Document:

ex_205612.htm

Exhibit 10.1

 

PRE-INCORPORATION AND SHAREHOLDERS AGREEMENT

 

 

 

TABLE OF CONTENTS

 

	 	 	 	
			Page

			
	
			1.

				
			Definitions

				
			1

			
	 	
			1.1

				
			Affected Party

				
			1

			
	 	
			1.2

				
			Affiliate

				
			1

			
	 	
			1.3

				
			Arbitral Tribunal

				
			1

			
	 	
			1.4

				
			Arredondo Shares

				
			1

			
	 	
			1.5

				
			Award

				
			2

			
	 	
			1.6

				
			Board

				
			2

			
	 	
			1.7

				
			Business Day

				
			2

			
	 	
			1.8

				
			Business Plan

				
			2

			
	 	
			1.9

				
			Company

				
			2

			
	 	
			1.10

				
			Company Bylaws

				
			2

			
	 	
			1.11

				
			Confidential Information

				
			2

			
	 	
			1.12

				
			Contracts

				
			2

			
	 	
			1.13

				
			Control

				
			2

			
	 	
			1.14

				
			Director

				
			2

			
	 	
			1.15

				
			Disclosing Party

				
			2

			
	 	
			1.16

				
			Dispute

				
			2

			
	 	
			1.17

				
			Disputing Person

				
			2

			
	 	
			1.18

				
			Fundamental Decisions

				
			2

			
	 	
			1.19

				
			ICC Rules

				
			2

			
	 	
			1.20

				
			Independent Contractor Service Agreement

				
			3

			
	 	
			1.21

				
			Initial Shares

				
			3

			
	 	
			1.22

				
			INVO Purchase Order

				
			3

			
	 	
			1.23

				
			INVO Shares

				
			3

			
	 	
			1.24

				
			Mexico

				
			3

			
	 	
			1.25

				
			Notice of Exercise

				
			3

			
	 	
			1.26

				
			Offer

				
			3

			

 

i

 

 

	 	
			1.27

				
			Offeror

				
			3

			
	 	
			1.28

				
			Other Shareholder(s)

				
			3

			
	 	
			1.29

				
			Person

				
			3

			
	 	
			1.30

				
			Pesos

				
			3

			
	 	
			1.31

				
			Prime Rate

				
			3

			
	 	
			1.32

				
			Purpose

				
			3

			
	 	
			1.33

				
			Ramirez Shares

				
			3

			
	 	
			1.34

				
			Recipient

				
			3

			
	 	
			1.35

				
			Request for Arbitration

				
			3

			
	 	
			1.36

				
			Series A Shares

				
			3

			
	 	
			1.37

				
			Series B Shares

				
			4

			
	 	
			1.38

				
			Series C Shares

				
			4

			
	 	
			1.39

				
			Shareholder

				
			4

			
	 	
			1.40

				
			Shareholder’s Notice

				
			4

			
	 	
			1.41

				
			Shares

				
			4

			
	 	
			1.42

				
			Subsidiary

				
			4

			
	 	
			1.43

				
			Territory

				
			4

			
	 	
			1.44

				
			Transfer

				
			4

			
	 	
			1.45

				
			Unaffected Party

				
			4

			
	
			2.

				
			Formation of Company

				
			4

			
	 	
			2.1

				
			Execution of Shareholders Agreement

				
			4

			
	
			3.

				
			Representations and Warranties of the Shareholders

				
			4

			
	 	
			3.1

				
			Representations and Warranties of INVO

				
			4

			
	 	
			3.2

				
			Representations and Warranties of Arredondo

				
			5

			
	 	
			3.3

				
			Representations and Warranties of Ramirez

				
			6

			
	
			4.

				
			Company Formation and Operations

				
			6

			
	 	
			4.1

				
			Formation of Company

				
			6

			
	 	
			4.2

				
			Capital Stock; Series A Shares, Series B Shares, and Series C Shares

				
			7

			
	 	
			4.3

				
			Organizational Filings

				
			7

			
	 	
			4.4

				
			National Foreign Investment Registry

				
			8

			
	 	
			4.5

				
			Accountants and/or Auditors

				
			8

			
	 	
			4.6

				
			Financial Statements and Other Information

				
			8

			
	 	
			4.7

				
			Inspection of Property

				
			9

			

 

ii

 

 

	 	
			4.8

				
			Insurance

				
			9

			
	 	
			4.9

				
			Business Plan, Budgets

				
			9

			
	
			5.

