EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
Execution Version
AMENDED AND RESTATED LICENSE AND SUPPLY AGREEMENT
 

 
 
BETWEEN
 
 
 
ACERUS PHARMACEUTICALS CORPORATION
 
 
 
and
 
 
 
AYTU BIOSCIENCE, INC.
 
 
Dated as of July 29, 2019

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
TABLE OF CONTENTS
 
 
Article 1 DEFINITIONS

 2
Article 2 GOVERNANCE AND CLOSING

13
2.1
Joint Commercialization Committee
13

2.2
Decision Making; Authority
16

2.3
Opportunity
16

2.4
General Principles
16

2.5
A&R Closing.
17

Article 3 POST MARKETING TRIALS AND OBLIGATIONS

18

3.1
Overview of Development
18

3.2
Required Clinical Trials
18

Article 4 REGULATORY MATTERS

19

4.1
Transfer of the Product NDA and Related FDA Regulatory Submissions
19

4.2
Regulatory Responsibilities
20

4.3
Safety Matters
20

4.4
Regulatory Communications
20

4.5
Inspections
21

4.6
Product Recalls and Withdrawals
21

Article 5 MANUFACTURE AND SUPPLY OF PRODUCT

22

5.1
Supply and Purchase of Product
22

Article 6 COMMERCIALIZATION

26

6.1
Commercialization
26

6.2
Transition Period Activities
26

6.3
Sales Force Activities.
27

 
 
 

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
6.4
Sales Training.
28

6.5
Detailing
29

6.6
Promotional Materials
30

Article 7 PAYMENTS

31

7.1
Payments
31

7.2
Supply Price of Product
33

7.3
Payment Method
34

7.4
Taxes
34

7.5
Interest
34

7.6
Currency Exchange
34

7.7
Records
34

7.8
No Right of Setoff
36

Article 8 LICENSE RIGHTS AND LIMITATIONS, RESTRICTIONS AND OWNERSHIP

36

8.1
License to Aytu
36

8.2
Grant Back License
36

8.3
Pharmacy Promotion
36

8.4
Acerus Trademarks
36

8.5
Ownership of Materials
37

8.6
Negative Covenants
38

8.7
Sublicensing; Subcontracting
38

 

 
 
 

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 

 
Article 9 INTELLECTUAL PROPERTY

39
9.1
Background Intellectual Property
39

9.2
Pulsatile Dosing Patent Family.
39

9.3
Patent Prosecution and Maintenance
40

9.4
Patent Assignments.
40

9.5
Infringement by Third Parties
40

9.6
Third Party Claims for Infringement or Misappropriation
41

Article 10 CONFIDENTIALITY

42

10.1
Definition of Confidential Information
42

10.2
Confidentiality
42

10.3
Exclusions
42

10.4
Permitted Disclosures
43

10.5
Terms of Agreement
43

10.6
Mandatory Disclosure
44

Article 11 PUBLIC ANNOUNCEMENTS; USE OF NAMES; PUBLICATIONS

44

11.1
Public Announcements
44

11.2
Use of Names and Logos
44

 
 
 

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 

 
Article 12 REPRESENTATIONS, WARRANTIES AND COVENANTS

45
12.1
Mutual Representations and Warranties of Acerus and Aytu
45

12.2
Product Warranties of Acerus
46

12.3
Additional Representations and Warranties of Acerus
46

12.4
Additional Representations and Warranties of Aytu
47

12.5
Disclaimer
48

12.6
Non-Solicitation
48

12.7
Non-Competition
48

12.8
Covenants of the Parties.
49

Article 13 INDEMNIFICATION

49

13.1
Indemnification by Aytu
49

13.2
Indemnification by Acerus
50

13.3
Indemnification Procedures
50

13.4
Survival of Indemnification Obligations
50

13.5
Insurance
50

Article 14 TERM AND TERMINATION

51

14.1
Term
51

14.2
Termination
51

14.3
Consequences of Termination
52

14.4
Remedies
53

 

 
 

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 

Article 15 MISCELLANEOUS

54
15.1
Notices
54

15.2
Entire Agreement
54

15.3
Assignment
55

15.4
Force Majeure
55

15.5
Headings
55

15.6
Independent Contractor
55

15.7
Severability
55

15.8
No Third-Party Beneficiaries
55

15.9
Amendment
55

15.10
Governing Law
56

15.11
Dispute Resolution
56

15.12
Injunctive Relief
58

15.13
Nature of Licenses
58

15.14
Waiver of Jury Trial
58

15.15
Limitation of Liability
58

15.16
Survival
59

15.17
No Waiver
59

15.18
Counterparts
59

15.19
Further Assurances
59

 
 
 
 

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
AMENDED AND RESTATED LICENSE AND SUPPLY AGREEMENT
 
This AMENDED AND RESTATED LICENSE AND SUPPLY AGREEMENT (this “Agreement”) is
made and effective as of July 29, 2019 (the “A&R Signing Date”) by and between
Acerus Pharmaceuticals Corporation, a corporation incorporated under the laws of
Canada, having its principal office at 2486 Dunwin Drive, Mississauga, ON L5L
1J9, Canada (“Acerus”), and Aytu Bioscience, Inc., a Delaware corporation having
its principal office at 373 Inverness Parkway, Suite 206 Englewood, CO 80112,
USA (“Aytu”) (each of Acerus and Aytu being a “Party,” and collectively, the
“Parties”).
 
WHEREAS, Acerus Pharmaceuticals SRL (now known as Acerus Biopharma Inc.) and
Aytu are parties to that certain License and Supply Agreement (the “2016
Agreement”) effective as of April 22, 2016 (the “2016 Agreement Effective
Date”), pursuant to which Acerus exclusively licensed to Aytu the right to
develop, use, commercialize, distribute and sell the Product in the Territory;
 
WHEREAS, Acerus Pharmaceuticals SRL assigned the 2016 Agreement to Acerus on the
2016 Agreement Effective Date; and
 
WHEREAS, Acerus and Aytu now desire to amend and restate the 2016 Agreement in
its entirety to make such changes as set forth herein, including to provide that
Acerus and Aytu will cooperate to commercialize the Product in the Territory,
with the effect that, as of the A&R Closing Date (as defined below), the 2016
Agreement shall be superseded and replaced in its entirety by this Agreement.
 
NOW THEREFORE, in consideration of the mutual promises and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
 
 
 
1

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
Article 1
 
DEFINITIONS
 
The following terms, whether used in the singular or the plural, shall have the
meanings designated to them under this Article unless otherwise specifically
indicated.
 
1.1 “2016 Agreement” has the meaning set forth in the Recitals.
 
1.2 “2016 Agreement Effective Date” has the meaning set forth in the Recitals.
 
1.3 “Accounting Standards” means the current accounting standards applicable to
Aytu or Acerus, as applicable, for the relevant time period. As of the A&R
Signing Date, the Accounting Standards are U.S. GAAP for Aytu and International
Financial Reporting Standards for Acerus, but in the event Aytu or Acerus, as
applicable, adopts a different accounting standard, such as the International
Financial Reporting Standards (in the case of Aytu), then such accounting
standard shall become the Accounting Standards as of the effective date of its
adoption, as applicable.
 
1.4 “Acerus” has the meaning set forth in the Preamble.
 
1.5 “Acerus COGS” shall mean, with respect to the Product or placebo dispensers,
as applicable, Acerus’ purchase price from the Product contract manufacturer
plus the allocations of the items added to Acerus COGS included in Schedule 1.5.
 
1.6 “Acerus Commission Payments” has the meaning set forth in Section 7.1(a).
 
1.7 “Acerus Confidential Information” has the meaning set forth in Section 10.1.
 
1.8 “Acerus House Marks” has the meaning set forth in Section 1.15.
 
1.9 “Acerus Indemnitees” has the meaning set forth in Section 13.1.
 
1.10 “Acerus Intellectual Property” means the Acerus Patents and Acerus
Know-How.
 
1.11 “Acerus Know-How” means any and all Know-How Controlled by Acerus at the
A&R Closing Date that is reasonably necessary to make, use, sell, offer for
sale, import, market, Promote, develop or Commercialize the Product together
with any Developed Technology in which Acerus has an ownership interest, but, in
each case excluding the Acerus Patents.
 
1.12 “Acerus Manufacturing Defect” has the meaning set forth in Section 13.2.
 
1.13 “Acerus Patent” means any patent or patent application in the Territory
that is Controlled, in full or in part, by Acerus at any time during the Term
and that claims or would otherwise be infringed by the Product or any
formulation or line extension thereof, or the Manufacture or use of Product or
any such Product or any formulation or line extension thereof, and any
provisional, continuation, divisional, continuation in part application,
substitution, reissue, renewal, reexamination, protection certificate,
extension, registration and confirmation of any such patent or patent
application. The Acerus Patents as of the A&R Signing Date include those listed
in Schedule 1.13.
 
 
 
2

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
1.14 “Acerus Sales Channel” means urologists and endocrinologists, including in
each case the paraprofessional staff of urologists and endocrinologists,
including their respective nurse practitioners and physician assistants, in the
Territory.
 
1.15 “Acerus Trademarks” means the trademarks that are owned or Controlled by
Acerus as of or following the A&R Signing Date, including the Acerus name and
logo (the “Acerus House Marks”), as set forth on Schedule 1.15.
 
1.16 “Active Ingredient” means testosterone.
 
1.17 “Active Ingredient Specifications” means the Specifications for the Active
Ingredient to be used in Product, attached hereto as Schedule 1.17, as such
Specifications may be amended from time to time by the JCC.
 
1.18 “Affiliate” means any company or entity controlled by, controlling, or
under common control with a Party. For purposes of the definition of
“Affiliate,” “control” and, with corresponding meanings, the terms “controlled
by,” “controlling,” and “under common control with” means (a) the ownership,
directly or indirectly, of more than fifty percent (50%) of the voting
securities, participating profit interest, or other ownership interests of a
legal entity, or (b) the possession, directly or indirectly, of the power to
direct the management or policies of a legal entity, whether through the
ownership of voting securities or by contract relating to voting rights or
corporate governance.
 
1.19 “Agreement” has the meaning set forth in the Preamble.
 
1.20 “Ambulatory Blood Pressure Study” means the post-marketing obligations
applicable to the Product pursuant to Sections 505(o)(3) and 505(o)(4) of the
FD&C Act, as more particularly described in the letter from the FDA to Aytu (in
its capacity as holder of the NDA for the Product on the applicable date) dated
March 22, 2018 (and all such additional correspondence relating to such subject
matter since such time, as applicable), a copy of which has been provided to
Acerus prior to the A&R Signing Date.
 
1.21 “ANDA” means an Abbreviated New Drug Application as defined in the FD&C Act
and applicable regulations promulgated thereunder by the FDA.
 
1.22 “Annual Product Net Revenue” means Net Revenue of the Product in any fiscal
year beginning on July 1 and ending on June 30.
 
1.23 “Applicable Laws” means the laws, statutes, rules or regulations applicable
to a Party’s activities to be performed under this Agreement including the
federal FD&C Act, the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)),
the federal Civil Monetary Penalties Law (42 U.S.C. § 1320a-7a), the civil False
Claims Act (31 U.S.C. §§ 3729 et seq.), the criminal False Claims Law (42 U.S.C.
§ 1320a-7b(a)), the criminal Health Care Fraud laws (18 U.S.C. §§ 286, 287,
1347, 1349), the PDMA, the Patient Protection and Affordable Care Act of 2010
(42 U.S.C. § 18001 et seq.), the Federal Sunshine Law (42 U.S.C. § 1320a-7h), as
amended, the Generic Drug Enforcement Act of 1992 (21 U.S.C. §335a et seq.), the
Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. §§1320d
et seq.) as amended by the Health Information Technology for Economic and
Clinical Health Act (42 U.S.C. §§ 17921 et seq.), the exclusion laws (42 U.S.C.
§ 1320a-7), Medicare (Title XVIII of the Social Security Act), Medicaid (Title
XIX of the Social Security Act), state and federal licensure laws, the
regulations promulgated pursuant to such laws, the U.S. Foreign Corrupt
Practices Act (15 U.S.C. §78dd-1, et seq.), as amended and other laws related to
fraud, waste and abuse, anti-corruption and bribery, racketeering, money
laundering or terrorism, and any other state or federal law similar to the
foregoing.
 
 
 
3

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
1.24 “Applicable Senior Officers” means the Chief Executive Officer, Chief
Operating Officer and/or the Chief Financial Officer of Aytu or his or her
designee, and the Chief Executive Officer and/or Chief Financial Officer of
Acerus or his or her designee.
 
1.25 “Arbitration” has the meaning set forth in Section 15.11(c).
 
1.26 “Arbitration Request” has the meaning set forth in Section 15.11(d).
 
1.27 “Arbitrators” has the meaning set forth in Section 15.11(e)(i).
 
1.28 “A&R Closing” has the meaning set forth in Section 2.5(a).
 
1.29 “A&R Closing Date” has the meaning set forth in Section 2.5(a).
 
1.30 “A&R Signing Date” has the meaning set forth in the Preamble.
 
1.31 “Audited Party” has the meaning set forth in Section 7.7(b).
 
1.32 [Reserved].
 
1.33 “Average Detail Level” means the total number of Details by a Party’s Sales
Representatives with Target Healthcare Providers in the Party’s respective Sales
Channel during the relevant time period, divided by the headcount of the Party’s
Sales Representatives conducting such Details during the same time period
(prorated for partial time periods of a Sales Representative’s engagement).
 
1.34 [Reserved].
 
1.35 “Aytu” has the meaning set forth in the Preamble.
 
1.36 “Aytu Confidential Information” has the meaning set forth in Section 10.1.
 
1.37 “Aytu House Marks” has the meaning set forth in Section 6.6(b).
 
1.38 “Aytu Indemnitees” has the meaning set forth in Section 13.2.
 
1.39 “Aytu Sales Channel” means all fields outside the Acerus Sales Channel, in
the Territory.
 
1.40 “Background Intellectual Property” has the meaning set forth in Section
9.1.
 
1.41 “Bankruptcy Laws” means Title 11 of the United States Code, 11 U.S.C.
§§ 101 1330, as it may be amended from time to time, any successor statute or
any applicable state or foreign laws relating to bankruptcy, dissolution,
liquidation, winding up or reorganization.
 
 
 
4

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
1.42  “Base Requirement” means a number of Sales Representatives working on a
Full Time Basis (i.e., at least 37.5 hours per week during his/her engagement by
Aytu) to conduct primary Detailing of the Product in the Aytu Sales Channel;
provided that in no event shall the minimum number of Sales Representatives be
fewer than thirty (30) when the Base Requirement is in effect other than in
accordance with Section 6.3(a)(iii).
 
1.43 “Batch” means batches of Product for commercial resale or supply or
stability testing purposes in the sizes set forth in Schedule 1.43 hereto.
 
1.44 “Business Day(s)” means any day except (a) Saturday, (b) Sunday (c) a day
that is a federal legal holiday in the U.S. or (d) a day that is a legal holiday
in Canada.
 
1.45 “Cardiovascular PMR” means the post-marketing obligations applicable to the
Product pursuant to Sections 505(o)(3) and 505(o)(4) of the FD&C Act, as more
particularly described in the letter from the FDA to Endo (in its capacity as
holder of the NDA for the Product on the applicable date) dated September 2,
2015 (and all such additional correspondence relating to such subject matter
since such time, as applicable), a copy of which has been provided to Aytu prior
to the 2016 Agreement Effective Date.
 
1.46 “cGMP” has the meaning set forth in Section 1.120.
 
1.47 “Claims” has the meaning set forth in Section 13.1.
 
1.48 “Clinical Trial” means any clinical testing of Product in human subjects.
 
1.49 “Commercial Pricing Strategy” has the meaning set forth in
Section 2.1(c)(x).
 
1.50 “Commercialization or Commercialize” means, with respect to the Product,
activities directed to the preparation for sale of, offering for sale of, or
sale of the Product in the Territory, including activities related to Commercial
Pricing Strategy, market access, marketing, advertising or Promoting the
Product.
 
1.51 “Commercialization Costs” has the meaning set forth in Section 6.1.
 
1.52 “Commercialization Plan” means the Parties’ commercialization plan for the
Product as initially drafted by Acerus and submitted to the JCC for development,
revision and approval; provided that Aytu shall draft the portion of the
Commercialization Plan concerning the Aytu Sales Channel, which will also be
subject to the JCC’s approval.
 
1.53 “Commercially Reasonable Efforts” means [**].
 
1.54 “Competing Product” means [**].
 
1.55 “Confidential Information” has the meaning set forth in Section 10.1.
 
 
 
5

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
1.56 “Controlled” means, with respect to any item of Know-How or any
intellectual property right, that a Party owns or has a license to such item or
right and has the ability to grant to the other Party a license or sublicense
under such item or right as provided for in this Agreement without violating the
terms of any agreement or other arrangement with any Third Party in existence,
as applicable.
 
1.57 “Damages” has the meaning set forth in Section 13.1.
 
1.58 “Debarred/Excluded” has the meaning set forth in Section 12.1(g).
 
1.59 “Defending Party” has the meaning set forth in Section 13.3.
 
1.60 “Delivery Date” means the date for the delivery of Product to the delivery
destination as stated in the applicable Purchase Order for such shipment, which
may not be less than seven (7) months following submission of the Purchase Order
to Acerus, subject to the terms and conditions of this Agreement.
 
1.61 “Detail” means a face-to-face contact by a Sales Representative of a Party
with a Target Healthcare Provider and during which the indicated uses, safety,
effectiveness, contraindications, side effects, warnings and other relevant
characteristics of the Product are described by the Sales Representative in a
fair and balanced manner consistent with the FD&C Act and all Applicable Laws.
When used as a verb, “Detail” shall mean to engage in a Detail.
 
1.62 “Developed Technology” means Know-How conceived or reduced to practice or
originally authored by or on behalf of Acerus and any intellectual property
rights appurtenant thereto (including any patents and patent applications
claiming such Know-How).
 
1.63 “Disclosing Party” has the meaning set forth in Section 10.1.
 
1.64 [Reserved].
 
1.65 “Existing CDA” has the meaning set forth in Section 15.2.
 
1.66 “FD&C Act” means the U.S. Federal Food, Drug, and Cosmetics Act (21 U.S.C.
§ 301 et seq.), as amended.
 
1.67 “FDA” means the U.S. Food and Drug Administration.
 
1.68 “Field” means the treatment of hypogonadism in men.
 
1.69 “Finished Product” means Product that is Manufactured, packaged and
released in a manner for sale or use, including trade or sample use, by an end
user of such Product, in each case in accordance with Applicable Law and the
Product Specifications.
 
1.70 “Forecasting Subcommittee” has the meaning set forth in Section 2.1(d)(i).
 
 
 
6

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
1.71  “Full Time Basis” means, in the case of a Sales Representative employed or
otherwise engaged by either Party to Detail the Product, the provision of not
less than 37.5 hours of service to such Party per week in connection with the
Detailing of the Product and such Party’s other products.
 
1.72 “GAAP” means the U.S. generally accepted accounting principles,
consistently applied.
 
1.73 [Reserved].
 
1.74 “Healthcare Providers” means physicians and other paraprofessional staff
authorized to provide healthcare services, such as nurse practitioners,
physician assistants, or another staff member who, under Applicable Law, has the
authority to write a prescription.
 
1.75 [Reserved].
 
1.76 “Incentive Compensation” means the total compensation made available, based
on an applicable incentive cycle (e.g., monthly, quarterly or annual pay
periods), by or under the authority of a Party to a Sales Representative
involved in Promotion of a Product under this Agreement based on the performance
of products (including the Product) being promoted by such Sales Representative
in the Territory, including any target bonus, award or other incentive, but
excluding salary.
 
1.77 “IND” means an Investigational New Drug Application as defined in the FD&C
Act and applicable regulations promulgated thereunder by the FDA, the filing of
which is necessary to commence a Clinical Trial.
 
1.78 “Indemnitee” has the meaning set forth in Section 13.3.
 
1.79 “Indemnitor” has the meaning set forth in Section 13.3.
 
1.80 “Initial Term” has the meaning set forth in Section 14.1.
 
