Exhibit 10.27
 
*** OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. SECTION 240.24b-2

LICENSE, CO-DEVELOPMENT AND COMMERCIALIZATION AGREEMENT
 
between
 
Palatin Technologies, Inc.
 
and
 
Chemical Works of Gedeon Richter Plc.
 

 
This binding agreement was executed on August 29th, 2014
 
 
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LICENSE, CO-DEVELOPMENT AND COMMERCIALIZATION AGREEMENT
 
THIS LICENSE, CO-DEVELOPMENT AND COMMERCIALIZATION AGREEMENT (the “Agreement”),
effective as of August 29th, 2014 (the “Effective Date”), is entered between:
 
Palatin Technologies, Inc., a United States company operating under the laws of
the United States of America and under the laws of the State of Delaware, with a
principal place of business at 4-B Cedar Brook Drive, Cranbury, New Jersey
08512, USA (“Palatin”),
 
and:
 
Chemical Works of Gedeon Richter Plc., a Hungarian company operating under the
laws of Hungary with a principal place of business at Gyömrői út 19-21, Budapest
1103, Hungary (“Gedeon Richter”).
 
Palatin and Gedeon Richter are sometimes referred to herein individually as a
“Party” and collectively as the “Parties”.
 
Recitals
 
WHEREAS:
 
A.
Palatin, a United States company operating under the laws of the State of
Delaware, is developing the Product (as hereinafter defined);

 
B.
Gedeon Richter, a Hungarian company operating under the laws of Hungary, is
engaged in the development, manufacture and commercialization of pharmaceutical
products;

 
C.
The Parties entered into a Confidential Disclosure Agreement as of *** for the
purpose of evaluating the in-licensing of the Product for the treatment of
female sexual dysfunction and exchanging confidential information between each
other;

 
D.
Gedeon Richter offered Palatin a Non-Binding Proposal of Terms for Collaboration
(dated as of ***), in the framework of which Gedeon Richter outlined a business
collaboration for the Product;

 
E.
The Parties concluded an agreement dated as of *** and its first amendment dated
as of *** relating to an option to negotiate an exclusive license for the
purpose of granting to Gedeon Richter an exclusive right to negotiate the terms
of a license agreement for the Product;

 
F.
Gedeon Richter desires to obtain from Palatin certain exclusive rights and
licenses to manufacture, develop, have developed, register, commercialize, use,
sell, offer for sale and import the Product in the Field (as hereinafter
defined) in the Territory (as hereinafter defined), and Palatin is willing to
grant to Gedeon Richter such rights and licenses and to exclusively supply
Gedeon Richter with the Product for the Territory, all on the terms and
conditions set forth in this Agreement and the Supply Agreement for Development
(as hereinafter defined) and the Commercial Supply Agreement (as hereinafter
defined); and

 
G.
Palatin desires to use the results of clinical trials and Major regulatory
submissions within the Territory (as hereinafter defined) for its use outside
the Territory and Gedeon Richter desires to use the results of clinical trials
and regulatory submissions outside the Territory for its use inside the
Territory.

 
NOW, THEREFORE, Palatin and Gedeon Richter agree as follows:
 
1.  
DEFINITIONS

 
For the purposes of this Agreement, the following terms shall have the
respective meanings set forth below:
 
1.1 “Affiliate” means, with respect to a Party, any person, corporation, firm,
joint venture or other entity which, directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control with such
Party. As used in this definition, “control” means possession of the power to
direct or cause the direction of the management and policies of an entity,
whether through the ownership of fifty percent (50%) or more of the outstanding
voting securities or by contract or otherwise.
 
1.2  “Audit Disagreement” shall have the meaning set forth in Section 9.7(b).
 
 
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1.3 “Business Day” means any day that is not a Saturday, a Sunday or other day
on which banks are required or authorized by law to be closed in either Hungary
or New Jersey.
 
1.4 “Change of Control” any person, corporation or other entity other than a
Party becomes the beneficial owner(s) directly or indirectly, of more than fifty
percent (50%) of the outstanding equity securities of the Party, or otherwise
becomes entitled, directly or indirectly, to vote more than fifty percent (50%)
of the voting power entitled to be cast at elections for directors (“Voting
Power”) of the Party, other than as a result of the issuance of equity
securities in connection with any financing transaction; (ii) a consolidation or
merger (in one transaction or a series of related transactions) of a Party
pursuant to which the holders of a Party’s equity securities immediately prior
to such transaction or series of related transactions would not be the holders,
directly or indirectly, immediately after such transaction or series of related
transactions of more than fifty percent (50%) of the Voting Power of the entity
surviving such transaction or series of related transactions; and (iii) the
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all of the assets of a Party.
 
1.5 “Clinical Study” means any investigation involving human subjects intended
to discover or verify the clinical, pharmacological and/or other pharmacodynamic
effects of an investigational product(s), and/or to identify any adverse
reactions to an investigational product(s), and/or to study absorption,
distribution, metabolism, and excretion of an investigational product(s) with
the object of ascertaining its safety and/or efficacy.
 
1.6 “CMC” means chemistry, manufacturing and controls, including design,
development and technical file of the relevant device necessary for
administration of the Product.
 
1.7 Commercialization” and “Commercialize” shall refer to all activities
undertaken relating to the pre-marketing, marketing, distribution and sale of a
Product, and the process of Commercialization, respectively.
 
1.8 “Commercially Reasonable Efforts” means the carrying out of such obligations
with a level of efforts and resources consistent with the commercially
reasonable practices it employs for its own products (in any case, such level
shall not be below the standard level in the pharmaceutical industry) in the
exercise of prudent scientific and business judgment that would be applied to
the research, development, manufacture or commercialization of a pharmaceutical
product. Commercially Reasonable Efforts require that the Party:  (a) in a
timely manner assign responsibility for such obligations or tasks to specific
employee(s) with sufficient skills and experience as are required to accomplish
such obligations or tasks, and hold such employee(s) accountable for progress
and monitor such progress on an on-going basis; (b) set and timely seek to
achieve specific and meaningful objectives for carrying out such obligations;
and (c) timely make and implement decisions and allocate resources designed to
advance progress with respect to such objectives.
 
1.9 “Competent Authority” shall mean any applicable regulatory authority,
including but not limited to EMA or any other certification or Notified Bodies
in the Territory responsible for the grant of the Regulatory Approval.
 
1.10 “Control” or “Controlled” shall mean possession of the ability to grant the
licenses or sublicenses as provided for herein without violating the terms of
any agreement or other arrangement with any Third Party.
 
1.11 “CTA” means a Clinical Trial Application filed with the Competent
Authority.
 
1.12 “Development” means all activities relating to preclinical development,
clinical development and CMC/process development, as are customary in the
pharmaceutical and medical device industry and necessary for obtaining
Regulatory Approval.
 
1.13 “Dossier” means documentation in the English language compiled according to
the European Union requirements in Common Technical Documentation (hereinafter
referred to as “CTD”) format.
 
1.14 “EMA” means European Medicines Agency or any successor entity.
 
1.15 “EU” means the countries of the European Union, as constituted from time to
time.
 
1.16 “FDA” means the U.S. Food and Drug Administration or any successor entity.
 
1.17 “Field” means human use in treatment of female sexual dysfunction.
 
1.18 “First Commercial Sale” means, on a country-by-country basis, the date of
the first sale or other commercial disposal of the Product by Gedeon Richter or
an Affiliate or Sublicensee of Gedeon Richter pursuant to a Regulatory Approval.
 
1.19 “GCP” means the Good Clinical Practices guidelines defined by 28/2005/EC
directive and appropriate ICH guide and required by the European Commission,
and  other standards of the European Commission that are generally recognized
within the European pharmaceutical industry, including the ICH Harmonized
Tripartite Guideline for Good Clinical Practice, as amended from time to time.
 
1.20 “Gedeon Richter Development Plan” means the Development activities to be
performed by Gedeon Richter *** and listed in Exhibit VI, as the same may be
amended in accordance with the provisions of this Agreement.
 
 
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1.21 “Gedeon Richter Know-How” means any Information within the control of
Gedeon Richter obtained or gained during the performance of the Gedeon Richter
Development Plan, the Commercialization Plan or Gedeon Richter’s obligations
under this Agreement.
 
1.22 “GLP” means the Good Laboratory Practices regulations defined by 9/2204/EC
and 10/2004/EC as well as appropriate OECD guide and according to standards,
guidelines and regulations promulgated or otherwise required by the European
Commission, and published standards of the European Commission, and other
standards of the European Commission that are generally recognized within the
European pharmaceutical industry, including Council Directive 2001/83/EC, as
amended from time to time.
 
1.23 “GMP” means the Good Manufacturing Practices regulations and General
Biologics Products Standards defined by European Directive 94/2003/EC, 9/2204/EC
and 10/2004/EC as well as appropriate OECD guide GMP also includes similar
standards, guidelines and regulations promulgated and required by the European
Commission, and published standards of the European Commission and other
standards of the European Commission that are generally recognized within the
European pharmaceutical industry, including the Guide to Good Manufacturing
Practices for Medicinal Products and Council Directive 2001/83/EC, as amended
from time to time.
 
1.24 “GVP” means Good Pharmacovigilance Practices for the European Union, a set
of guidelines for the conduct of pharmacovigilance in the EU, drawn up based on
Article 108a of Directive 2001/83/EC, by the European Medicines Agency in
cooperation with competent authorities in Member States and interested parties,
and applying to marketing authorization holders in the EU, the Agency and
competent authorities in Member States.
 
1.25 “Indemnitee” means a Gedeon Richter Indemnitee or a Palatin Indemnitee.
 
1.26 “Information” means techniques, data and information relating to the
Product, including, but not limited to, inventions, practices, methods,
knowledge, know-how, skill, trade secrets, experience and test data (including
but not limited to pharmacological, toxicological, preclinical and clinical test
data); data, records and information derived from research, preclinical
development and clinical development - including but not limited to full
clinical study reports, full clinical study datasets in SDTM format, statistical
evaluation program codes, regulatory submissions, adverse reactions, CMC/process
development, analytical and quality control data, and Commercialization,
marketing, pricing, distribution, cost, sales and manufacturing data or
descriptions.
 
1.27 “Initiation” means ***.
 
1.28 “Investigational Product” means a pharmaceutical form of an active
ingredient and/or the relevant placebo being tested or used as a reference in a
Clinical Study, including but not limited to the finished product form equipped
with the relevant device necessary for administration or a product with a
marketing authorization when used or assembled (formulated or packaged) in a way
different from the approved form, or when used for an unapproved indication, or
when used to gain further information about an approved use.
 
1.29 “Joint Steering Committee” shall have the meaning contained in Section 4.1.
 
1.30 “Major regulatory submission” means any documents or data submitted to or
communications to be carried out with EMA, Competent Authorities that contain
substantial or important new information related to the Product or the
Development of the Product in the Field, e.g. Marketing Authorization
Application, Investigators’ Brochure, clinical trial reports or report
summaries, other study reports, IMPD, CMC documentation, Development Safety
Update Reports or their amendments, substantial amendments of clinical trial
protocols that are not of a merely administrative nature.
 
1.31 “Marketing Authorization Application” means an application for Regulatory
Approval required to be approved by the Competent Authorities and necessary for
the commercial manufacture, use, storage, import, export, transport,
commercialization or sale of a Product in any country of the Territory.
 
1.32 “Milestones Payments” mean the payments to be made by Gedeon Richter to
Palatin in accordance with Section 7.2.
 
1.33 “Net Sales” means the gross amounts invoiced or otherwise billed by Gedeon
Richter and its Affiliates and Sublicensees in connection with sales of the
Product in the Territory, calculated in accordance with accounting standards of
Gedeon Richter and its Affiliates or Sublicensees (IFRS, since Gedeon Richter is
obliged to report its consolidated performance to the stock exchange according
to IFRS) as applicable, consistently applied, less the following amounts
specifically identified as related to, and specifically allocated to, the
Products (without duplication of any amounts deducted in accordance with
IFRS):  ***.  Upon the sale or other disposal of the Product other than in a
bona fide arm’s length transaction exclusively for money or upon any use of the
Product for purposes which do not result in a disposal of that Product in
consideration of sales revenue customary in the country of use, such sale, other
disposal or use shall be deemed to constitute a sale at the relevant open market
price in the country in which the sale, other disposal or use occurs, or, if
that price is not ascertainable, at the price the goods or services provided in
exchange for the Products would obtain in an arm’s length transaction.
 
