Document:

ASSET PURCHASE AND TRADEMARK ASSIGNMENT AGREEMENT

 Exhibit 10.16 
  
 [********] Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with
the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended. 
  
 ASSET PURCHASE AND TRADEMARK ASSIGNMENT AGREEMENT 
  
 ASSET PURCHASE AND TRADEMARK ASSIGNMENT AGREEMENT executed this 19th day of March, 1998, by and between LAYTON BIOSCIENCE, INC., a Delaware corporation (“Purchaser”) with an address at 105 Reservoir Road, Atherton, CA 94027 and MERCK & CO., Inc., a New
Jersey corporation (“Seller”) with an address at One Merck Drive, Whitehouse Station, New Jersey 08889. 
  
 ARTICLE 1- DEFINITIONS 
  
 The following terms as used in this Agreement shall have the meanings set forth below: 
  
 SECTION 1.1 “Acquired Assets” means (a) the Trademarks as set forth in Schedule A, (b) any and all of Seller’s worldwide right, title and
interest in the Intellectual Property as of the Closing Date, (c) the Documentation, and (d) all United States Food and Drug Administration New Drug Applications for the Product as set forth in Schedule B, but specifically excluding all Excluded
Assets. 
  
 SECTION 1.2 “Affiliate” of a person means
(i) any corporation or business entity fifty (50%) percent or more of the voting stock or other equity interest of which is owned directly or indirectly by such Person; or (ii) any corporation or business entity which directly or indirectly owns
fifty (50%) percent or more of the voting stock or other equity interest of such Person; or (iii) any corporation or business entity under the direct or indirect control of a Person described in clause (i) or (ii), but “Affiliate” shall
not include, as to Seller, any joint venture, partnership or similar entity in which Seller owns an equity interest of fifty percent (50%) or less and shall not include Banyu Pharmaceutical Co., Limited. 
  
 SECTION 1.3 “Agreement” or “this Agreement” means this
Asset Purchase and Trademark Assignment Agreement, including all Schedules hereto. 
  
 SECTION 1.4 “Assumed Liabilities” means the liabilities to be assumed by Purchaser pursuant hereto, namely all claims and complaints (including, without limitation, all damages, losses, expenses and
liabilities) relating to any or all of the Acquired Assets, made or brought after the Closing Date including, without limitation, (i) all liabilities arising out of the sale, purchase, consumption or use of the Product in the Territory and (ii) all
liabilities arising out of any generation, treatment, storage, transportation, disposal or release, of any hazardous material, substance, waste or any toxic or other material regulated by any federal, state, provincial or local environmental
statute, rule or regulation (except as provided in Section 8.2 hereof); provided, however that Assumed Liabilities shall not include claims and complaints (A) arising out of the sale, purchase, consumption or use of the Product prior to the Closing
Date, (B) arising out of the consumption or use of Product sold or otherwise transferred by Seller to Persons other 

  

 
than Purchaser, or (C) asserting and establishing a breach of a specific warranty given by Seller in this Agreement. 
  
 SECTION 1.5 “Closing Date” means the date on which the
“Closing” occurs as defined in Section 3.1 below. 
  
 SECTION 1.6 “Developments” shall mean all developments, improvements, enhancements or additions to or of the Acquired Assets or the Product, including without limitation any rights, patents, research, documents, intellectual
property or other property developed, generated, or acquired by Purchaser or its successors or assigns after the date hereof with respect to the Acquired Assets or the Product. 
  
 SECTION 1.7 “Documentation” means the documents, papers, files and other Recorded Information described in
Schedule C hereto. 
  
 SECTION 1.8 “Excluded Assets”
means all assets, property, rights and interests of Seller other than the Acquired Assets, including without limitation all patents, information, know-how, trademarks, trade names, good will, intellectual property and proprietary rights, new drug
applications and their equivalents, NDC numbers and their equivalents, product registrations, or other assets of Seller. 
  
 SECTION 1.9 “Excluded Liabilities” means the liabilities retained by Seller pursuant hereto, namely all claims and complaints (including,
without limitation, all damages, losses, expenses and liabilities) relating to any or all of the Acquired Assets, made or brought prior to the Closing Date including, without limitation, all liabilities (A) arising out of the sale, purchase,
consumption or use of the Product prior to the Closing Date or (B) arising out of the consumption or use of Product sold or otherwise transferred by Seller to Persons other than Purchaser. 
  
 SECTION 1.10 “Intellectual Property” means any and all of the
following, but only to the extent that, in each case, they relate directly to the Product in the Territory and are set forth or embodied the Documentation: Know-how, Patents, Marks, methods, processes, formulae, techniques, trade secrets,
copyrights, copyright applications, copyright registrations, inventions, inventors’ notes, molecular compositions, mechanisms of activity, and works of authorship; and specifically excludes (A) any information known or to become known to Seller
or any of its employees, contractors or agents which is not in the form of Recorded Information, and (B) any Know-how, Patents, methods, processes, formulae, techniques, trade secrets, copyrights, copyright applications, copyright registrations,
inventions, inventor’s notes, molecular compositions, mechanism of activity, works of authorship or Information to the extent that they are used for purposes other than manufacturing, marketing, selling, producing, licensing or in any way
exploiting mecamylamine hydrochloride in the Territory. 
  
 SECTION 1.11 “Know-how” means any and all technical Information and know-how which relates directly to the Product, including, without limitation, biological, chemical, pharmacological, toxicological, clinical, assay, control and
manufacturing data. 
  
 SECTION 1.12 “Liens and
Encumbrances” means, with respect to the Acquired Assets, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind, including, without limitation, the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset. 
  

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 SECTION 1.13 “Marks” means any trademarks, service marks or names used for the Product in the
Territory, and all trademark and service mark registrations (and any applications therefor) associated therewith in the Territory, together with all associated good will, including without limitation the name “INVERSINE.” 
  
 SECTION 1.14 “Net Sales” means [********]. 
  
 SECTION 1.15 “New Drug Applications” and “NDAs” mean the
applications for the Product filed with the U.S. Food and Drug Administration (“FDA”) for marketing authorization of the Product within the United States, as described in Schedule B, and all legal rights and privileges belonging or
accruing to the owner or holder of such applications. 
  
 SECTION
1.16 “Patents” shall mean all patents and patent applications which generically or specifically claim the Product and (A) in which Seller has an ownership interest as of the date hereof or (B) to which Seller, as of the date hereof, has or
shall in the future have the right to grant licenses. Included within the definition of Patents are all continuations, continuations-in-part, divisions, patents of addition, reissues, renewals or extensions thereof and all SPCs with respect thereto.
The list of patent applications and patents encompassed within Patents is set forth in Schedule D hereto. 
  
 SECTION 1.17 “Payment Year” means each twelve-month period after the Closing Date, with the first Payment Year, if any, commencing on the date
of the first sale of the Product to a customer in the United States and later Payment Years commencing on the same day of each succeeding year. 
  
 SECTION 1.18 “Person” means an individual, a corporation, a partnership, an association, a trust, or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof. 
  
 SECTION 1.19 “Product” means (A) the chemical compound mecamylamine hydrochloride, and (B) as of the Closing Date, the formulated tablet containing mecamylamine hydrochloride as heretofore marketed by Seller
in the United States under the trademark INVERSINE®, and (C) after the Closing Date, any tablet or other formulation of mecalmylamine hydrochloride or any derivative thereof (including but not limited to any stereoisomers, either separated or combined, any hydrates, any
solvates and any crystal forms). 
  
 SECTION 1.20
“Proprietary Information” means Recorded Information which discloses methods, processes, methodologies, ideas, formulae, techniques, Know-how, marketing data, product pricing, listing, product plans, procedures and techniques used by
Seller prior to the date of this Agreement in connection with the Product, where such information derives Independent economic value, actual or potential, from not being generally known to and not 

  

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being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use, and which has heretofore been the
subject of efforts by Seller that were reasonable under the circumstances to maintain its secrecy. 
  
 SECTION 1.21 “Qualified Successor” means (A) any individual, corporation or partnership that has a net worth of [********] or greater at the
time of evaluation, or (B) any individual, corporation or partnership that has a net worth of less than [********] at the time of evaluation if Seller has consented in writing to such entity being classified as a Qualified Successor, which consent
shall not be unreasonably withheld. For purposes of this definition, “net worth” shall mean total assets minus total liabilities as shown in a financial statement for such individual, corporation or partnership which has been prepared in
accordance with generally accepted accounting principles consistently applied. 
  
 SECTION 1.22 “Recorded Information” means information or data that is physically recorded or stored in a readable or retrievable form, e.g., writing microfiche, computer disk, etc. 
  
 SECTION 1.23 “SPC” means a right based upon a patent to exclude
others from making, using or selling the Product, such as a Supplementary Protection Certificate. 
  
 SECTION 1.24 “Territory” means all the countries and territories of the world. 
  
 SECTION 1.25 “Technical Package” means a specific collection of Recorded Information relating to the manufacture
of the Product by Seller prior to the date of this Agreement. The Technical Package is expected to contain such items as: process flow diagrams, material safety data sheets, bulk drug specifications, finished product specifications. 
  
 SECTION 1.26 “Third Party” means any Person other than a party to
this Agreement or an Affiliate of either party. 
  
 SECTION 1.27
“Trademarks” means the trademarks and trademark registrations for the Product as set forth in Schedule A. “Trademark” means any one of the Trademarks. The Trademark shown on Schedule A as being currently registered in Somalia is
referred to hereinafter as the “Somali Trademark.” 
  
 ARTICLE II- PURCHASE AND SALE 
  
 SECTION 2.1
Purchase and Sale. On and subject to the terms and conditions set forth in this Agreement, Seller agrees to sell, convey, assign and transfer to Purchaser and Purchaser agrees to purchase, on the Closing Date, all of Seller’s right,
title and interest in and to the Acquired Assets, subject only to Seller’s retained right to use any information within the Acquired Assets to the extent it relates to the Excluded Assets or to Excluded Liabilities or to any products
hereinafter developed by Seller. The Purchaser shall not acquire pursuant hereto any assets or rights of any kind or nature, real or personal, tangible or intangible, other than the Seller’s right, title and interest in and to the Acquires
Assets and such rights as may be set forth herein, and Seller shall retain all other assets, including, without limitation, the Excluded Assets. Seller make no representation or warranty of good title to the Acquired Assets but quitclaims all of its
right, title and interest in and to the Acquired Assets to the Purchaser. 
  

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 SECTION 2.2 Assumption of Liabilities. On the terms and subject to the conditions of this
Agreement, the Purchaser agrees to assume the Assumed Liabilities. The parties understand and agree that Purchaser does not and should not assume or become liable for any liabilities, obligations, commitments or debts related to the Acquired Assets
and arising from the sale, purchase, consumption, or use of Product sold by Seller prior to the Closing Date. However, nothing in this Section 2.2 shall restrict, reduce or in any way affect the obligations of Purchaser pursuant to Section 8.3 of
this Agreement. 
  
 SECTION 2.3 Purchase Price. 

 
 (a) Purchaser shall pay to Seller, in consideration for the Acquired
Assets, the following amount (the “Purchase Price”): 
  
 (i) on the Closing Date, the sum of [********] (the “Initial Payment”); and 
  
 (ii) a series of [********] annual installment payments (each a “Royalty Payment”), due and payable not later than thirty (30) days following
the end of each Payment Year and equal to the lesser of 
  
 (A)
[********], or 
  
 (B) an amount (the “Royalty”) equal
to [********] of Net Sales for such Payment Year. 
  
 (b)
Notwithstanding any other provision of this Section 2.3, no Royalty Payment shall be payable unless and until Product shall be produced, brought to market, and sold to a customer within the United Sates (other than an Affiliate of Purchaser). And
the first Payment Year shall not commence until the date when the first such sale occurs. 
  
 (c) On or promptly after the Closing Date, but in no event later than thirty (30) days after the Closing Date, Seller shall deliver all tangible portions of the Acquired Assets (excluding the Technical Package) to
Purchaser by hand delivery at the Closing or by shipping such items at Purchaser’s expense to a destination in the United States specified by Purchaser. The Technical Package shall be delivered to Purchaser as provided in subsection 2.3(f)
below. 
  
 (d) Seller hereby agrees that at all times after the
Closing Date, unless an Event of Default shall have occurred and be continuing, neither Seller nor any Affiliate of Seller shall directly or indirectly market, sell, produce, license or in any way exploit mecmylamine hydrochloride in the Territory.

  
 (e) The Initial Payment will be tendered by Purchaser to
Seller not later than the close of banking business on the Closing Date by Federal wire of funds to Chase Manhattan Bank, [********], Merck & Co., Inc. [********]; Reference: Sale of Inversine® to Layton Bioscience, Inc. March
         1998 [Closing Date]. All Royalty Payments shall be paid by Purchaser to Seller on the date they are due by federal wire funds according to the wire transfer fund instructions above or amended
wire instructions given by Seller to Purchaser in writing. 
  
 (f)
Following the Closing Date, the Seller shall use reasonable efforts to assemble the Technical Package. The Seller shall describe the Technical Package in a schedule (the “Technical Package Schedule”) to be delivered to Purchaser at the
same time as the Technical 

  

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Package. Notwithstanding any provision hereof to the contrary, the description of the Technical Package in the Technical Package Schedule as delivered by
Seller shall conclusively establish the identity of the Documentation to be included in the Technical Package. Delivery of the Technical Package as described in the Technical Package Schedule to Purchaser shall be the Seller’s sole post-Closing
responsibility with regard to the delivery of Documentation to Purchaser. The Seller shall deliver the Technical Package and the Technical Package Schedule to Purchaser not later than one hundred twenty (120) days after the Closing Date by shipping
such items at Seller’s expense to a destination in the United States specified by Purchaser. 
  
 SETION 2.4 Events of Default. The following shall be Events of Default under this Agreement: 
  

	 	(a)	The Purchaser shall fail to make any payment (including without limitation any Royalty Payment) in accordance with the terms of this Agreement within ten (10) days after such
payment is due; 

  

	 	(b)	The Purchaser shall fail to furnish to Seller any Payment Statement (as defined in Section 7.9(e) hereof) within ten (10) days after such Payment Statement is due;

  

	 	(c)	Except as provided in Section 7.6 hereof, the Purchaser, without the prior written consent of Seller, shall resell or abandon any Trademark (other than the Somali Trademark) or the
NDA or effect any substantial change of ownership or control of Purchaser before payment in full of all payments required or potentially required under Section 2.3, provided that such Event of Default shall be deemed to have occurred immediately
prior to any such resale, abandonment or substantial change as set forth in Section 7.5 hereof; 

  

	 	(d)	The Purchaser shall fail to observe or perform any other covenant or obligation required to be observed or performed by it hereunder or under the Material Transfer Agreement by and
between the parties hereto dated as of the date hereof; 

  

	 	(e)	Any financial statement, representation, warranty or certificate (including without limitation any Payment Statement required pursuant to Section 7.9(e) hereof) made or furnished by
the Purchaser to Seller in connection with this Agreement shall be materially false, incorrect or incomplete when made; 

  

	 	(f)	The Purchaser shall admit its insolvency or its inability to pay its debts as they mature, the Purchaser shall become a debtor in any proceedings in bankruptcy or for
reorganization, or Purchaser shall discontinue normal business operations or materially change the nature of its business. 