				
			The Territory, Non-Competition and Other Covenants by the Shareholders

				
			10

			
	 	
			5.1

				
			Territory

				
			10

			
	 	
			5.2

				
			Exclusivity

				
			10

			
	
			6.

				
			Term; Termination and Dissolution

				
			10

			
	 	
			6.1

				
			Term

				
			10

			
	 	
			6.2

				
			Termination of Agreement

				
			10

			
	 	
			6.3

				
			Survival of Provisions

				
			10

			
	 	
			6.4

				
			Winding Up and Dissolution

				
			10

			
	
			7.

				
			Transfer and Sale

				
			10

			
	 	
			7.1

				
			Transfers

				
			10

			
	
			8.

				
			Right of First Refusal on Sale of Shares

				
			11

			
	 	
			8.1

				
			Right of First Refusal

				
			11

			
	 	
			8.2

				
			Expiration of Option

				
			11

			
	 	
			8.3

				
			Shareholder’s Notice

				
			11

			
	
			9.

				
			Corporate Governance Provisions

				
			12

			
	 	
			9.1

				
			Governance

				
			12

			
	 	
			9.2

				
			Management

				
			13

			
	 	
			9.3

				
			Inconsistent Terms

				
			13

			
	
			10.

				
			Business Plan: Financing of Company

				
			13

			
	 	
			10.1

				
			Business Plan

				
			13

			
	 	
			10.2

				
			Capital Funding

				
			13

			
	
			11.

				
			Anti-Corruption Policies

				
			13

			
	 	
			11.1

				
			Anti-Corruption Principles

				
			14

			
	 	
			11.2

				
			US Foreign Corrupt Practices

				
			14

			
	 	
			11.3

				
			Corrective Actions

				
			14

			
	
			12.

				
			Arbitration

				
			14

			
	 	
			12.1

				
			Exclusive Method for Resolution of Disputes

				
			14

			
	 	
			12.2

				
			Applicable Rules

				
			14

			
	 	
			12.3

				
			Procedures for Initiation of Arbitration

				
			15

			
	 	
			12.4

				
			Venue, Language

				
			15

			
	 	
			12.5

				
			Selection of Arbitrators

				
			15

			

 

iii

 

 

	 	
			12.6

				
			Award/Confirmation, Vacation and Enforcement

				
			15

			
	
			13.

				
			Confidentiality

				
			15

			
	 	
			13.1

				
			Confidential Information

				
			15

			
	 	
			13.2

				
			Restrictions on Disclosure and Use

				
			16

			
	 	
			13.3

				
			Exceptions

				
			16

			
	 	
			13.4

				
			Required Disclosures

				
			16

			
	 	
			13.5

				
			No Rights Granted

				
			17

			
	 	
			13.6

				
			Enforcement by Government Action In Mexico

				
			17

			
	
			14.

				
			Notices

				 	
			17

			
	
			15.

				
			Successors and Assigns

				
			18

			
	
			16.

				
			Governing Law

				
			18

			
	
			17.

				
			Interpretation

				
			18

			
	
			18.

				
			Waiver

				
			19

			
	
			19.

				
			Survival of Representations and Warranties

				
			19

			
	
			20.

				
			Amendment

				
			19

			
	
			21.

				
			Counterparts

				
			19

			
	
			22.

				
			Specific Performance

				
			19

			

 

iv

 

 

PRE-INCORPORATION AND SHAREHOLDERS AGREEMENT

 

THIS SHAREHOLDERS AGREEMENT is made and entered into as of the 9/21/2020 (“Shareholders Agreement”) by and between INVO Centers, LLC, a limited liability company organized under the laws of the State of Delaware, U.S.A., whose principal office is located at 5582 Broadcast Court Sarasota, Florida, U.S.A. (“INVO”), Francisco Arredondo, M.D. PLLC a professional limited liability company organized under the laws of Texas whose principal office as located at 4 Chipping Glen, San Antonio, Texas, 78257 (“Arredondo”) and Ramirez a limited liability company organized under the laws of Texas whose principal office as located at 2000 South Main Street, Suite 585, McAllen, Texas, 78503 (“Ramirez”), together with INVO and Arredondo, the “Shareholders”).

