Document:

Exhibit

Exhibit 10.3

TRANSITION AGREEMENT
This Transition Agreement (“Agreement”) is made and entered into as of August 2, 2019, by and between Mr. Cooper Group Inc., a Delaware corporation (the “Company”), with its principal place of business located at 8950 Cypress Waters Blvd., Coppell, TX 75019 and Anthony W. Villani, an individual (hereinafter called the “Executive”).
W I T N E S S E T H:
WHEREAS, Executive is currently employed as the Company’s Executive Vice President and General Counsel;
WHEREAS, Executive previously notified the Company of his intention to retire on October 4, 2019 (“Retirement Date”);
WHEREAS, the Company acknowledges that as of October 4, 2019 Executive shall be “Retirement” eligible and shall have met and satisfied the “Retirement Criteria” as those terms are defined under the Company’s incentive compensation plan and agreements with Executive;
WHEREAS, the Company wishes to induce Executive to remain in his present employment through the Retirement Date  (“the Transition Period”); and
WHEREAS, the Company believes it to be in its best interest to offer Executive a severance arrangement on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, for and in consideration of the foregoing, the mutual covenants and agreements contained herein, and other good and valuable consideration, the parties hereto agree as follows:
Section 1.  Definitions.
a.    “Accrued Benefits” means (i) earned but unpaid salary through the Retirement Date, (ii) any reimbursable expenses through the last day of employment, (iii) any vested benefits in accordance with the terms of the Company’s employee benefits plans or programs or as otherwise provided herein, and (iv) any benefit continuation and/or conversion rights in accordance with the Company’s employee benefits plans or programs.
b.    “Cause” means (i) any act by Executive constituting (x) a felony charge under the laws of the United States or any state thereof or (y) misdemeanor charge involving moral turpitude, (ii) any act of misappropriation or fraud committed by Executive in connection with the Company’s or its subsidiaries’ business, (iii) any material breach by Executive of any material agreement to which Company and Executive are parties, after written notice thereof from the Company’s Board of Directors is given in writing and such breach is not cured to the satisfaction of the Company’s Board of Directors within a reasonable period of time (not greater than 30 days) under the circumstances, (iv) any breach of any reasonable and lawful rule or directive of the Company or its Board of Directors, (v) the gross or willful neglect of duties or gross or willful malfeasance or misconduct by Executive, or (vi) the habitual use of drugs or habitual, excessive use of alcohol to 

the extent that any of such uses in the good faith determination of the Company’s Board of Directors materially interferes with the performance of Executive’s duties.
c.    "Developing Business" means any new business concepts and services the Company has developed and is in the process of developing during Executive’s employment with the Company.
d.    “Good Reason” means the occurrence, without the express written consent of Executive, of any of the following circumstances, unless, with respect to clauses (A), (B), (C) and (D) hereof, such circumstances are corrected by the Company in all material respects within thirty (30) days following written notification by Executive to the Company (which written notice must be delivered within thirty (30) days after the occurrence of such circumstances) that Executive intends to terminate Executive’s employment for one of the reasons set forth below: (A) a material reduction in the Executive’s base salary; (B) any relocation of Executive’s principal office by more than twenty-five (25) miles from 8950 Cypress Waters Blvd., Coppell, TX 75019, (C) a material diminution in the authorities, duties or responsibilities of Executive, or (D) Company’s breach of any term of this Agreement or of that certain Retention Bonus Agreement executed between Company and Executive.
e.    “Release” means a release of employment claims in the form attached hereto as Exhibit A.
Section 2.    Employment through the conclusion of the Transition Period.  If Executive remains employed by the Company and does not voluntarily resign his employment before the end of the Transition Period, he shall be entitled to receive (a) the Accrued Benefits, (b) twelve (12) months of Executive’s current base salary payable on the Company’s normal payroll schedule (but not less frequently than monthly) for twelve (12) consecutive months,  (c) at the conclusion of the twelve (12) months a final and additional lump sum payment of $760,000 and (d) the Company waives the 6 month notice of retirement provision and any unvested restricted stock units granted to Executive after January 1, 2018 pursuant to the applicable Nationstar Mortgage Holdings Inc. Restricted Stock Unit Agreement (“RSU Agreement”) will continue to vest per the vesting schedule attached hereto as Exhibit B.  All payments shall be subject to applicable federal, state, local and other tax withholding.  Notwithstanding the foregoing, in order to receive the severance payments and benefits under subsections (b), (c) and (d), Executive must validly execute and not revoke a signed Release to the Company on or within twenty-one (21) days after Executive’s termination of employment and any payments otherwise due prior to the delivery of the Release shall be paid in a lump sum following delivery of the signed Release, subject to the provisions of Section 5.
Section 3.    Termination before the conclusion of the Transition Period.  If the Company terminates Executive for Cause, or if Executive resigns without Good Reason before the end of the Transition Period, Executive shall be entitled to receive only the Accrued Benefits. If Company terminates Executive without Cause or by Executive For Good Reason before the end of the Transition Period, Executive shall be entitled to the severance payments specified in Section 2.

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Section 4.    Restrictive Covenants. 
a.    Non-Competition.    Executive agrees that during the term of this Agreement and for the one (1) year period immediately following termination of such employment for any reason or no reason, Executive shall not, anywhere in the United States, directly or indirectly, either as a principal, agent, employee, employer, consultant, partner, shareholder of a closely held corporation or shareholder in excess of five percent (5%) of a publicly traded corporation, corporate officer or director, or in any other individual or representative capacity, engage or otherwise participate in any manner or fashion in any business that is in competition in any manner whatsoever with (i) the mortgage lending business of the Company or its subsidiaries (including, but not limited to, the business of originating, servicing or owning residential mortgages and related assets or (ii) any other business (A) in which the Company or its subsidiaries is engaged at the time of Executive’s termination of employment, or which is part of the Company’s Developing Business and (B) in which Executive learns Confidential Information  or meets and develops relationships with potential and existing suppliers, financing sources, clients, customers and employees or in which Executive receives specialized training or knowledge.
b.     Employee Nonsolicitation.  Executive agrees that during the period of Executive’s employment with the Company or its affiliates and for the twelve (12) month period immediately following termination of such employment (the “Restricted Period”), Executive shall not, directly or indirectly, solicit or induce any officer, director, employee, agent or consultant of the Company or any of its successors, assigns, subsidiaries or affiliates, or otherwise encourage any such person or entity to leave or sever his, her or its employment or other relationship with the Company or its successors, assigns, subsidiaries or affiliates.
c.    Confidentiality.  Executive acknowledges that the continued success of the Company depends upon the use and protection of a large body of confidential, proprietary, and/or trade secret information that (i) is related to the Company’s or its subsidiaries’ current or potential business and (ii) is not generally known or publicly available. All of such confidential, proprietary and trade secret information now existing or developed during Executive’s employment with the Company will be referred to as “Confidential Information.” Confidential Information includes, without specific limitation, the confidential, proprietary and trade secret information, that is obtained by Executive during the course of his or her employment, and that relates to the business and affairs of the Company and its subsidiaries, or of customers of the Company, or to any of their development, transition and transformation plans, methodologies and methods of doing business, strategic, marketing and expansion plans, including plans regarding planned and potential sales, financial and business plans, confidential employee lists and contact information, compensation and incentive structures and strategies, or to their confidential sales information, including volumes, pricing, and margins, new and existing programs and services, prices and terms, customer service, integration processes, requirements and costs of providing service, products or support. Executive agrees that he or she shall not disclose, at any time (including after his employment ends), to any unauthorized person or use for his own account any of such Confidential Information without the prior written consent of the Company’s Board of Directors, unless and to the extent that any Confidential 

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Information is required (or permitted as provided below) to be disclosed pursuant to any applicable law or court order. Confidential Information will not be deemed to include information (i) that is or becomes  available to the public other than as a result of a breach of this Agreement by Executive or any other person, (ii) that becomes available to Executive following termination of employment from a third party that has no confidentiality obligation to the Company related to such information, or (iii) that is independently developed by Executive following termination of employment from other sources of available information or Executive’s general knowledge, without reference to or use of the Confidential Information. Pursuant to the Defend Trade Secrets Act of 2016, the parties hereto acknowledge and agree that Executive shall not have criminal or civil liability under any Federal or State trade secret law for the disclosure of a trade secret that (i) is made (x) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney and (y) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In addition, if Executive files a lawsuit for retaliation by the Company or any of its subsidiaries for reporting a suspected violation of law, Executive may disclose the trade secret to his attorney and may use the trade secret information in the court proceeding, if Executive (A) files any document containing the trade secret under seal and (B) does not disclose the trade secret, except pursuant to court order. Executive has the right under federal law to certain protections for cooperating with or reporting legal violations to the Securities Exchange Commission (“SEC”) and/or its Office of the Whistleblower, as well as certain other governmental entities and self-regulatory organizations.  As such, nothing in this Agreement or otherwise is intended to prohibit Executive from disclosing this Agreement to, or from cooperating with or reporting violations to, the SEC or any other such governmental entity or self-regulatory organization, and Executive may do so without notifying the Company.  Neither the Company nor any of its subsidiaries may retaliate against Executive for any of these activities, and nothing in this Agreement or otherwise requires Executive to waive any monetary award or other payment that Executive might become entitled to from the SEC or any other governmental entity.  Moreover, nothing in this Agreement or otherwise prohibits Executive from notifying the Company that Executive is going to make a report or disclosure to law enforcement.
Section 5.    Code Section 409A. This Agreement is intended to comply with Section 409A of the Internal Revenue Code (the “Code”) or an exemption thereunder, and this Agreement shall be construed and administered in accordance with such intention. Severance payments provided under the Agreement may only be made upon a “separation from service” under Code Section 409A and are intended to be excluded from Code Section 409A either as “short term deferrals” within the meaning of Treasury Regulations Section 1.409A-1(b)(4) or payments under an involuntary separation pay plan under Treasury Regulations Section 1.409A-1(b)(9) to the maximum extent possible.  For purposes of Code Section 409A, the right to installment payments of severance shall be treated as the right to a series of separate payments. If Executive is a “specified employee” (as defined in Code Section 409A) at the time of his termination of employment, then any payment that is subject to Code Section 409A will be delayed for six months and will be paid in a lump sum, without interest, during the seventh month after termination of employment; provided that, if 

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Executive dies during such six-month period, the delayed payment shall be immediately payable to Executive’s spouse, if any, otherwise to Executive’s estate.  In no event shall the timing of Executive’s execution of a release, directly or indirectly, result in Executive designating the calendar year of any severance payment, and if a payment that is subject to execution of the release could be made in more than one taxable year, payment shall be made in the later taxable year.  
Section 6.    Miscellaneous.  
a.    The failure of any party to this Agreement at any time or times to require performance of any provision of this Agreement shall in no manner affect the right to enforce the same.  No waiver by any party to this Agreement of any provision (or of a breach of any provision) of this Agreement, whether by conduct or otherwise, in any one or more instances shall be deemed or construed either as a further or continuing waiver of any such provision or breach or as a waiver of any other provision (or of a breach of any other provision) of this Agreement.
b.    This Agreement shall inure to the benefit of and be enforceable by Exectuive or his legal representatives.  If Executive shall die prior to receipt of all amounts due under this Agreement, such amounts shall be payable to Executive’s spouse, if any, otherwise to Executive’s estate.
c.    Wherever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid.  However, if any one or more of the provisions of this Agreement shall be invalid, illegal or unenforceable in any respect for any reason, the validity, legality or enforceability of any such provisions in every other respect and of the remaining provisions of this Agreement shall not be impaired.
d.    This Agreement shall be governed by and interpreted in accordance with the laws of the State of Texas (without giving effect to any applicable conflict of law provisions).
e.    This Agreement may be executed in counterparts.  Signatures delivered by fax or e-mail shall be as effective, as if they were originals.

[Signature page follows]

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and Executive has executed this Agreement, as of the date and year first written above.
Executive
/s/ Anthony W. Villani     
Anthony W. Villani
Mr. Cooper Group Inc.

/s/ Kelly Ann Doherty         
By:  Kelly Ann Doherty 
Its:  Executive Vice President

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Exhibit A to Transition Agreement

WAIVER AND RELEASE OF ALL CLAIMS
This Waiver and Release ("Agreement") is made and entered into by and between NATIONSTAR MORTGAGE LLC (including its subsidiaries and affiliates, collectively "NSM" or “Company”) and Anthony W. Villani ("Employee") (each, a “Party” and collectively, the “Parties”).
RECITALS
WHEREAS, in conjunction with the Transition Agreement entered into by the Company and Employee, Employee is required to sign a waiver and release of all claims; and
WHEREAS, by entering into this Agreement, the Parties intend to resolve any and all of Employee’s disputes, claims, complaints, grievances, charges, actions, petitions, liabilities, and demands that Employee may have against NSM, including without limitation, attorneys’ fees, disbursements, monetary fines, damages, equitable relief, and/or any other benefits or other remuneration from NSM.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the sufficiency of which is hereby acknowledged, the parties agree as follows:
AGREEMENT
1.    Payments To Employee:    In consideration of Employee’s execution and compliance with this Agreement, NSM agrees to provide Employee with the payments and benefits as set forth in that certain Transition Agreement between NSM and Employee dated August 2, 2019.  Employee understands and acknowledges that the consideration given pursuant to this Agreement in exchange for the execution of and compliance with this Agreement is given in addition to anything of value to which Employee is, as a matter of law, entitled.  All payments will be less the required Federal and State payroll tax withholding and other lawful and authorized deductions. 
2.    Release of Claims.    In exchange for the payment to Employee of the consideration detailed in this Agreement, Employee, for and on behalf of Employee and Employee’s heirs, administrators, executors, and assigns, does hereby fully, forever, irrevocably and unconditionally release and discharge NSM, including its past and present officers, directors, partners, members, parents, subsidiaries, divisions, affiliates, agents, employees, shareholders, representatives, attorneys, successors, assigns, and all persons acting by, through, under, or in concert with them (hereinafter collectively referred to as "Releasees"), for anything that has occurred up to the date of execution of this Agreement, including but not limited to, any and all claims resulting from Employee’s employment with NSM and any and all claims relating to the administration or terms of any employment or benefit plan or contract.  This includes all claims, demands, rights, liabilities, and causes of action of every nature and description whatsoever, whether known or unknown, whether in tort, contract, statute, rule, ordinance, order, regulation, or otherwise, including, without limitation, any claims arising under or based upon Title VII of the Civil Rights Act, as amended; 

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the Civil Rights Act of 1991, as amended; Section 1981 of U.S.C. Title 42; the Age Discrimination in Employment Act; the Americans with Disabilities Act, as amended; the Family and Medical Leave Act, as amended; the Fair Credit Reporting Act; the Fair Labor Standards Act, as amended; the Equal Pay Act, as amended; the Employee Retirement Income Security Act, as amended (with respect to unvested benefits); the Consolidated Omnibus Budget Reconciliation Act; the Sarbanes Oxley Act of 2002, as amended; the Worker Adjustment and Retraining Notification Act, as amended; the Uniform Service Employment and Reemployment Rights Act, as amended; the Texas Labor Code (specifically including the Texas Payday Act, the Texas Anti-Retaliation Act, Chapter 21 of the Texas Labor Code and the Texas Whistleblower Act) and amendments to those laws; all State and Local statutes that may be legally waived that employees could bring employment claims under, including any State or Local anti-discrimination statute, wage and hour statute, leave statute, equal pay statute and whistleblower statute; any federal or state constitutions; any and all claims pursuant to federal, state or local statute or ordinance; any and all claims pursuant to contract, quasi contract, common law or tort; and claims that are known or unknown, suspected or unsuspected, concealed or hidden, or whether developed or undeveloped, up through the date of Employee’s execution of this Agreement.
Notwithstanding the foregoing, the parties expressly acknowledge and agree that Employee does not release any claim which cannot be released by private agreement, such as unemployment compensation claims, workers’ compensation claims, claims of entitlement to vested benefits under any 401(k) plan or other ERISA-covered benefit plan provided by NSM, claims after the Effective Date of this Agreement, or any rights or claims arising the Transition Agreement.  Nothing in this Agreement shall be construed to prohibit Employee from filing a charge with or participating in any investigation or proceeding conducted by the Equal Employment Opportunity Commission, National Labor Relations Board, Occupational Health and Safety Administration, Securities and Exchange Commission, the Department of Justice or a comparable state or local enforcement agency.  Notwithstanding the preceding sentence, Employee agrees to waive any right to recover monetary damages in connection with any charges filed by Employee or by anyone else on Employee’s behalf. To the fullest extent permitted by law, Employee further waives Employee’s right to participate in any collective or class action under the Fair Labor Standards Act or similar or state or local law, and Employee agrees to opt-out of any such collective or class action against NSM, to which Employee may be or become a party or class member.  The preceding waivers do not include and employee has not waived Employee’s right to file an application for or to accept a whistleblower award from the SEC pursuant to Section 21F of the Exchange Act.
3.    No Admission.    Execution of this Agreement and compliance with this Agreement shall not be considered as an admission by NSM of any liability whatsoever, or as an admission by NSM of: any violation of the rights of Employee or of any other person; a violation of any order, law, statute or duty; a breach of any contract; or an act of discrimination whatsoever against Employee or any other person.  NSM specifically disclaims any liability to or discrimination against Employee or any other person; or any alleged violation of any rights of Employee or any person, any order, law, statute, duty; or a breach of any contract on the part of NSM and/or Releasees. 
4.     Post-Termination Insider Trading Obligations     Employee understands and acknowledges that pursuant to the NSM insider trading policy, if Employee is in possession of 

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Material Nonpublic Information, Employee may not trade in Company securities until that information has become public or is no longer material.
5.    Time to Consider and Right to Revoke.    Employee acknowledges that Employee has been informed, pursuant to the federal Older Workers Benefit Protection Act of 1990, that:

		
	a)
	Employee has the right to consult with an attorney before signing this Agreement;

		
	b)
	Employee does not waive rights or claims under the federal Age Discrimination in Employment Act that may arise after the date this waiver is executed;

		
	c)
	Employee has been given twenty-one (21) days within which to consider this agreement. Employee knowingly and voluntarily waives the remainder of the 21 day consideration period, if any, following the date Employee signed this Agreement below.  Employee agrees that Employee has not been asked by NSM to shorten Employee’s time-period for consideration of whether to sign this Agreement.  Employee agrees that NSM has not threatened to withdraw or alter the benefits due Employee prior to the expiration of the 21 day period nor has NSM provided different terms to Employee because Employee has decided to sign this Agreement prior to the expiration of the 21 day consideration period.  Employee understands that having waived some portion of the 21 day consideration period, NSM may expedite the processing of benefits provided to Employee in exchange for signing this Agreement; 

		
	d)
	Employee may, for a period of seven (7) days following the execution of this Agreement, revoke this Agreement and that said Agreement will not be considered effective until the revocation period has passed; and

		
	e)
	This Agreement is written in a manner in which Employee fully understands and Employee enters into this Agreement knowingly and voluntarily.

Revocation must be made by delivering a written notice of revocation to: Eric Austin, SVP Human Resources, Nationstar Mortgage LLC, 4000 Horizon Way, Irving, Texas 75063.  For this revocation to be effective, written notice must be postmarked or it must be received electronically or by fax to (469) 322-1642 no later than 5:00 p.m. Central Standard Time on the seventh day after Employee signs this Agreement. 

Employee understands that nothing in this Agreement is intended to interfere with or deter Employee’s right to challenge the waiver of an ADEA claim or state law age discrimination claim or the filing of an ADEA charge or ADEA complaint or state law age discrimination complaint or charge with the Equal Employment Opportunity Commission or any state discrimination agency or commission or to participate in any investigation or proceeding conducted by those agencies.  Further, Employee understands that nothing in this Agreement would require Employee to tender back the money received under this Agreement if Employee seeks to challenge the validity of the 

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ADEA or state law age discrimination waiver, nor does Employee agree to ratify any ADEA or state law age discrimination waiver that fails to comply with the Older Workers' Benefit Protection Act by retaining the money received under the Agreement.  Further, nothing in this Agreement is intended to require the payment of damages, attorneys’ fees or costs to NSM should Employee challenge the waiver of an ADEA or state law age discrimination claim or file an ADEA or state law age discrimination suit except as authorized by federal or state law. However, Employee does waive any right to recover monetary damages with respect to any charge, complaint, or lawsuit against NSM filed by Employee or anyone else on Employee’s behalf that concerns the ADEA, state law age discrimination laws, the Older Workers’ Benefit Protection Act or any other law, rule or regulation concerning the rights of older workers.

6.     Cooperation. Employee agrees that certain matters in which Employee has been involved during Employee’s employment may necessitate Employee’s assistance and cooperation with NSM in the future.  Accordingly, Employee agrees to the extent reasonably requested by NSM, to cooperate with NSM in connection with any dispute, claim, investigation, legal or regulatory matter involving NSM that relates to Employee’s period of employment with NSM. Employee will further make himself/herself reasonably available to answer questions from NSM regarding Employee’s former duties and responsibilities and the knowledge Employee obtained in connection therewith.  NSM shall make reasonable efforts to minimize disruption of Employee’s other activities.  NSM shall reimburse Employee for reasonable out-of-pocket expenses incurred in connection with such cooperation. 
    
7.    Employee Benefits.  Employee understands and acknowledges that any vested benefits under any of NSM’s employee benefit plans shall be governed by the terms of the applicable plan documents and award agreements.  
8.    Miscellaneous.    
		
	a)
	Entire Agreement.  This Agreement and the Transition Agreement contain the entire understanding and agreement between the parties with respect to the matters set forth therein; supersede any other agreements between the parties hereto concerning the subject matters thereof, oral or written, and may not be amended, supplemented, changed, or modified in any manner, orally, or otherwise, except by an instrument in writing, executed by all parties hereto. 

		
	b)
	Successors Bound.  This Agreement and the Transition Agreement are binding on the parties hereto, and their respective heirs, representatives, successors and assigns. 

		
	c)
	Governing Law.  NSM and Employee agree that any questions arising under this Agreement, whether of validity, interpretation, performance or otherwise, will be governed by and construed in accordance with the laws of the state of Texas applicable to agreements made and to be performed in Texas without regard to choice of law rules.  

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

Page 4 of 5

		
	e)
	Severability.  Both parties agree and understand that if any provision of this Agreement is declared to be unenforceable by a court of competent jurisdiction, the remaining terms and conditions shall not be affected and shall remain in full force and effect.

		
	f)
	No Waiver.  NSM may elect not to pursue any remedy available to it under this Agreement or by law, provided, that such election shall not operate as a waiver of any such remedy or of any other remedy, nor shall it constitute a waiver of any of Employee’s other obligations under this Agreement.

A copy of this Agreement was hand delivered or electronically delivered to Employee on or about _________________, 2019.

Notwithstanding any other provision in this Agreement, if Employee does not sign and deliver this Agreement to NSM on or before 21 days following Employee’s Termination Date or on or before 21 days of Employee’s receipt of the Agreement, whichever date occurs later, then this Agreement will be null and void and Employee will not be entitled to the Release Consideration described above.