  
 SECTION 2.5 Interest and Liquidated Damages. In the event that any payment by Purchaser under this Agreement (including without limitation any
Royalty Payment) is made ten (10) or more days later than when due, Purchaser shall pay interest to Seller, on all such payments, in the amount of the prime rate reported in the Wall Street Journal on the payment due date plus two percentage
points, such interest to be accrued and payable daily without the necessity for any notice, demand or other action by Seller until the overdue amount has been paid in full. In the event Purchaser fails to make any Royalty Payment required under this
Agreement 

  

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within ninety (90) days of the date such payment is due, Seller shall be entitled to receive liquidated damages of double the amount of the overdue payment,
such liquidated damages being payable immediately without the necessity for any notice, demand or other action by Seller until the overdue amount has been paid in full. 
  
 SETION 2.8 Indemnity. Purchaser shall indemnify Seller for all costs and expenses (including but not limited to
attorney’s fees) incurred in attempt(s) to collect any payments due or to enforce any remedy provided under this Agreement. 
  
 SECTION 2.9 Remedies. (a) Upon the occurrence of any Event of Default, the Purchaser shall be deemed to have granted Seller a non-exclusive
royalty-free license of all Acquired Assets then owned, possessed or claimed by Purchaser, with the right to manufacture, use, distribute, market and sell such Acquired Assets and the Product in the Territory (the”License”).
Notwithstanding the preceding sentence, the Seller shall be deemed to have released the License, effective upon the cure of such Event of Default by Purchaser and receipt by Seller of all payments and obligations required under this Agreement
(including without limitation all Royalty Payments and all interest payable on account of any overdue payments). 
  
 (b) After any Event of Default, Seller shall have, in addition to the rights and remedies given to it by this Agreement, all those rights and remedies
allowed by all applicable laws, including without limitation the Uniform Commercial Code as enacted in the Commonwealth of Pennsylvania. 
  
 SECTION 2.10 Breach Notice. If any Event of Default occurs as described in Section 2.4 hereof (other than an Event of Default specified in
paragraph (f) of Section 2.4), the Seller shall provide written notice of such Event of Default and shall permit the Purchaser thirty (30) days after dispatch of such notice in which to cure such Event of Default. If the Seller breaches any
obligation under this Agreement, the Purchaser shall provide written notice of such breach and shall permit the Seller thirty (30) days in which to cure such breach. 
  
 SECTION 2.11 Legal Tender. All payments required to made under this Agreement shall be made in lawful money of the
United Sates of America. 
  
 SECTION 2.12 Copy of
Documentation. Notwithstanding any provision of this Agreement to the contrary, Seller shall have the right to retain one copy of the Documentation for its records, subject to the provisions of Sections 6.3 and 2.3(d). 
  
 ARTICLE III- EXECUTION, CLOSING AND EFFECTIVENESS 
  
 SECTION 3.1 Execution: Closing. 
  
 (a) The transactions contemplated by this Agreement shall be
consummated at a closing (the “Closing”) to occur on or before March 31, 1998, at Seller’s offices in West Point, Pennsylvania, or at such other location as the parties may mutually agree. 
  
 (b) At the Closing, Seller shall deliver to Purchaser
appropriately executed and authenticated Trademark Assignments to the Purchaser in the form of Schedules E-1, E-2 and E-3 hereto quitclaiming all its right, title and interest in and to the Trademarks (collectively the “Trademark
Assignment”). 
  

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 (c) At the Closing, Seller shall execute and deliver to Purchaser an assignment and bill
of sale, in the form attached hereto as Schedule F, quitclaiming all its right, title and interest in and to the NDA, the Intellectual Property and the Documentation from Seller to Purchaser. 
  
 (d) At the Closing, Purchaser shall pay to Seller the
Initial Payment of [********] by wire transfer in Federal funds available to Seller, as described in Section 2.3(e). 
  
 (e) At the Closing, Purchaser shall deliver to Seller such corporate resolutions of Purchaser, certified copies of the articles of
incorporation and by-laws of Purchaser and certificates of incumbency and authority of the officers of Purchaser as Seller may request in order to ascertain the correctness of the representations and warranties of Purchaser as set forth in Article V
hereof. 
  
 (f) Purchaser shall pay or cause to
be paid any and all transfer, stamp, sales or other similar taxes or duties payable in connection with the sale or transfer of the Acquired Assets to Purchaser. 
  
 (g) Purchaser shall pay or cause to be paid any and all third-party costs and expenses relating to the
transfer and assignment to Purchaser of the Trademarks, including, without limitation, all costs and taxes with respect to recordation of transfer. Recordation of transfer and assignment of the Trademarks shall be the responsibility of Purchaser.

  
 (h) At any time or from time to time after
the Closing, Seller shall, at the request of Purchaser and at Purchaser’s expense, execute and deliver any further instruments or documents and take such further action as Purchaser may reasonably request in order to accomplish transfer of
Seller’s right, title and interest in and to the Acquired Assets to Purchaser as contemplated hereby; provided, however, that after the Closing Date, apart from such customary further assurances, the Seller shall have no other obligations
except as specifically set forth and described herein, and without limitation of the foregoing the Seller shall have no obligation to (i) assist or otherwise participate in the amendment or supplementation of the NDA or otherwise to participate in
any filings or other activities relating to the NDA other than filing the notice of transfer as contemplated by Section B hereof, or (ii) assist or otherwise participate in efforts to validate, continue or improve any process for or related to the
manufacture of the Product. 
  
 SECTION 3.2 Conditions
Precedent to Closing. 
  
 (a) Conditions Precedent to
Obligations of Seller. The obligation of Seller to consummate the transactions contemplated by this Agreement to be consummated at the Closing shall be subject to the reasonable satisfaction, or to the waiver by Seller in writing, on or before
the Closing Date, of the following conditions, all of which are for the sole benefit of Seller: 
  
 (i) All representations and warranties of Purchaser set forth in Article V or elsewhere in this Agreement shall be true, correct and complete, and shall
be certified by Purchaser to be true, correct and complete, as of the Closing Date. 
  
 (ii) No Event of Default under this Agreement shall have occurred and be continuing as of the date of the Closing and Purchaser shall have performed and complied in all 

  

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material respects with each and every covenant, agreement and condition required by this Agreement to be performed or complied with by Purchaser prior to or
on the Closing Date. 
  
 (iii) All approvals, applications,
notifications or filings of or to public authorities, federal, state, local, or foreign, and, except as consented to Seller, all consents or approvals of any nongovernmental persons who are parties to contracts or other agreements to which Purchaser
is also a party or to which any assets of Purchaser are subject, the granting of which is necessary for the consummation of the transactions contemplated to be consummated at the Closing, shall have been obtained. 
  
 (iv) Timely and effective occurrence of the events specified in paragraphs
(d) and (e) of subsection 3.1 above shall be a condition precedent to the effectiveness of the items and documents delivered as described in paragraphs (b) and (c) of subsection 3.1 above. 
  
 (b) Conditions Precedent to Obligations of Purchaser. The obligation of
Purchaser to consummate the transactions contemplated by this Agreement to be consummated at the Closing shall be subject to the reasonable satisfaction, or to the waiver by Purchaser in writing, on or before the Closing Date, of the following
conditions, all of which are for the sole benefit of Purchaser: 
  
 (i) All representations and warranties of Seller set forth in Article IV or elsewhere in this Agreement shall be true, correct and complete, and shall be certified by Seller to be true, correct and complete, as of the Closing Date.

  
 (ii) Seller shall have performed and complied in all material
respects with each and every covenant, agreement and condition required by this Agreement to be performed or complied with by Seller prior to or on the Closing Date. 
  
 (iii) All approvals, applications, notifications or filings of or to public authorities, federal, state, local, or foreign,
and, except as consented to by Purchaser, all consents or approvals of any nongovernmental persons who are parties to contracts or other agreements to which Seller is also a party to or which any assets of Seller are subject, the granting of which
is necessary for the consummation of the transactions contemplated to be consummated at the Closing, shall have been obtained. 
  
 SECTION 3.3 Further Assurances. Seller and Purchaser agree that at any time or from time to time after the Closing, each party, at the request and
expense of the other, shall execute and deliver to the other all such instruments and documents or further assurances as the other party may reasonably request in order to quitclaim to Purchaser all of Seller’s right, title and interest in and
to the Acquired Assets as contemplated hereby and to implement the License granted to Purchaser in Section 2.9 hereof; provided, however, that after the Closing, apart from such customary further assurances, the Seller shall have no other
obligations except as specifically set forth and described herein, and without limitation of the foregoing the Seller shave have no obligation to (i) assist or otherwise participate in the amendment or supplementation of the NDA or otherwise to
participate in any filings or other activities relating to the NDA other than filing the notice of transfer as contemplated by Section 6 hereof, or (ii) assist or otherwise participate in efforts to validate, continue or improve any process for or
related to the manufacture of the Product. 
  

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 SECTION 3.4 No Brokers. Seller and Purchaser mutually represent and warrant to each other that
they have not negotiated with any broker or finder in connection with this Agreement or the subject matter hereof. Each party agrees that should any claim be made against the other party for any broker’s commission or finder’s fee by
reason of the acts of such party, the party upon whose acts such claim is adjudicated shall hold the other party harmless from and against all liability and expense in connection therewith. 
  
 ARTICLE IV- SELLER’S REPRESENTATIONS AND WARRANTIES 
  
 Subject to Section 9.4 hereof, Seller represents and warrants as of the
Execution Date and the Closing Date that: 
  
 SECTION 4.1
Corporate Existence and Authorization; Contravention. 
  
 (a) Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of New Jersey. 
  
 (b) The execution, delivery and performance by Seller of this Agreement and each of the documents contemplated hereby to which the Seller
is a party are within Seller’s corporate power, have been duly authorized by all necessary corporate action and do not contravene or constitute a default under any provision of the certificate of incorporation or by-laws of Seller or any
provision of applicable law or regulation or of any judgment, injunction, order or decree binding upon Seller or to which any Acquired Asset is subject, or any indenture, bank loan, credit, or other agreement binding upon Seller or to which the
Acquired Assets are subject. This Agreement and each of the documents contemplated hereby to which the Seller is a party is a legal, valid and binding agreement of Seller enforceable in accordance with its terms. 
  
 (c) Except for the requirement that both Purchaser and
Seller provide written notice, in the form attached hereto as Schedule G, of the transfer of the NDA from Seller to Purchaser, and any requirements of Hart-Scott-Rodino and any equivalent law or regulation currently in effect in any country or
jurisdiction other than the United States, the execution, delivery and performance by Seller of this Agreement, and the consummation by Seller of the transactions contemplated hereby, require no action by or in respect of, or filing with, any
governmental body, agency or official or any other consent of any person, firm or other entity. 
  
 SECTION 4.2 Status of Acquired Assets. 
  
 (a) To the best of Seller’s knowledge, the Acquired Assets are free and clear of all Liens and Encumbrances. 
  
 (b) To the best of Seller’s knowledge, (i) no product
formula, formulation, Trademark, process, method, substance, or other material (an “Item”) which is part of the Acquired Assets infringes any rights owned or held by any person other than Seller, and (ii) no item currently being
manufactured, distributed, sold or used by any person infringes any rights of Seller to the Acquired Assets. 
  

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 SECTION 4.3 Litigation. 
  
 (a) To the knowledge of Seller, there are no pending private or governmental proceedings, claims, actions,
or investigations against Seller relating to the Product which are likely (either individually or in the aggregate) to result in an adverse decision imposing a judgment, fine or penalty. 
  
 (b) Since 1960, there have been no judgments, decrees or orders of any court or other governmental body
binding upon Seller relating to the Product. 
  
 SECTION 4.4
Compliance with Laws. Seller is now charged with, and to the best of the knowledge of Seller is not now under investigation with respect to, any violation of any applicable law, regulation, order or requirement in the United States of America
which related to the Product. 
  
 SECTION 4.5 Sufficiency of
Transfer. The Acquired Assets and the rights transferred under this Agreement include all assets used or held by Seller for use primarily in connection with the Product in the Territory as of the date hereof, except for the Excluded Assets.

  
 SECTION 4.6 Transfer Documents. The assignments and
transfer documents to be delivered to Purchaser pursuant to Section 3.1 will be in appropriate form and sufficient to quitclaim to Purchaser all of Seller’s right, title and interest in and to the Acquired Assets. 
  
 SECTION 4.7 NDA Review. Seller had provided Purchaser with the
opportunity to review the true, accurate and complete NDA’s for the Product, which include information concerning side effects, injury, toxicity or sensitivity reaction, or unexpected incidents, whether or not serious or unexpected, relating to
the Product (“Adverse Experiences”), which Seller has reported to the FDA during the three (3) years immediately preceding the Closing Date. Any additional information regarding Adverse Experiences received by Seller before the Closing
Date but not yet reported to the FDA will be provided to Purchaser within fourteen (14) days after Closing Date. For purposes of this Section 4.7, “serious” and “unexpected” have the meanings set forth in Section 6.4 of this
Agreement. Additionally, Seller has allowed Purchaser to meet with officials of the Food and Drug Administration review the approval status of the NDAs for the Product. 
  
 SECTION 4.8 Intellectual Property. The Intellectual Property set forth or embodied in the Documentation includes
substantially all of the Know-how, Marks, Patents, methods, processes, formulae, techniques, trade secrets, copyrights, copyright applications, copyright registrations, inventions, inventor’s notes, molecular compositions, mechanisms of
activity, and works of authorship which (a) relate primarily to the Product, (b) are owned and readily obtainable by Seller as of the date this representation and warranty is given, and (c) exist on the date this representation and warranty is given
in the form of Recorded Information that is in the possession of, and readily obtainable by, the Seller. Seller makes no representation or warranty concerning the accuracy, completeness or utility of the Documentation or any of the Intellectual
Property. 
  
 SECTION 4.9 Patents and Marks; Disclaimers.

  
 (a) Seller does not represent, and specifically disclaims,
that it is the holder of any unexpired Patents in the United States. All of the information about Patents contained in the Documentation relates to expired Patents. 
  

 11 

 (b) Seller does not represent, and specifically disclaims, that it is the holder of (i) any Patents that
are registered or effective outside the United States or (ii) any Marks that are registered or effective outside the United States except as shown on Schedule A. 
  
 SECTION 4.10 Tax Matters. In all respects relating to the Acquired Assets or Seller’s business related to the
Acquired Assets directly or indirectly, (A) Seller has filed all federal, state, local and foreign tax returns required to be filed for the jurisdictions in which the business or assets of Seller are subject to tax, (B) each such return is complete,
accurate and in compliance with applicable law and regulations in all material respects, and (C) Seller has paid or provided for all such taxes of any nature whatsoever, with any related penalties, interest and liabilities (any of the foregoing
being referred to herein as a “Tax”), that are or would be shown on such tax returns as due and payable on or before the date hereof, other than such Taxes as are being contested in good faith. 
  
