Exhibit 10.7


 


[*] Certain
information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be
competitively harmful if publicly disclosed.


 


ROYALTY
AGREEMENT


 


This Royalty Agreement
(this “Agreement”) is effective as of the 14th day of May, 2020 (the “Effective Date”) by and
between Chelexa BioSciences, Inc., having an address at 181 Market Street, Unit 20, Lowell, MA 01852 (“Chelexa”) and
Hoth Therapeutics, Inc., having an address at 1 Rockefeller Plaza, Suite 1039, New York, New York 10020 (“Hoth”). Chelexa
and Hoth are each hereafter referred to individually as a “Party” and together as the “Parties”.


 


WHEREAS, pursuant to
that certain Assignment and Assumption Agreement between Chelexa and Hoth dated as of even date herewith (the “Assignment
and Assumption Agreement”), Chelexa is assigning to Hoth, all of its rights and obligations in and
to and liabilities under, of whatever kind or nature, the certain License Agreement between Chelexa and The University of Cincinnati,
a state institution of higher education organized under Section 3361 of the Ohio Revised Code, having an address at 51 Goodman
Dr., Suite 240, Cincinnati, OH 45221-0829 (“UC”), entered into and made effective on February 27, 2013, and amended on
April 17, 2013 and February 27, 2013 (the “UC Agreement’’), in accordance with the terms and conditions set forth therein;


 


WHEREAS, as consideration
for the assignment of the UC Agreement (as defined in the Assignment and Assumption Agreement), Hoth has agreed to, among other
things, pay to Chelexa royalties on the sale or other disposition of the Products (as defined below), on the terms and conditions
set forth in this Agreement.


 


NOW, THEREFORE, in
consideration of the mutual covenants contained herein and in the Assignment and Assumption Agreement, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the Parties hereby agree as follows.


 


		1.	DEFINITIONS



 


Whenever used in the
Agreement with an initial capital letter, the terms defined in this Article 1 shall have the meanings specified. Capitalized
terms used but not defined in this Agreement shall have the meanings ascribed to such terms in the Assignment and Assumption Agreement.


 


		1.1.	“Invention” means any innovation, improvement,
development, discovery, and information relating thereto, whether or not written or otherwise fixed in any form or medium, regardless
of the media on which it is contained and whether or not patentable or copyrightable as described in UC Disclosure # [*], “[*].”



  


		1.2.	“Invention Rights” means collectively and individually
Patent Rights and Know-How.



 


		1.3.	“Know-how” means any and all proprietary information,
methods, processes, techniques and data, which are necessary or useful for the manufacture, use or sale of any Licensed Product
(as defined below) and which comprise Confidential Information (as defined herein in Article 6.3, below).



 






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		1.4.	“Licensed Product”
means any and all products and processes, (i) in the jurisdiction where such products and processes are being manufactured,
used, offered for sale, sold or imported which could not be manufactured, used, offered for sale, sold or imported without infringing
one or more claims of the Patent Rights, or (ii) are manufactured, used or sold, in whole or in part, through the use of the Invention
Right s.



 


		1.5.	“Licensee” shall mean shall mean any Third Party
to whom Hoth grants a license of or transfers some or all of the rights to or in the Licensed Product.



 


		1.6.	“Net Sales” means the aggregate gross revenues
derived by Hoth and its sublicensees from the sale of the Licensed Products to, and practice of the Licensed Product for, an unaffiliated
third party in an arm’s length transaction, less credits granted on account of price adjustments, recalls, rejections or return
of item s previously sold, and excises, sales taxes, duties or other taxes imposed upon and paid with respect to such sales.



 


“Net
Sales” shall not include sales or transfers between Hoth and its Affiliates.


 


		1.7.	“Patent Rights” means
any patents and patent applications based on the Invention, and any foreign counterparts thereof, as well as all continuations,
continuations-in-part, divisions, and renewals thereof, all patents which may be granted thereon, and all reissues, reexaminations,
extensions, patents of additions and patents of importation thereof, including specifically the following issued patents and pending
patent applications:


  


	
        UC

        Family
        Number
	
        Jurisdiction
	Serial#	Title	Notes
	[*]	[*]	[*]	[*]	[*]
	[*]	[*]	[*]	[*]	[*]
	[*]	[*]	[*]	[*]	[*]
	[*]	[*]	[*]	[*]	[*]
	[*]	[*]	[*]	[*]	[*]
	[*]	[*]	[*]	[*]	[*]
	[*]	[*]	[*]	[*]	[*]
	[*]	[*]	[*]	[*]	[*]
	[*]	[*]	[*]	[*]	[*]



 






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		1.8.	“Royalty Payment” shall have
the meaning set forth in Section 2.1.



 


		1.9.	“Territory” shall mean all
countries and jurisdictions of the world.



