PediatRx Inc.: Exhibit 10.1 - Filed by newsfilecorp.com





CONFIDENTIAL 



BINDING TERM SHEET FOR (1) GRANISOL® AND AQUORALTM US
CO-
PROMOTION AGREEMENT, (2) SALE OF EX-US RIGHTS FOR GRANISOL

AND 
NON-BINDING TERM SHEET FOR THE ACQUISITION OF PEDIATRX
INC. 
BY APRICUS BIOSCIENCES, INC. 

  January 26, 2012 


	
      1. Parties 
	
      (1) Apricus Biosciences, Inc., a Nevada corporation with
      its principal address at 11975 El Camino Real, Suite 300 San Diego, CA
      92130 (“APRICUS”); and 

	  	
      

	  	
      (2) PediatRx Inc., a Nevada corporation with its
      principal address at 405 Trimmer Rd., Suite 200, Califon, NJ 07830
      (“PEDIATRX”). 

	  	
      

	2. Co-Promotion
Agreement in U.S.
      for Granisol and Aquoral 	
      PEDIATRX owns or has co-promotion rights to the U.S.
      Products (as defined below), including (a) the U.S. Abbreviated New Drug
      Application (“ANDA”) to the branded generic drug Granisol (the “Granisol
      U.S. Regulatory Filing”) (granisetron HCl) oral solution, ANDA #078334 and
      (b) Aquoral (Oxidised Glycerol Triester (OGT) based liquid delivered by an
      oral spray for the management of Xerostomia) US NDC
      No. NHRIC 8546.0001.40 (collectively, the “U.S. Products”). 

	  	
      

	  	
      PEDIATRX desires to enhance the marketing of the U.S.
      Products in the U.S. by enlisting the support and participation of APRICUS
      in the U.S. Products promotion and detailing effort. 

	  	
      

	  	
      APRICUS and PEDIATRX agree to enter into a definitive Co-
      Promotion Agreement (“Co-Promotion Agreement”) for Granisol and to assign
      the PEDIATRX Co-Promotion Agreement with Bi-Coastal for Aquoral in the
      U.S. to APRICUS by February 13, 2012 according to the terms and conditions
      as described in Exhibit A attached hereto. 

	 
	
      

	  	
      The Co-Promotion Agreement shall also include a covenant
      by PEDIATRX not to license to any third party any additional co- promotion
      rights in the non-exclusive states as defined in Schedule A, Section 1,
      for a period of five (5) years from the Effective Date of the Co-Promotion
      Agreement if the Merger described in Section 4 herein does not occur. For
      clarity, APRICUS will continue to have full co- promotional rights in the
      non-exclusive territories. 

	 
	
      

	  	
      Upon execution of this Term Sheet by both Parties,
      PEDIATRX will place an order for a full commercial batch of Gransiol
      (“Commercial Batch”) that has three full years of shelf life left with
      Therapex. APRICUS will pay to Therapex directly the cost of the Commercial
      Batch. APRICUS will receive the Commercial Batch as soon as
  




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CONFIDENTIAL 




	  	
      possible after the date of the closing of the
      Co-Promotion Agreement. APRICUS will provide to PEDIATRX up to 500 bottles
      of Granisol from the Commercial Batch for PEDIATRX to replace that product
      whose shelf-life will expire currently with distributors and wholesalers.
      

	
      
	
       

	
      3. Sale of Ex-US Rights to Granisol 
	
      PEDIATRX desires to sell and assign to APRICUS all
      non-U.S. Granisol intellectual property owned or controlled by PEDIATRX
      (including trade secrets, know-how, patent applications, patents,
      trademarks and trademark applications and all other intellectual property
      of any kind whatsoever) (collectively, the “Non-US IP”) and including the
      rights to all regulatory approvals and the rights to make, have made,
      offer to sell, sell, import, pursue regulatory filings and commercialize
      Granisol in all countries and territories of the world outside of the U.S.
      (“Non-US Rights”). 

	
	
       

	  	
      APRICUS and PEDIATRX agree to enter into a definitive
      Sale Agreement (“Sale Agreement”) for GRANISOL for the Non-US IP and the
      non-US Rights by February 13, 2012. 