EMPLOYEE UNDERSTANDS AND AGREES THAT EMPLOYEE MAY BE WAIVING SIGNIFICANT LEGAL RIGHTS BY SIGNING THIS RELEASE, AND REPRESENTS THAT EMPLOYEE ENTERED INTO THIS RELEASE VOLUNTARILY, AFTER HAVING THE OPPORTUNITY TO CONSULT WITH AN ATTORNEY OF EMPLOYEE’S OWN CHOOSING, WITH A FULL UNDERSTANDING OF AND IN AGREEMENT WITH ALL OF ITS TERMS.

Date:___________________________    __________________________________________
             Anthony W. Villani

Date:___________________________    __________________________________________
Kelly Ann Doherty
EVP, Nationstar Mortgage LLC

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Exhibit B to Transition Agreement

	
									
	Grant Date
	QTY - Granted
	QTY - Unvested
	Vesting Date 1
	QTY Vesting 1
	Vesting Date 2
	QTY Vesting 2
	Vesting Date 3
	QTY Vesting 3

	03/01/2018
	23,205.000
	15,478.000
	03/01/2020
	7,727.000
	03/01/2021
	7,751.00
	N/A
	N/A

	03/01/2019
	27,263.000
	27,263.000
	03/01/2020
	9,078.000
	03/01/2021
	9,079.000
	03/01/2022
	9,106.00

	12/01/2018
	16,695.000
	16,695.000
	03/01/2020
	5,559.000
	03/01/2021
	5,559.000
	03/01/2022
	5,577.00Blueprint

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

 

Execution Version

AMENDED AND RESTATED LICENSE AND SUPPLY AGREEMENT

 

 

 

BETWEEN

 

 

 

ACERUS
PHARMACEUTICALS CORPORATION

 

 

 

and

 

 

 

AYTU
BIOSCIENCE, INC.

 

 

Dated as of July 29, 2019

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

 

TABLE OF CONTENTS

 

 

	

Article 1 DEFINITIONS

	

	
 2

	

Article 2 GOVERNANCE AND CLOSING

	

	
13

	

2.1

	

Joint Commercialization Committee

	13

	

2.2

	

Decision Making; Authority

	16

	

2.3

	

Opportunity

	16

	

2.4

	

General Principles

	16

	

2.5

	

A&R Closing.

	17

	

Article 3 POST MARKETING TRIALS AND OBLIGATIONS

	

	18

	

3.1

	

Overview of Development

	18

	

3.2

	

Required Clinical Trials

	18

	

Article 4 REGULATORY MATTERS

	

	19

	

4.1

	

Transfer of the Product NDA and Related FDA Regulatory
Submissions

	19

	

4.2

	

Regulatory Responsibilities

	20

	

4.3

	

Safety Matters

	20

	

4.4

	

Regulatory Communications

	20

	

4.5

	

Inspections

	21

	

4.6

	

Product Recalls and Withdrawals

	21

	

Article 5 MANUFACTURE AND SUPPLY OF PRODUCT

	

	22

	

5.1

	

Supply and Purchase of Product

	22

	

Article 6 COMMERCIALIZATION

	

	26

	

6.1

	

Commercialization

	26

	

6.2

	

Transition Period Activities

	26

	

6.3

	

Sales Force Activities.

	27

 

 

 

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

 

 

 

 

	

6.4

	

Sales Training.

	28

	

6.5

	

Detailing

	29

	

6.6

	

Promotional Materials

	30

	

Article 7
PAYMENTS

	

	31

	

7.1

	

Payments

	31

	

7.2

	

Supply Price of Product

	33

	

7.3

	

Payment Method

	34

	

7.4

	

Taxes

	34

	

7.5

	

Interest

	34

	

7.6

	

Currency Exchange

	34

	

7.7

	

Records

	34

	

7.8

	

No Right of Setoff

	36

	

Article 8 LICENSE RIGHTS AND LIMITATIONS, RESTRICTIONS AND
OWNERSHIP

	

	36

	

8.1

	

License to Aytu

	36

	

8.2

	

Grant Back License

	36

	

8.3

	

Pharmacy Promotion

	36

	

8.4

	

Acerus Trademarks

	36

	

8.5

	

Ownership of Materials

	37

	

8.6

	

Negative Covenants

	38

	

8.7

	

Sublicensing; Subcontracting

	38

 

 

 

 

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

 

  

 

	

Article 9 INTELLECTUAL PROPERTY

	

	
39

	

9.1

	

Background Intellectual Property

	39

	

9.2

	

Pulsatile Dosing Patent Family.

	39

	

9.3

	

Patent Prosecution and Maintenance

	40

	

9.4

	

Patent Assignments.

	40

	

9.5

	

Infringement by Third Parties

	40

	

9.6

	

Third Party Claims for Infringement or
Misappropriation

	41

	

Article 10 CONFIDENTIALITY

	

	42

	

10.1

	

Definition of Confidential Information

	42

	

10.2

	

Confidentiality

	42

	

10.3

	

Exclusions

	42

	

10.4

	

Permitted Disclosures

	43

	

10.5

	

Terms of Agreement

	43

	

10.6

	

Mandatory Disclosure

	44

	

Article 11 PUBLIC ANNOUNCEMENTS; USE OF NAMES;
PUBLICATIONS

	

	44

	

11.1

	

Public Announcements

	44

	

11.2

	

Use of Names and Logos

	44

 

 

 

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

 

  

 

	

Article 12 REPRESENTATIONS, WARRANTIES AND
COVENANTS

	

	
45

	

12.1

	

Mutual Representations and Warranties of Acerus and
Aytu

	45

	

12.2

	

Product Warranties of Acerus

	46

	

12.3

	

Additional Representations and Warranties of Acerus

	46

	

12.4

	

Additional Representations and Warranties of Aytu

	47

	

12.5

	

Disclaimer

	48

	

12.6

	

Non-Solicitation

	48

	

12.7

	

Non-Competition

	48

	

12.8

	

Covenants of the Parties.

	49

	

Article 13 INDEMNIFICATION

	

	49

	

13.1

	

Indemnification by Aytu

	49

	

13.2

	

Indemnification by Acerus

	50

	

13.3

	

Indemnification Procedures

	50

	

13.4

	

Survival of Indemnification Obligations

	50

	

13.5

	

Insurance

	50

	

Article 14 TERM AND TERMINATION

	

	51

	

14.1

	

Term

	51

	

14.2

	

Termination

	51

	

14.3

	

Consequences of Termination

	52

	

14.4

	

Remedies

	53

 

 

 

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

 

  

	

Article 15 MISCELLANEOUS

	

	
54

	

15.1

	

Notices

	54

	

15.2

	

Entire Agreement

	54

	

15.3

	

Assignment

	55

	

15.4

	

Force Majeure

	55

	

15.5

	

Headings

	55

	

15.6

	

Independent Contractor

	55

	

15.7

	

Severability

	55

	

15.8

	

No Third-Party Beneficiaries

	55

	

15.9

	

Amendment

	55

	

15.10

	

Governing Law

	56

	

15.11

	

Dispute Resolution

	56

	

15.12

	

Injunctive Relief

	58

	

15.13

	

Nature of Licenses

	58

	

15.14

	

Waiver of Jury Trial

	58

	

15.15

	

Limitation of Liability

	58

	

15.16

	

Survival

	59

	

15.17

	

No Waiver

	59

	

15.18

	

Counterparts

	59

	

15.19

	

Further Assurances

	59

 

 

 

 

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

 

 

 

 

AMENDED AND RESTATED LICENSE AND SUPPLY AGREEMENT

 

This
AMENDED AND RESTATED LICENSE AND SUPPLY AGREEMENT (this
“Agreement”) is
made and effective as of July 29, 2019 (the “A&R Signing Date”) by and
between Acerus Pharmaceuticals Corporation, a corporation
incorporated under the laws of Canada, having its principal office
at 2486 Dunwin Drive, Mississauga, ON L5L 1J9, Canada
(“Acerus”), and
Aytu Bioscience, Inc., a Delaware corporation having its principal
office at 373 Inverness Parkway, Suite 206 Englewood, CO
80112, USA (“Aytu”) (each of Acerus and Aytu
being a “Party,”
and collectively, the “Parties”).

 

WHEREAS, Acerus
Pharmaceuticals SRL (now known as Acerus Biopharma Inc.) and Aytu
are parties to that certain License and Supply Agreement (the
“2016
Agreement”) effective as of April 22, 2016 (the
“2016 Agreement Effective
Date”), pursuant to which Acerus exclusively licensed
to Aytu the right to develop, use, commercialize, distribute and
sell the Product in the Territory;

 

WHEREAS, Acerus
Pharmaceuticals SRL assigned the 2016 Agreement to Acerus on the
2016 Agreement Effective Date; and

 

WHEREAS, Acerus and
Aytu now desire to amend and restate the 2016 Agreement in its
entirety to make such changes as set forth herein, including to
provide that Acerus and Aytu will cooperate to commercialize the
Product in the Territory, with the effect that, as of the A&R
Closing Date (as defined below), the 2016 Agreement shall be
superseded and replaced in its entirety by this
Agreement.

 

NOW
THEREFORE, in consideration of the mutual promises and agreements
set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:

 

 

 

1

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

 

 

 

 

Article 1

 

DEFINITIONS

 

The
following terms, whether used in the singular or the plural, shall
have the meanings designated to them under this Article unless
otherwise specifically indicated.

 

1.1 “2016 Agreement” has the meaning
set forth in the Recitals.

 

1.2 “2016 Agreement Effective Date” has
the meaning set forth in the Recitals.

 

1.3 “Accounting Standards” means the
current accounting standards applicable to Aytu or Acerus, as
applicable, for the relevant time period. As of the A&R Signing
Date, the Accounting Standards are U.S. GAAP for Aytu and
International Financial Reporting Standards for Acerus, but in the
event Aytu or Acerus, as applicable, adopts a different accounting
standard, such as the International Financial Reporting Standards
(in the case of Aytu), then such accounting standard shall become
the Accounting Standards as of the effective date of its adoption,
as applicable.

 

1.4 “Acerus” has the meaning set forth
in the Preamble.

 

1.5 “Acerus COGS” shall mean, with
respect to the Product or placebo dispensers, as applicable,
Acerus’ purchase price from the Product contract manufacturer
plus the allocations of the items added to Acerus COGS included in
Schedule 1.5.

 

1.6 “Acerus Commission Payments” has
the meaning set forth in Section 7.1(a).

 

1.7 “Acerus Confidential Information”
has the meaning set forth in Section 10.1.

 

1.8 “Acerus House Marks” has the
meaning set forth in Section 1.15.

 

1.9 “Acerus Indemnitees” has the
meaning set forth in Section 13.1.

 

1.10 “Acerus
Intellectual Property” means the Acerus Patents and
Acerus Know-How.

 

1.11 “Acerus
Know-How” means any and all Know-How Controlled by
Acerus at the A&R Closing Date that is reasonably necessary to
make, use, sell, offer for sale, import, market, Promote, develop
or Commercialize the Product together with any Developed Technology
in which Acerus has an ownership interest, but, in each case
excluding the Acerus Patents.

 

1.12 “Acerus
Manufacturing Defect” has the meaning set forth in
Section 13.2.

 

1.13 “Acerus
Patent” means any patent or patent application in the
Territory that is Controlled, in full or in part, by Acerus at any
time during the Term and that claims or would otherwise be
infringed by the Product or any formulation or line extension
thereof, or the Manufacture or use of Product or any such Product
or any formulation or line extension thereof, and any provisional,
continuation, divisional, continuation in part application,
substitution, reissue, renewal, reexamination, protection
certificate, extension, registration and confirmation of any such
patent or patent application. The Acerus Patents as of the A&R
Signing Date include those listed in
Schedule 1.13.

 

 

 

2

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

 

 

 

 

1.14 “Acerus
Sales Channel” means urologists and endocrinologists,
including in each case the paraprofessional staff of urologists and
endocrinologists, including their respective nurse practitioners
and physician assistants, in the Territory.

 

1.15 “Acerus
Trademarks” means the trademarks that are owned or
Controlled by Acerus as of or following the A&R Signing Date,
including the Acerus name and logo (the “Acerus House Marks”), as set forth
on Schedule 1.15.

 

1.16 “Active
Ingredient” means testosterone.

 

1.17 “Active
Ingredient Specifications” means the Specifications
for the Active Ingredient to be used in Product, attached hereto as
Schedule 1.17, as such Specifications may be amended from time
to time by the JCC.

 

1.18 “Affiliate”
means any company or entity controlled by, controlling, or under
common control with a Party. For purposes of the definition of
“Affiliate,” “control” and, with
corresponding meanings, the terms “controlled by,”
“controlling,” and “under common control
with” means (a) the ownership, directly or indirectly,
of more than fifty percent (50%) of the voting securities,
participating profit interest, or other ownership interests of a
legal entity, or (b) the possession, directly or indirectly,
of the power to direct the management or policies of a legal
entity, whether through the ownership of voting securities or by
contract relating to voting rights or corporate
governance.

 

1.19 “Agreement”
has the meaning set forth in the Preamble.

 

1.20 “Ambulatory
Blood Pressure Study” means the post-marketing
obligations applicable to the Product pursuant to
Sections 505(o)(3) and 505(o)(4) of the FD&C Act, as more
particularly described in the letter from the FDA to Aytu (in its
capacity as holder of the NDA for the Product on the applicable
date) dated March 22, 2018 (and all such additional correspondence
relating to such subject matter since such time, as applicable), a
copy of which has been provided to Acerus prior to the A&R
Signing Date.

 

1.21 “ANDA”
means an Abbreviated New Drug Application as defined in the
FD&C Act and applicable regulations promulgated thereunder by
the FDA.

 

1.22 “Annual
Product Net Revenue” means Net Revenue of the Product
in any fiscal year beginning on July 1 and ending on
June 30.

 

1.23 “Applicable
Laws” means the laws,
statutes, rules or regulations applicable to a Party’s
activities to be performed under this Agreement including the
federal FD&C Act, the federal Anti-Kickback Statute (42 U.S.C.
§ 1320a-7b(b)), the federal Civil Monetary Penalties Law (42
U.S.C. § 1320a-7a), the civil False Claims Act (31 U.S.C.
§§ 3729 et seq.), the criminal False Claims Law (42
U.S.C. § 1320a-7b(a)), the criminal Health Care Fraud laws (18
U.S.C. §§ 286, 287, 1347, 1349), the PDMA, the Patient
Protection and Affordable Care Act of 2010 (42 U.S.C. § 18001
et seq.), the Federal Sunshine Law (42 U.S.C. § 1320a-7h), as
amended, the Generic Drug Enforcement Act of 1992 (21 U.S.C.
§335a et seq.), the Health Insurance Portability and
Accountability Act of 1996 (42 U.S.C. §§1320d et seq.) as
amended by the Health Information Technology for Economic and
Clinical Health Act (42 U.S.C. §§ 17921 et seq.), the
exclusion laws (42 U.S.C. § 1320a-7), Medicare (Title XVIII of
the Social Security Act), Medicaid (Title XIX of the Social
Security Act), state and federal licensure laws, the regulations
promulgated pursuant to such laws, the U.S. Foreign Corrupt
Practices Act (15 U.S.C. §78dd-1, et seq.), as amended and
other laws related to fraud, waste and abuse, anti-corruption and
bribery, racketeering, money laundering or terrorism, and any other
state or federal law similar to the foregoing.

 

 

 

3

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

 

 

 

 

1.24 “Applicable
Senior Officers” means the Chief Executive Officer,
Chief Operating Officer and/or the Chief Financial Officer of Aytu
or his or her designee, and the Chief Executive Officer and/or
Chief Financial Officer of Acerus or his or her
designee.

 

1.25 “Arbitration”
has the meaning set forth in Section 15.11(c).

 

1.26 “Arbitration
Request” has the meaning set forth in
Section 15.11(d).

 

1.27 “Arbitrators”
has the meaning set forth in Section 15.11(e)(i).

 

1.28 “A&R
Closing” has the meaning set forth in Section
2.5(a).

 

1.29 “A&R
Closing Date” has the meaning set forth in Section
2.5(a).

 

1.30 “A&R
Signing Date” has the meaning set forth in the
Preamble.

 

1.31 “Audited
Party” has the meaning set forth in
Section 7.7(b).

 

1.32 [Reserved].

 

1.33 “Average
Detail Level” means the total number of Details by a
Party’s Sales Representatives with Target Healthcare
Providers in the Party’s respective Sales Channel during the
relevant time period, divided by the headcount of the Party’s
Sales Representatives conducting such Details during the same time
period (prorated for partial time periods of a Sales
Representative’s engagement).

 

1.34 [Reserved].

 

1.35 “Aytu”
has the meaning set forth in the Preamble.

 

1.36 “Aytu
Confidential Information” has the meaning set forth in
Section 10.1.

 

1.37 “Aytu
House Marks” has the meaning set forth in Section
6.6(b).

 

1.38 “Aytu
Indemnitees” has the meaning set forth in
Section 13.2.

 

1.39 “Aytu
Sales Channel” means all fields outside the Acerus
Sales Channel, in the Territory.

 

1.40 “Background
Intellectual Property” has the meaning set forth in
Section 9.1.

 

1.41 “Bankruptcy
Laws” means Title 11 of the United States Code,
11 U.S.C. §§ 101 1330, as it may be amended from
time to time, any successor statute or any applicable state or
foreign laws relating to bankruptcy, dissolution, liquidation,
winding up or reorganization.

 

 

 

4

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

 

 

 

 

1.42  “Base
Requirement” means a number of Sales Representatives
working on a Full Time Basis (i.e., at least 37.5 hours per week
during his/her engagement by Aytu) to conduct primary Detailing of
the Product in the Aytu Sales Channel; provided that in no event
shall the minimum number of Sales Representatives be fewer than
thirty (30) when the Base Requirement is in effect other than in
accordance with Section 6.3(a)(iii).

 

1.43 “Batch”
means batches of Product for commercial resale or supply or
stability testing purposes in the sizes set forth in
Schedule 1.43 hereto.

 

1.44 “Business
Day(s)” means any day except (a) Saturday,
(b) Sunday (c) a day that is a federal legal holiday in
the U.S. or (d) a day that is a legal holiday in
Canada.

 

1.45 “Cardiovascular
PMR” means the post-marketing obligations applicable
to the Product pursuant to Sections 505(o)(3) and 505(o)(4) of
the FD&C Act, as more particularly described in the letter from
the FDA to Endo (in its capacity as holder of the NDA for the
Product on the applicable date) dated September 2, 2015 (and
all such additional correspondence relating to such subject matter
since such time, as applicable), a copy of which has been provided
to Aytu prior to the 2016 Agreement Effective Date.

 

1.46 “cGMP”
has the meaning set forth in Section 1.120.

 

1.47 “Claims”
has the meaning set forth in Section 13.1.

 

1.48 “Clinical
Trial” means any clinical testing of Product in human
subjects.

 

1.49 “Commercial
Pricing Strategy” has the meaning set forth in
Section 2.1(c)(x).

 

1.50 “Commercialization
or Commercialize” means, with respect to the Product,
activities directed to the preparation for sale of, offering for
sale of, or sale of the Product in the Territory, including
activities related to Commercial Pricing Strategy, market access,
marketing, advertising or Promoting the Product.

 

1.51 “Commercialization
Costs” has the meaning set forth in Section
6.1.

 

1.52 “Commercialization
Plan” means the Parties’ commercialization plan
for the Product as initially drafted by Acerus and submitted to the
JCC for development, revision and approval; provided that Aytu
shall draft the portion of the Commercialization Plan concerning
the Aytu Sales Channel, which will also be subject to the
JCC’s approval.

 

1.53 “Commercially
Reasonable Efforts” means [**].

 

1.54 “Competing
Product” means [**].

 

1.55 “Confidential
Information” has the meaning set forth in
Section 10.1.

 

 

 

5

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

 

 

 

 

1.56 “Controlled”
means, with respect to any item of Know-How or any intellectual
property right, that a Party owns or has a license to such item or
right and has the ability to grant to the other Party a license or
sublicense under such item or right as provided for in this
Agreement without violating the terms of any agreement or other
arrangement with any Third Party in existence, as
applicable.

 

1.57 “Damages”
has the meaning set forth in Section 13.1.

 

1.58 “Debarred/Excluded”
has the meaning set forth in Section 12.1(g).

 

1.59 “Defending
Party” has the meaning set forth in
Section 13.3.

 

1.60 “Delivery
Date” means the date for the delivery of Product to
the delivery destination as stated in the applicable Purchase Order
for such shipment, which may not be less than seven (7) months
following submission of the Purchase Order to Acerus, subject to
the terms and conditions of this Agreement.

 

1.61 “Detail”
means a face-to-face contact by a Sales Representative of a Party
with a Target Healthcare Provider and during which the indicated
uses, safety, effectiveness, contraindications, side effects,
warnings and other relevant characteristics of the Product are
described by the Sales Representative in a fair and balanced manner
consistent with the FD&C Act and all Applicable Laws. When used
as a verb, “Detail” shall mean to engage in a
Detail.

 

1.62 “Developed
Technology” means Know-How conceived or reduced to
practice or originally authored by or on behalf of Acerus and any
intellectual property rights appurtenant thereto (including any
patents and patent applications claiming such
Know-How).

 

1.63 “Disclosing
Party” has the meaning set forth in
Section 10.1.

 

1.64 [Reserved].

 

1.65 “Existing
CDA” has the meaning set forth in
Section 15.2.

 

1.66 “FD&C
Act” means the U.S. Federal Food, Drug, and Cosmetics
Act (21 U.S.C. § 301 et seq.), as
amended.

 

1.67 “FDA”
means the U.S. Food and Drug Administration.

 

1.68 “Field”
means the treatment of hypogonadism in men.

 

1.69 “Finished
Product” means Product that is Manufactured, packaged
and released in a manner for sale or use, including trade or sample
use, by an end user of such Product, in each case in accordance
with Applicable Law and the Product Specifications.

 

1.70 “Forecasting
Subcommittee” has the meaning set forth in Section
2.1(d)(i).

 

 

 

6

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

 

 

 

 

1.71  “Full
Time Basis” means, in the case of a Sales
Representative employed or otherwise engaged by either Party to
Detail the Product, the provision of not less than 37.5 hours
of service to such Party per week in connection with the Detailing
of the Product and such Party’s other products.

 

1.72 “GAAP”
means the U.S. generally accepted accounting principles,
consistently applied.

 

1.73 [Reserved].

 

1.74 “Healthcare
Providers” means physicians and other paraprofessional
staff authorized to provide healthcare services, such as nurse
practitioners, physician assistants, or another staff member who,
under Applicable Law, has the authority to write a
prescription.

 

1.75 [Reserved].

 

1.76 “Incentive
Compensation” means the total compensation made
available, based on an applicable incentive cycle (e.g., monthly,
quarterly or annual pay periods), by or under the authority of a
Party to a Sales Representative involved in Promotion of a Product
under this Agreement based on the performance of products
(including the Product) being promoted by such Sales Representative
in the Territory, including any target bonus, award or other
incentive, but excluding salary.

 

1.77 “IND”
means an Investigational New Drug Application as defined in the
FD&C Act and applicable regulations promulgated thereunder by
the FDA, the filing of which is necessary to commence a Clinical
Trial.

 

1.78 “Indemnitee”
has the meaning set forth in Section 13.3.