 

WHEREAS, INVO, Arredondo and Ramirez intend to commercialize the INVO IVC procedures and offer related medical treatments and services in Mexico (the “Business”);

 

WHEREAS, INVO, Arredondo and Ramirez intend to develop the Business and desire to become shareholders in a Mexican company set up as a sociedad anonima de capital variable (“Company”), to be incorporated in Mexico pursuant to the Mexican General Corporations Code (the “Code”) and to be named Positib Fertility, S.A. de C.V., and to have its corporate domicile in ‘‘‘‘‘‘‘‘‘‘‘‘‘ Monterrey, Nuevo Leon, México;

 

WHEREAS, this Shareholders Agreement will also set forth the rights and obligations of the Shareholders with respect to Company, certain agreements as to the management of Company and the transfer of capital stock of the Company; and

 

WHEREAS, the Company will be incorporated, set up and organized pursuant to the terms of this Shareholders Agreement.

 

NOW, THEREFORE, the parties hereto agree as follows:

 

1.     Definitions.

 

Except as set forth in this Section 1 and as otherwise indicated herein, capitalized terms used herein without definition shall have the meaning set forth in this Shareholders Agreement. The following terms when used in this Shareholders Agreement with initial capital letters, shall have the respective meanings set forth in this Section 1.

 

1.1     Affected Party. The term “Affected Party” shall mean INVO, Arredondo or Ramirez, and their respective permitted successors and assigns, if such party is a party to or affected by a Transfer of Shares.

 

1.2     Affiliate. The term “Affiliate” shall mean any other Person directly or indirectly Controlling, Controlled by, or under common Control with the Person to which such term applies.

 

1.3     Arbitral Tribunal. The term “Arbitral Tribunal” shall have the meaning set forth in Section 12.5.

 

1.4     Arredondo Shares. The term “Arredondo Shares” shall mean Series B Shares held by Arredondo.

 

1

 

 

1.5     Award. The term “Award” shall have the meaning set forth in Section 12.6.

 

1.6     Board. The term “Board” shall have the meaning set forth in Section 9.1.

 

1.7     Business Day. The term “Business Day” shall mean any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of Mexico or the U.S.A., or is a day on which banking institutions in Mexico or the U.S.A, are authorized or required to be closed by law or other governmental action.

 

1.8     Business Plan. The term “Business Plan” shall mean the business plan relating to Company’s business attached hereto as Exhibit B. which shall be incorporated herein by this reference.

 

1.9     Company. The term “Company” shall have the meaning set forth in Section 4.

 

1.10   Company Bylaws. The term “Company Bylaws” shall mean the charter document (estatutos sociales) of Company, substantially in the form of Exhibit A attached hereto and incorporated herein by this reference.

 

1.11     Confidential Information. The term “Confidential Information” shall have the meaning set forth in Section 13.1.

 

1.12     Contracts. The term “Contracts” shall mean the Independent Contractor Agreement and the Purchase Orders used by the Company.

 

1.13     Control. The terms “Control” and its correlatives “Controlling” and “Controlled,” when used by themselves and not as part of a defined term, mean with respect to an entity the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies, or the power to approve major decisions, of such entity, whether through the ownership of voting interests or by contract or otherwise including the possession of direct or indirect equity or beneficial interests in the profits or voting control of any entity.

 

1.14     Director. The term “Director” shall have the meaning set forth in Section 9.1.

 

1.15     Disclosing Party. The term “Disclosing Party” shall have the meaning set forth in Section 13.1.

 

1.16     Dispute. The term “Dispute” shall have the meaning set forth in Section 12.1.

 

1.17     Disputing Person. The term “Disputing Person” shall have the meaning set forth in Section 12.3

 

1.18     Fundamental Decisions. The term “Fundamental Decisions” shall have the meaning set forth in Annex I.

 

1.19     ICC Rules. The term “ICC Rules” shall have the meaning set forth in Section 12.2.

 

2

 

 

1.20     Independent Contractor Service Agreement. The term “Independent Contractor Agreement” shall mean the agreement to be entered into between Arredondo and Company for the personal consulting services to be provided substantially in the form of Exhibit D attached hereto and incorporated herein by this reference.

