3 the ownership or operation of the Assets prior to the Effective Date.

 

7.2 Indemnification by Harrow. Subject to the provisions of this Section 7,
Harrow shall indemnify and hold harmless Elle, its officers, directors,
affiliates, agents, stockholders and representatives (collectively, the “Elle
Indemnitees”), from and against any and all Losses incurred or suffered by a
Elle Indemnitee to the extent arising out of:

 

7.2.1 any breach of the representations and warranties of Harrow set forth in
this Agreement;

 

7.2.2 any breach of any covenant or agreement of Harrow set forth in this
Agreement or in any certificate, instrument, or other document delivered
pursuant to this Agreement;

 

7.2.3 the ownership or operation of the Assets after the Effective Date or the
manufacture, use, or sale of Product solely by Harrow, its Licensees or their
respective Affiliates or use of Product by their customers.

 

 

 

 

7.3 Offset. Harrow may offset against the Net Sales Payment Consideration or any
other amounts due Elle from Harrow, any amounts owed to Harrow for
indemnification under Section 7.1. The exercise of such offset by Harrow in good
faith, whether or not ultimately determined to be justified, shall not
constitute an event of default hereunder. Neither the exercise nor the failure
to exercise, any such right of offset shall constitute an election of remedies
or limit Harrow in any manner in the enforcement of any other remedies that may
be available to it.

 

7.4 Procedure. A party seeking indemnification (the “Indemnitee”) shall promptly
notify the other party (the “Indemnifying Party”) in writing of a claim or suit;
provided that an Indemnitee’s failure to give such notice or delay in giving
such notice shall not affect such Indemnitee’s right to indemnification under
this Section 7 except to the extent that the Indemnifying Party has been
prejudiced by such failure or delay. Harrow shall have the right to control the
defense of all indemnification claims hereunder. Elle shall have the right to
participate at its own expense in the claim or suit with counsel of its own
choosing. Harrow shall consult with the Indemnitee in good faith with respect to
all non-privileged aspects of the defense strategy. Elle shall cooperate with
the Harrow as reasonably requested, at the Elle’s sole cost and expense. Harrow
shall not settle any claim or suit with respect to which Elle is the
Indemnifying Party without Elle’s prior written consent, which consent shall not
be unreasonably withheld.

 

8. Confidentiality and Publication.

 

8.1 Confidential Information. During the term of this Agreement, and for a
period of five (5) years following the expiration or earlier termination hereof,
except as otherwise provided in this Section 8, Elle shall maintain in
confidence all data and information comprising the Assets (the “Confidential
Information”), and shall not use, disclose or grant the use of the Confidential
Information except on a need-to-know basis to those directors, officers,
employees and contractors, to the extent such disclosure is reasonably necessary
in connection with performing its obligations or exercising its rights under
this Agreement. To the extent that disclosure is authorized by this Agreement,
prior to disclosure, Elle shall obtain agreement of any such Person to hold in
confidence and not make use of the Confidential Information for any purpose
other than those permitted by this Agreement. Elle shall notify the other
promptly upon discovery of any unauthorized use or disclosure of the
Confidential Information.

 

8.2 Terms of this Agreement. Except as otherwise provided in this Section 8,
neither party shall disclose any terms or conditions of this Agreement to any
Third Party without the prior consent of the other party; provided, however,
that a party may disclose the terms or conditions of this Agreement, (a) on a
need-to-know basis to its legal and financial advisors to the extent such
disclosure is reasonably necessary, and (b) to a Third Party in confidence in
connection with (i) an equity investment in such party, (ii) a merger,
consolidation or similar transaction by such party, (iii) a permitted
(sub)license under this Agreement, or (iv) the sale of all or substantially all
of the assets of such party. Notwithstanding the foregoing, prior to execution
of this Agreement, the parties have agreed upon the substance of information
that can be used to describe the terms of this transaction, and each party may
disclose such information, as modified by mutual agreement from time to time,
without the other party’s consent.

 

 

 

 

8.3 Permitted Disclosures. The confidentiality obligations contained in this
Section 8 shall not apply to the extent that (a) a party is required (i) in the
reasonable opinion of such party’s legal counsel, to disclose information by
applicable law, regulation, rule (including rule of a stock exchange or
automated quotation system), order of a governmental agency or a court of
competent jurisdiction or legal process, including tax authorities, or (ii) to
disclose information to any governmental agency for purposes of obtaining
approval to test or market a product, provided in either case that, to the
extent practicable, such party shall provide written notice thereof to the other
party and sufficient opportunity to object to any such disclosure or to request
confidential treatment thereof; or (b) a party can demonstrate that (i) the
information was or became public knowledge, other than as a result of actions of
such party in violation hereof; or (ii) the information was disclosed to the
Recipient on an unrestricted basis from a source unrelated to any party to this
Agreement and not under a duty of confidentiality to the other party.
Notwithstanding anything to the contrary herein, Harrow may disclose the terms
and conditions of this Agreement to any Person with whom Harrow has, or is
proposing to enter into, a business relationship, as long as such Person has
entered into a confidentiality agreement with Harrow.

