Document:

License and Commercial Agreement between the Company and NeuroSystec Corporation

 Exhibit 10.39 
  
 LICENSE AND COMMERCIALIZATION AGREEMENT 
  
 THIS LICENSE AND COMMERCIALIZATION AGREEMENT including the exhibits referred to herein and attached hereto which are
hereby incorporated by reference (the “Agreement”), entered into as of May 13, 2004, by and between NeuroSystec Corporation, a Delaware corporation having a principal place of business located at Mann Biomedical Park, 25134 Rye
Canyon Loop, Suite 370, Valencia, CA 91355 (“NeuroSystec”) and DURECT Corporation, a Delaware corporation having a principal place of business located at 10240 Bubb Road, Cupertino, California 95104 (“DURECT”).

  
 RECITALS 
  
 A. WHEREAS, DURECT owns or has rights to certain information and data
relating to the development of [***], including rights in the Field (as defined below) and has conducted certain pre-clinical investigations regarding same.  
  
 B. WHEREAS, DURECT has licensed certain rights to Active Agents as locally delivered therapeutics in the Field with rights
to sublicense to NeuroSystec pursuant to [***]. 
  
 C.
WHEREAS, DURECT owns or has rights to certain proprietary technology for site-specific and time-released delivery of drugs, defined below as the DURECT Drug Delivery Platforms. 
  
 D. WHEREAS, NeuroSystec desires to research, develop and commercialize one or more Active Agents in the Field, possibly in
connection with a DURECT Drug Delivery Platform. 
  
 E. WHEREAS,
DURECT desires to grant certain rights and licenses to NeuroSystec for the development and commercialization of Active Agents in the Field, including rights under the DURECT Drug Delivery Platforms. 
  
 F. WHEREAS, DURECT desires to assist NeuroSystec in the development of Active
Agents in the Field in accordance with the terms and conditions herein set forth. 
  
 G. WHEREAS, NeuroSystec desires to purchase from DURECT supplies of the DURECT Drug Delivery Platforms, in each case to the extent desired by NeuroSystec in the commercialization of Active Agents in the Field.

  

 NOW, THEREFORE, in consideration of the mutual covenants and obligations set forth herein, and for
other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, NeuroSystec and DURECT hereby agree as follows: 
  

	1.	DEFINITIONS 

  
 As used in this Agreement, the following terms shall have the meanings indicated herein: 
  
 1.1. “Active Agent” shall mean the compounds disclosed in the Joint Patent Rights for use in the
Field. 
  
 1.2. “Affiliate” shall mean,
with respect to any Person, any other Person that, directly or indirectly, through one or more intermediates, is controlled by, controls, or is under common control with such Person, as of or after the Effective Date. For purposes of this definition
only, the term “control” means the possession of the power to direct or cause the direction of the management and policies of an entity, whether by ownership of voting stock or partnership interest, by contract or otherwise,
including, without limitation, direct or indirect ownership of fifty percent (50%) or more of the voting interest in the entity in question. 
  
 1.3. “Approval” shall mean the approval, including pharmacological, toxicological, and clinical approvals, which need to be
granted by the relevant governmental authorities of a territory, for importation, promotion, distribution, sale, and administration thereof to patients of a Licensed Product in such territory (including, without limitation, an NDA or PMA granted by
the FDA, including variations, extensions, and renewals thereof). 
  
 1.4. “Combination Product” shall mean a Licensed Product sold in combination with one or more commercially available products, which are sold separate from the Licensed Product by NeuroSystec or a third party in the
ordinary course of business (such one or more commercially available product or products shall hereinafter be referred to collectively as the “Combination Component”). By way of example and without limitation, the following would be a
Combination Product: [***]. 
  
 1.5.
“Commercially Reasonable Efforts” shall mean a level of effort that would ordinarily be applied by a company of similar size and assets in developing, registering and marketing pharmaceutical or medical device products of a
similar market potential, profit potential, strategic value and of similar scientific and regulatory risks. 
  
 1.6. “Confidential Information” shall have the meaning set forth in Section 11.1 below. 
  
 1.7. “Control” or “Controlled” shall
mean owned or in-licensed from a Third Party, with the ability to grant access to or a license or sublicense to NeuroSystec in accordance with this Agreement without violating the terms of any agreement or other arrangement with any Third Party.

  
 1.8. “Deductible Expenses” shall mean
to the extent actually incurred or allowed with respect to any sale of a Licensed Product: [***] 
  
 1.9. “DURECT Data” shall mean all data and information owned or Controlled by DURECT as of or after the Effective Date related to
the development, manufacturing, administration and use of Active Agent, the Joint Patent Rights, and any DURECT Drug Delivery Platforms, in each case in the Field, including but not limited to pre-clinical and clinical 
  

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 investigation protocols, data, and other results (including safety and efficacy data), information typically found in a
Chemistry, Manufacturing and Controls (CMC) section of an FDA filing, all FDA, EMEA and other regulatory submissions and correspondence, and information for investigations, including but not limited to investigator brochures. 
  
 1.10. [***]  
  
 1.11. “DURECT Drug Delivery Platforms” shall mean the
following drug delivery technology or methods owned or Controlled by DURECT: [***]. 
  
 1.12. “DURECT Know-How” shall mean all proprietary data, information and materials owned or Controlled by DURECT relating to the development and manufacturing of DURECT Drug Delivery Platforms,
any Active Agent and the Joint Patent Rights including, without limitation, know-how, test results, knowledge, techniques, discoveries, inventions, specifications, designs, regulatory filings, reports and all other documents, and specifically
includes, but is not limited to, the DURECT Data. 
  
 1.13.
“DURECT Patent Rights” shall mean any existing and future Patent Rights anywhere in the world owned or Controlled by DURECT specific to the DURECT Drug Delivery Platforms, the Active Agent and the Joint Patent Rights, including
without limitation, “DURECT Core Inventions,” as defined in Section 7.2 below. 
  
 1.14. “DURECT Intellectual Property” shall mean DURECT Know-How and DURECT Patent Rights. 
  
 1.15. “Effective Date” shall mean the date on which [***]. 
  
 1.16. “EMEA” shall mean the European Medicines
Evaluation Agency or any successor thereto. 
  
 1.17.
“Equity Agreement” shall mean the Stockholders Agreement of NeuroSystec dated May 13, 2004. 
  
 1.18. “FDA” shall mean the United States Food and Drug Administration, or any successor thereto. 
  
 1.19. “Field” shall mean local delivery of
therapeutic agent(s) to the middle or inner ear for the following indications: (a) treatment of tinnitus; and (b) to improve post-operative recovery and tolerance of surgical implantation of devices such as cochlear implants in the inner ear.

  
 1.20. “GAAP” shall mean United States
generally accepted accounting principles, consistently applied or, if applicable, corresponding accounting principles in effect in relevant jurisdictions outside the United States, consistently applied. 
  
 1.21. [***]  
  

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 1.22. “Joint Patent Rights” shall mean the intellectual property disclosed in the
patent application filed as [***], as well as any Patent Rights covering Inventions as that term is defined in the [***]. 
  
 1.23. “Licensed Product” shall mean: (i) any pharmaceutical formulation containing an Active Agent or, (ii) a product
incorporating an active ingredient and a DURECT Drug Delivery Platform pursuant to NeuroSystec opting to develop such Licensed Product under Section 2.7, in any case for use in the Field, either of which may be alone or in association or combination
with one or several other active or inactive ingredients, as a stand-alone product, or in combination with appropriate devices or bioerodable compounds which provide for site-directed delivery and/or extended release of such pharmaceutical
formulation, including, without limitation, DURECT Drug Delivery Platforms which is developed and commercialized by NeuroSystec under this Agreement. 
  
 1.24. “Marketing Approval Application” shall mean generally a marketing authorization application filed with the FDA, EMEA or
other applicable health/regulatory authority, for approval to market and distribute Licensed Products in the applicable jurisdiction, including, without limitation, an NDA or PMA filed with the FDA. 
  
 1.25. “NeuroSystec Data” shall mean all data and
information developed by or for NeuroSystec, its Affiliates and/or its Sublicensee(s) in connection with the development, manufacturing, administration and use of any Active Agent and generally of any Licensed Product in the Field during the Term,
including but not limited to pre-clinical and clinical investigation protocols, data, and other results (including safety and efficacy data), information typically found in a Chemistry, Manufacturing and Controls (CMC) section of an FDA filing, all
FDA, EMEA and other regulatory submissions and correspondence, and information for investigators including investigator brochures. 
  
 1.26. “NDA” shall mean a new drug application filed with or granted by the FDA with respect to a Licensed Product seeking approval
to commercially market said new drug. 
  
 1.27.
“Net Sales” shall mean with respect to a Licensed Product on a country-by-country basis (subject to the Combination Product adjustment below), [***]. 
  
 1.28. “Patent Rights” shall mean any patent applications, continuations, continuations-in-parts,
divisionals, or other patent applications (including, without limitation, provisional applications and PCT patent applications) and patents issuing from any of the foregoing including, but not limited to, any extension, renewal, reexamination,
substitution, or reissue of such patents and all foreign equivalents of any of the foregoing. 
  
 1.29. “Party” shall mean either NeuroSystec or DURECT, as appropriate, and collectively NeuroSystec and DURECT are referred to herein as the “Parties”. 
  
 1.30. “Party Data” shall mean either NeuroSystec Data
or DURECT Data, as appropriate, each to the extent developed under this Agreement after the Effective Date. 
  
 1.31. “Person” shall mean an individual, corporation, partnership, limited liability company (“LLC”), trust, business
trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein. 
  

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 1.32. “PMA” shall mean a pre-marketing application filed with or granted by the
FDA with respect to a Licensed Product seeking approval to commercially market said new device. 
  
 1.33. “Sublicensee(s)” shall mean any Third Party to whom NeuroSystec has sublicensed any or all of the rights in, to and under
the DURECT Patent Rights and/or DURECT Know-How licensed to NeuroSystec hereunder. 
  
 1.34. “Term” shall have the meaning set forth in Section 10.1 of this Agreement. 
  
 1.35. “Territory” shall mean the world. 
  

1.36. “Third Party” shall mean any Person or entity other than a Party. 
  
 1.37. “Valid Claim” shall mean any claim of an issued
and unexpired patent within the DURECT Patent Rights, which has not been held unenforceable or invalid by a court or other governmental agency of competent jurisdiction in an unappealed and unappealable decision, and which has not been disclaimed or
admitted to be invalid or unenforceable through reissue or otherwise. 
  
 1.38. “Work Plan” shall mean the detailed written plan, budget and timeline for the development of each Licensed Product, the first of which shall be drafted and approved by NeuroSystec within sixty (60) days after
the Effective Date, as may be amended from time to time thereafter at the direction of NeuroSystec. 
  
 For purposes of this Agreement, except as otherwise expressly provided herein or unless the context otherwise requires: (a) the use herein of the plural
shall include the single and vice versa and the use of the masculine shall include the feminine; (b) unless otherwise set forth herein, the use of the term “including” means “including but not limited to”; and (c) the words
“herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision. Additional terms may be defined throughout this Agreement. 
  

	2.	LICENSES 

  
 2.1. License Grant. DURECT hereby grants to NeuroSystec an exclusive, royalty-bearing license, including the right to grant sublicenses,
under the DURECT Intellectual Property, to research and develop, make, have made, use, sell, offer for sale, import, export, and otherwise commercialize any Licensed Product within the Field in the Territory. 
  
 2.2. Exclusivity. The license granted to NeuroSystec in section
2.1 is exclusive even with respect to DURECT, and DURECT shall not retain any rights under the DURECT Intellectual Property to research and develop, make, have made, use, sell, offer for sale or otherwise commercialize, import, and export any
Licensed Product within the Field in the Territory except as expressly provided herein. NeuroSystec hereby grants to DURECT a non-exclusive, royalty-free license with no right to sublicense, under its rights in the DURECT 
  

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 Intellectual Property solely to perform the work assigned to it under the Work Plan. During the Term, DURECT shall not,
directly or indirectly, perform any development or commercialization activities in the Field except as expressly set forth in the Work Plan and DURECT shall not, directly or indirectly, license any Third Party any rights to develop or commercialize
any product in the Field. 
  
 2.3. Sublicensing.
NeuroSystec may, under the rights granted to it hereunder, freely grant sublicenses to any Third Party, including the right to grant further sublicenses. 
  
 2.4. Termination of Exclusivity by DURECT. In the event that NeuroSystec has failed to use Commercially Reasonable Efforts to develop and
commercialize a Licensed Product in the Field, DURECT shall notify NeuroSystec in writing. NeuroSystec shall have the greater of [***] days from the date of such notice or, if [***] days is not commercially reasonable, such longer
period as is commercially reasonable, to remedy such failure (the “Cure Period”). By way of example without limitation, it is hereby agreed that cessation by NeuroSystec of all activities related to the research, development,
registration or marketing of all Licensed Products for a period of [***] consecutive months would constitute a failure to use Commercially Reasonable Efforts where such cessation was not otherwise due to a Force Majeure event pursuant to
Section 12.6. If NeuroSystec has failed to remedy such failure within the Cure Period, then DURECT may elect, in its sole discretion, by written notice to NeuroSystec to (i) terminate this Agreement, such termination to take effect in due course so
as to permit an orderly wind down of operations pertaining to this agreement; or (ii) convert the license granted in Section 2.1 to DURECT Intellectual Property into a non-exclusive license. However, if NeuroSystec disputes such lack of diligence in
writing within the Cure Period, DURECT shall not have the right to terminate this Agreement or convert the license in Section 2.1 to non-exclusive unless and until an arbitration tribunal has determined pursuant to Section 12.3 that NeuroSystec has
not used Commercially Reasonable Efforts to develop and commercialize a Licensed Product, and NeuroSystec has failed to cure such lack of diligence within a reasonable period of time to be set by such arbitration tribunal. DURECT acknowledges and
agrees that as a part of its development activities and diligence obligations hereunder NeuroSystec may conduct feasibility studies for the application of Licensed Product(s) to specific indications in the Field before undertaking further
development. 
  
 2.5. Limitation on
Commercialization. DURECT shall not market or sell any product for any use outside of the Field to the extent that the formulation of such product would not require a separate FDA Approval from the Approval already in place for the formulation
of the Licensed Product developed, marketed or sold by NeuroSystec, its Affiliates or Sublicensees if the formulation of such product were to be sold for the same indication as the Licensed Product; however, the foregoing shall not apply in the
event DURECT has commenced development of such product outside the Field prior to NeuroSystec’s commencement of development of the Licensed Product. For the avoidance of doubt, DURECT will not be restricted from marketing or selling a different
formulation for use outside of the Field if such formulation would require a different FDA Approval from the one in place for the Licensed Product in question. 
  

2.6. [***] 
  
 2.6.1. [***] 
  

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 2.6.2. [***] 
  
 2.7. Other Active Ingredients. DURECT acknowledges that NeuroSystec shall have the right to develop products
hereunder that do not include an Active Agent. In the event NeuroSystec develops, makes, uses, imports, sells or offers for sale a product not incorporating an Active Agent but incorporating a DURECT Drug Delivery Platform, then that product shall
be deemed a Licensed Product and the license granted pursuant to Section 2.1 hereunder shall include such product and such product shall be subject to the royalty set forth in Sections 4.1.5 (iii) and (iv) and 4.2, to the extent applicable.

  

	3.	DISCLOSURE OF DURECT KNOW-HOW. 

  
 3.1. Disclosure of DURECT Know-How. Subject to the last two sentences of this Section 3.1, DURECT shall on NeuroSystec’s reasonable
request upon reasonable notice transfer to or make available to NeuroSystec the then most current version of all relevant DURECT Know-How and related expertise useful for NeuroSystec with the goal of enabling NeuroSystec to undertake the research,
development and commercialization of the Active Agent and generally any Licensed Product so long as such Licensed Product is under active development. DURECT shall update DURECT Know-How and expertise related to any Active Agent and Licensed
Products previously transferred to NeuroSystec regularly at Development Committee meetings. NeuroSystec shall have access to DURECT personnel for the purpose of transferring and/or updating DURECT Know-How which shall be at no cost to NeuroSystec,
but is limited to a total of [***] person hours within the first [***] months after the Effective Date. Any request by NeuroSystec under this Section 3.1 for such transfer of DURECT Know-How requiring an expenditure of time by DURECT
personnel in excess of the [***] person hours will be deemed to be an assignment of work to DURECT under the Work Plan as specified in Section 6.2 below. 
  

	4.	ROYALTIES, PAYMENTS AND RELATED OBLIGATIONS 

  
 4.1. Payments by NeuroSystec to DURECT. As a partial reimbursement to DURECT for research and development and other expenses incurred by
DURECT in connection with its efforts researching and developing Active Agents and DURECT Drug Delivery Platforms, NeuroSystec shall pay to DURECT the amounts set forth in Sections 4.1.1 through 4.1.4 below: 
  
 4.1.1. Up-Front Fees. [***] 
  
 4.1.2. Equity. [***]  
  
 4.1.3. Milestones. Upon the first occurrence of the following
milestones by NeuroSystec, its Affiliates or any Sublicensee, each a one-time, non-refundable fee, due and payable within sixty (60) days after such event: 
  
 [***] 
  
 Each of the above milestones shall be payable once only and only for the first occurrence of each such milestone. 
  

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 4.1.4. Sublicense Fees. [***] of all upfront, milestone, or any special fees,
payments or other consideration realized by NeuroSystec in exchange for granting a sublicense of any rights granted in Section 2.1 to a Third Party (excluding Affiliates of NeuroSystec, for clarification examples of which include [***], and
affiliates of [***] that are also Affiliates of NeuroSystec, so long as such entities are Affiliates of NeuroSystec at the relevant time).  
  
 4.1.5. Royalties. In addition to the foregoing, earned running royalties for each tier of sales by NeuroSystec, its Affiliates and
Sublicensees in each country in the Territory where a Valid Claim within the DURECT Patent Rights exists: 
  

	 	(i)	a royalty of [***] of Net Sales of all Licensed Products (excluding any Licensed Product which does not include an Active Agent) covered by a Valid Claim, on that portion of
annual Net Sales in a calendar year which does not exceed [***]; and 

  

	 	(ii)	a royalty of [***] of Net Sales of all Licensed Products (excluding any Licensed Product which does not include an Active Agent) covered by a Valid Claim, on that portion of
annual Net Sales in a calendar year in excess of [***]; 

  
 and if a Licensed Product includes a DURECT Drug Delivery Platform: 
  

	 	(iii)	a royalty of [***] of Net Sales of all such Licensed Products covered by a Valid Claim, that include a DURECT Drug Delivery Platform, on that portion of annual Net Sales in a
calendar year which does not exceed [***]; and 

  

	 	(iv)	a royalty of [***] of Net Sales of all such Licensed Products covered by a Valid Claim, that include a DURECT Drug Delivery Platform, on that portion of annual Net Sales in a
calendar year in excess of [***]. 

  
 For the avoidance of
doubt, no royalty shall be payable under Sections 4.1.5 (i) and (ii) for a Licensed Product that does not include an Active Agent. Further, royalties payable under Section 4.1.5 (iii) and (iv), if in fact payable, shall be in addition to and not in
substitution for those payable under Section 4.1.5 (i) and (ii). 
  
 4.2. Payments by NeuroSystec for the [***]. In addition to the royalties of Section 4.1.5 above, NeuroSystec shall pay to DURECT royalties for net sales of Licensed Products by NeuroSystec, its Affiliates and Sublicensees that
include [***]. 
  
 4.3. Payments by NeuroSystec
to [***]. In addition to the royalties of Section 4.1.5 and 4.2 above, NeuroSystec shall pay to [***], earned running royalties for net sales of Licensed Products by NeuroSystec, its Affiliates and Sublicensees where such products are
covered by a Valid Claim under the Joint Patent Rights. Such royalty shall be [***] of net sales of such products. For the purposes of this Section 4.3, net sales shall be calculated as [***]. Such payments will be calculated at the
end of each calendar year and paid to [***] within sixty (60) days of the end of each calendar year. All calculations of fees payable to [***] will be based on United Stated Dollars. Net sales in currency other than United Stated
Dollars will be converted to United States Dollars using the currency exchange rate quoted in the Wall St. Journal (or comparable publication if not quoted in the Wall St. Journal) on the last day of the calendar year for which net sales are
calculated. Along with payment, NeuroSystec will provide a statement showing the calculation used to calculate net sales and the royalty payment. 
  