 

1.21     Initial Shares. The terms Initial Shares shall mean the shares of the Company as described in Section 4.2.

 

1.22     INVO Purchase Order. The term “INVO Purchase Order” shall mean the purchase orders used between INVO Bioscience Inc. and Company for the supply of the INVO IVC products, material, technical assistance and training substantially in the form of Exhibit C attached hereto and incorporated herein by this reference.

 

1.23     INVO Shares. The term “INVO Shares” shall mean Series A Shares held by INVO.

 

1.24     Mexico. The term “Mexico” shall mean the United Mexican States.

 

1.25     Notice of Exercise. The term “Notice of Exercise” shall have the meaning set forth in Section 8.1.

 

1.26     Offer. The term “Offer” shall have the meaning set forth in Section 8.1.

 

1.27     Offeror. The term “Offeror” shall have the meaning set forth in Section 8.1.

 

1.28     Other Shareholder(s). The term “Other Shareholders” shall have the meaning set forth in Section 8.1.

 

1.29     Person. The term “Person” shall mean a natural person, corporation, limited liability company, variable stock company joint venture, partnership or any other entity.

 

1.30     Pesos. The term “Pesos” shall mean the legal currency of Mexico.

 

1.31     Prime Rate. The term “Prime Rate” shall mean the prime rate of interest as reported in the “Money Rates” column or similar listing of The Wall Street Journal, in effect from time to time (which rate shall be adjusted on the effective date of each change in such prime rate).

 

1.32     Purpose. The term “Purpose” shall have the meaning set forth in Section 13.1.

 

1.33     Ramirez Shares. The term “Ramirez Shares” shall mean Series C Shares held by Ramirez.

 

1.34     Recipient. The term “Recipient” shall have the meaning set forth in Section 13.1.

 

1.35     Request for Arbitration. The term “Request for Arbitration” shall have the meaning set forth in Section 12.3.

 

1.36     Series A Shares. The term “Series A Shares” shall mean Company’s issued and outstanding Series A shares. Each Series A share shall have a par value of Pesos $1,000.

 

3

 

 

1.37     Series B Shares. The term “Series B Shares” shall mean Company’s issued and outstanding Series B shares. Each Series B share shall have a par value of Pesos $1,000.

 

1.38     Series C Shares. The term “Series C Shares” shall mean Company’s issued and outstanding Series C shares. Each Series C share shall have a par value of Pesos $1,000.

 

1.39     Shareholder. The term “Shareholder” shall have the meaning set forth in the heading of this Shareholders Agreement.

 

1.40     Shareholder’s Notice. The term “Shareholder’s Notice” shall have the meaning set forth in Section 8.1.

 

1.41     Shares. The term “Shares” shall mean, without duplication (a) all Series A Shares, Series B Shares and Shares C at any time issued to or purchased or otherwise acquired and held by the Shareholders

 

1.42     Subsidiary. The term “Subsidiary” of any person shall mean any other Person directly or indirectly Controlled by such Person at any time during the term of this Shareholders Agreement and for so long as such Control continues.

 

1.43     Territory. The term “Territory” shall have the meaning set forth in Section 5.1.

 

1.44     Transfer. The term “Transfer” shall mean any transfer, sale, pledge, hypothecation, change of control of a shareholder or other disposition, whether voluntary or by operation of law. For purposes of this agreement a change of control shall occur if more than 50% of the stock of a Shareholder is transferred to a Person.

 

1.45     Unaffected Party. The term “Unaffected Party” shall mean INVO, Arredondo or Ramirez, and their respective successors and assigns, if such party is not a party to or affected by a Transfer.

 

2.     Formation of Company.

 

2.1     Execution of Shareholders Agreement.

 

(a)     Execution of Shareholders Agreement. The execution and delivery of this Shareholders Agreement will take place on or before 10/1/2010. Thereafter, within three weeks, the Shareholders agree to proceed with the formation of the Company pursuant to Section 4. The Company will be incorporated in accordance with the Company Bylaws and Arredondo, Ramirez and INVO shall cause the Company to execute the Independent Contractor Agreement. The Company will acquire exclusively from INVO Bioscience Inc. the INVOcell product to be used by the Company to render its services at cost plus any incurred shipping, customs and related fees. The INVO Purchase Orders and the Independent Contractor Agreement will be substantially in the form attached hereto as Exhibit C and Exhibit D, respectively.