	
	
       

	  	
      The Sale Agreement shall also include a covenant not to
      compete in the non-US Territory in the field of anti-emetic drugs by
      PEDIATRX, its officers and board members for a period of seven (7) years
      from the Effective Date of the Sales Agreement along with other terms and
      conditions that are standard for such agreements. 

	
      
	
       

	
      4. Merger of PEDIATRX and APRICUS      
	
      APRICUS is a public US company whose shares are traded on
      the NASDAQ Capital Market and PEDIATRX is a public US company whose shares
      trade on the OTCBB. 

	
	
       

	  	
      APRICUS expects to acquire 100% of the outstanding voting
      common stock of PEDIATRX from the PEDIATRX Shareholders (the “Shares”)
      through a merger (the “Merger”) that will occur in the following manner:
      

	
	
       

	  	
      (a) Signing of this Term Sheet by APRICUS and PEDIATRX
      (collectively, the “Parties”); 

	  	
      (b) Due diligence occurs and a definitive merger
      agreement (“Merger Agreement”) is negotiated and signed by the Parties;
      

	  	
      (c) APRICUS to prepare and file with the SEC a Form S-4
      registering its common shares to be exchanged for the Shares; 

	  	
      (d) PEDIATRX to prepare, file with the SEC and mail a
      proxy to send to its shareholders to approve the Merger; 

	
      
	
      (e) The PEDIATRX shareholders approve the Merger;
  

	
      
	
      (f) The Merger closes (the “Merger Closing”); and
  

	
      
	
      (g) PEDIATRX will become a wholly-owned subsidiary of
    APRICUS through a reverse triangular merger or in the most tax efficient
      method determined
    by PEDIATRX and APRICUS. 




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CONFIDENTIAL 

 


	  	
      Depending on whether or not SEC review occurs for the S-4
      or the Proxy, the Merger is currently estimated to close by no later than
      April 30, 2012, or another date as mutually agreed by APRICUS and
    PEDIATRX. 

	 	
       

	  	
      Pursuant to the Merger, all outstanding voting common
      stock of PEDIATRX will be exchanged for the right to receive APRICUS’s
      registered shares of common stock described in Paragraph 5(b) herein and
      PEDIATRX will receive certain cash consideration as described in Paragraph
      5(b) at the Merger Closing. David Tousley will terminate all 690,000 of
      his stock options and PEDIATRX will make best efforts to gain agreement to
      terminate the remaining 112,500 options and 515,000 warrants of PEDIATRX
      by or before the Merger Closing. In no case, however, will the Merger
      compensation described in Section 5 (b) herein increase. 

	 	
       

	  	
      APRICUS expects that PEDIATRX will have no other net
      company liabilities at the Merger Closing other than $675,000, which may
      include unpaid employment, consulting and PEDIATRX start-up costs, notes
      payable and other debt after considering working capital assets and
      working capital liabilities on a net basis. APRICUS agrees to assume up to
      $675,000 in net company liabilities and to pay such liabilities within a)
      with regard to the notes payable, 5 calendar days from the Merger Closing
      and, b) with regard to the other liabilities, 15 calendar days of the
      Merger Closing. 

	 	
       

	  	
      Within sixty days after the Merger Closing, APRICUS and
      PEDIATRX shall undertake a working capital adjustment and the Holdback
      Common Stock Merger Consideration (as defined in Section 5 herein) will be
      adjusted accordingly by the amount by which the current assets of PEDIATRX
      less the current liabilities of PEDIATRX at the time of the Closing Date
      (the “Net Working Capital”) differs from the $675,000. 

	 	
       

	5. Consideration 	
      (a) For Co-Promotion Agreement and Sale Agreement and
      No Shop Provision. PEDIATRX will receive the following
      consideration from APRICUS for the signing and closing of the Co-Promotion
      Agreement, Sale Agreement and as consideration for the No Shop Provision
      contained in Section 22: 

	 	
       

	  	
           (i) $325,000 in cash to be paid
      to PEDIATRX on the date that both the transactions described in the
  Co-Promotion Agreement and Sale Agreement have been executed.  