 SECTION 4.11 Data. All Recorded Information in the possession of, and
readily obtainable by, the Seller reflecting quality, toxicity, safety and/or efficacy characteristics of the Product has been disclosed to Purchaser prior to, or will be disclosed to Purchaser on, the Closing Date; provided, however, that to the
extent that such Recorded Information is contained in the Technical Package, such Recorded Information will be disclosed to Purchaser at or before the time the Technical Package is delivered to Purchaser. Except as set forth in the preceding
sentence, Seller makes no representation or warranty concerning the accuracy, completeness or utility of any Recorded Information disclosed to Purchaser on, prior to or after the Closing Date. 
  
 ARTICLE V- PURCHASER’S REPRESENTATIONS AND WARRANTIES 

 
 Purchaser represents and warrants as of the Execution Date and the Closing
Date that: 
  
 SECTION 5.1 Corporate Existence. Purchaser
is a corporation duly organized and validly existing under the laws of the State of Delaware. 
  
 SECTION 5.2 Due Authorization: Noncontravention. The execution, delivery and performance by Purchaser of this Agreement and each of the documents contemplated hereby to which the Purchaser is a party are within
Purchaser’s power, have been duly approved and authorized by all necessary action and do not contravene or constitute a default under the constitutive documents of Purchaser or of applicable law or regulation or of any agreement, judgment,
injunction, order, decree or other instrument binding upon Purchaser. This agreement is a legal, valid and binding agreement of Purchaser enforceable in accordance with its terms. 
  
 SECTION 5.3 Government Action. To the best of Purchaser’s knowledge, except for the requirement that both
Purchaser and Seller provide written notice, in the form attached hereto as Schedule G, of the transfer of the NDA from Seller to Purchaser and any requirements of Hart-ScottoRodino and any equivalent law or regulation currently in effect in any
country or jurisdiction other than the United States, the execution, delivery and performance by Purchaser of this Agreement and each of the documents contemplated hereby to which the Purchaser is a party require no action by or in respect of, or
filing with, any governmental body, agency or official, or any other consent. 
  
 SECTION 5.4 Solvency and Financial Condition. Purchaser is financially sound and fully solvent and had no reason to anticipate any inability to perform, or material difficulty performing, any of its obligations
set forth in this Agreement. 
  

 12 

 SECTION 5.5 Financial Statements. The financial statements dated March 31, 1996 and 1997 (audit
report dated August 29, 1997) and previously furnished to Seller (i) are the most recent financial statements for the Purchaser, (ii) have been prepared in accordance with generally accepted accounting principles consistently applied, (iii) provide
an accurate representation of Purchaser’s financial condition at the date thereof and the results of operations for the periods covered thereby, (iv) contain no material misstatements, errors or omissions, (v) do not fail to disclose the
existence of any liens, judgments, leases, contracts or contingent liabilities of Purchaser. There have been no material adverse changes in the assets or liabilities, or in the business condition, financial or otherwise, of the Purchaser from March
31, 1997 to the date hereof. 
  
 SECTION 5.6 Hart Scott
Rodino. Purchaser has complied and will comply in all material respects with the requirements of Hart Scott Rodino, 15 U.S.C. Section 18A. 
  
 SECTION 5.7 Further representations and warranties. 
  

	 	(a)	This Agreement is valid and binding and enforceable in accordance with its terms. 

  

	 	(b)	The property of the Purchaser is not subject to any liens, security interests, leases or other interests except as set forth in Schedule 5.7(b). The Acquired Assets and the
Developments will not be subject to any liens, security interests, leases or other interests except as set forth in Schedule 5.7(b) at any time before all Royalty Payments have been paid. 

  

	 	(c)	The location of the chief executive offices and all other places of business of Purchaser are as set forth in Schedule 5.7(c). 

  

	 	(d)	The Purchaser has no subsidiaries, direct or indirect; the Purchaser is not engage in any joint venture or partnership with any other person. 

  
 SECTION 5.8 Disclosure. No representation or warranty by Purchaser in
this Agreement contains any untrue statement of material fact. 
  
 ARTICLE VI- SELLER’S COVENANTS 
  
 Seller
covenants and agrees as follows: 
  
 SECTION 6.1 Filings.
Seller will use reasonable efforts in good faith to file or cause to be filed with the FDA, as soon as practicable after the Closing Date, the notice (substantially in the form of Schedule G attached hereto), required to be filed by it in connection
with its transfer of the NDA. 
  
 SECTION 6.2 No Liens and
Encumbrances. Any Liens and Encumbrances known by Seller to exist with respect to any of the Acquired Assets shall be satisfied of record on or prior to the Closing Date by Seller. 
  
 SECTION 6.3 Confidentiality. Until the later of ten (10) years following the Closing Date or the payment in full of
the last Royalty Payment to become due and payable, Seller will, and will cause each of its Affiliates and employees to, preserve the confidentiality of 

  

 13 

 
all confidential, proprietary and trade secret information used or held for use primarily in connection with the Acquired Assets, provided that (i)
Seller and its Affiliates may use and disclose any such information which has been publicly disclosed (other than by Seller or any Affiliate in breach of its obligations under this Section ) or as otherwise permitted under this Agreement; or to the
extent such information relates to Excluded Assets, provided that, if such information relates to both Acquired Assets and Excluded Assets, Seller will maintain its confidentiality only to the extent that maintenance of its confidentiality does not
unreasonably interfere with Seller’s or its Affiliates ability to use, market or sell any or all of the Excluded Assets; and (ii) to the extent that Seller or any Affiliate thereof may become legally compelled to disclose any of information,
Seller or such Affiliate may (to the extent so compelled) disclose such information if they shall have first used reasonable efforts in good faith, and shall have afforded Purchaser the opportunity, to obtain an appropriate protective order, or
other satisfactory assurance of confidential treatment, for the information required to be so disclosed. 
  
 SECTION 6.4 Adverse Experience and Reaction Reporting. Until the later of ten (10) years following the Closing Date or the payment in full of the
last Royalty Payment to become due and payable, Seller shall notify Purchaser of any information concerning any serious or unexpected side effects, injuries, toxicities, sensitivity reactions, adverse experiences, or other incidents relating to the
Product, of which Seller receives notice on or after the Closing Date, including providing copies of all such adverse experience or reaction reports within two (2) weeks of Seller’s receipt of such reports. For purposes of this Section 6.4 and
Section 7.5: (A) “serious” means an experience or reaction which is fatal or life threatening, results in persistent or significant disability, requires inpatient hospitalization or prolongation of existing inpatient hospitalization, is a
congenital anomaly, cancer, or the result of an overdose, or is another important medical event (even if not life-threatening, resulting in death, or requiring hospitalization) if, based upon appropriate medical judgments, such medical event may
jeopardize the patient’s or subject’s health or may require medical or surgical intervention to prevent one of the other outcomes listed previously, and (B) “unexpected” means a condition or development not listed in the
then-current FDA-approved labeling for the Product, and includes those experiences or reactions that show a significant increase in incidence or severity over what appears on the labeling of the Product or in NDA trials or that are a failure of the
Product to achieve claimed activity. 
  
 SECTION 6.5
Notification of Orders Received. Commencing on the Closing Date and continuing until the second anniversary of the Closing Date, Seller will use its best efforts to notify Purchaser of any and all order for the Product actually received by
the Seller by promptly forwarding such orders to Purchaser. Notwithstanding the foregoing, Seller does not anticipate any such orders and has made no representations to Purchaser that any such orders are likely to be received or forwarded.

  
 ARTICLE VII- PURCHASER’S COVENANTS 
  
 Purchaser covenants and agrees as follows: 
  
 SECTION 7.1 Confidentiality. Until the later of ten (10) years
following the Closing Date or the payment in full of the last Royalty Payment to become due and payable, Purchaser will, and will cause each of its Affiliates and employees to, preserve the confidentiality of all confidential, proprietary and trade
secret information and material included within the Acquired Assets, or disclosed hereunder, which relates to any Excluded Assets, provided that (i) Purchaser and its Affiliates may use and disclose any such information which has been
publicly 

  

 14 

 
disclosed (other than by Purchaser or any Affiliate in breach of its obligations under this Section) or as otherwise permitted under this Agreement; or to
the extent such information relates to the Acquired Assets, provided that, if such information relates to both Acquired Assets and Excluded Assets, Purchaser will maintain its confidentiality only to the extent that maintenance of its
confidentiality does not unreasonably interfere with Purchaser’s ability to use, market or sell units of the Product in the ordinary course of business; and (ii) to the extent that Purchaser or any Affiliate thereof may become legally compelled
to disclose any of such information, Purchaser or such Affiliate may (to the extent so compelled) disclose such information if they shall have first used reasonable efforts in good faith, and shall have afforded Seller the opportunity to obtain an
appropriate protective order, or other satisfactory assurance of confidential treatment, for the information required to be so disclosed. 
  
 SECTION 7.2 FDA Filings. Purchaser will use its reasonable efforts in good faith promptly to file or cause to be filed with the FDA, any notice,
document and/or other materials required to be filed by it in connection with its purchase of the Acquired Assets (including without limitation the filings required by 21 CFR Section 314.72) and to make promptly any further filings and take any
actions required of it as may be necessary to consummate the transactions contemplated hereby. 
  
 SECTION 7.3 Post-Closing; Use of Names. Beginning on the Closing Date, Purchaser will mark clearly all units of the Product manufactured or distributed to indicate Purchaser’s ownership of the Product and
will not use the words, names or combined letters “Merck”, “Merck & Co., Inc.”, “MMD”, “Merck Manufacturing Division”, “Merck Sharp & Dohme”, “MSD”, “Merck Frosst”,
“Frosst”, “Merck Frosst Canada Inc.” or any variation thereof or other word, name or letter combination substantially similar thereto, or any other trade name or trademark of Seller in connection with the Product or otherwise, or
as part of the name of the Purchaser or any Affiliate of the Purchaser, after the Closing Date. 
  
 SECTION 7.4 Cooperation in Litigation. From and after the Closing Date, Purchaser agrees that in the defense of any litigation, hearing, regulatory
proceeding or investigation or other similar matter relating to the Acquired Assets or the Excluded Liabilities, Purchaser will make available to Seller during normal business hours, but without unreasonably disrupting its business, all personnel
and records as to the Acquired Assets held by Purchaser and reasonably necessary to permit the effective defense or investigation of such matters. 
  
 SECTION 7.5 Adverse Experience and Reaction Reporting. Effective on the Closing Date and continuing until the later of ten (10) years following the
Closing Date or the payment in full of the last Royalty Payment to become due and payable, Purchaser shall be responsible for reporting adverse experiences and reactions with respect to the Product in conformance with all applicable laws, rules and
regulations and shall send to Seller, throughout the term of this Agreement, copies of all such adverse experience or reaction reports, with all serious and unexpected adverse experiences as defined in Section 6.4 hereof (and relevant government
reporting forms) sent within two (2) weeks of Purchaser’s receipt, and all adverse experiences or reactions other than serious or unexpected adverse experiences (and relevant government reporting forms) sent to Seller on a quarterly basis
addressed to Seller. 
  
 SECTION 7.6 Resale; Abandonment.
(a) Purchaser agrees not to resell or abandon any Trademark (other than the Somali Trademark) or the NDA for the Product (any such resale or abandonment being a “Transfer”), or to effect any substantial change in ownership or control of
Purchaser (including but not limited to a sale of more than 49% of the voting stock or other equity interest of Purchaser or any form of merger or consolidation) (a “Substantial 

  

 15 

 
Change”), before all payments and all potential payments required under Section 2.3 have been made. 
  
 (b) Notwithstanding subsection (a) of this Section 7.6, Purchaser shall be
entitled to transfer the Acquired Assets or any interest in Purchaser to an Affiliate of Purchaser or to a Qualified Successor or to effect a merger or consolidation as a result of which an Affiliate or a Qualified Successor shall be the surviving
corporation, provided that each and every one of the following conditions is met: 
  
 (i) In the case of a Qualified Successor, the Purchaser shall provide to Seller in writing, no less than thirty (30) days prior to the
proposed Transfer of Substantial Change, the name and address of the proposed Qualified Successor and, unless the proposed Qualified Successor is a public held company which is required to file and has filed current annual and quarterly 10K and 10Q
reports with the Securities Exchange commission, copies of the Qualified Successor’s most recent audited financial statements, the dates of which shall not in any case be more than one year prior to the date of the proposed Transfer or
Substantial Change. Seller’s receipt and review of such financial statements shall be subject to its confidentiality obligations hereunder, and in addition Seller shall, if so requested, execute an additional confidentiality agreement in
customary form for the benefit of the proposed Qualified Successor. 
  
 (ii) No such Transfer or Substantial Change shall operate to release Purchaser from any of its obligations hereunder, and (except for a merger or consolidation in which Purchaser ceases to retain its separate
corporate existence) Purchaser shall remain obligated hereunder as if no Transfer or Substantial Change had occurred.; 
  
 (iii) Immediately prior to any such Transfer or Substantial Change, the Purchaser shall execute and deliver to Seller a certificate signed
by its chief executive officer reaffirming the representations and warranties set forth in Sections 5.1, 5.2, 5.3, 5.4 and 5.7 above as to the Purchaser as of the time of such Transfer or Substantial Change; 
  
 (iv) Immediately prior to any such Transfer or Substantial
Change, the Affiliate or Qualified Successor which is the proposed transferee or surviving corporation shall execute and deliver to Seller a certificate signed by its chief executive officer affirming the representations and warranties set forth in
Sections 5.1, 5.2, 5.3, 5.4, 5.5, 5.6, and 5.7 above as to such Affiliate or Qualified Successor as of the time of such Transfer or Substantial Change; 
  
 (v) The Affiliate transferee or Qualified Successor under any Transfer or Substantial Change shall agree in writing to be bound by all of
the obligations of Purchaser hereunder, including without limitation the obligations set forth in this Section 7.6. 
  
 (c) Except as provided in subsection (b) of this Section 7.6, if the Purchaser, without the prior written consent of Seller, effects a Transfer or
Substantial Change before payment in full of all payments required or potentially required under Section 2.3, then an Event of Default shall be deemed to have occurred prior to any such Transfer or Substantial Change and the license provided in
Section 2.9 hereof shall be deemed to have been granted prior to the effectiveness of any such Transfer or Substantial Change. 
  

 16 

 SECTION 7.7 Taxes. Purchaser will, at Seller’s request and expense, cooperate with Seller and
its Affiliates in connection with any audit of Seller by the Internal Revenue Service or any other U.S. or non-U.S. taxing authority of any tax return in connection with the Acquired Assets. Seller will have the sole right, at its sole expense, to
conduct any audit (including without limitation, any audit referred to in the preceding sentence) or any other proceeding before any taxing authority, to prepare and file any amended tax return, claim for refund or tax court petition, to prosecute
any such claim and to select counsel, to engage in litigation and to consent to any settlement in connection therewith with respect to any taxes for the period prior to the Closing Date, and Purchaser will execute and deliver, or cause to be
executed and delivered, to Seller or its designees all instruments (including, without limitation, powers of attorney) reasonably requested by Seller in order to implement the provisions of this Section 7.7. 
  