1.81 “Inspection Period” has the meaning set forth in Section 5.1(d)(i).
 
1.82 “Invoiced Amount per Unit” has the meaning set forth in Section 7.2(b)(i).
 
1.83 “JCC” has the meaning set forth in Section 2.1.
 
1.84 “Know-How” means and includes conceptions, ideas, reductions-to-practice,
innovations, inventions, processes, machines, equipment, compositions of matter,
compounds, formulations, products, genetic material, improvements, enhancements,
modifications, technological developments, know-how, methods, treatments,
techniques, systems, designs, artwork, drawings, plans, specifications,
blueprints, works, mask works, software, documentation, data and information
(irrespective of whether in human or machine-readable form), works of
authorship, and products, in each case whether or not patentable, copyrightable,
or susceptible to any other form of legal protection.
 
 
 
7

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
1.85 “Latent Defect” has the meaning set forth in Section 5.1(d)(i).
 
1.86 “Long Term Inability to Supply” means, with respect to Product, Acerus’
failure to supply Aytu with at least [**] over any [**] consecutive month
period, in each case, of the quantities of Product that Acerus is obligated to
supply pursuant to the binding portion of the then-applicable Master Production
Plan and in accordance with the terms of this Agreement, for any reason other
than force majeure, as described in Section 15.4.
 
1.87 “Manufacture” has the meaning set forth in Section 5.1(a).
 
1.88 “Master Manufacturing Plan” has the meaning set forth in Section
2.1(d)(ii)(1).
 
1.89 “Master Production Plan” has the meaning set forth in
Section 2.1(d)(ii)(2).
 
1.90 “Materials” shall mean the components and materials used in the Manufacture
of the Product, including Raw Materials (active and inert), and subassemblies
(e.g., multi-dose dispensers of the Product and the components thereof)
including packaging and labeling materials used to Manufacture Finished Product.
 
1.91 “NDA” means a New Drug Application as defined in the FD&C Act and
applicable regulations promulgated thereunder by the FDA.
 
1.92 “NDC” has the meaning set forth in Section 5.1(a)(iv).
 
1.93 “Net Revenue” means the gross amount invoiced by Aytu, its Affiliates, or
Permitted Sublicensees for the sale of Product to Third Parties, less
deductions, determined in accordance with Aytu’s Accounting Standards as
generally and consistently applied by Aytu, for: (i) normal and customary trade,
cash and quantity discounts actually allowed and properly taken, credits, price
adjustments or allowances for damaged Products, returns, defects, recalls or
rejections of Products or retroactive price reductions specifically identifiable
to the Product; (ii) chargebacks and rebates (or the equivalent thereof,
inclusive of patient co-pay coupons, cards or other co-pay assistance program
deductions through point-of-care discounting or physical rebate couponing)
granted to group purchasing organizations, managed health care organizations or
to federal, state/provincial, local and other governments, including their
agencies, or to trade customers and other amounts paid on sale or dispensing of
the Product or to wholesalers for inventory management programs; (iii) freight,
shipping insurance and other transportation expenses directly related to the
sale (but not sampling) of Product (if actually borne by Aytu, its Affiliates,
or sublicensees without reimbursement from any Third Party); (iv) required
distribution commissions/fees (such as fees related to services provided
pursuant to distribution service agreements with major wholesalers) payable to
any Third Party providing distribution services to Aytu so long as such
commissions/fees are consistent with the distribution commissions/fees payable
in respect to other branded prescription products commercialized by Aytu;
(v) sales, value-added, excise taxes, tariffs and duties, and other taxes and
government charges directly related to the sale, to the extent such items are
included in the gross invoice price and actually borne by Aytu, its Affiliates,
or Permitted Sublicensees without reimbursement from any Third Party (but not
including taxes assessed against the income derived from such sales) and
(vi) amounts repaid or credited or provisions made for uncollectible amounts on
previously sold Product.
 
 
 
8

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
“Net Revenue,” as set forth in the above definition, shall be calculated in
accordance with Aytu’s usual and customary accounting methods, which shall be in
accordance with the Accounting Standards. Revenue from Aytu to its Affiliates or
Permitted Sublicensees shall be disregarded for purposes of calculating Net
Revenue.
 
1.94 “Next Generation Product” means a drug product for use in men containing
testosterone as its sole active pharmaceutical ingredient incorporating or
containing improvements, additions, refinements, modifications or developments
to the Product that would reasonably be expected to improve the quality or
improve consumer or patient acceptance of the Product for which a sNDA to the
Product NDA would be permitted under Applicable Law.
 
1.95 “Non-Binding Commitment” has the meaning set forth in Section 5.1(b)(i).
 
1.96 “Non-Defending Party” has the meaning set forth in Section 13.3.
 
1.97 “Ordinary Course Terminations and Reassignments” has the meaning set forth
in Section 6.3(a)(iii).
 
1.98 “Original Payment” has the meaning set forth in Section 7.4.
 
1.99 “OTC Version(s)” shall mean any version of Product for use in the Field
that has been approved by the FDA for sale to customers or patients in the
Territory without a prescription.
 
1.100 “Packaging Specifications” means the packaging and labeling Specifications
for Product, attached hereto as Schedule 1.100, as such Specifications may be
amended from time to time by the JCC.
 
1.101 “Party” or “Parties” has the meaning set forth in the Preamble.
 
1.102 “Permitted Sublicensee” means any sublicensee of the rights granted to a
Party under this Agreement in accordance with Section 8.7(b).
 
1.103 “Person” means any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization or government or
political subdivision thereof.
 
1.104 “Previously Purchased Product” has the meaning set forth in Section
7.1(c)(vii)(1).
 
1.105 “Product” means a drug product for use in men containing testosterone as
its sole active pharmaceutical ingredient prepared using nasal gel drug delivery
technology to treat hypogonadism in males, in any formulation and any dosage
strength under development by Acerus and/or Aytu at any time before or during
the Term, including NATESTO, an authorized generic version thereof or ANDA
therefor and any OTC Versions.
 
 
 
9

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
1.106 “Product Cost(s)” means [**].
 
1.107 “Product-Specific Sales Force” means either the Aytu Product-Specific
Sales Force or the Acerus Product-Specific Sales Force, as applicable.
 
1.108 “Product Specifications” means the Specifications for Product attached
hereto as Schedule 1.108, including process Specifications and analytical
methods, as such Specifications may be amended from time to time by the JCC,
including, without limitation, such amendments as may be required to obtain or
maintain Regulatory Approval for Product.
 
1.109 “Product Training” has the meaning set forth in Section 6.4(a).
 
1.110 “Promotion” or “Promote” means (a) those activities customarily undertaken
by a Party’s Field Sales Representatives in the Territory to encourage the
approved use of, increase awareness, improve access to, or encourage the use of
the Product, including Detailing, and (b) any other activities customarily
undertaken by a Party aimed at encouraging the approved use of a particular
prescription pharmaceutical product, including without limitation,
communications to healthcare professionals, healthcare professional peer-to-peer
communications, communications to direct customers, consumers, patients, patient
families, employers, employees, payors, stakeholders, and group purchasing
organizations, communications of product benefits to integrated healthcare
delivery networks, the creation and use of Promotional Materials, marketing,
meetings and events (including without limitation speaker bureau events), trade
shows, advocacy activities, including with respect to guideline organizations,
and sponsorships, in each case (a) and (b), as approved by the JCC and set forth
in the Commercialization Plan.
 
1.111 “Promotional Materials” means any and all written, printed, graphic,
electronic, audio, video or other materials to be used in connection with any
Promotion activities, as developed and approved in accordance with Sections
2.1(c)(viii) and 2.1(c)(ix). For clarity, Promotional Materials may include
materials such as Detail aids, reprints and disease state materials, as
applicable, as approved in accordance with Sections 2.1(c)(viii) and 2.1(c)(ix).
 
1.112 “Pulsatile Dosing Patent Family” means the patent applications listed in
Schedule 1.112 entitled “Methods of Testosterone Therapy” which name employees
of both Parties.
 
1.113 “Purchase Order” has the meaning set forth in Section 5.1(b)(i).
 
1.114 “Quality Agreement” means the quality agreement to be entered into by the
Parties promptly following the A&R Closing Date (and in any event, within thirty
(30) days) concerning quality assurance, quality control, and validation related
to the Manufacture of Product, in customary form and consistent with customary
practices in the pharmaceutical industry.
 
 
 
10

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
1.115 “Raw Materials” means, in relation to Product, the starting Materials,
Active Ingredient, excipients and packaging materials used in the Manufacture
thereof.
 
1.116 “Raw Material Specifications” means the Specifications relating to the
handling, warehousing, and storage of Raw Materials attached hereto as
Schedule 1.116 as such Specifications may be amended from time to time by the
JCC.
 
1.117 “Receiving Party” has the meaning set forth in Section 10.1.
 
1.118 “Regulatory Approval” means, for Product, all permissions, approvals,
licenses, registrations, authorizations, or clearances of any Regulatory
Authority related to NDA #205488 that are necessary for the sale of such Product
in the Territory.
 
1.119 “Regulatory Authority” means the FDA and the authority(ies) that are
responsible for granting any FDA approval for the Manufacture, use and sale of
Product in the Territory.
 
1.120 “Regulatory Requirements” means (a) all specifications, methods of
Manufacture, and other information in NDA #205488 and thereafter related in any
way to Product, and (b) all laws, rules, regulations, applicable regulatory
guidance documents, and other requirements of any Regulatory Authority that
govern Product, including its Manufacture, including but not limited to the
requirements set forth in the FD&C Act, the quality system regulation rules set
forth in 21 C.F.R. Part 820, and the current good manufacturing practices
regulations set forth in 21 C.F.R. § 210 et seq. and 21 C.F.R. §§ 600-610 and
the World Health Organization’s cGMP Guidelines (collectively, “cGMP”), and in
each case, the foreign equivalents thereof, as any of the foregoing may be
amended from time to time.
 
1.121 “Regulatory Submissions” means all applications, filings, dossiers and the
like submitted to the FDA and associated with NDA #205488, including any
internal records, minutes or informal communications (e-mails and letters)
related to discussions with the FDA, as set forth on Schedule 1.121.
 
1.122 “Renewal Term” has the meaning set forth in Section 14.1.
 
1.123 “Requesting Party” has the meaning set forth in Section 7.7(b).
 
1.124 “Required Clinical Trials” has the meaning set forth in Section 3.2.
 
1.125 “Safety Agreement” has the meaning set forth in Section 4.3(b).
 
1.126 “Sales Channel” means the Acerus Sales Channel or the Aytu Sales Channel,
as applicable.
 
1.127 “Sales Representative” means a Field sales representative (a) who is
employed by a Party or Subcontractor to conduct Promotion and other
Commercialization activities with respect to the Product in the Territory
pursuant to this Agreement, (b) has been sufficiently trained in accordance with
this Agreement and (c) substantially meets the qualifications as may be
determined by the JCC from time to time.
 
 
 
11

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
1.128  “sNDA” means a Supplemental New Drug Application as defined in the FD&C
Act and applicable regulations promulgated thereunder by the FDA.
 
1.129 “Specialty Pharmacy” means a third-party service provider providing
reimbursement assistance services to Aytu and dispensing Product.
 
1.130 “Specifications” means each of the following as they relate to the Active
Ingredient, Raw Materials and/or Product, as appropriate:
 
(a) the Product Specifications,
 
(b) the Raw Material Specifications,
 
(c) the Packaging Specifications or
 
(d) the Active Ingredient Specifications.
 
1.131 “Stock Exchange” has the meaning set forth in Section 10.5.
 
1.132 “Subcontractors” has the meaning set forth in Section 8.7(b).
 
1.133 “Supply Price” has the meaning set forth in Section 7.2(a).
 
1.134 “Target Healthcare Provider” means any Healthcare Provider (i) identified
by either Party and submitted in writing to the JCC as being a suitable target
for the Promotion and Detailing of the Product in the Territory, or (ii) any
Healthcare Provider that is a past, current, or expected prescriber of the
Product (as reasonably expected by either Party based on market experience), or
(iii) a decile 5-10 testosterone prescriber (defined as prescribing of
testosterone products in the top 60% of all class prescribers) in the topical
testosterone gel prescription class or total testosterone prescription class
(including all formulations of testosterone). Notwithstanding the forgoing, the
JCC may approve additional Target Healthcare Providers outside the forgoing
definitions.
 
1.135 “Term” has the meaning set forth in Section 14.1.
 
1.136  “Termination Payment Period” has the meaning set forth in Section
14.3(f).
 
1.137 “Termination Payments” has the meaning set forth in Section 14.3(f).
 
1.138 “Territory” means the U.S.
 
1.139 “Third Party” means any Person other than Acerus, Aytu and their
respective Affiliates.
 
1.140 “Threshold 1 Arbitrator” has the meaning set forth in Section 15.11(e)(i).
 
 
 
12

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
1.141 “Training Materials” means the materials (which may include written or
other recorded, videotaped or Web-based training materials or online training
programs) to be used in Product Training for each Party’s personnel regarding
the Product, as approved by the JCC in accordance with Section 6.4(b).
 
1.142 “Transition Period” has the meaning set forth in Section 6.2(a).
 
1.143 “Unit” means a unit of Product comprised of one multi-dose dispenser
filled with drug product in accordance with the Product Specifications, as may
be amended in accordance with FDA requirements.
 
1.144 “U.S.” means the United States of America and all territories thereof.
 
1.145 “Withholding Taxes” has the meaning set forth in Section 7.4.
 
Article 2
GOVERNANCE AND CLOSING
 
2.1 Joint Commercialization Committee. The Parties’ development of Product (if
any) and Commercialization of the Product under this Agreement shall be overseen
by a Joint Commercialization Committee (the “JCC”) constituted within thirty
(30) days after the A&R Closing Date with responsibilities as described in this
Article 2 and as set forth below.
 
(a) Membership; Subcommittees.
 
(i)
The JCC shall include an equal number of representatives from each Party,
including at least two commercial representatives from each Party and one
financial representative from each Party. The chief executive officers of the
Parties shall not be members of the JCC. Promptly following the A&R Closing
Date, each Party shall appoint its initial representatives to the JCC. Each
Party may replace its JCC representatives at any time by providing notice to the
other Party. Acerus will designate one of its representatives as the chairperson
of the JCC. The chairperson shall not have powers or authority beyond those of
any other member of the JCC, but will be responsible for scheduling meetings,
preparing and circulating an agenda in advance of each meeting (provided that
either Party may request to include a specific item on any such agenda),
preparing and issuing minutes of each meeting within thirty (30) days
thereafter, and revising and finalizing such minutes to reflect timely comments
thereon.
 
(ii)
The JCC shall have authority to establish one or more subcommittees that report
to the JCC and assist the JCC. Any subcommittees formed beyond the JCC shall be
subordinate to the JCC, shall have such membership and responsibilities as the
JCC shall determine (provided that at least one representative from each Party
shall be included on any such subcommittee which shall consist of an equal
number of representatives from each Party), and may be disbanded by the JCC at
any time. Unless otherwise specifically approved by the JCC or set forth in this
Agreement, each subcommittee shall operate on the same terms, including decision
making, as the JCC; provided, that a subcommittee may not make any decision that
is inconsistent with this Agreement or the Commercialization Plan as approved by
the JCC.
 
 
 
13

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
(b) Meetings. The JCC shall meet a minimum of once per calendar quarter, and any
additional ad hoc meetings may be called by either Party on at least five (5)
Business Days’ written notice, as determined by the Party in good faith to be
reasonably necessary. The Parties shall endeavor to schedule meetings of the JCC
at least two (2) months in advance. At least one (1) meeting of the JCC per year
shall be held in person, which in person meeting shall be held alternately at
the headquarters of each of the Parties or at such location as may be mutually
agreed by the Parties. All other meetings of the JCC may be by telephone or
videoconference, as determined by the Parties. Either Party may invite subject
matter experts or other relevant personnel to attend any meeting of the JCC.
 
(c) Responsibilities. The JCC shall:
 
(i)
Review and assess, through a formal business review process set by the JCC, the
monitoring of detailing effectiveness, resonance of Promotional messaging and
effectiveness of other programs implemented to Promote Product sales;
 
(ii)
Review the Commercialization Plan for the Product developed by Acerus and
submitted to the JCC on an annual basis;
 
(iii)
Review results and progress of any Required Clinical Trial and discuss and
prepare proposed amendments or modifications when such changes appear to be
advisable to achieve the Parties’ Product development goals and/or implement
labeling changes with respect to such matters;
 
(iv)
Facilitate the exchange of regulatory documents and other regulatory information
between the Parties pursuant to Article 4;
 
(v)
Discuss the state of the markets for Product in the Territory and opportunities
and issues concerning the Commercialization of Product, including consideration
of marketing and Promotional strategy, marketing research plans, payer
strategies and tactics, labeling, Product positioning and Product profile
issues;
 
(vi)
Coordinate and monitor post-Regulatory Approval activities;
 
(vii)
Resolve, or attempt to resolve any disputes not resolved by any subordinate
subcommittee created by the JCC;
 
(viii)
Oversee development of all advertising and Promotional Materials relating to the
Product in the Territory, which shall be consistent with the Commercialization
Plan and with the then current Product labels and package inserts;
 
 
 
14

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
(ix)
Review and update advertising and Promotional Materials relating to the Product
on a semi-annual basis and otherwise as necessary;
 
(x)
To the extent permitted by Applicable Laws, discuss strategy for Product
pricing, rebates, discounts, and commercial and government contracting
(“Commercial Pricing Strategy”);
 
(xi)
As may be determined by the JCC, establish the guidelines surrounding the
qualifications and experience levels for Sales Representatives appropriate for
each Sales Channel; and
 
(xii)
Perform such other functions as appropriate to further the purposes of this
Agreement and as allocated to it in writing by the Parties.
 
(d) Forecasting Subcommittee.
 
(i)
A subcommittee of the JCC with responsibility for overseeing the Manufacture
(including forecasting) of the Product in the Territory and such other matters
as may be designated by the JCC from time to time is hereby established by the
JCC (the “Forecasting Subcommittee”). The Forecasting Subcommittee shall consist
of an equal number of representatives from each Party. Acerus will designate one
of its representatives as the chairperson of the Forecasting Subcommittee. The
Forecasting Subcommittee will meet on a monthly basis, whether in person, via
telephone conference or video conference, as determined by the members.
 
(ii)
The JCC hereby delegates to the Forecasting Subcommittee responsibility for:
 
(1)
Reviewing and overseeing matters relating to Manufacturing of the Product,
including preparing a manufacturing plan setting forth all information required
by Article 5 of this Agreement (the “Master Manufacturing Plan”), and reviewing
existing warehouse stock;
 
(2)
Preparing, approving and updating on a monthly basis a written twenty-four
(24) month forecast of the quantities of Product to be supplied to Aytu (the
“Master Production Plan”); and
 
(3)
Performing such other functions as may be delegated to it by the JCC.
 
(iii)
The Parties shall provide the Forecasting Subcommittee with access to all
information necessary to prepare and update forecasting for quantities of the
Product and placebo dispensers to be supplied to Aytu, including inventory
levels of the Product on a monthly basis, and the Forecasting Subcommittee shall
keep the JCC reasonably informed of its activities.
 
 
 
15

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
2.2 Decision Making; Authority. The JCC shall make its decisions by consensus,
with each Party’s representatives collectively having one vote. If the JCC is
unable to reach consensus regarding a matter before it within fifteen (15) days,
the issue shall be presented to the Parties’ chief executive officers, for
attempted resolution by good faith negotiations during a period of thirty
(30) days. In the event that the chief executive officers are unable to reach a
final determination within such thirty (30) day period, then Acerus shall have
the final decision making authority over such disputed matters; provided that
(i) Acerus shall reasonably consider the input of Aytu’s members to the JCC with
respect to such Commercial Pricing Strategy and the Master Production Plan; and
(ii) subject to Applicable Law, if the matter relates specifically to matters
affecting the Aytu Sales Channel, Aytu’s prior written approval shall be
required, with such approval not to be unreasonably withheld or delayed.
Notwithstanding anything to the contrary herein, any dispute regarding (a) the
level of monetary spending required by the approved Commercialization Plan or
(b) whether Acerus reasonably considered Aytu’s input with respect to the
Commercialization Plan or the Commercial Pricing Strategy shall be resolved by
the binding Arbitration process set forth in Section 15.11 herein. For clarity,
each Party shall have final decision-making authority over salaries, hiring and
firing decisions for its Sales Representatives, subject to the JCC requirements
for qualifications for Sales Representatives. For further clarity, and without
limitation to any of the foregoing, Aytu agrees to implement the decisions of
the JCC such that those items from the definition of Net Revenue that are
subject to the authority of the JCC do not deviate from what has been approved
by the JCC (other than for any non-discretionary price adjustments taken by
customers, provided that Aytu promptly notifies the JCC of any such
adjustments).
 