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CONFIDENTIAL 

 


	  	
      (b) For Merger. PEDIATRX Shareholders will receive
      the following consideration from APRICUS for the Merger at the Merger
      Closing (unless indicated below) as follows: 

	 
    	
      

	  	
            (i) $3,600,000 in common
      stock of APRICUS (the “Common Stock Merger Consideration”); and 

	  	
            (ii) $400,000 in common
      stock of APRICUS that will be held back for a period of six (6) months
      (the “Holdback Period”) from the PEDIATRX shares held by Cameron Durrant
      and David Tousley (collectively the “Holdback Shareholders”) as an
      indemnity for breaches of PEDIATRX’s representations and warranties and
      for any shortfall in the Net Working Capital (the “Holdback Common Stock
      Merger Consideration”). 

	 
    	
      

	  	
      PEDIATRX Shareholders will receive $3,600,000 of the
      Common Stock Merger Consideration at the Merger Closing. Once the Holdback
      Period has expired, then PEDIATRX will be required to distribute the
      remaining portion of its Holdback Common Stock Consideration to the
      Holdback Shareholders, net of any claims or pending claims. 

	 
    	
      

	  	
      The share exchange ratio of the PEDIATRX Shares and the
      APRICUS shares will be set based on the average of the closing prices of
      APRICUS common stock on the Nasdaq Capital Market for the ten trading days
      from either as applicable (a) the fifteenth trading day before the agreed
      Merger Closing Date to the sixth trading day before the Merger Closing
      Date or (b) the fifteenth trading day before the termination day of the
      Holdback Period to the sixth trading day before the termination day of the
      Holdback Period. 

	 
    	
      

	6. Merger Agreement Non- Compete 	
      The Merger Agreement shall include a covenant not to
      compete in (a) the US Territory in the field of antiemetic drugs and (b)
      in the world in the field of Xerostomia or dry mouth by the PEDIATRX
      officers and board members each for a period of seven (7) years from the
      Effective Date of the Merger Agreement along with other terms and
      conditions that are standard for such agreements. 

	 
    	
      

	7. PEDIATRX and APRICUS Efforts 	
      PEDIATRX and APRICUS will make reasonable efforts to
      enter, sign and close the Co-Promotion Agreement, Sales Agreement and the
      Merger. 

	 
    	
      

	8. Conduct of PEDIATRX prior to the Merger
    	
      After the date of this Term Sheet, and until this Term
      Sheet either terminates or is replaced by the Merger Agreement, PEDIATRX
      shall continue to operate its business and its underlying assets in the
      ordinary course according to its past commercial practices and shall
    




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CONFIDENTIAL 

 


	  	
      not sell, license or otherwise dispose of any of its
      assets other than in the ordinary course of business according to its past
      commercial practices. 

	 
    	
      

	  	
      PEDIATRX shall not issue any additional securities or pay
      any dividends, bonuses or other distributions, or grant stock or stock
      options or warrants to its stockholders, employees, officers or directors
      or enter into any new employment, consulting, licensing, partnership or
      other agreements, or settlements or enter into any litigation outside the
      ordinary course of its business and according to its past commercial
      practices. 

	 
    	
      

	  	
      PEDIATRX shall maintain the cash on the financial books
      of the company in the ordinary course and shall not dividend any cash to
      any party or declare any stock repurchase that is not in the ordinary
      course of business. 

	 
    	
      

	  	
      Prior to the Closing of the Merger, the Company shall
      terminate the lock-up of any shares of PEDIATRX held by Cameron Durrant
      and David Tousley and permit them to be exchanged for the Common Stock
      Merger Consideration described herein, subject to the Holdback. 

	  	
      

      

	9. Merger Tax & Accounting Treatment
    	
      It is expected that the Merger will constitute a tax-free
      reorganization for U.S. Federal income tax purposes. Final structure of
      the transaction may be modified as a part of tax planning but will not
      change any of the economic terms outlined in this term sheet. 

	 
    	
      

	10. Merger Securities Law Matters/Stock
      Sale Plan 	
      APRICUS and PEDIATRX will agree on a sale plan for the
      orderly distribution of the shares of APRICUS’s common stock to be sold by
      the officers and directors of PEDIATRX. 