 SECTION 7.8 Best Efforts. Purchaser agrees to use its best efforts, in
good faith, to market and sell units of the Product until all Royalty Payments required or potentially required to be made under this Agreement have been paid in full. 
  
 SECTION 7.9 Further Covenants. Until all Royalty Payments have been paid in full (together with any interest or
liquidated damages payable as provided in Section 2.5): 
  
 (a)
The Purchaser will notify Seller in writing thirty (30) days in advance of any change in the location of any of its executive offices or places of business. 
  
 (b) The purchaser shall keep and require it Affiliates and sublicensees to keep complete and accurate books and records of all sales of the Product and
all other matters and transactions relating to the Product and the Acquired Assets, in accordance with generally accepted accounting practices consistently applied, including without limitation records of the volume of unit sales, the prices in
effect, from time to time, the revenue derived from sales of the Product and all other information used or necessary to be used in computing Net Sales and Royalty Payments. Seller shall have the right, without charge and at Seller’s expense,
through a certified public accountant or like person reasonably acceptable to Purchaser, to examine and audit all books and records relating to the Product or the Acquired Assets during regular business hours, subject to customary confidentiality
protections; provided, however, that such examination and audit shall not take place more often than once a year. In addition, the Purchaser will furnish Seller any information regarding its business affairs and financial condition within a
reasonable time after written request therefor. 
  
 (c) The
Purchaser will give immediate written notice to Seller of any litigation or proceeding in which Purchaser is a party that might materially and adversely affect the Product or Acquired Assets. Purchaser’s rights in the Product or Acquired
Assets, or Purchaser’s financial condition, property or business. 
  
 (d) The Purchaser will not mortgage, pledge, grant or permit to exist a lien, lease, pledge, change or security interest upon any of the Acquired Assets or the Developments, except for liens and security interests in favor of Seller.

  
 (e) At the time each Royalty Payment is due, Purchaser shall
furnish to Seller a statement, certified as true and correct by its chief executive officer, which statement shall demonstrate in detail how the amount of the Royalty Payment has 

  

 17 

 
been calculated (“Payment Statement”). Without limiting the generality of the foregoing, each payment Statement shall contain the following
information: total sales volume of Inversine® in
the United States during the applicable Payment Year, the unit price for Inversine® in effect in the United States from time to time during such Payment Year; itemization of all taxes and duties taken into account in calculating Net Sales; and itemized details of all rebates and returns with
respect to Inversine® in the United States during
such Payment Year. All such information shall be presented in accordance with generally accepted accounting practices consistently applied. 
  
 (f) The Purchaser will not materially alter the use of any Trademark or use any Trademark in association with any drug, product, item or service other
than the Product. If the Purchaser desires to change or supplement the use of the Product from that specified under “Goods” in Schedule A hereto, Purchaser will (i) register as required in the United States Patent and Trademark Office to
reflect any such changed or supplemental use, (ii) retain the present uses as shown under “Goods” in Schedule A in any revised or subsequent trademark registrations for the Product, and (iii) retain and preserve all trademarks for the
Product (and all uses therefor) existing as of the Closing Date. 
  
 (g) If Purchaser intends to use, manufacture, distribute or sell the Product in the form of a stereoisomer or other derivative other than the formulation heretofore manufactured and sold by Seller under the name “INVERSINE,”
Purchaser shall notify Seller not less than six (6) months prior to such proposed use, manufacture, distribution or sale. 
  
 ARTICLE VIII- SURVIVAL; INDEMNIFICATION 
  
 SECTION 8.1 Survival; Remedy for Breach. All representations, warranties, covenants and indemnities of the parties contained herein shall survive
the Closing Date until the later of ten (10) years after the Closing Date or two (2) years after the last Royalty Payment required or potentially required to be paid hereunder is due and payable. The covenants and agreements of Seller and Purchaser
hereunder that require by their terms performance or compliance on and after the Closing Date shall continue in force thereafter in accordance with their terms. 
  

SECTION 8.2 Indemnification by Seller. Seller shall indemnify Purchaser against and defend Purchaser against any and all damage, loss, liability
and expense (including, without limitation, reasonable attorneys’ fees in connection with any action, claim, suit or proceeding brought against Purchaser and/or its Affiliate(s)) and the cost of remedial action under applicable laws and
regulations incurred or suffered by Purchaser arising out of (1) any misrepresentation or breach of covenant, agreement, representation or warranty of Seller contained in this Agreement or (ii) any Excluded Liability, provided, however, that
Purchaser shall not be entitled to any indemnification under this Section 8.2, except for claims under sections 4.2, and 4.5, unless and until the amount of claims for which Purchaser is entitled to be indemnified exceeds in the aggregate $175,000
(the “Deductible”), in which event Purchaser is entitled to receive indemnification with respect to such claims to the extent of the entire amount of the Deductible. 
  

 18 

 SECTION 8.3 Indemnification by Purchaser. 
  
 (a) Purchaser shall indemnify Seller against and agrees to
hold Seller harmless from any and all damage, loss, liability and expense (including without limitation, reasonable attorneys’ fees and expenses in connection with any action, claim, suit or proceeding brought against Seller and/or its
Affiliate(s)) and the cost of remedial action under applicable laws and regulations incurred or suffered by Seller and/or its Affiliates arising out of (i) any and all acts and omissions of Purchaser before or after the Closing Date, whether or not
such acts are negligent, unlawful or otherwise wrongful in any manner, in connection with the transactions contemplated by this Agreement, including without limitation Purchaser’s efforts to become the owner of the NDA, to amend or supplement
the NDA, and to validate, continue or improve any process for or related to the manufacture of the Product, (ii) any misrepresentation or breach of covenant, agreement, representation or warranty of Purchaser contained in this Agreement, or (iii)
any Assumed Liability. Without limitation of the foregoing, Purchaser acknowledges and agrees that its indemnification obligations under this section 8.3 include indemnifying Seller and holding Seller harmless against any liability which may be
asserted under the “Best Price” provisions of the Federal Medicaid statute (42 U.S.C. Section 1396r-8) in the event that Purchaser raises the price of the Product after the Closing Date. 
  
 (b) If Seller or any Affiliate thereof has retained any
liability which would otherwise be an Assumed Liability as a result of the failure to obtain the consent of a third party to transfer such liability to Purchaser, Purchaser shall indemnify Seller against and agrees to hold Seller harmless from any
such liability incurred with respect to any period beginning on or after the Closing Date, provided that Seller notifies Purchaser of the existence of such failure to obtain consent in a notice expressly referring to this Section 8.3 (b).

  
 SECTION 8.4 Indemnification; Notice and Settlements. A
party seeking indemnification pursuant to Section 8.2 or 8.3 (an “indemnified party”) shall give prompt notice to the party from whom such indemnification is sought (the “indemnifying party”) of the assertion of any claim, or the
commencement of any action or proceeding, in respect of which indemnity may be sought hereunder. The indemnifying party shall have the right to, and shall at the request of the indemnified party, assume the defense, with counsel reasonably
satisfactory to the indemnified party, of any such suit, action or proceeding at its own expense. An indemnifying party shall not be liable under Section 8.2 or 8.3 for any settlement effected without its consent of any claim, litigation or
proceeding in respect of which indemnity may be sought hereunder, which consent shall not be unreasonably withheld. 
  
 ARTICLE IX- MISCELLANEOUS 
  
 SECTION 9.1 Notices. All notices, requests and other communications to any party hereunder shall be in writing and shall be sent by fax and by first class mail or nationally recognized overnight delivery
service: 
  
 If to Seller to: 
  
 Merck & Co., Inc. 
 Sumneytown Pike 
 West Point, PA 19486

 Attention: Mr. Eugene Wolkoff 
 Senior Director, Business Development 
 Tel. (215) 652-0887 
 Fax: (215) 652-2131 
  

 19 

 with a copy to: 
  

Bruce Hartman, Esq. 
 Legal Department

 WP53C-326 
 Tel. (215) 652-5642

 Fax. (215) 652-6355 
  
 If to Purchaser to: 
  
 Layton Bioscience, Inc. 
 105 Reservoir Road

 Atherton, CA 84027 
 Attention:
Mr. Gary L. Snable 
 President and CEO 
 Tel. (650) 854-6614 
 Fax: (650) 854-4776 
  

with a copy to: 
  
 Thomas L. Barton, Esquire 
 Wise & Shepard
LLP 
 3030 Hansen Way Suite 100 
 Palo Alto, CA 94304-1006 
 Tel. (650) 856-1200 
 Fax. (650) 856-1344 
  
 Or such other addresses as
such party may hereafter specify by written notice to the other party. Each such notice, request or other communication shall be effective when received at the address specified in this Section 9.1. 
  
 SECTION 9.2 Expenses. All legal and other costs and expenses incurred
in connection herewith and the transactions contemplated hereby shall (except as otherwise provided herein) be paid by the party incurring such expenses. 
  
 SECTION 9.3 Bulk Sales Statutes. Purchaser hereby waives compliance by Seller with any applicable bulk sales statutes in any jurisdiction in
connection with the transactions under this Agreement. 
  
 SECTION
9.4 Limitation on Seller’s Representations and Warranties. 
  
 (a)
PURCHASER ACKNOWLEDGES THAT EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, SELLER HAS MADE NO REPRESENTATION OR WARRANTY WHATSOEVER AND PURCHASER HAS NOT RELIED ON ANY REPRESENATION OR WARRANTY, EXPRESS OR IMPLIED, EXCPET
THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, PURCHASER ACKNOWLEDGES THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, PURCHASER IS ACQUIRING THE ACQUIRED ASSETS ON AN “AS IS, WHERE IS”
BASIS WITHOUT ANY EXPRESS OR 

  

 20 

 
IMPLIED WARRANTIES AS TO THE FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY OR CONDITION OF THE ACQUIRED ASSETS OR AS TO ANY OTHER MATTER. 
  
 (b) Without limiting the generality of subsections 9.4(a) above, Seller has
made no representations or warranties that the Know-how, methods, processes, formulae, techniques, trade secrets or other information included in the Intellectual Property or in the Documentation or elsewhere in the Acquired Assets will be useful to
the Purchaser for any purpose whatsoever, and more specifically Seller has affirmatively disclosed to Purchaser certain problems previously experienced in connection with the manufacture of the Product and Seller makes no representations or
warranties concerning the manufacturing process or the efficacy, efficiency or adequacy of the Acquired Assets for the purpose of manufacturing, marketing or selling the Product either before or after the Closing. 
  
 (c) Without limiting the generality of subsections 9.4(a) and (b) above,
Seller has made no representations or warranties concerning the efficacy or safety for human use of the Product, whether in the formulation heretofore manufactured and sold under the name “INVERSINE” or in the form of any other
stereoisomer or other derivative. 
  
 SECTION 9.5 Successors
and Assigns. This Agreement shall be binding upon and shall insure to the benefit of the parties and their respective successors and assigns; provided, however, that this Agreement may not be assigned by either party without the prior written
consent of the other party hereto, and any attempted assignment without such consent shall be void. 
  
 SECTION 9.6 Entire Agreement; Amendment. This Agreement, including, without limitation, the Schedules hereto, embodies the entire agreement of the
parties hereto with respect to the subject matter hereof and supercedes any and all prior agreements with respect thereto, except for any prior confidentiality agreements which shall survive. In the event of any conflict between this Agreement and
any such prior confidentiality agreement, the agreement imposing stricter confidentiality shall govern. No waiver, amendment or modification of any provision hereof or of any right or remedy hereunder shall be effective unless in writing and signed
by the party against whom such waiver, amendment or modification is sought to be enforced. 
  
 SECTION 9.7 Captions; Construction. Captions herein are inserted for convenience of reference only and shall be ignored in the construction or interpretation of this Agreement. Unless otherwise specified, the
words “herein”, “hereof” and terms of like import shall be deemed to refer to the Agreement as a whole and not merely to a single part thereof. 
  
 SECTION 9.8 Public Announcement. No press release, public announcement, confirmation or other information regarding
this Agreement or related matters shall be made by either party without the prior written consent of the other party (other than as necessary to perform the provisions of this Agreement or to its employees or as may be required by law or by any
applicable rules of any stock exchange; provided, however, that disclosure to employees shall not result in a requirement of public disclosure under such applicable law or rules). 
  
 SECTION 9.9 Governing Law. This Agreement shall be governed by, interpreted and construed, and all claims and
disputes, whether in tort, contract or otherwise be resolved in accordance with the substantive laws of the Commonwealth of Pennsylvania without reference to any rules of conflict or laws of renvoi. 
  

 21 

 SECTION 9.10 Jurisdiction; Venue; Arbitration and Other Remedies. In the event of any controversy
or claim arising out of or relating to this Agreement, performance hereunder, termination hereof, or relationship created hereby, each party irrevocably submits to the exclusive jurisdiction of the courts of the Commonwealth of Pennsylvania and the
Federal courts of the United States District Court for the Eastern District of Pennsylvania for the purposes of any suit, action or other proceeding arising out of this Agreement or transactions contemplated hereby. Each party irrevocably and
unconditionally waives any objection to the laying of venue in the state and Federal courts of Pennsylvania as stated above and that any such action was brought in an inconvenient forum. Notwithstanding the foregoing: 
  
 (a) In the event of a threatened disclosure in violation of this Agreement,
Seller shall have the right to seek injunctive relief from any competent court in the jurisdiction where the disclosure is threatened to prevent such disclosure pending resolution of the merits of the dispute; 
  
 (b) At the option of Seller, any controversy, claim or dispute between the
parties hereto arising out of or relating to the performance, construction, interpretation or enforcement of this Agreement shall be submitting to binding confidential arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. § 1 et
seq. in accordance with the Rules of Commercial Arbitration of the American Arbitration Association or its successor. Any arbitration pursuant to this Agreement shall be conducted within the Eastern District of Pennsylvania by three neutral
arbitrators selected by the American Arbitration Association. The judgment upon the award rendered in any such arbitration shall be final and binding upon the parties and may be entered in any court having jurisdiction thereof. All fees and expenses
of the arbitrators and all other expenses of the arbitration, except for attorneys fees, shall be shared equally by the parties. Each party shall bear its own attorneys fees. 
  
 SECTION 9.11 Consent and Waiver Regarding Service of Process and Personal Jurisdiction. In any action, suit,
arbitration or proceeding to enforce the rights of either party under this Agreement or otherwise arising out of this Agreement or from any acts, omissions or activities of either party arising from or related in any way to this Agreement or the
transactions contemplated hereby, the Purchaser, by execution and delivery of this Agreement, expressly and irrevocably consents to the service of any complaint, summons, notice or other process relating to any such action, suit, arbitration or
proceeding by delivery thereof to it by hand or by any other manner provided for in Section 9.1 hereof. Purchaser hereby expressly and irrevocably waives any claim or defense in any such action, suit arbitration or proceeding based on any alleged
lack of personal jurisdiction, improper venue, forum non conveniens or any similar doctrine or theory. 
  