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 4.4. Royalty Term. NeuroSystec’s obligation to pay royalties under Sections 4.1.4,
4.1.5 and 4.3 shall continue on a Licensed Product-by-Licensed Product and on a country-by-country basis in the Territory until expiration or determination of invalidity of the last Valid Claim within the DURECT Patent Rights in such country.
NeuroSystec’s obligation to pay royalties under Sections 4.2 shall continue for so long as DURECT is obligated to make payments to [***] under the [***], but only to the extent that DURECT’s obligations to pay [***]
are due to NeuroSystec’s activities hereunder. 
  
 4.5. Royalty Reports. NeuroSystec shall deliver to DURECT, within forty-five (45) days after the end of each calendar year in which a Licensed Product is sold, transferred or otherwise disposed of by NeuroSystec, its
Affiliates or Sublicensees, a written report setting forth in reasonable detail (a) the number and types of Licensed Product(s) sold in each country, (b) the gross proceeds from such sales, (c) the calculation of the royalties payable to DURECT for
such calendar year under Section 4.1, including the amount of Net Sales and Deductible Expenses (broken down by category) and (d) the calculation of royalties payable to [***] and [***], respectively. Notwithstanding the foregoing,
NeuroSystec shall have no obligation under this Section 4.5 for so long as no royalties are payable under this Article 4. 
  
 4.6. Payment Terms.  
  
 4.6.1. NeuroSystec shall pay all royalties due and payable on Net Sales by it, its Affiliates and Sublicensees pursuant to Sections 4.1.5 on a per
calendar year basis within forty-five (45) days after the last day of each calendar year in which the applicable Licensed Product is sold, transferred or otherwise disposed of by NeuroSystec, its Affiliates and Sublicensees. 
  
 4.6.2. Unless expressly stated otherwise, all payments made under this
Agreement shall be made in United States Dollars and by wire transfer (net of bank charges which shall be borne by the paying party) to one or more bank accounts to be designated in writing by each Party or by [***] as the case may be. In the
event that a Licensed Product is sold by NeuroSystec, its Affiliates or Sublicensees in currencies other than United States Dollars, Net Sales shall be calculated by conversion of foreign currency to U.S. Dollars at the conversion rate equal to the
average of the conversion rates existing in the United States (referencing the “U.S. dollar noon buying rates”, or its equivalent, published in the Wall Street Journal) on the last working day of each month of the period during which
royalties are being calculated. 
  
 4.6.3. Except as
specifically provided in Section 4.1.5, no multiple royalties shall be due or payable for any Licensed Product notwithstanding that the manufacture, use, offer for sale, sale or import of any Licensed Product by or for NeuroSystec, its Affiliates or
Sublicensees is or shall be covered by more than one Valid Claim within DURECT Patent Rights. For the avoidance of doubt, royalties due under Sections 4.2 and 4.3 shall not be deemed multiple royalties. 
  
 4.7. Taxes. Each Party shall be responsible for and pay all
taxes, duties and levies directly imposed by all foreign, federal, state, local or other taxing authorities (including, without limitation, export, sales, use, excise, and value-added taxes) based on such Party’s transactions or payments under
this Agreement, other than taxes imposed or based on net income. If withholding under the applicable laws of any country is required with respect to any payment to be made by 
  

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 either Party under this Agreement, the paying Party shall withhold the required amount and pay such amount to the
appropriate governmental authority and all amounts due hereunder shall be reduced by the amount required to be withheld. In such a case, the withholding Party shall, upon the other Party’s request, promptly provide the other Party with original
receipts or other evidence sufficient to allow the other Party to obtain the benefits of any such tax withholding. The Parties shall use reasonable efforts, if applicable and appropriate, to cooperate in reducing any tax withholding on payments made
hereunder. 
  
 4.8. Inspection of Books and Records.
Each Party shall maintain, and require its Affiliates and Sublicensees to maintain in accordance with GAAP, complete and accurate books and records which enable the calculation of royalties and other payments payable hereunder to be verified. Each
Party, its Affiliates and its Sublicensees shall retain such books and records for each annual period for [***] after the submission of the corresponding report under Section 4.5 or invoice under Section 6.2. Upon [***] prior written
notice to the other Party, independent accountants reasonably acceptable to such other Party may have access to such books and records to conduct a review or audit no more than once per calendar year, for the sole purpose of verifying the accuracy
of the other Party’s reports and payments under this Agreement. Such access shall be permitted during the audited Party’s normal business hours [***]. In the event of any underpayment or overcharge, the audited Party shall promptly
pay to the auditing Party the difference between the amount actually paid or charged by the audited Party and the amount determined to be owed under this Section 4.8. Any such inspection or audit shall be at the auditing Party’s expense, unless
the inspection or audit results in a determination that the audited Party’s payment obligations to the auditing Party have been understated, that audited Party’s payments have been underpaid, or that the audited Party has overcharged the
auditing Party, each by more than [***] of the amount actually paid by the audited Party or owed by the auditing Party for the period examined, in which case the audited Party shall pay all reasonable costs and expenses incurred by the
auditing Party in the course of making such determination, including the reasonable fees and expenses of such accountant. 
  
 4.9. Royalty Anti-stacking. If NeuroSystec must pay to a Third Party license fees or royalties to obtain patent rights from such Third Party
without which NeuroSystec could not practice under the DURECT Patent Rights and thereby sell Licensed Product (because the sale of Licensed Product in the absence of such license would infringe such Third Party’s patent rights), then the
royalties described in Sections 4.1.5 shall be [***] 
  

	5.	MANUFACTURE AND SUPPLY 

  
 5.1. Supply of DURECT Drug Delivery Platforms. DURECT shall have the exclusive right to manufacture and supply DURECT Drug Delivery
Platforms including [***] for use in NeuroSystec’s development efforts as set forth in the Work Plan at DURECT’s fully burdened cost determined in accordance with GAAP. 
  
 5.2. Commercial Manufacture and/or Assembly of Licensed Products. DURECT shall have the exclusive right to
manufacture and supply Licensed Products pursuant to a Supply Agreement to be negotiated as set forth in Section 5.3 as follows: 
  
 5.2.1. If, and to the extent that, NeuroSystec determines in its sole discretion to commercialize Licensed Products utilizing [***], DURECT
shall manufacture and supply the final, fully assembled product including such [***]. 
  

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 5.2.2. If, and to the extent that, NeuroSystec determines in its sole discretion to commercialize
Licensed Products utilizing a [***], DURECT shall manufacture and supply, at a minimum, such [***]. 
  
 5.2.3. If, and to the extent that, NeuroSystec determines in its sole discretion to commercialize Licensed Products utilizing a [***],
DURECT shall manufacture and supply any raw polymer substances required by such [***]. 
  
 5.2.4. If, and to the extent that, NeuroSystec determines in its sole discretion to commercialize Licensed Products utilizing a [***], DURECT shall manufacture and supply any raw polymer substances
required by such [***]. 
  
 5.3. Supply
Pricing. DURECT shall provide any Licensed Products or components thereof designated in Section 5.2 (“DURECT Manufactured Products”) pursuant to a Supply Agreement. The parties will negotiate a Supply Agreement defining the
products to be supplied by DURECT and the terms and conditions of such supply. Such Supply Agreement shall include, without limitation: [***] 
  

	6.	DEVELOPMENT, REGISTRATION, COMMERCIALIZATION AND ADVERSE EVENTS 

  
 6.1. Development Committee. NeuroSystec and DURECT will form a development committee (the “Development Committee”),
consisting of an equal number of representatives of each of NeuroSystec and DURECT (initially being two representatives each, unless and until the parties mutually agree to another number of equal representatives for each Party). For each Licensed
Product, the Development Committee shall develop a work plan (a “Product Work Plan”), subject to approval by NeuroSystec, which outlines the pre-clinical program required to establish the feasibility of such Licensed Product for use in
humans in the Field, which may include: [***]. Each such Product Work Plan once approved by NeuroSystec shall be deemed a part of the Work Plan. The Development Committee shall be chaired by a NeuroSystec-appointed member thereof designated
from time to time by NeuroSystec. Meetings of the Development Committee shall be at least biannual and at such times and places or in such form (e.g., in person, telephonic or video conference) as the members of the Development Committee shall
determine. The Development Committee shall keep minutes of its discussions. All records of the Development Committee shall at all times be available to both Parties. The Development Committee may from time-to-time and as determined appropriate by
NeuroSystec participate in (a) amendment of the Work Plan, as directed by NeuroSystec, (b) facilitation and coordination of the flow of information between NeuroSystec and DURECT and the activities of the parties under this Agreement and (c)
discussion of the parties’ research and development activities with respect to each Licensed Product under this Agreement and sharing of information with respect thereto. The preparation, amendment, and implementation of the Work Plan by the
Development Committee shall be subject to review by, and require the written approval of, NeuroSystec. 
  
 6.2. Development Services Provided by DURECT. The Development Committee may assign responsibility for development activities to DURECT by
amendment of the Work Plan at the direction of NeuroSystec; provided, however, that DURECT accepts to perform the work assigned. DURECT shall be solely responsible for all initial and subsequent Formulation Development with respect to the Licensed
Product during the Term of the Agreement in 
  

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 accordance with specifications as are set forth in the Work Plan, and NeuroSystec shall reimburse to DURECT all DURECT
FTE Development Costs as calculated in accordance with Exhibit C associated with such Formulation Development activities in accordance with the procedures set forth in Sections 6.2.1 and 6.2.2 below with respect to DURECT’s Formulation
Development activities; provided, however, if DURECT is unable to perform or fails to carry out any such Formulation Development, then NeuroSystec (itself or through Third Parties) shall have the right to perform such formulation development.
“Formulation Development” means [***]. DURECT’s attendance at Development Committee meetings and related travel and expenses shall be deemed development activities assigned to DURECT under the Work Plan, reimbursable at
DURECT’s actual costs and standard personnel FTE rates. DURECT shall use commercially reasonable efforts to render the services assigned to and accepted by DURECT as set forth in the Work Plan in a timely and professional manner consistent with
industry standards and in accordance with this Agreement and any terms set forth in the Work Plan and agreed to by DURECT, including, without limitation, timely delivery of all deliverables. 
  
 6.2.1. In consideration for DURECT performing the
Formulation Development, NeuroSystec shall reimburse to DURECT all DURECT FTE Development Costs incurred by DURECT in connection with the Formulation Development; provided that with respect to the Formulation Development, NeuroSystec shall not be
obligated to pay for any portion of the DURECT FTE Development Costs that exceeds the budget in the then-current Work Plan, and DURECT shall not be obligated to perform activities which would result in DURECT FTE Development Costs in excess of the
budget in the then-current Work Plan therefor without the prior written agreement of the Parties to amend such budget. 
  
 6.2.2. DURECT shall submit an invoice to NeuroSystec for DURECT FTE Development Costs under the Work Plan on a monthly basis in
arrears, and NeuroSystec shall render payment to DURECT within thirty (30) days of NeuroSystec’s receipt of such invoice. DURECT shall retain copies of any receipts, bills, invoices, expense account information and any other supporting data for
DURECT’s FTE Development Costs, which NeuroSystec shall have the right to audit in accordance with Section 4.8. NeuroSystec shall be responsible for all expenses relating to the Work Plan. 
  
 6.3. No Authority or Decision Making. Although development of
Licensed Products will be discussed by the Development Committee, and the Development Committee shall strive to act unanimously, the Development Committee shall operate solely as a forum for discussing scientific, technical, clinical, and regulatory
matters relating to the development of the Licensed Products. Accordingly, the Development Committee shall have no authority to make decisions binding upon either Party. NeuroSystec shall retain all rights and authority to make development and
commercialization decisions within the Field regarding the Licensed Products. 
  
 6.4. Information Transfer and Reference Rights.  
  
 6.4.1. During the term of this Agreement, the parties will share with each other relevant data and information relating to the development of
Licensed Products (excluding internal business and financial information, except as otherwise expressly provided for herein) primarily through Development Committee meetings and teleconferences or as otherwise 
  

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 reasonably necessary for such sharing to occur. All Party Data and other information disclosed by a Party pursuant to
this Section 6.4 shall be treated as the disclosing Party’s Confidential Information in accordance with Article 11. 
  
 6.4.2. [***] 
  
 6.4.3. [***] 
  
 6.5. Adverse Event Reporting. Each Party shall itself comply, and cause any of its personnel, employees, agents, consultants, contractors
and subcontractors to comply with all applicable local, state and national laws, rules and regulations regarding adverse event reporting and shall promptly notify the other Party in writing upon receipt of any information concerning any potentially
serious or unexpected side effect, injury, toxicity or sensitivity reaction or any unexpected incidents or other adverse experience and the severity thereof associated with the development, clinical uses, studies, investigations, tests, marketing
and commercialization of any product containing an Active Agent or any Licensed Product, whether or not determined to be attributable to the Active Agent or the Licensed Products. Prior to the first clinical use of the first Licensed Product, the
parties shall mutually agree upon the details of reasonable policies and procedures to govern and effectuate the foregoing adverse event reporting obligations. Prior to commercialization by either Party of a pharmaceutical containing an Active
Agent, the Parties shall develop and exchange pharmacovigilance standard operating procedures (“SOPs”). Based upon such SOPs, the Parties shall agree upon a detailed procedure regarding handling of adverse events from the
commercialization activities conducted by any of the Parties. NeuroSystec agrees and acknowledges that DURECT may provide information it obtains under this Section 6.5 to DURECT’s other clients developing and/or marketing products incorporating
a DURECT Drug Delivery Platform or Active Agent outside of the Field. 
  
 6.6. Regulatory Reporting. Subject to Section 6.6.1 below, the Parties understand and agree that NeuroSystec, itself or through its agents, shall have the sole right to correspond with appropriate regulatory agencies and
submit INDs and Marketing Approval Applications for Licensed Products as NeuroSystec deems useful or necessary to fulfill its obligations hereunder. Accordingly, except as otherwise required by law, DURECT shall not correspond directly with the FDA
or any other regulatory authority relating to the process of obtaining Approvals for Licensed Products, without NeuroSystec’s prior permission. Notwithstanding the foregoing, DURECT agrees to provide such reasonable assistance, as requested by
NeuroSystec and at NeuroSystec’s expense, in preparing, submitting and maintaining such INDs and Marketing Approval Applications 
  
 6.6.1. [***]  
  
 6.6.2. [***]  
  
 6.7. Development and Commercialization Responsibilities. Subject to this Section 6.7, NeuroSystec shall pay for all costs related to and
shall bear all responsibility for the development, manufacturing, registration and sale of the Licensed Product(s). Subject to this Section 6.7, NeuroSystec shall pay for all costs related to and shall bear all responsibility for all marketing and
promotional activities related to Licensed Product(s) in the Territory and shall decide on the strategy regarding such activities. NeuroSystec shall use Commercially Reasonable Efforts to develop, obtain Approvals for, promote and sell Licensed
Product(s) being granted Approval in the Territory. 
  

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	7.	PATENT MAINTENANCE AND ENFORCEMENT 

  
 7.1. Sole Inventions. Subject to Sections 7.2, 7.3, and 7.4, any and all inventions and Patent Rights thereto developed or conceived by or
on the behalf of a Party or its Affiliates alone or jointly with any Third Party shall be solely owned by such Party or its Affiliates with regard to the other Party. The other Party shall have no rights to participate in or obligation to share
costs related to the filing, prosecution, maintenance, enforcement, and defense of Patent Rights directed to such inventions, if any. 
  
 7.2. DURECT Core Inventions. Without regard to inventorship, all inventions (together with all intellectual property rights therein) that
comprise: [***] (individually and collectively, the “DURECT Core Inventions”) shall be solely owned by DURECT with regard to NeuroSystec and its Affiliates or Sublicensees. DURECT’s rights and interests in and to DURECT Core
Inventions shall be deemed part of DURECT Patent Rights hereunder and are licensed to NeuroSystec in accordance with the licenses granted herein. DURECT acknowledges and agrees that it shall use commercially reasonable efforts to gain Control of
DURECT Core Inventions to the extent that such inventions are developed by or with any third party pursuant to an agreement between DURECT and such Third Party.  
  
 7.3. NeuroSystec Funded Inventions. Without regard to inventorship, all inventions in the Field (together with
all intellectual property rights therein) [***] (“NeuroSystec Funded Inventions”) and Patent Rights thereto shall be solely owned by NeuroSystec with regard to DURECT and its Affiliates. NeuroSystec hereby grants DURECT a
non-exclusive, royalty free, perpetual license to any NeuroSystec Funded Inventions that relate to an Active Agent, for use outside the Field and subject to all other terms of this Agreement. DURECT shall have no rights to participate in or
obligation to share costs related to the filing, prosecution, maintenance, enforcement, and defense of Patent Rights directed to NeuroSystec Funded Inventions, if any. 
  
 7.4. Patent Enforcement. If either Party becomes aware that any patents within the DURECT Patent Rights are
being or have been infringed by any Third Party in the Field, such Party shall promptly notify the other Party in writing describing the facts relating thereto in reasonable detail. DURECT shall have the initial right, but not the obligation, to
institute, prosecute and control any action, suit or proceeding (an “Action”) with respect to such infringement including any declaratory judgment action, at its expense, using counsel of its choice. NeuroSystec shall cooperate
reasonably with DURECT, including being named in such Action if necessary, at DURECT’s written request and expense, in connection with any such Action. Any amounts recovered in such Action shall be used first to reimburse costs and expenses
incurred by DURECT and then NeuroSystec, to the extent such costs and expenses have been reasonably incurred in connection with such Action (including attorneys and expert fees) and any remainder attributable to compensatory damages shall be
retained by NeuroSystec and shall be treated as Net Sales hereunder except to the extent that DURECT has already received royalty payments pursuant to Section 4.1.5 for such amounts; provided, however, that any remainder that is attributable to an
increase by the court pursuant to 35 USC Section 284 or equivalent foreign law provision shall be retained by DURECT. For the avoidance of doubt, in the event that the court awards increased damages pursuant to 35 USC Section 284 or equivalent
foreign law provision, the reimbursement of costs and expenses shall be subtracted first from such increased damages. 
  

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 7.5. Step-In Enforcement. In the event DURECT fails to initiate any Action involving any
commercially significant infringement of the DURECT Patent Rights within the Field within [***] of receiving notice thereof or a shorter period of time if NeuroSystec’s rights in the DURECT Patent Rights are reasonably likely to be
prejudiced by such a delay, NeuroSystec shall have the right, but not the obligation, to initiate and/or maintain such Action in its own name, or in DURECT’s name if necessary, and at its own expense, and DURECT shall cooperate reasonably with
NeuroSystec, at NeuroSystec’s written request and expense, in connection with any such Action. Any amounts recovered in such Action shall be used first to reimburse costs and expenses incurred by NeuroSystec and then DURECT, to the extent such
costs and expenses have been reasonably incurred in connection with such Action (including attorneys and expert fees) and any remainder attributable to compensatory damages shall be retained by NeuroSystec and shall be treated as Net Sales hereunder
except to the extent that DURECT has already received royalty payments pursuant to Section 4.1.5 for such amounts; provided, further, that any remainder that is attributable to an increase by the court pursuant to 35 USC Section 284 or equivalent
foreign law provision shall be retained by NeuroSystec. For the avoidance of doubt, in the event that the court awards increased damages pursuant to 35 USC Section 284 or equivalent foreign law provision, the reimbursement of costs and expenses
shall be subtracted first from such increased damages. 
  
 7.6.
Cooperation. In any Action, the parties shall provide each other with reasonable cooperation and assistance, including agreeing to be named as a party to such Action, causing other necessary parties and parties with an interest to join
and be named as necessary, and, upon the written request and at the expense of the Party bringing such Action, the other Party shall make available, at reasonable times and under appropriate conditions, all relevant personnel, records, papers,
information, samples, specimens, and the like in its possession. Notwithstanding any other provision of this Article 7, neither Party shall make any settlements of any suit, proceeding or action relating to an infringement of any DURECT Patent
Rights in the Field that would materially and adversely affect the other Party or the rights and licenses granted hereunder without first obtaining such other Party’s prior written consent, such consent not to be unreasonably withheld or
delayed or conditioned upon receipt of consideration. 
  