 
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1.34 “Notified Bodies” means an accredited body and Commission announced
organization with identification number issued by the Commission. Its designated
tasks are the evaluation and certification of the conformity of devices in the
European Commission, and management of other conformity assessment tasks.
 
1.35 “Palatin Development Plan” means the Development activities, including ***,
to be performed by Palatin *** and listed in Exhibit V, as the same may be
amended in accordance with the provisions of this Agreement. For the avoidance
of doubt, ***.
 
1.36 “Palatin Know-How” means (a) any Information within the Control of Palatin
as of the Effective Date relating to the Development of the Product in the
Field, including but not limited to the information contained in the
documentation listed in Exhibit II, (b) all Information generated or obtained by
Palatin after the Effective Date during the performance of Palatin’s obligations
under this Agreement, and (c) all other Information generated or obtained by
Palatin after the Effective Date relating to the Development of the Product in
the Field and Commercialization activities undertaken by or on behalf of
Palatin. Notwithstanding anything herein to the contrary, Palatin Know-How shall
exclude the Palatin Patents.
 
1.37 “Palatin Patent” means (i) each patent application and patent listed in
Exhibit III, including (a) all reissues, substitutions, confirmations,
registrations, validations, re-examinations, additions, continuations, continued
prosecution applications, continuations-in-part, or divisions of or to any of
the foregoing; and (b) all extensions, renewals or restorations of any of the
foregoing by existing or future extension, renewal or restoration mechanisms,
including supplementary protection certificates or the equivalent thereof and
(ii) any patent application filed or to be filed, and any patent obtained or to
be obtained, by Palatin in the Territory during the term of this Agreement
relating to the Product in the Field.
 
1.38 “Phase III Study” means a Clinical Study designed to confirm the
preliminary evidence that an investigational product is safe and effective for
use in the intended indication and recipient population.
 
1.39 “Pivotal Study” means a Phase III Study intended to support Regulatory
Approval by the Competent Authorities.
 
1.40 “Product” means any pharmaceutical product for humans formulated in any
finished product form that contains bremelanotide (PT-141) as active
pharmaceutical ingredient, including but not limited to any relevant device
necessary for administration.
 
1.41 “Regulatory Approval” means any approvals, product and/or establishment
licenses, registrations or authorizations of any Competent Authority or other
governmental entity, necessary for the commercial manufacture, use, storage,
import, export, transport, commercialization or sale of the Product in a
regulatory jurisdiction in the Territory.
 
1.42 “Sublicensee” shall mean a Third Party (except an Affiliate) to whom Gedeon
Richter has granted a license or sublicense to Commercialize the Product in the
Territory in accordance with the terms and conditions of this Agreement.
 
1.43 “Territory” shall mean all countries that are listed in Exhibit I.
 
1.44 “Third Party” means any entity other than Palatin or Gedeon Richter and its
respective Affiliates and Sublicensees.
 
1.45 “Top-5 Countries” shall mean ***.
 
1.46 “Top 3 Countries” shall mean ***.
 
1.47 “Trademark” means registered trademark owned by Gedeon Richter pertaining
to the Product in the Territory.
 
1.48 “Valid Claim” means a claim of any unexpired Palatin Patent (as may be
extended through supplementary protection certificate or patent term extension
or the like), that has not been withdrawn, canceled or disclaimed nor held to be
invalid or unenforceable by a court or tribunal of competent jurisdiction in a
decision that is unappealable or unappealed within the time allowable for
appeal, or, in the case of any patent application, that has not been finally
rejected in a decision by the relevant patent office that is unappealable or
unappealed within the time allowable for appeal.
 
2.  
LICENSE

 
2.1 License to Gedeon Richter. Subject to the terms and conditions of this
Agreement, Palatin hereby grants to Gedeon Richter (a) an exclusive (even as to
Palatin and its Affiliates), royalty-bearing license, including the right to
grant sublicenses in accordance with Section 2.2, under the Palatin Patents and
Palatin Know-How to develop, have developed, register, commercialize, import,
market, store, sell, and offer to sell the Product in the Field in the
Territory, and (b) a co-exclusive (with Palatin and its Affiliates only)
license, including the right to grant sublicenses in accordance with
Section 2.2, under the Palatin Patents and Palatin Know-How to research,
develop, have developed, manufacture and have manufactured the Product solely
for use, commercialization, importation, sale or offer for sale in the Field in
the Territory (the rights granted under the foregoing clauses (a) and (b),
collectively, the “License”). Notwithstanding the foregoing, Gedeon Richter
shall not exercise its rights to manufacture the Product or have the Product
manufactured unless Palatin fails to supply the goods in accordance with the
Commercial Supply Agreement or the Parties otherwise agree.
 
 
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2.2 Sublicenses.
 
2.2.1 Subject to the terms and conditions of this Agreement, Gedeon Richter
shall have the right to sublicense the rights granted in Section 2.1 above.
 
2.2.2 Except in the case of a sublicense to an Affiliate of Gedeon Richter, each
sublicense granted pursuant to this Section 2.2 shall require the prior written
consent of Palatin, which consent shall not be unreasonably withheld. Gedeon
Richter shall provide to Palatin written notice of each proposed sublicense,
which written notice shall include a reasonable level of detail regarding the
terms of the proposed sublicense and the proposed Sublicensee’s ability to
perform its obligations hereunder. Unless Palatin provides to Gedeon Richter
written notice that Palatin is withholding its consent to the proposed
sublicense within *** after its receipt of the applicable notice from Gedeon
Richter, Palatin shall be deemed to have consented to the proposed sublicense.
 
2.2.3 Each sublicense agreement shall be in writing and consistent with all the
terms and conditions of this Agreement and shall provide that the Sublicensee
shall be bound by and subject to all applicable terms and conditions of this
Agreement in the same manner and to the same extent as Gedeon Richter is bound
thereby. Each sublicense agreement shall provide that Gedeon Richter and Palatin
shall have the same rights, ownership and/or licenses to all inventions and
Information generated by such Sublicensee to the same extent as if such
invention or Information was generated or obtained by Gedeon Richter, which
rights, ownership and/or licenses shall survive the termination of the
applicable sublicense agreement. Each sublicense agreement shall provide that
further sublicensing by the Sublicensee is prohibited. Gedeon Richter shall
provide a complete copy of each sublicense agreement to Palatin within *** after
its execution. If any sublicense agreement provides for the payment of
non-royalty consideration to Gedeon Richter (including, without limitation,
upfront fees and milestone fees), Gedeon Richter shall pay to Palatin ***
percent (***%) of such non-royalty consideration.
 
2.2.4 Notwithstanding anything herein to the contrary, Gedeon Richter shall be
responsible for the performance of each of its Sublicensee’s and Affiliate’s
financial and other obligations hereunder, including, without limitation, the
payment of all royalties due under Article 7 whether or not paid to Gedeon
Richter by a Sublicensee or Affiliate.
 
2.3 Palatin Retained Rights. Subject to Section 2.5, and notwithstanding the
rights granted to Gedeon Richter in Section 2.1 and without limiting the
generality of Section 2.4, the Parties acknowledge that Palatin retains the
following: (a) the right to practice the Palatin Patents and Palatin Know-How in
the Territory to exercise its rights or to fulfill its obligations under this
Agreement, the Supply Agreement for Development and the Commercial Supply
Agreement, including the manufacturing and development of Products; and (b) the
right to practice and license the Palatin Patents and Palatin Know-How outside
the scope of the License. For clarity, and notwithstanding anything herein to
the contrary, Palatin may (i) develop, have developed, manufacture, have
manufactured, use and provide to Third Parties Products for purposes of
Commercializing the Product outside the Field in the Territory and (ii) develop,
have developed, manufacture, have manufactured and distribute Products in the
Territory for purposes of Commercializing the Products outside the Territory and
outside the Field in the Territory.
 
2.4 No Further Rights. Only the License granted pursuant to the express terms of
this Agreement shall be of any legal force or effect. No other license rights
shall be granted or created by implication, estoppels or otherwise.
 
2.5 Right of First Offer and Negotiation.
 
2.5.1 If Palatin determines to license rights to the Product to a Third Party
for purposes of Commercializing the Product outside the Field in the Territory,
then Palatin shall provide written notice of the same to Gedeon Richter (the
“Field Offer Notice”). If, within *** after its receipt of the Field Offer
Notice, Gedeon Richter indicates by written notice an interest in licensing such
rights, Palatin will negotiate with Gedeon Richter, for a period of up to ***, a
mutually acceptable term sheet for such license. If the parties are not able to
reach agreement on and do not execute a term sheet with respect to the foregoing
rights within such *** period, Palatin shall be free to continue with the
Commercialization of the Product in the field of use in the territory described
in the Field Offer Notice without further obligation to Gedeon Richter.
 
2.5.2 If Palatin determines to license rights to the Product to a Third Party
for purposes of Commercializing the Product in the Field in any country
identified on Exhibit IV, then Palatin shall provide written notice of the same
to Gedeon Richter (the “Territory Offer Notice”). If, within *** after its
receipt of the Territory Offer Notice, Gedeon Richter indicates by written
notice an interest in licensing such rights, Palatin will negotiate with Gedeon
Richter, for a period of up to ***, a mutually acceptable term sheet for such
license. If the parties are not able to reach agreement on and do not execute a
term sheet with respect to the foregoing rights within such *** period, Palatin
shall be free to continue with the Commercialization of the Product in the Field
in the territory described in the Territory Offer Notice without further
obligation to Gedeon Richter.
 
3.  
JOINT STEERING COMMITTEE

 
3.1 Formation of the Joint Steering Committee. As soon as reasonably practicable
after the Effective Date, but not later than ***, the Parties shall establish a
joint steering committee (the “Joint Steering Committee”). Each Party shall
appoint two (or more if the Parties so agree) appropriately qualified employees
of appropriate seniority to serve as its representatives on the Joint Steering
Committee. Each Party may replace its Joint Steering Committee representatives
with appropriately qualified employees of appropriate seniority at any time and
from time to time upon written notice to the other Party. The initial
chairperson of the Joint Steering Committee shall be appointed by Palatin, and
thereafter the right to appoint the chairperson shall alternate on a meeting by
meeting basis between Palatin and Gedeon Richter.
 
 
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3.2 Meetings of the Joint Steering Committee. Meetings of the Joint Steering
Committee shall be held *** or more frequently as requested by either Party to
maintain the progress of the Development and the registration procedure. After
the completion of the Development and registration procedure in the Territory,
meetings shall be held *** but may be called by either Party with not less than
ten (10) Business Days’ notice to the other, unless such notice is waived. The
Joint Steering Committee may hold meetings in person or by teleconference or
videoconference. The chairperson shall be responsible for calling meetings of
the Joint Steering Committee and, after seeking input from the other members of
the Joint Steering Committee, setting the agenda for meetings and circulating
the agenda to other members of the Joint Steering Committee at least five (5)
Business Days prior to the applicable meeting. The agenda for meetings will
include all items requested by members of the Joint Steering Committee. The
chairperson shall insure the orderly conduct of meetings and distribute written
minutes of the meetings within five (5) Business Days following each meeting.
The chairperson shall provide all Joint Steering Committee members an
opportunity to review and comment on the minutes before such minutes are filed
as final records of the Joint Steering Committee. Each Party shall use
reasonable efforts to cause its representatives to attend the meetings of the
Joint Steering Committee. Each Party shall bear all the expenses of its
representatives on the Joint Steering Committee. Except as set forth in this
Section 3.2, the chairperson of the Joint Steering Committee will not have any
greater power or authority than any other member of the Joint Steering
Committee.
 