 

3.     Representations and Warranties of the Shareholders.

 

3.1     Representations and Warranties of INVO. As a material inducement to INVO entering into this Shareholders Agreement, INVO hereby represents and warrants as follows:

 

(a)     Organization and Corporate Power. INVO is a limited liability company duly organized and validly existing under the laws of the State of Delaware, U.S.A. INVO has all requisite corporate power and authority and all material licenses, permits and authorizations necessary to own and operate its properties, to carry on its businesses as now conducted and presently proposed to be conducted and to carry out the transactions contemplated by this Shareholders Agreement.

 

(b)     Authorization; No Breach. The execution, delivery and performance of this Shareholders Agreement and of any of the Contracts required to be executed by INVO and the transactions contemplated hereby and thereby have been duly authorized by INVO, and such documents constitute valid and binding obligations of INVO, enforceable in accordance with their respective terms, subject as to enforcement to bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights.

 

(c)     Governmental Consent. No license, permit, consent, approval or authorization of, or filing with, any governmental authority is required in connection with the execution, delivery and performance by INVO of this Shareholders Agreement or any of the Contracts required to be executed by INVO, or the consummation by INVO of any other transactions contemplated hereby or thereby, except as expressly contemplated herein or in the exhibits hereto.

 

(d)     Absence of Certain Agreements. INVO (i) is not a party to any agreement (other than this Shareholders Agreement), whereby any of the INVO Shares or any interest therein held by it on the date hereof is to be offered, sold, assigned, pledged, hypothecated or otherwise transferred, and (ii) it has no present intention of transferring any INVO Shares or any interest therein to any Person.

 

4

 

 

3.2     Representations and Warranties of Arredondo. As a material inducement to enter into this Shareholders Agreement, Arredondo hereby represents and warrants as follows:

 

(a)     Organization and Corporate Power. Arredondo is a professional limited liability company, duly organized, validly existing and in good standing under the laws of the State of Texas. Arredondo has all requisite corporate power and authority and all material licenses, permits and authorizations necessary to own and operate its properties, to carry on its businesses as now conducted and presently proposed to be conducted and to carry out the transactions contemplated by this Shareholders Agreement.

 

(b)     Authorization; No Breach. The execution, delivery and performance of this Shareholders agreement and of any of the Contracts required to be executed by Arredondo and the transactions contemplated hereby and thereby have been duly authorized by Arredondo, and such documents constitute valid and binding obligations of Arredondo, enforceable in accordance with their respective terms, subject as to enforcement to bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights.

 

(c)     Governmental Consent. No license, permit, consent, approval or authorization of, or filing with, any governmental authority is required in connection with the execution, delivery and performance by Arredondo of this Shareholders Agreement or any of the Contracts required to be executed by Arredondo, or the consummation by Arredondo of any other transactions contemplated hereby or thereby, except as expressly contemplated herein or in the exhibits hereto.

 

(d)     Absence of Certain Agreements. Arredondo (i) is not a party to any agreement (other than this Shareholders Agreement), whereby any of the Arredondo Shares or any interest therein held by it on the date hereof is to be offered, sold, assigned, pledged, hypothecated or otherwise transferred, and (ii) it has no present intention of transferring any Arredondo Shares or any interest therein to any Person.

 

5

 

 

3.3     Representations and Warranties of Ramirez. As a material inducement to enter into this Shareholders Agreement, Ramirez hereby represents and warrants as follows.

 

(a)     Organization and Corporate Power. Ramirez is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of Texas. Ramirez has all requisite corporate power and authority and all material licenses, permits and authorizations necessary to own and operate its properties, to carry on its businesses as now conducted and presently proposed to be conducted and to carry out the transactions contemplated by this Shareholders Agreement.

 

(b)     Authorization; No Breach. The execution, delivery and performance of this Shareholders agreement and of any of the Contracts required to be executed by Ramirez and the transactions contemplated hereby and thereby have been duly authorized by Ramirez, and such documents constitute valid and binding obligations of Ramirez, enforceable in accordance with their respective terms, subject as to enforcement to bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights.