 7.7. DURECT Rights. Notwithstanding anything set forth in this Agreement, DURECT shall have sole discretion with regard to whether and where to file for patent protection for any DURECT Intellectual Property. In the event
DURECT desires to abandon prosecution or maintenance of any patent application or patent within the DURECT Intellectual Property directly relevant to the Field in any country or region, it shall, within sufficient time, offer to permit NeuroSystec
to assume the prosecution of such patent application or the maintenance of such patent. If NeuroSystec elects to assume the same, it shall have the right to offset the full cost of such maintenance and prosecution against the royalty otherwise owed
to DURECT from Net Sales in such country or region. 
  
 7.8. [***] Inventions. The provisions of this Article 7 notwithstanding, and without regard to inventorship, the Parties acknowledge that [***] shall own certain inventions related to the [***] pursuant to the
terms of the [***]. 
  

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	8.	REPRESENTATIONS, WARRANTIES AND COVENANTS 

  
 8.1. Representations, Warranties and Covenants of NeuroSystec. NeuroSystec represents and warrants that, as of the Effective Date:

  
 8.1.1. NeuroSystec is a corporation, duly organized,
validly existing and in good standing under the laws of Delaware. 
  
 8.1.2. The execution, delivery and performance of this Agreement has been duly authorized by all necessary corporate action on the part of NeuroSystec. 
  
 8.1.3. There is no pending, or to its knowledge, threatened Third Party lawsuit, claim, action or demand against
NeuroSystec. 
  
 8.1.4. The execution, delivery and
performance of this Agreement will not conflict with (a) the Equity Agreement of NeuroSystec or (b) any other agreement to which NeuroSystec is a party or by which it is bound. 
  
 8.2. Representations, Warranties and Covenants of DURECT. DURECT represents, warrants and covenants that, as
of the Effective Date: 
  
 8.2.1. DURECT is a corporation,
duly organized validly existing and in good standing under the laws of Delaware; 
  
 8.2.2. The execution, delivery and performance of this Agreement has been duly authorized by all necessary corporate action on the part of DURECT; 
  
 8.2.3. DURECT has the right and authority to grant the rights and licenses granted to NeuroSystec under this
Agreement; 
  
 8.2.4. DURECT has not granted any right,
license or interest in, to or under the DURECT Patent Rights or DURECT Data inconsistent with the rights, license and interests granted to NeuroSystec in this Agreement, and DURECT shall not grant during the term of this Agreement any right, license
or interest in, to or under the DURECT Intellectual Property that is inconsistent with the rights, licenses and interests granted to NeuroSystec hereunder; 
  
 8.2.5. DURECT has provided to NeuroSystec a true copy (including any amendments thereto) of each agreement with a Third Party referring or relating
substantially to the manufacture, use or sale of any Active Agent. Exhibit A contains a complete list of all such Third Party agreements. 
  
 8.2.6. There is no pending or, to DURECT’s knowledge, threatened Third Party lawsuit, claim, action or demand against DURECT which relates to
the use of any Active Agent or the DURECT Intellectual Property. 
  
 8.2.7. To DURECT’s knowledge, the exercise of the rights (including intellectual property rights existing as of the Effective Date) to the DURECT Know How, the DURECT Drug Delivery Platforms and the Active Agent granted
hereunder would not infringe or 
  

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 give rise to a claim of misappropriation of the intellectual property of any Third Party in the Territory, it being
understood that DURECT has undertaken no investigation or analysis with respect to the Active Agent. 
  
 8.2.8. Other than the patents and patent applications DURECT has licensed from [***] and those listed on Exhibit B, DURECT represents and
warrants that it is not the assignee, co-assignee, or licensee, of any patents, or patent applications, that would preclude NeuroSystec from exercising any of the rights granted hereunder. 
  
 8.2.9. To its knowledge, DURECT does not own or control any
investigational new drug application, drug master file or comparable regulatory filing for any Active Agent not included in this Agreement. 
  
 8.3. Disclaimer. EXCEPT AS EXPRESSLY PROVIDED FOR IN THIS AGREEMENT, NEITHER PARTY MAKES, AND EACH PARTY HEREBY DISCLAIMS, ANY AND ALL
REPRESENTATIONS AND WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT AND ANY WARRANTY
ARISING OUT OF PRIOR COURSE OF DEALING AND USAGE OF TRADE. 
  

	9.	INDEMNIFICATION AND INSURANCE 

  
 9.1. Indemnification by NeuroSystec. NeuroSystec shall indemnify and hold harmless DURECT, its Affiliates and their respective officers,
directors, employees and agents (each a “DURECT Indemnitee”) from and against claims, demands, liabilities, damages, losses and expenses, including reasonable attorney’s fees and costs, actually incurred by the indemnified
party arising out of or in connection with any lawsuit, claim, action or demand (“Claims”) based upon (i) the negligence, intentional misconduct of NeuroSystec or its Affiliates; (ii) breach by NeuroSystec or its Affiliates of the
terms of, or the covenants, representations and warranties made by it in this Agreement; (iii) use by or on behalf of NeuroSystec of any Active Agents or Licensed Products for clinical trials, (iv) the use, manufacture, marketing, promotion, sale,
advertising, transportation, handling, storage, or distribution of Licensed Products, (v) any defect or alleged defect in the labeling of the Licensed Products, and (vi) any defect or alleged defect in the design or formulation of the Licensed
Products; except in each case for (x) Claims arising due to the negligence, intentional misconduct, or breach of this Agreement by DURECT or its Affiliates, and (y) Claims for which DURECT is obligated to indemnify NeuroSystec Indemnitees pursuant
to Section 9.2.  
  
 9.2. Indemnification by
DURECT. DURECT shall indemnify and hold harmless NeuroSystec, its Affiliates and their respective officers, directors, employees and agents (each a “NeuroSystec Indemnitee”) from and against claims, demands, liabilities,
damages, losses and expenses, including reasonable attorney’s fees and costs, actually incurred by the indemnified party arising out of or in connection with any Claims based upon (i) the negligence, intentional misconduct of DURECT or its
Affiliates; (ii) breach by DURECT or its Affiliates of the terms of, or the covenants, representations and warranties made by it in this Agreement; (iii) manufacturing defects of any DURECT Drug Delivery Platform, only if manufactured by or for
DURECT and provided to NeuroSystec hereunder; and (iv) any defect or alleged defect in the design of the 
  

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 underlying DURECT Drug Delivery Platform (for the avoidance of doubt, this clause is not intended to apply to design
defects or alleged defects introduced in a Licensed Product as a result of work performed by DURECT under the Work Plan at the direction of NeuroSystec unless such alleged defects are a result of the negligence or intentional misconduct of DURECT);
except in each case for (x) Claims arising due to the negligence, intentional misconduct omissions of, or breach of this Agreement by NeuroSystec or its Affiliates and (y) Claims for which NeuroSystec is obligated to indemnify DURECT Indemnitees
pursuant to Section 9.1. 
  
 9.3. Procedure. The
foregoing indemnifications are subject to the following procedural requirements: the NeuroSystec Indemnitee or DURECT Indemnitee shall give prompt written notice to the indemnifying party of any claims, suits or proceedings by Third Parties which
may give rise to any claim for which indemnification may be required under this Article 9, and the NeuroSystec Indemnitee or DURECT Indemnitee shall reasonably cooperate with the indemnifying party and its counsel in the course of the defense of any
such suit, claim or demand, such cooperation to include without limitation using reasonable efforts to provide or make available documents, information and witnesses at the expense of the indemnifying party. The indemnifying party shall be entitled
to assume the defense and control of any such claim at its own cost and expense; provided, however, that the NeuroSystec Indemnitee or DURECT Indemnitee shall have the right to be represented by its own counsel at its own cost in such matters.
Neither the indemnifying party nor the indemnified party shall settle or dispose of any such matter in any manner which would materially and adversely affect the rights or interests of the other party (including the obligation to indemnify
hereunder) without the prior written consent of the other party, which shall not be unreasonably withheld or delayed or conditioned on further consideration. 
  
 9.4. NeuroSystec Insurance. Prior to dosing the first human with the Licensed Product in the first clinical trial, NeuroSystec shall, at its
sole cost and expense, procure and maintain comprehensive general liability insurance and clinical trial insurance policies from a qualified insurance company which has a superior rating from a recognized rating service, with minimum limits of
[***] for combined bodily injury and property damage. Additionally, prior to launch of any Licensed Product hereunder, NeuroSystec shall, at its sole cost and expense, procure and maintain products liability insurance policies from a
qualified insurance company which has a superior rating from a recognized rating service, with coverage terms and limits standard and customary for commercialization of products similar to the Licensed Products in the pharmaceutical industry, but no
less than [***] for combined bodily injury and property damage. All such insurance policies shall include DURECT as an additional named insured. 
  
 NeuroSystec will furnish to DURECT certificates of all such insurance policies: 
  
 - at least 30 days prior to the scheduled commencement of a clinical trial for a Licensed Product (and within 30 days of the
date of each anniversary of the related insurance certificate date), evidence of coverage in accordance with this Section 9.4; and 
  
 - at least 60 days prior to the first commercial sale by NeuroSystec in the Territory (and within 30 days of the date of each anniversary of the related
insurance certificate date), evidence of insurance coverage in accordance with this Section 9.4. 
  

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 If NeuroSystec is unable to secure or maintain all such insurance policies and coverage as provided for
herein, the parties will negotiate in good faith reasonable accommodations regarding risk exposure of the parties. 
  

	10.	TERM AND TERMINATION 

  
 10.1. Term. This Agreement shall commence on the Effective Date and continue in full force and effect until the expiration of all of
NeuroSystec’s royalty payment obligations as specified under Section 4.4, unless terminated earlier pursuant to Sections 2.4, 10.2, 10.3, 10.4 or 12.6 (the “Term”). [***] 
  
 10.2. NeuroSystec Termination. NeuroSystec may terminate this
Agreement: 
  
 10.2.1. upon [***]
days prior written notice if NeuroSystec decides to halt development of Licensed Products. 
  
 10.2.2. upon [***] days prior written notice if the Effective Date does not occur within [***] days of the execution
of this Agreement, provided such written notice is sent by NeuroSystec within [***] days of the execution of the Agreement. 
  
 10.3. Termination by Either Party. Either Party may terminate this Agreement upon written notice to the other Party if the other Party (i)
makes a general assignment for the benefit of creditors; (ii) files an insolvency petition in bankruptcy; (iii) petitions for or acquiesces in the appointment of any receiver, trustee or similar officer to liquidate or conserve its business or any
substantial part of its assets; (iv) commences under the laws of any jurisdiction any proceeding for relief under the Bankruptcy Code of 1986, as amended (“Code”) or similar bankruptcy laws in applicable jurisdictions, involving its
insolvency, reorganization, adjustment of debt, dissolution, liquidation or any other similar proceeding for the release of financially distressed debtors; or (v) becomes a party to any proceeding or action of the type described above in (iii) or
(iv), and such proceeding or action remains undismissed or unstayed for a period of more than sixty (60) days. 
  
 10.4. DURECT Termination. DURECT may terminate this agreement upon written notice if (i) NeuroSystec has not paid DURECT the amounts set
forth in Section 4.1.1 in the time period set forth therein and has not cured such breach within [***] days following receipt of notice of such breach, (ii) NeuroSystec has not issued to DURECT the stock set forth in the Equity Agreement
within the agreed upon timeframe and has not cured such breach within seven (7) days following receipt of notice of such breach or (iii) NeuroSystec is in material breach of any other provision hereunder and has not cured such breach within
[***] days following the receipt of a first notice which specifies in reasonable detail the nature of the breach sent to it by DURECT; provided, however, that in each case under this clause iii), if NeuroSystec disputes such breach in writing
within the Cure Period, DURECT shall not have the right to terminate this Agreement unless and until an arbitration tribunal has determined pursuant to Section 12.3 that NeuroSystec is in material breach of any other provision hereunder as set forth
in (iii), and NeuroSystec has failed to cure such breach within a reasonable period of time to be set by such arbitration tribunal. 
  

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 10.5. Effect of Termination.  
  
 10.5.1. Upon termination of this Agreement in its entirety pursuant
to Section 2.4, 10.2, or 10.4, the licenses granted by DURECT to NeuroSystec hereunder shall terminate and NeuroSystec shall provide all data and information requested by DURECT that is reasonably deemed necessary by DURECT to continue research,
development and commercialization of Licensed Products that had been conducted by NeuroSystec and [***] Termination of this Agreement by any Party shall not require resort to any court or compliance with any other formality and shall not
prejudice the right of either party to recover any damages for breach of this Agreement. 
  
 10.5.2. Upon termination of this Agreement in its entirety pursuant to Section 12.6, the licenses granted by DURECT to NeuroSystec hereunder shall terminate. 
  
 10.6. Survival. Articles 4 (solely with respect to amounts owed
prior to expiration or termination), 1, 9, 10, 11 and 12 and Sections 7.1, 7.2, 7.3, and 8.3 shall survive expiration or termination of this Agreement. 
  

	11.	CONFIDENTIAL INFORMATION AND PUBLICATION 

  
 11.1. Confidentiality. In connection with the Non-Disclosure Agreement, as defined below, and with this Agreement, the parties have
disclosed and will disclose or make available to each other information, data and materials of a confidential or proprietary nature (“Confidential Information”), including but not limited to each Party’s proprietary
know-how, invention disclosures, materials and/or technologies, economic information, business or research strategies, clinical trial data and information, trade secrets and material embodiments thereof. 
  
 11.2. Confidentiality and Non-Use. The recipient of a
disclosing Party’s Confidential Information shall maintain such Confidential Information in confidence, and shall disclose such Confidential Information only to those of its employees, agents, consultants, Sublicensees, attorneys, accountants,
advisors, existing and potential investors, and potential development and commercialization partners who have a reasonable need to know such Confidential Information for purposes contemplated by this Agreement and who are bound by obligations of
confidentiality and non-use no less restrictive then those set forth herein. The recipient of the disclosing Party’s Confidential Information shall use such Confidential Information solely to exercise its rights and perform its obligations
under this Agreement (including, without limitation, the right to use and disclose such Confidential Information, to the extent required, in regulatory applications and filings), unless otherwise mutually agreed in writing. The recipient of the
disclosing Party’s Confidential Information shall take the same degree of care that it uses to protect its own confidential and proprietary information of a similar nature and importance (but in any event no less than reasonable care).

  
 11.3. Exclusions. Confidential Information of a
disclosing Party shall not include information that: (a) was in the recipient’s possession prior to receipt from the disclosing Party as demonstrated by contemporaneous documentation; (b) was or becomes, through no fault of the recipient,
publicly known; (c) was furnished to the recipient by a Third Party without breach of a duty or obligation of confidentiality to the disclosing Party; (d) was independently developed by the recipient without use of, application of or reference to
the disclosing Party’s Confidential Information as demonstrated by contemporaneous documentation. 
  

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 11.4. Legal Disclosures. It shall not be a violation of this Article 11 for the recipient
to disclose the disclosing Party’s Confidential Information when such information is required to be disclosed under applicable law, but such disclosure shall be for the sole purpose of and solely to the extent required by such law, and provided
that the recipient, to the extent possible, shall give the disclosing Party prior written notice of the proposed disclosure and cooperate fully with the disclosing Party to minimize the scope of any such required disclosure, to the extent possible
and in accordance with applicable law and will use all reasonable efforts to secure confidential treatment of such Confidential Information required to be disclosed. 
  
 11.5. Termination. All obligations of confidentiality and non-use imposed under this Article 11 shall expire
[***] years after the date of expiration or termination of this Agreement. 
  
 11.6. Non-Disclosure Agreement. The nondisclosure agreement between DURECT and Stephen McCormack (acting as an agent for NeuroSystec) dated August 15, 2003 (“Non-Disclosure Agreement”)
is expressly superseded with respect to the Confidential Information disclosed under the Non-Disclosure Agreement that are also disclosed under this Agreement and therefore subject to the confidentiality restrictions of this Article 11. [***]
 
  
 11.7. Publications and Press Releases.
Neither Party shall issue any press release, publication, or any other public announcement relating to this Agreement, without obtaining the other Party’s prior written approval, provided, however, that the parties may issue a mutually agreed
upon joint press release regarding this Agreement at a time to be mutually agreed upon. In the event a Party desires to publish in a scientific or academic journal or similar publication or to make a public presentation in the form of a seminar or
lecture or the like, Confidential Information developed by such Party relating to a Licensed Product, in addition to any necessary internal reviews or approvals by such Party, such Party shall submit a copy of the proposed publication or
presentation to the other Party [***] days prior to any disclosure or submission to any Third Party. The parties agree to review and evaluate the submission to determine the effect, if any, that such publication or presentation would have on
the commercialization of Licensed Products, whereupon the parties may either approve, require modifications to, or disapprove the proposed publication or presentation. Neither Party shall have the right to publish or present Confidential Information
of the other and shall remove the Confidential Information of the other Party from any proposed publication or presentation at the request of the other Party. Once such press releases, publications, or other public announcements have been approved
for disclosure by the parties, such approval will not be required again before a Party may subsequently repeat disclosure of information contained therein. Notwithstanding the foregoing, each Party shall have the right to make such disclosures as
may be required by applicable laws, including applicable securities laws. Independent investigators that have been engaged by one or both parties shall be allowed to release information regarding studies performed by such investigators in a manner
consistent with academic standards so long as each Party is given a reasonable opportunity to review such release of information to ensure that intellectual property being disclosed has been appropriately handled in accordance with Article 7, such
review not to exceed [***] days. 
  

	12.	MISCELLANEOUS 

  
 12.1. Trademarks. NeuroSystec will have sole responsibility for, and ownership of, any and all trademarks for the Licensed Product used in
the Territory. 
  

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***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

 12.2. Marking Requirement. Each Party agrees to mark the appropriate patent number or
numbers as reasonably requested by the other Party on such Licensed Products made or sold in accordance with all applicable governmental laws, rules and regulations to the extent reasonably possible, and to require its Affiliates and Sublicensees to
do the same. Each Party acknowledges and agrees that by agreeing to mark Licensed Products, the other Party is not agreeing or otherwise admitting that any such marked product is covered by the claims of the DURECT Patent Rights or any other patent.
In the event that [***] requests that DURECT cause a Licensed Product and its packaging to display prominently, in a manner reasonably acceptable to [***], an [***] name and logo, and to identify [***] as a developer of
such Licensed Product, NeuroSystec shall identify [***] as the developer of the [***] and include the [***] name and logo on such Licensed Product and packaging for Licensed Products incorporating the [***] to the extent
permitted by applicable law, regulation, or the FDA or foreign counterpart thereof having jurisdiction. Unless otherwise instructed by DURECT, NeuroSystec shall identify, in a manner reasonably acceptable to DURECT, DURECT as the developer of the
DURECT Drug Delivery Platforms on the packaging of Licensed Products incorporating DURECT Drug Delivery Platforms to the extent permitted by applicable law, regulation, or the FDA or foreign counterpart thereof having jurisdiction. All uses of the
DURECT name and marks or [***] name and marks shall be subject to prior review and approval by DURECT and/or [***] as the case may be, such approval not to be unreasonabley withheld or conditioned on further consideration. 

 
 12.3. Governing Law; Dispute Resolution. 
  
 12.3.1. This Agreement shall be governed by, and construed and
interpreted, in accordance with the internal laws of the State of California without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of California to
the rights and duties of the parties. 
  
 12.3.2. In the
event of any controversy, claim or dispute arising out of or related to this Agreement or to the breach or interpretation thereof (a “Dispute”), the parties shall first refer such Dispute to the Chief Executive Officer, or his or
her duly appointed representative (each a “Responsible Executive”) of each Party for attempted resolution by good faith executive negotiations within thirty (30) days after such referral is made. In the event such officers are
unable to resolve such Dispute within such thirty (30) day period, either Party may assert its rights in a manner in accordance with the provisions of Section 12.3.3-12.3.6. 
  