3.3 Functions of the Joint Steering Committee. The Joint Steering Committee
shall oversee and direct the development, regulatory and commercialization
strategy in the Territory with respect to the Development, obtaining Regulatory
Approval and Commercialization of the Product in the Field, and shall coordinate
communications among the Parties and the exchange of information concerning the
progress of the Development of the Product and the Parties involvement in
post-Development activities. The Joint Steering Committee’s responsibilities
shall include:
 
(a)           receiving and reviewing reports and other information from the
Parties with regard to Development and Commercialization activities and
coordinating the exchange of CMC, clinical and nonclinical data, including,
where appropriate, raw data from studies carried out by or on behalf of the
Parties;
 
(b)           reviewing and evaluating progress under the Gedeon Richter
Development Plan and the Palatin Development Plan;
 
(c)           deciding on the performance of an additional Pivotal Study to be
performed in accordance with the provisions of Section 4.1.2(b);
 
(d)           reviewing and approving amendments to the Gedeon Richter
Development Plan and the Palatin Development Plan;
 
(e)           monitoring the progress of studies and approving additional
studies, including drug-drug interaction studies and other ancillary studies;
 
(f)           reviewing and approving Marketing Authorization Application(s) and
Major regulatory submissions in the Territory relating to the Product and as
otherwise provided in this Agreement with respect to regulatory submissions to
the FDA;
 
(g)           establishing procedures regarding the collection, sharing and
reporting of adverse event information relating to the Product; and
 
(h)           reviewing and approving the Commercialization Plan and all
amendments thereto.
 
3.4 Reporting to the Joint Steering Committee. Each Party shall regularly inform
the other Party about the actual status of its development activities with
respect to the Product in the Field during the Joint Steering Committee meetings
or upon the other Party’s request by providing the Joint Steering Committee with
all necessary reports in connection with its Development activities within a
reasonable time, but no later than *** following such request. Gedeon Richter
shall regularly inform Palatin about the actual status of the Commercialization
efforts during the Joint Steering Committee meetings or upon Palatin’s request
by providing the Joint Steering Committee with all necessary reports in
connection with the Commercialization activities within a reasonable time, but
not later than *** following such request.
 
3.5 Decisions of the Joint Steering Committee. The Joint Steering Committee
shall act by consensus. The representatives from each Party will have,
collectively, one (1) vote on behalf of that Party. The Joint Steering Committee
shall strive to seek consensus in its actions and decision making process. If
after reasonable discussion and good faith consideration of each Party’s view on
a particular matter before the Joint Steering Committee, the Joint Steering
Committee is unable after a period of *** to reach consensus on such matter,
then either Party may refer such matter to the Parties’ respective Chief
Executive Officers for good faith negotiation and resolution in accordance with
Section 15.2.1; provided, however, that the Parties acknowledge and agree that
(a) the purpose of the Joint Steering Committee is to facilitate the efficient
Development and Commercialization of Products and (b) if either Party reasonably
believes that delays caused by the foregoing resolution process would hinder or
delay any Development or Commercialization activities under the Gedeon Richter
Development Plan, Commercialization Plan or Palatin Development Plan or that
have been committed to a Competent Authority or the FDA by a particular date,
then the Parties shall reduce such time periods (including the time period
contemplated by Section 15.2.1) as reasonably necessary to prevent such
hindrance or delay. If the Chief Executive Officers are not able to resolve such
matter within *** pursuant to Section 15.2.1 or, if applicable, the reduced
period, then Gedeon Richter has the decisive vote regarding *** and Palatin has
the decisive vote regarding ***. Notwithstanding the immediately preceding
sentence, if the Joint Steering Committee is unable to reach consensus with
respect to any matter pertaining to safety or labeling of the Product (a
“Disputed Matter”) and a Party (the “Invoking Party”) believes in good faith
that the course of action proposed by the other Party is reasonably likely to
have a material adverse effect on the Invoking Party’s rights hereunder, such
Invoking Party may invoke the provisions of Section 15.2 for purposes of
resolving the Disputed Matter.
 
3.6 Subcommittees. From time to time, the Joint Steering Committee may establish
subcommittees to oversee particular projects or activities within the scope of
the authority of the Joint Steering Committee, as it deems necessary or
advisable. Each subcommittee shall consist of such number of representatives of
each Party as the Joint Steering Committee determines is appropriate from time
to time and shall meet with such frequency as the Joint Steering Committee shall
determine.
 
 
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3.7 Alliance Manager. Each Party shall designate an alliance manager, who shall
be responsible for the day-to-day coordination of the collaboration between the
Parties and shall facilitate communication between the Parties. The Alliance
Manager may but need not be one of the designated members of the Joint Steering
Committee.
 
3.8 Limitation on Joint Steering Committee Authority. Notwithstanding the
creation of the Joint Steering Committee, each Party to this Agreement shall
retain the rights, powers and discretions granted to it hereunder, and the Joint
Steering Committee shall not be delegated or vested with any such rights, powers
or discretion unless such delegation or vesting is expressly provided for herein
or the Parties expressly so agree in writing. The Joint Steering Committee shall
not have the power to amend or modify this Agreement.
 
4.  
DEVELOPMENT AND REGULATORY

 
4.1 Development and Regulatory Activities.
 
4.1.1 Development and Regulatory Activities by Gedeon Richter.
 
(a) Except as set forth in Section 4.1.2, Gedeon Richter shall use Commercially
Reasonable Efforts to execute the Gedeon Richter Development Plan and obtain and
maintain Regulatory Approval of the Product in the Territory. Gedeon Richter
shall be responsible for the conduct of activities performed pursuant to the
Gedeon Richter Development Plan. Without limiting the foregoing, Gedeon Richter
shall ***, and *** shall occur no later than ***, with Initiation of the Pivotal
Study as soon after such submission as is consistent with Commercially
Reasonable Efforts. Gedeon Richter shall provide the protocol of each of its
Clinical Studies and, until the completion of the Development and registration
procedure in the Territory, copies of each Major regulatory submission to the
Joint Steering Committee and (a) prior to commencing any such Clinical Study,
allow Palatin (through its representatives on the Joint Steering Committee) to
review and comment on the protocol with respect to its suitability for use in
obtaining regulatory approval by the FDA, and (b) prior to submitting any such
Major regulatory submission, allow Palatin (through its representatives on the
Joint Steering Committee) to review and comment on the Major regulatory
submission with respect to its general content and any inconsistencies with
regulatory submissions outside the Territory. Palatin may review and comment on
such protocols and Major regulatory submissions during the *** period after its
receipt of the applicable protocol or Major regulatory submission, and Gedeon
Richter shall consider in good faith any comments thereto provided by Palatin
within such period; provided, however, that the Joint Steering Committee shall
have the right to make all final decisions with respect to such protocols and
Major regulatory submissions in the Territory. For the avoidance of doubt, the
Parties agree that if approved by the Joint Steering Committee, Gedeon Richter
may perform some or all of the Gedeon Richter Development Plan outside
Territory.
 
(b) The direct Third Party costs of the Gedeon Richter Development Plan,
currently estimated at ***, will be reviewed by the Joint Steering Committee at
least twice annually, with the Joint Steering Committee determining the total
projected Third Party costs of the Gedeon Richter Development Plan. Until such
time as ***, *** shall pay Third Party costs as they are incurred until *** has
paid *** of the then currently estimated direct Third Party costs of the Gedeon
Richter Development Plan, and *** shall pay Third Party costs as they are
incurred until *** has paid *** of the then currently estimated direct Third
Party costs. Upon the conclusion of the Gedeon Richter Development Plan, and at
the discretion of the Joint Steering Committee at any review of Third Party
costs of the Gedeon Richter Development Plan, the Joint Steering Committee may
require that either party make additional Third Party cost payments, or make
reimbursement payments to the other Party, with the objective that Palatin shall
pay ***, and Gedeon Richter shall pay ***. Any Third Party costs to be
reimbursed by one Party to the other Party shall be paid within thirty (30) days
after the receipt of the relevant invoice issued after such Third Party costs
are incurred, together with appropriate supporting documentation.
 
4.1.2 Development and Regulatory Activities By Palatin.
 
(a) Palatin, at its own cost, shall use Commercially Reasonable Efforts  to
execute the Palatin Development Plan, including the Clinical Studies specified
therein or as may be amended in accordance with the provisions of this
Agreement, and obtain and maintain approvals, product and/or establishment
licenses, registrations or authorizations of the FDA, necessary for the
commercial manufacture, use, storage, import, export, transport,
commercialization or sale of the Product in the Field in the United States.
Palatin shall provide the protocol of all such Clinical Studies, including the
Pivotal Studies, and, until the completion of the Development and registration
procedure in the Territory and in the United States, copies of each regulatory
submission necessary to obtain regulatory approval by the FDA, to the Joint
Steering Committee and (a) prior to commencing any such Clinical Study or
Pivotal Study, allow Gedeon Richter (through its representatives on the Joint
Steering Committee) to review and comment on the protocol with respect to its
suitability for use in obtaining Regulatory Approval by the Competent
Authorities, and (b) prior to submitting any such regulatory submission, allow
Gedeon Richter (through its representatives on the Joint Steering Committee) to
review and comment on the regulatory submission with respect to its general
content and any inconsistencies with Major regulatory submissions in the
Territory. Gedeon Richter may review and comment on such protocols and
regulatory submissions during the *** period after its receipt of the applicable
protocol or regulatory submission, and Palatin shall consider in good faith any
comments thereto provided by Gedeon Richter within such period; provided,
however, that Palatin shall have the right to make all final decisions with
respect to such protocol. For the avoidance of doubt, the cost of *** shall be
***. The Parties anticipate that ***.
 
(b) If, in connection with Gedeon Richter’s efforts to obtain Regulatory
Approval of the Product by the Competent Authorities, Gedeon Richter, using
Commercially Reasonable Efforts, completes *** which has met its primary
endpoints, and (i) the EMA or the reference member state (RMS) does not grant
Marketing Authorization based on the above *** and the *** or (ii) the Joint
Steering Committee decides that *** is necessary for Gedeon Richter to obtain
the Regulatory Approval in Territory, then *** such ***, which *** will be
conducted by *** in the United States or the EU, at Gedeon Richter’s option. ***
shall provide the protocol of such *** to the Joint Steering Committee and,
prior to commencing such ***, allow *** (through its representatives on the
Joint Steering Committee) to review and comment on the protocol with respect to
its suitability for use in obtaining Regulatory Approval by the Competent
Authorities or regulatory approval by the FDA. *** may review and comment on
such protocol during the *** period after its receipt of the protocol, and ***
shall consider in good faith any comments thereto provided by *** within such
period; provided, however, that the Joint Steering Committee shall have the
right to make all final decisions with respect to such protocol. ***.
 
(c) If the Initiation of at least one Pivotal Study contemplated by Section
4.1.2(a) does not occur on or before ***, then, as Gedeon Richter’s sole remedy:
 
 
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(i) Gedeon Richter may by written notice to Palatin terminate this Agreement. If
Gedeon Richter terminates this Agreement pursuant to this Section 4.1.2(c)(i),
then (A) the License shall immediately terminate, (B) Gedeon Richter shall,
within *** following the effective date of the termination, return to Palatin
all Palatin Know-How and, at Palatin’s option, transfer, assign, convey and
deliver to Palatin all Gedeon Richter Know-How, and (C) Palatin shall, within
*** after Gedeon Richter fulfills its obligations pursuant to Section
4.1.2(c)(i)(B), reimburse Gedeon Richter *** (representing ***% of the sum of
the *** and the option fee paid pursuant to that certain Option to Negotiate an
Exclusive License, dated ***, between Palatin and Gedeon Richter, as amended).
Palatin shall reimburse Gedeon Richter for all reasonable out-of-pocket costs
actually incurred by Gedeon Richter in connection with the transfer, assignment,
conveyance and delivery of the Gedeon Richter Know How pursuant to Section
4.2.1(c)(1)(B); or
 
(ii) Gedeon Richter may elect to maintain its License, provided that ***.
 