 SECTION 9.12 Waiver of Jury Trial. In any action, suit, arbitration or proceeding to enforce the rights of either party under this Agreement or
otherwise arising out of this Agreement or from any acts, omissions or activities of either party arising from or related in any way to this Agreement or the transactions contemplated hereby, the parties hereto, by execution and delivery of this
Agreement, expressly and irrevocably waive their right to a jury trial and stipulate that any such action, suit or proceeding shall be tried to the court (or arbitrator if the proceeding is under Section 9.10(b) hereof). 
  
 SECTION 9.13 Cooperation. Each party agrees to execute such further
papers, agreements, documents, instruments and the like as may be reasonably necessary or desirable to effect the purpose of this Agreement and to carry out its provisions. 
  

 22 

 SECTION 9.14 Waiver. No waiver by any party in one or more instances of any of the provisions of
this Agreement or the breach thereof shall establish a precedent for any other instance with respect to that or any other provision. Furthermore, in case of waiver of a particular provision, all other provisions of this Agreement will continue in
full force and effect. 
  
 SECTION 9.15 Severability. If
any provision of this Agreement is held to be invalid or unenforceable, all other provisions shall nevertheless continue in full force and effect. 
  
 SECTION 9.16 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute but one and the same instrument. 
  
 SECTION 9.17 No Third Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to confer upon any third party any rights, remedies, obligations or liabilities. 
  
 SECTION 9.18 Compliance with Laws and Regulations. In performing their
obligations pursuant to this Agreement, the parties hereto agree and covenant that they will comply with all applicable federal, state, and local laws and regulations. 
  
 SECTION 9.19 Expenses. Each of the parties hereto will pay its own expenses incurred in connection with this
Agreement or any transaction contemplated by this Agreement. 
  
 IN WITNESS WHEREOF, this Agreement has been signed by authorized representatives on behalf of each of the parties hereto as of the day and year first above written. 
  
 MERCK & CO., INC. 
  

									
	By:	 	 /s/ D. Anstice
	 	 	 	By:	 	 /s/ Michael Gaines

	 	 	
	 	 	 	 	 	

	 	 	 Name: David W. Anstice
	 	 	 	 	 	 
	 	 	Title: President, Human Health- The Americas	 	 	 	 	 	 

  
 LAYTON BIOSCIENCE, INC. 
  

									
	By:	 	 /s/ Gary L. Snable
	 	 	 	By:	 	 /s/ Scott Bauer

	 	 	
	 	 	 	 	 	

  

 23 

 INDEX TO SCHEDULES 
  

			
	 Schedule A
	  	Trademarks
		
	 Schedule B
	  	New Drug Application
		
	 Schedule C
	  	Documentation
		
	 Schedule D
	  	Patents and Patent Applications
		
	 Schedules E-1, E-2, E-3
	  	Form of Trademark Assignments
		
	 Schedule F
	  	 Form of Assignment and Bill of Sale for NDA,
 Intellectual Property and Documentation

		
	 Schedule G
	  	Notice to FDA
		
	 Schedule 5.7(b)
	  	Liens and encumbrances
		
	 Schedule 5.7(c)
	  	Location of Purchaser’s offices and places of business

  

 24 

 SCHEDULE A 
  
 TRADEMARKS 
  

											
	 TRADEMARK

	  	LOCATION

	  	REG. NO.

	  	REG. DATE

	  	EXP. DATE

	  	 GOODS

						
	 INVERSINE
	  	USA	  	626,116	  	01-May-56	  	01-May-06	  	Medicinal preparation for use as hypotensive agent
						
	 INVERSINE
	  	Ireland	  	58,180	  	02-Nov-55	  	02-Nov-07	  	Medicinal preparation for use as hypotensive agent
						
	 INVERSINE
	  	Somalia	  	2,948	  	14-Jan-81	  	14-Jan-01	  	Chemical, medicinal, pharmaceutical, sanitary, disinfecting, veterinary

  

 25 

 SCHEDULE B 
  
 NEW DRUG APPLICATION 
  
 INVERSINE® 
  

							
	 PROD. NO.

	  	STREGNTH

	  	FORM

	  	 INITIAL REG.DATE/NUMBER

	 3219
	  	2.5 mg	  	Tablet	  	01-Mar-55
	 	  	 	  	 	  	NDA 10251

  

 26 

 SCHEDULE C 
  
 DOCUMENTATION 
  
 [********] 
  
 [Entire page has been redacted.] 
  

 27 

 SCHEDULE D 
  
 PATENTS AND PATENT APPLICATIONS 
  
 United States Patent No. 2,831,027, Isocamphane compounds and processes for preparing the 
 same; patented April 15, 1959 (patent expired). 
  

 28 

 SCHEDULE E-1 
  
 TRADEMARK ASSIGNMENT- U.S. 
  
 WHEREAS, MERCK & CO., INC., a New Jersey corporation, having its principal offices at One Merck Drive, Whitehouse Station, New Jersey 08889-0100, is
the owner of the following trademark now registered in the United States Patent and Trademark Office: 
  

									
	 TRADEMARK

	  	 REG. NO.

	  	 REG. DATE

	  	 EXP. DATE

	  	 GOODS

					
	 INVERSINE
	  	626,116	  	01-May-56	  	01-May-06	  	 Medicinal preparation
 for the use as hypotensive agent

  
 WHEREAS, Layton
BioScience, Inc., a Delaware corporation having its principal offices at Atherton, California, U.S.A., is desirous of acquiring said registered trademark, 
  
 NOW, THEREFORE, in consideration of the sum of One ($1.00) Dollar and other good and valuable consideration, the receipt of which is hereby acknowledged,
MERCK & CO., INC., hereby quitclaims to Layton BioScience, Inc., without representation or warranty of title, all of its presently existing right, title and interest in the United Sates in and to said trademark together with the goodwill of the
business symbolized by said trademarks and registrations thereof. 
  
 Signed this
            day of            , 1998. 
  

			
	 MERCK & CO., INC.

		
	 By:
	 	 
	 	 	

	 	 	 Name:
 Title:

  

			
	State of                                    
             	  	 
	 	  	 s.s.

	County of
                                        
    	  	 
		
	Subscribed and sworn to before
me this            day of            ,1998	  	 
		
	 	  	 
	
	 	 
	 Notary Public
	  	 

  

 29 

 SCHEDULE E-2 
  
 TRADEMARK ASSIGNMENT- IRELAND 
  

WHEREAS, MERCK & CO., a New Jersey corporation, having its principal offices at One Merck Dr, Whitehouse Station, New Jersey 08889-0100, is the
owner of the following trademark now registered with the Controller of Patents, Designs and Trademarks of the Republic of Ireland: 
  

									
	 TRADEMARK

	  	 REG. NO.

	  	 REG. DATE

	  	 EXP. DATE

	  	 GOODS

	 INVERSINE
	  	58,180	  	02-Nov-55	  	02-Nov-07	  	 Medicinal preparation
 for use as hypotensive agent

  
 WHEREAS, Layton
BioScience, Inc., a Delaware corporation having its principal offices at Atherton, California, U.S.A., is desirous of acquiring said registered trademark. 
  
 NOW, THEREFORE, in consideration of the sum of One ($1.00) Dollar and other good and valuable consideration, the receipt of which is hereby acknowledged,
MERCK & CO., INC., hereby quitclaims to Layton BioScience, Inc. without representation or warranty of title, all of its presently existing right, title and interest in the Republic of Ireland in and to said trademarks together with the goodwill
of the business symbolized by said trademarks and registrations thereof. 
  
 Signed this             day of            , 1998. 
  

			
	 MERCK & CO., INC.

		
	 By:
	 	 
	 	 	

	 	 	 Name:
 Title:

  

			
	State of                                    
             	  	 
	 	  	 s.s.

	County of
                                        
    	  	 
		
	Subscribed and sworn to before
me this            day of            , 1998	  	 
		
	 	  	 
	
	 	 
	 Notary Public
	  	 

  

 30 

 SCHEDULE E-3 
  
 TRADEMARK ASSIGNMENT- SOMALIA 
  

WHEREAS, MERCK & CO., INC., a New Jersey corporation, having its principal offices at One Merck Drive, Whitehouse Station, New Jersey 08889-0100,
is the owner of the following trademark now registered with the Ministry of Industry of the Republic of Somalia: 
  

									
	 TRADEMARK

	  	 REG. NO

	  	 REG. DATE

	  	 EXP. DATE

	  	 GOODS

	 INVERSINE
	  	2,948	  	14-Jan-81	  	14-Jan-01	  	 Chemical, medicinal,
 pharmaceutical,
 sanitary, disinfecting,
 veterinary products

  
 WHEREAS, Layton
BioScience, Inc., a Delaware corporation having its principal offices at Atherton, California, U.S.A., is desirous of acquiring said registered trademark, 
  
 NOW, THEREFORE, in consideration of the sum on One ($1.00) Dollar and other good and valuable consideration, the receipt of which is hereby acknowledged,
MERCK & CO., INC., hereby quitclaims to Layton BioScience, Inc., without said representation or warranty of title, all of its presently existing right, title and interest in Somalia in and to said trademarks together with the goodwill of the
business symbolized by said trademarks and registrations thereof. 
  
 Signed this
            day of            , 1998. 
  

			
	 MERCK & CO., INC.

		
	 By:
	 	 
	 	 	

	 	 	 Name:
 Title:

  

			
	State of                                    
             	  	 
	 	  	s.s.
	County of
                                        
    	  	 
		
	Subscribed and sworn to before
me this            day of            , 1998	  	 
		
	 	  	 
	
	 	 
	 Notary Public
	  	 

  

 31 

 SCHEDULE F 
  
 [ASSIGNMENT AND BILL OF SALE 
 FOR NDA, INTELLECTUAL PROPERTY AND DOCUMENTATION] 
  
 QUITCLAIM ASSIGNMENT AND BILL OF SALE 
  
 KNOW ALL MEN BY THESE PRESENTS, that Merck & Co., Inc., a New Jersey corporation (“Seller”), for and in consideration of the sum on ONE DOLLAR and other valuable consideration as set forth in this Asset Purchase and Trademark
Assignment Agreement by and between Seller and Layton BioScience, Inc., a Delaware corporation (“Purchaser”) dated as of the date hereof (the “Agreement”), and intending to be legally bound hereby, has sold, conveyed, assigned,
transferred, set over and delivered, and by these presents does hereby sell, convey, assign, transfer, set over and deliver, unto Purchaser all of Seller’s right, title and interest in and to the following property (the “Property”),
to have and to hold the Property unto Purchaser, its successors and assigns, for its own proper use and benefit forever: 
  
 1. The following New Drug Application for INVERSINE® (mecamylamine hydrochloride) filed with the U.S. Food and Drug Administration (“FDA”) for marketing authorization within the United States,
and all legal rights and privileges belonging or accruing to the owner or holder of such application: 
  

							
	 PROD. NO.

	  	 STRENGTH

	  	 FORM

	  	 INITIAL REG.DATE/NO.

	 3219
	  	2.5 mg	  	Tablet	  	 01-Mar-55

	 	  	 	  	 	  	 NDA 10251

  
 2. The following documents, paper and
files (the “Documentation”): 
  
 [********] 

 
 3. All intellectual Property to the extent set forth or embodied in the Documentation.

  
 Notwithstanding any other provision hereof to the contrary, the Buyer shall
not acquire pursuant hereto any property, assets or rights of any kind or nature, real or personal, tangible or intangible, other than the Seller’s right, title and interest in and to the Property. Seller makes no representation or warranty of
good title to the Property but quitclaims all of its right, title and interest in and to the Property to the Purchaser. 
  
 PURCHASER ACKNOWLEDGES THAT EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ASSIGNMENT AND BILL OF SALE OR IN THE AGREEMENT, SELLER HAS MADE NO
REPRESENTATION OR WARRANTY WHATSOEVER AND PURCHASER HAS NOT RELIED ON ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, EXCEPT THOSE EXPRESSLY SET FORTH IN THIS ASSIGNMENT AND BILL OF SALE OR IN THE AGREEMENT. WITHOUT LIMITING THE GENERALITY OF
THE FOREGOING, PURCHASER ACKNOWLEDGES THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS ASSIGNMENT AND BILL OF SALE OR IN THE AGREEMENT, PURCHASER IS ACQUIRING THE PROPERTY ON AN “AS IS, WHERE IS” BASIS WITHOUT ANY EXPRESS OR IMPLIED WARRANTIES
AS TO THE FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY OR CONDITION OF THE PROPERTY OR AS TO ANY OTHER MATTER. 
  

 32 

 Without limiting the generality of the foregoing: 
  
 (a) Seller has made no representations or warranties that the Know-how, methods, processes, formulae, techniques, trade
secrets or other information included in the Intellectual Property or in the Documentation or elsewhere in the Property will be useful to the Purchaser for any purpose whatsoever, and more specifically Seller has affirmatively disclosed to Purchaser
certain problems previously experienced in connection with the manufacture of the Product and Seller makes no representations or warranties concerning the manufacturing process or the efficacy, efficiency or adequacy of the Property for the purpose
of manufacturing, marketing or selling the Product either before or after the First Closing. 
  
 (b) Seller has made no representations or warranties concerning the efficacy or safety for human use of the Product, whether in the formulation heretofore manufactured and sold under the name “INVERSINE” or
in the form of any other stereoisomer or other derivative. 
  
 (c) Seller has made no representation or warranty concerning the accuracy, completeness or utility of any Documentation or Intellectual Property contained within the Property. 
  
 (d) Seller has made no representation, and has specifically disclaimed, that it is the holder of any unexpired Patents in
the United Stated. Any information about Patents contained in the Documentation relates to expired Patents. 
  
 (e) Seller has made no representation, and has specifically disclaimed, that it is the holder of (i) any Patents that are registered or effective outside
the United States or (ii) any Marks that are registered or effective outside the United States except the trademarks in Ireland and Somalia shown on Schedule A to the Agreement. 
  
 Capitalized terms used in this Assignment and Bill of Sale, unless otherwise defined herein, shall have the meanings ascribed to them in the
Agreement. In the event of a conflict between the Agreement and this Assignment and Bill of Sale, the terms and conditions of the Agreement shall control. 
  
 IN WITNESS WHEREOF, Seller has caused this Assignment and Bill of Sale to be signed this
            day of March 1998. 
  

			
	 SELLER:

	
	 MERCK & CO., INC.

		
	By:	 	 
	 	 	

	 	 	 Name:
 Title:

			
		
	Witness:	 	 
	 	 	

	 	 	 Name:
 Title:

  

 33 

 SCHEDULE G 
  
 NOTICE TO FDA 
  
 Raymond J. Lipicky, M.D.- Director 
 Division of Cardio- Renal Drug Products

 HFD-110, Room 16B-45 
 Office of Drug Evaluation 1 (CDER)

 Food and Drug Administration 
 1451 Rockville Pike 

Rockville, Maryland 20852 
  
 Dear Dr. Lipicky: 
  

	 	NDA	10-251: Tablets INVERSINE (Mecamylamine HCI) 

  
 Pursuant to 21 CFR 314.72, we are notifying you that as of             , Merck Research Laboratories
division of Merck & Co., Inc., transferred ownership and all rights and responsibilities for NDA 10-251 to Layton BioSciences. 
  