 


		2.	FEES AND ROYALTIES



 


		2.1.	Approval Milestone. Hoth will pay Chelexa a one-time cash
fee of $3.5 million upon either (i) the first license in the U.S., any U.S. territory or the European Union to make, use and sell
a Licensed Product in such country or territory, or (ii) the receipt of approval from the United Stated Federal Drug Administration
(FDA) to make, use and sell a Licensed Product.



 


		2.2.	Royalty. Subject to the other terms and conditions of this
Agreement, during the Term, Hoth shall pay to Chelexa a royalty based on a percentage of annual aggregate Net Sales of the Licensed
Product in the Territory according to the following schedule: (the “Royalty Payment”).



 


	Calendar Year Net Sales (in US Dollars) for the Licensed Technology in the Territory	Incremental Royalty Rates as a Percentage(%) of Net Sales
	
         

        Portion
of Calendar Year Net Sales up to and including $[*] Million
	
         

        [*]%

	
         

        Portion
        of Calendar Year Net Sales that exceeds $[*] Million, up to and including
        $[*] Million
	
         

        [*]%

	
         

        Portion of
        Calendar Year Net Sales that exceeds $[*] Million
	
         

        [*]%




 






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		3.	RECORDS, REPORTS AND PAYMENTS



 


		3.1	Reporting of First Sale of Licensed Product. Hoth shall report
to Chelexa the date of first sale of a Licensed Product by Hoth or a sublicensee within thirty (30) days following that sale.



 


		3.2	Quarterly Progress Reports. No later than sixty (60) days
after the end of each Fiscal Quarter, Hoth shall provide to Chelexa a written Quarterly Progress Report. If multiple technologies
are covered by the license granted hereunder, the Progress Report shall provide the information set forth above for each technology.



 


		3.3	Quarterly Sales Reports. Hoth shall deliver to Chelexa within
sixty (60) days after the end of each Calendar Quarter a written report showing its sales of the Licensed Product as well as any
payments from sublicensees and its computation of remuneration to Chelexa due under this Agreement for such Calendar Quarter and
at the same time make the payment of the remuneration due. If it had no sale of any Licensed Product by Hoth or a sublicensee the
report shall so state. All Net Sales shall be segmented in each such report according to each Chelexa technology in the Licensed
Product. For payments by sublicensees, the report shall segment the payments by any applicable Chelexa technology in the sublicensed
product. The report shall include the rates of exchange used for conversion to US Dollars (USD) from the currency in which such
sales were made.



 


		3.4.	Payment for Sales Outside of US. In cases of sales outside
the USA, royalty payments shall be made in net US Dollars. The amounts shall be calculated using currency exchange rates as set
forth in The Wall Street Journal on the last day of the Calendar Quarter for which remuneration is due as noted in 7.3.



 


		3.5	No Offsets. All payments due to Chelexa from Hoth shall be
made without deduction for taxes, assessments, or other charges of any kind which may be imposed on Hoth by the government of the
country where the transactions occur or any political subdivision thereof with respect to any amounts payable to Chelexa pursuant
to this Agreement, and such taxes, assessments, or other charges shall be assumed by Hoth. Late payments shall be subject to an
interest charge of the lesser of one percent (1%) per month or the maximum allowed by law.



 






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		3.6	Books and Records; Right to Audit. Hoth shall keep full, true
and accurate books of accounts based on good accounting principles and other records containing relevant information and data which
may be necessary to ascertain and verify the remuneration payable to Chelexa hereunder for a period of three (3) years following
the year to which such records relate. During the Term and for a period of three (3) years following its termination, Chelexa shall
have the right to audit, or have an agent, accountant or other representative, audit such books, records and supporting data upon
thirty (30) days notice. Any audit shall be at Chelexa’s expense, except that Hoth shall reimburse Chelexa for the cost of the
audit in the event that Chelexa discovers an underpayment often percent (10%) or more of the amount due.



 


		3.7	Confidentiality. All matters relating to this Article 3 shall
be subject to the confidentiality provisions of Article 6.3 and shall not be used for any purpose other than in connection with
the examination by Chelexa contemplated by this Article, nor shall any such information or material be disclosed to any person
or entity other than Chelexa’s outside or in-house counsel, accountants, officers and those personnel of each having a legitimate
need to know.



 


		4.	DILIGENCE



 


		4.1.	Hoth agrees to use its best commercial efforts in the development, production and marketing of
Licensed Products within the global market and the respective discipline of biofilm prevention utilizing the Zinc Chelator DTPA
and will for such purpose make available adequate resources and qualified personnel. All such development and commercializing expenses
shall be borne by Hoth.



 


		4.2.	Hoth shall use its best commercial efforts to effect introduction of Hoth (or those of its sublicensees)
branded products into commercial use as quickly as is reasonably possible, consistent with sound and reasonable business practices
and judgment; thereafter, until the expiration of this Agreement, Hoth and its sublicensees shall endeavor to keep branded products
reasonably available to the public.