	 	 
	11.
      Seller’s Board & Stockholder Approval 	
      PEDIATRX will obtain the approval of its Board to enter
      into a) the Co-Promotion Agreement and Sale Agreement, and b) the Merger
      and c) will be required to obtain the approval of its shareholders for the
      Merger. 

	 
    	
      

	  	
      APRICUS will obtain the approval of its Board to enter
      into the Co- Promotion Agreement and Sale Agreement and the Merger.
      APRICUS is not required to obtain approval from its stockholders for
      Co-Promotion Agreement, Sales Agreement or Merger.





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CONFIDENTIAL 

 
	12. Merger Agreement Representations,
      Warranties, Indemnities & Other Provisions 	
      In the Merger Agreement, each party will make customary
      representations and warranties (which would survive the Closing), and will
      provide customary indemnities relating to the business, financial
      condition, contracts, liabilities and employees as applicable. The Merger
      Agreement will also contain customary covenants, closing conditions,
      warrantees, indemnification and other provisions. 

	     	
       

	13. Due Diligence/Access   	
      The Parties shall use reasonable commercial efforts to
      conduct joint due diligence relating to the Co-Promotion Agreement and
      Sale Agreement and the Merger in a timely manner. 

	
        

	
      The Parties shall afford each other reasonable access to
      personnel, properties, contracts, books and records and all other
      documents and data, in each case, to the extent relating to their assets.      

	     	
       

	14. Consents 	
      The Parties agree to cooperate with each other and
      proceed, as promptly as is reasonably practicable, to use commercially
      reasonable efforts to prepare and file, if necessary, any notifications
      required by any governmental or private entity and to seek to obtain all
      necessary consents and approvals from lenders, landlords, government
      entities and any other thirty party whose consent to the Co-Promotion
      Agreement, Sale Agreement and Merger might be required, and to comply with
      all other legal or contractual requirements for, or preconditions to, the
      execution and consummation of the Co- Promotion Agreement, Sale Agreement
      and the Merger. 

	     	
       

	15. Confidentiality 	
      The Parties entered into a Confidentiality Agreement,
      dated November 18, 2011 (“CDA”). The existence, status and terms of their
      negotiations and agreements regarding the Co-Promotion Agreement, Sale
      Agreement and the Merger shall also be subject to the CDA. Upon the
      signing of this Term Sheet, the Parties would make a joint public
      announcement concerning the Co-Promotion Agreement, Sale Agreement and
      Merger. 

	     	
       

	16. Signings & Closings   	
      The date for the signing and closing of the Co-Promotion
      Agreement and Sale Agreement are described in Paragraphs 2 and 3 herein.      

	
         

	
      The Parties shall use their reasonable commercial
      efforts, subject to the terms and conditions contained herein and subject
      to uncertainties of review time, if any by the SEC, if any, to execute the
  Merger Agreement and to close the Merger at a mutually agreed date.  

	     	
       

	17. Governing Law/Venue 	
      This Term Sheet shall be governed by the law of the State
      of California, except for its conflicts of law provisions. All disputes
      hereunder shall be adjudicated by the applicable state and federal courts
      in San Diego County, California. 

   





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CONFIDENTIAL 

 


	18. Binding/Non- binding Provisions       	
      Paragraphs 2, 3, 5(a), 7, 8, 11(a), 11(b), 13, 14, 15,
    17, 18, 19, 20, 21 and 22 shall be binding obligations of the Parties.    

	
       

	
      Except for the above paragraphs described in this
      Paragraph 18, the remaining paragraphs of this Term Sheet relating to the
      Merger should be viewed as an indication of good faith interest only
      regarding a transaction on the general terms and conditions outlined
      herein and does not create a binding obligation, fiduciary relationship or
      joint venture between the parties. 

	
       

	19. Termination 	
      This Term Sheet and the obligations hereunder relating
      hereto may be terminated: 

	     	
       

	  	
            (a) by mutual written
      consent of APRICUS and PEDIATRX; or 

	     	
       

	  	
            (b) by APRICUS by written
      notice to PEDIATRX if: 

	     	
       

	  	
                 
      (i) the Co-Promotion Agreement or Sale Agreement has not been signed and
      closed by
      February 
                
    13, 2012 or by a mutually agreed upon date by APRICUS and PEDIATRX; or    

	     	
       

	  	
                 
      (ii) APRICUS’s finding of a material adverse matter during its due
      diligence review; or 

	     	
       

	  	
                 
      (iii) APRICUS’s Board does not approve the Merger; or 

	     	
       

	  	
                 
      (iv) the Merger Agreement has not been signed by a mutually agreed upon
      date by APRICUS and PEDIATRX. 