 

8.4 Injunctive Relief. Each party acknowledges that it will be impossible to
measure in money the damage to the other party if such party fails to comply
with the obligations imposed by this Section 8, and that, in the event of any
such failure, the other party may not have an adequate remedy at law or in
damages. Accordingly, each party agrees that injunctive relief or other
equitable remedy, in addition to remedies at law or damages, is an appropriate
remedy for any such failure and shall not oppose the granting of such relief on
the basis that the disclosing party has an adequate remedy at law. Each party
agrees that it shall not seek, and agrees to waive any requirement for, the
securing or posting of a bond in connection with the other party seeking or
obtaining such equitable relief.

 

9. Term and Termination.

 

9.1 Term. The term of this Agreement shall commence on the Effective Date and
continue until expiration of the last to expire Payment Period, unless earlier
terminated as set forth below.

 

9.2 Termination.

 

9.2.1 If Harrow, whether alone or through an Affiliate or Third Party (including
Mayfield), (a) fails to use commercially reasonable efforts to develop and
commercialize a Product within the United States, or thereafter to use
reasonable efforts to actively promote, market and sell such Product within the
United States, or (b) before the third (3rd) anniversary of the Effective Date
fails either to file an Investigational New Drug Application in the United
States for a Product or to sell a Product for consideration, then Harrow shall
provide written notice thereof to Elle and, unless the parties otherwise
mutually agree in writing to extend the applicable time period, Elle shall have
the right to terminate the Agreement by providing Harrow with thirty (30) days’
prior written notice of termination within fifteen (15) days after Harrow’
written notice described in this Section 9.2.1.

 

 

 

 

9.2.2 If Mayfield fails to receive net proceeds of the sale of its equity
securities to Third Parties of at least ten million dollars ($10,000,000) in
cash, whether individually or in the aggregate, by June 1, 2020, then (a) Harrow
promptly shall provide written thereof to Elle and (b) Elle shall have the right
to terminate this Agreement by providing Harrow with thirty (30) days’ prior
written notice of termination within fifteen (15) days after Harrow’ notice
described in clause (a).

 

9.2.3 If Elle terminates this Agreement pursuant to this Section 9.2, then
Harrow shall (a) re-assign (or cause to be reassigned) the Assets to Elle and
(b) grant to Elle a non-exclusive, worldwide, royalty-free license under the
Improvement Patent Rights to make, have made, use, offer for sale, sell, and
import Dyspareunia Product.

 

9.3 Survival. Expiration or termination of this Agreement shall be without
prejudice to any rights which shall have accrued to the benefit of any party
prior to such expiration. Without limiting the generality of the foregoing,
Sections 3, 4, 5, 7, 8, 9.2.3, 9.3 and 10 shall survive any expiration or
termination of this Agreement.

 

10. Miscellaneous.

 

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

 

10.2 Assignment. Neither party shall assign its rights or obligations under this
Agreement without the prior written consent of the other party; provided,
however, that a party may, without such consent, assign this Agreement and its
rights and obligations hereunder (a) to any Affiliate, or (b) in connection with
the transfer or sale of all or substantially all of its business to which this
Agreement relates, or in the event of its merger, consolidation, change in
control or similar transaction; provided that any such permitted assignee shall
assume all obligations of its assignor under this Agreement including, in the
case of an assignment by Harrow, its payment obligations to Elle in accordance
with Section 5. Any purported assignment in violation of this Section 10.2 shall
be void and of no legal effect.

 

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

 

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

 

 

 

 

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

 

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

 

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

 

  If to Elle: Elle Pharmaceutical, LLC         If to Harrow: Harrow Health, Inc.
    12264 El Camino Real, Suite 350     San Diego, California 92130    
Attention: Chief Executive Officer

 

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

 

[SIGNATURE PAGE FOLLOWS.]