 12.3.3. Subject to Section 12.3.5, any Dispute that is not resolved under Section 12.3.2 shall be solely and
exclusively settled by final and binding arbitration in accordance with the then current commercial arbitration rules of the American Arbitration Association, subject to the terms and conditions of this Section 12.3. Either Party may initiate the
arbitration of a Dispute by sending written notice of such election to the other Party clearly marked “Arbitration Demand” (the “Arbitration Demand”). The Dispute shall be adjudicated by three (3) neutral and impartial
arbitrators. Each Party shall nominate one arbitrator within thirty (30) days after the other Party’s receipt of the Arbitration Demand, and the two arbitrators so named will then jointly appoint the third arbitrator as chairman of the
arbitration tribunal. The decision of the arbitration tribunal shall be final and binding upon the parties hereto, and may be entered in any competent court for judicial acceptance of such an award and order of enforcement. 
  

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***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

 12.3.4. All costs of the arbitration shall be shared equally by the parties, and each Party shall
be responsible for its own legal and other costs. The arbitrators shall not have the right or authority to award punitive damages to either Party. 
  
 12.3.5. Notwithstanding anything to the contrary in this Section 12.3, each Party may, and expressly reserves the right to, seek judicial relief
from any court of competent jurisdiction in order to obtain an injunction or other equitable relief or to enforce a breach of the confidentiality provisions in Article 11 or to otherwise obtain temporary relief pending the outcome of the
arbitration. 
  
 12.3.6. Arbitration will take place in
Cupertino, California if requested by NeuroSystec and in Los Angeles, California if requested by DURECT. The proceedings shall be conducted and all documentation shall be presented in English. The parties agree that the arbitration proceedings and
its contents shall be kept confidential, except as may otherwise be required by applicable law. 
  
 12.4. Export Regulations. The parties agree that this Agreement is subject in all respects to the laws and regulations of the United States
of America, including the Export Administration Act of 1979, as amended, and any regulations thereunder. 
  
 12.5. Limitation of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR INCIDENTAL, CONSEQUENTIAL, INDIRECT, PUNITIVE OR SPECIAL DAMAGES
OF THE OTHER PARTY ARISING OUT OF OR RELATED TO THIS AGREEMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. 
  
 12.6. Force Majeure. Neither Party shall be held responsible for any delay or failure in performance hereunder
to the extent caused by strikes, embargoes, unexpected government requirements, civil or military authorities, acts of God, earthquake, or by war, insurrection, terrorism or other causes beyond such Party’s control and without such Party’s
fault or negligence; provided that the affected Party notifies the unaffected Party as soon as reasonably possible, and resumes performance hereunder as soon as reasonably possible following cessation of such force majeure event. Each Party agrees
to give the other Party prompt written notice of the occurrence of any such condition set forth herein, the nature thereof, and the extent to which the affected Party will be unable fully to perform its obligations hereunder. Each Party further
agrees to use all reasonable efforts to correct the condition as quickly as possible, and to give the other prompt written notice when it is again fully able to perform such obligations. If, as a result of conditions set forth herein, either Party
is unable to substantially perform any of its material obligations hereunder for any consecutive period of three hundred and sixty-five (365) days, the other Party shall have the right to terminate this Agreement upon written notice. 
  
 12.7. Independent Contractors. The relationship of NeuroSystec
and DURECT established by this Agreement is that of independent contractors. Nothing in this Agreement shall be construed to create any other relationship between NeuroSystec and DURECT. Neither Party shall have any right, power or authority to bind
the other or assume, create or incur any expense, liability or obligation, express or implied, on behalf of the other. 
  

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***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

 12.8. Assignment. NeuroSystec and DURECT may assign this Agreement to an Affiliate or in
connection with the merger, acquisition or sale by NeuroSystec or DURECT, as the case may be, of all or substantially all of its assets relating to this Agreement upon prior written notice to DURECT or NeuroSystec, as the case may be, and without
the need for DURECT’s or NeuroSystec’s consent, as applicable, provided however that (a) any such assignee shall assume all obligations of NeuroSystec or DURECT, as the case may be, under this Agreement and (b) no assignment shall relieve
NeuroSystec or DURECT of responsibility for the performance of any accrued obligations which NeuroSystec or DURECT then has hereunder. Aside from the foregoing, no rights or obligations under this Agreement may be transferred or assigned by a Party
to a Third Party without the prior written consent of the other Party. Any assignment not in conformance with this Section 12.8 shall be null, void and of no legal effect. 
  
 12.9. Notices. All notices required or permitted to be given hereunder shall be (a) delivered in person or (b)
sent by express courier (via a reliable courier company such as FedEx or DHL), or (c) sent by registered airmail, with postage prepaid, and return receipt requested or (d) sent by facsimile (with a confirmation letter thereof sent by express courier
or registered airmail) to the address specified below or to such changed address as may have been previously specified in writing by the addressed Party from time to time during the term of this Agreement. If notice is given in person, by courier or
by fax, it shall be effective upon receipt; if notice is given by overnight delivery service, it shall be effective two (2) business days after deposit with the delivery service; and if notice is given by mail, it shall be effective five (5)
business days after deposit in the mail. Notices shall be sent as follows: 
  
 If to DURECT: 
  
 Attn: General
Counsel 
 DURECT Corporation 
 10240 Bubb Road 
 Cupertino, CA 95014 
 Main: (408) 777-1827 
 Facsimile: (408) 777-3577 
  
 If to NeuroSystec: 
  
 NEUROSYSTEC 
 Attn: Stephen McCormack 
 Mann Biomedical Park

 25134 Rye Canyon Loop 
 Suite
370 
 Valencia, CA 91355 
  
 Main: (661) 702-6880 
 Facsimile: (661)
702-6715 
  

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***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

 With copy to: 
  

Alfred E. Mann 
 c/o Advanced Bionics
Corporation 
 25129 Rye Canyon Road 
 Valencia, CA 91355 
  
 12.10. Modification;
Waiver. This Agreement may not be altered, amended or modified in any way except by a writing signed by authorized representatives of both of the parties. The failure of a Party to enforce any rights or provisions of the Agreement shall not be
construed to be a waiver of such rights or provisions, or a waiver by such Party to thereafter enforce such rights or provision or any other rights or provisions hereunder. No waiver shall be effective unless made in writing and signed by the
waiving Party. 
  
 12.11. Severability. If any
provision of this Agreement shall be found by a court of competent jurisdiction or the arbitration panel described in Section 12.3 to be void, invalid or unenforceable, the same shall be reformed to comply with applicable law or stricken if not so
conformable, so as not to affect the validity or enforceability of the remainder of this Agreement. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction or the arbitration panel described in
Section 12.3 to be void, invalid or unenforceable, and reformation or striking of such provision materially changes the economic benefit of this Agreement to either NeuroSystec or DURECT, NeuroSystec and DURECT shall modify such provision in
accordance with this Section 12.13 to obtain a legal, valid and enforceable provision and provide an economic benefit to NeuroSystec and DURECT that most nearly effects NeuroSystec’s and DURECT’s intent on entering into this Agreement.

  
 12.12. Bankruptcy Treatment of Licenses. The
parties agree that the rights granted to NeuroSystec hereunder, including, without limitation, those rights granted in Section 2, are rights in “intellectual property” within the scope of Section 101 (or its successors) of the United
States Bankruptcy Code (the “Code”). Licensee shall have the rights set forth herein with respect to the Licensed Products when and as developed or created. In addition, NeuroSystec, as a licensee of intellectual property rights
hereunder, shall have and may fully exercise all rights available to a licensee under the Code, including, without limitation, under Section 365(n) or its successors. In the event of a case under the Code involving DURECT, NeuroSystec shall have the
right to obtain (and DURECT or any trustee for DURECT or its assets shall, at NeuroSystec’s written request, deliver to NeuroSystec) a copy of all embodiments (including, without limitation, any work in progress) of any intellectual property
rights granted hereunder, including, without limitation, embodiments of any Licensed Products, and any DURECT Drug Delivery Platforms or any other intellectual property necessary or desirable for NeuroSystec to use or exploit any Licensed Products
or to exercise its rights hereunder. In addition, DURECT shall take all steps reasonably requested by NeuroSystec to perfect, exercise and enforce its rights hereunder, including, without limitation, filings in the U.S. Copyright Office and U.S.
Patent and Trademark Office, and under the Uniform Commercial Code. 
  
 12.13. Entire Agreement. The parties hereto acknowledge that this Agreement, together with the exhibits attached hereto, sets forth the entire agreement and understanding of the parties as to the subject matter hereto, and
supersedes all prior and contemporaneous discussions, agreements and writings in respect hereto. This Agreement supersedes the Non-Disclosure Agreement to the extent indicated in Section 11.6 hereunder. 
  

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***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

 12.14. Headings. The article, section and paragraph headings contained herein are for the
purposes of convenience only and are not intended to define or limit the contents of the articles, sections or paragraphs to which such headings apply. 
  
 12.15. Counterparts. This Agreement may be executed in two or more counterparts (including faxed counterparts), each of which shall be
deemed an original and all of which together shall constitute one instrument. 
  
 12.16. No Third-Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to confer, nor shall anything herein confer on, any person other than the parties and the respective
successors or permitted assigns of the parties, any rights, remedies, obligations or liabilities. For the avoidance of doubt, any payment made to [***] pursuant to Section 4.3 represents payments owed by NeuroSystec to DURECT, which DURECT
would otherwise remit to [***] pursuant to DURECT’s payment obligations, and are paid by NeuroSystec to [***] directly on behalf of DURECT solely for the convenience of DURECT and NeuroSystec. Such payments do not relieve DURECT
of its obligations to pay [***] and do not create an independent right on the part of [***] under this Agreement. 
  
 12.17. [***] 
  

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***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

 IN WITNESS WHEREOF, NeuroSystec and DURECT have executed this Agreement by their respective duly
authorized representatives. 
  

							
	NEUROSYSTEC CORPORATION	 	DURECT CORPORATION
				
	 By:
	 	 /s/

	 	By:	 	 /s/

				
	 Name:
	 	Alfred E. Mann	 	Name:	 	James E. Brown
				
	 Title:
	 	Chairman	 	Title:	 	CEO

  

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***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

 EXHIBIT A 
  

DURECT THIRD PARTY LICENSES 
  
 [***] 
  

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***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

 EXHIBIT B 
  

DURECT PATENT RIGHTS 
  
 [***] 
  

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 EXHIBIT C 
  

FTE COST CALCULATION 
  
 FTE Development Costs are equal to [***] 
  

 Page 30 of 30 
  

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.Business Transfer Agreement

 Exhibit 10.1 
  
 THIS AGREEMENT DATED 15 JULY 2004 
  
 PARTIES 
  

					
	 1
	  	Seller	  	eDIETS EUROPE LIMITED a company registered in Ireland (registered number 329476) whose registered office is at 29 North Anne Street, Dublin 7, Ireland;
			
	 2
	  	Buyer	  	TESCO IRELAND LIMITED a company registered in Ireland (no. 19542) whose registered office is at Gresham House, Marine Road, Dun Laoghaire, Co. Dublin, Ireland;
			
	 3
	  	eDiets.com	  	eDIETS.COM, INC., a company registered in Delaware whose principal place of business is at 3801 W. Hillboro Blvd, Deerfield Beach, Florida, USA;
			
	 4
	  	Unislim	  	UNISLIM IRELAND LIMITED a company registered in Ireland whose registered office is at 49 Lower Dorset Street, Dublin 1; and
			
	 5
	  	McCourt	  	CIARAN McCOURT, an individual, c/o eDiets Europe Limited.

  
 OPERATIVE PROVISIONS

  

	1	Definitions and interpretation 

  
 In this agreement, where the context so admits, the following definitions apply: 
  

			
	Accounting Date	  	31 December 2003;
		
	Accounts	  	the audited accounts of the Seller for the two financial years ending on the Accounting Date including the notes to such accounts and the Auditors’ report on such accounts and the
Directors’ report for those years;
		
	after tax basis	  	in relation to any payment which is expressed to be made “on an after tax basis” the amount of such payment shall be increased by such amount as will ensure that after deduction of
any Tax which is payable by the recipient (or would be payable but for the availability of loss relief or any other form of relief)

  

 1 

			
	 	  	on or in respect of or by reference to such increased amount at the highest marginal rate of Tax payable by the recipient there shall be left in the hands of the recipient a sum equal to the
amount that would have been payable had such payment not been subject to Tax in the hands of the recipient;
		
	Assets	  	the IT Assets, the Miami IT Assets, the Customer Database, the Goodwill and the Listed Contracts;
		
	audited	  	in relation to the Accounts, “audited” shall mean that the accounts have been reviewed and reported on by a chartered accountant, such report to state whether in the auditor’s
opinion the accounts have been properly prepared in accordance with the Companies Acts and all applicable regulations to be construed as one with those Acts and give a true and fair view of the state of affairs of the Seller at the Accounting
Date;
		
	Business	  	the business of delivering personalized weight loss and diet related fitness services in any online (including, but not limited to Internet, 3G, WAP, SMS, fax and phone) or offline medium
purposely directed to customers residing in the Territory and for the avoidance of doubt shall include the fitness service as incorporated in the eDiets Service, but shall not include any standalone online personalised fitness service or the
services as currently offered at http://www.eFitness.ie;
		
	Business Day	  	a day (other than a Saturday or Sunday) on which banks are open for business in Dublin, Ireland;
		
	Buyer’s Group	  	the Buyer, and any company which is for the time being a subsidiary or holding company of the Buyer or a subsidiary of any such holding company;
		
	Companies Act	  	Companies Acts 1963 to 2003;

  

 2 

			
	Completion	  	the completion of the sale and purchase of the Business and the Assets in accordance with clause 4;
		
	Confidential Information	  	 all information not at present in the public domain and used in or in connection with or otherwise relating to the Business, including information
relating to the customers or financial or other affairs of the Business and including, without limitation, information relating to:
  
 (i)       the marketing of any products or services including, without limitation, customer names
and lists and any other details of customers, contractual arrangements (whether in a written or unwritten form) with customers or suppliers, sales targets, sales statistics, market share statistics, prices, market research reports and surveys, and
advertising or other promotional materials; and
  
 (ii)      future projects, business development or planning, commercial relationships and negotiations;

		
	Consideration	  	as defined in clause 3.1;
		
	Control	  	the power to direct the affairs of a company, whether by contract, ownership of shares, management influence or otherwise;
		
	Customer Database	  	the database of all of the Business’ customers, details of, and any other associate information relating to, are set out in part 2 of schedule 1;
		
	Disclosure Letter	  	the letter of even date from the Seller to the Buyer qualifying the Warranties together with all documents annexed thereto;
		
	eDiets Service	  	the personalised weight loss and diet related fitness business carried out by eDiets.com;

  

 3 

			
	Employment Legislation	  	all legislation affecting the rights of employees and workers and the obligations on employers in Ireland;
		
	Employment Regulations	  	the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003;
		
	Excluded Employees	  	those persons employed by the Seller who do not transfer to Buyer, being those persons listed in part 2 of schedule 2;
		
	Excluded Liability	  	as defined in clause 2.3;
		
	Goodwill	  	the past and present goodwill related to the Business (other than goodwill associated with the ownership of the trademarks, copyrights or other Intellectual Property Rights of the Seller or
Seller’s Group licensed to the Buyer under the Technology Licence Agreement);
		
	Guarantors	  	eDiets.com, Unislim and McCourt;
		
	Intellectual Property Rights or IPR	  	all copyright and rights in the nature of copyright, database rights, patents, design rights, trade marks, applications and rights to apply for any of the above, moral rights, know-how,
inventions, confidential information and any other intellectual property rights, whether now known or in future subsisting in the United Kingdom, Ireland or any other part of the world;
		
	Irish Group Accounts Regulations	  	the European Communities (Companies: Group Accounts) Regulations 1992 as amended;
		
	IT Assets	  	the IT assets (including any peripheral items and consumables) listed in part 3 of schedule 1;
		
	Listed Contracts	  	the contracts of the Seller listed in part 1 of schedule 1;

  

 4 

			
	Management Accounts	  	the unaudited management accounts of the Seller in respect of the Business for the period which commenced on 1 January 2004 and ended on 30 June 2004;
		
	Miami IT Assets	  	the IT assets (including any peripheral items and consumables) listed in part 4 of schedule 1;
		
	Particulars of Employment	  	 in relation to each Transferring Employee:
  
 (a)      a copy of the written service agreement of the Transferring Employee or (as appropriate) of the
particulars of employment applicable and issued to such Transferring Employee in accordance with the provisions of the Terms of Employment (Information) Acts 1994 and 2001;
  
 (b)      the age, sex and date of commencement of employment of the
Transferring Employee including any employment with a previous employer which counts as continuous employment;
  
 (c)      particulars of any collective agreement affecting the terms of employment of the Transferring
Employee including disciplinary or grievance procedures and any procedures to be followed in the case of redundancy or dismissal; and
  
 (d)      particulars of his rights (if any) under the Seller’s pension scheme and all such
information as may be required to determine his retirement and leaving service benefit thereunder including (without limitation) his rate of pay current at Completion and length of service ranking for benefit if different from his period of
continuous employment referred to in (b) above, full copies of which have been supplied to the Buyer prior to the date hereof;

  

 5 

			
	Security Interest	  	any mortgage, pledge, lien, charge, security assignment, hypothecation, standard security, assignation, security trust, encumbrance or security interest or other agreement or arrangement
entered into to create or confer security over any asset;
		
	Seller’s Group	  	the Seller and any company which is for the time being a subsidiary or holding company of the Seller or a subsidiary of any such holding company;
		
	Service Level Agreement	  	an agreement between eDiets.com and the Buyer of even date setting out arrangements for the hosting and support of the technology and content licensed by the Buyer under the Technology
Licence Agreement;
		
	Services Agreement	  	an agreement between the Buyer and the Seller of even date setting out the arrangements for transitional services to be provided to the Buyer following Completion;
		
	Settlement Date	  	as defined in clause 5.1;
		
	Tax Authority	  	the Revenue Commissioners and any other governmental, state, federal or other fiscal, revenue, customs or excise authority, body or office whether in the Ireland or elsewhere in the world
having authority or jurisdiction to impose, administer or collect any Tax;
		
	Tax or Taxation	  	means all forms of taxation and includes (without limiting the generality of the foregoing) corporation tax, dividend withholding tax, capital gains tax, capital acquisitions tax, value added
tax, income tax, pay related social insurance, amounts due under the Pay As You Earn (“PAYE”) or the Pay Related Social Insurance (“PRSI”) system, income tax, customs and excise duties, any other import duties, stamp duty,
companies capital duty and all other similar taxes, rates, levies, duties or other fiscal impositions of any

  

 6 

			
	 	  	similar kind whatsoever (including in particular but without derogating from the generality of the foregoing any charge, fine, interest, surcharge or penalty), imposed by a Tax Authority
whether under the laws of Ireland or those of any other jurisdiction;
		
	Technology Licence Agreement	  	an agreement between the Seller, eDiets.com and the Buyer of even date setting out arrangements for the licensing to the Buyer of certain technology and content relating to the
Business;
		
	Territory	  	United Kingdom and Ireland;
		
	Transfer Time	  	00:01am on the day after Completion has concluded, in accordance with clause 4.1;
		
	Transferring Employees	  	those persons listed in part 1 of schedule 2;
		
	VAT	  	value added tax as imposed by VATA and legislation supplemental thereto, including any tax of a similar nature substituted for, or levied in addition to, such tax;
		
	VAT Records	  	the records relating to the Business and the Assets which are required to be preserved by the Seller under Section 16 of VATA and Regulation 9 of the Value Added Tax Regulations 1979 S.I. No.
63 of 1979;
		
	VATA	  	Value Added Tax Act 1972 (as amended);
		
	Warranties	  	the representations and warranties set out in clause 8 and schedule 3.

  

	1.1	References to recitals, clauses and schedules are references to recitals to, clauses of and schedules to this agreement. References to this agreement include a reference to the
schedules and to any annexures to this agreement. 

  

	1.2	All references to statutory provisions shall be construed as references to: 

  

	 	1.2.1	  any statutory modification or re-enactment thereof (at the date hereof) for the time being in force; 

  

 7 

	 	1.2.2	  all statutory instruments or orders made pursuant thereto up to the date hereof; and 

  

	 	1.2.3 	any statutory provision of which that statutory provision is a re-enactment or modification. 