2.3 Opportunity. In the event a commercial opportunity arises to generate
meaningful returns by promoting the Product to Healthcare Providers included in
the Aytu Sales Channel but otherwise not being targeted at that time, the JCC
will discuss how best to allocate the commercial opportunity between the
Parties.
 
2.4 General Principles.
 
(a) The JCC and its subordinate committees have no authority beyond the specific
responsibilities set forth in this Agreement with respect thereto. Any
subordinate committee created by the JCC shall have such duties and
responsibilities delegated to such committee by the JCC, as applicable, so long
as such duties and responsibilities do not exceed the power and authority
assigned to the JCC hereunder. In particular, and without limiting the
generality of the foregoing, neither the JCC nor any subordinate committee
thereof may amend or modify the terms or provisions of this Agreement.
 
(b) Each Party shall ensure that its representatives to the JCC or any
subcommittee thereof have appropriate expertise and authority to serve as
members of such committee. With the consent of the representatives of each Party
serving on a particular committee, other representatives of each Party may
attend meetings of that committee as observers. A meeting of the JCC or a
subordinate committee thereof may be held by audio or video teleconference with
the consent of each Party. Meetings of a committee shall be effective only if at
least one representative of each Party is present or participating. Each Party
shall be responsible for all of its own expenses of participating in committee
meetings. Each Party shall use good faith and cooperative efforts to facilitate
and assist the efforts of the committees.
 
 
 
16

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
(c) Each committee shall continue to exist until the Parties mutually agree to
dissolve it, and upon dissolution, the Parties shall discuss the assignment and
assumption of the powers and duties of such committee.
 
(d) The Parties may form any other committees as they shall mutually agree.
 
 
 
 
 
2.5 A&R Closing.
 
(a) Closing. Subject to the terms and conditions of this Agreement, the closing
of this Agreement and the other transactions contemplated hereby (the “A&R
Closing”) shall take place at 8:00 a.m. Eastern Time on the next Business Day
following the satisfaction or waiver (to the extent not prohibited by Applicable
Law) of the conditions set forth in Section 2.5(c) (other than those conditions
that by their terms are to be satisfied at A&R Closing, but subject to such
satisfaction or waiver), or at such other time and place as the Parties mutually
agree in writing (the day on which the A&R Closing takes place being the “A&R
Closing Date”).
 
(b) Pre-Closing Conduct of Business. From the A&R Signing Date to the A&R
Closing Date, except as otherwise required by this Agreement or consented to by
Acerus in writing (which consent shall not be unreasonably withheld, conditioned
or delayed), Aytu shall Promote and sell the Product in the ordinary course of
business consistent with past practice and maintain in effect the Regulatory
Approval and all Regulatory Submissions. Except as required by Applicable Law or
otherwise required by the 2016 Agreement, Aytu shall not, and shall not permit
any Affiliate to, without the prior written consent of Acerus (which consent
shall not be unreasonably withheld, conditioned or delayed) (i) engage in any
practice that could reasonably be considered “channel stuffing” or “trade
loading”, (ii) except in the ordinary course of business, consistent with past
practice, offer any rebates, discounts, promotions or credits, make any change
to any Promotional programs or make any change in the manner Aytu generally
extends rebates, discounts or credit to, or otherwise similarly deal with,
customers with respect to the Product, or (iii) agree, whether in writing or
otherwise, to do any of the foregoing. Prior to the A&R Closing, each Party
shall use Commercially Reasonable Efforts to take such action as is reasonably
necessary or appropriate in order to complete the transactions contemplated
hereby on the terms and subject to the conditions set forth herein.
 
(c) Condition to A&R Closing. The rights and obligations of the Parties to this
Agreement are subject to the condition that Acerus, prior to the date that is
six (6) months after the A&R Signing Date, first raises at least $10,000,000 of
gross proceeds additional capital through one or more series of transactions.
 
(d) A&R Closing Deliveries.
 
 
 
17

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
(i)
Deliveries by Acerus. At the A&R Closing, Acerus shall deliver, or cause to be
delivered, to Aytu:
 
(1)
Payment of Acerus’ pro rata portion of the 2020 FDA user fee referenced in
Section 4.1(a); and
 
(2)
A certificate executed by its Chief Executive Officer or Chief Financial Officer
that the capital raise has been closed.
 
(3)
Acerus payment of [**] to reimburse Aytu for half of specific direct costs that
were previously paid by Aytu to Acerus associated with serialization of Product.
 
(ii)
Deliveries by Aytu. At the A&R Closing, Aytu shall deliver, or cause to be
delivered, to Acerus:
 
(1)
Executed assignments by Aytu and the applicable inventors of the patents
included in the Pulsatile Dosing Patent Family to Acerus; and
 
(2)
The FDA executed letters, and any other letters or documents required to
transfer the Product NDA and related Regulatory Submissions to Acerus pursuant
to Section 4.1.
 

 
Article 3 

POST MARKETING TRIALS AND OBLIGATIONS
 
3.1 Overview of Development. Acerus shall conduct any Required Clinical Trials
and will keep Aytu reasonably informed, through the JCC, with respect to such
Required Clinical Trials. Upon written request by Acerus, Aytu will use good
faith efforts to provide Acerus any reasonably necessary information for such
Required Clinical Trials. Following the A&R Closing Date, the conduct of all
Clinical Trials other than Required Clinical Trials will be the sole
responsibility and at the sole discretion of Acerus.
 
3.2 Required Clinical Trials. As holder of the NDA for the Product following the
A&R Closing Date, Acerus (i) shall be responsible for all Clinical Trials
required by the applicable Regulatory Authorities to maintain the Regulatory
Approval for the Product (collectively the “Required Clinical Trials”); and (ii)
acknowledges and agrees that the terms and conditions of the Cardiovascular PMR
and Ambulatory Blood Pressure Study shall apply to it with respect to the
Product.
 
 
 
18

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 

Article 4 

REGULATORY MATTERS
 
4.1 Transfer of the Product NDA and Related FDA Regulatory Submissions.
 
(a) On or promptly after A&R Closing, Acerus shall submit (or cause the
necessary Third Party to submit) to the FDA executed letters in the form set
forth in Schedule 4.1(a) in order to transfer legal and record ownership of the
Regulatory Submissions for the Product, including any INDs, the Product NDA and
all supplemental submissions from Aytu to Acerus. Acerus shall not at any time
thereafter during the Term transfer any such Regulatory Submissions for the
Product, including any INDs and the Product NDA, to any other Person, without
the express written consent of Aytu, except in connection with any permitted
assignment of this Agreement in accordance with Section 15.3. At A&R Closing,
Acerus shall reimburse Aytu for the pro rata portion of the 2020 FDA user fee
rate paid by Aytu that is attributable to the post-A&R Closing portion of the
then-current FDA fiscal year and pay all FDA user fees thereafter.
 
(b) Pursuant to 21 C.F.R. § 314.72, Change in Ownership of an Application, the
Parties shall fulfill the following requirements:
 
(i)
Aytu shall submit a letter or other document that states that all rights to NDA
#205488 have been transferred to Acerus;
 
(ii)
Acerus shall submit an application form and a letter containing the following:
 
(1)
Acerus’ commitment to agreements, promises, and conditions made by Aytu of which
it has been informed and contained in NDA #205488, which are set forth on
Schedule 4.1(b) and provided to Acerus by Aytu prior to the A&R Closing;
 
(2)
The date that the change in ownership is effective; and
 
(3)
A statement that Acerus has a complete copy of the approved NDA #205488,
including supplements and records that are required to be kept under 21 C.F.R.
§ 314.81; and
 
(iii)
Acerus shall advise FDA about any change in the conditions in NDA #205488 under
21 C.F.R. § 314.70, except Acerus may advise FDA in the subsequent annual report
about a change in the Product’s label or labeling to change the Product’s brand
or the name of its manufacturer, packer, or distributor.
 
(c) As soon as practicable following the A&R Closing Date, Aytu shall transfer
to Acerus (and cause any Third Party in possession thereof to transfer to
Acerus) all other Regulatory Submissions for the Product in the Territory, which
have been approved by Acerus on or prior to the A&R Signing Date or are required
by law. Upon transfer of all such Regulatory Submissions, Acerus shall be the
legal and beneficial owner of such Regulatory Submissions.
 
 
 
19

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
4.2 Regulatory Responsibilities. From and after the A&R Closing, Acerus shall be
solely responsible at its own cost for all regulatory matters regarding the
Product, including preparing, filing, prosecuting and maintaining all
submissions to Regulatory Authorities for the Product, adverse event reporting,
post-marketing requirements, label and packaging updates, and serialization
costs. From and after the A&R Closing Date, Acerus shall own all right, title
and interest in and to all regulatory filings and submissions and Regulatory
Approvals with respect to the Product.
 
4.3 Safety Matters.
 
(a) From and after the A&R Closing, Acerus shall be responsible for establishing
and maintaining a global safety database for the Product.
 
(b) Within thirty (30) days after the A&R Closing, the Parties shall enter into
a safety data exchange agreement (the “Safety Agreement”), in customary form and
consistent with customary practices in the pharmaceutical industry, which the
Parties shall maintain, as may be amended by the Parties, in force throughout
the Term. The Safety Agreement shall describe the coordination of collection,
investigation, reporting, and exchange of information concerning adverse events
or any other safety problem of any significance, and Product complaints
involving adverse events, sufficient to permit each Party, its Affiliates
licensees or Permitted Sublicensees to comply with Applicable Laws. The Safety
Agreement will be promptly updated if required by changes in Applicable Laws. In
the event of any conflict or inconsistency between this Agreement and the Safety
Agreement with respect to: (i) safety-related matters, the Safety Agreement
shall prevail; and (ii) any other matter, this Agreement shall prevail.
 
(c) Aytu shall notify Acerus as promptly as reasonably possible, but in no event
more than twenty-four (24) hours of becoming aware of a serious adverse event,
which reporting requirements shall be set forth in further detail in the Safety
Agreement. All other adverse events and Product complaints will be reported as
promptly as reasonably possible, but in no event more than seventy-two (72)
hours of Aytu becoming aware of the event or Product quality complaint.
 
4.4 Regulatory Communications. From and after the A&R Closing, Acerus shall be
responsible, at its sole expense, for (a) all communications, reports and
responses to Regulatory Authorities concerning the Product, including adverse
event reports, and (b) all communications with Third Parties that relate to
product quality complaints and adverse events. Aytu shall not, without Acerus’
prior written consent (unless so required by Applicable Laws), correspond or
communicate with the FDA or with any other Regulatory Authority concerning the
Product, or otherwise take any action concerning any Regulatory Approval under
which the Product is marketed. Aytu shall provide to Acerus, promptly upon
receipt, copies of any communication from the FDA, or other Regulatory
Authority, related to the Product, and Acerus shall provide to Aytu, promptly
upon receipt, copies of any communication from the FDA or other Regulatory
Authority relevant to Aytu’s rights or obligations under this Agreement. Upon
Acerus’ request, Aytu shall cooperate fully with, and provide assistance to,
Acerus in connection with Acerus’ Regulatory Requirements arising from Aytu’s
Promotion or distribution activities under this Agreement (including adverse
event reporting) for the Product. If Aytu believes it is required by Applicable
Laws to communicate with the FDA or other Regulatory Authority regarding any
matter relating to the Product or Aytu’s activities hereunder, then Aytu shall,
unless and to the extent prohibited by Applicable Laws, so advise Acerus
promptly and provide Acerus in advance with a copy of any proposed communication
(including the text of any oral communication) with the FDA or such other
Regulatory Authority prior to such communication, and shall comply with any and
all reasonable direction of Acerus, to the extent consistent with Applicable
Laws, concerning any meeting or written or oral communication with the FDA or
any other Regulatory Authority or governmental authority. To the extent any
remedial action is required following any such inspection, Acerus shall provide
Aytu with a remediation plan not later than ten (10) Business Days following
notification by a Regulatory Authority of the need for remedial action, and Aytu
shall have a right to provide written comments on such remediation plan not
later than ten (10) Business Days after receipt thereof from Acerus, and Acerus
shall consider in good faith any such written comments and use reasonable
efforts to incorporate them into its remediation plan. Acerus shall use
commercially reasonable efforts to promptly take remedial actions pursuant to
the remediation plan. In the event that Aytu receives any material regulatory
letter or comments from any Regulatory Authority relating to the development or
Manufacture of Product, Acerus (as applicable) will promptly provide Aytu with
any data or information required by Aytu in preparing any response relating to
Acerus’ development or Manufacture of Product and will cooperate fully with Aytu
in preparing such response.
 
 
 
20

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
 
4.5 Inspections. In the event that any Acerus facility will be inspected by
representatives of any Regulatory Authority directed to Acerus’ Manufacture of
Product, Acerus shall notify Aytu promptly after learning of such inspection and
shall supply Aytu with copies of any correspondence or portions of
correspondence which are relevant to Aytu’s rights or obligations under this
Agreement. Following any such inspection, Acerus shall provide Aytu with a
written summary of that portion of the inspection that was relevant to Product
within seven (7) Business Days of such inspection.
 
4.6 Product Recalls and Withdrawals.
 
(a) Acerus shall be responsible for determining whether any recall or withdrawal
of the Product is necessary, and, promptly upon such determination, Acerus shall
notify Aytu of such recall or withdrawal. If Aytu becomes aware that the Product
may not comply with Applicable Law and/or a recall or withdrawal of the Product
may be necessary or desirable, Aytu shall provide Acerus with prompt written
notice thereof (within seventy-two (72) hours of becoming aware). Thereafter,
Acerus shall determine whether the Product should be recalled or withdrawn. In
all cases, each Party shall use Commercially Reasonable Efforts to implement any
recall of Product.
 
(b) The Party that is predominantly responsible for the applicable Product’s
non-compliance with applicable rules and regulations shall bear all Third Party
costs and expenses actually incurred and associated with conducting such recall
in accordance with such recall plan, unless such recall results predominantly
from the other Party’s material breach of its obligations under this Agreement
or unless such recall otherwise predominantly results from the negligence or
wrongful intentional acts or omissions of the other Party, in which case the
other Party shall bear all Third Party costs and expenses actually incurred and
associated with such recall.
 
(c) If neither Party is predominantly responsible or responsibility cannot be
ascertained as to the cause of the applicable non-compliance, the Parties agree
to submit the matter to a mutually acceptable independent laboratory or
consultant that has the capability of testing the Product to determine which
Party is responsible for such recall, whose fees shall be paid by the
non-prevailing Party.
 
 
 
21

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 

Article 5

MANUFACTURE AND SUPPLY OF PRODUCT
 
5.1 Supply and Purchase of Product.
 
(a) Manufacture and Supply of Product and Raw Materials. Acerus shall be
responsible for the production, manufacture, testing, packaging and all related
activities, including, without limitation, warehousing and storage of the
Product prior to delivery to Aytu in accordance with Section 5.1(c) below and
supplying Finished Product (collectively, the “Manufacture”), in accordance with
this Article 5, and carrying out quality assurance in accordance with the
Quality Agreement. Subject to Section 5.2, during the Term, Aytu, its Affiliates
and Permitted Sublicensees shall purchase all of its requirements of Product
from Acerus. In consideration for Acerus’ supply of Product, Aytu will pay
Acerus the Supply Price. Placebo dispensers and Product shall be supplied in
accordance with the following provisions.
 
(i)
Subject to the provisions of this Article 5, Acerus shall Manufacture Product in
accordance with the quantity requirements of Aytu, its Affiliates, licensees and
Permitted Sublicensees, in accordance with the applicable Master Production Plan
developed by the Forecasting Subcommittee and set forth in written Purchase
Orders and shall not Manufacture, supply or sell Product for or to any Third
Party for use in the Territory.
 
(ii)
Acerus shall have additional responsibilities for Product as set forth in the
Quality Agreement. In the event of any conflict or inconsistency between this
Agreement and the Quality Agreement with respect to: (i) quality-related
matters, the Quality Agreement shall prevail; and (ii) any other matter, this
Agreement shall prevail. Acerus shall have sole responsibility for disposing of
all wastes arising from Manufacture in accordance with all Applicable Laws and
Regulatory Requirements.
 
(iii)
Acerus shall supply Aytu with reasonable quantities of placebo dispensers
consistent with the applicable Master Production Plan approved by the JCC and
pursuant to written Purchase Orders, and shall provide such placebo dispensers
in finished form in accordance with this Article 5. Placebo dispensers shall be
supplied in accordance with Section 5.1(c) (provided, however, that any such
request shall be made in even multiples of the standard batch size for such
items set out in Schedule 1.43 and provided further that placebo dispensers
shall be included in the Master Production Plans submitted in accordance with
Section 5.1(b), at a cost equal to Acerus COGS (to be paid in full within
forty-five (45) days of the applicable delivery in accordance with
Section 5.1(c)(iii).
 
(iv)
Acerus will supply the Finished Product, labeled and packaged in shipping
containers suitable for sale in the Territory, with Acerus’ National Drug Code
(“NDC”) and label; provided that existing Aytu Product containing Aytu’s NDC and
label will continue to be sold until such time as it is either (a) exhausted or
(b) Acerus has completed a re label and re package of Product containing Aytu’s
NDC and label to label such Product with Acerus’ NDC and label.
 
(b) Forecasts; Orders.
 
(i)
The first seven (7) months of each Master Production Plan, as established by the
Forecasting Subcommittee, shall be deemed to be a binding, non-cancellable
purchase order for Product and placebo dispensers and shall be accompanied by
any other information required under Section 5.1(c) (the “Purchase Order”). The
following seventeen (17) months of the Master Production Plan shall be the
Forecasting Subcommittee’s non-binding, good faith estimate of such requirements
based on sales and forecasted demand for Product and placebo dispensers
(“Non-Binding Commitment”).
 
(ii)
Each Master Production Plan and included binding Purchase Order shall be deemed
to be automatically accepted, and shall be binding on Acerus and Acerus will be
required to supply the Product and placebo dispensers set forth in a Purchase
Order, unless Aytu is notified by Acerus, within ten (10) Business Days, that
the Purchase Order terms violate the requirements set forth in this Article 5.
In the event of any conflict or inconsistency between this Agreement and any
Purchase Order, this Agreement shall prevail.
 
(c) Purchase of Product; Deliveries.
 
(i)
Except to the extent the Parties may otherwise agree in writing with respect to
a particular shipment, all orders for Product placed hereunder shall be
submitted to Acerus according to the procedures described in Section 5.1 of this
Agreement. Each Purchase Order for Product and placebo dispensers shall
specify: (A) the type of Product being ordered (i.e., whether the Product is
intended for trade or samples); (B) the amount of such Product and placebo
dispensers being requested (which shall be in accordance with this Section 5.1
and be in even multiples of the standard batch size (as set forth in Schedule
1.43), unless otherwise agreed by Acerus); and (C) the requested Delivery Dates,
such Delivery Date to be not less than seven (7) months following submission of
the Purchase Order to Acerus in accordance with Section 5.1(b)(ii). Acerus shall
supply Product and placebo dispensers in such quantities on the Delivery Dates
set forth in the Purchase Order.
 
 
 
22

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
(1)
Acerus shall furnish to Aytu at least five days prior to the release for
delivery to Aytu of each shipment of Product ordered by Aytu hereunder, (i) a
certificate of analysis reflecting that such Product and any Raw Materials used
conform to the relevant Specifications and (ii) all documentation required by
Applicable Law or Regulatory Requirements.
 