 

1.79 “Indemnitor”
has the meaning set forth in Section 13.3.

 

1.80 “Initial
Term” has the meaning set forth in
Section 14.1.

 

1.81 “Inspection
Period” has the meaning set forth in Section
5.1(d)(i).

 

1.82 “Invoiced
Amount per Unit” has the meaning set forth in
Section 7.2(b)(i).

 

1.83 “JCC”
has the meaning set forth in Section 2.1.

 

1.84 “Know-How”
means and includes conceptions, ideas, reductions-to-practice,
innovations, inventions, processes, machines, equipment,
compositions of matter, compounds, formulations, products, genetic
material, improvements, enhancements, modifications, technological
developments, know-how, methods, treatments, techniques, systems,
designs, artwork, drawings, plans, specifications, blueprints,
works, mask works, software, documentation, data and information
(irrespective of whether in human or machine-readable form), works
of authorship, and products, in each case whether or not
patentable, copyrightable, or susceptible to any other form of
legal protection.

 

 

 

7

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

 

 

 

 

1.85 “Latent
Defect” has the meaning set forth in Section
5.1(d)(i).

 

1.86 “Long
Term Inability to Supply” means, with respect to
Product, Acerus’ failure to supply Aytu with at least [**]
over any [**] consecutive month period, in each case, of the
quantities of Product that Acerus is obligated to supply pursuant
to the binding portion of the then-applicable Master Production
Plan and in accordance with the terms of this Agreement, for any
reason other than force majeure, as described in
Section 15.4.

 

1.87 “Manufacture”
has the meaning set forth in Section 5.1(a).

 

1.88 “Master
Manufacturing Plan” has the meaning set forth in
Section 2.1(d)(ii)(1).

 

1.89 “Master
Production Plan” has the meaning set forth in
Section 2.1(d)(ii)(2).

 

1.90 “Materials”
shall mean the components and materials used in the Manufacture of
the Product, including Raw Materials (active and inert), and
subassemblies (e.g., multi-dose dispensers of the Product and the
components thereof) including packaging and labeling materials used
to Manufacture Finished Product.

 

1.91 “NDA”
means a New Drug Application as defined in the FD&C Act and
applicable regulations promulgated thereunder by the
FDA.

 

1.92 “NDC”
has the meaning set forth in Section 5.1(a)(iv).

 

1.93 “Net
Revenue” means the gross amount invoiced by Aytu, its
Affiliates, or Permitted Sublicensees for the sale of Product to
Third Parties, less deductions, determined in accordance with
Aytu’s Accounting Standards as generally and consistently
applied by Aytu, for: (i) normal and customary trade,
cash and quantity discounts actually allowed and properly taken,
credits, price adjustments or allowances for damaged Products,
returns, defects, recalls or rejections of Products or retroactive
price reductions specifically identifiable to the Product;
(ii) chargebacks and rebates (or the equivalent thereof,
inclusive of patient co-pay coupons, cards or other co-pay
assistance program deductions through point-of-care discounting or
physical rebate couponing) granted to group purchasing
organizations, managed health care organizations or to federal,
state/provincial, local and other governments, including their
agencies, or to trade customers and other amounts paid on sale or
dispensing of the Product or to wholesalers for inventory
management programs; (iii) freight, shipping insurance and
other transportation expenses directly related to the sale (but not
sampling) of Product (if actually borne by Aytu, its Affiliates, or
sublicensees without reimbursement from any Third Party);
(iv) required distribution commissions/fees (such as fees
related to services provided pursuant to distribution service
agreements with major wholesalers) payable to any Third Party
providing distribution services to Aytu so long as such
commissions/fees are consistent with the distribution
commissions/fees payable in respect to other branded prescription
products commercialized by Aytu; (v) sales, value-added,
excise taxes, tariffs and duties, and other taxes and government
charges directly related to the sale, to the extent such items are
included in the gross invoice price and actually borne by Aytu, its
Affiliates, or Permitted Sublicensees without reimbursement from
any Third Party (but not including taxes assessed against the
income derived from such sales) and (vi) amounts repaid or
credited or provisions made for uncollectible amounts on previously
sold Product.

 

 

 

8

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

 

 

 

 

“Net
Revenue,” as set forth in the above definition, shall be
calculated in accordance with Aytu’s usual and customary
accounting methods, which shall be in accordance with the
Accounting Standards. Revenue from Aytu to its Affiliates or
Permitted Sublicensees shall be disregarded for purposes of
calculating Net Revenue.

 

1.94 “Next
Generation Product” means a drug product for use in
men containing testosterone as its sole active pharmaceutical
ingredient incorporating or containing improvements, additions,
refinements, modifications or developments to the Product that
would reasonably be expected to improve the quality or improve
consumer or patient acceptance of the Product for which a sNDA to
the Product NDA would be permitted under Applicable
Law.

 

1.95 “Non-Binding
Commitment” has the meaning set forth in
Section 5.1(b)(i).

 

1.96 “Non-Defending
Party” has the meaning set forth in
Section 13.3.

 

1.97 “Ordinary
Course Terminations and Reassignments” has the meaning
set forth in Section 6.3(a)(iii).

 

1.98 “Original
Payment” has the meaning set forth in Section
7.4.

 

1.99 “OTC
Version(s)” shall mean any version of Product for use
in the Field that has been approved by the FDA for sale to
customers or patients in the Territory without a
prescription.

 

1.100 “Packaging
Specifications” means the packaging and labeling
Specifications for Product, attached hereto as Schedule 1.100,
as such Specifications may be amended from time to time by the
JCC.

 

1.101 “Party”
or “Parties” has
the meaning set forth in the Preamble.

 

1.102 “Permitted
Sublicensee” means any sublicensee of the rights
granted to a Party under this Agreement in accordance with Section
8.7(b).

 

1.103 “Person”
means any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization or
government or political subdivision thereof.

 

1.104 “Previously
Purchased Product” has the meaning set forth in
Section 7.1(c)(vii)(1).

 

1.105 “Product”
means a drug product for use in men containing testosterone as its
sole active pharmaceutical ingredient prepared using nasal gel drug
delivery technology to treat hypogonadism in males, in any
formulation and any dosage strength under development by Acerus
and/or Aytu at any time before or during the Term, including
NATESTO, an authorized generic version thereof or ANDA therefor and
any OTC Versions.

 

 

 

9

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

 

 

 

 

1.106 “Product
Cost(s)” means [**].

 

1.107 “Product-Specific
Sales Force” means either the Aytu Product-Specific
Sales Force or the Acerus Product-Specific Sales Force, as
applicable.

 

1.108 “Product
Specifications” means the Specifications for Product
attached hereto as Schedule 1.108, including process
Specifications and analytical methods, as such Specifications may
be amended from time to time by the JCC, including, without
limitation, such amendments as may be required to obtain or
maintain Regulatory Approval for Product.

 

1.109 “Product
Training” has the meaning set forth in Section
6.4(a).

 

1.110 “Promotion”
or “Promote”
means (a) those activities customarily undertaken by a
Party’s Field Sales Representatives in the Territory to
encourage the approved use of, increase awareness, improve access
to, or encourage the use of the Product, including Detailing, and
(b) any other activities customarily undertaken by a Party aimed at
encouraging the approved use of a particular prescription
pharmaceutical product, including without limitation,
communications to healthcare professionals, healthcare professional
peer-to-peer communications, communications to direct customers,
consumers, patients, patient families, employers, employees,
payors, stakeholders, and group purchasing organizations,
communications of product benefits to integrated healthcare
delivery networks, the creation and use of Promotional Materials,
marketing, meetings and events (including without limitation
speaker bureau events), trade shows, advocacy activities, including
with respect to guideline organizations, and sponsorships, in each
case (a) and (b), as approved by the JCC and set forth in the
Commercialization Plan.

 

1.111 “Promotional
Materials” means any and
all written, printed, graphic, electronic, audio, video or other
materials to be used in connection with any Promotion
activities, as developed and approved in accordance with Sections
2.1(c)(viii) and 2.1(c)(ix). For clarity, Promotional Materials may
include materials such as Detail aids, reprints and disease state
materials, as applicable, as approved in accordance with Sections
2.1(c)(viii) and 2.1(c)(ix).

 

1.112 “Pulsatile
Dosing Patent Family” means the patent applications
listed in Schedule 1.112 entitled “Methods of Testosterone
Therapy” which name employees of both Parties.

 

1.113 “Purchase
Order” has the meaning set forth in
Section 5.1(b)(i).

 

1.114 “Quality
Agreement” means the quality agreement to be entered
into by the Parties promptly following the A&R Closing Date
(and in any event, within thirty (30) days) concerning quality
assurance, quality control, and validation related to the
Manufacture of Product, in customary form and consistent with
customary practices in the pharmaceutical industry.

 

 

 

10

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

 

 

 

 

1.115 “Raw
Materials” means, in relation to Product, the starting
Materials, Active Ingredient, excipients and packaging materials
used in the Manufacture thereof.

 

1.116 “Raw
Material Specifications” means the Specifications
relating to the handling, warehousing, and storage of Raw Materials
attached hereto as Schedule 1.116 as such Specifications may
be amended from time to time by the JCC.

 

1.117 “Receiving
Party” has the meaning set forth in
Section 10.1.

 

1.118 “Regulatory
Approval” means, for Product, all permissions,
approvals, licenses, registrations, authorizations, or clearances
of any Regulatory Authority related to NDA #205488 that are
necessary for the sale of such Product in the
Territory.

 

1.119 “Regulatory
Authority” means the FDA and the authority(ies) that
are responsible for granting any FDA approval for the Manufacture,
use and sale of Product in the Territory.

 

1.120 “Regulatory
Requirements” means (a) all specifications,
methods of Manufacture, and other information in NDA #205488 and
thereafter related in any way to Product, and (b) all laws,
rules, regulations, applicable regulatory guidance documents, and
other requirements of any Regulatory Authority that govern Product,
including its Manufacture, including but not limited to the
requirements set forth in the FD&C Act, the quality system
regulation rules set forth in 21 C.F.R. Part 820, and the
current good manufacturing practices regulations set forth in
21 C.F.R. § 210 et seq. and 21 C.F.R.
§§ 600-610 and the World Health Organization’s
cGMP Guidelines (collectively, “cGMP”), and in each case, the
foreign equivalents thereof, as any of the foregoing may be amended
from time to time.

 

1.121 “Regulatory
Submissions” means all applications, filings, dossiers
and the like submitted to the FDA and associated with NDA #205488,
including any internal records, minutes or informal communications
(e-mails and letters) related to discussions with the FDA, as set
forth on Schedule 1.121.

 

1.122 “Renewal
Term” has the meaning set forth in
Section 14.1.

 

1.123 “Requesting
Party” has the meaning set forth in
Section 7.7(b).

 

1.124 “Required
Clinical Trials” has the meaning set forth in Section
3.2.

 

1.125 “Safety
Agreement” has the meaning set forth in
Section 4.3(b).

 

1.126 “Sales
Channel” means the Acerus Sales Channel or the Aytu
Sales Channel, as applicable.

 

1.127 “Sales
Representative” means
a Field sales representative (a) who is employed by a Party or
Subcontractor to conduct Promotion and other Commercialization
activities with respect to the Product in the Territory pursuant to
this Agreement, (b) has been sufficiently trained in accordance
with this Agreement and (c) substantially meets the qualifications
as may be determined by the JCC from time to time.

 

 

 

11

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

 

 

 

 

1.128  “sNDA”
means a Supplemental New Drug Application as defined in the
FD&C Act and applicable regulations promulgated thereunder by
the FDA.

 

1.129 “Specialty
Pharmacy” means a third-party service provider
providing reimbursement assistance services to Aytu and dispensing
Product.

 

1.130 “Specifications”
means each of the following as they relate to the Active
Ingredient, Raw Materials and/or Product, as
appropriate:

 

(a) the Product
Specifications,

 

(b) the Raw Material
Specifications,

 

(c) the Packaging
Specifications or

 

(d) the Active
Ingredient Specifications.

 

1.131 “Stock
Exchange” has the meaning set forth in Section
10.5.

 

1.132 “Subcontractors”
has the meaning set forth in Section 8.7(b).

 

1.133 “Supply
Price” has the meaning set forth in
Section 7.2(a).

 

1.134 “Target
Healthcare Provider” means any Healthcare Provider (i)
identified by either Party and submitted in writing to the JCC as
being a suitable target for the Promotion and Detailing of the
Product in the Territory, or (ii) any Healthcare Provider that is a
past, current, or expected prescriber of the Product (as reasonably
expected by either Party based on market experience), or (iii) a
decile 5-10 testosterone prescriber (defined as prescribing of
testosterone products in the top 60% of all class prescribers) in
the topical testosterone gel prescription class or total
testosterone prescription class (including all formulations of
testosterone). Notwithstanding the forgoing, the JCC may approve
additional Target Healthcare Providers outside the forgoing
definitions.

 

1.135 “Term”
has the meaning set forth in Section 14.1.

 

1.136  “Termination
Payment Period” has the meaning set forth in Section
14.3(f).

 

1.137 “Termination
Payments” has the meaning set forth in Section
14.3(f).

 

1.138 “Territory”
means the U.S.

 

1.139 “Third
Party” means any Person other than Acerus, Aytu and
their respective Affiliates.

 

1.140 “Threshold 1
Arbitrator” has the meaning set forth in
Section 15.11(e)(i).

 

 

 

12

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

 

 

 

 

1.141 “Training
Materials” means the materials (which may include
written or other recorded, videotaped or Web-based training
materials or online training programs) to be used in Product
Training for each Party’s personnel regarding the Product, as
approved by the JCC in accordance with Section 6.4(b).

 

1.142 “Transition
Period” has the meaning set forth in Section
6.2(a).

 

1.143 “Unit”
means a unit of Product comprised of one multi-dose dispenser
filled with drug product in accordance with the Product
Specifications, as may be amended in accordance with FDA
requirements.

 

1.144 “U.S.”
means the United States of America and all territories
thereof.

 

1.145 “Withholding
Taxes” has the meaning set forth in
Section 7.4.

 

Article
2

GOVERNANCE AND
CLOSING

 

2.1 Joint
Commercialization Committee. The
Parties’ development of Product (if any) and
Commercialization of the Product under this Agreement shall be
overseen by a Joint Commercialization Committee (the
“JCC”)
constituted within thirty (30) days after the A&R Closing Date
with responsibilities as described in this Article 2 and as
set forth below.

 

(a) Membership;
Subcommittees.

 

(i)

The JCC shall
include an equal number of representatives from each Party,
including at least two commercial representatives from each Party
and one financial representative from each Party. The chief
executive officers of the Parties shall not be members of the JCC.
Promptly following the A&R Closing Date, each Party shall
appoint its initial representatives to the JCC. Each Party may
replace its JCC representatives at any time by providing notice to
the other Party. Acerus will designate one of its representatives
as the chairperson of the JCC. The chairperson shall not have
powers or authority beyond those of any other member of the JCC,
but will be responsible for scheduling meetings, preparing and
circulating an agenda in advance of each meeting (provided that
either Party may request to include a specific item on any such
agenda), preparing and issuing minutes of each meeting within
thirty (30) days thereafter, and revising and finalizing such
minutes to reflect timely comments thereon.

 

(ii)

The JCC shall have
authority to establish one or more subcommittees that report to the
JCC and assist the JCC. Any subcommittees formed beyond the JCC
shall be subordinate to the JCC, shall have such membership and
responsibilities as the JCC shall determine (provided that at least
one representative from each Party shall be included on any such
subcommittee which shall consist of an equal number of
representatives from each Party), and may be disbanded by the JCC
at any time. Unless otherwise specifically approved by the JCC or
set forth in this Agreement, each subcommittee shall operate on the
same terms, including decision making, as the JCC; provided, that a
subcommittee may not make any decision that is inconsistent with
this Agreement or the Commercialization Plan as approved by the
JCC.

 

 

 

13

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

 

 

 

 

(b) Meetings.
The JCC shall meet a minimum of once per calendar quarter, and any
additional ad hoc meetings may be called by either Party on at
least five (5) Business Days’ written notice, as determined
by the Party in good faith to be reasonably necessary. The Parties
shall endeavor to schedule meetings of the JCC at least two
(2) months in advance. At least one (1) meeting of the JCC per
year shall be held in person, which in person meeting shall be held
alternately at the headquarters of each of the Parties or at such
location as may be mutually agreed by the Parties. All other
meetings of the JCC may be by telephone or videoconference, as
determined by the Parties. Either Party may invite subject matter
experts or other relevant personnel to attend any meeting of the
JCC.

 

(c) Responsibilities.
The JCC shall:

 

(i)

Review and assess,
through a formal business review process set by the JCC, the
monitoring of detailing effectiveness, resonance of Promotional
messaging and effectiveness of other programs implemented to
Promote Product sales;

 

(ii)

Review the
Commercialization Plan for the Product developed by Acerus and
submitted to the JCC on an annual basis;

 

(iii)

Review results and
progress of any Required Clinical Trial and discuss and prepare
proposed amendments or modifications when such changes appear to be
advisable to achieve the Parties’ Product development goals
and/or implement labeling changes with respect to such
matters;

 

(iv)

Facilitate the
exchange of regulatory documents and other regulatory information
between the Parties pursuant to Article 4;

 

(v)

Discuss the state
of the markets for Product in the Territory and opportunities and
issues concerning the Commercialization of Product, including
consideration of marketing and Promotional strategy, marketing
research plans, payer strategies and tactics, labeling, Product
positioning and Product profile issues;

 

(vi)

Coordinate and
monitor post-Regulatory Approval activities;

 

(vii)

Resolve, or attempt
to resolve any disputes not resolved by any subordinate
subcommittee created by the JCC;

 

(viii)

Oversee development
of all advertising and Promotional Materials relating to the
Product in the Territory, which shall be consistent with the
Commercialization Plan and with the then current Product labels and
package inserts;

 

 

 

14

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

 

 

 

 

(ix)

Review and update
advertising and Promotional Materials relating to the Product on a
semi-annual basis and otherwise as necessary;

 

(x)

To the extent
permitted by Applicable Laws, discuss strategy for Product pricing,
rebates, discounts, and commercial and government contracting
(“Commercial Pricing
Strategy”);

 

(xi)

As may be
determined by the JCC, establish the guidelines surrounding the
qualifications and experience levels for Sales Representatives
appropriate for each Sales Channel; and

 

(xii)

Perform such other
functions as appropriate to further the purposes of this Agreement
and as allocated to it in writing by the Parties.

 

(d) Forecasting
Subcommittee.

 

(i)

A subcommittee of
the JCC with responsibility for overseeing the Manufacture
(including forecasting) of the Product in the Territory and such
other matters as may be designated by the JCC from time to time is
hereby established by the JCC (the “Forecasting Subcommittee”). The
Forecasting Subcommittee shall consist of an equal number of
representatives from each Party. Acerus will designate one of its
representatives as the chairperson of the Forecasting Subcommittee.
The Forecasting Subcommittee will meet on a monthly basis, whether
in person, via telephone conference or video conference, as
determined by the members.

 

(ii)

The JCC hereby
delegates to the Forecasting Subcommittee responsibility
for:

 

(1)

Reviewing and
overseeing matters relating to Manufacturing of the Product,
including preparing a manufacturing plan setting forth all
information required by Article 5 of this Agreement (the
“Master Manufacturing
Plan”), and reviewing existing warehouse
stock;

 

(2)

Preparing,
approving and updating on a monthly basis a written twenty-four
(24) month forecast of the quantities of Product to be
supplied to Aytu (the “Master
Production Plan”); and

 

(3)

Performing such
other functions as may be delegated to it by the JCC.

 

(iii)

The Parties shall
provide the Forecasting Subcommittee with access to all information
necessary to prepare and update forecasting for quantities of the
Product and placebo dispensers to be supplied to Aytu, including
inventory levels of the Product on a monthly basis, and the
Forecasting Subcommittee shall keep the JCC reasonably informed of
its activities.

 

 

 

15

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

 

 

 

 

2.2 Decision Making;
Authority. The JCC shall
make its decisions by consensus, with each Party’s
representatives collectively having one vote. If the JCC is unable
to reach consensus regarding a matter before it within fifteen (15)
days, the issue shall be presented to the Parties’ chief
executive officers, for attempted resolution by good faith
negotiations during a period of thirty (30) days. In the event
that the chief executive officers are unable to reach a final
determination within such thirty (30) day period, then Acerus
shall have the final decision making authority over such disputed
matters; provided that (i) Acerus shall reasonably consider the
input of Aytu’s members to the JCC with respect to such
Commercial Pricing Strategy and the Master Production Plan; and
(ii) subject to Applicable Law, if the matter relates specifically
to matters affecting the Aytu Sales Channel, Aytu’s prior
written approval shall be required, with such approval not to be
unreasonably withheld or delayed. Notwithstanding anything to the
contrary herein, any dispute regarding (a) the level of monetary
spending required by the approved Commercialization Plan or (b)
whether Acerus reasonably considered Aytu’s input with
respect to the Commercialization Plan or the Commercial Pricing
Strategy shall be resolved by the binding Arbitration process set
forth in Section 15.11 herein. For clarity, each Party shall have
final decision-making authority over salaries, hiring and firing
decisions for its Sales Representatives, subject to the JCC
requirements for qualifications for Sales Representatives. For
further clarity, and without limitation to any of the foregoing,
Aytu agrees to implement the decisions of the JCC such that those
items from the definition of Net Revenue that are subject to the
authority of the JCC do not deviate from what has been approved by
the JCC (other than for any non-discretionary price adjustments
taken by customers, provided that Aytu promptly notifies the JCC of
any such adjustments).

 

2.3 Opportunity. In the event a
commercial opportunity arises to generate meaningful returns by
promoting the Product to Healthcare Providers included in the Aytu
Sales Channel but otherwise not being targeted at that time, the
JCC will discuss how best to allocate the commercial opportunity
between the Parties.

 

2.4 General
Principles.

 

(a) The JCC and its
subordinate committees have no authority beyond the specific
responsibilities set forth in this Agreement with respect thereto.
Any subordinate committee created by the JCC shall have such duties
and responsibilities delegated to such committee by the JCC, as
applicable, so long as such duties and responsibilities do not
exceed the power and authority assigned to the JCC hereunder. In
particular, and without limiting the generality of the foregoing,
neither the JCC nor any subordinate committee thereof may amend or
modify the terms or provisions of this Agreement.

 

(b) Each Party shall
ensure that its representatives to the JCC or any subcommittee
thereof have appropriate expertise and authority to serve as
members of such committee. With the consent of the representatives
of each Party serving on a particular committee, other
representatives of each Party may attend meetings of that committee
as observers. A meeting of the JCC or a subordinate committee
thereof may be held by audio or video teleconference with the
consent of each Party. Meetings of a committee shall be effective
only if at least one representative of each Party is present or
participating. Each Party shall be responsible for all of its own
expenses of participating in committee meetings. Each Party shall
use good faith and cooperative efforts to facilitate and assist the
efforts of the committees.

 

 

 

16

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

 

 

 

 

(c) Each committee
shall continue to exist until the Parties mutually agree to
dissolve it, and upon dissolution, the Parties shall discuss the
assignment and assumption of the powers and duties of such
committee.

 

(d) The Parties may
form any other committees as they shall mutually
agree.