(d) Palatin undertakes to perform all CMC Development activities, including the
necessary technical design and Development of the relevant autoinjector,
necessary for Gedeon Richter to obtain and maintain the Regulatory Approval of
the Product in the Territory; provided, however that if Gedeon Richter assumes
responsibility for conducting manufacturing activities pursuant to Section 6.3,
then Gedeon Richter shall also assume responsibility for CMC Development
activities to the extent relating thereto.
 
(e) Upon Gedeon Richter’s request and if available at Palatin, Palatin shall
transfer the relevant analytical methods necessary for the performance of the
Gedeon Richter Development Plan, to Gedeon Richter, free of charge.
 
4.1.3 Further Development Activities. The Parties, through the Joint Steering
Committee, shall negotiate in good faith to amend the Gedeon Richter Development
Plan and the Palatin Development Plan from time to time for the conduct of
additional development activities. Should a Party desire to conduct further
development studies for the Product, including, without limitation,
post-marketing studies, the Parties shall discuss the possible conduct of such
development activities. Each Party shall obtain the Joint Steering Committee’s
consent before conducting such further development studies for the Product, such
consent not to be unreasonably withheld. Unless otherwise agreed, and except to
the extent that such further development studies are included in the Gedeon
Richter Development Plan and to be paid, in part, by Palatin pursuant to Section
4.1.1(b), *** shall *** costs in connection with such further development
studies. Notwithstanding the foregoing, the Parties agree that in the case of
any preclinical or clinical study (including the post-marketing studies) imposed
or requested by the Competent Authority (in the case of Gedeon Richter) or FDA
(in the case of Palatin), each Party shall be free to perform, at its own cost,
such study without the Joint Steering Committee’s consent.
 
4.1.4 Material Transfer. To facilitate the Development activities hereunder,
either Party may provide to the other Party certain biological materials,
chemical compounds such as the active pharmaceutical ingredient or its
formulated forms, development and regulatory materials or any other materials
necessary for obtaining Regulatory Approval in the Territory, owned by or
licensed by a Third Party to the supplying Party for use by the other Party in
furtherance of such Development activities (such materials or compounds provided
hereunder are referred to, collectively, as “Materials”), provided that any
licensed Materials may only be provided as permitted under the relevant license
agreement. Except as otherwise provided under this Agreement, all such Materials
delivered to the other Party shall remain the sole property of the supplying
Party, shall be used in furtherance of the Development activities and solely
under the control of the other Party (or its Affiliates), shall not be used or
delivered to or for the benefit of any Third Party without the prior written
consent of the supplying Party, and shall not be used in research or testing
involving human subjects, unless expressly agreed. The Materials supplied under
this Section 4.1.4 are supplied “as is” and must be used with prudence and
appropriate caution in any experimental work, since not all of their
characteristics may be known.
 
4.2 Specific Regulatory Responsibilities.
 
4.2.1 Gedeon Richter’s Responsibilities. Gedeon Richter or its designated
representatives or its Sublicensee(s) will be the applicant and the holder of
the marketing authorization in all countries in the Territory, and Gedeon
Richter will be the responsible Party to submit the Marketing Authorization
Application and shall use Commercially Reasonable Efforts to carry out the
registration procedures necessary to obtain Regulatory Approvals in the
Territory. Subject to Section 4.1.1 and the approval of the Joint Steering
Committee, ***. During the term of this Agreement, Gedeon Richter shall, at its
own cost, execute all updates of the Dossier. Gedeon Richter shall notify
Palatin of any necessary update to the Dossier promptly after becoming aware of
the need for such update. Nothing in this Section 4.2.1 is intended to limit
Gedeon Richter’s obligations under Section 4.1.1 with respect to obtaining and
maintaining Regulatory Approval of the Product in the Territory or Gedeon
Richter’s obligations under Section 4.3.3 with respect to the exchange of
information relating to its Development and regulatory activities under this
Agreement.
 
4.2.2 Palatin’s Responsibilities. Palatin will be the responsible Party for
submitting, or causing to be submitted, the NDA and shall use Commercially
Reasonable  Efforts to obtain regulatory approval by the FDA. To the extent such
information is in Palatin’s possession or under its control on the Effective
Date or will be in Palatin’s possession after the Effective Date, and subject to
Section 4.1.2 and any applicable contractual obligations requiring
confidentiality, Palatin shall, at its own cost, be responsible for
(a) preparing and providing Gedeon Richter with the necessary administrative,
pre-clinical, clinical and CMC part of the Dossier in accordance with the
prevailing European Union Guidelines (“Notice to Applicants”) to support, to
obtain and to maintain the Regulatory Approvals for the Product in the Field in
the Territory, including the full eCTD and any other relevant data, information,
results, reports and databases in any format, (b) within *** after Gedeon
Richter’s written request, providing any additional Information, samples and
supporting documentation that is required for obtaining the Regulatory
Approval(s) and price approvals in the Territory. In addition, upon Palatin
submitting a U.S. NDA Data Package to the FDA, Palatin shall provide the U.S.
NDA Data Package to Gedeon Richter within *** after the U.S. NDA submission,
which is anticipated to be no later than ***. Upon Gedeon Richter’s request,
Palatin shall use Commercially Reasonable Efforts to assist Gedeon Richter in
answering any questions raised by the Competent Authorities in connection with
Gedeon Richter’s efforts to obtain and maintain the Regulatory Approvals.
Palatin shall provide reasonable assistance to Gedeon Richter in connection with
the preparation and finalization of the Dossier. Palatin shall notify Gedeon
Richter of any necessary update to the Dossier promptly after becoming aware of
the need for such update and shall cooperate with Gedeon Richter and timely
provide to Gedeon Richter any available information necessary to implement any
required changes to the Dossier. Nothing in this Section 4.2.2 is intended to
limit Palatin’s obligations under Section 4.3.3 with respect to the exchange of
information relating to its development activities under this Agreement.
 
 
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4.3 Conduct of Development and Regulatory Activities.
 
4.3.1 Compliance with the Gedeon Richter Development Plan, the Palatin
Development Plan and Applicable Laws. All Development and regulatory activities
in connection with the clinical development programs conducted to obtain and
maintain Regulatory Approval for the Product in the Territory shall be conducted
by and on behalf of Gedeon Richter in accordance with the Gedeon Richter
Development Plan and the other provisions of this Agreement, and by and on
behalf of Palatin in accordance with the Palatin Development Plan and the other
provisions of this Agreement. Each Party shall conduct those activities for
which it is the responsible Party under the Gedeon Richter Development Plan or
Palatin Development Plan and the other provisions of this Agreement, as
applicable, in compliance in all material respects with all applicable laws and
in accordance with GLP and GCP and GVP (when applicable) under the applicable
laws of the country in which such activities are conducted.
 
4.3.2 Diligence. Gedeon Richter shall use Commercially Reasonable Efforts to
conduct and complete the studies and activities assigned to it in the Gedeon
Richter Development Plan and the other provisions of this Agreement in order to
achieve the goals of the Gedeon Richter Development Plan in accordance with the
timelines  accepted by the Joint Committee. Palatin shall use Commercially
Reasonable Efforts to conduct and complete the studies and activities assigned
to it in the Palatin Development Plan and the other provisions of this Agreement
in order to achieve the goals of the Palatin Development Plan in accordance with
the timelines  accepted by the Joint Committee.
 
4.3.3 Information Regarding Development Activities. Each Party shall maintain
records, in sufficient detail and in good scientific manner appropriate for
patent and regulatory purposes, which shall fully and properly reflect all work
done and results achieved by or on behalf of such Party in the performance of
its development activities under this Agreement. Each Party shall keep the Joint
Steering Committee appropriately informed of the status of its clinical
development program and other activities conducted under the Gedeon Richter
Development Plan, the Palatin Development Plan and the other provisions of this
Agreement, as applicable, and its other development activities with respect to
the Product in the Field. Without limiting the foregoing, each Party shall, on a
*** basis (or, if sooner, promptly upon request by the Joint Steering
Committee), provide the Joint Steering Committee with summaries of data and
results and all supporting data and results generated or obtained in the course
of such Party’s performance of studies and activities under the Gedeon Richter
Development Plan and the Palatin Development Plan, and the other provisions of
this Agreement, as applicable. Each Party shares any Information with the other
Party on request. Upon reasonable prior written notice, each Party shall have
the right to inspect records and notebooks reflecting the work done and results
achieved by or on behalf of the other Party in the performance of its
development activities with respect to the Product in the Field pursuant to
either the Gedeon Richter Development Plan or the Palatin Development Plan and
the other provisions of this Agreement, as applicable. The Parties may use
information exchanged pursuant to this Section 4.3.3 for any purpose in
connection with the Development and Commercialization of Products in the Field
in the Territory (in the case of Gedeon Richter) and outside the Field in the
Territory and outside the Territory (in the case of Palatin).
 
4.4 Pharmacovigilance and Risk Management. The Parties shall handle safety
information, including adverse events occurring or having occurred in connection
with the use of the Product, in accordance with applicable laws and the
requirements of GVP, the Competent Authorities, the FDA and other relevant
regulatory authorities, as applicable. The Parties shall exchange all relevant
safety information, including information concerning adverse events occurring or
having occurred in connection with the use of the Product and information
obtained from any kind of investigation for reporting purposes such as, for
non-limiting example, periodic safety reports. No later than *** before the
projected launch of the Product in the first country of the Territory, the
Parties shall execute a separate agreement relating to safety matters and
defining the pharmacovigilance and risk management obligations of the Parties
(including, but not limited to, procedures for the exchange of safety
information and the roles and responsibilities of the Parties in connection with
the maintenance of a global safety database for the Product). In the absence of
such separate agreement, either Party may at any time and from time to time
refer material safety matters to the Joint Steering Committee for consideration
and resolution.
 
4.5 Regulatory Communications. Both Parties shall timely inform the Joint
Steering Committee of all of their scheduled meetings with the Competent
Authorities (in the case of Gedeon Richter) and the FDA (in the case of Palatin)
and provide the Joint Steering Committee with summaries of such meeting with the
Competent Authorities or FDA promptly after each meeting. In addition, the
Parties shall promptly provide the Joint Steering Committee with copies of all
written communications and a summary of material oral discussions with the
Competent Authorities (in the case of Gedeon Richter) and the FDA (in the case
of Palatin) with respect to the Product. In addition to the information required
to be provided to the Joint Steering Committee in other provisions of this
Agreement, both Parties shall timely provide the Joint Steering Committee with
summaries of any of their communications and correspondence with the Competent
Authorities, FDA or other applicable regulatory authorities in the Territory or
outside the Territory with respect to the Product. The Parties may use
information exchanged pursuant to this Section 4.5 for any purpose in connection
with the Development and Commercialization of Products in the Field in the
Territory (in the case of Gedeon Richter) and outside the Field in the Territory
and outside the Territory (in the case of Palatin).
 
4.6 Regulatory Costs. All costs to be incurred in connection with the
registration of the Product (including but not limited to filing fees,
registration costs, storage and transportation costs and other out-of pocket
costs relating to the receipt of all regulatory and marketing approvals) in the
Territory will be borne by ***. In the event such costs are initially incurred
at *** due to any reason, *** will reimburse them in the same currency as it was
paid by *** no later than *** from the receipt of *** respective invoice. ***
shall attach to its invoice(s) all available supportive documents.
 
5.  
COMMERCIALIZATION

 
5.1 Commercialization of the Product. The Parties agree that Gedeon Richter or
its Sublicensee(s) will exclusively Commercialize the Product in the Territory
under Gedeon Richter’s commercial name and trademark. Gedeon Richter will use
Commercially Reasonable Efforts to launch the Product within the shortest period
of time in *** after obtaining the Regulatory Approval, and in any event will
launch the Product in *** no later than *** after the receipt of the Regulatory
Approval and price approval or price reimbursement (if applicable) in the
respective country.
 
5.2 Commercialization Plan. Within *** after the initial regulatory filing in,
or otherwise applicable to, any of the ***, Gedeon Richter shall prepare a
commercialization plan for *** outlining its proposed premarketing and marketing
activities, including anticipated investments, and expected sales levels
relating to Product (the “Commercialization Plan”). The Commercialization Plan
will be reviewed and approved by the Joint Steering Committee.
 