(2)
Aytu shall not be required to take receipt of a Batch of Product with less than
[**] of remaining shelf life; provided that Aytu and Acerus may nonetheless
negotiate in good faith for Aytu to purchase any Batch not meeting the foregoing
remaining shelf life requirement.
 
(ii)
Any changes to a submitted Purchase Order will be deemed to reasonably extend
the Delivery Date for such Product or placebo dispensers. Upon submission and
acceptance of such changes, the Parties will work in good faith to determine the
new Delivery Date for such Purchase Order, as amended. For clarity, non-material
changes are not expected to restart the clock on the lead-time, but may increase
the lead-time to beyond the seven (7) months provided for herein.
 
(iii)
Property in, title to, and risk of loss of or damage to, all Raw Materials and
Product shall remain with Acerus and pass to Aytu only upon delivery to Aytu on
an Ex Works, Acerus’ (or its Third Party manufacturer’s) facility (Incoterms
2010) basis. Acerus shall provide all reasonably requested documentation in
connection with any shipment of Product, and Aytu shall provide Acerus with
copies of any shipping-related documentation required by Acerus in order to
comply with Applicable Laws.
 
(d) Acceptance and Rejection Procedures.
 
(i)
Aytu shall, promptly upon arrival at Aytu’s designated warehouse or third-party
logistics provider, carefully inspect each shipment of Product for transport
damages, losses and shortfalls. Apparent defects, such as, for example, damaged
containers or missing packages of Products, must be identified to the carrier
promptly upon arrival of the shipment and the freight documents at Aytu’s site
and, where possible, countersigned by the carrier’s representatives. Failure of
Aytu to notify such visually detectable defects to the carrier promptly upon
arrival of the concerned shipment and freight documents shall exclude liability
of Acerus for such defects. Thereafter, Aytu shall have thirty (30) days after
receipt of a shipment of Product (the “Inspection Period”) to determine if there
is any defect in the Product or any non-compliance with the Specifications,
which is discoverable by diligent and customary inspection of the shipment and
any accompanying documentation. Aytu shall notify Acerus of any such
non-compliance prior to the end of the Inspection Period, describing in
reasonable detail the non-compliance. Notwithstanding the foregoing, if with
respect to any unexpired Product, the non-compliance could not reasonably be
expected to have been found by diligent and customary inspection during the
Inspection Period and Aytu notifies Acerus of such non-compliance, describing
such Latent Defect in detail, within twenty five (25) days of Aytu’s knowledge
of the Latent Defect and within the shelf life of the Product, such
non-compliance shall be deemed to be a “Latent Defect” hereunder. Aytu shall be
deemed to have accepted any Product if it fails to notify Acerus of a
non-conformity or Latent Defect during the periods permitted in this Section
5.1(d)(i). At Acerus’ reasonable request, Aytu shall provide Acerus with any
available documentation or analysis that is reasonably necessary for Acerus to
determine whether such non-conformity or Latent Defect exists in such Product.
 
 
 
23

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
(ii)
Aytu acknowledges and agrees that Acerus shall be entitled to deliver a quantity
of Product that is not more than [**] less or greater than the amount set out in
any accepted Purchase Order, and that such delivery shall not entitle Aytu to
reject the applicable Product despite the failure of the delivered quantity to
strictly conform to the amount set out in the applicable Purchase Order.
 
(iii)
If Aytu notifies Acerus that Product delivered to Aytu is non-conforming or has
a Latent Defect, then as promptly as practicable after receipt of such notice
(but in no event later than [**] after receipt), Acerus shall (1) instruct Aytu
whether to return or destroy the Product in question (provided, that, Aytu may
retain samples of non-conforming Product for the purpose of determining any
dispute) and (2) provide Aytu with replacement Product, which Delivery Date
shall be as promptly as possible but in no event more than [**] after receipt of
the notice of non-conformity or Latent Defect.
 
(iv)
If Acerus agrees with the claim set forth in the notice delivered pursuant to
Section 5.1(d)(i), then the Party responsible for the non-conformity or Latent
Defect shall bear the costs and expenses related to return (if applicable) and
delivery of replacement Product. If the Parties do not agree (1) that there is a
non-conformity or Latent Defect or (2) that a particular Party is responsible
for the non-conformity or Latent Defect, then the Parties agree to submit the
Product in question to a mutually acceptable independent laboratory or
consultant that has the capability of testing the Product to determine whether
or not it complies with the Specifications and which Party is responsible for
such non-conformity or Latent Defect, whose fees shall be paid by the
non-prevailing Party. If the independent laboratory or consultant determines
that the non-conformity or Latent Defect is (A) due to damage to Product
(i) caused by Aytu or its agents or (ii) which occurs subsequent to delivery of
such Product to Aytu in accordance with Section 5.1(c)(iii), Acerus shall have
no liability to Aytu with respect thereto and Aytu shall pay for all shipping
costs of returning (if applicable) the Product and/or sending replacement
Product, as the case may be; or (B) caused by any other reason than those set
forth in clause (A), Acerus shall pay for all shipping costs of returning (if
applicable) the Product and/or sending replacement Product, as the case may be.
If payment for non-conforming Product has previously been made by Aytu, at
Aytu’s option, (i) Acerus shall pay Aytu the amount of such credit, (ii) Aytu
may offset the amount thereof against other amounts then due to Acerus hereunder
or (iii) Acerus shall replace such non-conforming Product with conforming
Product at no additional cost or expense to Aytu.
 
 
 
24

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
(v)
The rights, remedies and obligations set forth in this Section 5.1(d) shall be
the sole rights, remedies and obligations that either Party may otherwise have
with respect to non-conforming Product or Latent Defects.
 
(e)  Capacity. Subject to the terms and conditions of this Agreement, Acerus
shall ensure that the Product requirements set forth in the binding portion of
the most recent Master Manufacturing Plan are met. In the event that Acerus
becomes aware at any time of any matter, circumstance or event which might
reasonably be expected to give rise to an inability to supply Product based on
the most recent binding portion of the Master Manufacturing Plan (including that
the quality standards set forth herein and in the Quality Agreement have been
materially compromised such that Acerus may not be able to supply Product
Manufactured to the Product Specifications and/or comply with Regulatory
Requirements), Acerus shall give prompt written notice of such matter,
circumstance or event to the JCC, including without limitation, the cause
thereof, the anticipated length of such delay or shortfall and the action to be
taken to reduce, minimize or remove the adverse effects of any such delay.
Within seven (7) days after receipt of such a notice from Acerus, the JCC shall
meet with a view to agreeing to action as may be necessary to ensure that no
interruption of supply or shortfall in quantities of Product occurs. This
Section 5.1(e) is not intended to lessen or alter Acerus’ supply obligations set
forth in this Section 5.1.
 
5.2 Direct Supply. Notwithstanding the foregoing Section 5.1, in the event that
Acerus determines in its sole discretion that it would like Aytu to assume
responsibility for obtaining supply of Products from Acerus’ Third Party
manufacturer thereof or another supplier, the Parties shall negotiate in good
faith to enter into a new agreement mutually acceptable to the Parties to
provide for an Aytu technology transfer to make and have made Products.
 
5.3 Long Term Inability to Supply. In the event that a Long Term Inability to
Supply with respect to the Product has occurred and is continuing, Aytu shall
have the right to purchase Product from one or more alternative Third Party
suppliers and require Acerus to transfer to Aytu and such Third Party supplier
all of the technology necessary for such Third Party supplier to carry out its
supply obligations. Upon any transfer contemplated in this Section 5.3, the
Parties shall negotiate in good faith to enter into a new agreement mutually
acceptable to the Parties to provide for a royalty-bearing license.
 
 
 
25

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 

Article 6 

COMMERCIALIZATION
 
6.1  Commercialization. From and after A&R Closing, the Parties will pursue
Commercialization of the Product under this Agreement pursuant to a
Commercialization Plan, as drafted by Acerus and developed, reviewed and
approved by the JCC within sixty (60) days after the A&R Closing Date and
annually thereafter; provided that Aytu shall draft the portion of the
Commercialization Plan concerning the Aytu Sales Channel which will also be
subject to the JCC’s approval, such approval not to be unreasonably withheld.
The Commercialization Plan shall set forth the Commercialization strategy and
tactics for the coming year, including proposed targeting methodology and lists,
resourcing, call plans and key marketing messages for the Product. The Parties
will use Commercially Reasonable Efforts to carry out the obligations set forth
in the Commercialization Plan. The initial Commercialization Plan shall include
a detailed budget for the activities to be completed under the Commercialization
Plan. Each Party will bear its own costs and expenses associated with its
activities under this Agreement and the Commercialization Plan (the
“Commercialization Costs”).
 
6.2 Transition Period Activities.
 
(a) During the first six (6) months following the A&R Closing Date (the
“Transition Period”), the Parties shall use Commercially Reasonable Efforts to
transfer to Acerus as promptly as possible after the A&R Closing Date the
activities previously conducted by Aytu under the 2016 Agreement that are to be
conducted by Acerus under this Agreement; provided that until those activities
are transferred, Aytu shall continue to conduct activities related to the
Commercialization of the Product that it conducted immediately prior to the A&R
Closing Date, as set forth on Schedule 6.2(a).
 
(b) By the conclusion of the Transition Period, the activities set forth on
Schedule 6.2(a) will be transitioned to Acerus, including without limitation
reimbursement and certain patient support services; provided that Aytu shall
reimburse Acerus for all direct Specialty Pharmacy expenses not related to the
Product and for Aytu’s fair allocation of the fixed costs associated with the
Specialty Pharmacy program. Each Party shall share equally all costs associated
with the transition of activities pursuant to this Section 6.2. At any time and
to the extent dictated by Accounting Standards applicable to Aytu as advised by
Aytu’s accountants, in order to reflect Aytu as the exclusive seller of the
Product to wholesalers, pharmacies, and customers receiving direct shipment of
Product in the Territory, Aytu will (i) use Commercially Reasonable Efforts to
maintain in effect any agreements and arrangements with regard to the
distribution of the Product for the benefit of Acerus’ activities in the Acerus
Sales Channel and (ii) maintain contractual relationships with Third Parties
relating to Product sales that influence such determination, such as Specialty
Pharmacy, TrialCard, and others.
 
(c) To facilitate the transition of promotional activities for the Product in
the Acerus Sales Channel from Aytu to Acerus, Aytu and Acerus shall cooperate to
transfer, effective on or as promptly as practicable after the A&R Closing Date,
those of the Aytu personnel who the Parties agree are appropriate candidates to
work with the Product at Acerus and who have agreed in writing to be transferred
to Acerus.
 
 
 
26

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
6.3 Sales Force Activities.
 
(a) Size of Product-Specific Sales Force. From and after the A&R Closing, each
Party shall perform all Detailing with regard to the Product within its
respective Sales Channel exclusively through Sales Representatives on each
Party’s sales force (including independent Sales Representatives engaged by the
Parties) and consisting of the following:
 
(i)
Aytu shall employ a sales force (the “Aytu Product-Specific Sales Force”)
consisting of:
 
(1)
for the first twelve (12) months following the A&R Closing Date, a number of
Sales Representatives on a Full Time Basis that is not less than [**] and a
mutually agreed number of sales force managers appropriate to manage the Sales
Representatives;
 
(2)
thereafter during the Term, a minimum number of Sales Representatives equal to
the Base Requirement and an appropriate number of sales force managers to manage
the Sales Representatives.
 
(ii)
Acerus shall employ a sales force (the “Acerus Product-Specific Sales Force”)
consisting of:
 
(1)
at least ten (10) Sales Representatives on a Full Time Basis at all times after
the three (3)-month anniversary of the A&R Closing Date and before the six
(6)-month anniversary of the A&R Closing Date;
 
(2)
at least twenty (20) Sales Representatives on a Full Time Basis at all times
after the six-month anniversary of the A&R Closing Date and before the twelve
(12)-month anniversary of the A&R Closing Date; and
 
(3)
at least twenty-five (25) Sales Representatives on a Full Time Basis at all
times during the Term after the twelve (12)-month anniversary of the A&R Closing
Date.
 
Each Party shall provide the other Party with a roster of the Sales
Representatives on its Product-Specific Sales Force on a quarterly basis.
 
(iii)
The Product-Specific Sales Force requirements set forth in clause (i) and (ii)
above are subject to voluntary resignations by Sales Representatives or
terminations or reassignments of individual Sales Representatives by the
applicable Party due to a Sales Representative’s failure to achieve applicable
performance requirements or otherwise in the ordinary course in accordance with
the applicable Party’s human resources policies, including for cause
(collectively, “Ordinary Course Terminations and Reassignments”). If the number
of Sales Representatives employed by a Party drops below the number of Sales
Representatives required pursuant to clause (i) or (ii) above as a result of
Ordinary Course Terminations and Reassignments, such Party shall promptly (and
in any event within seventy-five (75) days) replace such individual with a new
Sales Representative who meets the qualifications determined by the JCC;
provided that if the number of Sales Representatives employed by Aytu drops
below the number of Sales Representatives required pursuant to clause (i) or
(ii) above as a result of transfer of more than five (5) Sales Representatives
during the Transition Period pursuant to Section 6.2(c), then Aytu shall have
one hundred and twenty (120) days to replace such individual with a new Sales
Representative. For clarity, such Party will be in breach of this Section 6.3 if
it fails to replace any Sales Representative in accordance with this Section
6.3(a)(iii) within the seventy-five (75)-day period after the Sales
Representative resigns or is terminated or resigned as a result of Ordinary
Course Terminations and Reassignments; provided that a Party will not be in
breach if such Party uses its best efforts to replace the Sales Representative
but is nonetheless unable to replace such Sales Representative within one
hundred and twenty (120) days.
 
 
 
27

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
(b) Product Promotional Position; Incentive Compensation. For the first
twenty-four (24) months after A&R Closing, and thereafter as set forth in the
applicable Commercialization Plan, each Party will ensure that the Product is
Promoted in a primary (P1) or secondary (P2) Detailing position with such
Party’s Product-Specific Sales Force. Each Party’s Product-Specific Sales Force
will be eligible to receive according to the Incentive Compensation plan an
amount that is no less than [**] of the spending available in the Party’s
Incentive Compensation plan each calendar quarter. After the end of the two
(2)-year period referred to in this Section 6.3(b), the Parties, through the
JCC, will discuss in good faith and attempt to agree on Incentive Compensation
plans for each successive two (2)-year period during the Term. If the Parties
are unable to agree to new Incentive Compensation plans prior to the expiration
of a given two (2)-year period, the Incentive Compensation plans for the
immediately preceding two-year period shall continue to apply following such two
(2)-year period.
 
6.4 Sales Training.
 
(a) Training Program. After the A&R Closing Date, the Parties shall cooperate to
train each Party’s Sales Representatives on the Product (who have not already
been so trained) in accordance with the applicable Commercialization Plan and
Applicable Laws, including, without limitation, training concerning (i) the
scientific basis and indications for the Product, (ii) competitive product
knowledge, (iii) permissible communications regarding safety and efficacy claims
relating to the Product, (iv) permissible communications related to the Product
in accordance with the Product labeling, (v) reporting of adverse events (vi)
use of Promotional Materials and (vii) other appropriate topics relevant to the
Promotion and Commercialization of the Product (the “Product Training”). Each
Party will be entitled to appoint the trainer(s) to conduct Product Training and
to determine the curriculum for its Sales Representatives, in accordance with
the Commercialization Plan. Each Party shall be responsible for planning and
conducting all Product Training, consistent with each Commercialization Plan,
and shall ensure that each Sales Representative and other applicable personnel
of such Party completes all required Product Training prior to commencing any
Promotion or other Commercialization activities under this Agreement and
continues to participate in Product Training at least annually thereafter. Each
Party shall also be responsible, at its own expense, for providing, and shall
provide, to all Sales Representatives and other applicable personnel of such
Party a broad general training program, including training on proper Promotion
and marketing techniques, ethics, compliance with Applicable Laws, and the
compliance with such Party’s policies, procedures, standards and practices.
 
(b) Training Materials. Acerus shall be solely responsible for determining the
content of and developing Product-Specific Training Materials for use hereunder.
Each Party will pay its expenses related to the production of Training Materials
(i.e., Acerus will pay for development, but Aytu will cover Aytu’s direct costs
related to printing and shipping of Training Materials relevant to Aytu Sales
Channel used for Product Training for Aytu’s Sales Representatives and
personnel).
 
 
 
28

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
(c) Training Expenses. Each Party shall be responsible for the costs and
expenses associated with Product Training for its Sales Representatives and
personnel, and any such costs that apply to both Parties’ Sales Representatives
and personnel shall be paid for equally by the Parties. All such training costs
shall be included in Commercialization Costs for the Party incurring such costs.
 
(d) Recordkeeping. The Parties shall maintain records related to Product
Training sufficient to show the Parties’ personnel in attendance at Product
Training sessions, including, for example, sign-in sheets and computer records
for Web-based training. The Parties shall maintain Product Training records,
including, for example, testing records, certifications, and copies of Training
Materials used at Product Trainings session for a period of three (3) years
following the end of the calendar year during which such Product Training
occurred. A Party shall provide copies of such records to the requesting Party
upon request.
 
6.5 Detailing.
 
(a) During the first two (2) years after the A&R Closing Date each Party shall
ensure that it achieves the Average Detail Levels set forth in the following
table (with any partial years being calculated on a straight-line pro-rata
basis):
 
 
Aytu
Acerus
Average Detail Level per calendar year
[**]
[**]
Average Detail Level per calendar quarter
[**]
[**]

 
 
(b) After the end of the two (2)-year period referred to in Section 6.5(a), the
Parties, through the JCC, will discuss in good faith and attempt to agree on
Average Detail Level requirements for each successive two (2)-year period during
the Term. If the Parties are unable to agree to new Average Detail Level
requirements prior to the expiration of a given two (2)-year period, the Average
Detail Level requirements for the immediately preceding two-year period shall
continue to apply following such two (2)-year period. If either Party fails to
attain the Average Detail Level requirement for any calendar quarter, the Party
shall have up to two subsequent calendar quarters to address this shortfall by
achieving a greater number of Details in such subsequent calendar quarters to
make up for the previously recorded shortfall and meet the requirement for each
of those subsequent calendar quarters. Any such make-up Details may be performed
by different Sales Representatives working on a Full Time Basis and who either
(i) have qualifications set by the JCC (to the extent the JCC has exercised its
authority to set such qualifications) or (ii) have been approved by the JCC.
Failure (i) to meet this Average Detail Level requirement for any calendar
quarter (after the two make-up quarters) or (ii) to meet the annual Average
Detail Level requirement for each calendar year (after the make-up quarters
applicable to that calendar year), shall constitute a material breach of this
Agreement.
 
 
 
29

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
(c) Each Party shall provide reports to the other Party within sixty (60) days
after the end of each calendar quarter of its Commercialization activities for
the Product and the related Commercialization Costs incurred by it.
 
6.6 Promotional Materials.
 
(a) Initial Promotional Materials. Until such time when the JCC has developed
and produced new Promotional Materials, the Parties will continue to utilize
Promotional Materials for the Product that were developed and/or produced prior
to the A&R Closing Date; provided that if such use by Acerus will trigger
incremental out-of-pocket costs to Aytu, then Acerus shall reimburse Aytu for
such incremental out-of-pocket costs associated with the production of such
additional Promotional Materials.
 
(b) Development. The Parties shall develop and produce all advertising and
Promotional Materials relating to the Product in cooperation with the JCC in
accordance with Section 2.1(c)(viii) and (ix). All Promotional Materials shall
include the Acerus Trademarks (including the Acerus House Marks) as well as the
Aytu trade name and logo (the “Aytu House Marks”), in accordance with all
Regulatory Requirements. Aytu shall have the right to develop Promotional
Materials specific to the Aytu Sales Channel; provided that such materials will
be consistent with the materials developed by Acerus for the Product; provided
further that the JCC shall have the right to review, comment and approve such
Promotional Materials, such approval not to be unreasonably withheld. All
Promotional Materials to be used by a Party’s personnel pursuant to this
Agreement shall at all times be in compliance with Applicable Laws and the
labeling for the Product. Costs incurred by each Party in generating Promotional
Materials in accordance with this Section 6.6(b) will be included in
Commercialization Costs.
 