 

 

 

 

 

2.5 A&R Closing.

 

(a) Closing. Subject to the terms and
conditions of this Agreement, the closing of this Agreement and the
other transactions contemplated hereby (the “A&R Closing”) shall take place
at 8:00 a.m. Eastern Time on the next Business Day following the
satisfaction or waiver (to the extent not prohibited by Applicable
Law) of the conditions set forth in Section 2.5(c) (other than
those conditions that by their terms are to be satisfied at A&R
Closing, but subject to such satisfaction or waiver), or at such
other time and place as the Parties mutually agree in writing (the
day on which the A&R Closing takes place being the
“A&R Closing
Date”).

 

(b) Pre-Closing Conduct of Business. From
the A&R Signing Date to the A&R Closing Date, except as
otherwise required by this Agreement or consented to by Acerus in
writing (which consent shall not be unreasonably withheld,
conditioned or delayed), Aytu shall Promote and sell the Product in
the ordinary course of business consistent with past practice and
maintain in effect the Regulatory Approval and all Regulatory
Submissions. Except as required by Applicable Law or otherwise
required by the 2016 Agreement, Aytu shall not, and shall not
permit any Affiliate to, without the prior written consent of
Acerus (which consent shall not be unreasonably withheld,
conditioned or delayed) (i) engage in any practice that could
reasonably be considered “channel stuffing” or
“trade loading”, (ii) except in the ordinary course of
business, consistent with past practice, offer any rebates,
discounts, promotions or credits, make any change to any
Promotional programs or make any change in the manner Aytu
generally extends rebates, discounts or credit to, or otherwise
similarly deal with, customers with respect to the Product, or
(iii) agree, whether in writing or otherwise, to do any of the
foregoing. Prior to the A&R Closing, each Party shall use
Commercially Reasonable Efforts to take such action as is
reasonably necessary or appropriate in order to complete the
transactions contemplated hereby on the terms and subject to the
conditions set forth herein.

 

(c) Condition to A&R Closing. The rights
and obligations of the Parties to this Agreement are subject to the
condition that Acerus, prior to the date that is six (6) months
after the A&R Signing Date, first raises at least $10,000,000
of gross proceeds additional capital through one or more series of
transactions.

 

(d) A&R Closing Deliveries.

 

 

 

17

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

 

 

 

 

(i)

Deliveries by Acerus. At the A&R
Closing, Acerus shall deliver, or cause to be delivered, to
Aytu:

 

(1)

Payment of
Acerus’ pro rata portion of the 2020 FDA user fee referenced
in Section 4.1(a); and

 

(2)

A certificate
executed by its Chief Executive Officer or Chief Financial Officer
that the capital raise has been closed.

 

(3)

Acerus payment of
[**] to reimburse Aytu for half of specific direct costs that were
previously paid by Aytu to Acerus associated with serialization of
Product.

 

(ii)

Deliveries by Aytu. At the A&R
Closing, Aytu shall deliver, or cause to be delivered, to
Acerus:

 

(1)

Executed
assignments by Aytu and the applicable inventors of the patents
included in the Pulsatile Dosing Patent Family to Acerus;
and

 

(2)

The FDA executed
letters, and any other letters or documents required to transfer
the Product NDA and related Regulatory Submissions to Acerus
pursuant to Section 4.1.

 

 

Article
3 

POST MARKETING TRIALS AND
OBLIGATIONS

 

3.1 Overview of
Development. Acerus shall
conduct any Required Clinical Trials and will keep Aytu reasonably
informed, through the JCC, with respect to such Required Clinical
Trials. Upon written request by Acerus, Aytu will use good faith
efforts to provide Acerus any reasonably necessary information for
such Required Clinical Trials. Following the A&R Closing Date,
the conduct of all Clinical Trials other than Required Clinical
Trials will be the sole responsibility and at the sole discretion
of Acerus.

 

3.2 Required Clinical
Trials. As holder of the
NDA for the Product following the A&R Closing Date, Acerus (i)
shall be responsible for all Clinical Trials required by the
applicable Regulatory Authorities to maintain the Regulatory
Approval for the Product (collectively the “Required Clinical Trials”); and
(ii) acknowledges and agrees that the terms and conditions of the
Cardiovascular PMR and Ambulatory Blood Pressure Study shall apply
to it with respect to the Product.

 

 

 

18

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

 

 

 

 

Article
4 

REGULATORY MATTERS

 

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

 

(a) On or promptly
after A&R Closing, Acerus shall submit (or cause the necessary
Third Party to submit) to the FDA executed letters in the form set
forth in Schedule 4.1(a) in order to transfer legal and record
ownership of the Regulatory Submissions for the Product, including
any INDs, the Product NDA and all supplemental submissions from
Aytu to Acerus. Acerus shall not at any time thereafter during the
Term transfer any such Regulatory Submissions for the Product,
including any INDs and the Product NDA, to any other Person,
without the express written consent of Aytu, except in connection
with any permitted assignment of this Agreement in accordance with
Section 15.3. At A&R Closing, Acerus shall reimburse Aytu
for the pro rata portion of the 2020 FDA user fee rate paid by Aytu
that is attributable to the post-A&R Closing portion of the
then-current FDA fiscal year and pay all FDA user fees
thereafter.

 

(b) Pursuant to 21
C.F.R. § 314.72, Change in Ownership of an Application,
the Parties shall fulfill the following requirements:

 

(i)

Aytu shall submit a
letter or other document that states that all rights to NDA #205488
have been transferred to Acerus;

 

(ii)

Acerus shall submit
an application form and a letter containing the
following:

 

(1)

Acerus’
commitment to agreements, promises, and conditions made by Aytu of
which it has been informed and contained in NDA #205488, which
are set forth on Schedule 4.1(b) and provided to Acerus by Aytu
prior to the A&R Closing;

 

(2)

The date that the
change in ownership is effective; and

 

(3)

A statement that
Acerus has a complete copy of the approved NDA #205488, including
supplements and records that are required to be kept under 21
C.F.R. § 314.81; and

 

(iii)

Acerus shall advise
FDA about any change in the conditions in NDA #205488 under 21
C.F.R. § 314.70, except Acerus may advise FDA in the
subsequent annual report about a change in the Product’s
label or labeling to change the Product’s brand or the name
of its manufacturer, packer, or distributor.

 

(c) As soon as
practicable following the A&R Closing Date, Aytu shall transfer
to Acerus (and cause any Third Party in possession thereof to
transfer to Acerus) all other Regulatory Submissions for the
Product in the Territory, which have been approved by Acerus on or
prior to the A&R Signing Date or are required by law. Upon
transfer of all such Regulatory Submissions, Acerus shall be the
legal and beneficial owner of such Regulatory
Submissions.

 

 

 

19

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

 

 

 

 

4.2 Regulatory
Responsibilities. From and after
the A&R Closing, Acerus shall be solely responsible at its own
cost for all regulatory matters regarding the Product, including
preparing, filing, prosecuting and maintaining all submissions to
Regulatory Authorities for the Product, adverse event reporting,
post-marketing requirements, label and packaging updates, and
serialization costs. From and after the A&R Closing Date,
Acerus shall own all right, title and interest in and to all
regulatory filings and submissions and Regulatory Approvals with
respect to the Product.

 

4.3 Safety
Matters.

 

(a) From and after the
A&R Closing, Acerus shall be responsible for establishing and
maintaining a global safety database for the Product.

 

(b) Within thirty (30)
days after the A&R Closing, the Parties shall enter into a
safety data exchange agreement (the “Safety Agreement”), in customary
form and consistent with customary practices in the pharmaceutical
industry, which the Parties shall maintain, as may be amended by
the Parties, in force throughout the Term. The Safety Agreement
shall describe the coordination of collection, investigation,
reporting, and exchange of information concerning adverse events or
any other safety problem of any significance, and Product
complaints involving adverse events, sufficient to permit each
Party, its Affiliates licensees or Permitted Sublicensees to comply
with Applicable Laws. The Safety Agreement will be promptly updated
if required by changes in Applicable Laws. In the event of any
conflict or inconsistency between this Agreement and the Safety
Agreement with respect to: (i) safety-related matters,
the Safety Agreement shall prevail; and (ii) any other matter,
this Agreement shall prevail.

 

(c) Aytu shall notify
Acerus as promptly as reasonably possible, but in no event more
than twenty-four (24) hours of becoming aware of a serious
adverse event, which reporting requirements shall be set forth in
further detail in the Safety Agreement. All other adverse events
and Product complaints will be reported as promptly as reasonably
possible, but in no event more than seventy-two (72) hours of Aytu
becoming aware of the event or Product quality
complaint.

 

4.4 Regulatory
Communications. From and after
the A&R Closing, Acerus shall be responsible, at its sole
expense, for (a) all communications, reports and responses to
Regulatory Authorities concerning the Product, including adverse
event reports, and (b) all communications with Third Parties that
relate to product quality complaints and adverse events. Aytu shall
not, without Acerus’ prior written consent (unless so
required by Applicable Laws), correspond or communicate with the
FDA or with any other Regulatory Authority concerning the Product,
or otherwise take any action concerning any Regulatory Approval
under which the Product is marketed. Aytu shall provide to Acerus,
promptly upon receipt, copies of any communication from the FDA, or
other Regulatory Authority, related to the Product, and Acerus
shall provide to Aytu, promptly upon receipt, copies of any
communication from the FDA or other Regulatory Authority relevant
to Aytu’s rights or obligations under this Agreement. Upon
Acerus’ request, Aytu shall cooperate fully with, and provide
assistance to, Acerus in connection with Acerus’ Regulatory
Requirements arising from Aytu’s Promotion or distribution
activities under this Agreement (including adverse event reporting)
for the Product. If Aytu believes it is required by Applicable Laws
to communicate with the FDA or other Regulatory Authority regarding
any matter relating to the Product or Aytu’s activities
hereunder, then Aytu shall, unless and to the extent prohibited by
Applicable Laws, so advise Acerus promptly and provide Acerus in
advance with a copy of any proposed communication (including the
text of any oral communication) with the FDA or such other
Regulatory Authority prior to such communication, and shall comply
with any and all reasonable direction of Acerus, to the extent
consistent with Applicable Laws, concerning any meeting or written
or oral communication with the FDA or any other Regulatory
Authority or governmental authority. To the extent any remedial
action is required following any such inspection, Acerus shall
provide Aytu with a remediation plan not later than ten (10)
Business Days following notification by a Regulatory Authority of
the need for remedial action, and Aytu shall have a right to
provide written comments on such remediation plan not later than
ten (10) Business Days after receipt thereof from Acerus, and
Acerus shall consider in good faith any such written comments and
use reasonable efforts to incorporate them into its remediation
plan. Acerus shall use commercially reasonable efforts to promptly
take remedial actions pursuant to the remediation plan. In the
event that Aytu receives any material regulatory letter or comments
from any Regulatory Authority relating to the development or
Manufacture of Product, Acerus (as applicable) will promptly
provide Aytu with any data or information required by Aytu in
preparing any response relating to Acerus’ development or
Manufacture of Product and will cooperate fully with Aytu in
preparing such response.

 

 

 

20

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

 

 

 

 

 

4.5 Inspections. In the event that
any Acerus facility will be inspected by representatives of any
Regulatory Authority directed to Acerus’ Manufacture of
Product, Acerus shall notify Aytu promptly after learning of such
inspection and shall supply Aytu with copies of any correspondence
or portions of correspondence which are relevant to Aytu’s
rights or obligations under this Agreement. Following any such
inspection, Acerus shall provide Aytu with a written summary of
that portion of the inspection that was relevant to Product within
seven (7) Business Days of such inspection.

 

4.6 Product Recalls and
Withdrawals.

 

(a) Acerus shall be
responsible for determining whether any recall or withdrawal of the
Product is necessary, and, promptly upon such determination, Acerus
shall notify Aytu of such recall or withdrawal. If Aytu becomes
aware that the Product may not comply with Applicable Law and/or a
recall or withdrawal of the Product may be necessary or desirable,
Aytu shall provide Acerus with prompt written notice thereof
(within seventy-two (72) hours of becoming aware). Thereafter,
Acerus shall determine whether the Product should be recalled or
withdrawn. In all cases, each Party shall use Commercially
Reasonable Efforts to implement any recall of Product.

 

(b) The Party that is
predominantly responsible for the applicable Product’s
non-compliance with applicable rules and regulations shall bear all
Third Party costs and expenses actually incurred and associated
with conducting such recall in accordance with such recall plan,
unless such recall results predominantly from the other
Party’s material breach of its obligations under this
Agreement or unless such recall otherwise predominantly results
from the negligence or wrongful intentional acts or omissions of
the other Party, in which case the other Party shall bear all Third
Party costs and expenses actually incurred and associated with such
recall.

 

(c) If neither Party is
predominantly responsible or responsibility cannot be ascertained
as to the cause of the applicable non-compliance, the Parties agree
to submit the matter to a mutually acceptable independent
laboratory or consultant that has the capability of testing the
Product to determine which Party is responsible for such recall,
whose fees shall be paid by the non-prevailing Party.

 

 

 

21

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

 

 

Article
5

MANUFACTURE AND SUPPLY OF
PRODUCT

 

5.1 Supply and
Purchase of Product.

 

(a) Manufacture
and Supply of Product and Raw Materials. Acerus shall be
responsible for the production, manufacture, testing, packaging and
all related activities, including, without limitation, warehousing
and storage of the Product prior to delivery to Aytu in accordance
with Section 5.1(c) below and supplying Finished Product
(collectively, the “Manufacture”), in accordance with
this Article 5, and carrying out quality assurance in
accordance with the Quality Agreement. Subject to Section 5.2,
during the Term, Aytu, its Affiliates and Permitted Sublicensees
shall purchase all of its requirements of Product from Acerus. In
consideration for Acerus’ supply of Product, Aytu will pay
Acerus the Supply Price. Placebo dispensers and Product shall be
supplied in accordance with the following provisions.

 

(i)

Subject to the
provisions of this Article 5, Acerus shall Manufacture Product
in accordance with the quantity requirements of Aytu, its
Affiliates, licensees and Permitted Sublicensees, in accordance
with the applicable Master Production Plan developed by the
Forecasting Subcommittee and set forth in written Purchase Orders
and shall not Manufacture, supply or sell Product for or to any
Third Party for use in the Territory.

 

(ii)

Acerus shall have
additional responsibilities for Product as set forth in the Quality
Agreement. In the event of any conflict or inconsistency between
this Agreement and the Quality Agreement with respect
to: (i) quality-related matters, the Quality Agreement
shall prevail; and (ii) any other matter, this Agreement shall
prevail. Acerus shall have sole responsibility for disposing of all
wastes arising from Manufacture in accordance with all Applicable
Laws and Regulatory Requirements.

 

(iii)

Acerus shall supply
Aytu with reasonable quantities of placebo dispensers consistent
with the applicable Master Production Plan approved by the JCC and
pursuant to written Purchase Orders, and shall provide such placebo
dispensers in finished form in accordance with this Article 5.
Placebo dispensers shall be supplied in accordance with Section
5.1(c) (provided, however, that any such request shall be made in
even multiples of the standard batch size for such items set out in
Schedule 1.43 and provided further that placebo dispensers
shall be included in the Master Production Plans submitted in
accordance with Section 5.1(b), at a cost equal to Acerus COGS (to
be paid in full within forty-five (45) days of the applicable
delivery in accordance with Section 5.1(c)(iii).

 

(iv)

Acerus will supply
the Finished Product, labeled and packaged in shipping containers
suitable for sale in the Territory, with Acerus’ National
Drug Code (“NDC”) and label; provided that
existing Aytu Product containing Aytu’s NDC and label will
continue to be sold until such time as it is either (a) exhausted
or (b) Acerus has completed a re label and re package of Product
containing Aytu’s NDC and label to label such Product with
Acerus’ NDC and label.

 

(b) Forecasts;
Orders.

 

(i)

The first seven
(7) months of each Master Production Plan, as established by the
Forecasting Subcommittee, shall be deemed to be a binding,
non-cancellable purchase order for Product and placebo dispensers
and shall be accompanied by any other information required under
Section 5.1(c) (the “Purchase Order”). The following
seventeen (17) months of the Master Production Plan shall be
the Forecasting Subcommittee’s non-binding, good faith
estimate of such requirements based on sales and forecasted demand
for Product and placebo dispensers (“Non-Binding
Commitment”).

 

(ii)

Each Master
Production Plan and included binding Purchase Order shall be deemed
to be automatically accepted, and shall be binding on Acerus and
Acerus will be required to supply the Product and placebo
dispensers set forth in a Purchase Order, unless Aytu is notified
by Acerus, within ten (10) Business Days, that the Purchase Order
terms violate the requirements set forth in this Article 5. In
the event of any conflict or inconsistency between this Agreement
and any Purchase Order, this Agreement shall prevail.

 

(c) Purchase of
Product; Deliveries.

 

(i)

Except to the
extent the Parties may otherwise agree in writing with respect to a
particular shipment, all orders for Product placed hereunder shall
be submitted to Acerus according to the procedures described in
Section 5.1 of this Agreement. Each Purchase Order for Product
and placebo dispensers shall specify: (A) the type of
Product being ordered (i.e., whether the Product is intended for
trade or samples); (B) the amount of such Product and placebo
dispensers being requested (which shall be in accordance with this
Section 5.1 and be in even multiples of the standard batch
size (as set forth in Schedule 1.43), unless otherwise agreed by
Acerus); and (C) the requested Delivery Dates, such Delivery
Date to be not less than seven (7) months following submission of
the Purchase Order to Acerus in accordance with
Section 5.1(b)(ii). Acerus shall supply Product and placebo
dispensers in such quantities on the Delivery Dates set forth in
the Purchase Order.

 

 

 

22

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

 

 

 

 

(1)

Acerus shall
furnish to Aytu at least five days prior to the release for
delivery to Aytu of each shipment of Product ordered by Aytu
hereunder, (i) a certificate of analysis reflecting that such
Product and any Raw Materials used conform to the relevant
Specifications and (ii) all documentation required by
Applicable Law or Regulatory Requirements.

 

(2)

Aytu shall not be
required to take receipt of a Batch of Product with less than [**]
of remaining shelf life; provided that Aytu and Acerus may
nonetheless negotiate in good faith for Aytu to purchase any Batch
not meeting the foregoing remaining shelf life
requirement.

 

(ii)

Any changes to a
submitted Purchase Order will be deemed to reasonably extend the
Delivery Date for such Product or placebo dispensers. Upon
submission and acceptance of such changes, the Parties will work in
good faith to determine the new Delivery Date for such Purchase
Order, as amended. For clarity, non-material changes are not
expected to restart the clock on the lead-time, but may increase
the lead-time to beyond the seven (7) months provided for
herein.

 

(iii)

Property in, title
to, and risk of loss of or damage to, all Raw Materials and Product
shall remain with Acerus and pass to Aytu only upon delivery to
Aytu on an Ex Works, Acerus’ (or its Third Party
manufacturer’s) facility (Incoterms 2010) basis. Acerus shall
provide all reasonably requested documentation in connection with
any shipment of Product, and Aytu shall provide Acerus with copies
of any shipping-related documentation required by Acerus in order
to comply with Applicable Laws.

 

(d) Acceptance
and Rejection Procedures.

 

(i)

Aytu shall,
promptly upon arrival at Aytu’s designated warehouse or
third-party logistics provider, carefully inspect each shipment of
Product for transport damages, losses and shortfalls. Apparent
defects, such as, for example, damaged containers or missing
packages of Products, must be identified to the carrier promptly
upon arrival of the shipment and the freight documents at
Aytu’s site and, where possible, countersigned by the
carrier’s representatives. Failure of Aytu to notify such
visually detectable defects to the carrier promptly upon arrival of
the concerned shipment and freight documents shall exclude
liability of Acerus for such defects. Thereafter, Aytu shall have
thirty (30) days after receipt of a shipment of Product (the
“Inspection
Period”) to determine if there is any defect in the
Product or any non-compliance with the Specifications, which is
discoverable by diligent and customary inspection of the shipment
and any accompanying documentation. Aytu shall notify Acerus of any
such non-compliance prior to the end of the Inspection Period,
describing in reasonable detail the non-compliance. Notwithstanding
the foregoing, if with respect to any unexpired Product, the
non-compliance could not reasonably be expected to have been found
by diligent and customary inspection during the Inspection Period
and Aytu notifies Acerus of such non-compliance, describing such
Latent Defect in detail, within twenty five (25) days of
Aytu’s knowledge of the Latent Defect and within the shelf
life of the Product, such non-compliance shall be deemed to be a
“Latent Defect”
hereunder. Aytu shall be deemed to have accepted any Product if it
fails to notify Acerus of a non-conformity or Latent Defect during
the periods permitted in this Section 5.1(d)(i). At Acerus’
reasonable request, Aytu shall provide Acerus with any available
documentation or analysis that is reasonably necessary for Acerus
to determine whether such non-conformity or Latent Defect exists in
such Product.

 

 

 

23

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

 

 

 

 

(ii)

Aytu acknowledges
and agrees that Acerus shall be entitled to deliver a quantity of
Product that is not more than [**] less or greater than the amount
set out in any accepted Purchase Order, and that such delivery
shall not entitle Aytu to reject the applicable Product despite the
failure of the delivered quantity to strictly conform to the amount
set out in the applicable Purchase Order.

 

(iii)

If Aytu notifies
Acerus that Product delivered to Aytu is non-conforming or has a
Latent Defect, then as promptly as practicable after receipt of
such notice (but in no event later than [**] after receipt), Acerus
shall (1) instruct Aytu whether to return or destroy the Product in
question (provided, that, Aytu may retain samples of non-conforming
Product for the purpose of determining any dispute) and (2) provide
Aytu with replacement Product, which Delivery Date shall be as
promptly as possible but in no event more than [**] after receipt
of the notice of non-conformity or Latent Defect.

 

(iv)

If Acerus agrees
with the claim set forth in the notice delivered pursuant to
Section 5.1(d)(i), then the Party responsible for the
non-conformity or Latent Defect shall bear the costs and expenses
related to return (if applicable) and delivery of replacement
Product. If the Parties do not agree (1) that there is a
non-conformity or Latent Defect or (2) that a particular Party is
responsible for the non-conformity or Latent Defect, then the
Parties agree to submit the Product in question to a mutually
acceptable independent laboratory or consultant that has the
capability of testing the Product to determine whether or not it
complies with the Specifications and which Party is responsible for
such non-conformity or Latent Defect, whose fees shall be paid by
the non-prevailing Party. If the independent laboratory or
consultant determines that the non-conformity or Latent Defect is
(A) due to damage to Product (i) caused by Aytu or its agents
or (ii) which occurs subsequent to delivery of such Product to
Aytu in accordance with Section 5.1(c)(iii), Acerus shall have
no liability to Aytu with respect thereto and Aytu shall pay for
all shipping costs of returning (if applicable) the Product and/or
sending replacement Product, as the case may be; or (B) caused by
any other reason than those set forth in clause (A), Acerus shall
pay for all shipping costs of returning (if applicable) the Product
and/or sending replacement Product, as the case may be. If payment
for non-conforming Product has previously been made by Aytu, at
Aytu’s option, (i) Acerus shall pay Aytu the amount of
such credit, (ii) Aytu may offset the amount thereof against
other amounts then due to Acerus hereunder or (iii) Acerus
shall replace such non-conforming Product with conforming Product
at no additional cost or expense to Aytu.