  

	1.3	Words denoting the singular shall include the plural and vice versa; words denoting any gender shall include all genders; and words denoting persons shall include national persons,
partnerships, bodies corporate, and other entities however described and whether or not having legal personality. 

  

	1.4	The headings in this agreement are for ease of reference only and shall not affect its interpretation. 

  

	1.5	The words “subsidiary” and “holding company” shall have the same meanings in this agreement as their respective definitions in Section 155 of the Companies Act
1963 and, as regards Irish undertakings a “subsidiary undertaking” is to be construed in accordance with Regulation 4 of the Irish Group Accounts Regulations and “parent undertaking” is to be construed in accordance with
Regulation 3 of the Irish Group Accounts Regulations. 

  

	1.6	References to the knowledge of any party shall mean the knowledge, information, belief or awareness of that party which shall be deemed to include any knowledge, information, belief
or awareness of an employee of such party (including, in the case of the Seller, Ciaran McCourt and Colin Mitchell), which such employee ought reasonably to have had in relation to the matter in question. 

  

	1.7	A time of day is a reference to the time in Dublin, Ireland. 

  

	2	Agreement for sale 

  

	2.1	The Seller as beneficial owner agrees to sell and the Buyer shall purchase the Business as a going concern together with the Assets with effect from the Transfer Time. The Seller
confirms to the Buyer that the Business and Assets will be sold free of any Security Interest. 

  

	2.2	Subject to clause 2.3, risk in the operation of the Business and the Assets shall pass to the Buyer at the Transfer Time. 

  

	2.3	Nothing in this agreement shall be construed as an acceptance or assumption by the Buyer of any liability or obligation incurred in connection with the Business arising before or
referable to the period prior to the Transfer Time (“Excluded Liability”). 

  

 8 

	2.4	The Seller undertakes to the Buyer to indemnify the Buyer on an after tax basis and keep it fully indemnified from and against all costs (including legal costs and disbursements
reasonably incurred), claims, actions, proceedings, losses, damages and expenses in respect of any Excluded Liability. 

  

	2.5	The Buyer undertakes to the Seller to indemnify the Seller and keep it fully indemnified from and against any and all liabilities relating to or arising from the Business and the
Assets arising after the Transfer Time except to the extent that such liability arises out of an Excluded Liability, the Seller’s breach of the Warranties or a breach by the Seller or by a member of the Seller’s Group of the Technology
Licence Agreement, the Service Level Agreement or the Services Agreement. 

  

	3	Consideration 

  

	3.1	The consideration (“Consideration”) payable in cash for the Assets and the Business shall be the aggregate sum of STG £2,000,000. 

  

	3.2	The consideration shall be apportioned as follows: 

  

			
	IT Assets	  	 STG £40,000

	Miami IT Assets	  	 STG £30,000

	Customer Database	  	 STG £100,000

	Goodwill of Business relating to United Kingdom customers	  	 STG £1,774,899.03

	Goodwill of Business relating to Republic of Ireland customers	  	 STG £55,099.97

	Listed Contracts	  	 STG £1

  

	3.3	The Consideration shall be exclusive of any VAT or any other applicable sales or transfer tax. 

  

	4	Completion 

  

	4.1	Completion shall take place on the first Business Day following the execution of this agreement when all of the following items are delivered and payments received:

  

	 	4.1.1 	the Seller shall deliver to the Buyer: 

  

	 	4.1.1.1 	consents from the relevant contracting parties that the Listed Contracts may be assigned or novated to Tesco and, subject to clause 6, duly executed assignments or novations in the
agreed form of the Listed Contracts and such original documents as are in the possession or under the control of the Seller in relation to the Listed Contracts; 

  

 9 

	 	4.1.1.2 	the Customer Database in the format and on the media specified by the Buyer; 

  

	 	4.1.1.3 	the IT Assets and the Miami IT Assets to such location and at such time as reasonably specified by the Buyer; 

  

	 	4.1.1.4 	its records of PRSI and PAYE relating to all the Transferring Employees duly completed up to the Transfer Time; 

  

	 	4.1.1.5 	the duly executed Services Agreement; 

  

	 	4.1.1.6 	the duly executed Technology Licence Agreement; 

  

	 	4.1.1.7 	the duly executed Service Level Agreement; and 

  

	 	4.1.1.8 	the Management Accounts; 

  

	 	4.1.1.9 	Tax Clearance Certificate pursuant to section 980 of the Taxes Consolidation Act, 1997 (as amended); 

  

	 	4.1.1.10 	those Assets which are capable of transfer by delivery, whereupon the title thereto shall pass to the Buyer by such delivery. 

  

	 	4.1.2 	the Buyer shall pay the Consideration by electronic funds transfer for immediately available cleared funds to the following account of the Seller: account number 17193242 (account
holder eDiets Europe Limited) of the AIB Bank IFSC (sort code 93-00-67), 11 Old Jewry, London EC2 8DP, London, England; 

  

	 	4.1.3 	the Buyer shall execute and deliver to the Seller: 

  

	 	4.1.3.1 	the duly executed Services Agreement; 

  

	 	4.1.3.2 	the duly executed Technology Licence Agreement; and 

  

 10 

	 	4.1.3.3 	the duly executed Service Level Agreement. 

  

	4.2	In relation to the duly executed agreements referred to in clauses 4.1.1.6 and 4.1.1.7 the Seller shall (where applicable) procure the execution of such agreements by other members
of the Seller’s Group specified in the signature blocks of such agreements prior to delivery. 

  

	4.3	The Seller shall procure that all notices, correspondence, information, orders or inquiries relating to the Business or the Assets which are received by the Seller or any member of
the Seller’s Group on or after Completion are as soon as reasonably practicable passed to the Buyer. 

  

	5	Apportionments 

  

	5.1	Without prejudice to clause 2.3, all payments and outgoings in relation to the Business and the Assets made in the ordinary course of business including but not limited to
royalties, payments under rental agreements, salaries, wages, PAYE, PRSI, pension contributions and all other payments to or in respect of the Employees (“Outgoings”) and all periodical receivables in relation to the Business and the
Assets (“Receivables”) shall be apportioned on a time basis so that such part of the Outgoings and Receivables as is attributable to the period prior to the Transfer Time shall be borne by or belong to the Seller and such part of the
Outgoings and Receivables as is attributable to the period commencing thereafter shall be borne by or belong to the Buyer. Subject to the foregoing method of apportionment, any amount of Receivables and/or Outgoings which should have otherwise been
payable to or by, as applicable, the other party hereto shall be settled by a payment in cash 30 Business Days after Completion (“the Settlement Date”) in accordance with clauses 5.1 to 5.6 inclusive. No apportionment shall be made in
respect of VAT. The Seller shall prepare a statement of apportionments and shall deliver it to the Buyer within 10 Business Days after the Transfer Time. If the Buyer disagrees with such statement it shall notify the Seller within 10 Business Days
of the receipt of such statement. Any disagreement regarding the statement of apportionments shall be resolved in accordance with clause 5.7.  

  

	5.2	If and to the extent that the Seller receives any deposit or advance payment from a customer under a Listed Contract that is referable to the supply of goods or services by the
Business after the Transfer Time which does not fall to be dealt with under clause 5.1, the Seller shall as from Completion hold or receive the same (excluding the proportion thereof charged as VAT) as trustee for the Buyer, shall record such
payment separately in its books and shall account to the Buyer for the same on the Settlement Date. 

  

	5.3	 If and to the extent that the Seller has prior to the Transfer Time made any prepayment to a supplier in the ordinary course of business in respect of goods or
services to be supplied 

  

 11 

	 	 
to the Business after the Transfer Time under a Listed Contract which does not fall to be dealt with under clause 5.1, the Buyer shall reimburse to the
Seller the amount thereof (excluding the proportion thereof charged as VAT) on the Settlement Date. If and to the extent that the Buyer receives any payment from a customer that is referable to the supply of goods or services by the Business prior
the Transfer Time which does not fall to be dealt with under clause 5.1, the Buyer shall record such payment separately in its books and shall account to the Seller for the same on the Settlement Date. 

  

	5.4	If and to the extent that the Seller has prior to the Transfer Time placed any order with a supplier in respect of goods or services to be supplied to the Business before the
Transfer Time (but payment for which arises after the Transfer Time) under a Listed Contract which does not fall to be dealt with under clause 5.1, the Seller shall reimburse to the Buyer the amount thereof (excluding the proportion thereof charged
as VAT) on the Settlement Date. 

  

	5.5	Goods and services supplied by the Seller before the Transfer Time shall be invoiced by the Seller and VAT payable in respect thereof shall be accounted for by the Seller. Goods and
services supplied by the Buyer after the Transfer Time shall be invoiced by the Buyer and VAT payable in respect thereof shall be accounted for by the Buyer. 

  

	5.6	For the avoidance of doubt, any payments or outgoings which relate to obligations entered into by the Seller which have been made outside the ordinary course of business shall be
borne in their entirety by the Seller, whether or not they are attributable to the periods before or after the Transfer Time. Any payments or outgoings referred to expressly in the Listed Contracts shall be deemed to be in the ordinary course of
business. 

  

	5.7	The Seller and the Buyer shall together endeavour to agree the payments required by this clause 5. If the Seller and the Buyer are unable to reach agreement thereon within 30
Business Days after Completion, the matter shall be referred to an independent Irish chartered accountant mutually agreeable to the Seller and Buyer who shall be instructed to determine the relevant amounts, providing the Seller and the Buyer for
this purpose with all relevant working papers or copies thereof. The said accountant shall act as expert and not as arbitrator and in the absence of manifest error, his decision shall be final. The chartered accountant’s costs shall be borne
equally by the Seller and Buyer. 

  

	6	Listed Contracts 

  

	6.1	Subject to clause 6.2, with effect from the Transfer Time, the Buyer shall become entitled to all of the rights and benefits of the Seller under the Listed Contracts.

  

 12 

	6.2	If consent to the assignment or novation of any of the Listed Contracts is required from any person, the Seller shall obtain such consent or novation and, until such consent or
novation is obtained: 

  

	 	6.2.1 	the Seller shall hold the benefit of the Listed Contract on trust for the Buyer and shall give all requested assistance after Completion to the Buyer to enable the Buyer to enforce
the rights of the Seller under the Listed Contract and the Buyer shall (subject to clause 6.3) perform the obligations of the Seller under the Listed Contract; 

  

	 	6.2.2 	if any requisite consent is refused or not obtained within 30 days (or such longer period as the Buyer may specify) after Completion then (as the Buyer may in its absolute
discretion elect) either: 

  

	 	6.2.2.1 	the Seller shall continue to hold the benefit of the Listed Contract concerned in trust for the Buyer absolutely and pay over any benefit derived under the Listed Contract promptly
to the Buyer with effect from Completion until the benefit of the Listed Contract is assigned to the Buyer or is the subject of a novation in favour of the Buyer and the Buyer shall perform (subject to clause 6.3) on behalf of the Seller all the
obligations of the Seller under the Listed Contract; or 

  

	 	6.2.2.2 	the Seller will use all reasonable endeavours to procure the cancellation of the relevant Listed Contract so that the Buyer is able to enter into new arrangements with the relevant
party or parties. 

  

	6.3	Nothing in this agreement shall: 

  

	 	6.3.1 	require the Buyer to perform any obligations or discharge any liabilities created by or arising under any Listed Contract insofar as such obligations or liabilities fall due to be
performed before Transfer Time; 

  

	 	6.3.2 	make the Buyer liable for any act, neglect, default or omission in respect of any Listed Contract committed by the Seller before Transfer Time; or 

  

	 	6.3.3 	make the Buyer liable for any claim, expense, loss or damage arising from any failure to obtain any third party consent to this agreement or from any breach of any Listed Contract
caused by the execution, completion or performance of this agreement. 

  

 13 

	6.4	The Seller shall indemnify and hold harmless the Buyer against all actions, proceedings, losses, costs, expenses, damages, claims and demands and all other liabilities whatsoever
(including, without limitation, all losses, liabilities and reasonable and proper costs incurred as a result of defending or settling any claim alleging any such liability) suffered or incurred by the Buyer by reason of or arising out of any of the
matters listed in clause 6.2.2 and 6.3. 

  

	6.5	Except as otherwise provided in this clause 6, the Buyer undertakes to the Seller that it will duly and properly perform, assume and pay and discharge when due, subject to clause
6.3, all obligations and liabilities of the Seller under the Listed Contracts arising after the Transfer Time. The Buyer shall indemnify and hold harmless the Seller and Seller’s Group against all actions, proceedings, losses, costs, expenses,
damages, claims and demands and all other liabilities whatsoever (including, without limitation, all losses, liabilities and reasonable and proper costs incurred as a result of defending or settling any claim alleging any such liability) suffered or
incurred by the Seller arising out of the Listed Contracts after the Transfer Time arising from the Buyer’s or its representative’s act or omission. 

  

	7	Employees 

  

	7.1	The parties acknowledge and agree that pursuant to the Employment Regulations the contracts of employment between the Seller and the Transferring Employees will have effect after
the Transfer Time as if originally made between the Buyer and the Transferring Employees. 

  

	7.2	The Seller shall indemnify and keep indemnified the Buyer against each and every cost (including reasonable legal costs and disbursements), claim, liability, expense, or demand
arising from: 

  

	 	7.2.1 	the employment or termination of employment of any Excluded Employee or any other person (other than the Transferring Employees) who claims that their employment transfers to the
Buyer (or the Buyer’s Group) by virtue of the operation of the Employment Regulations to the transaction contemplated by this agreement; 

  

	 	7.2.2 	the transfer to the Buyer (or the Buyer’s Group) of any liability in connection with the termination of employment of any person by the Seller up to and including the Transfer
Time; 

  

	 	7.2.3 	any act or omission by the Seller in respect of any Transferring Employee up to and including the Transfer Time; or 

  

	 	7.2.4 	failure by the Seller to comply with its obligations under regulation 8 of the Employment Regulations (except to the extent that claims arise from acts or omissions by the Buyer).

  

 14 

	7.3	The Buyer shall indemnify and keep indemnified the Seller against each and every cost (including reasonable legal costs) claim, liability, expense, or demand arising from:

  

	 	7.3.1	  any act or omission by the Buyer in respect of any Transferring Employee after the Transfer Time; 

  

	 	7.3.2 	the termination by the Buyer of the employment of any Transferring Employee after the Transfer Time; or 

  

	 	7.3.3 	a failure by the Buyer to comply with its obligations under regulation 8 of the Employment Regulations. 

  

	7.4	Salaries and other emoluments, tax, PAYE and PRSI payments and contributions to retirement benefit schemes relating to the Transferring Employees shall be borne by the Seller up to
and including the Transfer Time and all necessary apportionments shall be made in accordance with clause 5. 

  

	7.5	The Seller shall pay to the Buyer a sum equal to the value of any holiday pay accrued by the Transferring Employees but not taken as at the Transfer Time, less the value of any
holiday pay taken in excess of such accrued entitlement and less any holiday pay paid in advance of any of the Transferring Employees’ entitlements. If the resulting calculation is negative, the Buyer shall make such payment to the Seller.

  

	8	Warranties 

  

	8.1	The Seller acknowledges that the Buyer is entering into this agreement in reliance upon each of the Warranties and that the Warranties are given with the intention of inducing the
Buyer to enter into this agreement. Accordingly, the Seller represents and warrants to the Buyer (in relation to the Business and Assets) that each of the statements set out in part 1 of schedule 3 is true and accurate in all respects.

  

	8.2	The Warranties shall be separate and independent and shall not be limited by reference to any other paragraph or sub-paragraph of part 1 of schedule 3 or by any other provision of
this agreement. 

  

	8.3	 The Seller’s Warranties are given subject to the matters disclosed in the Disclosure Letter. The Seller shall indemnify and hold harmless the Buyer (and
members of the Buyer’s Group) from and against all actions, proceedings, losses, costs (including legal costs and disbursements), expenses, damages, claims and demands and all other liabilities whatsoever (including, without limitation, all
losses, liabilities and reasonable and proper 

  

 15 

	 	 
costs incurred as a result of defending or settling any claim alleging any such liability) suffered or incurred by the Buyer (or a member of the Buyer’s
Group) by reason of any breach by the Seller of any of the Warranties provided however that the Seller shall not be liable for indirect or consequential loss. 

  

	8.4	Subject to the matters disclosed in the Disclosure Letter, the Warranties shall not be qualified or in any way affected by any investigation made by the Buyer or by its knowledge of
any information which it may have received or been given or which it may have actual or implied or constructive notice of prior to the signing of this agreement. 

  

	8.5	The Buyer acknowledges that the Seller is entering into this agreement in reliance upon each of the Buyer’s Warranties and that the Buyer’s Warranties are given with the
intention of inducing the Seller to enter into this agreement. Accordingly, the Buyer represents and warrants to the Seller that each of the statements set out in part 2 of schedule 3 is true and accurate in all respects. The Warranties shall be
separate and independent and shall not be limited by reference to any other paragraph or sub-paragraph of part 2 of schedule 3 or by any other provision of this agreement. The Buyer shall, indemnify and hold harmless the Seller (and members of the
Buyer’s Group) from and against all third party’s actions, proceedings, losses, costs, expenses, damages, claims and demands and all other liabilities whatsoever (including, without limitation, all losses, liabilities and reasonable and
proper costs incurred as a result of defending or settling any claim alleging any such liability) suffered or incurred by the Seller (or a member of the Seller’s Group) by reason of any third party claims resulting from any material breach by
the Buyer of any of the Buyer’s Warranties. 

  

	8.6	The Guarantors acknowledge that the Buyer is entering into this agreement in reliance upon each of the Guarantors’ Warranties set out in part 3 of schedule 3 and that the
Guarantors’ Warranties are given with the intention of inducing the Buyer to enter into this agreement. Accordingly, the Guarantors represent and warrant to the Buyer that each of the statements set out in part 3 of schedule 3 is true and
accurate in all respects. The Guarantors’ Warranties shall be separate and independent and shall not be limited by reference to any other paragraph or sub-paragraph of part 3 of schedule 3 or by any other provision of this agreement. The
Guarantors shall indemnify and hold harmless the Buyer (and members of the Buyer’s Group) from and against all third party’s actions, proceedings, losses, costs, expenses, damages, claims and demands and all other liabilities whatsoever
(including, without limitation, all losses, liabilities and reasonable and proper costs incurred as a result of defending or settling any claim alleging any such liability) suffered or incurred by the Buyer (or a member of the Buyer’s Group) by
reason of any third party claims resulting from any material breach by the Guarantors of any of the Guarantors’ Warranties. 

  

 16 

	8.7	The Warranties shall remain in full force and effect notwithstanding Completion. 

  

	9	Post-Completion provisions 

  

	9.1	To assure to the Buyer the full benefit of the Business, the Seller undertakes by way of further consideration for the obligations of the Buyer under this agreement, as separate and
independent agreements, that it shall not (and shall procure that none of the Seller’s Group shall) without the Buyer’s prior written consent: 

  

	 	9.1.1 	for two years from Completion either solely or jointly with, or as manager, agent or consultant of, any person (corporate or unincorporated) intentionally carry on or be engaged or
concerned or interested directly or indirectly in Ireland and the United Kingdom in an online business the same as or similar in all material respects to the Business other than as the owner of securities listed on a recognised stock exchange which
do not amount to more than five per cent (5%) of the class of securities concerned; 

  

	 	9.1.2 	for two years from Completion, in respect of goods or services competitive with those presently supplied by the Business, solicit, canvass, entice away or supply goods or services
to (either on their own account or as the manager, agent, consultant or employee of any other person) any person who is or was within a period of twelve months prior to Completion a customer in the Territory of the Seller (or of any member of the
Seller’s Group) in relation to the Business; 

  

	 	9.1.3 	for two years from Completion induce or seek to induce any employee to leave the employment of the Buyer whether or not such person would be in breach of contract (save that an
employee who applies to the Seller in response to a published job advertisement shall not be considered to be induced); 

  

	 	9.1.4 	at any time after Completion use, or give consent to any third party to use, the name “eDiets” or any colourable imitation thereof in the Territory; and

  

	 	9.1.5 	at any time do or say anything untrue which could reasonably be anticipated to be harmful to the reputation of the Business or which leads or may lead any person, firm or company to
cease to do business with the Buyer. 