(c) Use of Promotional Materials. The Parties shall (i) utilize only those
advertising and Promotional Materials approved by the JCC when performing
activities under the Commercialization Plan, and (ii) use the Promotional
Materials solely for the purposes of conducting the Promotion activities in the
Territory as contemplated under this Agreement, (iii) ensure that the
Promotional Materials are not modified, changed, misbranded or altered in any
way by such Party or its personnel, and (iv) in conducting Promotion activities
hereunder, make only those statements and claims regarding the Product,
including as to efficacy and safety, that are consistent with the Promotional
Materials, the labeling and Applicable Laws. Each Party shall promptly notify
the other Party, and provide the other Party with a copy, of any correspondence
or other report or complaint received by a Party or any Party personnel from any
Regulatory Authority or any Third Party claiming that any oral or written
statements about the Product or any Promotional Materials are inconsistent with
the applicable labeling or are otherwise in violation of Applicable Laws or that
any Party Sales Representative or other Party personnel conducting Promotion or
other Commercialization activities is making statements or claims regarding a
Product that are inconsistent with the Promotional Materials or the Product
labeling.
 
 
 
30

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
Article 7
 
PAYMENTS
 
7.1 Payments.
 
(a) Commission Payments. After the A&R Closing Date, Aytu will pay Acerus
commissions on Product sales on a quarterly basis as follows (such amounts due
to Acerus, the “Acerus Commission Payments”):
 
(i)
[**] for Annual Product Net Revenue between [**] and [**] in the combined Aytu
Sales Channel and the Acerus Sales Channel.
 
(ii)
[**] for Annual Product Net Revenue between [**] and [**] in the combined Aytu
Sales Channel and the Acerus Sales Channel; and
 
(iii)
For Annual Product Net Revenue greater than [**] in the combined Aytu Sales
Channel and the Acerus Sales Channel as further described in Section 7.1(c)
below:
 
(1)
Aytu Sales Channel [**] commission.
 
(2)
Acerus Sales Channel: [**] commission.
 
(b) Reporting. Aytu will be responsible for tracking Annual Product Net Revenue
and will deliver to Acerus (i) a report on a monthly basis setting forth current
Annual Product Net Revenue and (ii) a notice promptly upon achieving an Annual
Product Net Revenue amount that would trigger a change in the commission rate
due to Acerus [**].
 
(c) Determining Commission Payments Based on Annual Product Net Revenue.
 
(i)
The Commission Payment payable to Acerus under Section 7.1(a)(i) for a given
calendar quarter, will equal (i) the Net Revenue for the Product during the
quarter less the Product Costs associated with the generation of said Net
Revenue, multiplied by [**].
 
(ii)
The Commission Payment payable to Acerus under Section 7.1(a)(ii) for a given
calendar quarter, will equal (i) the Net Revenue for the Product during the
quarter less the Product Costs associated with the generation of said Net
Revenue, multiplied by [**].
 
(iii)
The Product Net Revenue attributable to the Aytu Sales Channel under
Section 7.1(a)(iii)(1) for a given calendar quarter, will equal (i) the product
of Net Product Revenue multiplied by (ii) the proportion of Product
prescriptions written in that calendar quarter in the Aytu Sales Channel. Such
product will be multiplied by a [**] commission rate and represent the Acerus
Commission Payment under Section 7.1(a)(iii)(1). For clarity, the Aytu
proportion of Product prescriptions equals the number of Product prescriptions
written in that calendar quarter in the Aytu Sales Channel divided by the total
Product prescriptions written in that same calendar quarter.
 
 
 
31

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
(iv)
The Product Net Revenue attributable to the Acerus Sales Channel under
Section 7.1(a)(iii)(2) for a given calendar quarter, will equal (i) the product
of Net Product Revenue multiplied by (ii) the proportion of Product
prescriptions written in that calendar quarter in the Acerus Sales Channel. Such
product will be multiplied by a [**] commission rate and represent the Acerus
Commission Payment under Section 7.1(a)(iii)(2). For clarity, the Acerus
proportion of Product prescriptions equals the number of Product prescriptions
written in that calendar quarter in the Acerus Sales Channel divided by the
total Product prescriptions written in that same calendar quarter.
 
(v)
The sum of Acerus Commission Payments under Section 7.1(c)(iii) and Section
7.1(c)(iv) will then be reduced by the Product Costs proportional to the
prescriptions written in that calendar quarter in the Acerus Sales Channel and
will represent the Commission Payment payable to Acerus under Section
7.1(a)(iii)(1) and Section 7.1(a)(iii)(2). For clarity, the Acerus proportion of
Product prescriptions equals the number of Product prescriptions written in that
calendar quarter in the Acerus Sales Channel divided by the total Product
prescriptions written in that same calendar quarter.
 
(vi)
If it is unclear whether a particular prescription should be accounted for in
the Acerus Sales Channel or the Aytu Sales Channel, the Net Revenue associated
with such prescription shall be divided in accordance with the proportion of
prescriptions between the two Sales Channels for such calendar quarter and any
adjudications required for discrepancies shall be handled by the JCC.
 
(vii)
For purposes of this Section 7.1(c), the following shall apply:
 
(1)
For any Product sold that was purchased by Aytu under the 2016 Agreement at a
price equal to Acerus COGS plus [**] (“Previously Purchased Product”), and then
sold into the Aytu Sales Channel or the Acerus Sales Channel, Acerus will refund
Aytu an aggregate amount equal to the [**] paid above Acerus COGS.
 
(2)
In order to determine the number of prescriptions to be applied in the
calculations set forth in this Section 7.1, the Parties shall use the number of
prescriptions as reported by the data sources listed in Schedule 7.1(c)(vii)(3),
as such schedule may be amended from time to time by the JCC. If there are
discrepancies between the data sources listed on Schedule 7.1(c)(vii)(3), such
discrepancies shall be resolved or reconciled by the JCC.
 
 
 
32

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
(d) The example set forth on Schedule 7.1(d) illustrates this calculation.
 
(e) Notwithstanding the foregoing, if the Aytu Sales Channel generates Net
Revenues of at least [**] in a half-calendar year (January 1-June 30 or July
1-December 31) during the Term and the Acerus Sales Channel generates Net
Revenues of less than [**] in the same calendar half-year, Acerus shall pay a
license fee to Aytu, within forty-five (45) days of the end of said calendar
half-year, in an amount equal to the product of (i) [**] minus the actual annual
Net Revenues generated by the Acerus Sales Channel in such calendar half-year
and (ii) [**]; provided that at the end of the calendar year Aytu shall
reimburse Acerus for such license fee if during that full calendar year the
Acerus Sales Channel generates Net Revenues in excess of [**] in the same
calendar year. If the relevant time period above starts other than on the first
day of the calendar year, the foregoing shall be paid on a pro rata basis.
 
7.2 Supply Price of Product.
 
(a) Supply Price. The price for Product (except for supply of placebo
dispensers, which shall be supplied in accordance with Section 5.1(a)(iii)) to
be paid by Aytu shall be equal to Acerus COGS for the Product (calculated in
United States Dollars using the applicable daily rate of exchange on the date of
the invoice delivered in accordance with Section 7.2(b) upon delivery of
applicable Product, as published in The Wall Street Journal, New York edition)
(the “Supply Price”).
 
(b)  Payments.
 
(i)
Acerus shall invoice Aytu for all Product delivered to Aytu in accordance with
Section 5.1(c)(iii) in an amount equal to Acerus COGS for such Product
(calculated in United States dollars using the applicable daily rate of exchange
on the date of the invoice delivered in accordance with Section 7.2(b), as
published in The Wall Street Journal, New York edition) (on a per Unit basis,
the “Invoiced Amount per Unit”). Aytu shall pay the amount of such invoice not
later than thirty (30) days following Aytu’s receipt of such invoice; provided,
however, that Aytu may contest any invoice or portion thereof, to the extent
that it reasonably believes that the charges reflected therein are inappropriate
or lack a clear basis (paying all charges that are appropriate). Once any such
issue or concern is resolved, Aytu shall pay any remaining appropriate charges
within thirty (30) days of the date that such resolution occurs.
 
(ii)
Not later than twenty-one (21) days after the end of each calendar quarter
during the Term, Aytu shall provide Acerus with a report detailing Aytu’s
reasonable estimate as of the date of such report for the Acerus Commission
Payment due in respect of the Products supplied hereunder during the immediately
preceding calendar quarter.
 
(iii)
Within forty-five (45) days after the end of each applicable calendar quarter,
Aytu shall deliver a report setting out the amount of the Acerus Commission
Payment due, setting forth in reasonable detail the calculation of such amount,
signed by the Chief Financial Officer of Aytu certifying that all deductions are
in accordance with GAAP and this Agreement. Payment of such Acerus Commission
Payment due for such calendar quarter shall accompany delivery of such quarterly
report.
 
 
 
33

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
7.3 Payment Method. All payments due under this Agreement to Acerus shall be
made by bank wire transfer in immediately available funds to an account
designated by Acerus. All payments due under this Agreement to Aytu shall be
made by bank wire transfer in immediately available funds to an account
designated by Aytu.
 
7.4  Taxes. The Parties will each be solely responsible for their own compliance
with governmental jurisdictional tax regimes, if applicable, to any transaction
contemplated in this agreement. If Aytu determines that it is required by any
Applicable Laws to withhold any taxes from any payment made by Acerus (an
“Original Payment”) pursuant to this Agreement (“Withholding Taxes”), Aytu shall
(a) withhold the required amount and pay it to the appropriate governmental
authority; Aytu shall provide to Acerus such documentation as may be reasonably
requested by Acerus, evidencing the payment of such Withholding Taxes to the
appropriate governmental authority, and the calculation of the amount of such
Withholding Taxes. The Parties will reasonably cooperate in completing and
filing documents required under the provisions of any Applicable Laws in
connection with the making of any required tax payment or withholding payment,
or in connection with any claim to a refund of or credit for any such payment.
Notwithstanding any of the foregoing, neither Party currently expects any
Withholding Taxes to apply to the payments from Aytu to Acerus pursuant to this
Agreement. In the event such Withholding Taxes apply in the future, the Parties
agree to negotiate an amendment to this Agreement to structure the relationship
in a way that does not trigger Withholding Taxes for Acerus and both Parties
will collaborate in good faith to give effect to such an amendment.
 
7.5 Interest. If either Party fails to make any payment due under this Agreement
within [**] of the date upon which such payment is due, then interest shall
accrue on such payment on a daily basis from the date such payment was
originally due at a rate equal to LIBOR (or a suitable replacement agreed by the
Parties such as SOFR) (as published in The Wall Street Journal, New York
edition) plus [**], or at the maximum rate permitted by Applicable Law,
whichever is the lower, and such interest shall be paid when such payment is
made.
 
7.6 Currency Exchange. All amounts referred to in this Agreement are expressed
in, and all payments to Acerus hereunder will be payable in, U.S. Dollars.
 
7.7  Records.
 
(a) Retention.
 
(i)
Acerus Records
 
  After the A&R Closing Date, Acerus shall keep for at least three (3) years
following the end of the calendar year to which they pertain complete records of
all matters relating to (1) all development work on Product done by Acerus and,
as may be further described in the Quality Agreement, (2) Manufacturing of
Product (including as are necessary or useful in calculation of Acerus COGS for
the Product) and (3) Commercialization activities performed by Acerus pursuant
to Article 6. Such recordkeeping obligations shall survive any expiration or
termination of this Agreement for the time period provided herein.
 
(ii)
Aytu Records
 
  Aytu shall keep for at least three (3) years following the end of the calendar
year to which they pertain complete records of Net Revenue of Product in the
Territory and Commercialization activities performed by Aytu pursuant to Article
6. Such record keeping obligation shall survive any expiration or termination of
this Agreement for the time provided herein.
 
 
 
34

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
 
(b) Audit Right. Subject to the other terms of this Section 7.7, either Party
(the “Requesting Party”) may audit the records of the other Party (the “Audited
Party”). The records to be audited are records regarding Net Revenue (including,
for greater certainty, the Supply Price applicable in respect of all Net
Revenue) or each Party’s compliance with Article 6 of this Agreement (including
detailed information relevant to the number of Sales Representatives engaged by
or on behalf of the Party with respect to the Product and the Details completed
thereby), and, with respect to Acerus, the Manufacturing of the Product. Such
audit shall be conducted (i) after at least thirty (30) days prior written
notice from the Requesting Party, (ii) at the facility(ies) where the applicable
records are maintained, (iii) on Business Days during normal business hours and
without disruption to operations of the Audited Party (to the extent reasonably
practicable, such examination shall be completed within five (5) Business Days),
and (iv) no more frequently than once in any calendar year and not more than
once with respect to any particular records. The audit shall be conducted by
(1) an internationally recognized independent certified public accounting firm
selected by the Requesting Party and not objected to by the Audited Party (but
not the accounting firm that conducts or has within the past three (3) years
conducted the audit of such Requesting Party’s financial statements) or (2) in
the case of an audit of Acerus’ development work on Product, professionals of
Aytu’s choosing having the appropriate scientific and/or regulatory background
and experience. The auditor will execute a written confidentiality agreement
with the Audited Party that is substantially similar to the confidentiality
provisions of Article 10 and limiting the disclosure and use of information
obtained from such audit to authorized representatives of the Parties and the
purposes germane to this Section 7.7. The auditor will disclose to the
Requesting Party only the amount and accuracy of costs or payments, as
applicable, reported and actually paid or otherwise payable under this
Agreement. The auditor will send a copy of the report to both Parties at the
same time. The Requesting Party shall be responsible for expenses for the audit,
except that the Audited Party shall reimburse the Requesting Party up to [**]
for such independent accountant documented services if the independent
accountant determines that payments made by the Audited Party are less than [**]
of the amount actually owed for the period of the audit and such determination
is finally resolved in favor of the Requesting Party pursuant to Section 7.7(c)
below if contested by the Audited Party. All inspections made hereunder shall be
made no later than [**] after the records subject to the investigation were due,
and all records not so audited within [**] will be deemed accurate and in
accordance with the terms of this Agreement. The determination of the auditor
shall be final and unappealable on the Parties absent obvious error.
 
(c) Underpayment or Overpaymen. If, as a result of any audit pursuant to
Section 7.7(b), it is shown that the Audited Party’s payments to the Requesting
Party under this Agreement with respect to the period of time audited were less
than the amount that should have been paid pursuant to this Agreement, then the
Audited Party shall, within thirty (30) days after the Requesting Party’s demand
therefor, pay the Requesting Party the amount of such shortfall. If, as a result
of any audit pursuant to Section 7.7(b), it is shown that the Audited Party’s
payments to the Requesting Party under this Agreement with respect to the period
of time audited exceeded the amount that should have been paid pursuant to this
Agreement, then the Requesting Party shall, within thirty (30) days after the
Audited Party’s demand therefor, pay the Audited Party the amount of such
excess.
 
 
 
35

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
 
7.8 No Right of Setoff. Neither Party shall have the right to set off any amount
owing to it by the other Party against any amount payable by it to the other
Party under this Agreement or otherwise.
 
Article 8
 
LICENSE RIGHTS AND LIMITATIONS, RESTRICTIONS AND OWNERSHIP
 
8.1 License to Aytu. Subject to the terms and conditions of this Agreement,
Acerus hereby grants to Aytu, commencing on the A&R Closing Date and for the
duration of the Term, a royalty-free, exclusive (including with respect to
Acerus except as to Acerus’ performance of its obligations under this Agreement)
license (with the right to sublicense solely in accordance with Section 8.7),
under the Acerus Intellectual Property, to develop (to the extent required for
Aytu fulfill its obligations hereunder), use, offer for sale, sell, import,
market and Promote Product in the Territory.
 
8.2 Grant Back License. Subject to the terms and conditions of this Agreement,
Aytu hereby grants to Acerus, commencing on the A&R Closing Date and for the
duration of the Term, a royalty-free, exclusive license (with the right to
sublicense solely in accordance with Section 8.7) to Promote the Product in the
Acerus Sales Channel in the Territory. Aytu shall retain the right to Promote
and distribute the Product on an exclusive basis in the Aytu Sales Channel and
to be the exclusive seller of the Product to all wholesalers, pharmacies, and
other customers that receive direct shipments of Product for the Term set forth
in this Agreement.
 
8.3 Pharmacy Promotion. Both Parties shall have the right to Promote the Product
to pharmacies, in the manner set forth herein.
 
8.4 Acerus Trademarks.
 
(a) Grant of License
 
. Subject to the terms and conditions of this Agreement, Acerus hereby grants to
Aytu, commencing on the A&R Closing Date and for the duration of the Term, an
exclusive, royalty-free license (with the right to sublicense in accordance with
Section 8.7) to use the Acerus Trademarks solely in connection with
Commercialization of the Product in the Territory, in accordance with the terms
of the license granted in Section 8.1. Aytu may use the Acerus Trademarks on
Product subject in all respects to all Applicable Laws and Regulatory
Requirements.
 
(b) Use of Trademark. Aytu shall comply with all Applicable Laws pertaining to
the proper use and designation of the Acerus Trademarks. Additionally, Aytu
shall use Commercially Reasonable Efforts to:
 
(i)
ensure that, when required, the Acerus Trademarks are accompanied by words
accurately describing the nature of the goods or services to which it relates
and that the Acerus Trademarks are displayed in accordance with such branding
guidelines as Acerus may provide from time to time;
 
 
 
36

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
(ii)
to the extent reasonably practicable after receipt of a written request from
Acerus, comply with the reasonable requirements of Acerus as to the form,
manner, scale and context of use of the Acerus Trademarks;
 
(iii)
display the proper form of trademark and service mark notice associated with the
Acerus Trademark in accordance with instructions received from Acerus;
 
(iv)
include, on any item which bears the Acerus Trademarks, a statement identifying
Acerus as the owner of the Acerus Trademark and stating that Aytu is an
authorized licensee and user of the Acerus Trademark;
 
(v)
not conduct, without the written consent of Acerus, the whole or any part of its
business under a business name or trading style which incorporates any of the
Acerus Trademarks; and
 
(vi)
neither use nor display any of the Acerus Trademarks in such relation to any
other mark or marks owned by any Third Party, Aytu or an Affiliate of Aytu as to
suggest that the multiple marks constitute a single or composite trademark,
service mark, or are under the same proprietorship.
 
(c) Additional Trademark Terms
 
. Aytu shall not take any action inconsistent with Acerus’ ownership of the
Acerus Trademarks. Any benefits (including good will) accruing from Aytu’s use
of the Acerus Trademarks shall automatically vest in Acerus. Aytu shall not form
any combination trademarks or trade names with the Acerus Trademarks. Aytu shall
grant Acerus reasonable access to Aytu’s records pertaining to packaging and
promotional activities, packaging and Promotional Materials for the purpose of
inspecting Aytu’s use of the Acerus Trademarks.
 
8.5 Ownership of Materials.
 
(a) As between the Parties, Acerus shall own all right, title and interest in
and to the Promotional Materials, Training Materials, advertising and labeling
for the Product, in each case including all content contained therein and all
applicable copyrights and trademark rights (but excluding any trademark or other
rights in Aytu House Marks). To the extent Aytu (or any of its Affiliates or
other agents) obtains or otherwise has a claim to the Promotional Materials,
Training Materials, advertising and labeling for the Product, Aytu shall assign,
and hereby does assign, to Acerus (or its designated Affiliate) all of Aytu’s
(and its Affiliate’s and other agent’s) right, title and interest in and to such
Promotional Materials, Training Materials, advertising and labeling for the
Product, and all content therein (excluding, in each case, any rights in Aytu
House Marks). Acerus hereby grants to Aytu an exclusive (other than with respect
to Acerus or any of its Permitted Sublicensees or Subcontractors), royalty-free
license to use the Promotional Materials, Training Materials, advertising and
labeling for the Product and under all copyrights that cover the Promotional
Materials, Training Materials, advertising and labeling for the Product, solely
as necessary to Promote and otherwise Commercialize the Product in the Aytu
Sales Channel in the Territory, in each case in accordance with this Agreement,
including the quality control and usage restrictions set forth in this
Agreement. Other than in accordance with Section 8.7, such license shall be
non-transferable and non-sublicensable. Any such license shall automatically and
immediately terminate upon the expiration or earlier termination of this
Agreement for any reason.
 