 

 

 

 

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

 

  ELLE PHARMACEUTICAL, LLC       By: /s/ Elias Reichel   Name: Elias Reichel  
Title: President         HARROW HEALTH, INC.       By: /s/ Mark Baum   Name:
Mark Baum   Title: Chief Executive Officer

 

[Signature Page to Asset Purchase Agreement]

 

 

 

 

EXHIBIT A

 

PATENT ASSIGNMENT

 

WHEREAS, ELLE PHARMACEUTICAL, LLC, a Delaware limited liability company
(“Assignor”), with a place of business at 74 Chestnut St., Weston, Massachusetts
02493 is the owner of all rights, title, and interests in and to the patent
applications and patents shown on the attached Schedule 1 (the “Assigned Patent
Rights”); and

 

WHEREAS, HARROW HEALTH, INC., a Delaware corporation (“Assignee”), with a place
of business at 12264 El Camino Real, Suite 350, San Diego, California 92130,
desires to acquire the entire right, title, and interest in and to the Assigned
Patent Rights and all the inventions and discoveries disclosed and/or claimed in
the Assigned Patent Rights (the “Inventions”);

 

NOW THEREFORE, be it known that effective as of ___________, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Assignor hereby sells, assigns, transfers, and sets over unto
Assignee (1) the entire right, title, and interest in all countries throughout
the world in and to said Assigned Patent Rights and Inventions, including any
renewals, revivals, reissues, reexaminations, extensions, continuations,
continuations-in-part, and divisions of said Assigned Patent Rights and any
substitute applications therefor; (2) the entire right to file patent
applications (“New Applications”) in the name of Assignee or its designee on the
aforesaid Inventions in all countries of the world; (3) the entire right, title,
and interest in and to any patent which issued and may issue on the Inventions
in any country, and any renewals, revivals, reissues, reexaminations, and
extensions thereof, and any patents of confirmation, registration, and
importation of the same; (4) the right to sue and recover for, and the right to
profits or damages due or accrued in connection with, any and all past, present,
or future infringements of the Assigned Patent Rights and Inventions; and (5)
the entire right, title, and interest in all convention and treaty rights of all
kinds, including without limitation all rights of priority in any country of the
world, in and to the above Assigned Patent Rights and Inventions.

 

AND for the same consideration, said Assignor hereby covenants and agrees to and
with said Assignee its successors, legal representatives and assigns, that, at
the time of execution and delivery of these presents, said Assignor is the sole
and lawful owner of the entire right, title and interest in and to said
Inventions and Assigned Patent Rights, and that the same are unencumbered and
that said Assignor has good and full right and lawful authority to sell and
convey the same in the manner herein set forth.

 

AND for the same consideration, said Assignor hereby covenants and agrees to and
with said Assignee, its successors, legal representatives and assigns, that said
Assignor will, whenever counsel of said Assignee, or the counsel of its
successors, legal representatives and assigns, shall advise that any proceeding
in connection with said Inventions and Assigned Patent Rights in any country,
including interference proceedings, is lawful and desirable, or that any
application for letters patent, or that any division, continuation or
continuation-in-part of any application for letters patent or any reissue or
extension of any letters patent, to be obtained thereon, is lawful and
desirable, sign all papers and documents, take all lawful oaths, and do all acts
necessary or required to be done for the procurement, maintenance, enforcement
and defense of said Inventions and Assigned Patent Rights, without charge to
said Assignee, its successors, legal representatives and assigns, but at the
cost and expense of said Assignee, its successors, legal representatives and
assigns.

 

A-1

 

 

AND, Assignor hereby authorizes and requests the competent authorities to grant
and to issue any and all patents on the Inventions throughout the world to
Assignee, its successors, or assigns, whose rights, title, and interests in such
patents are the same as would have been held and enjoyed by Assignor had this
assignment, sale, and transfer not been made.

 

IN WITNESS WHEREOF, the Assignor has caused this Patent Assignment to be duly
executed by its officer thereunto duly authorized as of the _____ day of _____,
20__.

 

  ELLE PHARMACEUTICAL, LLC       By:                             Name:    
Title:  

 

STATE OF )     )   COUNTY OF _____________ )  

 

On ____________________, before me, ____________________, a Notary Public,
personally appeared ____________________ who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.

 

I certify under PENALTY OF PERJURY under the laws of _______ that the foregoing
paragraph is true and correct.

 

WITNESS my hand and official seal.

 

Signature _______________________________

 

A-2

 

 

  Acknowledgement of Assignee:       HARROW HEALTH, INC.       By:
                    Name:     Title:  

 

STATE OF )     )   COUNTY OF _____________ )  

 

On ____________________, before me, ____________________, a Notary Public,
personally appeared ____________________ who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.

 

I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.

 

WITNESS my hand and official seal.

 

Signature _______________________________

 

A-3

 

 

EXHIBIT A: SCHEDULE 1

ASSIGNED PATENT RIGHTS

 

A-4

 

 

EXHIBIT B

CERTAIN ASSETS TO BE TRANSFERRED

 

B-1