  

	9.2	In the event of termination of the Technology Licence Agreement due to the breach of Buyer, the provisions of clause 9.1 shall no longer apply and the Seller shall be free to
recommence business in the Territory. 

  

 17 

	9.3	In the event of termination of the Technology License Agreement due to the breach of the Buyer or for any reason other than Seller’s breach of the Technology Licence Agreement,
the Seller may (subject to applicable data protection laws) immediately recommence use of the Customer Database as was delivered to the Buyer on Completion (“Original Customer Database”) for the Business, and all of the rights and benefits
of the Original Customer Database shall automatically be deemed assigned to Seller (and Buyer hereby assigns all the rights and benefits of the Original Customer Database). In this event, the Buyer (at its own expense) shall do or procure the doing
of all acts and/or the execution of all documents which the Seller may reasonably consider necessary for giving full effect to, and securing to the Seller the full benefit of the rights, powers and remedies of, this clause9.3. Nothing in this clause
9.3 shall oblige the Buyer to delete any customers from any Buyer customer database. 

  

	9.4	The Seller agrees that if Ciaran McCourt does not remain as an employee of the Seller and/or provide services to the Buyer under the Services Agreement for a period of six months
from the date of Completion it shall pay the Buyer STG £20,000 per month in respect of that part of the six month period which has not elapsed at the time Ciaran McCourt leaves the Seller’s employment or ceases to provide such services.
If Ciaran McCourt leaves the employment of the Seller or ceases to provide such services during a month, the £20,000 shall be pro-rated to reflect the unexpired part of the month. 

  

	9.5	Clause 9.4 shall not apply in the event that Ciaran McCourt leaves the employment of the Seller or is unable to provide the services in each case as a result of death or physical or
mental incapacity. 

  

	10	Confidentiality 

  

	10.1	The Seller undertakes with the Buyer that it and every member of the Seller’s Group shall keep confidential and except with the prior consent in writing of the Buyer shall not
disclose to any third party or make use of any Confidential Information or other know-how relating directly to the Business including but not limited to any such Confidential Information about current or future affairs or plans of the Business or
about customers or other persons with whom the Seller has had dealings or has been concerned in relation to the Business. 

  

	10.2	 The provisions of clause 10.1 shall not apply to (a) Confidential Information which is required to be disclosed by law or by any recognised stock exchange or
regulatory body having the right to require such disclosure provided that the Seller or other relevant member of the Seller’s Group shall, so far as practicable, first have consulted with the Buyer and taken into account its reasonable
requirements as to the timing, contents and manner of making the relevant disclosure, (b) information publicly known, or (c) 

  

 18 

	 	 
information applicable to the business (including, without limitation, the strategies, know-how, business plans, financial data, customers, and intellectual
property) of Seller or Seller’s Group outside the Territory. 

  

	11.3	Except with respect to the Confidential Information of the Business transferred to Buyer, the Buyer undertakes with the Seller that it and every member of the Buyer’s Group
shall keep confidential and except with the prior consent in writing of the Seller shall not disclose to any third party or make use of any Confidential Information or other know-how relating to the business of the Seller or Seller’s Group
conducted outside the Territory, including but not limited to any such Confidential Information about current or future affairs, plans or customers of such business. 

  

	11	Guarantee 

  

	11.1	In consideration of the entry of the Buyer into this agreement, the Guarantors irrevocably and unconditionally as primary obligors undertake and guarantee to the Buyer on demand the
performance by Seller of all its obligations under this agreement and/or the other documents to be executed in connection with it. 

  

	11.2	The Guarantors shall hold harmless and indemnify the Buyer on demand against losses, liabilities, damages, costs and expenses (including legal costs and expenses on an indemnity
basis) which the Buyer suffers by reason of a default by the Seller in the performance of its obligations under this agreement or the other documents to be executed in connection with it. 

  

	11.3	If the Seller defaults in the performance of its obligations under this agreement, the Guarantors shall on demand perform (or procure the performance of) that obligation, so that
the same benefits shall be conferred on the Buyer as it would have received if the Seller had duly performed that obligation. 

  

	11.4	The obligations and liabilities of the Guarantors in this clause 11 are continuing obligations and liabilities which shall remain in force until the obligations of the Seller under
this agreement and the other documents to be executed in connection with it have been performed. 

  

	11.5	The obligations of the Guarantors under this clause 11 shall not be affected by anything which, but for this clause, might operate to release or otherwise exonerate it from or
affect its obligations. In particular none of the following shall affect the obligations of the Guarantors: 

  

	 	11.5.1 	 any time, indulgence, waiver or consent given at any time to the Seller or 

  

 19 

	 	 
another person except that the Guarantors’ obligations under this clause 11 shall not apply in relation to a breach by the Seller of this agreement that
the Buyer has expressly waived in writing; 

  

	 	11.5.2 	any legal limitation, disability, incapacity or other circumstances relating to the Seller or another person; 

  

	 	11.5.3 	an irregularity, unenforceability or invalidity of the obligations of a party to this agreement which does not affect the enforceability or validity of the relevant obligations(s)
being asserted; and 

  

	 	11.5.4 	the dissolution, amalgamation, reconstruction or insolvency of the Seller or the Seller’s Group. 

  

	11.6	The obligations and liabilities contained in this clause 11 may be enforced without the Buyer first taking any action against the Seller. 

  

	11.7	The Buyer may make one or more demands under this clause 11. 

  

	11.8	This clause 11 is expressly enforceable in any jurisdiction, including in the United States. 

  

	11.9	The liability of the Guarantors shall be joint and several. 

  

	11.10 	If there is an amendment and/or variation to the terms of this agreement and/or any other document referred to in it or to be executed in conjunction with it, the obligations of the
Guarantors under this clause 11 shall apply to the amended or varied term(s). 

  

	12	Announcements 

  

	12.1	None of the parties to this agreement shall make or authorise any announcement or issue any circular concerning the subject matter of this agreement without the consent of the other
parties (such consent not to be unreasonably withheld or delayed) save: 

  

	 	12.1.1 	as provided by the Employment Regulations in relation to any consultation with employees of the Seller; 

  

	 	12.1.2 	 nothing herein shall prevent any of the parties from making such announcements and issuing such circulars and notices as may be required by law or in order for it
to comply with the rules and regulations of any recognised stock exchange or relevant regulatory body in any jurisdiction provided that the party making the announcement or issuing the circular or notice shall, so far as practicable, first have
consulted with the other parties 

  

 20 

	 	 
and taken into account their reasonable requirements as to timing and contents of the relevant announcement, circular or notice; and

  

	 	12.1.3 	nothing shall restrict the Buyer from communicating with the management, staff and advisers to the Business in relation to the acquisition and any matters concerning the future
operation or management of the Business. 

  

	13	Assignment 

  

	13.1	None of the rights of the parties under this agreement may be assigned or transferred, save that (and in each case subject to clause 13.2): 

  

	 	13.1.1 	the Buyer may assign or transfer the benefit of this agreement (or any part hereof) including, without limitation, the Warranties and any document referred to in it (together with
any cause of action arising in connection with any of them) to any member of the Buyer’s Group without consent upon prior written notice to Seller; and 

  

	 	13.1.2 	the Seller may assign or transfer the benefit of this agreement (or any part hereof) including, without limitation, the Warranties and any document referred to in it (together with
any cause of action arising in connection with any of them) to any member of the Seller’s Group without consent upon prior written notice to Buyer. 

  

	13.2	Any transferee of this agreement shall be required to assume in writing all of the obligations associated with such transfer and the assignor shall undertake to the other party
hereto to procure the re-assignment to such assignor of such benefit upon the assignee ceasing to be a member of the Buyer’s Group or Seller’s Group, as applicable. 

  

	13.3	Notwithstanding the above, eDiets may assign this agreement as part of a sale of substantially all of the assets of eDiets, or its Group, or a change of Control or merger of eDiets,
or its Group, provided always that such assignment is not permitted to Wal-Mart Stores, Inc. or a member of its Group. 

  

	13.4	An assignment of this agreement shall not relieve the Guarantors of their obligations under this agreement. 

  

	14	Costs 

  
 Each of the parties shall respectively bear all legal and other costs and expenses incurred by it in connection with this agreement and the sale of the
Business. 
  

 21 

	15	VAT 

  

	15.1	The parties intend and shall use all reasonable endeavours to secure that the completion of the sale of the Business and Assets under this agreement shall constitute a sale of a
business for the purposes of Section 3(5)(b)(iii) and 5(8) VATA, and accordingly shall be treated as neither a supply of goods nor a supply of services such that no VAT will be chargeable in respect of the sale and purchase herein agreed. However,
if the Completion of the sale of the Assets under this Agreement is treated as a supply of goods or services for the purposes of VAT, the Buyer shall be liable to pay to the Seller VAT on the Consideration upon production of a valid VAT invoice.

  

	15.2	The Buyer warrants to the Seller that they are at the date hereof and will continue to be until and immediately after Completion duly registered for the purposes of VAT.

  

	15.3	If the Revenue Commissioners have before Completion indicated that the sale of the Business cannot be treated in the manner contemplated by clause 15.1 the Buyer shall on Completion
(against production of appropriate VAT invoices in respect thereof and in addition to any amounts expressed in this agreement to be payable by the Buyer) promptly pay the amount of any VAT which may be chargeable on the sale of the Business and of
the relevant Assets. If no such indication is given before Completion no amount in respect of VAT shall be paid by the Buyer on Completion but, if the Revenue Commissioners finally determine VAT to be payable in respect of the supply of the Assets
of the Business under this agreement the Seller shall notify the Buyer of that determination and the Buyer shall (unless it exercises its rights under the following provisions of this clause 15) pay to the Seller such VAT within 12 days of receipt
of a valid VAT invoice in respect of the supply for VAT purposes. 

  

	15.4	If the Buyer disagrees with the determination of the Revenue Commissioners it may, within seven days of being notified of such decision by the Seller notify the Seller that it
requires the Seller to obtain a review of the decision by the Revenue Commissioners and the Seller shall immediately request the Revenue Commissioners to undertake that review provided that the Buyer indemnifies and secures the Seller to its
reasonable satisfaction against all reasonable costs, charges and expenses (including Tax) which the Seller may incur. 

  

	15.5	The Seller shall notify the Buyer on receipt of the decision of the Revenue Commissioners and if the Buyer disagrees with the decision it may give notice to the Seller that it
requires the Seller to make all such appeals against the decision as, and in such manner as, the Buyer shall reasonably request from time to time and the Seller shall promptly comply with any such request by the Buyer provided that the Buyer
indemnifies and secures the Seller to its reasonable satisfaction against all reasonable costs, charges and expenses (including Tax) which the Seller may incur in connection with such appeals. 

  

 22 

	15.6	Within 14 days of the decision of the Revenue Commissioners referred to above or, if a further appeal has been made, within 14 days of the decision of the court or tribunal to which
the final such appeal has been made: 

  

	 	15.6.1 	the Buyer shall pay to the Seller by way of additional consideration a sum equal to the amount of VAT that has been determined to be properly payable in respect of the supply
(against delivery by the Seller of an appropriate VAT invoice) after deducting from it any amount previously paid in respect of such VAT by the Buyer to the Seller; or 

  

	 	15.6.2 	if an amount previously paid by the Buyer to the Seller in respect of VAT exceeds the VAT that is finally determined to be payable the Seller shall pay to the Buyer an amount equal
to the excess and deliver to the Buyer an appropriate tax credit invoice for VAT purposes; and 

  

	 	15.6.3 	the Seller will on Completion deliver to the Buyer such of the records referred to in Section 16 of VATA as relate exclusively to the Business. 

  

	16	Further assurance 

  

	16.1	The Seller shall (or shall procure that a member of the Seller’s Group shall) from time to time, on being reasonably required to do so by the Buyer, now or at any time in the
future, at the expense of the Seller do or procure the carrying out of all such acts and/or execute or procure the execution of all such documents in a form reasonably satisfactory to the Buyer as the Buyer may reasonably consider necessary for
giving full effect to this agreement and securing to the Buyer the full benefit of the rights, powers and remedies confirmed upon the Buyer in this agreement. 

  

	16.2	Without limiting clause 16.1, the Seller shall, if so requested by the Buyer, assign to the Buyer such manufacturers’ or suppliers’ guarantees and warranties relating to
the Assets as may be in force at the Transfer Time insofar as the same are capable of assignment and the benefit of all other claims against third parties relating to any of the Assets to the extent they relate to the period from the Transfer Time
(including, without limitation, any claim for breach of warranty or representation). To the extent that the same are not capable of assignment the Seller shall hold the benefit thereof on trust for the Buyer and shall take such action in relation
thereto as the Buyer may from time to time direct. 

  

	16.3	The Buyer and Seller will use their good faith efforts and cooperate as reasonably requested to cause the consummation of the transactions contemplated hereunder, and to execute and
deliver the documents, in accordance with the terms and conditions hereof. 

  

 23 

	17	Notices 

  

	17.1	To give notice under this agreement, a letter must be delivered personally or sent by pre-paid overnight internationally recognized courier service to the address below or to any
other address given in writing. A notice delivered by hand is served when delivered, a notice sent by courier is served the next business day after posting. 

  
 Buyer 
  
 For the attention of the CEO of Tesco.com Limited, with a copy the Company Secretaries of Tesco.com Limited and Tesco Stores Limited 
 Address: Tesco House, Delamare Road, Cheshunt, Herts EN8 9SL; 
  
 Seller 
  
 For the attention of Ciaran McCourt, with a copy to Alison Tanner of eDiets.com, the 
 Company Secretary of Unislim and McCourt 
 Address: 29 North Anne Street, Dublin 7, Ireland 
  
 eDiets.com 
  
 For the attention of Alison Tanner

 Address: 3801 W. Hilboro Blvd, Deerfield Beach, Florida, USA 
  
 Unislim 
  
 For the attention of Ciaran McCourt 
 Address:
49 Lower Dorset Street, Dublin 1, Ireland 
  
 McCourt 

 
 For the attention of Mr Ciaran McCourt 
 Address: c/o eDiets Europe Limited, 29 North Anne Street, Dublin 7, Ireland 
  

	18	General 

  

	18.1	This agreement may be entered into in any number of counterparts, each of which when so executed and delivered shall be an original, but all the counterparts shall together
constitute one and the same instrument. 

  

	18.2	This agreement (together with the documents entered into under it or at the same time as it) supersedes all prior understandings and agreements between the parties (whether written
or oral) relating to its subject matter and contains the entire agreement between the parties relating to its subject matter. 

  

	18.3	 No failure or delay by either party to exercise any right or remedy under this agreement shall be construed as a waiver of that right or remedy nor shall any single
or partial exercise of any right or remedy preclude the further exercise of that right or remedy. No waiver by either party of any breach of this agreement shall be considered as a waiver of a 

  

 24 

	 	 
preceding or subsequent breach. The rights and remedies provided in this agreement are cumulative and are not exclusive of any rights or remedies provided by
law. 

  

	18.4	If a court or administrative organisation with competent jurisdiction decides that a clause in this agreement is not valid this will not affect the rest of this agreement. The
parties shall try to agree on a suitable clause to replace the one which is not valid. The new clause should, as far as possible, achieve the same economic, legal and commercial aims as the invalid one. 

  

	18.5	Nothing in this agreement creates a partnership or employment relationship between the parties or makes one party the agent of another. 

  

	18.6	A purported variation of this agreement is not effective unless in writing signed by or on behalf of each of the parties. 

  

	18.7	This agreement shall be governed by the law of Ireland and each party agrees to submit to the exclusive jurisdiction of the courts of Ireland. 

  

	18.8	Nothing in clause 18.7 shall prevent either party applying to the courts of any other country for injunctive or other interim relief. 

  
 Signed by the parties on the date of this agreement. 
  

 25 

 SCHEDULE 1 
  

Assets 
  
 Part 1 
  
 Listed Contracts 
  

	1	All current contracts with customers listed in the Customer Database; 

  

	2	All contracts related to the hardware and software comprising the IT Assets; and 

  

	3	All contracts listed in the table below: 

  

					
	 30 April 2003
	  	eDiets contract 2003/2004 online content	  	 (1) Eircom.net
  
 (2) eDiets

			
	 19 May 2003
	  	Insertion order	  	 (1) Eircom.net
  
 (2) eDiets

			
	 1 August 2003
	  	AOL UK insertion order	  	 (1) AOL (UK) Limited
  
 (2) eDiets Europe Limited
  

			
	 12 November 2003
	  	MSN Insertion Order	  	 (1) eDiets UK
  
 (2) Microsoft Online-LP

			
	22 October 2003/18
November 2003	  	E-commerce and content agreement	  	 (1) eDiets Europe Limited
  
 (2) Icircle Limited

			
	 15 December 2003
	  	Program services agreement (for the eDiets diet and fitness program)	  	 (1) eDiets Europe Limited
  
 (2) The Voluntary Health Insurance Board

			
	 Undated
	  	Recipe club agreement	  	 (1) eDiets Europe Limited
  
 (2) eDiets.com, Inc.

  

 26 

					
	 	  	 	  	(3) Allrecipes Inc.
			
	 15 December 2003
	  	eDiets Europe Master Service Agreement and Dart Service Attachment for Advertisers/Agencies Addendum	  	 (1) eDiets Europe Limited
  
 (2) Doubleclick International Techsolutions Ltd.

			
	 19 May 2004
	  	Insertion order	  	 (1) PDV
  
 (2) eDiets

			
	 28th
August 2002
	  	Contract	  	 (1) iVillage
  
 (2) eDiets

			
	 22 October 2002
	  	Contract	  	Dealgroup
			
	 8 December 2003
	  	 	  	Valueclick
			
	 1 June 2004
	  	Advertising Insertion Order - eCPM	  	 (1) eDiets Europe Limited
  
 (2) Yahoo UK Limited

			
	 8 June 2004
	  	Advertising Insertion Order - eCPM	  	 (1) eDiets Europe Limited
  
 (2) Yahoo UK Limited

			
	 15 June 2004
	  	Performance Media Agreement	  	 (1) eDiets UK
  
 (2) MediaBrokers Limited

  
 Part 2

  
 Customer Database 
  
 The complete database relating to the Business containing all current and historic data
relating to or required for marketing to prospective customers, signing up new customers, billing customers and reporting on marketing and usage. 
  

 27 

 Part 3 
  
 IT Assets 
  
 Servers 
  
 Development
Server 
  
 IBM Netfinity 3500 (serial number: 1S865731Y551591W) including
Windows 2000 Server, ColdFusion 5 Pro, MS SQL Server 2000 and MS Visual Source Safe 
  
 Mission Control Server 
  
 Dell Poweredge 1650 (serial number:
35FQF0J 06859104643) including Windows 2000, ColdFusion 5 and MS SQL Server 2000 
  
 Mailserver 
  
 Dell Poweredge 2400 (serial number: B0J84OJ)
including Windows 2000 Server and Mdaemon Mailserver 
  
 Office Server

  
 Dell Poweredge 2400 (serial number: 8M6900J) including Windows 2000 and Norton
Antivirus Corporate 
  
 Chat Server 
  
 Compaq Deskpro (serial number: 8032DQK30157) including Windows 2000 and eShare expressions
Chat 
  
 For the avoidance of doubt, all servers include connected monitors,
keyboards and mice (if any). 
  
 Workstations 
  
 Eight Dell Optiplex GX240 desktop PCs (serial numbers: D3RLHOJ, 46GWBOJ, 98GWBOJ, 36GWBOJ,
D8GWBOJ, 26GWBOJ, 69GWBOJ and CJCQFOJ) 
  
 Printers and other peripheral
devices 
  
 HP Laserjet 4040N printer 
  
 HP Laserjet 5M printer 
  

 28 

 Four 24 Port 3Com Hubs 
  
 Two Server Cabinets 
  
 Two KVM Switches 
  
 Three uninterruptible power
supplies 
  
 For the avoidance of doubt, all workstations include connected
monitors, keyboards and mice. 
  