	     	
       

	        	
            (c) by PEDIATRX by written
      notice to APRICUS if: 

	     	
       

	  	
                 
      (i) the Co-Promotion Agreement or Sale Agreement has not been signed and
      closed by
      February 
                
    13, 2012 or by a mutually agreed upon date by APRICUS and PEDIATRX; or    

	     	
       

	  	
                 
      (ii) the Merger Agreement has not been signed by a mutually agreed upon
      date by APRICUS and PEDIATRX; or 

	     	
       

	  	
                 
      (iii) the PEDIATRX Shareholders do not approve the Merger. 

	     	
       

	20. Consideration if No Merger Closing
      Occurs 	
      If the Merger does not occur then PEDIATRX shall keep the
      $325,000 to be paid to it pursuant to Paragraph 5(a) herein and it shall
      also receive a payment of $1,000,000 of APRICUS’s unregistered common
      stock, other than as a result of (a) 





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CONFIDENTIAL 

 


	  	
      PEDIATRX filing for bankruptcy or (b) if the GRANISOL asset has otherwise
      been
      materially impaired, in which case the payment of $1,000,000 of APRICUS’s unregistered common
      stock shall not be paid.

	 	  
	  	The unregistered common stock will be
      issued pursuant to an exemption from the Securities Act of 1933, as
      amended, and will include resale S-3 registration rights if qualified or
      other registration rights if not. APRICUS and PEDIATRX will agree on a
      sale plan for the orderly distribution of the shares of APRICUS’s common
      stock to be sold by such persons or entities. 
	 	  
	  	The APRICUS shares will be set based
      on the average of the closing prices of APRICUS’s common stock on Nasdaq
      Capital Market for the ten trading days from the fifteenth trading day
      before the agreed Closing Date to the sixth trading day before the
      termination date of the Merger. 
	 	  
	  	If the Merger does not occur, then
      APRICUS will retain all rights it has under the Co-Promotion Agreement
      (including the assigned Bi- Coastal Co-Promotion Agreement) and the Sale
      Agreement. 
	 	  
	21. Expenses 	Each party will be responsible for
      their own business, legal and regulatory counsels and other expenses in
      consummating the Co- Promotion Agreement, Sale Agreement and the Merger
      and none of either Party’s expenses in consummating these transactions
      will become obligations of the other Party. 
	 	  
	22. No- Shop 	Seller agrees not to solicit any
      other offers from third parties and will discontinue any other business
      discussions regarding the Co- Promotion Agreement and the Sale Agreement
      until March 1, 2012 or sale of the Company or license of its assets until
      May 15, 2012 if the Merger closing has not yet occurred by that time (the
      “No-Shop Period”). 
	 	  
	  	In the case PEDIATRX receives an
      unsolicited offer during the No- Shop Period, PEDIATRX will send the
      received offer to APRICUS within 2 business days. 
	 	  
	23. Merger Agreement 	The Merger Agreement shall contain
      additional customary terms and conditions for merger agreements as agreed
      by the parties. 
	 	  
	24. Disclosure 	The existence and terms of the Term
      Sheet are confidential and shall not be publicly disclosed, except to the
      extent required under the Securities Exchange Act of 1934.




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CONFIDENTIAL 

 

          Unless signed this Term Sheet will expire on January 26, 2012.
If the terms and conditions described above are acceptable to the parties below,
please so indicate by your signatures below.

APRICUS BIOSCIENCES, INC 

 

By:   ss/ Bassam
Damaj__________________ 
Name: Bassam Damaj, Ph.D. 
Title:
President and Chief Executive Officer 
Date: January 26, 2012 

 

Agreed and Accepted: 

PEDIATRX INC 

 

By:   ss/ Cameron
Durrant                                   

Name: Cameron Durrant, MD, MBA 
Title: President and Chief
Executive Officer 
Date: January 26, 2012

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