 

 

 

24

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

 

 

 

 

(v)

The rights,
remedies and obligations set forth in this Section 5.1(d)
shall be the sole rights, remedies and obligations that either
Party may otherwise have with respect to non-conforming Product or
Latent Defects.

 

(e) 
Capacity. Subject to the
terms and conditions of this Agreement, Acerus shall ensure that
the Product requirements set forth in the binding portion of the
most recent Master Manufacturing Plan are met. In the event that
Acerus becomes aware at any time of any matter, circumstance or
event which might reasonably be expected to give rise to an
inability to supply Product based on the most recent binding
portion of the Master Manufacturing Plan (including that the
quality standards set forth herein and in the Quality Agreement
have been materially compromised such that Acerus may not be able
to supply Product Manufactured to the Product Specifications and/or
comply with Regulatory Requirements), Acerus shall give prompt
written notice of such matter, circumstance or event to the JCC,
including without limitation, the cause thereof, the anticipated
length of such delay or shortfall and the action to be taken to
reduce, minimize or remove the adverse effects of any such delay.
Within seven (7) days after receipt of such a notice from
Acerus, the JCC shall meet with a view to agreeing to action as may
be necessary to ensure that no interruption of supply or shortfall
in quantities of Product occurs. This Section 5.1(e) is not
intended to lessen or alter Acerus’ supply obligations set
forth in this Section 5.1.

 

5.2 Direct Supply. Notwithstanding the
foregoing Section 5.1, in the event that Acerus determines in
its sole discretion that it would like Aytu to assume
responsibility for obtaining supply of Products from Acerus’
Third Party manufacturer thereof or another supplier, the Parties
shall negotiate in good faith to enter into a new agreement
mutually acceptable to the Parties to provide for an Aytu
technology transfer to make and have made Products.

 

5.3 Long Term Inability to Supply. In the
event that a Long Term Inability to Supply with respect to the
Product has occurred and is continuing, Aytu shall have the right
to purchase Product from one or more alternative Third Party
suppliers and require Acerus to transfer to Aytu and such Third
Party supplier all of the technology necessary for such Third Party
supplier to carry out its supply obligations. Upon any transfer
contemplated in this Section 5.3, the Parties shall negotiate
in good faith to enter into a new agreement mutually acceptable to
the Parties to provide for a royalty-bearing license.

 

 

 

25

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

 

 

Article
6 

COMMERCIALIZATION

 

6.1 
Commercialization. From and after
A&R Closing, the Parties will pursue Commercialization of the
Product under this Agreement pursuant to a Commercialization Plan,
as drafted by Acerus and developed, reviewed and approved by the
JCC within sixty (60) days after the A&R Closing Date and
annually thereafter; provided that Aytu shall draft the portion of
the Commercialization Plan concerning the Aytu Sales Channel which
will also be subject to the JCC’s approval, such approval not
to be unreasonably withheld. The Commercialization Plan shall set
forth the Commercialization strategy and tactics for the coming
year, including proposed targeting methodology and lists,
resourcing, call plans and key marketing messages for the Product.
The Parties will use Commercially Reasonable Efforts to carry out
the obligations set forth in the Commercialization Plan. The
initial Commercialization Plan shall include a detailed budget for
the activities to be completed under the Commercialization Plan.
Each Party will bear its own costs and expenses associated with its
activities under this Agreement and the Commercialization Plan (the
“Commercialization
Costs”).

 

6.2 Transition Period
Activities.

 

(a) During the
first six (6) months following the A&R Closing Date
(the “Transition
Period”), the Parties shall use Commercially
Reasonable Efforts to transfer to Acerus as promptly as possible
after the A&R Closing Date the activities previously conducted
by Aytu under the 2016 Agreement that are to be conducted by Acerus
under this Agreement; provided that until those activities are
transferred, Aytu shall continue to conduct activities related to
the Commercialization of the Product that it conducted immediately
prior to the A&R Closing Date, as set forth on Schedule
6.2(a).

 

(b) By the conclusion
of the Transition Period, the activities set forth on Schedule
6.2(a) will be transitioned to Acerus, including without limitation
reimbursement and certain patient support services; provided that
Aytu shall reimburse Acerus for all direct Specialty Pharmacy
expenses not related to the Product and for Aytu’s fair
allocation of the fixed costs associated with the Specialty
Pharmacy program. Each Party shall share equally all costs
associated with the transition of activities pursuant to this
Section 6.2. At any time and to the extent dictated by Accounting
Standards applicable to Aytu as advised by Aytu’s
accountants, in order to reflect Aytu as the exclusive seller of
the Product to wholesalers, pharmacies, and customers receiving
direct shipment of Product in the Territory, Aytu will (i) use
Commercially Reasonable Efforts to maintain in effect any
agreements and arrangements with regard to the distribution of the
Product for the benefit of Acerus’ activities in the Acerus
Sales Channel and (ii) maintain contractual relationships with
Third Parties relating to Product sales that influence such
determination, such as Specialty Pharmacy, TrialCard, and
others.

 

(c) To facilitate the
transition of promotional activities for the Product in the Acerus
Sales Channel from Aytu to Acerus, Aytu and Acerus shall cooperate
to transfer, effective on or as promptly as practicable after the
A&R Closing Date, those of the Aytu personnel who the Parties
agree are appropriate candidates to work with the Product at Acerus
and who have agreed in writing to be transferred to
Acerus.

 

 

 

26

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

 

 

 

 

6.3 Sales Force
Activities.

 

(a) Size of Product-Specific Sales Force.
From and after the A&R Closing, each Party shall perform all
Detailing with regard to the Product within its respective Sales
Channel exclusively through Sales Representatives on each
Party’s sales force (including independent Sales
Representatives engaged by the Parties) and consisting of the
following:

 

(i)

Aytu shall employ a
sales force (the “Aytu
Product-Specific Sales Force”) consisting
of:

 

(1)

for the first
twelve (12) months following the A&R Closing Date, a number of
Sales Representatives on a Full Time Basis that is not less than
[**] and a mutually agreed number of sales force managers
appropriate to manage the Sales Representatives;

 

(2)

thereafter during
the Term, a minimum number of Sales Representatives equal to the
Base Requirement and an appropriate number of sales force managers
to manage the Sales Representatives.

 

(ii)

Acerus shall employ
a sales force (the “Acerus
Product-Specific Sales Force”) consisting
of:

 

(1)

at least ten (10)
Sales Representatives on a Full Time Basis at all times after the
three (3)-month anniversary of the A&R Closing Date and before
the six (6)-month anniversary of the A&R Closing
Date;

 

(2)

at least twenty
(20) Sales Representatives on a Full Time Basis at all times after
the six-month anniversary of the A&R Closing Date and before
the twelve (12)-month anniversary of the A&R Closing Date;
and

 

(3)

at least
twenty-five (25) Sales Representatives on a Full Time Basis at all
times during the Term after the twelve (12)-month anniversary of
the A&R Closing Date.

 

Each
Party shall provide the other Party with a roster of the Sales
Representatives on its Product-Specific Sales Force on a quarterly
basis.

 

(iii)

The
Product-Specific Sales Force requirements set forth in clause (i)
and (ii) above are subject to voluntary resignations by Sales
Representatives or terminations or reassignments of individual
Sales Representatives by the applicable Party due to a Sales
Representative’s failure to achieve applicable performance
requirements or otherwise in the ordinary course in accordance with
the applicable Party’s human resources policies, including
for cause (collectively, “Ordinary Course Terminations and
Reassignments”). If the number of Sales
Representatives employed by a Party drops below the number of Sales
Representatives required pursuant to clause (i) or (ii) above as a
result of Ordinary Course Terminations and Reassignments, such
Party shall promptly (and in any event within seventy-five (75)
days) replace such individual with a new Sales Representative who
meets the qualifications determined by the JCC; provided that if
the number of Sales Representatives employed by Aytu drops below
the number of Sales Representatives required pursuant to clause (i)
or (ii) above as a result of transfer of more than five (5) Sales
Representatives during the Transition Period pursuant to Section
6.2(c), then Aytu shall have one hundred and twenty (120) days to
replace such individual with a new Sales Representative. For
clarity, such Party will be in breach of this Section 6.3 if it
fails to replace any Sales Representative in accordance with this
Section 6.3(a)(iii) within the seventy-five (75)-day period after
the Sales Representative resigns or is terminated or resigned as a
result of Ordinary Course Terminations and Reassignments; provided
that a Party will not be in breach if such Party uses its best
efforts to replace the Sales Representative but is nonetheless
unable to replace such Sales Representative within one hundred and
twenty (120) days.

 

 

 

27

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

 

 

 

 

(b)
Product Promotional Position;
Incentive Compensation. For the first twenty-four (24)
months after A&R Closing, and thereafter as set forth in the
applicable Commercialization Plan, each Party will ensure that the
Product is Promoted in a primary (P1) or secondary (P2) Detailing
position with such Party’s Product-Specific Sales Force. Each
Party’s Product-Specific Sales Force will be eligible to
receive according to the Incentive Compensation plan an amount that
is no less than [**] of the spending available in the Party’s
Incentive Compensation plan each calendar quarter. After the end of
the two (2)-year period referred to in this Section 6.3(b), the
Parties, through the JCC, will discuss in good faith and attempt to
agree on Incentive Compensation plans for each successive two
(2)-year period during the Term. If the Parties are unable to agree
to new Incentive Compensation plans prior to the expiration of a
given two (2)-year period, the Incentive Compensation plans for the
immediately preceding two-year period shall continue to apply
following such two (2)-year period.

 

6.4 Sales Training.

 

(a) Training Program. After the A&R
Closing Date, the Parties shall cooperate to train each
Party’s Sales Representatives on the Product (who have not
already been so trained) in accordance with the applicable
Commercialization Plan and Applicable Laws, including, without
limitation, training concerning (i) the scientific basis and
indications for the Product, (ii) competitive product knowledge,
(iii) permissible communications regarding safety and efficacy
claims relating to the Product, (iv) permissible communications
related to the Product in accordance with the Product labeling, (v)
reporting of adverse events (vi) use of Promotional Materials and
(vii) other appropriate topics relevant to the Promotion and
Commercialization of the Product (the “Product Training”). Each Party
will be entitled to appoint the trainer(s) to conduct Product
Training and to determine the curriculum for its Sales
Representatives, in accordance with the Commercialization Plan.
Each Party shall be responsible for planning and conducting all
Product Training, consistent with each Commercialization Plan, and
shall ensure that each Sales Representative and other applicable
personnel of such Party completes all required Product Training
prior to commencing any Promotion or other Commercialization
activities under this Agreement and continues to participate in
Product Training at least annually thereafter. Each Party shall
also be responsible, at its own expense, for providing, and shall
provide, to all Sales Representatives and other applicable
personnel of such Party a broad general training program, including
training on proper Promotion and marketing techniques, ethics,
compliance with Applicable Laws, and the compliance with such
Party’s policies, procedures, standards and
practices.

 

(b) Training Materials. Acerus shall be
solely responsible for determining the content of and developing
Product-Specific Training Materials for use hereunder. Each Party
will pay its expenses related to the production of Training
Materials (i.e., Acerus will pay for development, but Aytu will
cover Aytu’s direct costs related to printing and shipping of
Training Materials relevant to Aytu Sales Channel used for Product
Training for Aytu’s Sales Representatives and
personnel).

 

 

 

28

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

 

 

 

 

(c) Training Expenses. Each Party shall be
responsible for the costs and expenses associated with Product
Training for its Sales Representatives and personnel, and any such
costs that apply to both Parties’ Sales Representatives and
personnel shall be paid for equally by the Parties. All such
training costs shall be included in Commercialization Costs for the
Party incurring such costs.

 

(d) Recordkeeping. The Parties shall
maintain records related to Product Training sufficient to show the
Parties’ personnel in attendance at Product Training
sessions, including, for example, sign-in sheets and computer
records for Web-based training. The Parties shall maintain Product
Training records, including, for example, testing records,
certifications, and copies of Training Materials used at Product
Trainings session for a period of three (3) years following the end
of the calendar year during which such Product Training occurred. A
Party shall provide copies of such records to the requesting Party
upon request.

 

6.5 Detailing.

 

(a) During the
first two (2) years after the A&R Closing Date each Party shall
ensure that it achieves the Average Detail Levels set forth in the
following table (with any partial years being calculated on a
straight-line pro-rata basis):

 

	
 

	

Aytu

	

Acerus

	

Average Detail Level per calendar year

	

[**]

	

[**]

	

Average Detail Level per calendar quarter

	

[**]

	

[**]

 

 

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

 

 

 

29

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

 

 

 

 

(c) Each Party shall
provide reports to the other Party within sixty (60) days after the
end of each calendar quarter of its Commercialization activities
for the Product and the related Commercialization Costs incurred by
it.

 

6.6 Promotional
Materials.

 

(a) Initial Promotional Materials. Until
such time when the JCC has developed and produced new Promotional
Materials, the Parties will continue to utilize Promotional
Materials for the Product that were developed and/or produced prior
to the A&R Closing Date; provided that if such use by Acerus
will trigger incremental out-of-pocket costs to Aytu, then Acerus
shall reimburse Aytu for such incremental out-of-pocket costs
associated with the production of such additional Promotional
Materials.

 

(b) Development. The Parties shall develop
and produce all advertising and Promotional Materials relating to
the Product in cooperation with the JCC in accordance with Section
2.1(c)(viii) and (ix). All Promotional Materials shall include the
Acerus Trademarks (including the Acerus House Marks) as well as the
Aytu trade name and logo (the “Aytu House Marks”), in accordance
with all Regulatory Requirements. Aytu shall have the right to
develop Promotional Materials specific to the Aytu Sales Channel;
provided that such materials will be consistent with the materials
developed by Acerus for the Product; provided further that the JCC
shall have the right to review, comment and approve such
Promotional Materials, such approval not to be unreasonably
withheld. All Promotional Materials to be used by a Party’s
personnel pursuant to this Agreement shall at all times be in
compliance with Applicable Laws and the labeling for the Product.
Costs incurred by each Party in generating Promotional Materials in
accordance with this Section 6.6(b) will be included in
Commercialization Costs.

 

(c) Use of Promotional Materials. The
Parties shall (i) utilize only those advertising and Promotional
Materials approved by the JCC when performing activities under the
Commercialization Plan, and (ii) use the Promotional Materials
solely for the purposes of conducting the Promotion activities in
the Territory as contemplated under this Agreement, (iii) ensure
that the Promotional Materials are not modified, changed,
misbranded or altered in any way by such Party or its personnel,
and (iv) in conducting Promotion activities hereunder, make only
those statements and claims regarding the Product, including as to
efficacy and safety, that are consistent with the Promotional
Materials, the labeling and Applicable Laws. Each Party shall
promptly notify the other Party, and provide the other Party with a
copy, of any correspondence or other report or complaint received
by a Party or any Party personnel from any Regulatory Authority or
any Third Party claiming that any oral or written statements about
the Product or any Promotional Materials are inconsistent with the
applicable labeling or are otherwise in violation of Applicable
Laws or that any Party Sales Representative or other Party
personnel conducting Promotion or other Commercialization
activities is making statements or claims regarding a Product that
are inconsistent with the Promotional Materials or the Product
labeling.

 

 

 

30

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

 

 

 

 

Article
7

 

PAYMENTS

 

7.1 Payments.

 

(a) Commission Payments. After the A&R
Closing Date, Aytu will pay Acerus commissions on Product sales on
a quarterly basis as follows (such amounts due to Acerus, the
“Acerus Commission
Payments”):

 

(i)

[**] for Annual
Product Net Revenue between [**] and [**] in the combined Aytu
Sales Channel and the Acerus Sales Channel.

 

(ii)

[**] for Annual
Product Net Revenue between [**] and [**] in the combined Aytu
Sales Channel and the Acerus Sales Channel; and

 

(iii)

For Annual Product
Net Revenue greater than [**] in the combined Aytu Sales Channel
and the Acerus Sales Channel as further described in Section 7.1(c)
below:

 

(1)

Aytu Sales Channel
[**] commission.

 

(2)

Acerus Sales
Channel: [**] commission.

 

(b) Reporting. Aytu will be responsible for
tracking Annual Product Net Revenue and will deliver to Acerus (i)
a report on a monthly basis setting forth current Annual Product
Net Revenue and (ii) a notice promptly upon achieving an Annual
Product Net Revenue amount that would trigger a change in the
commission rate due to Acerus [**].

 

(c) Determining Commission Payments Based on Annual
Product Net Revenue.

 

(i)

The Commission
Payment payable to Acerus under Section 7.1(a)(i) for a given
calendar quarter, will equal (i) the Net Revenue for the Product
during the quarter less the Product Costs associated with the
generation of said Net Revenue, multiplied by [**].

 

(ii)

The Commission
Payment payable to Acerus under Section 7.1(a)(ii) for a given
calendar quarter, will equal (i) the Net Revenue for the Product
during the quarter less the Product Costs associated with the
generation of said Net Revenue, multiplied by [**].

 

(iii)

The Product Net
Revenue attributable to the Aytu Sales Channel under
Section 7.1(a)(iii)(1) for a given calendar quarter, will
equal (i) the product of Net Product Revenue multiplied by (ii) the
proportion of Product prescriptions written in that calendar
quarter in the Aytu Sales Channel. Such product will be multiplied
by a [**] commission rate and represent the Acerus Commission
Payment under Section 7.1(a)(iii)(1). For clarity, the Aytu
proportion of Product prescriptions equals the number of Product
prescriptions written in that calendar quarter in the Aytu Sales
Channel divided by the total Product prescriptions written in that
same calendar quarter.

 

 

 

31

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

 

 

 

 

(iv)

The Product Net
Revenue attributable to the Acerus Sales Channel under
Section 7.1(a)(iii)(2) for a given calendar quarter, will
equal (i) the product of Net Product Revenue multiplied by (ii) the
proportion of Product prescriptions written in that calendar
quarter in the Acerus Sales Channel. Such product will be
multiplied by a [**] commission rate and represent the Acerus
Commission Payment under Section 7.1(a)(iii)(2). For clarity,
the Acerus proportion of Product prescriptions equals the number of
Product prescriptions written in that calendar quarter in the
Acerus Sales Channel divided by the total Product prescriptions
written in that same calendar quarter.

 

(v)

The sum of Acerus
Commission Payments under Section 7.1(c)(iii) and Section
7.1(c)(iv) will then be reduced by the Product Costs proportional
to the prescriptions written in that calendar quarter in the Acerus
Sales Channel and will represent the Commission Payment payable to
Acerus under Section 7.1(a)(iii)(1) and Section 7.1(a)(iii)(2). For
clarity, the Acerus proportion of Product prescriptions equals the
number of Product prescriptions written in that calendar quarter in
the Acerus Sales Channel divided by the total Product prescriptions
written in that same calendar quarter.

 

(vi)

If it is unclear
whether a particular prescription should be accounted for in the
Acerus Sales Channel or the Aytu Sales Channel, the Net Revenue
associated with such prescription shall be divided in accordance
with the proportion of prescriptions between the two Sales Channels
for such calendar quarter and any adjudications required for
discrepancies shall be handled by the JCC.

 

(vii)

For purposes of
this Section 7.1(c), the following shall apply:

 

(1)

For any Product
sold that was purchased by Aytu under the 2016 Agreement at a price
equal to Acerus COGS plus [**] (“Previously Purchased Product”),
and then sold into the Aytu Sales Channel or the Acerus Sales
Channel, Acerus will refund Aytu an aggregate amount equal to the
[**] paid above Acerus COGS.

 

(2)

In order to
determine the number of prescriptions to be applied in the
calculations set forth in this Section 7.1, the Parties shall use
the number of prescriptions as reported by the data sources listed
in Schedule 7.1(c)(vii)(3), as such schedule may be amended from
time to time by the JCC. If there are discrepancies between the
data sources listed on Schedule 7.1(c)(vii)(3), such discrepancies
shall be resolved or reconciled by the JCC.

 

 

 

32

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

 

 

 

 

(d) The example set
forth on Schedule 7.1(d) illustrates this calculation.

 

(e) Notwithstanding the
foregoing, if the Aytu Sales Channel generates Net Revenues of at
least [**] in a half-calendar year (January 1-June 30 or July
1-December 31) during the Term and the Acerus Sales Channel
generates Net Revenues of less than [**] in the same calendar
half-year, Acerus shall pay a license fee to Aytu, within
forty-five (45) days of the end of said calendar half-year, in an
amount equal to the product of (i) [**] minus the actual annual Net
Revenues generated by the Acerus Sales Channel in such calendar
half-year and (ii) [**]; provided that at the end of the calendar
year Aytu shall reimburse Acerus for such license fee if during
that full calendar year the Acerus Sales Channel generates Net
Revenues in excess of [**] in the same calendar year. If the
relevant time period above starts other than on the first day of
the calendar year, the foregoing shall be paid on a pro rata
basis.

 

7.2 Supply Price of
Product.

 

(a) Supply Price. The price for Product
(except for supply of placebo dispensers, which shall be supplied
in accordance with Section 5.1(a)(iii)) to be paid by Aytu
shall be equal to Acerus COGS for the Product (calculated in United
States Dollars using the applicable daily rate of exchange on the
date of the invoice delivered in accordance with
Section 7.2(b) upon delivery of applicable Product, as
published in The Wall Street
Journal, New York edition) (the “Supply Price”).

 

(b) 
Payments.

 

(i)

Acerus shall
invoice Aytu for all Product delivered to Aytu in accordance with
Section 5.1(c)(iii) in an amount equal to Acerus COGS for such
Product (calculated in United States dollars using the applicable
daily rate of exchange on the date of the invoice delivered in
accordance with Section 7.2(b), as published in The Wall Street Journal, New York
edition) (on a per Unit basis, the “Invoiced Amount per Unit”). Aytu
shall pay the amount of such invoice not later than thirty
(30) days following Aytu’s receipt of such invoice;
provided, however, that Aytu may contest any invoice or portion
thereof, to the extent that it reasonably believes that the charges
reflected therein are inappropriate or lack a clear basis (paying
all charges that are appropriate). Once any such issue or concern
is resolved, Aytu shall pay any remaining appropriate charges
within thirty (30) days of the date that such resolution
occurs.

 

(ii)

Not later than
twenty-one (21) days after the end of each calendar quarter during
the Term, Aytu shall provide Acerus with a report detailing
Aytu’s reasonable estimate as of the date of such report for
the Acerus Commission Payment due in respect of the Products
supplied hereunder during the immediately preceding calendar
quarter.

 

(iii)

Within forty-five
(45) days after the end of each applicable calendar quarter,
Aytu shall deliver a report setting out the amount of the Acerus
Commission Payment due, setting forth in reasonable detail the
calculation of such amount, signed by the Chief Financial Officer
of Aytu certifying that all deductions are in accordance with GAAP
and this Agreement. Payment of such Acerus Commission Payment due
for such calendar quarter shall accompany delivery of such
quarterly report.