 

(c)     Governmental Consent. No license, permit, consent, approval or authorization of, or filing with, any governmental authority is required in connection with the execution, delivery and performance by Ramirez of this Shareholders Agreement or any of the Contracts required to be executed by Ramirez, or the consummation by Ramirez of any other transactions contemplated hereby or thereby, except as expressly contemplated herein or in the exhibits hereto.

 

(d)     Absence of Certain Agreements. Ramirez (i) is not a party to any agreement (other than this Shareholders Agreement), whereby any of the Ramirez Shares or any interest therein held by it on the date hereof is to be offered, sold, assigned, pledged, hypothecated or otherwise transferred, and (ii) it has no present intention of transferring any Arredondo Shares or any interest therein to any Person.

 

4.     Company Formation and Operations.

 

The Shareholders will incorporate the Company as follows:

 

4.1     Formation of Company. On or before 10/1/2020 pursuant to the terms of this Agreement, the Shareholders will complete the formation of the Company before a Mexican Notary Public in Monterrey, Mexico, by executing the public deed containing the articles of incorporation and bylaws of the Company substantially in the form of the draft Company Bylaws attached hereto as Exhibit A. The main purpose of Company will be to establish a fertility center delivering IVC (INVOcell) procedures to a patient population and the Company will have all requisite corporate power and authority necessary to own and operate, and to carry on the Business, as proposed and provided in the Business Plan. The Shareholders acknowledge that subsequent to the execution of the said notarial deed before the notary public, such notary public will cause such deed to be recorded in the Public Registry of Commerce in Monterrey, Nuevo Leon, Mexico. Each of the Shareholders agrees to comply with the Company Bylaws, as they may be amended from time to time, in accordance with the terms of such Company Bylaws.

 

6

 

 

4.2     Capital Stock; Series A Shares, Series B Shares, and Series C Shares.

 

(a)     Capital Stock. The Shareholders agree that the capital stock of Company shall be variable, with a minimum fixed capital of Pesos $99,000, represented by 33 shares of Series A Shares, with a par value of Pesos $1,000 each, 33 shares of Series B Shares, with a par value of Pesos $1,000 each, and 33 shares of Series C, with a par value of Pesos $1,000 with a and unlimited variable capital.

 

(b)     Subscription of Series A Shares, Series B Shares and Series C Shares. The Company Bylaws will include the Initial Shares and capital stock structure as provide in Section 4.2(a). The Shareholders agree to contribute capital and increase the variable capital stock of the Company in the amounts as provided in the Business Plan. Any capital increase and the respective issuance of shares will be done by the Shareholders equally and each will receive Shares to reflect such capital increase. Unless Arredondo or Ramirez do not contribute to the Company their respective share of the capital increase pursuant to the Initial Business Plan, Arredondo Shares and Ramirez Shares cannot be diluted or represent at any time less than 33% of the capital of the Company, unless otherwise approved in advance and writing by Arredondo and Ramirez respectively.

 

(c)     Share Certificates. The share certificates to be issued and delivered to INVO, Arredondo and Ramirez shall be signed by two (2) members of the Board of Directors as provided in the Company Bylaws.

 

(d)     Each certificate evidencing Shares and each certificate issued in exchange for or upon the transfer of any Shares shall satisfy all the requirements set forth in the Mexican Companies Law (Ley General de Sociedades Mercantiles). The temporary and final share certificates shall bear the following legend:

 

“THE TRANSFER, DISPOSITION OR ENCUMBRANCE OF THE SHARES OF THE CORPORATION IS RESTRICTED BY THE TERMS OF THE BYLAWS OF THE CORPORATION. ANY TRANSFER, DISPOSITION OR ENCUMBRANCE MADE IN VIOLATION OF SUCH TERMS SHALL BE NULL AND VOID.”

 

(e)     Status of Shares Upon Payment. The Shareholders agree that upon payment for the Shares in accordance with the terms hereof all of the Shares to be issued pursuant hereto will be validly issued, fully paid and non-assessable.

 

4.3     Organizational Filings. The Company shall make, execute and file all documents, certificates, agreements and other instruments as may be reasonably necessary or appropriate for the conduct of the business of Company and for the qualification or licensing of Company to do business in the Territory where such qualification or licensing is required in connection with the purposes of Company as set forth in the Company Bylaws, or in connection with the ownership or possession of their respective assets or properties, or conduct of the Business.