 
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5.3 Diligence. Gedeon Richter agrees to use Commercially Reasonable Efforts to
diligently Commercialize the Product in the Field in the Territory and obtain
such approvals as may be necessary for the sale of the Product. Gedeon Richter’s
efforts shall be comparable to those efforts Gedeon Richter makes with respect
to its other products of market potential, stage of development and patent
protection.
 
6.  
SUPPLY FOR DEVELOPMENT AND COMMERCIAL SUPPLY

 
6.1 Subject to the terms of this Agreement, during the term of this Agreement
and until Palatin supplies Product under the Supply Agreement for Development
and Commercial Supply Agreement, Palatin shall manufacture in accordance with
GMP and supply the Investigational Product and if necessary the relevant placebo
product or the active pharmaceutical ingredient of the Product for use by Gedeon
Richter in connection with the research and Development of the Product in the
Field in the Territory in accordance with the Gedeon Richter Development Plan
and to carry out all activities necessary for obtaining and maintaining the
Regulatory Approval. Palatin shall, by itself or through its Third Party
contract manufacturers, supply to Gedeon Richter (or its Affiliates or
Sublicensees) all quantities of Investigational Product (packaged or
prepackaged) required by Gedeon Richter (or its Affiliates or Sublicensees) for
the Development of the Product in the Field in the Territory. All Product
supplied to Gedeon Richter pursuant to this Article 6 shall be manufactured in
accordance with GMP and used exclusively for conducting the studies and
activities specified in the Gedeon Richter Development Plan. The price of such
Investigational Product shall be ***. Palatin shall issue the relevant invoice
for such payment which shall be paid by Gedeon Richter no later than *** from
the receipt of Palatin’s respective invoice. Palatin shall attach to its
invoice(s) appropriate supporting documentation.
 
6.2 The Parties agree to execute a separate supply agreement for the supply of
the Investigational Product or any material necessary for the Development of the
Product in the Field in the Territory (the “Supply Agreement for Development”).
All other supply, including commercial supply, of the Product shall be as set
forth in a separate commercial supply agreement (the “Commercial Supply
Agreement”).
 
6.3 The Commercial Supply Agreement shall provide, inter alia, that if Palatin
determines to retain a Third Party, other than the Third Parties specified in
Exhibit VII hereto or any Third Party retained by Palatin to provide an
alternative source supplier for the Third Parties specified in Exhibit VII, for
the purpose of manufacturing the Product for distribution in the Field in the
Territory, then Palatin shall provide written notice of the same to Gedeon
Richter (the “Manufacture Offer Notice”). If, within *** after its receipt of
the Manufacture Offer Notice, Gedeon Richter indicates by written notice ***, a
mutually acceptable term sheet for amending or revising the Commercial Supply
Agreement to provide for ***. If the Parties are not able to reach agreement on
and do not execute a term sheet with respect to the *** within such *** period,
Palatin shall be free to *** without further obligation to Gedeon Richter.
 
7.  
UPFRONT AND MILESTONE PAYMENTS

 
7.1 Within *** following the receipt of the relevant invoice issued by Palatin
on the Effective Date of this Agreement, Gedeon Richter shall pay to Palatin
6,730,771 EUR (six million seven hundred and thirty thousand seven hundred and
seventy-one euros) (the “Upfront Payment”).
 
7.2 During the term of this Agreement, Gedeon Richter shall pay to Palatin the
following milestone payments:
 
Milestones
 
Milestone Payments:
Upon Initiation of first Phase III Study or Pivotal Study by Palatin pursuant to
Section 4.1.2(a)
 
2,500,000 EUR (two million five hundred thousand euros)
Upon ***
 
***
Upon ***
 
An amount equal to ***
Upon ***
 
For each ***, an amount *** equal to ***
Upon the end of the first such year of Commercialization of the Product during
which the aggregate Net Sales (from inception of Commercialization) exceed
***.  This is a one-time, sales-related milestone based on cumulative Net Sales.
 
An amount equal to ***
Upon the end of the first such year of Commercialization of the Product during
which the aggregate Net Sales (from inception of Commercialization) exceed
***.  This is a one-time, sales-related milestone based on cumulative Net Sales.
 
An amount equal to ***
Upon the end of the first such year of Commercialization of the Product during
which the Net Sales exceed *** for the first time in a single year. This is a
one-time, sales-related milestone payment based on annual Net Sales.
 
***
Upon the end of the first such year of Commercialization of the Product during
which the Net Sales exceed *** for the first time in a single year. This is a
one-time, sales-related milestone payment based on annual Net Sales.
 
***
Upon the end of the first such year of Commercialization of the Product during
which the Net Sales exceed *** for the first time in a single year. This is a
one-time, sales-related milestone payment based on annual Net Sales.
 
***
Upon the end of the first such year of Commercialization of the Product during
which the Net Sales exceed *** for the first time in a single year. This is a
one-time, sales-related milestone payment based on annual Net Sales.
 
***
Total
 
***

 
 
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8.  
ROYALTIES

 
8.1 Royalty on Net Sales. On a ***, Gedeon Richter shall pay to Palatin
royalties on the Net Sales of Product in each country in the Territory ***:
 
 
(i)
***;

 
 
(ii)
the date that is the *** of the Effective Date; and

 
 
(iii)
the date that is the *** of the First Commercial Sale.

 
8.2 Royalty Rate. The royalty rate payable by Gedeon Richter on Net Sales of the
Product in the Territory by Gedeon Richter, its Affiliates and its Sublicensees
shall be ***.  Sales between Gedeon Richter, its Affiliates and its Sublicensees
shall not be counted as Net Sales for purposes of calculating the royalties
payable hereunder.
 
In case the Joint Steering Committee decides that ***, then the royalty rate
payable to Palatin according to this section shall be *** percent (***%) instead
of *** percent (***%) for the remaining term of this Agreement.
 
8.3 Royalty Rate Reduction. Royalty rates with regard to the Product will be
reduced by *** percent (*** %), on a ***, should any Third Party market in any
country in the Territory during the term of this Agreement generic product(s)
that are directly competitive with the Product if and for so long as (a) such
generic product(s) has in such country an approved public price at least ***
percent (***%) less than the public price of the Product and (b) sales of such
generic product(s) in such country constitute in the immediately preceding ***
period *** percent (***%) of the Product’s market share in volume as evidenced
by IMS data provided by Gedeon Richter. The reduced royalty rates will apply to
Net Sales of the Product in the applicable country effective as of the first day
of the next calendar quarter after Gedeon Richter provides written notice of the
royalty rate reduction to Palatin and supporting documentation reasonably
satisfactory to Palatin demonstrating that the conditions described in this
Section 8.3 have been satisfied.
 
8.4 Royalties Payable to Third Parties. If there are any royalties to be paid by
Palatin to any Third Party licensors, Palatin shall be liable for the payment of
such royalties, and Palatin’s payment of such royalties shall not affect the
amounts otherwise due or payable by Gedeon Richter hereunder.
 
9.  
PAYMENTS

 
9.1 Royalty Reports and Payments. Gedeon Richter shall make royalty payments to
Palatin on a quarterly basis within *** after the end of each calendar quarter
in which Net Sales occurred. A report summarizing the Net Sales of each Product
during the relevant quarter on a country-by-country basis shall be delivered to
Palatin within *** following the end of each calendar quarter for which
royalties are due.
 
9.2 Milestone Payments. Gedeon Richter will make milestone payments to Palatin
within *** after the receipt of the relevant invoice of Palatin issued after the
respective milestone has been reached.
 
9.3 Payments Interest. Any payments due under this Agreement shall be due on
such date as specified in this Agreement and, in the event such date is not a
Business Day, then the next succeeding Business Day. Based on any failure of
Gedeon Richter to make a payment within *** after the due date, Gedeon Richter
shall pay computed interest (the interest period commences on the due date and
ends on the payment date) to Palatin at a rate per annum equal to the EUR LIBOR
or USD LIBOR, as the case may be (according to the underlying payment due), for
one month quoted on the due date by the European Central Bank plus a premium of
*** percent (***%). The interest rate shall be adjusted monthly and interest
shall be compounded monthly in arrears. In addition, interest shall be computed
on the basis of a 360 day year actual days elapsed, and shall be due and payable
on the tender of the underlying principal payment.
 
9.4 Taxes. If laws or regulations require that taxes be withheld, Gedeon Richter
will (a) deduct those taxes from the remittable payment, (b) timely pay the
taxes to the proper taxing authority, and (c) send proof of payment to Palatin
within thirty (30) days of receipt of confirmation of payment from the relevant
taxing authority. Gedeon Richter agrees to make all lawful and reasonable
efforts to minimize such taxes to Palatin. If Gedeon Richter is so required then
Palatin and Gedeon Richter shall co-operate in all respects and take all
reasonable steps to lawfully avoid the making of any such deductions.
 
9.5 Calculation of Royalties and Sales-Related Milestone Payments. Gedeon
Richter will calculate Net Sales on a monthly basis based on the aggregate Net
Sales in all countries in the Territory ***. The conversion of Net Sales that
occur in currencies other than HUF will be made by ***, as approved by Gedeon
Richter’s principal auditor, consistently applied. For purposes of calculating
the amount of royalties payable pursuant to Article 8 and determining whether
sales-related milestones have been achieved, Net Sales, ***; provided, however,
***.
 
 
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9.6 Payment Currency. All payments made pursuant to this Agreement, including
the Upfront Payment, Milestone Payments and all royalties payable pursuant to
Article 8, will be paid to Palatin in EUR. All payments shall be paid by wire
transfer of immediately available funds to an account at a commercial bank
designated by Palatin at least ten (10) Business Days before payment is due.
 
9.7 Records of Revenues and Expenses.
 
9.7.1 Gedeon Richter shall maintain complete and accurate records which are
relevant to the revenues on a country-by-country basis under this Agreement, and
such records shall be open during reasonable business hours for a period of ***
from creation of individual records for examination at Palatin’s expense and not
more often than *** by a certified public accountant selected by Palatin or
Palatin’s internal accountants, unless Gedeon Richter objects to the use of such
internal accountants, for the sole purpose of verifying for Palatin the
correctness of calculations and classifications of such revenues under this
Agreement. Palatin shall bear its own costs related to such audit; provided,
that for any underpayments greater than *** percent (***%) by Gedeon Richter,
Gedeon Richter shall pay Palatin the amount of underpayment, interest as
provided for in Section 9.3 from the time the amount was due and Palatin’s
out-of-pocket expenses. For any underpayments less than *** percent (***%) by
Gedeon Richter found under this Section 9.7.1, Gedeon Richter shall pay Palatin
the amount of such underpayment. If Gedeon Richter shall pay any underpayment
even it is over *** percent (*** %) before such examination to be made by
Palatin, no interest or no other payments will be made consequently. Any
overpayments by Gedeon Richter will, at Palatin’s option, be refunded to Gedeon
Richter or credited to future royalties. Any records or accounting information
received from Gedeon Richter shall be confidential information for purposes of
Section 10.1. Results of any such audit shall be provided to both Parties and
shall be confidential information for purposes of Section 10.1.
 
9.7.2 If there is a dispute between the Parties following any audit performed
pursuant to Section 9.7.1, either Party may refer the issue (an “Audit
Disagreement”) to an independent certified public accountant for resolution. In
the event an Audit Disagreement is submitted for resolution by either Party, the
Parties shall comply with the following procedures:  (a) the Party submitting
the Audit Disagreement for resolution shall provide written notice to the other
Party that it is invoking the procedures of this Section 9.7.2; (b) within
thirty (30) Business Days of the giving of such notice, the Parties shall
jointly select a recognized international accounting firm to act as an
independent expert to resolve such Audit Disagreement; (c) the Audit
Disagreement submitted for resolution shall be described by the Parties to the
independent expert, which description may be in written or oral form, within ten
(10) Business Days of the selection of such independent expert; (d) the
independent expert shall render a decision on the matter as soon as practicable;
(e) the decision of the independent expert shall be final and binding unless
such Audit Disagreement involves alleged fraud, breach of this Agreement or
construction or interpretation of any of the terms or conditions hereof; and (f)
all fees and expenses of the independent expert, including any Third Party
support staff or other costs incurred with respect to carrying out the
procedures specified at the direction of the independent expert in connection
with such Audit Disagreement, shall be borne by each Party in inverse proportion
to the disputed amounts awarded to the Party by the independent expert through
such decision (e.g., Palatin disputes $100 and the independent expert awards
Palatin $60, then Palatin pays forty percent (40%) and Gedeon Richter pays sixty
percent (60%) of the independent expert’s costs).
 