 Effective the date of this letter; all communications to the sponsor should be addressed to: 
  
 Martha Reitman, M.D. 
 Layton BioScience, Inc. 
 105 Reservoir Road 
 Atherton, CA 94027 
 (650) 854-6614 
  
 A letter and completed FDA Form 356h has been submitted to your office by Layton BioScience, Inc. under separate cover a copy of which is
attached. Their letter certifies that they are assuming sponsorship of and have been provided a complete copy of NDA 10-251. 
  
 Please direct any questions regarding the transfer of NDA 10-251 to Larry P. Bell, M.D. (610/397-2310) or, in my absence, to Bonnie J. Goldmann, M.D. (610/397-2383).

  

			
	 Sincerely,

	
	 
	

	 Larry P. Bell, M.D.

	 Senior Director, Regulatory Affairs

  
 Certified No. 
  

 34 

 SCHEDULE 5.7(b) 
  
 LIENS AND ENCUMBRANCES 
  
 None 
  

 35 

 SCHEDULE 5.7(c) 
  
 LOCATION OF PURCHASER’S OFFICES AND PLACES OF BUSINESS 
  
 105 Reservoir Road 
 Atherton, CA 94027 
  

 36AMENDED AND RESTATED LICENSE AGREEMENT

 Exhibit 10.17 
  
 [********] Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with
the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended. 
  
 TARGACEPT CONTRACT NO. 03-060-0147 
  
 AMENDED AND RESTATED 
 LICENSE AGREEMENT 
  
 This Amended and Restated License Agreement (this
“Agreement”) is made and entered into to be effective the 9th day of March 2004, by and between the UNIVERSITY OF SOUTH FLORIDA RESEARCH FOUNDATION, INC., a corporation not for profit under Chapter 617 of the Florida Statutes and a
direct support organization of the University of South Florida (“University”) pursuant to Section 1004.28 of the Florida Statutes, having its principal office at 4202 East Fowler Avenue, Tampa, Florida 33620, U.S.A. (hereinafter
referred to as “RESEARCH FOUNDATION”), and Targacept, Inc., a Delaware Corporation, having its principal office at 200 East First Street, Suite 300, Winston-Salem, North Carolina 27101-4165 (hereinafter referred to as
“LICENSEE”) and amends and restates in its entirety the License Agreement dated October 13, 1997, as amended, between RESEARCH FOUNDATION and LICENSEE, as assignee of Layton Bioscience, Inc. (the “Original
Agreement”). 
  
 WITNESSETH 
  
 WHEREAS, RESEARCH FOUNDATION is the exclusive licensee of certain
“Patent Rights” (as later defined herein) relating to the use of mecamylamine to treat neuropsychiatric disorders and has the right to grant licenses under said Patent Rights; 
  
 WHEREAS, RESEARCH FOUNDATION desires to have the Patent Rights utilized in the public interest and is willing to grant a
license thereunder; and 
  
 WHEREAS, LICENSEE intends to develop,
produce, manufacture, market and/or sell “Licensed Product(s)” (as later defined herein) and is willing to commit itself to a diligent program of exploiting the Patent Rights so that public utilization shall result therefrom; and

  
 WHEREAS, LICENSEE desires to obtain a license under the Patent
Rights upon the terms and conditions hereinafter set forth. 
  
 NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows: 
  
 ARTICLE I. DEFINITIONS 
  
 For the purposes of this Agreement, the following words and phrases shall have the following meanings: 
  

	 	1.1	“Annual License Fee” shall mean [********], and “Annual Rights Fee” means [********]. 

  

	 	1.2	“Competition” shall, with respect to any Licensed Product, be deemed to exist in a particular country for and after the first calendar quarter in which [********].

  

	 	1.3	“Competitive Product” shall mean, with respect to any Licensed Product, any pharmaceutical product containing an active ingredient that is the same compound as a Named
Compound contained in or comprising such Licensed Product, or any analog, salt, solvate, prodrug form, inclusion complex or metabolite thereof, that [********]. 

  

	 	1.4	“Confidential Information” shall mean, subject to Paragraph 15.3, information that is confidential, proprietary or otherwise not generally available to the public.

  

	 	1.5	“Effective Date” shall mean the date so identified above in the preamble to this Agreement. 

  

	 	1.6	“Improvement” shall mean, with respect to any Licensed Product, technology that [********]. 

  

	 	1.7	“Licensed Process” shall mean any process that relates to a Named Compound and infringes or would infringe, in whole or in part, a Valid Claim contained in the Patent
Rights. 

  

	 	1.8	“Licensed Product” shall mean any product or part thereof containing or comprising a Named Compound that: 

  

	 	(a)	infringes or would infringe, in whole or in part, a Valid Claim contained in the Patent Rights in the country in which such product or part thereof is made, used, leased or sold; or

  

	 	(b)	is made by a process that is a Licensed Process in the country in which such product is made, used or sold. 

  

	 	1.9	“LICENSEE” shall include, in addition to Targacept, Inc.: a related company of Targacept, Inc., the voting stock of which is, directly or indirectly, at least fifty
percent (50%) owned or controlled by Targacept, Inc.; an organization which directly or indirectly controls more than fifty percent (50%) of the voting stock of Targacept, Inc.; and an organization, the majority ownership of which is, directly or
indirectly, common to the ownership of Targacept, Inc.. References in this Paragraph 1.9 to “voting stock” shall mean capital stock entitled to vote in the election of the board of directors or the analogous body of a noncorporate entity.

  

	 	1.10	“Losses” shall mean all claims and expenses, including reasonable attorneys’ fees, actually incurred. 

  

	 	1.11	“Milestones” shall mean events defined in Appendix B. 

  

 2 

	 	1.12	“Named Compounds” shall mean [********]. 

  

	 	1.13	“NDA Filing Date” shall mean the date on which LICENSEE (or its sublicensee or collaborative partner) files its first New Drug Application (or its equivalent) with the
United States Food and Drug Administration or any comparable foreign regulatory authority for the use of a Licensed Product to treat attention deficit hyperactivity disorder and/or any other neuropsychiatric disease or disorder in any country.

  

	 	1.14	“Net Sales” shall mean [********]. 

  

	 	1.15	“Option Invention” shall mean any discovery, compound, improvement, invention, idea, process or technique, whether or not patentable, that (i) is made, conceived or first
reduced to practice by RESEARCH FOUNDATION and (ii) without regard to any rights reserved under Paragraph 2.2, cannot reasonably be practiced without infringing the Patent Rights licensed to LICENSEE hereunder. 

  

	 	1.16	“Patent Rights” shall mean, collectively, (i) the patents and patent applications listed on Appendix A, (ii) all patents that issue from patent applications listed
on Appendix A and all reexaminations, reissues, revisions, substitutes, renewals or extensions thereof, and (iii) all other United States and foreign patents that issue from applications that claim priority to patents and patent applications
listed on Appendix A, including, without limitation, continuation applications, continuation-in-part applications, divisional applications, substitute applications, reissue applications or requests for examination and foreign applications of
any of the foregoing. 

  

	 	1.17	“Special Issue Dispute” shall mean a dispute between the parties as to whether (i) LICENSEE is meeting its diligence obligation hereunder or (ii) a condition that would
give rise to a royalty reduction under Paragraph 4.1(b)(i) or 4.1(c) has occurred or been met. 

  

	 	1.18	“Sublicense Fees” shall mean any fees (including the fair market value of any consideration paid other than in cash) received by LICENSEE for a sublicense of Patent
Rights, excluding (i) running royalties on the sale or lease of Licensed Products, (ii) payments specifically allocated to research and development for, or to the manufacture or supply of, a Licensed Product or Licensed Process, (iii) amounts
received by LICENSEE that it is required to repay (e.g., a loan) and (iv) payments received in exchange for securities of LICENSEE. 

  

	 	1.19	“Substantial LICENSEE IP Rights” shall mean any issued patent or pending patent application owned or licensed by LICENSEE that claims an Improvement, but excluding
Improvements for which both LICENSEE and RESEARCH FOUNDATION provided independent inventive contribution. 

  

	 	1.20	“Territory” shall mean the world. 

  

 3 

	 	1.21	“Valid Claim” shall mean: (i) any claim of an issued patent that has not expired and that has not been held invalid or unenforceable by decision of a court or other
governmental agency of competent jurisdiction or been admitted to be invalid through reissue, disclaimer or otherwise; or (ii) any claim of a pending patent application that has not expired or become canceled, abandoned or otherwise disallowed.

  
 ARTICLE II. GRANT 
  

	 	2.1	(a) RESEARCH FOUNDATION hereby grants to LICENSEE the perpetual, exclusive right and license under the Patent Rights to research, develop, make, have made, use, market, distribute,
lease, sell, import and export Licensed Products and Licensed Processes for any and all indications in the Territory, with the right to practice all or any portion of the foregoing right and license through subcontractors which, unless specifically
sublicensed hereunder, shall not be considered sublicensees hereunder. 

  
 (b) In the event that RESEARCH FOUNDATION receives a bona fide third party offer whereby such third party would obtain a right or license under any of the Patent Rights for any purpose not exclusively licensed
to LICENSEE hereunder (the “Subject Rights”), (i) RESEARCH FOUNDATION shall notify LICENSEE of all material terms of such offer in writing (the “Subject Notice”) within ten (10) business days after its receipt by
RESEARCH FOUNDATION, which notice shall certify as to the receipt of such offer from a bona fide third party, and (ii) LICENSEE shall thereupon have a right of refusal to license the Subject Rights on the same terms set forth in the Subject
Notice. LICENSEE may exercise its right of first refusal at any time within [********] after its receipt of the Subject Notice by written notice to RESEARCH FOUNDATION, and, in such event, the parties shall work diligently towards execution
of a definitive license agreement reflecting the terms in the Subject Notice and, to the extent not inconsistent, the terms hereof; provided that, if mutually acceptable, the parties may elect instead to amend and restate this agreement to
incorporate the Subject Rights and associated terms. If LICENSEE’s right of refusal expires unexercised, RESEARCH FOUNDATION shall have the right to license the Subject Rights to such third party on the terms set forth in the Subject Notice;
provided that, in the event of any substantive change in such terms, RESEARCH FOUNDATION shall again provide the Subject Notice to LICENSEE and LICENSEE shall again have a right of first refusal as provided herein. LICENSEE shall, notwithstanding
the periods provided in this Paragraph 2.1(b), use good faith efforts to respond to the Subject Notice (whether the initial Subject Notice or a subsequent Subject Notice following a substantive change in terms) as promptly as reasonably practicable
within the applicable period. 
  
 (c) RESEARCH FOUNDATION: (i)
shall, within thirty (30) days of the identification of each Option Invention, report such Option Invention to LICENSEE, together with any patent disclosures and any supporting technical 

  

 4 

 
data or other information it possesses that may be relevant to understanding the value or commercial significance of such Option Invention; and (ii) hereby
grants to LICENSEE a first option to negotiate an exclusive, worldwide, royalty-bearing commercially reasonable license (with the right to sublicense) to RESEARCH FOUNDATION’s rights in each Option Invention for any purpose. LICENSEE may
exercise any such option by providing written notice to RESEARCH FOUNDATION within sixty (60) days of its receipt of the notice of the applicable Option Invention. Upon exercise of the Option, the parties shall negotiate in good faith the terms of
such license based on [********]. 
  

	 	2.2	RESEARCH FOUNDATION reserves to the University the right to practice under the Patent Rights solely for the University’s internal research and education purposes; provided that
the foregoing rights shall be expressly subject to RESEARCH FOUNDATION’s obligations pursuant to Paragraph 15. 

  

	 	2.3	Notwithstanding anything herein to the contrary, in no event shall either RESEARCH FOUNDATION or University perform research sponsored by, or for the benefit of, a third party
for-profit entity where such research, if performed by such third party for-profit entity, would infringe or would be reasonably likely to infringe the Patent Rights licensed to LICENSEE hereunder. 

  

	 	2.4	The license granted hereunder shall not be construed to confer any rights upon LICENSEE by implication, estoppel or otherwise as to any technology except as specifically set forth
herein. 

  

	 	2.5	LICENSEE may grant exclusive or nonexclusive sublicenses to third-party sublicensees with respect to all or any portion of the license granted to LICENSEE hereunder only with the
approval of RESEARCH FOUNDATION, which shall: (i) be given unless RESEARCH FOUNDATION reasonably believes in good faith that the proposed sublicense will result in LICENSEE’s inability to fulfill its obligations hereunder; (ii) otherwise not be
unreasonably withheld or delayed; and (iii) be deemed given unless written notice to the contrary is received by LICENSEE within thirty (30) days after written notice requesting approval is received by RESEARCH FOUNDATION. RESEARCH FOUNDATION shall,
notwithstanding the period provided in this Paragraph 2.4, use good faith efforts to respond to LICENSEE’S written notice as promptly as reasonably practicable within such period. 

  

	 	2.6	LICENSEE agrees to forward to RESEARCH FOUNDATION a copy of any and all fully executed sublicense agreements contemplated by Paragraph 2.4. At the request of RESEARCH FOUNDATION,
LICENSEE shall also provide copies of all distribution agreements and other such agreements relative to the Licensed Products or involving rights granted to LICENSEE under the agreement. 

  

	 	2.7	 Termination of the license granted to LICENSEE in this Agreement shall terminate all sublicenses which may have been granted by LICENSEE; provided that any
sublicensee may elect to continue its sublicense by advising RESEARCH 

  

 5 

	 	 
FOUNDATION in writing, within (60) sixty days of the sublicensee’s receipt of written notice of such termination from RESEARCH FOUNDATION, of its
election and its agreement to assume all of the obligations to RESEARCH FOUNDATION (including obligations for payment) contained in this Agreement. Any sublicense granted by LICENSEE shall contain provisions corresponding to those of this paragraph
respecting termination and the conditions of continuance of sublicenses. 

  

	 	2.8	Except as otherwise provided in a research or other written agreement between the parties, each invention, discovery, proprietary development, data and information, in any medium or
manifestation, including any method, process, composition of matter, apparatus, device, system, product, article of manufacture or appliance made or developed after the Effective Date, and all intellectual property rights relating thereto, shall be
owned exclusively by the party making or developing it, without any accounting, compensation or other obligation hereunder to the other party. 

  
 ARTICLE III. DUE DILIGENCE 
  

	 	3.1	LICENSEE shall use commercially reasonable efforts (either alone or through research collaborations or alliances with research organizations, pharmaceutical companies or other third
parties) to market and sell, or to develop, one or more Licensed Products or Licensed Processes through a diligent program for exploitation of the Patent Rights, and LICENSEE’s failure to use such efforts shall be grounds for RESEARCH
FOUNDATION to terminate this Agreement pursuant to Paragraph 13.3. Without limiting the generality of the foregoing, until the NDA Filing Date, LICENSEE shall: (i) spend a minimum of [********]to conduct research and development of one or
more Licensed Products; provided that, for the avoidance of doubt, any or all of such amount may [********]; and (ii) deliver to RESEARCH FOUNDATION, at least annually, a brief report summarizing its research and development activities
completed since the last report, research and development activities currently in process, planned future research and development activities and research and development work being performed by third parties. If RESEARCH FOUNDATION believes
LICENSEE is failing to comply with its obligations under this Paragraph 3.1, RESEARCH FOUNDATION may send notice to the LICENSEE asserting such belief and the basis therefor. LICENSEE shall have sixty (60) days from its receipt of such notice either
to (i) commence compliance with its obligations under this Paragraph 3.1 to RESEARCH FOUNDATION’s reasonable satisfaction or (ii) send notice to RESEARCH FOUNDATION requesting that such issue be resolved in accordance with Article XII, in which
case the procedures set forth in Article XII shall be followed. 