 Software 
  
 Server software: 
  
 Four Windows 2003 Server (Licence Nos: 17689809; Part Number: P73-00269) 
  
 One Windows 2000 Server (Licence No: XF7DM-RWCCW-H9DD4-Y89M7-HHPCG) 
  
 One ColdFusion Server Pro 5 (Licence No: CFW500-46808-27256-61549) 
  
 One ColdFusion MX Server Standard 6.1 (Licence No: CPD600-11173-78284-73155) 
  
 Two MS SQL server 2000 (Licence No: 17689809; Part Number: 228-00779) 
  
 One Mdaemon Pro Mailserver Software (Licence No: BKQDGQT-YZGLANV-IYJALDE) 
  
 One Norton Antivirus Corporate Edition (V. 4.0) (Licence No: 3895247960) 
  
 One eShare Expressions Chat Software (Licence No: QYFHNFJDF0JAF-112F-19) 
  
 Development workstations: 
  
 Three off MS Visual Source Safe (Licence Nos: 885-1350633, 874-7881263, 875-3005956) 
  
 Three Allaire Homesite (Licence Nos: HSW500-04836-48229-50673; HSW500-07335-18229-21694; HSW500-08434-88229-30673) 
  
 Three PC Anywhere Remote Access Software 
  
 Miscellaneous Software: 
  
 Eight Windows XP Pro 
  
 Eight MS Office 
  

 29 

 Part 4 
  
 Miami IT Assets 
  
 Site Hardware/Software 
  
 DB Cluster 
  
 Poweredge 6350/550 (serial
number: EWSXA; server name: DBCMIA30) 
  
 Poweredge 6350/550 (serial number:
EWSXI; server name: DBCMIA31) each including Advanced Server software and SQL Server software 
  
 Poweredge 220S (serial number 4FK1M31) 
  
 Web
Servers 
  
 Poweredge 1650 (serial number: 2CPXB11; server name: WEBMIA31)

  
 Poweredge 1650 (serial number: 99PXB11; server name: WEBMIA32) 
  
 Poweredge 1650 (serial number: FBPXB11; server name: WEBMIA36) 
  
 Poweredge 1650 (serial number: H9PXB11; server name: WEBMIA39) 
  
 each including ColdFusion software 
  
 Email servers 
  
 Poweredge 1650 (serial number: 9PBXB11; server name:MAILMIA30) 
  
 Poweredge 1650 (serial number: 79PXB11; server name:LSERVMIA30) 
  
 each including Listserv software, LSMTP software 
  
 DNS Server 
  
 QA Machine 
  
 Poweredge 1650 (serial
number: JBPXB11; server name: QAMIA60) 
  
 including ColdFusion software and SQL
Server software 
  
 Miscellaneous software 
  
 Robocopy and b-compare 
  

 30 

 SCHEDULE 2 
  

Employees 
  
 Part 1 
  
 Transferring Employees 
  

	1	Eric Crean, Senior Developer 

  

	2	Sethil Nathan, Programmer 

  

	3	Shane Casey, Graphics 

  

	4	Barbara Wilson, Head of Nutrition 

  

	5	Claire Kehoe, Head of Customer Services 

  

	6	Kelly Collins, New Customer Care 

  

	7	John Callan, Business Development Manager 

  
 Part 2 
  
 Excluded Employees 
  

	1	Ciaran McCourt, CEO 

  

	2	Colin Mitchell, CTO 

  

	3	Patricia O’Brien 

  

	4	Manuel Jiminez 

  

	5	Andrea Brandt 

  

	6	Krisa Schact 

  

	7	Fernanda Adelenda 

  

	8	Bridie Clair 

  

	9	Niall Gannon 

  

	10	Nadine Malkus 

  

 31 

 SCHEDULE 3 
  

The Warranties 
  
 Part 1 
  
 Seller’s Warranties 
  

	1	CAPACITY OF SELLER 

  

	1.1	The Seller is entitled to sell the Business and Assets to the Buyer on the terms set out in this agreement. 

  

	1.2	The Seller has the power and authority to enter into and perform this agreement which constitutes, or when executed will constitute, binding obligations in accordance with their
terms. 

  

	1.3	Neither the execution and delivery of this agreement by the Seller nor the transactions contemplated by this agreement are prohibited by, or violate any provision of and will not
result in a breach of: 

  

	 	1.3.1 	any applicable law, rule, regulation, judgment, decree, order or other requirements of any government, quasi-government, statutory, administrative or regulatory body, court or
agency; or 

  

	 	1.3.2 	the Memorandum or Articles of Association of the Seller. 

  

	1.4	This Agreement constitutes and imposes valid, legal and binding obligations on the Seller, fully enforceable in accordance with its terms. 

  

	1.5	The Seller is and was at all times in the past empowered and duly qualified to carry on the Business in all jurisdictions in which the Business is and was carried on.

  

	1.6	The Business is not carried on outside Ireland through a branch or agency or other permanent establishment. 

  

	2	ACCOUNTS 

  

	2.1	The Buyer has been supplied with a true and complete copy of the Accounts. 

  

	2.2	The Accounts were prepared in accordance with requirements of all relevant statutes and generally accepted accounting practices in Ireland. 

  

 32 

	2.3	The Accounts, to the knowledge of the Seller: 

  

	 	2.3.1 	are complete and accurate in all material respects; 

  

	 	2.3.2 	show a true and fair view of the state of affairs and results of the Seller (including in relation to the Business) for the period 1 January 2002 to the Accounting Date;

  

	 	2.3.3 	as at the date to which they are drawn are not affected by any extraordinary, exceptional materially unusual or materially non-recurring items; 

  

	 	2.3.4 	make full provision for depreciation of the fixed assets of the Seller (including in relation to the Business) having regard to their original cost and estimated life;

  

	 	2.3.5 	provide or reserve in full for all liabilities (including contingent, unquantified or disputed liabilities) of the Seller (including in relation to the Business) as at the
Accounting Date, with the exception of the VAT position which is noted in the Accounts but for which no provision has been made; 

  

	 	2.3.6 	make full provision for any bad or doubtful debts for old, depreciated and unsaleable stock and for taxation on profits (whether on an income or capital nature); and

  

	 	2.3.7 	fully disclose all or any change in the accounting policies adopted by the Seller (including in relation to the Business). 

  

	2.4	No material part of the amounts included in the Accounts or (in the case of an amount arising after the Accounting Date) in the books of the Seller in respect of debtors:

  

	 	2.4.1 	is overdue by more than 12 weeks; 

  

	 	2.4.2 	has been released on terms that the debtor pays less than the full book value of his debt; 

  

	 	2.4.3 	has been written off; or 

  

	 	2.4.4 	has provided to be or is regarded by the Seller as irrecoverable in whole or in part. 

  

 33 

	2.5	The Management Accounts: 

  

	 	2.5.1 	were prepared in accordance with the same convention and on the same bases and using the same policies as the Accounts; 

  

	 	2.5.2 	were properly prepared from the records of the Seller and with the same care as the Accounts; 

  

	 	2.5.3 	show a true and fair view of the state of affairs and results of the Seller for the period to which they relate; and 

  

	 	2.5.4 	do not contain any material inaccuracies. 

  

	2.6	The books and records of the Seller which relate to the Business are to be delivered to the Buyer at Completion (including invoices and other records that are required for value
added tax purposes): 

  

	 	2.6.1 	have been fully and accurately kept in accordance with the Companies Acts; and 

  

	 	2.6.2	do not contain material inaccuracies. 

  

	3	TRADING POSITION 

  

	3.1	Since the Accounting Date, to the knowledge of the Seller: 

  

	 	3.1.1 	there has been no material adverse change in the financial or trading position or prospects of the Business or in the value or state of the assets or amount or nature of the
liabilities of the Business as compared with the position disclosed in the Accounts; 

  

	 	3.1.2 	the Seller has not, in relation to the Business, disposed of any assets or assumed or incurred any outstanding capital commitment or any material liabilities (whether actual or
contingent) otherwise than in the ordinary course of carrying on the Business; 

  

	 	3.1.3 	the Business has been carried on in the ordinary and usual course without interruption and so as to maintain the same as a going concern; 

  

	 	3.1.4 	nothing has been done in the conduct or management of the affairs of the Business which would will materially adversely prejudice the interests of the Buyer as prospective Buyer of
the Business; 

  

 34 

	 	3.1.5 	the trading prospects of the Business have not been materially adversely affected as a result of an event or circumstance which arose after the Accounting Date; and

  

	 	3.1.6 	since the Accounting Date, the Seller has not done or omitted to do anything which might have materially prejudicially affected the Goodwill. 

  

	3.2	The Business has not been materially and adversely affected by the loss of any important customer, account or source of supply and no important customer, account or source of supply
has substantially reduced its dealings with the Business. 

  

	3.3	To the knowledge of the Seller, the transactions contemplated by this agreement will not result in loss of business with any of the Business’ present customers or source of
supply. 

  

	3.4	The Seller is not a party to any contract or arrangement relating to the Business which is subject to termination by another party or under which the rights of any person are likely
to be affected as a result of the transactions contemplated by this agreement. 

  

	3.5	To the knowledge of the Seller, the Seller is entitled to carry on the Business as it is currently carried on by it and has been carried on by it during the 3 years prior to the
date of this agreement without infringing any valid Intellectual Property Right of any other person, firm or company. 

  

	3.6	No substantial part of the Business is carried on or is required to be carried on with the agreement or consent of a third party (from which consent has not been obtained) nor is
there any agreement which significantly restricts the activities of the Seller in relation to the Business. 

  

	4	ASSETS 

  

	4.1	The Seller is the owner of and has good marketable title to all the Assets and all the Assets are in the Seller’s possession or under its control. 

  

	4.2	The Seller has not disposed of or agreed to dispose of, or granted or agreed to grant any option, encumbrance, Security Interest, lien or right of pre-emption in respect of, or
offered for sale, its estate or interest in any of the Assets. 

  

	4.3	 The IT Assets, the Miami IT Assets, the Transferring IPR (as defined in 13.1 below) and the Technology licensed under the Technology Licence Agreement are all the

  

 35 

	 	 
hardware and software (including peripheral items and consumables) and Intellectual Property Rights required to operate the Business.

  

	5	CONTRACTS 

  

	5.1	The copies of the Listed Contracts provided by the Seller to the Buyer are true, accurate and complete in all respects and full particulars of any amendments, whether written or
oral, have been notified to the Buyer. 

  

	5.2	No party to any of the Listed Contracts has provided or otherwise communicated to the Seller its desire to terminate or not renew any such Listed Contract with the Buyer after
Completion. 

  

	5.3	The Seller has not received notice that it is in default under any of the Listed Contracts, and to the knowledge of the Seller it is not in default of any Listed Contracts and it
has not waived rights or privileges under them. 

  

	5.4	No threat or claim of default under the Listed Contracts, or any other agreement or arrangement to which the Seller is a party relating to the Business or the Assets, has been made
and is outstanding, and to the knowledge of the Seller there is nothing by which any of the Listed Contracts, agreements or arrangements may be prematurely terminated by another party. 

  

	5.5	To the knowledge of the Seller, no party to a Listed Contract is in default under it, being a default which is material in the context of the Business. 

  

	5.6	To the knowledge of the Seller, the Customer Database is accurate and comprehensive in all material respects. 

  

	5.7	The number of new customers registered during the calendar year 2003 was not less than 26,503. 

  

	5.8	The lifetime value of a customer at 30 June 2004 is 5.189 months (calculated in accordance with the formula set out at Appendix A). 

  

	6	EMPLOYEES 

  

	6.1	The Particulars of Employment are true, complete and accurate in all respects. 

  

	6.2	There are not now outstanding: 

  

	 	6.2.1 	 any service agreements or contracts between the Seller and any of the Transferring Employees which cannot be terminated by the Seller by 

  

 36 

	 	 
12 weeks notice or less without giving rise to a claim for damages or compensation (other than a statutory redundancy payment); 

 

	 	6.2.2 	any recognition or other agreement or arrangement (whether or not legally binding) between the Seller and any trade union or other body representing the Transferring Employees;

  

	 	6.2.3 	any liabilities of the Seller for industrial training levy or for any other statutory or governmental levy or charge; or 

  

	 	6.2.4 	training schemes, or similar arrangements or proposals. 

  

	6.3	To the knowledge of the Seller there is no outstanding claim by a Transferring Employee or any trade union and no disputes have during the preceding three years arisen between the
Seller and any material number or category of Transferring Employees or any trade union and there are no present circumstances which are likely to give rise to any such dispute or claim. 

  

	6.4	The Seller has at all times complied as respects the Transferring Employees with the Employment Legislation; the Seller is not under any present future or contingent liability to
pay compensation for loss of office or employment to any ex-officer or ex-employee and no payments are now due by the Seller under the Unfair Dismissals Acts 1977 to 2001 or the Redundancy Payments Acts 1967 to 2003. 

  

	6.5	None of the Transferring Employees is currently suspended, subject to a disciplinary warning, has raised a grievance or is the subject of a disciplinary investigation or procedure
or appeal. 

  

	6.6	Since the Accounting Date: 

  

	 	6.6.1 	no liability to pay compensation of any kind or any payment of any kind to any person who is or has been a director or other employee has been incurred by the Seller, whether under
the Employment Legislation or otherwise howsoever; and 

  

	 	6.6.2 	no gratuitous payment has been made or promised by the Seller in connection with the actual or proposed termination or suspension of employment or variation of any contract of
employment of any present or former director or employee nor will any such payment be made or promised prior to Completion. 

  

	6.7	None of the Transferring Employees are remunerated on a profit-sharing or bonus or commission basis of any nature whatsoever. 

  

 37 

	6.8	There is no amount owing to any of the Transferring Employees other than for remuneration accrued due or for reimbursement of business expenses. 

  

	6.9	There is no amount owing by any of the Transferring Employees to the Seller. 

  

	6.10	The Seller has in relation to each of the Transferring Employees complied in all material respects with: 

  

	 	6.10.1 	all obligations imposed on it by all Employment Legislation, statutes, regulations and codes of conduct and practice relating to or affecting the employment of the Transferring
Employees or in relation to any trade union and has maintained current, adequate and suitable records regarding the service and terms and conditions of employment of each of the Transferring Employees; 

  

	 	6.10.2 	all collective agreements, recognition agreements and customs and practices for the time being dealing with such relations or the conditions of service of the Transferring
Employees; and 

  

	 	6.10.3 	all relevant orders, awards and recommendations made under any relevant statute, regulation or code of conduct and practice affecting the conditions of service or otherwise in
relation to the Transferring Employees. 

  

	6.11	The Seller has complied with its obligations under Regulation 8 of the Employment Regulations and otherwise to inform and consult with representatives of the Transferring Employees.

  

	6.12	Within the period of one year preceding and ending on the Completion Date the Seller has not: 

  

	 	6.12.1 	given notice of any redundancies to the Minister for Enterprise, Trade and Employment or started consultations with any independent trade union, or unions, under the provisions of
Part II of the Protection of Employment Act 1977 (as amended), or failed to comply with any obligation under the said Part II; or 

  

	 	6.12.2 	been a party to transfer as defined in the Employment Regulations. 

  

 38 

	6.13	Since the Accounting Date no change has been made in the rate of remuneration or the endowment or pension benefits or any other terms of employment of any of the Transferring
Employees. No negotiations for any increase in the remuneration or benefits of any Transferring Employee are current or, to the Seller’s knowledge, likely to take place within 6 months after Completion. 

  

	6.14	None of the following are in existence and there are no proposals for any of the following: 

  

	 	6.14.1 	profit sharing schemes; 

  

	 	6.14.2 	share option schemes; 

  

	 	6.14.3 	‘phantom’ share option schemes; 

  

	 	6.14.4 	profit related pay schemes; 

  

	 	6.14.5 	in relation to the Transferring Employees, employee share ownership trusts under Section 519 and Schedule 12 of the Taxes Consolidation Act, 1997; 

  

	 	6.14.6 	employee benefit trusts. 

  

	6.15	Notwithstanding anything herein to the contrary, the Seller has agreed to make certain payments, payable upon the occurrence of the Completion, as further described in the
Disclosure Letter. 

  

	7	PENSIONS 

  

	7.1	 Apart from payments made to Irish Life in connection with Personal Retirement Savings Accounts for Claire Kehoe, Barbara Wilson, Shane Casey and Eric Crean,
(“the Disclosed Scheme”) the Seller is not under any legal or moral obligation otherwise to pay pensions, gratuities, superannuation allowances, life assurance benefits, medical, accident or disability benefits or the like (together
“Benefits”) to or in respect of any of the Transferring Employees or any spouse, widow, widower, child, dependent or any of them; and there are no other pension or other schemes or arrangements to provide any Benefits in relation to, or
binding on, the Seller or to which the Seller contributes or in which the Seller participates or to which the Seller has previously contributed or participated in respect of the Transferring Employees and save in respect of the Disclosed Scheme the
Seller has no liability of any kind in relation to the provision or non-provision of any Benefits in respect of the Transferring Employees. No proposal has been announced or promise made to 

  

 39 

	 	 
establish any schemes, arrangement or practice for the provision of such benefits in respect of the Transferring Employees. 

  

	7.2	All contributions, premiums, payments and expenses due to the Disclosed Scheme from the Seller or any of the Transferring Employees were paid when they fall due and are not paid in
arrears. 

  

	7.3	There are not and have never been in respect of the Disclosed Scheme (including access to the Disclosed Scheme) any civil, criminal or arbitration proceedings nor are there any
other claims or disputes in progress pending or threatened (other than routine claims for benefits) against the Seller or any other person the Seller is or may be liable to indemnify or compensate, and to the knowledge of the Seller there are no
circumstances which might give rise to any such claims. 

  

	7.4	No promise or guarantee (oral or written) has been made or given to any of the Transferring Employees by the Seller that any particular level or amount of benefits will be provided
for or in respect of such Transferring Employee under the Disclosed Scheme. 

  

	7.5	There has been disclosed to the Buyer a true and complete statement giving details of the rate and amount of contributions made by the Seller to the Disclosed Scheme in respect of
each Transferring Employee entitled to such a contribution. 

  

	7.6	The amount of the benefits payable to and in respect of members of the Disclosed Scheme (other than fully insured benefits) is based solely on the amount of the accumulated
contributions made to the Disclosed Scheme by and in respect of the member and the investment returns thereon. 

  

	7.7	The Seller has not provided any financial or investment advice to any person in relation to the Disclosed Scheme in breach of any applicable legislation. 

 

	7.8	In relation to the Disclosed Scheme the Seller has at all time complied with Article 141 of the EC Treaty, every directive of the European Commission, every ruling or judgment of
any court relating to Article 141 of the EC Treaty and all applicable legislation with regard to eligibility for membership, the provision of benefits and the payment of contributions in respect of the Transferring Employees.

  

	8	PRODUCT LIABILITY 

  
 To the knowledge of the Seller, the Business has not sold or provided any product or service which does not in any material respect comply with all
applicable laws, 

  

 40 

 
regulations or standards or which is defective or dangerous or not in accordance with any representation or warranty, express or implied, given in respect of
it. 
  

	9	DISPUTES/LITIGATION 

  

	9.1	The Seller is not engaged in any capacity in any litigation, criminal or arbitration proceedings affecting the Business and to the knowledge of the Seller no litigation, criminal or
arbitration proceedings are pending or threatened by or against the Seller. 

  

	9.2	The Seller is not subject to any order or judgment in relation to the Business given by any court or governmental agency and has not been a party to any undertaking or assurance
given to any court or governmental agency which is still in force nor are there any facts or circumstances to the knowledge of the Seller which (with or without the giving of notice or lapse of time) would be likely to result in the Seller becoming
subject to such an order or judgment or being required to be a party to any such undertaking or assurance, which would adversely affect the Buyer. 

  

	9.3	To the knowledge of the Seller, neither the Seller nor any of the Transferring Employees is the subject of any investigation, inquiry, process or request for information in respect
of any aspect of the Business by any governmental or European Communities body, department, board or agency or by any regulatory body or organisation charged with the supervision of any activities from time to time engaged in by the Business and
none is pending or threatened and to the knowledge of the Seller there are no facts which are likely to give rise to any of the foregoing. 