 

 

 

33

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

 

 

 

 

7.3 Payment
Method.
All payments due under this Agreement to Acerus shall be made by
bank wire transfer in immediately available funds to an account
designated by Acerus. All payments due under this Agreement to Aytu
shall be made by bank wire transfer in immediately available funds
to an account designated by Aytu.

 

7.4 
Taxes. The Parties will
each be solely responsible for their own compliance with
governmental jurisdictional tax regimes, if applicable, to any
transaction contemplated in this agreement. If Aytu determines that
it is required by any Applicable Laws to withhold any taxes from
any payment made by Acerus (an “Original Payment”) pursuant to
this Agreement (“Withholding
Taxes”), Aytu shall (a) withhold the required amount
and pay it to the appropriate governmental authority; Aytu shall
provide to Acerus such documentation as may be reasonably requested
by Acerus, evidencing the payment of such Withholding Taxes to the
appropriate governmental authority, and the calculation of the
amount of such Withholding Taxes. The Parties will reasonably
cooperate in completing and filing documents required under the
provisions of any Applicable Laws in connection with the making of
any required tax payment or withholding payment, or in connection
with any claim to a refund of or credit for any such payment.
Notwithstanding any of the foregoing, neither Party currently
expects any Withholding Taxes to apply to the payments from Aytu to
Acerus pursuant to this Agreement. In the event such Withholding
Taxes apply in the future, the Parties agree to negotiate an
amendment to this Agreement to structure the relationship in a way
that does not trigger Withholding Taxes for Acerus and both Parties
will collaborate in good faith to give effect to such an
amendment.

 

7.5 Interest. If either Party
fails to make any payment due under this Agreement within [**] of
the date upon which such payment is due, then interest shall accrue
on such payment on a daily basis from the date such payment was
originally due at a rate equal to LIBOR (or a suitable replacement
agreed by the Parties such as SOFR) (as published in The Wall Street Journal, New York
edition) plus [**], or at the maximum rate permitted by Applicable
Law, whichever is the lower, and such interest shall be paid when
such payment is made.

 

7.6 Currency
Exchange. All amounts
referred to in this Agreement are expressed in, and all payments to
Acerus hereunder will be payable in, U.S. Dollars.

 

7.7 
Records.

 

(a) Retention.

 

(i)

Acerus
Records

 

 
After
the A&R Closing Date, Acerus shall keep for at least three
(3) years following the end of the calendar year to which they
pertain complete records of all matters relating to (1) all
development work on Product done by Acerus and, as may be further
described in the Quality Agreement, (2) Manufacturing of Product
(including as are necessary or useful in calculation of Acerus COGS
for the Product) and (3) Commercialization activities performed by
Acerus pursuant to Article 6. Such recordkeeping obligations shall
survive any expiration or termination of this Agreement for the
time period provided herein.

 

(ii)

Aytu
Records

 

 
Aytu
shall keep for at least three (3) years following the end of
the calendar year to which they pertain complete records of Net
Revenue of Product in the Territory and Commercialization
activities performed by Aytu pursuant to Article 6. Such record
keeping obligation shall survive any expiration or termination of
this Agreement for the time provided herein.

 

 

 

34

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

 

 

 

 

 

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

 

(c) Underpayment
or Overpaymen. If, as a result
of any audit pursuant to Section 7.7(b), it is shown that the
Audited Party’s payments to the Requesting Party under this
Agreement with respect to the period of time audited were less than
the amount that should have been paid pursuant to this Agreement,
then the Audited Party shall, within thirty (30) days after
the Requesting Party’s demand therefor, pay the Requesting
Party the amount of such shortfall. If, as a result of any audit
pursuant to Section 7.7(b), it is shown that the Audited
Party’s payments to the Requesting Party under this Agreement
with respect to the period of time audited exceeded the amount that
should have been paid pursuant to this Agreement, then the
Requesting Party shall, within thirty (30) days after the
Audited Party’s demand therefor, pay the Audited Party the
amount of such excess.

 

 

 

35

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

 

 

 

 

 

7.8 No Right of
Setoff. Neither Party
shall have the right to set off any amount owing to it by the other
Party against any amount payable by it to the other Party under
this Agreement or otherwise.

 

Article
8

 

LICENSE RIGHTS AND LIMITATIONS,
RESTRICTIONS AND OWNERSHIP

 

8.1 License to
Aytu. Subject to the
terms and conditions of this Agreement, Acerus hereby grants to
Aytu, commencing on the A&R Closing Date and for the duration
of the Term, a royalty-free, exclusive (including with respect to
Acerus except as to Acerus’ performance of its obligations
under this Agreement) license (with the right to sublicense solely
in accordance with Section 8.7), under the Acerus Intellectual
Property, to develop (to the extent required for Aytu fulfill its
obligations hereunder), use, offer for sale, sell, import, market
and Promote Product in the Territory.

 

8.2 Grant Back
License. Subject to the
terms and conditions of this Agreement, Aytu hereby grants to
Acerus, commencing on the A&R Closing Date and for the duration
of the Term, a royalty-free, exclusive license (with the right to
sublicense solely in accordance with Section 8.7) to Promote
the Product in the Acerus Sales Channel in the Territory. Aytu
shall retain the right to Promote and distribute the Product on an
exclusive basis in the Aytu Sales Channel and to be the exclusive
seller of the Product to all wholesalers, pharmacies, and other
customers that receive direct shipments of Product for the Term set
forth in this Agreement.

 

8.3 Pharmacy
Promotion. Both Parties
shall have the right to Promote the Product to pharmacies, in the
manner set forth herein.

 

8.4 Acerus
Trademarks.

 

(a) Grant
of License

 

.
Subject to the terms and conditions of this Agreement, Acerus
hereby grants to Aytu, commencing on the A&R Closing Date and
for the duration of the Term, an exclusive, royalty-free license
(with the right to sublicense in accordance with Section 8.7)
to use the Acerus Trademarks solely in connection with
Commercialization of the Product in the Territory, in accordance
with the terms of the license granted in Section 8.1. Aytu may use
the Acerus Trademarks on Product subject in all respects to all
Applicable Laws and Regulatory Requirements.

 

(b) Use
of Trademark. Aytu shall comply
with all Applicable Laws pertaining to the proper use and
designation of the Acerus Trademarks. Additionally, Aytu shall use
Commercially Reasonable Efforts to:

 

(i)

ensure that, when
required, the Acerus Trademarks are accompanied by words accurately
describing the nature of the goods or services to which it relates
and that the Acerus Trademarks are displayed in accordance with
such branding guidelines as Acerus may provide from time to
time;

 

 

 

36

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

 

 

 

 

(ii)

to the extent
reasonably practicable after receipt of a written request from
Acerus, comply with the reasonable requirements of Acerus as to the
form, manner, scale and context of use of the Acerus
Trademarks;

 

(iii)

display the proper
form of trademark and service mark notice associated with the
Acerus Trademark in accordance with instructions received from
Acerus;

 

(iv)

include, on any
item which bears the Acerus Trademarks, a statement identifying
Acerus as the owner of the Acerus Trademark and stating that Aytu
is an authorized licensee and user of the Acerus
Trademark;

 

(v)

not conduct,
without the written consent of Acerus, the whole or any part of its
business under a business name or trading style which incorporates
any of the Acerus Trademarks; and

 

(vi)

neither use nor
display any of the Acerus Trademarks in such relation to any other
mark or marks owned by any Third Party, Aytu or an Affiliate of
Aytu as to suggest that the multiple marks constitute a single or
composite trademark, service mark, or are under the same
proprietorship.

 

(c) Additional
Trademark Terms

 

. Aytu
shall not take any action inconsistent with Acerus’ ownership
of the Acerus Trademarks. Any benefits (including good will)
accruing from Aytu’s use of the Acerus Trademarks shall
automatically vest in Acerus. Aytu shall not form any combination
trademarks or trade names with the Acerus Trademarks. Aytu shall
grant Acerus reasonable access to Aytu’s records pertaining
to packaging and promotional activities, packaging and Promotional
Materials for the purpose of inspecting Aytu’s use of the
Acerus Trademarks.

 

8.5 Ownership of
Materials.

 

(a) As between the
Parties, Acerus shall own all right, title and interest in and to
the Promotional Materials, Training Materials, advertising and
labeling for the Product, in each case including all content
contained therein and all applicable copyrights and trademark
rights (but excluding any trademark or other rights in Aytu House
Marks). To the extent Aytu (or any of its Affiliates or other
agents) obtains or otherwise has a claim to the Promotional
Materials, Training Materials, advertising and labeling for the
Product, Aytu shall assign, and hereby does assign, to Acerus (or
its designated Affiliate) all of Aytu’s (and its
Affiliate’s and other agent’s) right, title and
interest in and to such Promotional Materials, Training Materials,
advertising and labeling for the Product, and all content therein
(excluding, in each case, any rights in Aytu House Marks). Acerus
hereby grants to Aytu an exclusive (other than with respect to
Acerus or any of its Permitted Sublicensees or Subcontractors),
royalty-free license to use the Promotional Materials, Training
Materials, advertising and labeling for the Product and under all
copyrights that cover the Promotional Materials, Training
Materials, advertising and labeling for the Product, solely as
necessary to Promote and otherwise Commercialize the Product in the
Aytu Sales Channel in the Territory, in each case in accordance
with this Agreement, including the quality control and usage
restrictions set forth in this Agreement. Other than in accordance
with Section 8.7, such license shall be non-transferable and
non-sublicensable. Any such license shall automatically and
immediately terminate upon the expiration or earlier termination of
this Agreement for any reason.

 

 

 

37

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

 

 

 

 

(b) Aytu hereby
grants to Acerus the non-exclusive right to use the Aytu House
Marks exclusively in connection with the Promotional Materials,
Training Materials, advertising and labeling for the Product in the
Acerus Sales Channel during the Term, to the extent consistent with
this Agreement. Such non-exclusive right shall automatically and
immediately terminate upon the expiration or earlier termination of
this Agreement for any reason and shall be non-transferable and
non-sublicensable.

 

8.6 Negative
Covenants.

 

(a) Aytu hereby
covenants that it shall not (i) use or practice, nor shall it cause
or permit any of its Affiliates, licensees or Permitted
Sublicensees to use or practice, directly or indirectly, any Acerus
Intellectual Property or Acerus Trademarks for any other purposes
other than those expressly permitted by this Agreement or (ii)
develop, conceive or reduce to practice any intellectual property
rights (including Know-How) that reads on to or is incorporated
into the Product, and if any such intellectual property rights are
developed, Aytu shall promptly assign (or cause its Affiliates and
applicable personnel to assign) to Acerus all right, title and
interest in and to such intellectual property rights.

 

(b) Acerus hereby
covenants that it shall not use or practice, nor shall it cause or
permit any of its Affiliates, licensees or Permitted Sublicensees
to use or practice, directly or indirectly, any Aytu House Marks
for any other purposes other than those expressly permitted by this
Agreement.

 

8.7 Sublicensing;
Subcontracting.

 

(a) Neither Party may
assign or sublicense its rights or obligations under this Agreement
(other than for a Party’s potential use of a Third Party
contract commercial organization as described in Section 8.7(b)
below) to another pharmaceutical/biotechnology company without the
prior written consent of the other Party.

 

(b) Subject in all
respects to the restrictions contained in Section 8.7(a) above,
each Party shall have the right to subcontract to Affiliates and
Third Parties (“Subcontractors”) its
responsibilities under this Agreement, without obtaining the
consent of the other Party; provided that the applicable Party
shall at all times remain responsible for the activities of its
Subcontractors. Each Party may engage independent sales
representatives and contract sales organizations to perform its
activities under the Commercialization Plan without the prior
written consent of the other Party.

 

(c) Each Party shall
enter into agreements with its Subcontractors that contain
confidentiality terms at least as strict as those set forth in
Article 10 hereof.

 

8.8 Neither Party
grants (or agrees to grant) to the other Party any right or license
to use any of its intellectual property, Know-How or other
proprietary information, materials or technology, or to practice
any of its patent, trademark, or trade dress rights, except as
expressly set forth in this Agreement.

 

 

 

38

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

 

 

 

 

Article
9

 

INTELLECTUAL
PROPERTY

 

9.1 Background Intellectual
Property. Except as
expressly set forth herein, as between the Parties, each Party is
and shall remain the owner of or shall retain control over all
intellectual property, including without limitation, patents,
patent applications, Know-How, trade secrets, trademarks,
copyrights and Confidential Information that it owns or controls as
of the A&R Closing Date or that it develops or acquires
thereafter pursuant to activities independent of this Agreement
(“Background Intellectual
Property”). No rights in any such Background
Intellectual Property are transferred to the other Party unless
expressly provided for herein.

 

9.2 Pulsatile Dosing Patent
Family.

 

(a) Assignment. Aytu hereby assigns all
right, title and interest owned by Aytu in the Pulsatile Dosing
Patent Family to Acerus, and Aytu agrees to cooperate with Acerus
in obtaining and sustaining of rights in the Pulsatile Dosing
Patent Family, and in confirming Acerus’ ownership thereof,
but at the expense of Acerus, including by delivery of executed
assignments pursuant to Section 2.5(d)(ii)(1).

 

(b) Use
of Rights in the Pulsatile Dosing Patent Family.

 

(i)

Territory/Nasal Gel Drug Delivery
Technology. Rights in the Pulsatile Dosing Patent Family in
nasal gel drug delivery technology in the Territory shall be Acerus
Intellectual Property. If Acerus decides to abandon any rights in
the Pulsatile Dosing Patent Family in nasal gel drug delivery
technology in the Territory, Acerus will notify Aytu and provide
Aytu the right to prosecute and maintain any such
rights.

 

(ii)

Territory/non-Nasal Gel Drug Delivery
Technology. Neither party will use, license, or abandon
rights in the Pulsatile Dosing Patent Family in non-nasal gel drug
delivery technology in the Territory without the prior written consent of the other
party, which consent shall not be unreasonably
withheld. Neither Party will develop a
Competing Product using rights in the Pulsatile Dosing
Patent Family in non-nasal gel drug delivery technology in the
Territory.

 

(iii)

Ex-Territory/Nasal Gel Drug Delivery
Technology. Rights in the Pulsatile Dosing Patent Family in
nasal gel drug delivery technology outside the Territory shall be
used solely at the discretion of Acerus and Aytu will have no right
in or to use such rights.

 

(iv)

Ex-Territory/non-Nasal Gel Drug Delivery
Technology. Neither party will use, license, or abandon
rights in the Pulsatile Dosing Patent Family in non-nasal gel drug
delivery technology outside the Territory without the prior written consent of the other
party, which consent shall not be unreasonably
withheld. Aytu shall not develop a
Competing Product using rights in the Pulsatile Dosing
Patent Family in non-nasal gel drug delivery technology outside the
Territory.

 

(c)  [**].

 

 

 

39

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

 

 

 

 

9.3 Patent Prosecution and
Maintenance. Except as
provided below, Acerus shall have the sole right and obligation to
prosecute and maintain the Acerus Patents in the Territory, to the
extent it has the rights to do so. On the reasonable request of
Acerus, Aytu shall cooperate, in all reasonable ways, in connection
with the prosecution of the Acerus Patents. Should Acerus decide
that it is no longer interested in maintaining or prosecuting a
particular Acerus Patent in the Territory in respect of which it
has the rights to so maintain and prosecute, Aytu may assume such
prosecution and maintenance in the Territory at its sole expense.
If Aytu assumes prosecution or maintenance of any Acerus Patent in
respect of which Acerus has the right to prosecute or maintain
pursuant to the immediately preceding sentence, then: (a) Acerus
shall not so abandon or fail to prosecute or maintain such Patent
if Aytu advises Acerus within ten (10) Business Days of notice of
Acerus’
intention to abandon or not prosecute or maintain the applicable
Acerus Patent, that Aytu desires to assume prosecution or
maintenance of the applicable Acerus Patent in Acerus’ name at
Aytu’s expense, in
which case Aytu shall have the right, but not the obligation
to do so (and, for greater certainty, Acerus shall be under no
obligation to assign the applicable Acerus Patent to Aytu), (b) to
the extent that Aytu so assumes prosecution or maintenance of such
Patent and to the extent required or useful for Aytu to initiate or
maintain a lawsuit or dispute with respect thereto, Acerus agrees
(at Aytu’s cost
and expense for Acerus’ reasonable out
of pocket costs and expenses agreed to in advance by Aytu) to (i)
be named as a party to any lawsuit or other dispute with any Person
regarding such Patent, (ii) exercise on behalf of Aytu Acerus’ rights under
any applicable agreement regarding the applicable Patent, and (c)
it shall not exercise any rights in relation to (including any
rights to assert or defend) such Patent without Aytu’s prior written consent, such
consent to be granted or withheld in Aytu’s sole discretion.
Aytu shall list Acerus Patents applicable to Product on the
packaging therefor, subject in all respects to all applicable laws
and Regulatory Requirements.

 

9.4           

Patent Assignments. Within [**] of the
A&R Signing Date (or such other time as the Parties may agree),
for each patent and patent application that is part of the Acerus
Patents, Acerus shall execute and record at the United States
Patent and Trademark Office or use commercially reasonable efforts
to cause its Affiliates or licensors to execute and record as
required, all assignments and other documents relating to ownership
and use interests such as license agreements, to evidence the
complete change of title from the inventors to the current assignee
and Acerus’
exclusive rights licensed from the current assignee. For avoidance
of doubt, Acerus shall ensure, at a minimum, that assignments of
all patents listed in the Orange Book for NATESTO® and all
patents and patent applications listed in Schedule 1.8 of the 2016
Agreement, including those that are continuations-in-part of the
Patent Application No. 10/772,964, are executed and recorded at the
United States Patent and Trademark Office.

 

 

9.5           

Infringement
by Third Parties

.

 

(a) Each of Aytu and
Acerus shall promptly notify the other Party in writing of any
alleged or threatened infringement of any Acerus Patent or the
Acerus Trademarks by a Third Party product, of which the Party
becomes aware.

 

 

 

40

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

 

 

 

 

(b)           Acerus
shall have the sole right, on behalf of itself and in its name, to
bring and control any action or proceeding with respect to any
alleged or threatened infringement of an Acerus Patent pertaining
to Product in the Territory. If Acerus declines to initiate any
action or proceeding against an infringer of an Acerus Patent
pertaining to Product in the Territory within ninety days of
becoming aware of any alleged or threatened infringement, Aytu will
have the right, but not the obligation, to bring and control any
action or proceeding with respect to such alleged or threatened
infringement of an Acerus Patent pertaining to Product in the
Territory.

 

(c)           For
any action or proceeding brought by Acerus or Aytu under this
Section 9.5, the other party shall cooperate reasonably in any
such effort, all at the initiating Party’s expense, and the
Parties shall reasonably cooperate to address new facts or
circumstances that come to light during the course of any such
action or proceeding that may affect the need for one Party or the
other to participate in such action. Both Parties agree to be
joined as a party plaintiff, at the initiating Party’s
expense, in any such action if needed for the initiating Party to
bring or continue an infringement action hereunder. The
non-initiating Party shall, at its own expense and with its own
counsel, have the right to advise and provide comments with respect
to any action brought under this Section 9.5.

 

(d)           Except
as otherwise agreed to by the Parties as part of a cost-sharing
arrangement, any recovery realized as a result of any litigation
under this Section 9.5 (including, for greater certainty, the
proceeds of any settlement relating to such litigation), after
reimbursement of any litigation expenses of Aytu and Acerus, as
applicable, shall be retained by Acerus for purposes of this
Agreement, except that to the extent any recovery is based on lost
sales or revenue, Aytu shall be entitled to receive a percentage of
any such recovery realized by Acerus based on the proportion of
such lost sales or revenue applicable to the Aytu Sales Channel, as
determined in good faith by agreement of the Parties, after
reimbursement of each of the Parties’ related litigation
expenses.

 

9.6           Third
Party Claims for Infringement or
Misappropriation. Each Party shall
promptly notify the other in writing of any potential or actual
allegation, claim or suit that the Manufacture, use or sale of
Product or any component thereof, or any other activities that are
undertaken pursuant to this Agreement, infringes or misappropriates
a Third Party’s patent or other proprietary rights. Acerus
shall be solely responsible for any royalties and other amounts
payable for or under any and all Third Party licenses with respect
to any Third Party patent or other proprietary rights if such Third
Party rights are infringed by the Manufacture, importation, sale,
or use of Product in the Territory or the marketing or Promotion of
the Product in the Acerus Sales Channel, except that Acerus shall
not be liable for any such Third Party licenses entered into by
Aytu without Acerus’ consent, with such consent not to be
unreasonably withheld, delayed or conditioned. Aytu shall be solely
responsible for any royalties and other amounts payable for or
under any and all Third Party licenses with respect to any Third
Party patent or other proprietary rights if such Third Party rights
are infringed by the marketing or Promotion of the Product in the
Aytu Sales Channel.

 

 

 

41

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

 

 

 

 

 

Article
10

 

CONFIDENTIALITY

 

10.1 Definition of
Confidential Information. During the Term,
either Party (the “Disclosing
Party”) may from time to time furnish the other Party
(the “Receiving
Party”) with scientific, technical, trade or business
information or materials which are treated by the Disclosing Party
as confidential or proprietary, including, without limitation,
information and materials related to, Product, processes, formulae,
procedures, tests, equipment, data, batch records, reports,
know-how, sources of supply, patent positioning, relationships with
consultants and employees, business plans and business
developments, and information concerning the existence, scope or
activities of any research, design, development, Manufacturing,
marketing or other projects. All such disclosed information shall
be referred to herein as “Confidential Information” if it is
provided in writing and is designated or otherwise identified as
“Confidential” at the time of disclosure, or if it is
first provided orally, visually, or by inspection and is identified
as “Confidential” at the time of disclosure.
Notwithstanding the foregoing, Confidential Information shall also
include such information or materials that would or should
reasonably be identified or understood by the Receiving Party to be
the confidential or proprietary information of the Disclosing
Party, even if they are not so identified as described in the
previous sentence. “Acerus
Confidential Information” means any and all
Confidential Information for which Acerus is the Disclosing Party
and Aytu the Receiving Party hereunder. “Aytu Confidential Information”
means any and all Confidential Information for which Aytu is the
Disclosing Party and Acerus the Receiving Party
hereunder.

 

10.2 
Confidentiality. Except to the
extent expressly authorized by this Agreement or otherwise agreed
in writing by the Parties, the Parties agree that for the Term and
for seven (7) years thereafter, the Receiving Party shall keep
confidential and shall not publish or otherwise disclose and shall
not use for any purpose any Confidential Information furnished to
it by the Disclosing Party pursuant to this Agreement.

 

10.3 Exclusions. Notwithstanding
anything herein to the contrary, the obligations of confidentiality
and nonuse under this Article 10 applicable to Confidential
Information hereunder shall not apply to information
that:

 

(a) at the time of
disclosure, is known publicly or thereafter becomes known publicly
through no fault of the Receiving Party, its Affiliates or
agents;

 

(b) is disclosed to the
Receiving Party on a non-confidential basis by a Third Party that
is not subject to any confidentiality obligations to the Disclosing
Party with respect to such information;

 

(c) was developed by
the Receiving Party independently of information obtained from the
Disclosing Party, as shown by the Receiving Party’s prior
written records;

 

(d) was already known
to the Receiving Party before receipt from the Disclosing Party, as
shown by the Receiving Party’s prior written records;
or

 

(e) is released with
the prior written consent of the Disclosing Party (subject to the
terms and conditions, if any, set out in the applicable
consent).