10.  
CONFIDENTIALITY

 
10.1 Confidential Information. Except as expressly provided herein, the Parties
agree that, for the term of this Agreement and for *** thereafter, the receiving
Party shall keep completely confidential and shall not publish or otherwise
disclose and shall not use for any purpose except for the purposes contemplated
by this Agreement any Information furnished to it by the disclosing Party hereto
pursuant to this Agreement, except that to the extent that it can be established
by the receiving Party by competent proof that such Information:
 
10.1.1 is or becomes public or available to the general public otherwise than
through the act or default of the receiving Party;
 
10.1.2 is obtained by the receiving Party from a Third Party who is lawfully in
possession of such Information and is not subject to an obligation of
confidentiality or non-use owed to the disclosing Party or others;
 
10.1.3 is previously known to the receiving Party prior to disclosure to the
receiving Party by the disclosing Party under this Agreement or otherwise, as
shown by written evidence, and is not obtained or derived directly or indirectly
from Information obtained from the disclosing Party;
 
10.1.4 is disclosed by the receiving Party pursuant to the requirement of law,
provided that the receiving Party has complied with the provisions set forth in
Section 10.3; or
 
10.1.5 is independently developed by the receiving Party without the use of or
reliance on any Information provided by the disclosing Party hereunder, as shown
by contemporaneous written evidence.
 
10.2 Public Domain. For the purposes of this Agreement, specific information
disclosed as part of the Information shall not be deemed to be in the public
domain or in the prior possession of the receiving Party merely because it is
embraced by more general information in the public domain or by more general
information in the prior possession of the receiving Party.
 
10.3 Legal Disclosure. If the receiving Party becomes legally required to
disclose any Information provided by the disclosing Party, the receiving Party
will give the disclosing Party prompt notice of such fact so that the disclosing
Party may obtain a protective order or other appropriate remedy concerning such
disclosure and/or waive compliance with the non-disclosure provision of this
Agreement. The receiving Party will reasonably cooperate with the disclosing
Party in connection with the disclosing Party’s efforts to obtain any such order
or other remedy. If any such order or other remedy does not fully preclude
disclosure or the disclosing Party waives such compliance, the receiving Party
will make such disclosure only to the extent that such disclosure is legally
required and will use its reasonable efforts to have confidential treatment
accorded to the disclosed Information.
 
 
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10.4 Permitted Use and Disclosures. Each Party hereto may use or disclose
Information disclosed to it by the other Party to the extent such use or
disclosure is reasonably necessary in complying with applicable governmental or
regulatory regulations or otherwise submitting information to tax or other
governmental authorities, conducting preclinical or clinical development, or
otherwise exercising its rights hereunder. Provided that, if a Party is required
to make any such disclosure of another Party’s confidential Information, other
than pursuant to a confidentiality agreement, it will give reasonable advance
notice to the latter Party of such disclosure and, save to the extent
inappropriate in the case of patent applications, will use its reasonable
efforts to secure confidential treatment of such Information prior to its
disclosure (whether through protective orders or otherwise).
 
10.5 Public Disclosure. Except as otherwise required by law (including
regulations promulgated by the US Securities and Exchange Commission) or the
rules of Hungary’s Stock Exchange or the NYSE MKT, neither Party shall issue a
press release or make any other public disclosure of the terms of this Agreement
without the prior approval of the other Party. Each Party shall submit any such
press release or public disclosure to the other Party for review and approval
prior to public disclosure, which approval shall not be unreasonably withheld.
If such other Party does not respond within thirty (30) days after receipt, the
press release or public disclosure shall be deemed approved in the form
originally proposed. Notwithstanding the foregoing, if a public disclosure is
required by law (a “Required Disclosure”), including without limitation in a
filing with the US Securities and Exchange Commission or in accordance with the
rules of Hungary’s Stock Exchange or the NYSE MKT, the disclosing Party shall
provide copies of the Required Disclosure to the non-disclosing Party reasonably
in advance of such filing or other disclosure for the non-disclosing Party’s
review and comment (but not approval). Each Party shall consider in good faith
any comments provided by the other Party with respect to the content of the
Required Disclosure, including with respect to the redaction of this Agreement
and any other agreement that is to be filed or otherwise publicly disclosed in
connection with the Required Disclosure.
 
10.6 Scientific Publication. In the event that either Party is required or
obliged or desires to make any scientific publication in a scientific journal or
at the conference in any academic society including Information obtained by
itself during the performance of Gedeon Richter Development Plan or Palatin
Development Plan and the other provisions of this Agreement, as applicable, such
Party shall submit to the other Party the full text of such scientific
publication at least thirty (30) working days prior to such submission for
review and approval. The Parties shall discuss in good faith whether such
publication should be made in consideration of the advantages and disadvantages
arising from such publication. For the avoidance of doubt, neither Party shall
be allowed to make any publication without the other Party’s consent, which
shall not be unreasonable withheld, it being expressly understood that each
Party shall at all times be entitled to withhold its consent in the event such
Party reasonably considers the relevant publication to prejudice its interests
or rights under this Agreement.
 
10.7 Confidential Terms. Except as expressly provided herein, each Party agrees
not to disclose any terms of this Agreement to any Third Party without the
consent of the other Party; except that disclosures may be made as required by
securities or other applicable laws, or to actual or prospective investors or
corporate partners, or to a Party’s accountants, attorneys and other
professional advisors.
 
10.8 Survival. This Article 10 will survive expiry or termination of this
Agreement for any reason.
 
11.  
REPRESENTATIONS, WARRANTIES AND COVENANTS

 
11.1 Mutual Representations and Warranties. Each Party hereby represents and
warrants to the other Party as of the Effective Date as follows:
 
11.1.1 Due Organization. Such Party is a corporation duly organized, validly
existing and in good standing under the laws of the state or country of its
incorporation (as set forth in the recitals of this Agreement), and is qualified
to do business and is in good standing as a foreign corporation in each
jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification and failure to have such would prevent it
from performing its obligations under this Agreement. Such Party has all
requisite corporate power and authorization to own, lease and operate all assets
and properties necessary to carry on its business as now being conducted.
 
11.1.2 Due Execution. The execution, delivery and performance by such Party of
this Agreement have been duly authorized by all necessary corporate action and
do not and will not (i) require any consent or approval of its stockholders or
(ii) violate any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to it or any provision of its charter or bylaws.
 
11.1.3 Binding Agreement. This Agreement, when executed and delivered by both
Parties, is a legal, valid and binding obligation of such Party, enforceable
against it in accordance with the terms and conditions hereof.
 
11.1.4 Authorization. Such Party has obtained all authorizations, consents and
approvals, governmental or otherwise, necessary for such Party to grant the
rights and licenses granted by such Party under this Agreement, and to otherwise
perform such Party’s obligations under this Agreement.
 
11.1.5 Conflicting  Agreements. The execution, delivery and performance of this
Agreement (i) are not prohibited or limited by, and will not result in the
breach of or a default under, any provision of the certificate or articles of
incorporation or bylaws of such Party; (ii) do not conflict with any law
applicable to such Party; and (iii) do not conflict with, result in a breach of,
constitute a default under, any material agreement binding on Palatin and/or
Gedeon Richter or any applicable order, writ, injunction or decree of any
regulatory authority to which Palatin and/or Gedeon Richter is a party or by
which Palatin and/or Gedeon Richter is bound. Such Party has not previously
granted any rights in conflict with or that otherwise interfere with the rights
and licenses granted herein. As of the Effective Date there are no existing
agreements, options, commitments or rights with, of or to any person or entity
to acquire or obtain any rights with respect to such Party’s intellectual
property in conflict with the rights and licenses granted herein.
 
 
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11.1.6 False Statement. Neither such Party, nor any officer or employee of such
Party, has knowingly made an untrue statement of a material fact to any
regulatory authority with respect to the Product, or has knowingly failed to
disclose a material fact required to be disclosed to any regulatory authority
with respect to the Product.
 
11.1.7 Litigation. There is no action pending or, to such Party’s best
knowledge, threatened in writing, directly or indirectly involving such Party
that would prohibit, hinder, materially delay or otherwise impair its ability to
perform its obligations hereunder or otherwise affect the legality, validity or
enforceability of this Agreement, or prevent or materially delay the execution
of this Agreement.
 
11.2 Palatin’s Additional Representations and Warranties. Palatin represents and
warrants to Gedeon Richter as of the Effective Date as follows:
 
11.2.1 Title. Palatin owns or controls all right, title and interest in and to
the intellectual property rights of Palatin, including the Palatin Know-How and
Palatin Patents, to the extent licensed to Gedeon Richter under this Agreement.
Palatin has the right to grant to Gedeon Richter all of the licenses and other
rights with respect to Palatin’s intellectual property rights granted to Gedeon
Richter under this Agreement free and clear of all encumbrances or claims of any
kind.
 
11.2.2 No Conflicts. Palatin has not entered into any agreement or granted any
rights with respect to the License that are inconsistent with the rights granted
to Gedeon Richter under this Agreement or which would limit or encumber Gedeon
Richter’s ability to exercise the rights and licenses granted to Gedeon Richter
under this Agreement.
 
11.2.3 Infringement. To Palatin’s best knowledge, the practice by Gedeon Richter
of any right granted herein will not infringe any valid patent.
 
11.2.4 Maintenance. All application and renewal fees and other steps required
for the maintenance or protection of the Palatin Patents in the Territory have
been paid on time or taken.
 
11.2.5 Disputes. There are no claims, challenges, disputes or proceedings, now
pending or threatened, with respect to ownership, validity or use of the Palatin
Patents in the Field in the Territory.
 
11.3 Covenants.
 
11.3.1 Inconsistent Rights. Each Party hereby covenants to the other that during
the Term, it will not grant, any rights in conflict with or that would otherwise
interfere with the rights and licenses granted herein. Throughout the Term,
neither Party shall cause existing agreements, options, commitments or rights
with, of or to any person or entity to acquire or obtain any rights with respect
to such Party’s intellectual property in conflict with the rights and licenses
granted herein.
 
11.3.2 Compliance with Law. Each Party shall comply, and shall cause its
Affiliates, Sublicensees, contractors and consultants to comply, with all
applicable laws in performing their respective obligations and exercising their
respective rights hereunder.
 
11.3.3 Competitive Products. Without the prior written consent of Palatin Gedeon
Richter shall not engage, directly or indirectly, in ***. For the avoidance of
doubt, this does not include ***.
 
12.  
INTELLECTUAL PROPERTY AND OWNERSHIP

 
12.1 Ownership.
 
12.1.1 As between the Parties, Palatin shall retain all right, title and
interest in and to the Palatin Know-How. Any invention, whether patentable or
not, derived from the Palatin Know-How shall be Palatin’s sole property.
 
12.1.2 As between the Parties, Gedeon Richter shall retain all right, title and
interest in and to the Gedeon Richter Know-How. Any invention, whether
patentable or not, derived from such Gedeon Richter Know-How shall be Gedeon
Richter’s sole property. Gedeon Richter grants to Palatin *** in connection with
the Development and Commercialization of Products ***, subject to all terms and
conditions of this Agreement.
 
12.2 Patent Rights.
 
12.2.1 Patent Prosecution - Palatin Patents. *** shall be responsible, at ***
expense, for preparing, filing, prosecuting and maintaining (including
conducting any interferences, re-examinations, reissues and oppositions) the
Palatin Patents in Territory, by itself or with Third Parties. *** will consult
with *** in all matters related to the Palatin Patents that are relevant to the
Product in the Field. *** shall implement all requests made by the Joint
Steering Committee with regard to the preparation, filing, prosecution and/or
maintenance of such Palatin Patents, including any extension of the Patent
protection in the Territory. In case of any opposition or nullification
procedure initiated by any Third Party in the Territory, *** shall consult with
*** and shall take all actions to prevent or terminate such procedure.
 