  

	9.4	To the knowledge of the Seller there are no claims pending or threatened against the Seller in relation to the Business by any Transferring Employee or other person in respect of
any accident or injury, which are not fully covered by insurance. 

  

	9.5	The Seller has not, in relation to the Business, accepted any liability or obligation to service, repair, maintain, take back or otherwise do or do anything in respect of any
product that would apply after such product has been delivered by it. 

  

	10	GENERAL MATTERS 

  

	10.1	All information given by any of the Sellers or the Sellers’ solicitors to the Buyer or the Buyer’s solicitors relating to the businesses, activities, affairs, assets or
liabilities of the Business was when given and remains accurate and comprehensive in all material respects. 

  

 41 

	10.2	There is nothing material in relation to the assets, business or financial condition of the Seller in relation to the Business, which has not been fully and fairly disclosed in
writing to the Buyer or the Buyer’s solicitors. 

  

	11	GENERAL COMPLIANCE WITH STATUTES AND LICENCES 

  

	11.1	To the knowledge of the Seller, the Seller has obtained all licences, consents, approvals, permissions, permits, test and other certificates and authorities (public or private)
(together “Licences”) necessary in any material respect for the carrying on of the Business in the places and in the manner in which the Business is now carried on. 

  

	11.2	All Licences have been provided to the Buyer. 

  

	11.3	To the knowledge of the Seller there is no reason or any facts or circumstances which (with or without the giving of notice or lapse of time) will give rise to any reason why any of
the Licences should be suspended, cancelled, revoked or not renewed. 

  

	11.4	To the knowledge of the Seller, the Seller has conducted and is conducting the Business in all respects in accordance with all applicable laws, rules, regulations, judgments,
decisions, decrees, orders, or other requirements of any government, quasi government, statutory, administrative or regulatory body, court or agency (whether of Ireland or elsewhere). 

  

	11.5	The Seller has established procedures under and has complied in all material respects with all applicable requirements from time to time in force under the Safety and Welfare at
Work, 1989 (as amended) and all regulations made under that Act. 

  

	12	DATA PROTECTION 

  

	12.1	The Seller warrants that it has obtained and maintained a proper registration under the Data Protection Acts, 1988 and 2003 necessary or appropriate in relation to its business
including, without limitation, relating to the obtaining, holding, processing, transfer and disclosure of personal data, and that it complies with the Data Protection Acts, 1988 and 2003, including, without limitation: 

  

	 	12.1.1 	informing data subjects of the identity of the data controller, its nominated representatives, the uses made of the data and any potential disclosures and obtaining their consent
(if necessary) in connection with the processing of personal data; 

  

	 	12.1.2 	 having in place appropriate technical and organisational measures against the accidental or unauthorised destruction, loss, alteration or 

  

 42 

	 	 
disclosure of personal data and procedures to ensure that unauthorised persons do not have access to any equipment used to process such data; and

  

	 	12.1.3 	having in place appropriate systems to identify which individuals have instructed the Seller that they do not wish to receive marketing information and comply with such
instructions. 

  

	12.2	The Seller warrants that no individual has claimed, and no grounds exist for any individual to claim, compensation from the Seller under the Data Protection Acts 1988 and 2003 for
loss or unauthorised disclosure of data or for any contravention of any of the requirements of the Data Protection Acts 1988 and 2003. 

  

	12.3	The Seller warrants that it has not received a notice or allegation from the Data Protection Commissioner or a data subject alleging non-compliance with the data protection
principles or any other provisions of the Data Protection Acts 1988 and 2003, or prohibiting the transfer of data to a country or territory outside Ireland or the European Economic Area. 

  

	13	INTELLECTUAL PROPERTY AND IT ASSETS 

  

	13.1	In this part 13, “Transferring IPR” means all Intellectual Property Rights, if any, consisting of licences granted from third parties pursuant to licence agreements, which
the Seller has in certain of the IT Assets and the Miami IT Assets. 

  

	13.2	To the knowledge of the Seller, no act has been done or has been omitted to be done which would entitle any authority or person to cancel, forfeit or modify any the Transferring
IPR. The ownership, possession and use of the Transferring IPR by the Buyer does not infringe the Intellectual Property Rights or any other rights owned or enjoyed by any third party and the Seller has not received notice of any claim or assertion
that the use by it of the Transferring IPR or any part of it infringes the rights of any third party. 

  

	13.3	There have not been, to the knowledge of the Seller, any actions, claims, counterclaims, applications or allegations impugning the validity of the Seller’s use of the
Transferring IPR nor are any such actions, claims, counterclaims, applications or allegations pending or reasonably anticipated and there is nothing to the knowledge of the Seller which could give rise to an action, claim, counterclaim, application
or allegation, which would result in a adverse effect. 

  

	13.4	No right has been granted by Seller to another person to possess or use, in any way, the Transferring IPR. 

  

 43 

	13.5	The Seller has obtained all necessary licences and consents required to possess, use and transfer to the Buyer the Assets and the Transferring IPR. 

  

	13.6	All licence agreements under which any of the Transferring IPR or Assets are licensed to the Seller have been disclosed to the Buyer. All such licences are in full force and effect
in accordance with their terms and conditions. 

  

	13.7	The IT Assets and the Miami IT Assets have not been affected by any defects or faults which have caused any materially adverse interruption to the Business at any time during the 3
years prior to the date of this agreement. 

  

	13.8	The IT Assets and the Miami IT Assets as used by the Seller are fully functional and there is no reason why such IT Assets or Miami IT Assets should require modification,
replacement or enhancement to enable the Buyer to carry out the Business using the Technology, IT Assets and the Miami IT Assets in the manner conducted by the Seller immediately prior to the Transfer Time. 

  

	13.9	To the knowledge of the Seller, the Customer Database does not, and the use by the Buyer of the Customer Database in accordance with all applicable laws will not, infringe any third
party Intellectual Property Rights. 

  

	14	TAXATION 

  

	14.1	The Seller has in respect of the Transferring Employees duly deducted all amounts from any payments from which Taxation falls to be deducted at source under the PAYE system and all
PRSI contributions and other sums required by law to be deducted from wages, salaries or other benefits of the Transferring Employees and the Seller has duly paid or accounted for such amounts and all other sums due in respect of any benefits of the
Transferring Employees that are subject to Taxation for which the Seller is liable and in respect of PRSI and other social security contributions to any Taxation Authority. 

  

	14.2	All customs duties and VAT payable to any Taxation Authority upon the importation of any part of the Assets and all excise duties payable to any Taxation Authority in respect of any
of the Assets have been paid in full and none of the Assets are liable to confiscation or forfeiture (whether by virtue of non-payment or underpayment of any tax or duty or by virtue of any non-compliance with any legislation or regulation relating
to any tax or duty). 

  

 44 

	14.3	All documents relating to the Business or the Assets which form part of the title the Seller to any asset or which may need to be enforced in relation to the business and which are
subject to stamp duty or any similar tax or duty have been duly stamped. 

  

	14.4	The Seller is registered for the purposes of VAT. 

  

 45 

 Part 2 
  
 Buyer’s Warranties 
  

	1	CAPACITY OF BUYER 

  

	1.1	The Buyer has the power and authority to enter into and perform this agreement which constitutes, or when executed will constitute, binding obligations on each of them in accordance
with their terms and each of them shall comply with such terms. 

  

	1.2	Neither the execution and delivery of this agreement by the Buyer nor the transactions contemplated by this agreement are prohibited by, or violate any provision of and will not
result in a material breach of: 

  

	 	1.2.1 	any applicable and material law, rule, regulation, judgment, decree, order or other requirements of any government, quasi-government, statutory, administrative or regulatory body,
court or agency; or 

  

	 	1.2.2 	the Memorandum or Articles of Association of the Buyer or Buyer’s Group. 

  

	1.3	This agreement constitutes and imposes valid, legal and binding obligations on the Buyer and is fully enforceable in accordance with its terms. 

  

	1.4	No permit, authorisation, consent or approval of or by, or any notification of or filing with, any person (governmental or private) is required by Buyer in connection with its
execution, delivery and performance of the agreement and the ancillary documents which Buyer is required to deliver pursuant hereto or its consummation of the transactions contemplated hereby and thereby. 

  

	2	RELIANCE 

  

	2.1	The Buyer acknowledges that, in entering into this agreement, it does not do so in reliance on any representation or warranty other than those expressly made by the Seller and the
Guarantors in this agreement. 

  

 46 

 Part 3 
  
 Guarantor Warranties 
  

	1	CAPACITY OF THE GUARANTORS 

  

	1.1	eDiets.com, Unislim and McCourt each has the power to enter into and perform this agreement which constitutes, or when executed will constitute, binding obligations on each of them
in accordance with their terms and each of them shall comply with such terms. 

  

	1.2	Neither the execution and delivery of this agreement by each of eDiets.com, Unislim and McCourt nor the transactions contemplated by this agreement are prohibited by, or violate any
provision or and will not result in a breach of: 

  

	 	1.2.1 	any applicable law, rule, regulation, judgment, decree, order or other requirements of any government, quasi-government, statutory, administrative or regulatory body, court or
agency; or 

  

	 	1.2.2 	the Memorandum or Articles of Association of eDiets.com or Unislim. 

  

	1.3	This agreement constitutes and imposes valid, legal and binding obligations on eDiets.com, Unislim and McCourt fully enforceable in accordance with its terms.

  

	1.4	No permit, authorisation, consent or approval of or by, or any notification of or filing with, any person (governmental or private) is required by the Guarantors in connection with
its execution, delivery and performance of the agreement and the ancillary documents which the Guarantors are required to deliver pursuant hereto or its consummation of the transactions contemplated hereby and thereby. 

  

	1.5	eDiets.com, Unislim and McCourt warrant and represent that they are the only shareholders of the Seller. 

  

 47 

 SCHEDULE 4 
  

Seller Protection Provisions 
  
 The provisions of this schedule shall apply notwithstanding anything else in this agreement and shall (to the extent applicable) have effect in limiting the liability of
the Seller, including, without limitation, for breach of the Warranties. 
  

	1	Nothing in this schedule limits the liability of the Seller in respect of any relevant claim which arises or is increased, as a consequence of, or which is delayed as a result of
willful misconduct or willful concealment by the Seller. 

  

	2	In this schedule the expression “relevant claim” means a claim against the Seller (or their respective successors in title) in respect of any of the Warranties.

  

	3	No relevant claim may be made against the Seller after, and all claims not already made shall be statute barred upon, (i) the 7th anniversary of the date of Completion or such
shorter period as shall apply under section 995(2) of the Taxes Consolidation Act 1997 in the case of a claim under paragraph of part 1 of schedule 3 (Taxation) and (ii) 24 months after the date of Completion in the case of any other claim under the
Warranties in schedule 3 (the “Expiry Date”). 

  

	4	Any relevant claim which is validly made before the Expiry Date shall (unless previously settled or withdrawn) be deemed to have been waived or withdrawn in the event that legal
proceedings in respect thereof are not issued and served on the Seller within 12 months of written notice of the relevant claim first being given as aforesaid. 

  

	5	Time shall be of the essence for the purposes of this schedule. 

  

	6	LIABILITY 

  

	6.1	Except as provided in paragraph 6.2, the aggregate liability of the Seller under this agreement, shall not exceed STG £2,000,000. For the purposes of this paragraph 6, the
limitation of liability shall be exclusive of reasonable legal costs and disbursements, which shall be recoverable in full. 

  

	6.2	The limitation of liability set out in paragraph 6.1 above does not apply to the Seller’s liability under clauses 2.4, 5, 6.4, 7.2, 9.1 and 9.4 of this agreement.

  

	7	The Seller shall not be liable in respect of any relevant claim unless: 

  

	 	7.1	the amount of the loss suffered by the Buyer in respect of each relevant claim exceeds STG £5,000; and 

  

 48 

	 	7.2	the Seller’s aggregate liability in respect of all relevant claims exceeds STG £20,000 in which event (subject to the provisions of this schedule) all relevant claims
previously notified shall accrue against and be recoverable from the Seller. 

  

	8	The Seller shall not be liable in respect of any relevant claim to the extent that it occurs solely as a result of: 

  

	 	8.1	a voluntary act, omission, transaction or arrangement carried out after the date hereof by or on behalf of the Buyer or after Completion by or on behalf of the Buyer otherwise than
in the ordinary and proper course of the Business as the same is carried out at the date of this agreement; 

  

	 	8.2	to the extent that the claim results from or is increased by the passing of any primary or subordinate legislation, or the making of any other government regulation not in force at
Completion or interpretation of law after the date of this agreement other than as contemplated in this agreement. 

  

	9	The Seller shall not be liable in respect of any relevant claim to the extent that the fact, event or circumstance giving rise to the breach or claim or otherwise relevant thereto
is fully and fairly disclosed in the Disclosure Letter, or otherwise in respect of any relevant claim which would not have arisen but for anything expressly provided to be done or omitted to be done pursuant to this agreement or which is otherwise
done or omitted to be done at the written request or consent of the Buyer. 

  

	10	Conduct of Proceedings 

  

	 	10.1	If the Buyer becomes aware of any third party claim (a “third party claim”) which might lead to a relevant claim being made the Buyer shall procure that notice thereof is
promptly given to the Seller and (subject to the Buyer being indemnified to its reasonable satisfaction by the Seller against all reasonable out-of-pocket costs and expenses incurred by the Buyer consequently arising and provided that any failure to
give such notice shall not affect the rights of the Buyer except to the extent that the Seller is materially prejudiced by such failure) the Buyer: 

  

	 	(a)	 shall not make any admission of liability, agreement or compromise with any person, body or authority in relation 

  

 49 

	 	 
to any such third party claim without prior consultation with and the prior agreement of the Seller (such consent not to be unreasonably withheld or
delayed); and 

  

	 	(b)	shall take such action as the Seller may request (but at the expense of the Seller) to avoid, dispute, resist, appeal, compromise or defend such third party claim which will give
rise to a relevant claim. 

  
 (Subject to being
given an indemnity by the Seller which is reasonably acceptable to the Buyer in all circumstances) take such action as the Seller reasonably requires (at the Seller’s expense) in relation to the relevant claim (as applicable) and permit the
Seller to conduct the relevant proceedings. 
  

	 	10.2	 If the Seller takes on or takes over the conduct of proceedings and/or negotiations pursuant to paragraph 10.1: 

  

	 	(a)	it shall keep the Buyer reasonably informed of proposed meetings with any relevant third party (reasonable shall, for the purposes of this paragraph 10.2, mean providing the Buyer
not less than 2 Business Days written notice informing it that such a meeting is to occur and such notice shall include the location, date and time of such meeting), allow an observer appointed on behalf of the Buyer to attend such meetings and
advise the Buyer of the outcome of meetings and discussions to which any such observer was not a party or at which he was not present; and 

  

	 	(b)	 where, in relation to a claim to which this clause 10 applies, the Seller is able to secure a settlement a relevant third party, it shall notify the Buyer in
writing and the Buyer shall be under no obligation to agree to such settlement unless (subject to the provisions in this schedule) the Buyer is to be paid the full amount of such settlement to which it is entitled pursuant to this 

  

 50 

	 	 
agreement (in which event the Seller shall be released from all liability in respect of the relevant claim). 

  

	 	10.3	The provisions of this paragraph 10 shall apply mutatis mutandis where the Buyer becomes aware of any potential claim which it may have against a third party in connection with any
relevant claim or potential relevant claim. 

  

	 	10.4	Nothing in this paragraph 10 shall impose any obligation on the Buyer to do anything which would be detrimental to the reputation or goodwill of the Buyer (either alone or in
connection with the Business), acting in good faith and in the reasonable judgment of the Buyer. 

  

	 	10.5	The Seller agrees to keep information and/or documents given to it pursuant to paragraph 10 confidential and only to use it for the purpose of the relevant claim in question.

  

	11	No person shall be entitled to recover any sum in respect of any relevant claim more than once in respect of the circumstances giving rise to a relevant claim.

  

	12	If in respect of a relevant claim the liability of the Buyer is contingent, then the Seller shall not be under any obligation to make any payment in respect thereof unless and until
such time as the contingent liability ceases to be contingent and becomes actual, and during the time such liability is contingent, paragraph 4 of this schedule shall not apply and the 12 month period therein referred to shall start to run from the
date such liability ceases to be contingent. 

  

	13	Nothing herein shall be deemed to relieve the Buyer from taking all reasonable steps to mitigate the Seller’s liability under this agreement. 

  

	14	The Buyer shall: 

  

	 	14.1	 subject to any duty of confidentiality, following service of a notice pursuant to paragraph 10.1 of this schedule keep the Seller fully informed of all material developments
known to them in relation to the matter or circumstances which will give rise to a relevant claim; and 

  

	 	14.2	 give the Seller and their professional advisors reasonable access during normal business hours to the personnel of the Buyer and to any relevant documents and records within
the power, permission or control of the Buyer to enable the Seller and their professional advisors to examine such documents and records as may be necessary for the purpose of considering a relevant claim, and take copies or photographs thereof at
the Seller’s own expense. 

  

 51 

 Appendix A 
  

The lifetime value in Seller’s Warranty 5.8 is calculated in accordance with the following formula: 
  
 The table LongTermValueCustomers contains both sterling and euro paying customers who have
terminated their membership in 2004 before 1st July 2004 and whose period of days as an eDiets customer exceeds 7 full days i.e. the period between the date of enrollment and the date of termination of membership exceeds 7 full days total
number of customer days (2504399) (give me the total number of full customer days from the table defined above) 
  
 select sum(DATEDIFF(day, enrolldate,paidthru)) from LongTermValueCustomers 
  
 (give me the total number of customer from the table defined above) 
  
 total number of customers (16086) 
  
 select count(*) from LongTermValueCustomers 
  
 average (2504399) / (16086) /30 (30 days per month) =5.189 
  
 sum sterling revenue 852924.1000 
  
 (give me the sum of customer revenue in sterling from the table defined above) 
  
 select sum(sterlingrevenue) from LongTermValueCustomers 
  
 sum euro revenue 37243.9000 (sterling conversion .66 = 24580.974) 
  
 (give me the sum of customer revenue in euros from the table defined above) 
  
 select sum(eurorevenue) from LongTermValueCustomers 
  
 total sterling = 852924.1000 + 24580.974= 877505.074 
  
 average 877505.074 / 16086 (num customers) = 54.55 
  

 52 

			
	 Signed by
 for and on behalf of
 eDIETS
EUROPE LIMITED
	  	 )
 )
 )

		
	 SIGNED by
 for and on behalf of
 TESCO
IRELAND LIMITED
	  	 )
 )
 )

		
	 SIGNED by
 for and on behalf of
 eDIETS.COM,
INC.
 as a Guarantor
	  	 )
 )
 )

		
	 SIGNED by
 for and on behalf of
 UNISLIM
IRELAND LIMITED,
 as a Guarantor
	  	 )
 )
 )

		
	 SIGNED by
 CIARAN McCOURT,
 as a Guarantor
	  	 )
 )
 )

  

 53 

 DATED 15 JULY 2004 
  
 eDIETS EUROPE LIMITED 
  
 TESCO IRELAND LIMITED 
  
 eDIETS.COM, INC. 
  
 UNISLIM IRELAND LIMITED 
  
 CIARAN McCOURT 
  
 BUSINESS TRANSFER AGREEMENT 
  

 CONTENTS 
  

					
	1	    	Definitions and interpretation	  	1
	2	    	Agreement for sale	  	8
	3	    	Consideration	  	9
	4	    	Completion	  	9
	5	    	Apportionments	  	11
	6	    	Listed Contracts	  	12
	7	    	Employees	  	14
	8	    	Warranties	  	15
	9	    	Post-Completion provisions	  	17
	10	    	Confidentiality	  	18
	11	    	Guarantee	  	19
	12	    	Announcements	  	20
	13	    	Assignment	  	21
	14	    	Costs	  	21
	15	    	VAT	  	22
	16	    	Further assurance	  	23
	17	    	Notices	  	24
	18	    	General	  	24
	SCHEDULE 1	  	26
	SCHEDULE 2	  	31
	SCHEDULE 3	  	33
	SCHEDULE 4	  	49

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00069-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00069-of-00352.parquet"}]]