 

 

 

42

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

 

 

 

 

10.4 Permitted
Disclosures.

 

(a) Notwithstanding the
foregoing, each Receiving Party may disclose the Disclosing
Party’s Confidential Information (i) to the Receiving
Party’s employees, consultants (including, for greater
certainty, financial advisors), Affiliates, agents, contractors,
licensees or Permitted Sublicensees who are bound by obligations
relating to confidentiality at least as restrictive of those
contained herein and who have a need to know such information in
connection with the Receiving Party’s performance of its
obligations or practice of its rights under this Agreement,
(ii) to Regulatory Authorities in connection with any
Regulatory Submissions required for development of Product or in
compliance with Regulatory Requirements, including, without
limitation, any requirements under or pursuant to the Food and Drug
Administration Amendments Act of 2007, or (iii) pursuant to
Sections 10.5 and 10.6. The foregoing shall not preclude
either Party from issuing a press release regarding a regulatory
filing (including where not mandatory or required) or its general
condition, operations and activities; provided that the issuing
Party promptly notifies the other Party prior to disclosing such
Confidential Information.

 

(b) Notwithstanding
anything to the contrary herein, Aytu acknowledges and agrees that
Acerus shall have the sole right to participate in and produce
scientific presentations or publish scientific publications in the
Territory with respect to pre-clinical and clinical development of
the Product (including results and observations observed during any
such pre-clinical and clinical development, and including any such
development work associated with the twice-daily dosing of the
Product). Prior to any such proposed presentation or publication,
Acerus shall, as soon as reasonably practicable prior to the
presentation or publication date, as the case may be, provide the
Aytu with the text of the applicable presentation or
publication.

 

10.5 Terms of
Agreement. The Parties agree
that the terms of this Agreement will be considered Confidential
Information of both Parties. Subject to Section 10.6 below, no
Party shall, without the prior written consent of the other Party,
disclose in any manner to any Third Party the terms and conditions
of this Agreement, except for terms or subject matter which has
been the subject of prior public disclosure or has been mutually
approved for such disclosure and except as set forth below. Each
Party acknowledges that the other Party may be legally required to
file this Agreement as an exhibit to its filings with the U.S.
Securities and Exchange Commission. In addition: (a) either
Party may disclose such terms as are required to be disclosed in
its publicly-filed financial statements or other public statements,
pursuant to Applicable Laws and Stock Exchange rules (e.g., the
rules of the U.S. Securities and Exchange Commission, Canadian
securities administrators, NASDAQ, Toronto Stock Exchange, NYSE,
OTC Markets or any other Stock Exchange on which securities issued
by either Party may be listed (each, a “Stock Exchange”)); provided, such
Party shall provide the other Party with a copy of the proposed
text of such statements or disclosure (including any exhibits
containing this Agreement) sufficiently in advance of the scheduled
release or publication thereof to afford such other Party a
reasonable opportunity to review and comment upon the proposed text
(including redacted versions of this Agreement), (b) either
Party shall have the further right to disclose the material
financial terms of this Agreement under a confidentiality
obligation no less protective than those set forth in this
Agreement, to any potential licensee, sublicensee, acquirer, merger
partner or potential providers of financing and their advisors or,
in the case of Acerus, to the owner of any Acerus Patents
Controlled by Acerus, (c) Aytu shall have the right to
disclose information regarding the development or Commercialization
status of Product in the Territory to the extent such disclosure is
deemed reasonably necessary or desirable by Aytu, and
(d) Acerus and Aytu shall have the right to disclose
information regarding the development or Commercialization status
of Product in the Territory to the extent such disclosure by Acerus
or Aytu, as applicable, is required by Applicable Laws or Stock
Exchange rules.

 

 

 

43

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

 

 

 

 

 

10.6 Mandatory
Disclosure.

 

(a) Notification
and Consultation

 

. In
the event that the Receiving Party is required by applicable law,
including without limitation disclosure obligations imposed under
federal securities laws, or by court order or judicial or
administrative process to disclose any part of the Disclosing
Party’s Confidential Information (including material terms or
conditions of this Agreement), the Receiving Party shall
(i) promptly notify the Disclosing Party of each such
requirement and identify the documents so required thereby, so that
the Disclosing Party may seek or request the Receiving Party to
seek an appropriate protective order, confidential treatment or
other remedy and/or waive compliance by the Receiving Party with
the provisions of this Agreement and (ii) consult with the
Disclosing Party on the advisability of taking legally available
steps to resist or narrow the scope of such
requirement.

 

(b) Limited
Disclosure. If, in the
absence of such a protective order, confidential treatment request,
other remedy or waiver by the Disclosing Party, the Receiving Party
is nonetheless required to disclose any part of the Disclosing
Party’s Confidential Information or any material terms or
conditions of this Agreement, the Receiving Party may disclose such
Confidential Information or material terms or conditions without
liability under this Agreement, except that the Receiving Party
shall furnish only that portion of the Confidential Information or
material terms or conditions that is legally required.

 

Article
11

 

 

 

PUBLIC ANNOUNCEMENTS; USE OF
NAMES; PUBLICATIONS

 

11.1 Public
Announcements. The Parties agree
that each Party’s public announcement of the execution of
this Agreement shall be approved by the other Party, with such
approval not to be unreasonably withheld, conditioned, or delayed,
and the Parties will cooperate in drafting their respective press
releases therefor as soon as practicable after the signature of
this Agreement by the Parties. Neither Party shall make any other
statement to the public regarding the execution and/or any other
aspect of the subject matter of this Agreement, except:
(i) where a Party reasonably believes disclosure is required
under Applicable Laws, and (ii) either Party may use the text
of a statement previously approved by the other Party. This
provision shall not apply to the matters covered by
Sections 10.5, 10.6 or 11.2.

 

11.2 Use of Names and
Logos. Acerus shall not
make use of the name of Aytu or any of its Affiliates in any
advertising or Promotional Material, or otherwise, without the
prior written consent of Aytu except pursuant to Section 6.6
(Promotional Materials), Section 8.5(b) (Ownership of Materials) or
Section 11.1 (Public Announcement). Except as provided in
Section 6.6 (Promotional Materials), Section 8.4 (Acerus
Trademarks License), Section 10.4 (Permitted Disclosures) or 11.1
(Public Announcement), Aytu shall not make use of the name of
Acerus or any of its Affiliates in any advertising or Promotional
Material, or otherwise, without the prior written consent of
Acerus. Notwithstanding the foregoing, either Party may use the
name of the other Party or its Affiliates in the context of
mentioning the existence of this Agreement in advertising or
Promotional Materials or other materials required to be filed in
accordance with applicable securities laws; provided that, to the
extent practicable, prior to any disclosures to the Securities and
Exchange Commission or the applicable Stock Exchange in connection
herewith, the Disclosing Party shall provide the other Party with
advance notice.

 

 

 

44

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

 

 

 

 

 

Article
12

 

REPRESENTATIONS, WARRANTIES AND
COVENANTS

 

12.1 Mutual Representations and
Warranties of Acerus and Aytu. Each of Acerus
and Aytu hereby represents and warrants to the other Party as of
the A&R Signing Date and as of the A&R Closing Date, except
to the extent such representations, warranties and covenants are
specifically made as of a particular date (in which case such Party
makes the representations, warranties and covenants as of such
particular date) as follows:

 

(a) It is duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or formation, as applicable.
It has the requisite corporate power and authority to conduct its
business as presently being conducted and as proposed to be
conducted by it.

 

(b) It has the
requisite corporate power and authority to enter into this
Agreement and to perform the services contemplated hereunder. All
corporate actions on its part, necessary for (i) the
authorization, execution, delivery and performance by it of this
Agreement, and (ii) the consummation of the transactions
contemplated hereby, have been duly taken.

 

(c) Assuming the due
authorization, execution and delivery by the other Party, this
Agreement is its legally valid and binding obligation, enforceable
against it in accordance with its terms (except in all cases as
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting
the enforcement of creditors’ rights generally and except
that the availability of the equitable remedy of specific
performance or injunctive relief is subject to the discretion of
the court or other tribunal before which any proceeding may be
brought).

 

(d) There is no
contractual restriction or obligation binding on either Party which
would be materially contravened by execution and delivery of this
Agreement or by the performance or observance of its
terms.

 

(e) Each Party has and
will continue to have written contracts with all Third Parties
(including employees and Subcontractors) performing services on its
behalf under this Agreement where such services are intended to
create inventions that assign to such Party all inventions and
rights therein.

 

(f) to each
Party’s knowledge, no representation or warranty made by it
in this Agreement, nor any statement contained in any schedule
hereto furnished by it, contains any untrue statement of a material
fact or omits any material fact necessary to make the statements
contained herein or therein not misleading.

 

(g) Neither Party, nor
any of its Affiliates, nor any of their respective officers,
employees, agents, representatives or other Persons used in the
performance of its obligations under this Agreement has been
debarred or suspended under 21 U.S.C. §335(a) or (b), excluded
from a federal health care program, debarred from federal
contracting, or convicted of or pled nolo contendere to any felony,
or to any federal or state legal violation (including misdemeanors)
relating to prescription drug products or fraud
(“Debarred/Excluded”).

 

 

 

45

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

 

 

 

 

12.2 Product Warranties of
Acerus. Acerus hereby
warrants to Aytu with respect to the Manufacturing of the
Product:

 

(a) It will ensure that
all Product supplied to Aytu will conform to Specifications and be
Manufactured and tested in compliance with this Agreement, the
Specifications, the Quality Agreement and Applicable Laws,
including all Regulatory Requirements.

 

(b) It will, and will
use Commercially Reasonable Efforts to cause its Third Party
suppliers to, ensure that all Product Manufactured by or on behalf
of Acerus and sold to Aytu pursuant to this Agreement will at the
time of delivery to the common carrier for such Product (i) meet
the Specifications and (ii) not be misbranded or adulterated within
the meaning of the FD&C Act.

 

(c) All Product
delivered to Aytu pursuant to this Agreement will, at the time of
such delivery, be free and clear of all liens, security interests
and other encumbrances.

 

Acerus’
obligations provided in Section 5.1(d) and 13.2 shall be the sole
and exclusive remedies available to Aytu with respect to Product
that fails to meet the warranties set forth in this Section
12.2.

 

12.3 Additional Representations and
Warranties of Acerus. Acerus hereby
further represents and warrants to Aytu as of the A&R Signing
Date and as of the A&R Closing Date, except to the extent such
representations, warranties and covenants are specifically made as
of a particular date (in which case Acerus makes the
representations, warranties and covenants as of such particular
date) as follows:

 

(a) Acerus shall be the
sole and exclusive owner of, or shall have exclusive rights to, all
of the Acerus Intellectual Property in existence on the A&R
Closing Date, and the Acerus Patents are in full force and effect
and have been maintained to date. Acerus has the exclusive right to
grant the rights granted under this Agreement commencing on the
A&R Closing Date. Acerus has not received any claims or notice
of any challenges from any Third Party disputing the validity and
enforceability of the issued Acerus Patents in existence on the
A&R Closing Date.

 

(b) There is no pending
or, to the knowledge of Acerus, threatened claim, interference,
opposition or demand of any Third Party challenging the ownership,
validity or scope of any Acerus Intellectual Property or Acerus
Trademarks in existence as of the A&R Closing
Date.

 

(c) Acerus has not been
served with any action or proceeding nor, to the knowledge of
Acerus, is there any threat of an action or proceeding nor, so far
as Acerus is aware, is there any event or state of facts, in each
case that could materially and adversely affect the rights granted
to Aytu herein.

 

 

 

46

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

 

 

 

 

(d) Except as set forth
on Schedule 12.3, Acerus has not granted to any Third Party
any rights with respect to the Acerus Trademarks. The Acerus
Trademarks are in full force and effect, are subsisting and valid,
and have been maintained to date, and are not subject to any
opposition proceedings. Its use or its Affiliates’ use of the
Acerus Trademarks does not infringe, misappropriate, or otherwise
violate any rights of any person and, to the knowledge of Acerus,
no Person is infringing, misappropriating or otherwise violating
the Acerus Trademarks.

 

(e) Acerus has not
received any Form 483 observations, warning letters or other
communications from a Regulatory Authority which would reasonably
be expected to adversely impact the Manufacture of
Product.

 

(f) Acerus now has in
effect and shall maintain in good standing for the period set forth
in Section 13.5 the insurance described in Section
13.5.

 

(g) No consent,
approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any
federal, state or local governmental authority, or any Third Party,
on the part of Acerus or any Affiliate thereof is required in
connection with the execution, delivery and performance of this
Agreement.

 

(h) No research or
development of the Acerus Intellectual Property, manufacture of
Products or research leading to the inventions covered by the
Acerus Intellectual Property was supported in whole or part by
funding or grants by any governmental agency or philanthropic or
charitable organization.

 

(i) Acerus and its
Affiliates have taken all reasonable actions necessary or
appropriate to preserve the confidentiality of all trade secrets,
proprietary and other Confidential Information material to Products
and Acerus Intellectual Property.

 

(j) Except as set out
in Schedule 12.3, the Acerus Intellectual Property and Acerus
Trademarks are wholly owned by or licensed to Acerus, free and
clear of all mortgages, pledges, charges, liens, equities, security
interests, or other encumbrances or similar agreements, or any
other obligation as at the A&R Closing Date.

 

(k) Neither Acerus nor
any Affiliate thereof is aware of any Third-Party activities which
would constitute misappropriation or infringement of any Acerus
Intellectual Property.

 

12.4 Additional Representations and
Warranties of Aytu. Aytu hereby
further represents and warrants to Acerus as of the A&R Signing
Date and as of the A&R Closing Date, except to the extent such
representations, warranties and covenants are specifically made as
of a particular date (in which case Aytu makes the representations,
warranties and covenants as of such particular date) as
follows:

 

(a) Except as would not
reasonably be expected to have a material adverse effect on the
Promotion of the Products in the Territory (i) to Aytu’s
knowledge, it and its Affiliates have Promoted the Product and
promoted its other products in the Territory in compliance with
Applicable Laws in all material respects, (ii) to Aytu’s knowledge, as of
the A&R Closing Date, neither it nor any of its Affiliates (A)
is being investigated, and there are no ongoing investigations, by
any Regulatory Authority or other government authority in the
Territory specifically or primarily relating to the Promotion of
any product (including the Product) in the Territory, nor (B) has
it or any of its Affiliates received written notice that any
Regulatory Authority or other government authority in the Territory
intends to conduct any such investigation, and (iii) neither it nor
any of its Affiliates (x) is a party or the subject of any action,
suit or other proceeding that is pending as of the A&R Closing
Date or was pending or filed at any time during the two (2) year
period prior to the A&R Closing Date, that alleges that it or
any of its Affiliates have violated any Applicable Laws in the
Territory in connection with the Promotion of any product in the
Territory, nor (y) has it or any of its Affiliates received any
threats in writing of any such action, suit or other proceeding as
of the A&R Closing Date or at any time during the two (2) year
period prior to the A&R Closing Date.

 

 

 

47

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

 

 

 

(b) It has not paid,
offered or promised to pay, or authorized the payment directly or
indirectly of any moneys or anything of value to (i) any government
official or employee, or any political party or candidate for
political office for the purpose of influencing any act or decision
of such official or of the government to obtain or retain business
or direct business to any person, in each case with respect to the
Product; or (ii) any Healthcare Provider or payor if any one
purpose is to encourage, influence or reward the prescribing or
purchasing of the Product or recommending the prescribing or
purchasing of the Product, except in either case, as permitted by
Applicable Laws (such as payments under applicable safe-harbor
provisions).

 

(c) There is no action,
suit, proceeding or investigation pending or, to its knowledge,
threatened before any court or administrative agency against Aytu
or its Affiliates which could, if there were an unfavorable
decision, directly or indirectly, reasonably be expected to
materially adversely affect its ability to perform its obligations
hereunder.

 

12.5 Disclaimer. EXCEPT AS
EXPRESSLY PROVIDED IN THIS AGREEMENT, EACH PARTY DISCLAIMS ANY AND
ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, AND NONINFRINGEMENT OF THE INTELLECTUAL
PROPERTY RIGHTS OF THIRD PARTIES.

 

12.6 
Non-Solicitation. Except for any
mutually agreed transfer of qualified Aytu personnel to Acerus,
during the Term and for a period of [**] thereafter, neither Party
nor its Affiliates shall actively recruit or solicit any of the
other Party’s sales force or other personnel who perform
marketing and promotional activities for the Product without the
prior written consent of the other Party; provided that each Party
and its Affiliates shall be permitted to engage in general
recruitment through advertisements or recruiting through head
hunters so long as employees and personnel of the other Party are
not specifically targeted.

 

12.7 
Non-Competition. During the Term
and for a period of [**] thereafter:

 

(a) Acerus shall not,
directly or indirectly, develop, offer for sale, commercialize,
research for the purpose of commercializing, sell, market or
promote any Competing Product in the Territory (including any
product that is substitutable at the retail pharmacy level for the
Product); provided, that if Acerus elects during the Term to
develop, offer for sale, commercialize, research for the purpose of
commercializing, sell, market or promote any Next Generation
Product in the Territory, such Next Generation Product, upon
receipt of Regulatory Approval in the Territory, will be deemed to
be the “Product” hereunder for the remainder of the
Term of this Agreement; and

 

(b) Aytu shall not,
directly or indirectly, develop, offer for sale, commercialize,
research for the purpose of commercializing, sell, market or
promote any Competing Product in the Territory (including any
product that is substitutable at the retail pharmacy level for the
Product);

 

provided,
however, that the foregoing restrictions with respect to a Party
shall not apply to any Competing Products that are being
researched, developed, manufactured or commercialized by a Third
Party (or any Affiliate of such Third Party that was an Affiliate
prior to the consummation of such acquisition) at the time such
Third Party acquires more than [**] of the issued and outstanding
capital stock of such Party or all or substantially all of the
assets of such Party.

 

The
Parties hereby acknowledge and agree that any material breach of
this Section 12.7 shall constitute a material breach of this
Agreement, entitling the nonbreaching Party to terminate this
Agreement in accordance with Section 14.2(b), subject to any
cure period set forth therein.

 

 

48

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

 

 

 

 

 

12.8 Covenants of the
Parties.

 

(a) Each Party will at
all times during the Term comply with all Applicable Laws in
performing its obligations under this Agreement.

 

(b) Each Party has
adopted and will at all times during the Term maintain a corporate
compliance program that is intended to assist each Party to be in
compliance with Applicable Laws, standards and guidelines relevant
to its business, addressing: (i) label Promotion; (ii) fraud and
abuse; (iii) a code of conduct and other applicable policies and
procedures; (iv) training on the code of conduct, policies and
procedures; (v) an auditing and monitoring function, and (vi)
designation of a compliance officer.

 

(c) Each Party shall
promptly notify the other Party if it becomes aware that it, any of
its Affiliates, or any officer, employee, agent, representative or
other Person who is performing any activities under this Agreement
is or becomes Debarred/Excluded;

 

 

Article
13

INDEMNIFICATION

 

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

 

 

 

49

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

 

 

 

 

 

13.2 Indemnification
by Acerus. Subject to
Sections 13.3 and 13.4, Acerus shall indemnify, defend and
hold Aytu, its Affiliates, and their respective directors,
officers, employees consultants, contractors, licensees,
sublicensees and agents (collectively, the “Aytu Indemnitees”) harmless from
and against any and all Claims brought by a Third Party against
such Aytu Indemnitee, including any Damages resulting therefrom, in
each case to the extent resulting from or based on: (a) any
development work (including pre-clinical, clinical, manufacturing,
or quality-related) done by Acerus for Product;
(b) Acerus’ breach of this Agreement or the 2016
Agreement; (c) the negligence or willful misconduct of, or
violation of Applicable Law by, Acerus, its Affiliates, licensees
or sublicensees, or their respective employees, contractors or
agents in the performance of this Agreement or the 2016 Agreement;
(d) breach of a contractual or fiduciary obligation owed by
Acerus to a Third Party (including without limitation
misappropriation of trade secrets); (e) intellectual property
infringement, trademark infringement, unfair competition, false
designation of origin, trademark dilution, passing off or
misappropriation related to the Acerus Intellectual Property,
Acerus Trademarks, the Products, or any other property provided by
Aytu under this Agreement, including with respect to the
development, Manufacture, use, sale, import, marketing or Promotion
of Product; (f) any Acerus Manufacturing Defect; or
(g) the use, development, Commercialization of the Product by
or on behalf of Acerus prior to the A&R Signing Date. An
“Acerus Manufacturing
Defect” shall be a defect in the Manufacturing or
other similar defect in Product where the Product (as manufactured
by or for Acerus) is not Manufactured in accordance with the
Specifications, the terms of this Agreement, the Regulatory
Approval, Regulatory Requirements, and/or all other Applicable
Laws. The foregoing indemnity obligation shall not apply to any
Damages to the extent such Damages result from any matter for which
Aytu is required to indemnify Acerus pursuant to this
Agreement.

 

13.3 Indemnification
Procedures. A Party seeking
indemnification under Section 13.1 or 13.2 hereof (the
“Indemnitee”)
shall promptly notify the other Party (the “Indemnitor”) in writing of any
claim, lawsuit or other action in respect of which the Indemnitee,
its Affiliates, or any of their respective directors, officers,
employees and agents intend to claim such indemnification. The
Indemnitee shall permit, and shall cause its Affiliates and their
respective directors, officers, employees and agents to permit the
Indemnitor to have complete control of such defense (except as set
forth below) so long as it promptly assumes the defense and
prosecutes the defense with appropriate diligence and care. The
Party controlling the defense hereunder (the “Defending Party”) shall have the
authority, at its discretion, to settle any such claim, lawsuit or
other action only with the prior written consent of the Party who
is not controlling the defense (the “Non-Defending Party”); provided,
however, that such consent shall not be unreasonably withheld,
delayed or conditioned so long as such settlement does not
adversely affect the Non-Defending Party’s rights hereunder
or impose any obligations on the Non-Defending Party in addition to
those set forth herein. The Defending Party and the Non- Defending
Party, and their respective Affiliates, and their respective
directors, officers, employees and agents shall cooperate fully
with each other and their respective legal representatives in the
investigation and defense of any claim, lawsuit or other action
covered by this indemnification. The Defending Party shall keep the
Non-Defending Party reasonably informed of the progress of the
action and shall consider the comments and observations of the
Non-Defending Party timely given in the course of the proceedings.
If the Indemnitor is the Defending Party, the Indemnitee shall have
the right, but not the obligation, to be represented by counsel of
its own selection and expense. Notwithstanding the foregoing, the
Indemnitee may be represented by separate counsel at the expense of
the Indemnitor if a conflict of interest exists between the
interests of the Indemnitor and Indemnitee so that a single counsel
representing Indemnitor cannot adequately defend the rights of the
Indemnitee.

 

13.4 Survival of
Indemnification Obligations. The provisions of
this Article 13 shall survive the termination or expiration of
this Agreement.