 
 
37

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
(b) Aytu hereby grants to Acerus the non-exclusive right to use the Aytu House
Marks exclusively in connection with the Promotional Materials, Training
Materials, advertising and labeling for the Product in the Acerus Sales Channel
during the Term, to the extent consistent with this Agreement. Such
non-exclusive right shall automatically and immediately terminate upon the
expiration or earlier termination of this Agreement for any reason and shall be
non-transferable and non-sublicensable.
 
8.6 Negative Covenants.
 
(a) Aytu hereby covenants that it shall not (i) use or practice, nor shall it
cause or permit any of its Affiliates, licensees or Permitted Sublicensees to
use or practice, directly or indirectly, any Acerus Intellectual Property or
Acerus Trademarks for any other purposes other than those expressly permitted by
this Agreement or (ii) develop, conceive or reduce to practice any intellectual
property rights (including Know-How) that reads on to or is incorporated into
the Product, and if any such intellectual property rights are developed, Aytu
shall promptly assign (or cause its Affiliates and applicable personnel to
assign) to Acerus all right, title and interest in and to such intellectual
property rights.
 
(b) Acerus hereby covenants that it shall not use or practice, nor shall it
cause or permit any of its Affiliates, licensees or Permitted Sublicensees to
use or practice, directly or indirectly, any Aytu House Marks for any other
purposes other than those expressly permitted by this Agreement.
 
8.7 Sublicensing; Subcontracting.
 
(a) Neither Party may assign or sublicense its rights or obligations under this
Agreement (other than for a Party’s potential use of a Third Party contract
commercial organization as described in Section 8.7(b) below) to another
pharmaceutical/biotechnology company without the prior written consent of the
other Party.
 
(b) Subject in all respects to the restrictions contained in Section 8.7(a)
above, each Party shall have the right to subcontract to Affiliates and Third
Parties (“Subcontractors”) its responsibilities under this Agreement, without
obtaining the consent of the other Party; provided that the applicable Party
shall at all times remain responsible for the activities of its Subcontractors.
Each Party may engage independent sales representatives and contract sales
organizations to perform its activities under the Commercialization Plan without
the prior written consent of the other Party.
 
(c) Each Party shall enter into agreements with its Subcontractors that contain
confidentiality terms at least as strict as those set forth in Article 10
hereof.
 
8.8 Neither Party grants (or agrees to grant) to the other Party any right or
license to use any of its intellectual property, Know-How or other proprietary
information, materials or technology, or to practice any of its patent,
trademark, or trade dress rights, except as expressly set forth in this
Agreement.
 
 
 
38

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
Article 9
 
INTELLECTUAL PROPERTY
 
9.1 Background Intellectual Property. Except as expressly set forth herein, as
between the Parties, each Party is and shall remain the owner of or shall retain
control over all intellectual property, including without limitation, patents,
patent applications, Know-How, trade secrets, trademarks, copyrights and
Confidential Information that it owns or controls as of the A&R Closing Date or
that it develops or acquires thereafter pursuant to activities independent of
this Agreement (“Background Intellectual Property”). No rights in any such
Background Intellectual Property are transferred to the other Party unless
expressly provided for herein.
 
9.2 Pulsatile Dosing Patent Family.
 
(a) Assignment. Aytu hereby assigns all right, title and interest owned by Aytu
in the Pulsatile Dosing Patent Family to Acerus, and Aytu agrees to cooperate
with Acerus in obtaining and sustaining of rights in the Pulsatile Dosing Patent
Family, and in confirming Acerus’ ownership thereof, but at the expense of
Acerus, including by delivery of executed assignments pursuant to Section
2.5(d)(ii)(1).
 
(b) Use of Rights in the Pulsatile Dosing Patent Family.
 
(i)
Territory/Nasal Gel Drug Delivery Technology. Rights in the Pulsatile Dosing
Patent Family in nasal gel drug delivery technology in the Territory shall be
Acerus Intellectual Property. If Acerus decides to abandon any rights in the
Pulsatile Dosing Patent Family in nasal gel drug delivery technology in the
Territory, Acerus will notify Aytu and provide Aytu the right to prosecute and
maintain any such rights.
 
(ii)
Territory/non-Nasal Gel Drug Delivery Technology. Neither party will use,
license, or abandon rights in the Pulsatile Dosing Patent Family in non-nasal
gel drug delivery technology in the Territory without the prior written consent
of the other party, which consent shall not be unreasonably withheld. Neither
Party will develop a Competing Product using rights in the Pulsatile Dosing
Patent Family in non-nasal gel drug delivery technology in the Territory.
 
(iii)
Ex-Territory/Nasal Gel Drug Delivery Technology. Rights in the Pulsatile Dosing
Patent Family in nasal gel drug delivery technology outside the Territory shall
be used solely at the discretion of Acerus and Aytu will have no right in or to
use such rights.
 
(iv)
Ex-Territory/non-Nasal Gel Drug Delivery Technology. Neither party will use,
license, or abandon rights in the Pulsatile Dosing Patent Family in non-nasal
gel drug delivery technology outside the Territory without the prior written
consent of the other party, which consent shall not be unreasonably withheld.
Aytu shall not develop a Competing Product using rights in the Pulsatile Dosing
Patent Family in non-nasal gel drug delivery technology outside the Territory.
 
(c)  [**].
 
 
 
39

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
9.3 Patent Prosecution and Maintenance. Except as provided below, Acerus shall
have the sole right and obligation to prosecute and maintain the Acerus Patents
in the Territory, to the extent it has the rights to do so. On the reasonable
request of Acerus, Aytu shall cooperate, in all reasonable ways, in connection
with the prosecution of the Acerus Patents. Should Acerus decide that it is no
longer interested in maintaining or prosecuting a particular Acerus Patent in
the Territory in respect of which it has the rights to so maintain and
prosecute, Aytu may assume such prosecution and maintenance in the Territory at
its sole expense. If Aytu assumes prosecution or maintenance of any Acerus
Patent in respect of which Acerus has the right to prosecute or maintain
pursuant to the immediately preceding sentence, then: (a) Acerus shall not so
abandon or fail to prosecute or maintain such Patent if Aytu advises Acerus
within ten (10) Business Days of notice of Acerus’ intention to abandon or not
prosecute or maintain the applicable Acerus Patent, that Aytu desires to assume
prosecution or maintenance of the applicable Acerus Patent in Acerus’ name at
Aytu’s expense, in which case Aytu shall have the right, but not the obligation
to do so (and, for greater certainty, Acerus shall be under no obligation to
assign the applicable Acerus Patent to Aytu), (b) to the extent that Aytu so
assumes prosecution or maintenance of such Patent and to the extent required or
useful for Aytu to initiate or maintain a lawsuit or dispute with respect
thereto, Acerus agrees (at Aytu’s cost and expense for Acerus’ reasonable out of
pocket costs and expenses agreed to in advance by Aytu) to (i) be named as a
party to any lawsuit or other dispute with any Person regarding such Patent,
(ii) exercise on behalf of Aytu Acerus’ rights under any applicable agreement
regarding the applicable Patent, and (c) it shall not exercise any rights in
relation to (including any rights to assert or defend) such Patent without
Aytu’s prior written consent, such consent to be granted or withheld in Aytu’s
sole discretion. Aytu shall list Acerus Patents applicable to Product on the
packaging therefor, subject in all respects to all applicable laws and
Regulatory Requirements.
 
9.4           
Patent Assignments. Within [**] of the A&R Signing Date (or such other time as
the Parties may agree), for each patent and patent application that is part of
the Acerus Patents, Acerus shall execute and record at the United States Patent
and Trademark Office or use commercially reasonable efforts to cause its
Affiliates or licensors to execute and record as required, all assignments and
other documents relating to ownership and use interests such as license
agreements, to evidence the complete change of title from the inventors to the
current assignee and Acerus’ exclusive rights licensed from the current
assignee. For avoidance of doubt, Acerus shall ensure, at a minimum, that
assignments of all patents listed in the Orange Book for NATESTO® and all
patents and patent applications listed in Schedule 1.8 of the 2016 Agreement,
including those that are continuations-in-part of the Patent Application No.
10/772,964, are executed and recorded at the United States Patent and Trademark
Office.
 
 
9.5           
Infringement by Third Parties
.
 
(a) Each of Aytu and Acerus shall promptly notify the other Party in writing of
any alleged or threatened infringement of any Acerus Patent or the Acerus
Trademarks by a Third Party product, of which the Party becomes aware.
 
 
 
40

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
(b)           Acerus shall have the sole right, on behalf of itself and in its
name, to bring and control any action or proceeding with respect to any alleged
or threatened infringement of an Acerus Patent pertaining to Product in the
Territory. If Acerus declines to initiate any action or proceeding against an
infringer of an Acerus Patent pertaining to Product in the Territory within
ninety days of becoming aware of any alleged or threatened infringement, Aytu
will have the right, but not the obligation, to bring and control any action or
proceeding with respect to such alleged or threatened infringement of an Acerus
Patent pertaining to Product in the Territory.
 
(c)           For any action or proceeding brought by Acerus or Aytu under this
Section 9.5, the other party shall cooperate reasonably in any such effort, all
at the initiating Party’s expense, and the Parties shall reasonably cooperate to
address new facts or circumstances that come to light during the course of any
such action or proceeding that may affect the need for one Party or the other to
participate in such action. Both Parties agree to be joined as a party
plaintiff, at the initiating Party’s expense, in any such action if needed for
the initiating Party to bring or continue an infringement action hereunder. The
non-initiating Party shall, at its own expense and with its own counsel, have
the right to advise and provide comments with respect to any action brought
under this Section 9.5.
 
(d)           Except as otherwise agreed to by the Parties as part of a
cost-sharing arrangement, any recovery realized as a result of any litigation
under this Section 9.5 (including, for greater certainty, the proceeds of any
settlement relating to such litigation), after reimbursement of any litigation
expenses of Aytu and Acerus, as applicable, shall be retained by Acerus for
purposes of this Agreement, except that to the extent any recovery is based on
lost sales or revenue, Aytu shall be entitled to receive a percentage of any
such recovery realized by Acerus based on the proportion of such lost sales or
revenue applicable to the Aytu Sales Channel, as determined in good faith by
agreement of the Parties, after reimbursement of each of the Parties’ related
litigation expenses.
 
9.6           Third Party Claims for Infringement or Misappropriation. Each
Party shall promptly notify the other in writing of any potential or actual
allegation, claim or suit that the Manufacture, use or sale of Product or any
component thereof, or any other activities that are undertaken pursuant to this
Agreement, infringes or misappropriates a Third Party’s patent or other
proprietary rights. Acerus shall be solely responsible for any royalties and
other amounts payable for or under any and all Third Party licenses with respect
to any Third Party patent or other proprietary rights if such Third Party rights
are infringed by the Manufacture, importation, sale, or use of Product in the
Territory or the marketing or Promotion of the Product in the Acerus Sales
Channel, except that Acerus shall not be liable for any such Third Party
licenses entered into by Aytu without Acerus’ consent, with such consent not to
be unreasonably withheld, delayed or conditioned. Aytu shall be solely
responsible for any royalties and other amounts payable for or under any and all
Third Party licenses with respect to any Third Party patent or other proprietary
rights if such Third Party rights are infringed by the marketing or Promotion of
the Product in the Aytu Sales Channel.
 
 
 
41

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
 
Article 10
 
CONFIDENTIALITY
 
10.1 Definition of Confidential Information. During the Term, either Party (the
“Disclosing Party”) may from time to time furnish the other Party (the
“Receiving Party”) with scientific, technical, trade or business information or
materials which are treated by the Disclosing Party as confidential or
proprietary, including, without limitation, information and materials related
to, Product, processes, formulae, procedures, tests, equipment, data, batch
records, reports, know-how, sources of supply, patent positioning, relationships
with consultants and employees, business plans and business developments, and
information concerning the existence, scope or activities of any research,
design, development, Manufacturing, marketing or other projects. All such
disclosed information shall be referred to herein as “Confidential Information”
if it is provided in writing and is designated or otherwise identified as
“Confidential” at the time of disclosure, or if it is first provided orally,
visually, or by inspection and is identified as “Confidential” at the time of
disclosure. Notwithstanding the foregoing, Confidential Information shall also
include such information or materials that would or should reasonably be
identified or understood by the Receiving Party to be the confidential or
proprietary information of the Disclosing Party, even if they are not so
identified as described in the previous sentence. “Acerus Confidential
Information” means any and all Confidential Information for which Acerus is the
Disclosing Party and Aytu the Receiving Party hereunder. “Aytu Confidential
Information” means any and all Confidential Information for which Aytu is the
Disclosing Party and Acerus the Receiving Party hereunder.
 
10.2  Confidentiality. Except to the extent expressly authorized by this
Agreement or otherwise agreed in writing by the Parties, the Parties agree that
for the Term and for seven (7) years thereafter, the Receiving Party shall keep
confidential and shall not publish or otherwise disclose and shall not use for
any purpose any Confidential Information furnished to it by the Disclosing Party
pursuant to this Agreement.
 
10.3 Exclusions. Notwithstanding anything herein to the contrary, the
obligations of confidentiality and nonuse under this Article 10 applicable to
Confidential Information hereunder shall not apply to information that:
 
(a) at the time of disclosure, is known publicly or thereafter becomes known
publicly through no fault of the Receiving Party, its Affiliates or agents;
 
(b) is disclosed to the Receiving Party on a non-confidential basis by a Third
Party that is not subject to any confidentiality obligations to the Disclosing
Party with respect to such information;
 
(c) was developed by the Receiving Party independently of information obtained
from the Disclosing Party, as shown by the Receiving Party’s prior written
records;
 
(d) was already known to the Receiving Party before receipt from the Disclosing
Party, as shown by the Receiving Party’s prior written records; or
 
(e) is released with the prior written consent of the Disclosing Party (subject
to the terms and conditions, if any, set out in the applicable consent).
 
 
 
42

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
10.4 Permitted Disclosures.
 
(a) Notwithstanding the foregoing, each Receiving Party may disclose the
Disclosing Party’s Confidential Information (i) to the Receiving Party’s
employees, consultants (including, for greater certainty, financial advisors),
Affiliates, agents, contractors, licensees or Permitted Sublicensees who are
bound by obligations relating to confidentiality at least as restrictive of
those contained herein and who have a need to know such information in
connection with the Receiving Party’s performance of its obligations or practice
of its rights under this Agreement, (ii) to Regulatory Authorities in connection
with any Regulatory Submissions required for development of Product or in
compliance with Regulatory Requirements, including, without limitation, any
requirements under or pursuant to the Food and Drug Administration Amendments
Act of 2007, or (iii) pursuant to Sections 10.5 and 10.6. The foregoing shall
not preclude either Party from issuing a press release regarding a regulatory
filing (including where not mandatory or required) or its general condition,
operations and activities; provided that the issuing Party promptly notifies the
other Party prior to disclosing such Confidential Information.
 
(b) Notwithstanding anything to the contrary herein, Aytu acknowledges and
agrees that Acerus shall have the sole right to participate in and produce
scientific presentations or publish scientific publications in the Territory
with respect to pre-clinical and clinical development of the Product (including
results and observations observed during any such pre-clinical and clinical
development, and including any such development work associated with the
twice-daily dosing of the Product). Prior to any such proposed presentation or
publication, Acerus shall, as soon as reasonably practicable prior to the
presentation or publication date, as the case may be, provide the Aytu with the
text of the applicable presentation or publication.
 
10.5 Terms of Agreement. The Parties agree that the terms of this Agreement will
be considered Confidential Information of both Parties. Subject to Section 10.6
below, no Party shall, without the prior written consent of the other Party,
disclose in any manner to any Third Party the terms and conditions of this
Agreement, except for terms or subject matter which has been the subject of
prior public disclosure or has been mutually approved for such disclosure and
except as set forth below. Each Party acknowledges that the other Party may be
legally required to file this Agreement as an exhibit to its filings with the
U.S. Securities and Exchange Commission. In addition: (a) either Party may
disclose such terms as are required to be disclosed in its publicly-filed
financial statements or other public statements, pursuant to Applicable Laws and
Stock Exchange rules (e.g., the rules of the U.S. Securities and Exchange
Commission, Canadian securities administrators, NASDAQ, Toronto Stock Exchange,
NYSE, OTC Markets or any other Stock Exchange on which securities issued by
either Party may be listed (each, a “Stock Exchange”)); provided, such Party
shall provide the other Party with a copy of the proposed text of such
statements or disclosure (including any exhibits containing this Agreement)
sufficiently in advance of the scheduled release or publication thereof to
afford such other Party a reasonable opportunity to review and comment upon the
proposed text (including redacted versions of this Agreement), (b) either Party
shall have the further right to disclose the material financial terms of this
Agreement under a confidentiality obligation no less protective than those set
forth in this Agreement, to any potential licensee, sublicensee, acquirer,
merger partner or potential providers of financing and their advisors or, in the
case of Acerus, to the owner of any Acerus Patents Controlled by Acerus,
(c) Aytu shall have the right to disclose information regarding the development
or Commercialization status of Product in the Territory to the extent such
disclosure is deemed reasonably necessary or desirable by Aytu, and (d) Acerus
and Aytu shall have the right to disclose information regarding the development
or Commercialization status of Product in the Territory to the extent such
disclosure by Acerus or Aytu, as applicable, is required by Applicable Laws or
Stock Exchange rules.
 
 
 
43

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
 
10.6 Mandatory Disclosure.
 
(a) Notification and Consultation
 
. In the event that the Receiving Party is required by applicable law, including
without limitation disclosure obligations imposed under federal securities laws,
or by court order or judicial or administrative process to disclose any part of
the Disclosing Party’s Confidential Information (including material terms or
conditions of this Agreement), the Receiving Party shall (i) promptly notify the
Disclosing Party of each such requirement and identify the documents so required
thereby, so that the Disclosing Party may seek or request the Receiving Party to
seek an appropriate protective order, confidential treatment or other remedy
and/or waive compliance by the Receiving Party with the provisions of this
Agreement and (ii) consult with the Disclosing Party on the advisability of
taking legally available steps to resist or narrow the scope of such
requirement.
 
(b) Limited Disclosure. If, in the absence of such a protective order,
confidential treatment request, other remedy or waiver by the Disclosing Party,
the Receiving Party is nonetheless required to disclose any part of the
Disclosing Party’s Confidential Information or any material terms or conditions
of this Agreement, the Receiving Party may disclose such Confidential
Information or material terms or conditions without liability under this
Agreement, except that the Receiving Party shall furnish only that portion of
the Confidential Information or material terms or conditions that is legally
required.
 
Article 11
 
 
 
PUBLIC ANNOUNCEMENTS; USE OF NAMES; PUBLICATIONS
 
11.1 Public Announcements. The Parties agree that each Party’s public
announcement of the execution of this Agreement shall be approved by the other
Party, with such approval not to be unreasonably withheld, conditioned, or
delayed, and the Parties will cooperate in drafting their respective press
releases therefor as soon as practicable after the signature of this Agreement
by the Parties. Neither Party shall make any other statement to the public
regarding the execution and/or any other aspect of the subject matter of this
Agreement, except: (i) where a Party reasonably believes disclosure is required
under Applicable Laws, and (ii) either Party may use the text of a statement
previously approved by the other Party. This provision shall not apply to the
matters covered by Sections 10.5, 10.6 or 11.2.
 
11.2 Use of Names and Logos. Acerus shall not make use of the name of Aytu or
any of its Affiliates in any advertising or Promotional Material, or otherwise,
without the prior written consent of Aytu except pursuant to Section 6.6
(Promotional Materials), Section 8.5(b) (Ownership of Materials) or Section 11.1
(Public Announcement). Except as provided in Section 6.6 (Promotional
Materials), Section 8.4 (Acerus Trademarks License), Section 10.4 (Permitted
Disclosures) or 11.1 (Public Announcement), Aytu shall not make use of the name
of Acerus or any of its Affiliates in any advertising or Promotional Material,
or otherwise, without the prior written consent of Acerus. Notwithstanding the
foregoing, either Party may use the name of the other Party or its Affiliates in
the context of mentioning the existence of this Agreement in advertising or
Promotional Materials or other materials required to be filed in accordance with
applicable securities laws; provided that, to the extent practicable, prior to
any disclosures to the Securities and Exchange Commission or the applicable
Stock Exchange in connection herewith, the Disclosing Party shall provide the
other Party with advance notice.
 