 


		4.3.	If at any time during the Term Hoth abandons development of the Licensed Product for any reason
other than safety or demonstrated lack of efficacy, Hoth agrees to take any steps reasonably necessary to facilitate the assignment
of the license and related intellectual property to Chelexa to enable Chelexa to pursue development of the Licensed Product utilizing
its own resources. Such steps include but are not limited to engaging with the University of Cincinnati to facilitate such transfer.
Any such transfer shall be conditioned upon Chelexa’s payment and reimbursement to Hoth of all fees and costs paid by Hoth
(including, but not limited to, legal and filing fees and/or payments made to UC or third parties related to the patents) to further
the rights and development of the Licensed Products that were obligations of Chelexa (or that were caused by Chelexa).



 


		5.	AFFILIATES AND LICENSEES



 


Hoth covenants that
it will ensure that the terms of this Agreement are binding upon all Affiliates and Licensees of Hoth, and all Net Sales made by
such Affiliates or Licensees shall be subject to the payment of the Royalty Payment under the terms of this Agreement. Notwithstanding
such Affiliate or Licensees obligations to Chelexa, Hoth shall remain fully responsible for the payment and performance of all
obligations to Chelexa under this Agreement. Hoth shall ensure that all agreements with Affiliates and Licensees shall include
a provision wherein the parties agree that the sale of Licensed Products are subject to the payment of the Royalty Payment to Chelexa
under this Agreement.


 






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		6.	MISCELLANEOUS



 


		6.1.	Term. The term of this Agreement shall begin on the date first
above mentioned and shall end on the earlier of May 31, 2025 or the last to expire patent in the Patent Rights, unless sooner terminated
in accordance with the terms of Section 5.2 hereof.



 


		6.2.	Termination. This Agreement may be terminated by Chelexa upon
written notice to Hoth. This Agreement may not be terminated by Hoth.



 


		6.3.	Confidentiality.



 


a)
In connection with this Agreement, it is acknowledged that each Party may disclose its confidential and proprietary
information to the other Party. Any such information that is first disclosed in writing, or if first disclosed orally is
later transmitted in written form, and is labeled as “Confidential” is referred to herein as “Confidential
Information.”


 


(b)
Each Party hereto shall maintain the Confidential Information of the other Party in confidence, and shall not disclose or
otherwise communicate such Confidential Information to others during the Term and for a period of three (3) years following
termination, or use it for any purpose except pursuant to, and in order to carry out, the terms and objectives of this
Agreement, and hereby agrees to exercise every reasonable precaution to prevent the unauthorized disclosure of such
Confidential Information by any of its directors, officers, employees, consultants or agents.


 


(c)
The provisions of Article 6.3 shall not apply to any Confidential Information disclosed hereunder which:


 


(i)
either was or will be lawfully disclosed to the recipient by an independent third party rightfully in possession of the
Confidential Information; or


 


(ii)
is public knowledge prior to or after its disclosure other than through acts of omission attributable to recipient; or


 


(iv)
was independently known to the recipient prior to receipt from the disclosing party, as demonstrably documented in
contemporaneous written records of the recipient; or


 


(v)
is required to be disclosed by any of the Parties to comply with applicable laws, to defend or prosecute litigation or to
comply with governmental regulations, provided that such Party promptly notifies the other Party so as to permit such Party
to take action to avoid and/or minimize the degree of such disclosure.


 






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		6.4.	Integrated Agreement. This Agreement, the Assignment and Assumption
Agreement and the exhibits and schedules hereto and thereto sets forth the entire agreement and understanding of the Parties with
respect to the subject matter hereof and supersedes all prior and contemporaneous agreements.



 


		6.5.	Successors and Assigns. The terms and conditions of this Agreement
shall be binding upon and inure to the benefit of the permitted successors and assigns of the Parties.



 


		6.6.	Sale or Transfer of Rights to Royalty Payments; Right to Encumber.
Notwithstanding anything to the contrary in the Assignment and Assumption Agreement, Chelexa may, at any time, sell, transfer,
encumber, assign, or pledge its right to receive the Royalty Payment under this Agreement. Notwithstanding the foregoing, no such
sale, transfer, assignment or pledge shall relieve Hoth of its obligations under this Agreement without the written consent of
Chelexa.



 


		6.7.	Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement
shall be governed by and construed under the laws of the State of New York without regard to the choice of law principles thereof.
Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of New
York located in The City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith
or therewith or with any transaction contemplated hereby or thereby, and hereby irrevocably waives any objection that such suit,
action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.



 


[Remainder of page intentionally
left blank]


 




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IN WITNESS WHEREOF,
the Parties have caused this Agreement to be executed by their duly authorized representative as of the date first set forth above.


 


	CHELEXA BIOSCIENCES, INC.	 	HOTH THERAPEUTICS, INC.
	 	 	 
	By:	/s/ Kenneth L. Rice Jr.	 	By:	/s/
    Robb Knie                     
	Name: 	Kenneth L. Rice Jr.	 	Name: 	Robb Knie
	Title:	Chief Executive Officer	 	Title:	Chief Executive Officer



  


  


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