 

13.5 Insurance. Each Party shall
maintain insurance with creditworthy insurance companies in
accordance with Applicable Law against such risks and in such
amounts as are usually maintained or insured against by other
companies of established repute engaged in the same or a similar
business. Throughout the Term and (i) for a period of
twenty-four (24) months thereafter, or (ii) until the
expiry date of the last lot of the Product delivered under this
Agreement, whichever is later, each Party shall maintain in full
force and effect, at its own cost and expense, comprehensive
general liability insurance, including product liability and
contractual liability insurance, of not less than
$5,000,000 in the aggregate, naming the other Party and its
Affiliates as additional insureds thereon, and providing that the
insurer shall give such Party at least ninety (90) days prior
written notice of cancellation in coverage. Such Party’s
insurance coverage shall be provided by an insurer or insurers
(having a minimum AM Best rating of A or otherwise acceptable to
the other Party, in its sole discretion) licensed to do business in
the Territory and will be primary and non-contributing to any
liability insurance carried by the other Party (only insofar as the
coverage relates to claims arising from each Party’s
operations). Acerus shall deliver to Aytu, promptly upon request, a
certificate of insurance evidencing the foregoing. Aytu shall
deliver to Acerus, promptly upon request, a certificate of
insurance evidencing the foregoing.

 

 

 

50

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

 

 

 

 

 

Article
14

 

TERM AND
TERMINATION

 

14.1 
Term. The initial term
of this Agreement shall commence on the A&R Closing Date and
shall expire upon the later to occur of: (a) [**] from the
A&R Closing Date; (b) the date on which the last of the
Acerus Patents has expired or been invalidated; or (c) a Third
Party has obtained Regulatory Approval for, and completed the first
commercial sale of, an AB-Rated Generic Product within the
Territory, unless earlier terminated in accordance with
Section 14.2 (the “Initial Term”), and this Agreement
shall thereafter automatically renew for successive one [**]
periods, unless either Party gives at least [**] prior written
notice of non-renewal to the other Party (each such [**] renewal
period, if any, a “Renewal
Term,” and together with the Initial Term, the
“Term”). For
clarity, if a Next Generation Product is covered by this Agreement,
the Term will still end upon the expiration of the last to expire
Acerus Patent covering the original Product and not the last to
expire patent covering the Next Generation Product.

 

14.2 
Termination.

 

(a) Mutual
Agreement. This Agreement
may be terminated in its entirety at any time upon mutual written
agreement between the Parties.

 

(b) Material
Breach. Either Party may
terminate this Agreement at any time upon written notice to the
other Party if the other Party is in material default or breach of
this Agreement and such material default or breach is not cured
within (i) ninety (90) days after written notice thereof
is delivered to the defaulting or breaching Party, or (ii) in
the case of a breach that cannot be cured within ninety
(90) days, within a reasonable period not exceeding one
hundred and twenty (120) days after written notice thereof is
delivered to the defaulting or breaching Party, so long as the
breaching Party is making a good faith effort to cure such default.
Termination shall not be the sole remedy for material breach of
this Agreement, and a Party may choose to continue to perform
hereunder and in response to any material breach may bring a claim
for damages (including a reduction in consideration due hereunder
going forward) and other available remedies under
Section 15.11 and injunctive relief under Section 15.12,
and bringing such a claim in good faith shall not constitute a
breach of this Agreement.

 

 

 

51

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

 

 

 

 

 

(c) Insolvency. If either Party shall
(i) become bankrupt or insolvent, (ii) file for a
petition therefor, (iii) make an assignment for the benefit of
creditors, or (iv) have a receiver appointed for its assets,
which appointment shall not be vacated within sixty (60) days
after the filing, then the other Party shall be entitled to
terminate this Agreement forthwith by written notice to such
Party.

 

(d) Safety Reasons. Either Party may
terminate this Agreement at any time upon written notice to the
other Party if (i) Acerus withdraws the Product from the market in
the Territory for a safety reason, or (ii) (1) the FDA materially
restricts the indications for the Product or (2) federal or state
pricing controls are imposed that, in either case, would result in
obvious and substantial loss of sales for the Product.

 

(e) Clinical
Trials Costs

 

(f) . If Acerus fails
to perform any of the Required Clinical Trials, Aytu may, at
Aytu’s option, pay any expenses related to such Required
Clinical Trials, provided that Acerus shall be required to
reimburse Aytu for such payment or, at Acerus’ request,
directly to offset it against Product Net Revenue attributable to
the Acerus Sales Channel.

 

(f)           Challenge.
If at any time during the Term, Aytu brings a proceeding or action
challenging the validity, scope, enforceability or ownership of any
of the Acerus Patents or Acerus Trademarks licensed to Aytu under
this Agreement, Acerus shall have, at its sole option, the right to
terminate this Agreement upon notice to Aytu, such termination to
be effective only if Aytu does not withdraw such challenge as soon
as reasonably practicable after such notice. Without limiting the
generality of the foregoing, Aytu specifically agrees that filing a
request for re-examination, knowingly copying patent claims so as
to institute an interference, or filing an opposition with respect
to any of the Acerus Patents shall be deemed a challenge under this
Section 14.2(f).

 

14.3 Consequences of
Termination.

 

(a) Termination
of Rights

 

(b) . Upon expiration
or termination of this Agreement for any reason, all licenses
granted to Aytu under this Agreement shall immediately terminate,
except as necessary to permit Aytu to sell off existing inventory
under Section 14.3(b), and, except as set forth in this Section
14.3, the rights and obligations of the Parties under this
Agreement shall terminate as of the date of such termination or
expiration and Aytu shall make any payments to Acerus required to
be made on account of activities that occurred prior to the
termination or expiration of the Agreement; provided, that except
as set forth in this Section 14.3, any payments contemplated to
survive termination in accordance with Section 14.3(b) shall remain
payable in accordance with the terms and conditions of such
sections.

 

 

 

52

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

 

 

 

 

(b) Sell
Off of Product. Upon expiration
of the Term or termination of this Agreement pursuant to
Section 14.2, the rights granted to Aytu under this Agreement
shall survive such expiration or termination only such that Aytu
shall have the right to sell off Product then in Aytu’s
inventory or on order from Acerus on the date on which the
applicable notice of termination is provided or this Agreement
otherwise expires; provided that Aytu pays to Acerus any payments
due in accordance with Section 7.1. Any other license provided
for by Acerus to Aytu in this Agreement shall, upon any such
termination or expiration, immediately and automatically
terminate.

 

(c) Trademark
Assignments. Subject to the
licenses provided herein and to Section 14.3(f), promptly following
any expiration of the Term or termination of this Agreement
pursuant to Section 14.2, Aytu shall assign to Acerus all
trademarks used in the Commercialization of the Product (to the
extent not already owned by Acerus).

 

(d) Return
of Confidential Information. Upon expiration
or termination of this Agreement in its entirety, unless otherwise
directed by Aytu, Acerus shall promptly return all Aytu
Confidential Information to Aytu, except for a single copy or
sample for documentation purposes only. Upon expiration or
termination of this Agreement in its entirety, unless otherwise
directed by Acerus, Aytu shall promptly return all Acerus
Confidential Information, Promotional Materials and Training
Materials to Acerus, except for a single copy or sample to be
retained for documentation purposes only.

 

(e) Accrued
Obligations. Except as set
forth herein, any termination or expiration of this Agreement shall
not relieve either Party of any obligation which has accrued prior
to the effective date of such termination or expiration, which
obligations shall remain in full force and effect for the period
provided therein.

 

(f) Termination Fee. If this Agreement is
terminated under Section 14.2(b) above by Aytu, then Aytu shall
only be required to pay Acerus amounts due and payable as of the
effective date of termination and Acerus shall pay to Aytu, as
compensation for past investment in the business and for future
lost profits and not as a penalty, an amount (the
“Termination
Payments”) equal to [**] of Net Revenue for [**]
following the effective date of termination (the
“Termination Payment
Period”), which amounts shall be due and payable by
Acerus by bank wire transfer in immediately available funds within
forty-five (45) days following each calendar quarter during the
Termination Payment Period. For clarity, if this Agreement is
terminated by Acerus pursuant to Sections 14.2(b), (c), (d) or (f),
no Termination Payments shall be due to Aytu.

 

14.4 Remedies. Termination of
this Agreement in accordance with and fulfillment of all
obligations set forth in this Article 14 shall not affect any
other rights or remedies that may be available to a Party in law or
equity, all remedies being cumulative and not
exclusive.

 

 

 

53

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

 

 

 

 

Article
15

 

MISCELLANEOUS

 

15.1 Notices. Any notice,
request, demand, waiver, consent, approval or other communication
which is required or permitted to be given to any Party shall be in
writing and shall be deemed given only (a) when delivered to
the Party personally, (b) five (5) days after sent to the
Party by registered mail, return receipt requested, postage
prepaid, (c) the second Business Day after sent by a
nationally recognized courier service guaranteeing next-day or
second-day delivery, charges prepaid, in each case addressed to the
Party at its address set forth below, or (d) when transmitted
as a PDF attachment to an e-mail (with response e-mail confirming
receipt) and followed with a copy by first class certified or
registered mail, postage prepaid, return receipt requested, or at
such other address as such Party may from time to time specify by
notice given in the manner provided herein to the Party entitled to
receive notice hereunder:

 

For
Acerus: 

Acerus
Pharmaceuticals Corporation

 

2486
Dunwin Drive

 

Mississauga,
Ontario

 

L5L 1J9

 

Attn:
Chief Executive Officer

 

E-mail:
[**]

 

With a
copy (which shall not constitute notice) to:

 

Hogan
Lovells US LLP

 

100
International Drive, Suite 2000

 

Baltimore,
MD 21202 USA

 

Attn:
Asher M. Rubin

 

E-mail:
[**]

 

For
Aytu: 

Aytu BioScience,
Inc.

 

373
Inverness Parkway, Suite 206

 

Englewood,
CO 80112 USA

 

Attn:
Chief Executive Officer

 

E-mail:
[**]

 

With
copies (which shall not constitute notice) to:

 

 

 

Dorsey
& Whitney, LLP

111
Main St.

Salt
Lake City, UT 84111 USA

Attn:
Nolan S. Taylor

E-mail:
[**]

 

15.2 Entire
Agreement. This Agreement,
the Quality Agreement and the Safety Agreement (including any
Schedules other attachments hereto or thereto, as applicable)
constitutes the entire agreement between the Parties with respect
to the subject matter hereof, and no oral or written statement may
be used to interpret or vary the meaning of the terms and
conditions hereof. This Agreement supersedes any prior or
contemporaneous agreements and understandings, whether written or
oral, between the Parties with respect to the subject matter
hereof, including the non-disclosure agreement between Acerus and
Aytu dated December 20, 2018 (the “Existing CDA”). All information
disclosed by Acerus pursuant to the Existing CDA shall be deemed
Acerus Confidential Information for the purposes of this Agreement,
and all information disclosed by Aytu pursuant to the Existing CDA
shall be deemed Aytu Confidential Information for the purposes of
this Agreement. Nothing in this Agreement shall alter, modify or
limit any obligation or liability of either Party under the 2016
Agreement with regard to time periods prior to the A&R Closing
Date.

 

 

 

54

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

 

 

 

 

 

15.3 Assignment. Neither Party may
assign or otherwise transfer this Agreement without the prior
written consent of the other Party; provided that either Party may
assign this Agreement without the consent of the other Party to any
Affiliate or in connection with the acquisition of such Party or
the sale of all or substantially all of the assets of such Party,
subject to Section 8.7(a). Any assignment of this Agreement in
violation of this Section 15.3 shall be null and void.
Assignment of this Agreement by either Party shall not relieve the
assignor of its obligations hereunder. This Agreement shall be
binding upon and inure to the benefit of the Parties and their
respective successors and permitted assigns.

 

15.4 Force
Majeure. Both Parties
shall be excused from the performance of their obligations under
this Agreement to the extent that such performance is prevented by
force majeure and the nonperforming Party promptly provides notice
of the prevention to the other Party. Such excuse shall be
continued so long as the condition constituting force majeure
continues and the nonperforming Party takes reasonable efforts to
minimize the effect of and overcome or remove the cause or
condition causing such force majeure. For purposes of this
Agreement, force majeure shall include conditions beyond the
control of the Parties, including, without limitation, an act of
God, war, civil commotion, terrorist act, labor strike or lock-out,
epidemic, failure or default of public utilities or common
carriers, destruction of production facilities or materials by
fire, earthquake, storm or like catastrophe, and failure of plant
or machinery (provided that such failure could not have been
prevented by the exercise of skill, diligence, and prudence that
would be reasonably and ordinarily expected from a skilled and
experienced person engaged in the same type of undertaking under
the same or similar circumstances). Notwithstanding the foregoing,
a Party shall not be excused from making payments owed hereunder
because of a force majeure affecting such Party.

 

15.5 Headings. The descriptive
headings contained in this Agreement are for convenience of
reference only and shall not affect in any way the meaning or
interpretation of this Agreement.

 

15.6 Independent
Contractor. Each Party shall
be acting as an independent contractor in performing under this
Agreement and shall not be considered or deemed to be an agent,
employee, joint venturer or partner of the other
Party.

 

15.7 Severability. If any term or
other provision of this Agreement is invalid, illegal or incapable
of being enforced by any law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner
materially adverse to any Party.

 

15.8 No Third-Party
Beneficiaries. Except as
provided in Article 13 in respect to Acerus Indemnitees and
Aytu Indemnitees, nothing in this Agreement, either express or
implied, is intended to or shall confer upon any Third Party any
legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.

 

15.9 Amendment. This Agreement
may not be amended or modified except by an instrument in writing
signed by authorized representatives of Aytu and
Acerus.

 

 

 

55

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

 

 

 

 

 

15.10 Governing Law. This Agreement
shall be governed by, and construed in accordance with, the laws of
the State of New York, United States of America (without giving
effect to principles of conflicts of laws that would require the
application of any other law) and the federal laws of the U.S., in
each case without reference to choice of law rules.

 

15.11 Dispute
Resolution. In the event of
any dispute under this Agreement (other than disputes excluded in
subsection (a) below), the Parties shall refer such dispute to
the Applicable Senior Officers for attempted resolution by good
faith negotiations within thirty (30) days after such referral
is made. If the Applicable Senior Officers are unable to resolve
the dispute within the time allotted, either Party may proceed as
set forth below.

 

(a) Alternative
Dispute Resolution. Any dispute,
controversy or claim arising out of or relating to the validity,
construction, enforceability or performance of this Agreement,
including disputes relating to an alleged breach or to termination
of this Agreement and including any claim of inducement by fraud or
otherwise, but excluding any dispute, controversy or claim arising
out of or relating to the validity, enforceability, or infringement
of any Acerus Patent or any suit for injunctive relief under
Section 15.12 (which shall be submitted to a court of
competent jurisdiction), shall be settled by mediation and
arbitration in the manner described below:

 

(b) Mediation.
The Applicable Senior Officers shall select a mediator with
appropriate expertise in the subject matter to which the dispute
relates, who will be engaged to resolve the dispute. If the
Applicable Senior Officers cannot agree on a mediator within
fifteen (15) days, each Party may seek appropriate resolution
through arbitration as described below. If the Parties are unable
to resolve their dispute through mediation within ninety
(90) days after selection of the mediator(s), either Party may
seek appropriate resolution through arbitration as described
below.

 

(c) 
Arbitration. Any dispute,
controversy or claim arising out of or relating to the validity,
construction, enforceability or performance of this Agreement which
is not resolved by mediation, including disputes relating to
alleged breach or to termination of this Agreement (other than
disputes referred to in Section 15.11(a) that are to be
submitted to a court of competent jurisdiction), shall be settled
by binding arbitration (“Arbitration”) in the manner
described below:

 

(d) Arbitration Request. If a Party intends
to begin an Arbitration to resolve a dispute, such Party shall
provide written notice (the “Arbitration Request”) to the other
Party informing such other Party of such intention and the issues
to be resolved. Within ten (10) Business Days after the
receipt of the Arbitration Request, the other Party may, by written
notice to the Party initiating Arbitration, add additional issues
to be resolved.

 

(e) Procedure.
The Arbitration shall be conducted pursuant to the then- current
JAMS Streamlined Arbitration Rules & Procedures for
disputes involving [**] or less and the JAMS Comprehensive
Arbitration Rules & Procedures for disputes involving more
than [**] or involving a right to terminate this Agreement under
Section 14.2(b), (c), (d) or (f). Notwithstanding those rules,
the following provisions shall apply to the Arbitration
hereunder:

 

 

 

56

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

 

 

 

 

 

(i)

Arbitrator

 

In the
event that the dispute at issue involves an amount less than [**],
the Arbitration shall be conducted by one (1) arbitrator (the
“Threshold 1
Arbitrator”). In the event, however, that the dispute
at issue involves an amount greater than [**]or the termination of
this Agreement under Section 14.2(b), (c), (d) or (f), the
Arbitration shall be conducted by a panel of three
(3) arbitrators (collectively, with the Threshold 1
Arbitrator, the “Arbitrators”). The Arbitrators
shall be selected from a pool of retired independent federal judges
to be presented to the Parties by JAMS. Neither Party shall engage
in ex parte contact with the Arbitrators.

 

(ii)

Proceedings

 

The
time periods set forth in the applicable JAMS rules shall be
followed, unless a Party can demonstrate to the Arbitrators that
the complexity of the issues or other reasons warrant the extension
of one or more of the time tables. Notwithstanding the foregoing,
the Arbitrators shall render a written opinion setting forth
findings of fact and conclusions of law with the reason therefor
stated within no later than six (6) months from the date on
which the Arbitrators were appointed to the dispute. A transcript
of the evidence adduced at the hearing shall be made and, upon
request, shall be made available to each Party. The Arbitrators
shall, in rendering their decision, apply the substantive law of
the State of New York and the federal law of the U.S., in each case
without regard to conflict of laws provisions, except that the
interpretation of and enforcement of this Section 15.11 shall
be governed by the Federal Arbitration Act. The Arbitrator shall
apply the Federal Rules of Evidence to the hearing. The proceeding
shall take place in New York, New York, or such other location as
the Parties may agree. The fees of the Arbitrators and JAMS shall
be paid by the losing Party, which shall be designated by the
Arbitrator. If the Arbitrator is unable to designate a losing
Party, it shall so state and the fees shall be split equally
between the Parties.

 

(iii)

Award

 

Subject
to Section 15.12, the Arbitrator is empowered to award any
remedy allowed by law, including money damages, prejudgment
interest and attorneys’ fees, and to grant final, complete,
interim, or interlocutory relief, including injunctive
relief.

 

(iv)

Costs

 

Except
as set forth in Sections 15.11(e)(ii) and (iii) above, each
Party shall bear its own legal fees and costs.

 

(v)

Confidentiality

 

The
Arbitration proceeding shall be confidential and the Arbitrators
shall issue appropriate protective orders to safeguard each
Party’s Confidential Information. Except as required by law,
no Party shall make (or instruct the Arbitrators to make) any
public announcement with respect to the proceedings or decision of
the Arbitrators without prior written consent of each other Party.
The existence of any dispute submitted to Arbitration, and the
award, shall be kept in confidence by the Parties and the
Arbitrators, except as required in connection with the enforcement
of such award or as otherwise required by Applicable
Law.

 

 

 

57

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

 

 

 

 

 

(vi)

Judgment;
Provisional Remedies

 

Any
court of competent jurisdiction may enter judgment upon any award.
The Parties consent to the jurisdiction of the above-specified
Court for the enforcement of these provisions and the entry of
judgment on any award. Each Party has the right before or during
the Arbitration to seek and obtain from the appropriate court
provisional remedies such as attachment, preliminary injunction,
replevin, etc. to avoid irreparable harm, maintain the status quo,
or preserve the subject matter of the Arbitration.

 

(vii)

Language

 

All
pleadings, complaints and other documents filed or presented in
connection with, and all proceedings in, any dispute resolution
proceeding described in this Section 15.11 must be in the
English language.

 

15.12 Injunctive
Relief

 

. Each
Party shall be entitled to seek injunctive relief to enforce the
respective covenants and agreements of the Parties in this
Agreement, including, without limitation, the respective rights and
obligations of the Parties under Articles 5, 8 and
10.

 

15.13 Nature of Licenses

 

. All
rights and licenses granted pursuant to this A&R Agreement are,
and shall otherwise be deemed to be, for purposes of 11 U.S.C.
§ 365(n), licenses of rights to “intellectual
property” as defined under 11 U.S.C. § 101(35A).
The Parties agree that Aytu, as a licensee of such rights under
this Agreement, shall retain and may fully exercise all of its
rights, including any right to enforce any exclusivity provision of
this Agreement, remedies, and elections under Bankruptcy Laws. To
the fullest extent permitted by Applicable Law, the Parties further
agree that, in the event of the commencement of a bankruptcy
proceeding by or against Acerus under the Bankruptcy Laws, Aytu
shall be entitled to all applicable rights under 11 U.S.C.
§ 365(n), including copies and access to, as appropriate,
any such intellectual property and all embodiments of such
intellectual property upon written request therefor by Aytu, and
such, if not already in its possession, shall be promptly delivered
to Aytu.

 

15.14 Waiver of Jury
Trial. EACH PARTY HERETO
WAIVES ITS RIGHT TO TRIAL OF ANY ISSUE BY JURY.

 

15.15 Limitation of
Liability. IN NO EVENT WILL
EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR LOST PROFITS OR FOR
ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE
DAMAGES, HOWEVER CAUSED, ON ANY THEORY OF LIABILITY AND WHETHER OR
NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES,
ARISING UNDER ANY CAUSE OF ACTION AND ARISING IN ANY WAY OUT OF
THIS AGREEMENT. THE FOREGOING LIMITATION WILL NOT LIMIT EITHER
PARTY’S INDEMNIFICATION OBLIGATIONS TO THE OTHER PARTY IN
RESPECT OF ANY THIRD PARTY CLAIM OR UNDER ARTICLE 13 OR OF
ARTICLE 10.

 

 

 

58

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

 

 

 

 

 

15.16 Survival.
Sections 7.1, 7.7, 8.4, 12.5, 14.2, and 14.3, and
Article 9, Article 10, Article 13 and Article 15
shall survive any termination or expiration of this
Agreement.

 

15.17 No Waiver. The failure of
either Party to enforce at any time for any period the provisions
of or any rights deriving from this Agreement shall not be
construed to be a waiver of such provisions or rights or the right
of such Party thereafter to enforce such provisions.

 

15.18 Counterparts. This Agreement
may be executed in one or more counterparts, and by the respective
Parties in separate counterparts, each of which when executed shall
be deemed to be an original but all of which taken together shall
constitute one and the same agreement.

 

15.19 Further
Assurances. Each Party shall
perform all further acts and things and execute and deliver such
further documents as may be necessary or as the other Party may
reasonably require to implement or give effect to this
Agreement.

 

[SIGNATURES
FOLLOW ON NEXT PAGE]

 

 

 

59

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

 

IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be executed as of the date first written above by their respective
duly authorized officers.

 

 

ACERUS
PHARMACEUTICALS CORPORATION

 

 

 

 

 

By:            

 

 

 

Name:                       

 

 

 

Title:                       

 

AYTU
BIOSCIENCE, INC.

 

 

 

 

 

By:            

 

 

 

Name:                       

 

 

 

Title:                       

 

 

 

 

60

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