 
 
44

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
 
Article 12
 
REPRESENTATIONS, WARRANTIES AND COVENANTS
 
12.1 Mutual Representations and Warranties of Acerus and Aytu. Each of Acerus
and Aytu hereby represents and warrants to the other Party as of the A&R Signing
Date and as of the A&R Closing Date, except to the extent such representations,
warranties and covenants are specifically made as of a particular date (in which
case such Party makes the representations, warranties and covenants as of such
particular date) as follows:
 
(a) It is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or formation, as applicable. It has the
requisite corporate power and authority to conduct its business as presently
being conducted and as proposed to be conducted by it.
 
(b) It has the requisite corporate power and authority to enter into this
Agreement and to perform the services contemplated hereunder. All corporate
actions on its part, necessary for (i) the authorization, execution, delivery
and performance by it of this Agreement, and (ii) the consummation of the
transactions contemplated hereby, have been duly taken.
 
(c) Assuming the due authorization, execution and delivery by the other Party,
this Agreement is its legally valid and binding obligation, enforceable against
it in accordance with its terms (except in all cases as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar laws affecting the enforcement of creditors’ rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court or other tribunal
before which any proceeding may be brought).
 
(d) There is no contractual restriction or obligation binding on either Party
which would be materially contravened by execution and delivery of this
Agreement or by the performance or observance of its terms.
 
(e) Each Party has and will continue to have written contracts with all Third
Parties (including employees and Subcontractors) performing services on its
behalf under this Agreement where such services are intended to create
inventions that assign to such Party all inventions and rights therein.
 
(f) to each Party’s knowledge, no representation or warranty made by it in this
Agreement, nor any statement contained in any schedule hereto furnished by it,
contains any untrue statement of a material fact or omits any material fact
necessary to make the statements contained herein or therein not misleading.
 
(g) Neither Party, nor any of its Affiliates, nor any of their respective
officers, employees, agents, representatives or other Persons used in the
performance of its obligations under this Agreement has been debarred or
suspended under 21 U.S.C. §335(a) or (b), excluded from a federal health care
program, debarred from federal contracting, or convicted of or pled nolo
contendere to any felony, or to any federal or state legal violation (including
misdemeanors) relating to prescription drug products or fraud
(“Debarred/Excluded”).
 
 
 
45

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
12.2 Product Warranties of Acerus. Acerus hereby warrants to Aytu with respect
to the Manufacturing of the Product:
 
(a) It will ensure that all Product supplied to Aytu will conform to
Specifications and be Manufactured and tested in compliance with this Agreement,
the Specifications, the Quality Agreement and Applicable Laws, including all
Regulatory Requirements.
 
(b) It will, and will use Commercially Reasonable Efforts to cause its Third
Party suppliers to, ensure that all Product Manufactured by or on behalf of
Acerus and sold to Aytu pursuant to this Agreement will at the time of delivery
to the common carrier for such Product (i) meet the Specifications and (ii) not
be misbranded or adulterated within the meaning of the FD&C Act.
 
(c) All Product delivered to Aytu pursuant to this Agreement will, at the time
of such delivery, be free and clear of all liens, security interests and other
encumbrances.
 
Acerus’ obligations provided in Section 5.1(d) and 13.2 shall be the sole and
exclusive remedies available to Aytu with respect to Product that fails to meet
the warranties set forth in this Section 12.2.
 
12.3 Additional Representations and Warranties of Acerus. Acerus hereby further
represents and warrants to Aytu as of the A&R Signing Date and as of the A&R
Closing Date, except to the extent such representations, warranties and
covenants are specifically made as of a particular date (in which case Acerus
makes the representations, warranties and covenants as of such particular date)
as follows:
 
(a) Acerus shall be the sole and exclusive owner of, or shall have exclusive
rights to, all of the Acerus Intellectual Property in existence on the A&R
Closing Date, and the Acerus Patents are in full force and effect and have been
maintained to date. Acerus has the exclusive right to grant the rights granted
under this Agreement commencing on the A&R Closing Date. Acerus has not received
any claims or notice of any challenges from any Third Party disputing the
validity and enforceability of the issued Acerus Patents in existence on the A&R
Closing Date.
 
(b) There is no pending or, to the knowledge of Acerus, threatened claim,
interference, opposition or demand of any Third Party challenging the ownership,
validity or scope of any Acerus Intellectual Property or Acerus Trademarks in
existence as of the A&R Closing Date.
 
(c) Acerus has not been served with any action or proceeding nor, to the
knowledge of Acerus, is there any threat of an action or proceeding nor, so far
as Acerus is aware, is there any event or state of facts, in each case that
could materially and adversely affect the rights granted to Aytu herein.
 
 
 
46

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
(d) Except as set forth on Schedule 12.3, Acerus has not granted to any Third
Party any rights with respect to the Acerus Trademarks. The Acerus Trademarks
are in full force and effect, are subsisting and valid, and have been maintained
to date, and are not subject to any opposition proceedings. Its use or its
Affiliates’ use of the Acerus Trademarks does not infringe, misappropriate, or
otherwise violate any rights of any person and, to the knowledge of Acerus, no
Person is infringing, misappropriating or otherwise violating the Acerus
Trademarks.
 
(e) Acerus has not received any Form 483 observations, warning letters or other
communications from a Regulatory Authority which would reasonably be expected to
adversely impact the Manufacture of Product.
 
(f) Acerus now has in effect and shall maintain in good standing for the period
set forth in Section 13.5 the insurance described in Section 13.5.
 
(g) No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority, or any Third Party, on the part of Acerus or any
Affiliate thereof is required in connection with the execution, delivery and
performance of this Agreement.
 
(h) No research or development of the Acerus Intellectual Property, manufacture
of Products or research leading to the inventions covered by the Acerus
Intellectual Property was supported in whole or part by funding or grants by any
governmental agency or philanthropic or charitable organization.
 
(i) Acerus and its Affiliates have taken all reasonable actions necessary or
appropriate to preserve the confidentiality of all trade secrets, proprietary
and other Confidential Information material to Products and Acerus Intellectual
Property.
 
(j) Except as set out in Schedule 12.3, the Acerus Intellectual Property and
Acerus Trademarks are wholly owned by or licensed to Acerus, free and clear of
all mortgages, pledges, charges, liens, equities, security interests, or other
encumbrances or similar agreements, or any other obligation as at the A&R
Closing Date.
 
(k) Neither Acerus nor any Affiliate thereof is aware of any Third-Party
activities which would constitute misappropriation or infringement of any Acerus
Intellectual Property.
 
12.4 Additional Representations and Warranties of Aytu. Aytu hereby further
represents and warrants to Acerus as of the A&R Signing Date and as of the A&R
Closing Date, except to the extent such representations, warranties and
covenants are specifically made as of a particular date (in which case Aytu
makes the representations, warranties and covenants as of such particular date)
as follows:
 
(a) Except as would not reasonably be expected to have a material adverse effect
on the Promotion of the Products in the Territory (i) to Aytu’s knowledge, it
and its Affiliates have Promoted the Product and promoted its other products in
the Territory in compliance with Applicable Laws in all material respects,
(ii) to Aytu’s knowledge, as of the A&R Closing Date, neither it nor any of its
Affiliates (A) is being investigated, and there are no ongoing investigations,
by any Regulatory Authority or other government authority in the Territory
specifically or primarily relating to the Promotion of any product (including
the Product) in the Territory, nor (B) has it or any of its Affiliates received
written notice that any Regulatory Authority or other government authority in
the Territory intends to conduct any such investigation, and (iii) neither it
nor any of its Affiliates (x) is a party or the subject of any action, suit or
other proceeding that is pending as of the A&R Closing Date or was pending or
filed at any time during the two (2) year period prior to the A&R Closing Date,
that alleges that it or any of its Affiliates have violated any Applicable Laws
in the Territory in connection with the Promotion of any product in the
Territory, nor (y) has it or any of its Affiliates received any threats in
writing of any such action, suit or other proceeding as of the A&R Closing Date
or at any time during the two (2) year period prior to the A&R Closing Date.
 
 
 
47

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
(b) It has not paid, offered or promised to pay, or authorized the payment
directly or indirectly of any moneys or anything of value to (i) any government
official or employee, or any political party or candidate for political office
for the purpose of influencing any act or decision of such official or of the
government to obtain or retain business or direct business to any person, in
each case with respect to the Product; or (ii) any Healthcare Provider or payor
if any one purpose is to encourage, influence or reward the prescribing or
purchasing of the Product or recommending the prescribing or purchasing of the
Product, except in either case, as permitted by Applicable Laws (such as
payments under applicable safe-harbor provisions).
 
(c) There is no action, suit, proceeding or investigation pending or, to its
knowledge, threatened before any court or administrative agency against Aytu or
its Affiliates which could, if there were an unfavorable decision, directly or
indirectly, reasonably be expected to materially adversely affect its ability to
perform its obligations hereunder.
 
12.5 Disclaimer. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, EACH PARTY
DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING
WITHOUT LIMITATION THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, AND NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD
PARTIES.
 
12.6  Non-Solicitation. Except for any mutually agreed transfer of qualified
Aytu personnel to Acerus, during the Term and for a period of [**] thereafter,
neither Party nor its Affiliates shall actively recruit or solicit any of the
other Party’s sales force or other personnel who perform marketing and
promotional activities for the Product without the prior written consent of the
other Party; provided that each Party and its Affiliates shall be permitted to
engage in general recruitment through advertisements or recruiting through head
hunters so long as employees and personnel of the other Party are not
specifically targeted.
 
12.7  Non-Competition. During the Term and for a period of [**] thereafter:
 
(a) Acerus shall not, directly or indirectly, develop, offer for sale,
commercialize, research for the purpose of commercializing, sell, market or
promote any Competing Product in the Territory (including any product that is
substitutable at the retail pharmacy level for the Product); provided, that if
Acerus elects during the Term to develop, offer for sale, commercialize,
research for the purpose of commercializing, sell, market or promote any Next
Generation Product in the Territory, such Next Generation Product, upon receipt
of Regulatory Approval in the Territory, will be deemed to be the “Product”
hereunder for the remainder of the Term of this Agreement; and
 
(b) Aytu shall not, directly or indirectly, develop, offer for sale,
commercialize, research for the purpose of commercializing, sell, market or
promote any Competing Product in the Territory (including any product that is
substitutable at the retail pharmacy level for the Product);
 
provided, however, that the foregoing restrictions with respect to a Party shall
not apply to any Competing Products that are being researched, developed,
manufactured or commercialized by a Third Party (or any Affiliate of such Third
Party that was an Affiliate prior to the consummation of such acquisition) at
the time such Third Party acquires more than [**] of the issued and outstanding
capital stock of such Party or all or substantially all of the assets of such
Party.
 
The Parties hereby acknowledge and agree that any material breach of this
Section 12.7 shall constitute a material breach of this Agreement, entitling the
nonbreaching Party to terminate this Agreement in accordance with
Section 14.2(b), subject to any cure period set forth therein.
 
 
48

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
 
12.8 Covenants of the Parties.
 
(a) Each Party will at all times during the Term comply with all Applicable Laws
in performing its obligations under this Agreement.
 
(b) Each Party has adopted and will at all times during the Term maintain a
corporate compliance program that is intended to assist each Party to be in
compliance with Applicable Laws, standards and guidelines relevant to its
business, addressing: (i) label Promotion; (ii) fraud and abuse; (iii) a code of
conduct and other applicable policies and procedures; (iv) training on the code
of conduct, policies and procedures; (v) an auditing and monitoring function,
and (vi) designation of a compliance officer.
 
(c) Each Party shall promptly notify the other Party if it becomes aware that
it, any of its Affiliates, or any officer, employee, agent, representative or
other Person who is performing any activities under this Agreement is or becomes
Debarred/Excluded;
 

 

Article 13

INDEMNIFICATION
 
13.1 Indemnification by Aytu. Subject to Sections 13.3 and 13.4, Aytu shall
indemnify, defend and hold Acerus, its Affiliates, and their respective
directors, officers, employees consultants, contractors, licensees, sublicensees
and agents (collectively, the “Acerus Indemnitees”) harmless from and against
any and all claims, suits, proceedings or causes of action (including, without
limitation, in connection with any claim of property damage, bodily injury or
death) (“Claims”) brought by a Third Party against such Acerus Indemnitee,
including any damages or other amounts payable to such Third Party, as well as
any reasonable attorneys’ fees and costs of litigation incurred as to any such
Claim until the indemnifying Party has acknowledged that it will provide
indemnification hereunder with respect to such Claim as provided below
(collectively, “Damages”), in each case resulting from or based on: (a) any
Promotion, sale, use, importation, storage, handling, distribution or offer for
sale or sale of Product by Aytu or any of its Affiliates, licensees or
sublicensees (whether under the 2016 Agreement or this Agreement), (b) Aytu’s
breach of this Agreement or the 2016 Agreement; (c) the gross negligence or
willful misconduct of, or violation of Applicable Law by Aytu, its Affiliates,
licensees or sublicensees, or their respective employees, contractors or agents
in the performance of this Agreement or the 2016 Agreement; and/or (d) breach of
a contractual or fiduciary obligation owed by Aytu to a Third Party (including
without limitation misappropriation of trade secrets). The foregoing indemnity
obligation shall not apply to the extent such Claims or Damages result from any
matter for which Acerus is required to indemnify Aytu pursuant to this
Agreement.
 
 
 
49

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
 
13.2 Indemnification by Acerus. Subject to Sections 13.3 and 13.4, Acerus shall
indemnify, defend and hold Aytu, its Affiliates, and their respective directors,
officers, employees consultants, contractors, licensees, sublicensees and agents
(collectively, the “Aytu Indemnitees”) harmless from and against any and all
Claims brought by a Third Party against such Aytu Indemnitee, including any
Damages resulting therefrom, in each case to the extent resulting from or based
on: (a) any development work (including pre-clinical, clinical, manufacturing,
or quality-related) done by Acerus for Product; (b) Acerus’ breach of this
Agreement or the 2016 Agreement; (c) the negligence or willful misconduct of, or
violation of Applicable Law by, Acerus, its Affiliates, licensees or
sublicensees, or their respective employees, contractors or agents in the
performance of this Agreement or the 2016 Agreement; (d) breach of a contractual
or fiduciary obligation owed by Acerus to a Third Party (including without
limitation misappropriation of trade secrets); (e) intellectual property
infringement, trademark infringement, unfair competition, false designation of
origin, trademark dilution, passing off or misappropriation related to the
Acerus Intellectual Property, Acerus Trademarks, the Products, or any other
property provided by Aytu under this Agreement, including with respect to the
development, Manufacture, use, sale, import, marketing or Promotion of Product;
(f) any Acerus Manufacturing Defect; or (g) the use, development,
Commercialization of the Product by or on behalf of Acerus prior to the A&R
Signing Date. An “Acerus Manufacturing Defect” shall be a defect in the
Manufacturing or other similar defect in Product where the Product (as
manufactured by or for Acerus) is not Manufactured in accordance with the
Specifications, the terms of this Agreement, the Regulatory Approval, Regulatory
Requirements, and/or all other Applicable Laws. The foregoing indemnity
obligation shall not apply to any Damages to the extent such Damages result from
any matter for which Aytu is required to indemnify Acerus pursuant to this
Agreement.
 
13.3 Indemnification Procedures. A Party seeking indemnification under
Section 13.1 or 13.2 hereof (the “Indemnitee”) shall promptly notify the other
Party (the “Indemnitor”) in writing of any claim, lawsuit or other action in
respect of which the Indemnitee, its Affiliates, or any of their respective
directors, officers, employees and agents intend to claim such indemnification.
The Indemnitee shall permit, and shall cause its Affiliates and their respective
directors, officers, employees and agents to permit the Indemnitor to have
complete control of such defense (except as set forth below) so long as it
promptly assumes the defense and prosecutes the defense with appropriate
diligence and care. The Party controlling the defense hereunder (the “Defending
Party”) shall have the authority, at its discretion, to settle any such claim,
lawsuit or other action only with the prior written consent of the Party who is
not controlling the defense (the “Non-Defending Party”); provided, however, that
such consent shall not be unreasonably withheld, delayed or conditioned so long
as such settlement does not adversely affect the Non-Defending Party’s rights
hereunder or impose any obligations on the Non-Defending Party in addition to
those set forth herein. The Defending Party and the Non- Defending Party, and
their respective Affiliates, and their respective directors, officers, employees
and agents shall cooperate fully with each other and their respective legal
representatives in the investigation and defense of any claim, lawsuit or other
action covered by this indemnification. The Defending Party shall keep the
Non-Defending Party reasonably informed of the progress of the action and shall
consider the comments and observations of the Non-Defending Party timely given
in the course of the proceedings. If the Indemnitor is the Defending Party, the
Indemnitee shall have the right, but not the obligation, to be represented by
counsel of its own selection and expense. Notwithstanding the foregoing, the
Indemnitee may be represented by separate counsel at the expense of the
Indemnitor if a conflict of interest exists between the interests of the
Indemnitor and Indemnitee so that a single counsel representing Indemnitor
cannot adequately defend the rights of the Indemnitee.
 
13.4 Survival of Indemnification Obligations. The provisions of this Article 13
shall survive the termination or expiration of this Agreement.
 
13.5 Insurance. Each Party shall maintain insurance with creditworthy insurance
companies in accordance with Applicable Law against such risks and in such
amounts as are usually maintained or insured against by other companies of
established repute engaged in the same or a similar business. Throughout the
Term and (i) for a period of twenty-four (24) months thereafter, or (ii) until
the expiry date of the last lot of the Product delivered under this Agreement,
whichever is later, each Party shall maintain in full force and effect, at its
own cost and expense, comprehensive general liability insurance, including
product liability and contractual liability insurance, of not less than
$5,000,000 in the aggregate, naming the other Party and its Affiliates as
additional insureds thereon, and providing that the insurer shall give such
Party at least ninety (90) days prior written notice of cancellation in
coverage. Such Party’s insurance coverage shall be provided by an insurer or
insurers (having a minimum AM Best rating of A or otherwise acceptable to the
other Party, in its sole discretion) licensed to do business in the Territory
and will be primary and non-contributing to any liability insurance carried by
the other Party (only insofar as the coverage relates to claims arising from
each Party’s operations). Acerus shall deliver to Aytu, promptly upon request, a
certificate of insurance evidencing the foregoing. Aytu shall deliver to Acerus,
promptly upon request, a certificate of insurance evidencing the foregoing.
 
 
 
50

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
 
Article 14
 
TERM AND TERMINATION
 
14.1  Term. The initial term of this Agreement shall commence on the A&R Closing
Date and shall expire upon the later to occur of: (a) [**] from the A&R Closing
Date; (b) the date on which the last of the Acerus Patents has expired or been
invalidated; or (c) a Third Party has obtained Regulatory Approval for, and
completed the first commercial sale of, an AB-Rated Generic Product within the
Territory, unless earlier terminated in accordance with Section 14.2 (the
“Initial Term”), and this Agreement shall thereafter automatically renew for
successive one [**] periods, unless either Party gives at least [**] prior
written notice of non-renewal to the other Party (each such [**] renewal period,
if any, a “Renewal Term,” and together with the Initial Term, the “Term”). For
clarity, if a Next Generation Product is covered by this Agreement, the Term
will still end upon the expiration of the last to expire Acerus Patent covering
the original Product and not the last to expire patent covering the Next
Generation Product.
 
14.2  Termination.
 
(a) Mutual Agreement. This Agreement may be terminated in its entirety at any
time upon mutual written agreement between the Parties.
 