 

7

 

 

4.4     National Foreign Investment Registry. Then Company shall make, execute and file all applications, documents, certificates, and other instruments as may be reasonably necessary or appropriate to register Company with the Mexican National Foreign Investment Registry (Registro National de Inversiones Extranjeras), in accordance with the Mexican Law of Foreign Investment (Ley de Inversion Extranjera) and to file and obtain, or cause to be filed or obtained, any permits, consents, approvals, authorizations, qualifications, registrations and/or periodic reports or filings as may be reasonably necessary to comply with the Mexican Foreign Investment Law or other applicable law in Mexico with respect to the ownership by INVO, Arredondo and Ramirez

 

4.5     Accountants and/or Auditors. The Company shall hire the accounting firm in Mexico for general accounting and tax consulting and if required the Company shall hire auditors in Mexico, as approved by unanimously by the Board of Directors. Upon the reasonable written request of INVO, Company shall request that accounting or audit firm in Mexico consult with and provide accounting research to INVO’s outside auditors as to such matters pertaining to Company as INVO’s outside auditors may reasonably request. The accounting firm and auditor may be changed only with the prior approval of the Shareholders as provided in Company Bylaws.

 

4.6     Financial Statements and Other Information.

 

(a)     For each fiscal year, which shall end on December 31 of each year, Company shall cause all statements of income and cash flows of Company for such fiscal year, and balance sheets of Company as of the end of such fiscal year, to be audited if required either in Mexico or in the U.S. in the form of a certified audit. The audited financial statements shall be presented in accordance with the Financial Information Norms (Normas de Información Financiera “NIFS”).

 

(b)     Company shall promptly deliver to INVO, Arredondo, and Ramirez (i) monthly financial and operating statements, which shall include a comparison against the applicable operating budget and capital budget (before seven (7) days after the end of each quarter with interim monthly financial summaries, (ii) quarterly financial and operating statements presented in accordance with NIFS, with a review of such statements (consisting of high level procedures, such as analytics, as an audit firm would do in the US for a public company each quarter, in order to provide assurance that the quarterly results are not materially misstated), where such statements shall include a comparison against the applicable operating budget and capital budget (before thirty (30) days after the end of each quarter), (iii) annual audited financial statements in accordance with Section 4.6(a), to which Company will attach a Company prepared comparison against the Business Plan for the fiscal year and the applicable operating budget and capital budget (not later than fifty (50) days after the end of each fiscal year), (iv) remote access to daily reports of gross sales and margins by category, (v) all auditor’s reports and management letters from the auditors in connection with their audits or reviews (promptly after receipt of same by Company) and (vi) such other information and financial data concerning Company as INVO, Arredondo or Ramirez may reasonably request. In addition, Company shall reasonably cooperate with INVO, Arredondo and Ramirez in order for INVO, Arredondo and Ramirez to have real time access to the financial books and records of Company, provided however, that neither INVO, Arredondo, nor Ramirez shall have the right to input data or modify in any way the financial books and records of Company.

 

(c)     Arredondo and Ramirez acknowledge that INVO may require supplemental reports with respect to financial statements of the Company and agree to furnish or take necessary steps to provide any such reports.

 

8

 

 

4.7     Inspection of Property. INVO, Arredondo, and Ramirez shall each have the right to designate from time to time one person (each, an “Inspector”) who shall have the right, upon reasonable notice and during normal business hours and such other times as they may reasonably request, to (a) visit and inspect any of the operations of Company, (b) examine the corporate and financial records of Company and make copies thereof, (c) discuss the affairs, finances and accounts of Company with the directors, officers, key employees and accountants (including independent auditors) of Company, and (d) carry out such other powers and rights of a “Comisario” as provided under Article 166 of the Mexican Ley General de Sociedades Mercantiles. Copies of the corporate and financial records of Company shall be treated as confidential information.

 

4.8     Insurance. Company shall apply for and maintain adequate insurance for Mexican corporations of similar size engaging in similar businesses, having each of INVO, Arredondo and Ramirez as an additional named insured, in an amount and with a carrier reasonably satisfactory to INVO, Arredondo and Ramirez.