 
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12.2.2 Infringement Claims against Gedeon Richter. *** shall give a written
notice of any claim or threatened by a Third Party for infringement of such
Third Party patents by the Product, or its use in the Field of Use in the
Territory (“Patent Infringement Claim”) within *** of the first knowledge of the
claim or threatened claim. *** shall have the right to take actions and to
defend with respect to such Patent Infringement Claim, provided that *** shall
provide all its reasonable assistance to *** in all actions brought against
Palatin and/or Gedeon Richter by Third Parties and shall reimburse to *** all
costs, expenses liabilities and indemnifications arising from such actions.
Neither Party may settle nor otherwise compromise any Patent Infringement Claim
nor appeal without the other Party’s written approval, such approval not to be
unreasonably withheld or delayed.
 
12.2.3 Third Party Infringement. Each Party shall promptly report in writing to
the other Party during the term of infringement of any of Palatin’s Patents by
use or exploitation by Third Party of the Product or any product competitive
with the Product. *** has the primary right, at *** expense, to initiate a suit
or take any other appropriate action, including compromising or settling any
action that involves any Palatin Patent. If *** does not initiate a suit or take
any other appropriate action within *** following receipt of notice of an
infringement claim, then *** shall have the right, at *** expense, initiate a
suit or take any other appropriate action in such country of Territory that it
believes reasonably required to protect Palatin’s Patents. In order to enable
Gedeon Richter to take protective measures, upon Gedeon Richter’s request,
Palatin shall include Gedeon Richter in the patent-roll of the Palatin’s Patent.
 
13.  
INDEMNIFICATION

 
13.1 Palatin. Palatin shall indemnify, defend and hold harmless Gedeon Richter
and its directors, officers, employees and agents (each a “Gedeon Richter
Indemnitee”) from and against any and all liabilities, damages, losses, costs or
expenses (including reasonable attorneys’ and professional fees and other
expenses of litigation and/or arbitration) resulting from a claim, suit or
proceeding made or brought by a Third Party against a Gedeon Richter Indemnitee
arising from or occurring as a result of (a) the manufacture of any
Investigational Product by or on behalf of Palatin, (b) any breach of the
representations and warranties set forth in Sections 11.1 and 11.2, and (c) any
gross negligence or willful misconduct on the part of Palatin, except to the
extent any of the foregoing were caused by the gross negligence or willful
misconduct of Gedeon Richter or breach of any term of this Agreement by Gedeon
Richter.
 
13.2 Gedeon Richter. Gedeon Richter shall indemnify, defend and hold harmless
Palatin and its directors, officers, employees and agents (each a “Palatin
Indemnitee”) from and against any and all liabilities, damages, losses, costs or
expenses (including reasonable attorneys’ and professional fees and other
expenses of litigation and/or arbitration) resulting from a claim, suit or
proceeding made or brought by a Third Party against a Palatin Indemnitee,
arising from or occurring as a result of (a) any breach of the representations
and warranties set forth in Section 11.1, or (b) any development, testing,
importation, use, offer for sale, sale or other distribution of any Product by
Gedeon Richter or its Affiliates and Sublicensees, except to the extent caused
by the gross negligence or willful misconduct of Palatin or breach of any term
of this Agreement by Palatin.
 
13.3 Procedure. In the event that any Indemnitee intends to claim
indemnification under this Article 13 it shall notify the other Party (the
“Indemnitor”) in writing of such claim as soon as reasonably practicable after
the Indemnitee receives notice of the claim. The Indemnitor shall have the sole
right to control the defense of the claim (including the right to settle the
claim solely for monetary consideration). The Indemnitee shall cooperate with
the Indemnitor and its legal representatives in the investigation of any action,
claim or liability covered by this Article 13 and do nothing which would
adversely affect such defense or settlement. No settlement with respect to any
such claim shall serve to establish liability on the part of any Indemnitee
without the express written consent of such Indemnitee. The Indemnitee shall
not, except at its own cost, voluntarily make any payment or incur any expense
with respect to any claim or suit without the prior written consent of the
Indemnitor, which the Indemnitor shall not be required to give.
 
13.4 Limitation of Liability. EXCEPT WITH RESPECT TO DAMAGES AWARDED TO A THIRD
PARTY BY A COURT OF COMPETENT JURISDICTION THAT ARE REQUIRED TO BE INDEMNIFIED,
AND EXCEPT IN THE CASE OF A BREACH OF THE CONFIDENTIALITY OBLIGATIONS SET FORTH
IN ARTICLE 10 OF THIS AGREEMENT, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE
OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES OR
LOSS OF PROFIT ARISING OUT OF OR RELATED TO THE PERFORMANCE OF THEIR RESPECTIVE
RESPONSIBILITIES UNDER THIS AGREEMENT.
 
13.5 Survival. This Article 13 will survive expiry or termination of this
Agreement for any reason.
 
14.  
TERM AND TERMINATION

 
14.1 Term. The term of this Agreement shall commence on the Effective Date and,
unless earlier terminated as provided in this Article 14, expire on ***. This
Agreement shall expire in its entirety ***.
 
14.2 Termination for Material Breach.
 
14.2.1 In the case that one of the Parties believes that the other Party has
materially breached the Agreement, the Joint Steering Committee shall be
notified and meet as soon as possible in order that the Parties attempt to
resolve any dispute as to the existence of any such material breach. Failing a
consensus decision by the Joint Steering Committee within *** of receiving the
matter for review, it shall then be referred for resolution as set forth in
Section 15.2.1. Failing a resolution within *** of receiving the matter for
review from the Joint Steering Committee, the non-breaching Party may then
proceed to give written notice of termination for material breach.
 
 
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14.2.2 If pursuant to Section 14.2.1, either Party gives written notice to the
other Party of termination for material breach, which notice shall describe such
material breach in reasonable detail and whether it has been deemed non-curable
or curable by the Joint Steering Committee and the Chief Executive Officers,
this Agreement and the rights and options granted herein may be terminated by
the non-breaching Party, effective *** after giving written notice to the
breaching Party of termination for non-curable breach, *** after giving written
notice to the breaching Party of such termination in the case of a curable
payment breach, and *** after giving written notice to the breaching Party of
such termination in the case of any other curable breach. The foregoing
notwithstanding, if any curable material breach is cured within the aforesaid
*** or *** period, the notice shall be automatically withdrawn and of no effect.
 
14.2.3 If Gedeon Richter has the right to terminate this Agreement pursuant to
Section 14.2.2 for Palatin’s material breach, Gedeon Richter may elect, by
written notice to Palatin, not to terminate this Agreement and instead to retain
this Agreement in effect (including, without limitation, with respect to ***),
in which case Palatin shall continue to be liable to Gedeon Richter for any
uncured material breach, and Gedeon Richter shall be entitled to pursue
resolution pursuant to Section 15.2.2. Following a final resolution pursuant to
Section 15.2.2 (unless Palatin in writing does not dispute Gedeon Richter’s
determination of Palatin’s material breach) of Palatin’s material breach of this
Agreement, Gedeon Richter may elect, in lieu of receiving a payment of damages
from Palatin, to offset Gedeon Richter’s future payment obligations to Palatin
under this Agreement by the amount of damages determined and awarded to Gedeon
Richter pursuant to Section 15.2.2 (or agreed to in writing by the Parties). For
purposes of the immediately preceding sentence, a final resolution with respect
to a dispute relating to intellectual property or a breach of the
confidentiality obligations of this Agreement means a final, non-appealable
judgment by a court of competent jurisdiction.
 
14.2.4 Any exercise by the Parties of their rights under Section 14.2.2 may be
on a country-by-country basis, in the non-breaching Party’s discretion, in which
case such termination shall be partial in nature and shall only apply to the
particular country which is the source of the alleged material breach.
Furthermore, Palatin shall have the alternative option, in its sole discretion,
instead of terminating the Agreement in part or in whole, to convert the
exclusive appointment of Gedeon Richter under Article 2 of this Agreement into a
non-exclusive appointment, and to apply such non-exclusive status on a
country-by-country basis, in the non-breaching Party’s discretion, in which case
such non-exclusivity shall only apply to the particular country which is the
source of the alleged material breach.
 
14.3 Termination for Insolvency. If voluntary or involuntary proceedings by or
against a Party are instituted in bankruptcy under any insolvency law, or a
receiver or custodian is appointed for such Party, or proceedings are instituted
by or against such Party for corporate reorganization or the dissolution of such
Party, which proceedings, if involuntary, shall not have been dismissed within
*** after the date of filing, or if such Party makes an assignment for the
benefit of creditors, or substantially all of the assets of such Party are
seized or attached and not released within *** thereafter, the other Party may
terminate this Agreement effective immediately upon notice of such termination.
Upon a termination of this Agreement pursuant to this Section 14.3 as a result
of Palatin’s insolvency, Gedeon Richter’s License will be deemed fully paid-up
and royalty-free, perpetual and irrevocable and Gedeon Richter shall have the
right to retain the Regulatory Approvals.
 
14.4 Termination for Regulatory Purposes. Gedeon Richter may terminate this
Agreement in its entirety or in part, and on a country-by-country basis:  (a) if
upon completion of all activities contemplated by the Gedeon Richter Development
Plan the results of the Development activities prove to be unsatisfactory to
proceed with the registration procedure in the Territory by no fault of Gedeon
Richter, and such unsatisfactory results cannot be cured through Commercially
Reasonable Efforts of Gedeon Richter, or (b) if the Competent Authorities do not
grant Regulatory Approval in the Territory by no fault of Gedeon Richter, or (c)
if the Competent Authorities withdraw the Regulatory Approval(s) in any
countries of the Territory by no fault of Gedeon Richter or Gedeon Richter
voluntary withdraws the Regulatory Approval(s) or the Marketing Authorization
Application(s) in any country of the Territory due to serious safety concerns.
In the event of a termination pursuant to this Section 14.4, Gedeon Richter
shall not be obliged to pay to Palatin the remaining milestone payments.
 
14.5 Force Majeure Event. If a Party suffers a delay or default in performing
any of its respective obligations hereunder because of a force majeure event
caused by conditions beyond either Party’s reasonable control which may, but do
not necessarily include acts of God, government restrictions (including export
and import restrictions), wars, insurrections, labor disturbances, shortages of
equipment, fuel or labor, destruction of facilities or materials by fire,
earthquake, storm or other casualty, judgment or injunction of any court,
epidemic, or failure of public utilities or common carrier (the “Force Majeure
Event”), it shall promptly notify the other Party in writing of the reasons for
the delay or default and shall use and continue to use Commercially Reasonable
Efforts to avoid, remove or mitigate such causes of non-performance. In case a
Party does not perform its obligations hereunder for a period of *** as a result
of a Force Majeure Event, the other Party shall have the right to terminate this
Agreement in its entirety upon providing written notice to the non-performing
Party, such termination to be effective *** after such notice if the Force
Majeure Event has not theretofore terminated.
 
14.6 Effects of Termination.
 
14.6.1 Accrued Rights and Obligations. Termination of this Agreement for any
reason shall not release any Party hereto from any liability which, at the time
of such termination, has already accrued to the other Party or which is
attributable to a period prior to such termination nor preclude either Party
from pursuing any rights and remedies it may have hereunder or at law or in
equity with respect to any breach of this Agreement. It is understood and agreed
that monetary damages may not be a sufficient remedy for any breach of this
Agreement and that the non-breaching Party may be entitled to injunctive relief
as a remedy for any such breach.
 
14.6.2 Survival. The rights and obligations set forth in this Agreement shall
extend beyond the term or termination of this Agreement only to the extent
expressly provided for herein, or to the extent that the survival of such rights
or obligations are necessary to permit their complete fulfillment or discharge.
 
14.6.3 License. Upon expiration of this Agreement or termination pursuant to
Section 14.2 as a result of Palatin’s material breach or pursuant to Section
14.3 as a result of Palatin’s insolvency, Gedeon Richter’s License will be
deemed fully paid-up and royalty-free, perpetual and irrevocable.
 