(b) Material Breach. Either Party may terminate this Agreement at any time upon
written notice to the other Party if the other Party is in material default or
breach of this Agreement and such material default or breach is not cured within
(i) ninety (90) days after written notice thereof is delivered to the defaulting
or breaching Party, or (ii) in the case of a breach that cannot be cured within
ninety (90) days, within a reasonable period not exceeding one hundred and
twenty (120) days after written notice thereof is delivered to the defaulting or
breaching Party, so long as the breaching Party is making a good faith effort to
cure such default. Termination shall not be the sole remedy for material breach
of this Agreement, and a Party may choose to continue to perform hereunder and
in response to any material breach may bring a claim for damages (including a
reduction in consideration due hereunder going forward) and other available
remedies under Section 15.11 and injunctive relief under Section 15.12, and
bringing such a claim in good faith shall not constitute a breach of this
Agreement.
 
 
 
51

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
 
(c) Insolvency. If either Party shall (i) become bankrupt or insolvent,
(ii) file for a petition therefor, (iii) make an assignment for the benefit of
creditors, or (iv) have a receiver appointed for its assets, which appointment
shall not be vacated within sixty (60) days after the filing, then the other
Party shall be entitled to terminate this Agreement forthwith by written notice
to such Party.
 
(d) Safety Reasons. Either Party may terminate this Agreement at any time upon
written notice to the other Party if (i) Acerus withdraws the Product from the
market in the Territory for a safety reason, or (ii) (1) the FDA materially
restricts the indications for the Product or (2) federal or state pricing
controls are imposed that, in either case, would result in obvious and
substantial loss of sales for the Product.
 
(e) Clinical Trials Costs
 
(f) . If Acerus fails to perform any of the Required Clinical Trials, Aytu may,
at Aytu’s option, pay any expenses related to such Required Clinical Trials,
provided that Acerus shall be required to reimburse Aytu for such payment or, at
Acerus’ request, directly to offset it against Product Net Revenue attributable
to the Acerus Sales Channel.
 
(f)           Challenge. If at any time during the Term, Aytu brings a
proceeding or action challenging the validity, scope, enforceability or
ownership of any of the Acerus Patents or Acerus Trademarks licensed to Aytu
under this Agreement, Acerus shall have, at its sole option, the right to
terminate this Agreement upon notice to Aytu, such termination to be effective
only if Aytu does not withdraw such challenge as soon as reasonably practicable
after such notice. Without limiting the generality of the foregoing, Aytu
specifically agrees that filing a request for re-examination, knowingly copying
patent claims so as to institute an interference, or filing an opposition with
respect to any of the Acerus Patents shall be deemed a challenge under this
Section 14.2(f).
 
14.3 Consequences of Termination.
 
(a) Termination of Rights
 
(b) . Upon expiration or termination of this Agreement for any reason, all
licenses granted to Aytu under this Agreement shall immediately terminate,
except as necessary to permit Aytu to sell off existing inventory under Section
14.3(b), and, except as set forth in this Section 14.3, the rights and
obligations of the Parties under this Agreement shall terminate as of the date
of such termination or expiration and Aytu shall make any payments to Acerus
required to be made on account of activities that occurred prior to the
termination or expiration of the Agreement; provided, that except as set forth
in this Section 14.3, any payments contemplated to survive termination in
accordance with Section 14.3(b) shall remain payable in accordance with the
terms and conditions of such sections.
 
 
 
52

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
(b) Sell Off of Product. Upon expiration of the Term or termination of this
Agreement pursuant to Section 14.2, the rights granted to Aytu under this
Agreement shall survive such expiration or termination only such that Aytu shall
have the right to sell off Product then in Aytu’s inventory or on order from
Acerus on the date on which the applicable notice of termination is provided or
this Agreement otherwise expires; provided that Aytu pays to Acerus any payments
due in accordance with Section 7.1. Any other license provided for by Acerus to
Aytu in this Agreement shall, upon any such termination or expiration,
immediately and automatically terminate.
 
(c) Trademark Assignments. Subject to the licenses provided herein and to
Section 14.3(f), promptly following any expiration of the Term or termination of
this Agreement pursuant to Section 14.2, Aytu shall assign to Acerus all
trademarks used in the Commercialization of the Product (to the extent not
already owned by Acerus).
 
(d) Return of Confidential Information. Upon expiration or termination of this
Agreement in its entirety, unless otherwise directed by Aytu, Acerus shall
promptly return all Aytu Confidential Information to Aytu, except for a single
copy or sample for documentation purposes only. Upon expiration or termination
of this Agreement in its entirety, unless otherwise directed by Acerus, Aytu
shall promptly return all Acerus Confidential Information, Promotional Materials
and Training Materials to Acerus, except for a single copy or sample to be
retained for documentation purposes only.
 
(e) Accrued Obligations. Except as set forth herein, any termination or
expiration of this Agreement shall not relieve either Party of any obligation
which has accrued prior to the effective date of such termination or expiration,
which obligations shall remain in full force and effect for the period provided
therein.
 
(f) Termination Fee. If this Agreement is terminated under Section 14.2(b) above
by Aytu, then Aytu shall only be required to pay Acerus amounts due and payable
as of the effective date of termination and Acerus shall pay to Aytu, as
compensation for past investment in the business and for future lost profits and
not as a penalty, an amount (the “Termination Payments”) equal to [**] of Net
Revenue for [**] following the effective date of termination (the “Termination
Payment Period”), which amounts shall be due and payable by Acerus by bank wire
transfer in immediately available funds within forty-five (45) days following
each calendar quarter during the Termination Payment Period. For clarity, if
this Agreement is terminated by Acerus pursuant to Sections 14.2(b), (c), (d) or
(f), no Termination Payments shall be due to Aytu.
 
14.4 Remedies. Termination of this Agreement in accordance with and fulfillment
of all obligations set forth in this Article 14 shall not affect any other
rights or remedies that may be available to a Party in law or equity, all
remedies being cumulative and not exclusive.
 
 
 
53

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
Article 15
 
MISCELLANEOUS
 
15.1 Notices. Any notice, request, demand, waiver, consent, approval or other
communication which is required or permitted to be given to any Party shall be
in writing and shall be deemed given only (a) when delivered to the Party
personally, (b) five (5) days after sent to the Party by registered mail, return
receipt requested, postage prepaid, (c) the second Business Day after sent by a
nationally recognized courier service guaranteeing next-day or second-day
delivery, charges prepaid, in each case addressed to the Party at its address
set forth below, or (d) when transmitted as a PDF attachment to an e-mail (with
response e-mail confirming receipt) and followed with a copy by first class
certified or registered mail, postage prepaid, return receipt requested, or at
such other address as such Party may from time to time specify by notice given
in the manner provided herein to the Party entitled to receive notice hereunder:
 
For Acerus: 
Acerus Pharmaceuticals Corporation
 
2486 Dunwin Drive
 
Mississauga, Ontario
 
L5L 1J9
 
Attn: Chief Executive Officer
 
E-mail: [**]
 
With a copy (which shall not constitute notice) to:
 
Hogan Lovells US LLP
 
100 International Drive, Suite 2000
 
Baltimore, MD 21202 USA
 
Attn: Asher M. Rubin
 
E-mail: [**]
 
For Aytu: 
Aytu BioScience, Inc.
 
373 Inverness Parkway, Suite 206
 
Englewood, CO 80112 USA
 
Attn: Chief Executive Officer
 
E-mail: [**]
 
With copies (which shall not constitute notice) to:
 
 
 
Dorsey & Whitney, LLP
111 Main St.
Salt Lake City, UT 84111 USA
Attn: Nolan S. Taylor
E-mail: [**]
 
15.2 Entire Agreement. This Agreement, the Quality Agreement and the Safety
Agreement (including any Schedules other attachments hereto or thereto, as
applicable) constitutes the entire agreement between the Parties with respect to
the subject matter hereof, and no oral or written statement may be used to
interpret or vary the meaning of the terms and conditions hereof. This Agreement
supersedes any prior or contemporaneous agreements and understandings, whether
written or oral, between the Parties with respect to the subject matter hereof,
including the non-disclosure agreement between Acerus and Aytu dated
December 20, 2018 (the “Existing CDA”). All information disclosed by Acerus
pursuant to the Existing CDA shall be deemed Acerus Confidential Information for
the purposes of this Agreement, and all information disclosed by Aytu pursuant
to the Existing CDA shall be deemed Aytu Confidential Information for the
purposes of this Agreement. Nothing in this Agreement shall alter, modify or
limit any obligation or liability of either Party under the 2016 Agreement with
regard to time periods prior to the A&R Closing Date.
 
 
 
54

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
 
15.3 Assignment. Neither Party may assign or otherwise transfer this Agreement
without the prior written consent of the other Party; provided that either Party
may assign this Agreement without the consent of the other Party to any
Affiliate or in connection with the acquisition of such Party or the sale of all
or substantially all of the assets of such Party, subject to Section 8.7(a). Any
assignment of this Agreement in violation of this Section 15.3 shall be null and
void. Assignment of this Agreement by either Party shall not relieve the
assignor of its obligations hereunder. This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors and
permitted assigns.
 
15.4 Force Majeure. Both Parties shall be excused from the performance of their
obligations under this Agreement to the extent that such performance is
prevented by force majeure and the nonperforming Party promptly provides notice
of the prevention to the other Party. Such excuse shall be continued so long as
the condition constituting force majeure continues and the nonperforming Party
takes reasonable efforts to minimize the effect of and overcome or remove the
cause or condition causing such force majeure. For purposes of this Agreement,
force majeure shall include conditions beyond the control of the Parties,
including, without limitation, an act of God, war, civil commotion, terrorist
act, labor strike or lock-out, epidemic, failure or default of public utilities
or common carriers, destruction of production facilities or materials by fire,
earthquake, storm or like catastrophe, and failure of plant or machinery
(provided that such failure could not have been prevented by the exercise of
skill, diligence, and prudence that would be reasonably and ordinarily expected
from a skilled and experienced person engaged in the same type of undertaking
under the same or similar circumstances). Notwithstanding the foregoing, a Party
shall not be excused from making payments owed hereunder because of a force
majeure affecting such Party.
 
15.5 Headings. The descriptive headings contained in this Agreement are for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
 
15.6 Independent Contractor. Each Party shall be acting as an independent
contractor in performing under this Agreement and shall not be considered or
deemed to be an agent, employee, joint venturer or partner of the other Party.
 
15.7 Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any law or public policy, all other
terms and provisions of this Agreement shall nevertheless remain in full force
and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
Party.
 
15.8 No Third-Party Beneficiaries. Except as provided in Article 13 in respect
to Acerus Indemnitees and Aytu Indemnitees, nothing in this Agreement, either
express or implied, is intended to or shall confer upon any Third Party any
legal or equitable right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
 
15.9 Amendment. This Agreement may not be amended or modified except by an
instrument in writing signed by authorized representatives of Aytu and Acerus.
 
 
 
55

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
 
15.10 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, United States of America
(without giving effect to principles of conflicts of laws that would require the
application of any other law) and the federal laws of the U.S., in each case
without reference to choice of law rules.
 
15.11 Dispute Resolution. In the event of any dispute under this Agreement
(other than disputes excluded in subsection (a) below), the Parties shall refer
such dispute to the Applicable Senior Officers for attempted resolution by good
faith negotiations within thirty (30) days after such referral is made. If the
Applicable Senior Officers are unable to resolve the dispute within the time
allotted, either Party may proceed as set forth below.
 
(a) Alternative Dispute Resolution. Any dispute, controversy or claim arising
out of or relating to the validity, construction, enforceability or performance
of this Agreement, including disputes relating to an alleged breach or to
termination of this Agreement and including any claim of inducement by fraud or
otherwise, but excluding any dispute, controversy or claim arising out of or
relating to the validity, enforceability, or infringement of any Acerus Patent
or any suit for injunctive relief under Section 15.12 (which shall be submitted
to a court of competent jurisdiction), shall be settled by mediation and
arbitration in the manner described below:
 
(b) Mediation. The Applicable Senior Officers shall select a mediator with
appropriate expertise in the subject matter to which the dispute relates, who
will be engaged to resolve the dispute. If the Applicable Senior Officers cannot
agree on a mediator within fifteen (15) days, each Party may seek appropriate
resolution through arbitration as described below. If the Parties are unable to
resolve their dispute through mediation within ninety (90) days after selection
of the mediator(s), either Party may seek appropriate resolution through
arbitration as described below.
 
(c)  Arbitration. Any dispute, controversy or claim arising out of or relating
to the validity, construction, enforceability or performance of this Agreement
which is not resolved by mediation, including disputes relating to alleged
breach or to termination of this Agreement (other than disputes referred to in
Section 15.11(a) that are to be submitted to a court of competent jurisdiction),
shall be settled by binding arbitration (“Arbitration”) in the manner described
below:
 
(d) Arbitration Request. If a Party intends to begin an Arbitration to resolve a
dispute, such Party shall provide written notice (the “Arbitration Request”) to
the other Party informing such other Party of such intention and the issues to
be resolved. Within ten (10) Business Days after the receipt of the Arbitration
Request, the other Party may, by written notice to the Party initiating
Arbitration, add additional issues to be resolved.
 
(e) Procedure. The Arbitration shall be conducted pursuant to the then- current
JAMS Streamlined Arbitration Rules & Procedures for disputes involving [**] or
less and the JAMS Comprehensive Arbitration Rules & Procedures for disputes
involving more than [**] or involving a right to terminate this Agreement under
Section 14.2(b), (c), (d) or (f). Notwithstanding those rules, the following
provisions shall apply to the Arbitration hereunder:
 
 
 
56

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
 
(i)
Arbitrator
 
In the event that the dispute at issue involves an amount less than [**], the
Arbitration shall be conducted by one (1) arbitrator (the “Threshold 1
Arbitrator”). In the event, however, that the dispute at issue involves an
amount greater than [**]or the termination of this Agreement under
Section 14.2(b), (c), (d) or (f), the Arbitration shall be conducted by a panel
of three (3) arbitrators (collectively, with the Threshold 1 Arbitrator, the
“Arbitrators”). The Arbitrators shall be selected from a pool of retired
independent federal judges to be presented to the Parties by JAMS. Neither Party
shall engage in ex parte contact with the Arbitrators.
 
(ii)
Proceedings
 
The time periods set forth in the applicable JAMS rules shall be followed,
unless a Party can demonstrate to the Arbitrators that the complexity of the
issues or other reasons warrant the extension of one or more of the time tables.
Notwithstanding the foregoing, the Arbitrators shall render a written opinion
setting forth findings of fact and conclusions of law with the reason therefor
stated within no later than six (6) months from the date on which the
Arbitrators were appointed to the dispute. A transcript of the evidence adduced
at the hearing shall be made and, upon request, shall be made available to each
Party. The Arbitrators shall, in rendering their decision, apply the substantive
law of the State of New York and the federal law of the U.S., in each case
without regard to conflict of laws provisions, except that the interpretation of
and enforcement of this Section 15.11 shall be governed by the Federal
Arbitration Act. The Arbitrator shall apply the Federal Rules of Evidence to the
hearing. The proceeding shall take place in New York, New York, or such other
location as the Parties may agree. The fees of the Arbitrators and JAMS shall be
paid by the losing Party, which shall be designated by the Arbitrator. If the
Arbitrator is unable to designate a losing Party, it shall so state and the fees
shall be split equally between the Parties.
 
(iii)
Award
 
Subject to Section 15.12, the Arbitrator is empowered to award any remedy
allowed by law, including money damages, prejudgment interest and attorneys’
fees, and to grant final, complete, interim, or interlocutory relief, including
injunctive relief.
 
(iv)
Costs
 
Except as set forth in Sections 15.11(e)(ii) and (iii) above, each Party shall
bear its own legal fees and costs.
 
(v)
Confidentiality
 
The Arbitration proceeding shall be confidential and the Arbitrators shall issue
appropriate protective orders to safeguard each Party’s Confidential
Information. Except as required by law, no Party shall make (or instruct the
Arbitrators to make) any public announcement with respect to the proceedings or
decision of the Arbitrators without prior written consent of each other Party.
The existence of any dispute submitted to Arbitration, and the award, shall be
kept in confidence by the Parties and the Arbitrators, except as required in
connection with the enforcement of such award or as otherwise required by
Applicable Law.
 
 
 
57

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
 
(vi)
Judgment; Provisional Remedies
 
Any court of competent jurisdiction may enter judgment upon any award. The
Parties consent to the jurisdiction of the above-specified Court for the
enforcement of these provisions and the entry of judgment on any award. Each
Party has the right before or during the Arbitration to seek and obtain from the
appropriate court provisional remedies such as attachment, preliminary
injunction, replevin, etc. to avoid irreparable harm, maintain the status quo,
or preserve the subject matter of the Arbitration.
 
(vii)
Language
 
All pleadings, complaints and other documents filed or presented in connection
with, and all proceedings in, any dispute resolution proceeding described in
this Section 15.11 must be in the English language.
 
15.12 Injunctive Relief
 
. Each Party shall be entitled to seek injunctive relief to enforce the
respective covenants and agreements of the Parties in this Agreement, including,
without limitation, the respective rights and obligations of the Parties under
Articles 5, 8 and 10.
 
15.13 Nature of Licenses
 
. All rights and licenses granted pursuant to this A&R Agreement are, and shall
otherwise be deemed to be, for purposes of 11 U.S.C. § 365(n), licenses of
rights to “intellectual property” as defined under 11 U.S.C. § 101(35A). The
Parties agree that Aytu, as a licensee of such rights under this Agreement,
shall retain and may fully exercise all of its rights, including any right to
enforce any exclusivity provision of this Agreement, remedies, and elections
under Bankruptcy Laws. To the fullest extent permitted by Applicable Law, the
Parties further agree that, in the event of the commencement of a bankruptcy
proceeding by or against Acerus under the Bankruptcy Laws, Aytu shall be
entitled to all applicable rights under 11 U.S.C. § 365(n), including copies and
access to, as appropriate, any such intellectual property and all embodiments of
such intellectual property upon written request therefor by Aytu, and such, if
not already in its possession, shall be promptly delivered to Aytu.
 
15.14 Waiver of Jury Trial. EACH PARTY HERETO WAIVES ITS RIGHT TO TRIAL OF ANY
ISSUE BY JURY.
 
15.15 Limitation of Liability. IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE
OTHER PARTY FOR LOST PROFITS OR FOR ANY SPECIAL, INDIRECT, INCIDENTAL,
CONSEQUENTIAL OR PUNITIVE DAMAGES, HOWEVER CAUSED, ON ANY THEORY OF LIABILITY
AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES, ARISING UNDER ANY CAUSE OF ACTION AND ARISING IN ANY WAY OUT OF THIS
AGREEMENT. THE FOREGOING LIMITATION WILL NOT LIMIT EITHER PARTY’S
INDEMNIFICATION OBLIGATIONS TO THE OTHER PARTY IN RESPECT OF ANY THIRD PARTY
CLAIM OR UNDER ARTICLE 13 OR OF ARTICLE 10.
 
 
 
58

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
 
 
 
 
15.16 Survival. Sections 7.1, 7.7, 8.4, 12.5, 14.2, and 14.3, and Article 9,
Article 10, Article 13 and Article 15 shall survive any termination or
expiration of this Agreement.
 
15.17 No Waiver. The failure of either Party to enforce at any time for any
period the provisions of or any rights deriving from this Agreement shall not be
construed to be a waiver of such provisions or rights or the right of such Party
thereafter to enforce such provisions.
 
15.18 Counterparts. This Agreement may be executed in one or more counterparts,
and by the respective Parties in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
 
15.19 Further Assurances. Each Party shall perform all further acts and things
and execute and deliver such further documents as may be necessary or as the
other Party may reasonably require to implement or give effect to this
Agreement.
 
[SIGNATURES FOLLOW ON NEXT PAGE]
 
 
 
59

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN
OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY
HARMFUL IN PUBLICLY DISCLOSED.
 
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the date first written above by their respective duly authorized officers.
 
 
ACERUS PHARMACEUTICALS CORPORATION
 
 
 
 
 
By:            
 
 
 
Name:                       
 
 
 
Title:                       
 
AYTU BIOSCIENCE, INC.
 
 
 
 
 
By:            
 
 
 
Name:                       
 
 
 
Title:                       
 
 
 
 
60