  

	 	3.2	 LICENSEE will use commercially reasonable efforts to effect the NDA Filing Date on or before December 31, 2012; provided that the parties acknowledge that (i) the
foregoing target is expressly subject to significant scientific, clinical and 

  

 6 

	 	 
regulatory uncertainties and (ii) failure to meet such target shall not constitute a breach of this Agreement or entitle RESEARCH FOUNDATION to terminate
this Agreement if SPONSOR is in compliance with Paragraph 3.1, but shall entitle RESEARCH FOUNDATION, upon sixty (60) days written notice to LICENSEE, to make the license granted in Paragraph 2.1(a) nonexclusive. 

  

	 	3.3	LICENSEE may, but expressly without creating any binding obligation, (i) consider University to conduct or, if applicable, to coordinate particular pre-clinical or early-stage
clinical research in furtherance of LICENSEE’s diligence obligations hereunder and (ii) communicate with University researchers from time to time regarding the research and development of one or more Licensed Products hereunder.

  
 ARTICLE IV. FEES AND ROYALTIES

  

	 	4.1	For the rights, privileges and license granted hereunder, LICENSEE shall pay to RESEARCH FOUNDATION: 

  

	 	(a)	Milestone payments payable, if at all, at the times and upon achievement of the Milestones set forth on Appendix B. 

  

	 	(b)	Running royalties equal to the Applicable Royalty Amount. The “Applicable Royalty Amount” shall be [********] of Net Sales of Licensed Products in any country;
provided that, with respect to a particular Licensed Product in a particular country: 

  
 (i) [********], the Applicable Royalty Amount shall be reduced to [********] of Net Sales of such Licensed Product in such
country; and 
  
 (ii) if LICENSEE (or a
sublicensee) deems it necessary or advisable to secure a third party license in order to practice in such country any portion of the license granted by RESEARCH FOUNDATION hereunder (including, without limitation, the sale of Licensed Products), the
Applicable Royalty Amount shall be reduced by [********]of the amounts paid to secure such third party license, but in no event to an amount less than [********] of Net Sales of Licensed Products in such country. 
  
 Notwithstanding the foregoing: 
  
 (1) the obligations in this Paragraph 4.1(b) shall expire
with respect to Net Sales of a particular Licensed Product in a particular country on the date of expiration of the last-to-expire Valid Claim included in the Patent Rights covering, in whole or in part, such Licensed Product in such country;

  

 7 

 (2) if Licensed Products are sold or leased by a sublicensee, LICENSEE shall instead pay
to RESEARCH FOUNDATION the lesser of the amount calculated as provided above in this Paragraph 4.1(b) or [********] of the running royalties on the sale or lease of Licensed Products actually received by LICENSEE from such sublicensee;

  
 (3) the Company’s obligation to pay
royalties under this Paragraph 4.1(b) shall be imposed only once with respect to the same unit of a Licensed Product regardless of how many Patent Rights or Valid Claims pertain thereto; and 
  
 (4) all Annual License Fees, in the aggregate, paid by
LICENSEE hereunder as of the NDA Filing Date shall be creditable against running royalties due under this Paragraph 4.1, after any reduction resulting from application of the various subparagraphs of this Paragraph 4.1; provided that a maximum of
[********] shall be creditable annually under this subparagraph (4). [********] 
  

	 	(c)	[********] of all Sublicense Fees actually received by LICENSEE from any sublicensee, to be reduced to [********] if such sublicense is granted together (whether in
the same or in a related agreement) with Substantial LICENSEE IP Rights. 

  

	 	4.2	Royalty payments shall be paid in United States dollars in Tampa, Florida, or at such other place as RESEARCH FOUNDATION may reasonably designate consistent with the laws and
regulations controlling in any foreign country. Any withholding taxes that the LICENSEE is required by law to withhold on remittance of the royalty payments will be deducted from the royalty paid. If any currency conversion shall be required in
connection with the payment of royalties hereunder, such conversion shall be made by using the exchange rate prevailing at the Chase Manhattan Bank (N.A.) on the last business day of the calendar quarter reporting period to which such royalty
payments relate. 

  

	 	4.3	In addition to the foregoing, LICENSEE shall pay to RESEARCH FOUNDATION (i) the Annual License Fee, which obligation shall expire as of the NDA Filing Date, and (ii) for the rights
granted to LICENSEE in Paragraph 2.1(b), the Annual Rights Fee, each such payment to be made within thirty (30) days of each anniversary of the Effective Date in United States dollars. 

  
 ARTICLE V. REPORTS AND RECORDS 
  

	 	5.1	 LICENSEE shall keep full, true and accurate books of account containing all particulars that may be necessary for the purpose of showing the amounts payable to
RESEARCH FOUNDATION hereunder for five (5) years following the end of the calendar year to which they pertain. Such books and records shall be made 

  

 8 

	 	 
available, upon reasonable notice and during normal business hours, for the inspection of RESEARCH FOUNDATION or its agents (at the sole expense of RESEARCH
FOUNDATION) for the purpose of verifying LICENSEE’s royalty statement or compliance in other respects with this Agreement. This obligation to maintain accurate books of account and the right to inspect them shall survive termination of this
Agreement for the period described above. 

  

	 	5.2	LICENSEE, within sixty (60) days after March 31, June 30, September 30 and December 31, of each year, shall deliver to RESEARCH FOUNDATION true and accurate reports, giving such
particulars of the business conducted by LICENSEE and its sublicensees during the preceding three-month period under this Agreement as shall be pertinent to a royalty accounting hereunder, including an accounting for Licensed Processes used and
Licensed Products and the billings, deductions and royalties due with respect thereto. In the event the examination shows an underpayment, LICENSEE shall pay RESEARCH FOUNDATION the amounts underpaid. In addition, in the event the examination shows
an underpayment of more than five percent (5%) for any quarter, LICENSEE shall pay the RESEARCH FOUNDATION, in addition to the amounts underpaid, out-of-pocket costs of the audit and interest on the underpayment at the rate of [********].

  

	 	5.3	With each such report submitted, LICENSEE shall pay to RESEARCH FOUNDATION the royalties due and payable under this Agreement. If no royalties shall be due, LICENSEE shall so
report. 

  

	 	5.4	The royalty payments set forth in this Agreement shall, if overdue, bear interest until payment at a rate of [********]. The payment of such interest shall not foreclose
RESEARCH FOUNDATION from exercising any other rights it may have as a consequence of the lateness of the payment. 

  
 ARTICLE VI. PATENT PROSECUTION 
  

	 	6.1	 The filing and prosecution of all United States and foreign patent applications and maintenance of all United States and foreign patents within the Patent Rights
during the term of this Agreement shall be the responsibility of LICENSEE at its sole expense and acting in good faith. LICENSEE shall (i) provide, or direct its patent counsel to provide, to RESEARCH FOUNDATION copies of all material information
specifically relating to the prosecution, issuance and maintenance of the Patent Rights and (ii) give due consideration in good faith to comments timely received from RESEARCH FOUNDATION or its patent counsel. RESEARCH FOUNDATION agrees to promptly
provide to LICENSEE such assistance, information, and executed documents needed to facilitate the prosecution, issuance, and maintenance of the Patent Rights as LICENSEE may reasonably request and LICENSEE shall reimburse RESEARCH FOUNDATION for
reasonable out-of-pocket expenses incurred to provide such assistance, 

  

 9 

	 	 
information, and documents, subject to received of itemized statements and other appropriate supporting documentation. 

  

	 	6.2	In the event the LICENSEE determines that filing, prosecution or maintenance of any of the U.S. or foreign patent applications or patents within the Patent Rights is not justified
and so advises RESEARCH FOUNDATION in writing, RESEARCH FOUNDATION will then have the option to file, prosecute or maintain any such Patent Rights at its own expense. If RESEARCH FOUNDATION does so: (i) RESEARCH FOUNDATION will then have the option
to delete such U.S. or foreign patent applications or patents within said Patent Rights from the license granted hereunder for the territory covered thereby; (ii) LICENSEE will have no rights under the license granted hereunder for any such deleted
U.S. or foreign patent applications or patent; (iii) RESEARCH FOUNDATION will obtain all rights in and to such deleted U.S. or foreign patent applications or patents and will be free to exploit and to assign or license any such deleted U.S. or
foreign patent applications or patents to third parties without effect on the amount of royalties or other payments due to RESEARCH FOUNDATION under Article III. 

  
 ARTICLE VII. INFRINGEMENT 
  

	 	7.1	The parties shall inform each other promptly, in writing, of any alleged infringement of the Patent Rights by a third party and any available evidence thereof. Neither party will
settle or compromise any claim or action in a manner that imposes any restrictions or obligations on the other party without such other party’s written consent, which shall not be unreasonably withheld. 

  

	 	7.2	During the term of this Agreement, LICENSEE shall have the first right, but shall not be obligated, to prosecute at its own expense any such infringements of the Patent Rights and,
in furtherance of such right, RESEARCH FOUNDATION hereby agrees that LICENSEE may join RESEARCH FOUNDATION as a party plaintiff in any such suit, without expense to RESEARCH FOUNDATION. Except as provided in Paragraph 7.4, the total cost of any such
infringement action commenced solely by LICENSEE shall be borne by LICENSEE, and LICENSEE shall keep any recovery or damages for past infringement derived therefrom. Subject to Paragraph 7.1, LICENSEE shall be entitled to settle any such litigation
by agreement, consent, judgment, voluntary dismissal or otherwise. 

  

	 	7.3	 If within six (6) months after having been notified of any alleged infringement, LICENSEE shall have been unsuccessful in persuading the alleged infringer to desist
and shall not have brought and shall not be diligently prosecuting an infringement action, or if LICENSEE shall notify RESEARCH FOUNDATION at any time prior thereto of its intention not to bring suit against any alleged infringer, then, and in those
events only, RESEARCH FOUNDATION shall have the right, but shall not be obligated, to prosecute at its own expense any infringement of the Patent Rights. The total cost of any such infringement action commenced solely by RESEARCH FOUNDATION will be
borne by 

  

 10 

	 	 
RESEARCH FOUNDATION, and RESEARCH FOUNDATION will keep any recovery or damages for past infringement derived therefrom. Subject to Paragraph 7.1, RESEARCH
FOUNDATION shall be entitled to settle any such litigation by agreement, consent, judgment, voluntary dismissal or otherwise. 

  

	 	7.4	In the event that LICENSEE shall undertake the enforcement and/or defense of the Patent Rights by litigation, LICENSEE may withhold up to fifty percent (50%) of the royalties
otherwise thereafter due RESEARCH FOUNDATION hereunder and apply the same toward reimbursement of up to fifty percent (50%) of its expenses, including reasonable attorneys’ fees, in connection therewith. Any recovery by LICENSEE of damages for
past infringement in any such suit shall be applied first in satisfaction of any unreimbursed expenses and legal fees of LICENSEE relating to the suit and next toward reimbursement of RESEARCH FOUNDATION for any royalties past due or withheld and
applied pursuant to this Article VII. LICENSEE shall keep the balance remaining from any such recovery. 

  

	 	7.5	In the event that a declaratory judgment action alleging invalidity or noninfringement of any of the Patent Rights shall be brought against RESEARCH FOUNDATION, LICENSEE at its
option, shall have the right, within thirty (30) days after commencement of such action, to intervene and take over the sole defense of the action at its own expense, except as provided in Paragraph 7.4. In such event, LICENSEE shall keep any
recovery or damages derived therefrom or from any counterclaims asserted therein. 

  

	 	7.6	In any infringement suit instituted, or declaratory action defended, by either party to enforce or protect the Patent Rights pursuant to this Agreement, the other party hereto
shall, at the request and expense of the party initiating or defending such suit, cooperate in all respects and, to the extent possible, have its employees testify when requested and make available relevant records, papers, information, samples,
specimens, and the like. 

  

	 	7.7	RESEARCH FOUNDATION warrants and represents that it owns all right, title and interest in and to the Patent Rights, has the lawful right to grant the license provided in this
Agreement and that it has not granted rights or licenses in derogation of this Agreement. RESEARCH FOUNDATION agrees that, during the term of this Agreement or any license granted hereunder, RESEARCH FOUNDATION shall not enter into any other
agreements that conflict with the rights or obligations provided hereunder, including any rights and obligations that survive termination of this Agreement. 

  
 ARTICLE VIII. PRODUCT LIABILITY; INDEMNIFICATION 
  

	 	8.1	 LICENSEE shall, at all times during the term of this Agreement and thereafter, indemnify, defend and hold RESEARCH FOUNDATION, the University and their trustees,
officers, employees and affiliates, harmless against all Losses 

  

 11 

	 	 
arising directly out of the death of, or injury to, any person or persons or damage to property resulting from the LICENSEE’s or any of its
sublicensee’s production, manufacture, sale, use (both experimental and consumer), lease, consumption or advertisement of the Licensed Product(s), except to the extent such Losses arise, directly or indirectly, out of the negligence or
misconduct of RESEARCH FOUNDATION, the University or any of their respective trustees, officers, employees, agents, representatives or affiliates. 

  

	 	8.2	LICENSEE shall procure and maintain liability insurance in amounts customary in the relevant industry in which LICENSEE commercially exploits Licensed Products.

  

	 	8.3	EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, RESEARCH FOUNDATION MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESSED OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND VALIDITY OF PATENT RIGHTS CLAIMS, ISSUED OR PENDING. NOTWITHSTANDING ANYTHING IN THIS ARTICLE VIII OR ELSEWHERE HEREIN TO THE CONTRARY, NEITHER PARTY
SHALL BE LIABLE FOR LOSS OF PROFITS, LOSS OF USE OR ANY OTHER INCIDENTAL, CONSEQUENTIAL, EXEMPLARY OR SPECIAL DAMAGES WHATSOEVER EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. 

  
 ARTICLE IX. EXPORT CONTROLS 
  

	 	9.1	It is understood that RESEARCH FOUNDATION is subject to United States laws and regulations controlling the export of technical data, computer software, laboratory prototypes and
other commodities (including the Arms Export Control Act, as amended and the Export Administration Act of 1979), and that its obligations hereunder are contingent on compliance with applicable United States export laws and regulations. The transfer
of certain technical data and commodities may require a license from the applicable agency of the United States Government and/or written assurances by LICENSEE that LICENSEE shall not export data or commodities to certain foreign countries without
prior approval of such agency. RESEARCH FOUNDATION neither represents that a license will not be required nor that, if required, it will be issued. 