 
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14.6.4 Transfer of Know-How to Palatin. Upon a termination of this Agreement
pursuant to Section 14.2 as a result of Gedeon Richter’s material breach,
pursuant to Section 14.3 as a result of Gedeon Richter’s insolvency, pursuant to
Section 14.4 or pursuant to Section 14.5 as a result of a Force Majeure Event
preventing performance by Gedeon Richter, (a) Gedeon Richter shall promptly
return to Palatin all Palatin Know-How in tangible form and (b) Gedeon Richter
shall promptly transfer and assign to Palatin, for no additional consideration,
all Gedeon Richter Know-How in tangible form. Notwithstanding the foregoing,
Gedeon Richter’s counsel may retain one (1) copy of such tangible Palatin
Know-How and Gedeon Richter Know-How for archival purposes and for ensuring
compliance with Article 10.
 
14.6.5 Transfer of Know-How to Gedeon Richter. Upon a termination of this
Agreement pursuant to Section 14.2 as a result of Palatin’s material breach,
pursuant to Section 14.3 as a result of Palatin’s insolvency or pursuant to
Section 14.5 as a result of a Force Majeure Event preventing performance by
Palatin, (a) Palatin shall promptly return to Gedeon Richter all Gedeon Richter
Know-How in tangible form and (b) Gedeon Richter thereafter automatically shall
have, as of the effective date of the termination, a royalty-free license
(including the right to sublicense) under the Palatin Know-How to the extent
necessary for the Development and Commercialization of the Product in the Field
in the Territory. Notwithstanding the foregoing, Palatin’s counsel may retain
one (1) copy of such tangible Gedeon Richter Know-How for archival purposes and
for ensuring compliance with Article 10.
 
14.6.6 Regulatory Approvals. Upon Palatin’s written request submitted to Gedeon
Richter within *** following a termination of the Agreement pursuant to Section
14.2 as a result of Gedeon Richter’s material breach, pursuant to Section 14.3
as a result of Gedeon Richter’s insolvency, pursuant to Section 14.4 or pursuant
to Section 14.5 as a result of a Force Majeure Event preventing performance by
Gedeon Richter, Gedeon Richter will initiate the transfer or assignment of the
Regulatory Approvals to Palatin or to a Third Party designated by Palatin. Upon
expiration of this Agreement or termination pursuant to Section 14.2 as a result
of Palatin’s material breach, pursuant to Section 14.3 as a result of Palatin’s
insolvency or pursuant to Section 14.5 as a result of a Force Majeure Event
preventing performance by Palatin, Gedeon Richter shall have the right to retain
the Regulatory Approvals. Except in the case of a termination pursuant to
Section 14.2 as a result of Gedeon Richter’s material breach, Palatin shall
reimburse Gedeon Richter for all out-of-pocket costs actually incurred by Gedeon
Richter in connection with the transfer or assignment of the Regulatory
Approvals pursuant to this Section 14.6.6. Gedeon Richter shall provide all
necessary assistance to Palatin for such transfer at Gedeon Richter’s cost.
Gedeon Richter shall be entitled to withdraw the Regulatory Approvals if Palatin
does not request the transfer or assignment of the Regulatory Approvals in
writing within *** following such termination.
 
14.6.7 Stock on Hand. Upon a termination of the Agreement pursuant to
Section 14.3 as a result of Gedeon Richter’s insolvency, pursuant to Section
14.4 or pursuant to Section 14.5, Gedeon Richter shall have the right to sell or
otherwise dispose of the stock of any Product subject to this Agreement then on
hand until the date that is *** after the effective date of such termination.
Sales made pursuant to this Section 14.6.7 shall be treated as Net Sales and
royalty thereon shall be paid to Palatin.
 
15.  
GOVERNING LAW, DISPUTES AND ARBITRATION

 
15.1 Governing Law. This Agreement shall be governed in all respects by the laws
of ***, excluding its conflicts of laws principles.
 
15.2 Disputes and Arbitration.
 
15.2.1 In the event of a dispute arising between the Parties concerning the
interpretation or performance of this Agreement, upon either Party’s written
request, the matter will be submitted to the Chief Executive Officers of the
Parties for good faith negotiation and resolution. In the event the Chief
Executive Officers are also unable to resolve such dispute within *** after such
request is received, either Party may invoke the provisions Section 15.2.2.
 
15.2.2 Except with respect to disputes relating to intellectual property or a
breach of the confidentiality obligations of this Agreement, any dispute,
controversy or claim arising out of or in relation to this Agreement, including
the validity, invalidity, breach or termination thereof which cannot be settled
amicably by the Parties in accordance with Section 15.2.1 shall be resolved by
arbitration in accordance with the Rules of Arbitration of the International
Chamber of Commerce in force on the date when the notice of arbitration is
submitted in accordance with such rules. Any arbitration shall be held in ***
and conducted in English by a panel of three arbitrators. The award shall be
final and binding upon the Parties and shall be the sole and exclusive remedy
between the Parties regarding the claims, counterclaims, issues, or accounting
presented to the arbitrators. Notwithstanding the foregoing, each Party may at
any time pursue equitable remedies, including without limitation injunctive
relief, to protect its Confidential Information and its intellectual property
rights. With respect to disputes relating to intellectual property or a breach
of the confidentiality obligations of this Agreement, each Party shall have the
right to pursue any legal or equitable remedy available to it under applicable
laws.
 
16.  
INSURANCE

 
16.1 During the term of this Agreement and for a period of *** following the
termination or expiration of this Agreement, each Party shall maintain in full
force and effect a policy of insurance or self-insurance against liability and
other risks associated with its activities and obligations under this Agreement,
including its Clinical Studies, in such amounts and on such terms as are
consistent with the normal business practices of prudent companies similarly
situated.
 
 
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17.  
MISCELLANEOUS

 
17.1 Independent Contractors. The relationship of the Parties hereto is that of
independent contractors, and nothing in this Agreement shall be construed to
give either Party the power or authority to act for, bind or commit the other
Party in any way. Nothing herein shall be construed to create the relationship
of agents, partners or joint venture partners between the Parties for any
purpose.
 
17.2 Assignment. This Agreement may not be assigned or otherwise transferred by
either Party to any Third Party without the prior written consent of the other
Party, such consent not to be unreasonably withheld; provided, however, that
either Party may assign this Agreement, without such consent, to its Affiliate
or to a Third Party in connection with a Change of Control. Any successor or
permitted assignee of rights and/or obligations hereunder shall, prior to such
assignment or Change of Control, agree in writing to assume the existing and
future obligations, rights, title and interest in, to and under this Agreement
of the Party with which it is entering into such Change of Control transaction.
If any successor or permitted assignee of rights and/or obligations hereunder
does not provide such written assumption prior to such assignment or Change of
Control, this Agreement shall be deemed to have been materially breached by the
Target Party immediately prior to the consummation of the Change of Control.
This Agreement shall be binding upon and inure to the benefit of the Parties and
their successors and permitted assigns. Any assignment or attempted assignment
by either Party in violation of the terms of this Section 17.2 shall be null,
void and of no legal effect.
 
17.3 Notices. All notices, requests and other communications hereunder shall be
in writing and shall be personally delivered or sent by telecopy or other
electronic facsimile transmission, by registered or certified mail, return
receipt requested, postage prepaid, or by overnight courier, in each case to the
Parties’ respective addresses specified below, or such other address as may be
specified by written notice delivered to the other Party in accordance with this
Section 17.3:
 
If to Palatin:
Palatin Technologies, Inc.
4-B Cedar Brook Drive
Cranbury, New Jersey 08512
USA
If to Gedeon Richter:
 
Chemical Works of Gedeon Richter Plc.
Budapest 1103
Gyömrői út 19-21.
Hungary

17.4 Advice of Counsel. Palatin and Gedeon Richter have each consulted counsel
of their choice regarding this Agreement, and each acknowledges and agrees that
this Agreement shall not be deemed to have been drafted by one Party or another
and will be construed accordingly.
 
17.5 Governing Language. This Agreement has been executed in English. If any
translation of this Agreement conflicts with the English version or contains
terms in addition to or different from the English version, the English version
shall prevail.
 
17.6 Further Assurances. Each Party agrees to execute, acknowledge and deliver
such further consents, documents and instruments, and to do all such other acts,
as may be necessary or appropriate in order to carry out the purposes and intent
of this Agreement.
 
17.7 Severability. In the event that any provisions of this Agreement
are determined to be invalid or unenforceable by a court of competent
jurisdiction, the remainder of the Agreement shall remain in full force and
effect without said provision. In such event the Parties shall, in good faith,
negotiate a substitute clause for any provision declared invalid or
unenforceable, which shall most nearly approximate the intent of the Parties
entering this Agreement.
 
17.8 Waiver. It is agreed that no waiver by either Party hereto of any breach of
default of any of the covenants or agreements herein set forth shall be deemed a
waiver as to any subsequent and/or similar breach or default.
 
17.9 Complete Agreement. This Agreement, the Supply Agreement for Development
and the Commercial Supply Agreement and that certain Confidential Information
Disclosure Agreement entered into by and between the Parties as of ***,
constitute the entire agreement, both written and oral, between the Parties with
respect to the subject matter hereof, and that all prior agreements respecting
the subject matter hereof, either written or oral, expressed or implied, are
merged and canceled, and are null and void and of no effect. No amendment or
change hereof or addition hereto shall be effective or binding on either of the
Parties hereto unless reduced to writing and duly executed on behalf of both
Parties.
 
The Exhibits form an integral part of this Agreement and references to this
Agreement include the Exhibits as well.
 
17.10 Use of Name. Neither Party shall use the name or trademarks of the other
Party without the prior written consent of such other Party except in connection
with the disclosure of the existence of this Agreement.
 
17.11 Headings. The captions to the several Articles and Sections hereof are not
a part of this Agreement, but are included merely for convenience of reference
only and shall not affect its meaning or interpretation.
 
17.12 Counterparts. This Agreement may be executed in two counterparts, each of
which shall be deemed an original and which together shall constitute one
instrument.
 
 
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IN WITNESS WHEREOF Palatin and Gedeon Richter have executed this Agreement by
their respective duly authorized representatives.
 
PALATIN TECHNOLOGIES, INC.
CHEMICAL WORKS OF GEDEON
RICHTER PLC.
       
Date:   29 August
2014                                                           
Date:   Budapest, August 29,
2014                                                                
   
By:   /s/ Carl Spana                                                           
By:   /s/ Erik
Bogsch                                                                
Print Name: Carl Spana
Print Name: Erik Bogsch
Title: President and Chief Executive Officer
Title: Managing director
               
Date:   29 August
2014                                                           
     
By:   /s/ Stephen T.
Wills                                                          
 
Print Name: Stephen T. Wills
 
Title: Chief Financial Officer and Chief Operating Officer
 

 

 
 
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EXHIBIT I
 
Territory
 
 
***
 
 

 
 
 
21

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EXHIBIT II
 
Palatin Know-How
 
***
 

 
 
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EXHIBIT III
 
 
Palatin Patent
 
The Palatin Patent consists of the following patent applications and patents,
including (a) all reissues, substitutions, confirmations, registrations,
validations, re-examinations, additions, continuations, continued prosecution
applications, continuations-in-part, or divisions of or to any of the foregoing;
and (b) all extensions, renewals or restorations of any of the foregoing by
existing or future extension, renewal or restoration mechanisms, including
supplementary protection certificates or the equivalent thereof:
 
Issued Patents
 
***
Country Name
 
Application Number
 
Date Filed
 
Patent Number
 
Grant Date
 
Status
 
***
 

 
Pending Applications
 
***
 
 
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EXHIBIT IV
 
Countries Subject to Right of First Offer and Negotiation
 
***
 

 
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Exhibit V
 
Palatin Development Plan
 
***
 

 
25

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Exhibit VI
 
Gedeon Richter Development Plan
 
***
 

 
26

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Exhibit VII
 
Third Party Manufacturers
 
***
 
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