  
 ARTICLE X. NON-USE OF NAMES 
  

	 	10.1	 LICENSEE shall not use the names of RESEARCH FOUNDATION, the University or of any of its employees, or any adaptation thereof, in any advertising, promotional or
sales literature without prior written consent obtained from RESEARCH FOUNDATION in each case, except that (i) LICENSEE may 

  

 12 

	 	 
state that it is licensed by RESEARCH FOUNDATION under one or more of the patents and/or applications comprising the Patent Rights and (ii) to the extent
required by law, regulation or court order. 

  

	 	10.2	RESEARCH FOUNDATION shall not use the name of LICENSEE or of any of its employees, or any adaptation thereof, in any advertising, promotional or sales literature without prior
written consent obtained from LICENSEE, except RESEARCH FOUNDATION to the extent required by law, regulation or court order. 

  
 ARTICLE XI. ASSIGNMENT 
  

	 	11.1	This Agreement is not assignable by either party without the consent of the other party except that (i) LICENSEE may assign this Agreement in connection with any merger,
consolidation, sale of all or substantially all of its assets or equity, or sale of a controlling interest in LICENSEE, and (ii) LICENSEE may assign this Agreement to another entity in which LICENSEE maintains at least a majority ownership interest.

  
 ARTICLE XII. DISPUTE RESOLUTION

  

	 	12.1	No party to this Agreement shall institute a proceeding in any court or administrative agency to resolve a Special Issue Dispute before that party has sought to resolve the Special
Issue Dispute through direct negotiation with the other party. If the dispute is not resolved within three weeks after a demand for direct negotiation, the parties shall attempt to resolve such Special Issue Dispute through mediation in Atlanta,
Georgia administered by the American Arbitration Association under its commercial mediation rules and procedures then in effect. The mediator shall be mutually acceptable to each of the parties. If the mediator is unable to facilitate a settlement
of the Special Issue Dispute within a reasonable period of time, as determined by the mediator, the mediator shall issue a written statement to the parties to that effect and the aggrieved party may then seek relief through final and binding
arbitration in Atlanta, Georgia administered by the American Arbitration Association under its commercial arbitration rules and procedures then in effect. All arbitration proceedings shall be before a board of three (3) arbitrators who are
knowledgeable about pharmaceutical development, and each party shall select one (1) arbitrator and the selected arbitrators shall select the third arbitrator. The arbitration proceedings shall be conducted in the English language and any award shall
be in United States dollars. The cost of the third arbitrator shall be divided equally between the parties and each party shall pay the costs of the arbitrator selected by it. The arbitrators shall have no power to add to, subtract from or modify
any of the terms or conditions of this Agreement, shall base any award on applicable laws and judicial precedent and include in such award a statement of the reasons upon which the award is based. 

  

 13 

	 	12.2	All applicable statutes of limitation and defenses based upon the passage of time shall be tolled while the procedures specified in this Article XII are pending. The parties shall
take such action, if any, required to effectuate such tolling 

  

	 	12.3	Each party is required to continue to perform its obligations under this Agreement pending final resolution of any Special Issue Dispute. 

  
 ARTICLE XIII. TERMINATION 
  

	 	13.1	RESEARCH FOUNDATION shall have the right to terminate this Agreement at any time upon notice to LICENSEE in the event either (a) If LICENSEE shall file in any court, pursuant to any
statute either of the United States or any state, a petition in bankruptcy or insolvency or for the appointment of a receiver or trustee of all or substantially all of LICENSEE’s property, or if LICENSEE shall make an assignment for the benefit
of creditors, or if LICENSEE shall commit any other affirmative act of insolvency; or (b) if there shall be filed against LICENSEE in any court, pursuant to any statute either of the United States or any state, an involuntary petition in bankruptcy
or insolvency or for reorganization, or if there shall be involuntarily appointed a receiver or trustee of all or substantially all of LICENSEE’s property, in either case unless such petition, assignment, affirmative act or appointment is set
aside or withdrawn or ceases to be in effect within one hundred twenty (120) days after the date of the filing. 

  

	 	13.2	If LICENSEE fails to pay RESEARCH FOUNDATION royalties due and payable hereunder, RESEARCH FOUNDATION shall have the right to terminate this Agreement on thirty (30) days notice,
unless LICENSEE shall pay RESEARCH FOUNDATION within the thirty (30) day period, all such royalties and interest due and payable. Upon the expiration of the thirty (30) day period and unless such termination notice shall have been withdrawn or
canceled during the 30-day period, if LICENSEE shall not have paid all such royalties and interest due and payable, the rights, privileges and license granted hereunder shall terminate. For the avoidance of doubt, failure by LICENSEE to pay the
Annual Rights Fee to RESEARCH FOUNDATION shall not give rise to a right of termination of this Agreement but, if such failure continues for ten (10) business days following receipt by LICENSEE of written notice thereof from RESEARCH FOUNDATION, the
rights granted to LICENSEE under Paragraph 2.1(b), but no other provision of this Agreement, shall terminate. 

  

	 	13.3	 Upon any material breach or default of this Agreement by LICENSEE, other than those occurrences set out in Paragraphs 12.1, 13.1 and 13.2 hereinabove, which shall
always take precedence in that order over any material breach or default referred to in this Paragraph 13.3, RESEARCH FOUNDATION shall have the right to terminate this Agreement and the rights, privileges and license granted hereunder on thirty (30)
days notice to LICENSEE. Such termination shall become effective unless (i) the termination notice shall have been withdrawn or canceled during the 30-day period, (ii) LICENSEE shall have cured such breach 

  

 14 

	 	 
or default prior to the expiration of the thirty (30) day period or (iii) at the expiration of such thirty (30) day period, LICENSEE can demonstrate to
RESEARCH FOUNDATION’s reasonable satisfaction that it is working diligently and in good faith to cure such breach or default, LICENSEE shall have an additional cure period, not to exceed ninety (90) days. 

  

	 	13.4	LICENSEE shall have the right to terminate this Agreement at any time upon written notice to RESEARCH FOUNDATION and payment of all amounts due RESEARCH FOUNDATION through the
effective date of the termination. 

  

	 	13.5	Upon termination of this Agreement for any reason, nothing herein shall be construed to release either party from any obligation that matured prior to the effective date of such
termination. LICENSEE may, however, after the effective date of such termination, sell all Licensed Products, and complete Licensed Products in the process of manufacture at the time of such termination and sell the same; provided that LICENSEE
shall pay to RESEARCH FOUNDATION the royalties thereon as required by Article IV and shall submit the reports required by Article V. 

  

	 	13.6	If not earlier terminated, this Agreement shall terminate on the date of expiration of the last-to-expire Valid Claim included in the Patent Rights, and LICENSEE shall thereupon
have the rights and licenses set forth in Paragraphs 2.1(a) and 2.4 without any further obligation to RESEARCH FOUNDATION hereunder, which rights and licenses shall survive such termination. 

  
 ARTICLE XIV. PAYMENTS, NOTICES AND OTHER COMMUNICATIONS

  

	 	14.1	Any payment, notice or other communication pursuant to this Agreement shall be given in writing and shall be deemed received on the date of personal delivery, one day after deposit
with a nationally recognized overnight delivery service with charges prepaid or two days after mailing if sent to such party by Certified First Class Mail, Postage Prepaid, addressed to it at its address below or as it shall designate by written
notice given to the other party. In the case of: 

  

			
	 RESEARCH FOUNDATION:
	 	LICENSEE:
		
	 USF Research Foundation, Inc.
 Attention: Business Manager
 USF Box 30445
 Tampa, Florida 33620-3044
	 	 Targacept, Inc.
 200 East First Street, Suite 300
 Winston-Salem, NC 27101-4165
 Attn:
Vice President, Business
 and Commercial Development

  
 ARTICLE XV.
CONFIDENTIALITY 
  

	 	15.1	 RESEARCH FOUNDATION and LICENSEE recognize that each party may need to provide certain of its Confidential Information from time to time to the 

  

 15 

	 	 
other party pursuant to this Agreement. The parties expressly agree that Confidential Information does not exist in written form only, but may also include
oral, printed, magnetic, electronic, computer-generated or other communications and information learned by inspection of tangible objects. RESEARCH FOUNDATION and LICENSEE agree to hold in confidence, in accordance with this Article XV, any
Confidential Information disclosed by one party to the other under this Agreement. For the purpose hereof, “hold in confidence” means that RESEARCH FOUNDATION and LICENSEE will not disclose the Information of the other party to a third
party and will protect the Information provided to it by the other party in the same manner in which it protects its own confidential information of similar nature, but will in no event use less than reasonable care. The Confidential Information
will remain the property of the party disclosing it. 

  

	 	15.2	The obligations of the receiving party to maintain confidentiality under this Agreement will survive its termination for ten (10) years thereafter. 

  

	 	15.3	Confidential Information does not include information that: 

  

	 	(i)	is already known to the receiving party prior to the Effective Date; 

  

	 	(ii)	is or becomes publicly known through no fault of receiving party; 

  

	 	(iii)	has been or is disclosed to the receiving party by a third party that the receiving party does not know (and is not reckless in not knowing) to be under an obligation of confidence
or secrecy to the disclosing party at the time of disclosure; 

  

	 	(iv)	is developed by employees or consultants of the receiving party who had no knowledge of the Confidential Information; 

  

	 	(v)	is approved for release by written authorization of the disclosing party; or 

  

	 	(vi)	is required to be disclosed by law, provided the receiving party promptly notifies the disclosing party in writing prior to such disclosure, considers in good faith any comments or
suggested changes to such disclosure from the disclosing party and gives the disclosing party a reasonable opportunity to prevent or limit the disclosure. 

  

	 	15.4	 The parties further agree that LICENSEE shall have the right to disclose Confidential Information to: (i) potential sublicensees, assignees or subcontractors for
the purpose of allowing any such potential sublicensee, assignee or subcontractor to evaluate whether to enter into a sublicense, assignment or subcontract; (ii) potential sublicensees, assignees or subcontractors, for the purpose of allowing such
sublicensee, assignee or subcontractor, as the case may be, to make, have made, use, research, develop, have developed, lease, market, offer to sell, sell, have sold, distribute, improve, import and export Licensed 

  

 16 

	 	 
Products; (iii) a purchaser or potential purchaser of all or substantially all of LICENSEE’s assets, or a party with which LICENSEE is then in
discussions regarding a potential business combination; and (iv) an investor or lender, or prospective investor or lender, in or to LICENSEE; provided, however, that, except in the case of an actual or prospective investor or lender, LICENSEE shall
obtain a confidentiality agreement (substantially similar in content to the provisions of this Paragraph 15) from the party to which such disclosures are to be made prior to any such disclosure. 

  
 ARTICLE XVI. MISCELLANEOUS PROVISIONS 
  

	 	16.1	This Agreement shall be construed, governed, interpreted and applied in accordance with the laws of the State of Florida, U.S.A., except that questions affecting the construction
and effect of any patent shall be determined by the law of the country in which the patent was granted. 

  

	 	16.2	The parties hereto acknowledge that this Agreement sets forth the entire Agreement and understanding, and supersedes and makes null and void any and all prior understandings and
agreements, of the parties hereto as to the subject matter hereof (including without limitation the Original Agreement and the letter between the RESEARCH FOUNDATION and LICENSEE dated April 29, 2003), and shall not be subject to any change or
modification except by the execution of a written instrument subscribed to by the parties hereto. 

  

	 	16.3	The provisions of this Agreement are severable, and in the event that any provisions of this Agreement shall be determined to be invalid or unenforceable under any controlling body
of the law, such invalidity or unenforceability shall not in any way affect the validity or enforceability of the remaining provisions hereof. 

  

	 	16.4	LICENSEE agrees to mark the Licensed Products sold in the United States (or their respective packagings or packaging inserts) with all applicable United States patent numbers. All
Licensed Products shipped to or sold in other countries (or their respective packagings or packaging inserts) shall be marked in such a manner as to conform with the patent laws and practice of the country of manufacture or sale.

  

	 	16.5	The failure of either party to assert a right hereunder or to insist upon compliance with any term or condition of this Agreement shall not constitute a waiver of that right or
excuse a similar subsequent failure to perform any such term or condition by the other party. 

  

	 	16.6	This Agreement will be binding and inure to the benefit of the parties hereto and their respective affiliates and permitted successors and assigns. 

  

	 	16.7	 The representations, warranties, covenants, and undertakings contained in this Agreement are for the sole benefit of the parties hereto and their permitted 

  

 17 

	 	 
successors and assigns and such representations, warranties, covenants, and undertakings will not be construed as conferring any rights on any other party,
other than the University. 

  

	 	16.8	Nothing contained in this Agreement will be deemed to place the parties hereto in a partnership, joint venture or agency relationship and neither party will have the right or
authority to obligate or bind the other party in any manner. 

  

	 	16.9	This Agreement may be executed in two counterparts, each of which will be deemed an original and both of which, taken together, shall constitute one and the same instrument.

  
 [remainder of page intentionally left blank]

  

 18 

 IN WITNESS WHEREOF, the parties have hereunto set their hands and seals and fully executed this Agreement the day and
year set forth below: 
  

									
	 UNIVERSITY OF SOUTH FLORIDA
 RESEARCH FOUNDATION, INC.
	 	 	 	 TARGACEPT, INC.

					
	 By
	 	 /s/ C P Carlucci
	 	 	 	 By
	 	 /s/ J. Donald deBethizy

	 	 	
	 	 	 	 	 	

	 Name
	 	 Carl P. Carlucci
	 	 	 	 Name
	 	 J. Donald deBethizy

	 Title
	 	 President
	 	 	 	 Title
	 	 President & CEO

  
 Acknowledged and Agreed to:

  

			
	 University of South Florida

		
	 By
	 	 /s/ Priscilla Pope

	 	 	

	 Name
	 	 Priscilla Pope

	 Title
	 	 Associate Vice President

  

 19 

 Appendix A 
  

Patent Applications 
  

					
	 No.

	 	 Date Filed

	 	 
	 60/055,234
	 	11-Aug-1997	 	 
			
	 08/935,364
	 	22-Sep-1997	 	 
			
	 US97/20689
	 	07-Nov-1997	 	 
	 US98/16634
	 	11-Aug-1998	 	 
			
	 09/198,882
	 	23-Nov-1998	 	 
			
	 09/461,087
	 	14-Dec-1999	 	 
			
	 09/526,403
	 	15-Mar-2000	 	 
			
	 09/398,720
	 	20-Sep-1999	 	 
			
	 60/112,534
	 	16-Dec-1998	 	 
			
	 US99/30137
	 	16-Dec-1999	 	 
	 US99/30153
	 	16-Dec-1999	 	 
			
	 09/882,934
	 	15-Jun-2001	 	 
	 09/882,935
	 	15-Jun-2001	 	 
			
	 10/441,947
	 	19-May-2003	 	 
			
	 Issued Patents
  
	 	 	 	 
	 No.

	 	 Date Filed

	 	 
	 6,034,079
	 	March 7, 2000	 	 

  

 20 

 Appendix B 
  

[********] 
  
 [Entire page has been redacted.] 
  

 21

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