 

4.9     Business Plan, Budgets.

 

(a)     Update of Business Plan, Budgets. Company, acting through its Board of Directors, shall unanimously (i) update from time to time the Business Plan for Company in order for the Business Plan, as updated, to apply to each 12-month period after the termination of the initial plan period, (ii) approve annual operating budgets for each 12-month period after the termination of the initial plan period, and (iii) approve annual capital budgets for each 12-month period after the termination of the initial plan period. In each case, the updated Business Plan, operating budget or capital budget shall be approved and go into effect prior to the completion of the time period for which an existing Business Plan, operating budget or capital budget is in effect.

 

(b)     Compliance with Business Plan. Company shall be managed in accordance with the terms of an approved Business Plan for the year or other time period in question, and shall make capital expenditures only in accordance with an approved capital budget for the year or other time period in question.

 

9

 

 

5.     The Territory, Non-Competition and Other Covenants by the Shareholders.

 

5.1     Territory. The Shareholders agree that the Company will operate in Monterrey, Nuevo Leon, Mexico (the “Territory”) and any other cities and places in Mexico as approved by the Board or by the Shareholders. Notwithstanding, the Shareholders may agree in the future to expand the Territory and set up operations in other cities in Mexico in accordance with the terms, set forth in the Business Plan as it may be amended, modified or updated from time to time.

 

5.2     Exclusivity. The Shareholders agree that the Company will be the exclusive distributor of INVO Bioscience Inc and affiliates with respect the INVO Products in México, and the Shareholders agree to not compete directly or indirectly with the Company in Mexico

 

6.     Term; Termination and Dissolution.

 

6.1     Term. The term of this Shareholders Agreement shall be from the date of execution until terminated under Section 6.2.

 

6.2     Termination of Agreement. This Shareholders Agreement shall be terminated on the date of the first occurrence of any of the following events: 

 

(a)     INVO, Arredondo, and Ramirez mutually agree in writing to terminate this Shareholders Agreement;

 

(b)     Following a sale of substantially all of the Company’s assets; or

 

(c)     The Shareholders sell all of their Shares to (i) one of the Shareholders; or (ii) a third party.

 

6.3     Survival of Provisions. Sections 5, 6.4, 12, 13, and 14-22, inclusive, any other provision hereof which specifically so provides, and any provision hereof where the context so requires, shall survive any termination of this Shareholders Agreement. Termination shall not affect any liability or obligation accrued before the date of termination.

 

6.4     Winding Up and Dissolution. Winding up and dissolution of Company shall occur only in accordance with the applicable provisions of the Mexican Ley General de Sociedades Mercantiles and the Company Bylaws.

 

7.     Transfer and Sale.

 

7.1     Transfers. Each Shareholder agrees not to Transfer any of its Shares (issued hereunder or hereafter acquired) except in compliance with this Shareholders Agreement. Except for Transfers to the Shareholders in accordance with this Shareholders Agreement, no Transfer shall be permitted (and any such Transfer shall be void and of no effect) unless and until each transferee delivers to Company an executed copy of this Shareholders Agreement, which signature page shall specify that such Person is bound by and takes such Shares subject to all the terms and conditions of this Shareholders Agreement. The Company Bylaws shall contain provisions incorporating the terms of Sections 7 and Section 8 to the extent necessary to ensure that such provisions are enforceable under Mexican law.

 

10

 

 

8.     Right of First Refusal on Sale of Shares.

 

8.1     Right of First Refusal. If any Shareholder desires to Transfer any or all of its Shares, (a) such Transfer must be pursuant to a written offer (the “Offer”) received from a proposed third party purchaser (the “Offeror”), and (b) such selling Shareholder shall give written notice of the Offer to the secretary of the Board (the “Shareholder’s Notice”) with a copy to the Chairman of the Board. The secretary shall deliver the Shareholder’s Notice to the other Shareholders (for the purpose of this Section 8 individually an “Other Shareholder” and collectively the “Other Shareholders”) by email or registered air mail not fewer than thirty (30) days before the date of the proposed disposition, which notice shall specify the terms and conditions of the Offer and the identity of the Offeror, and (c) each of the Other Shareholders shall have the option, but not the obligation, to purchase all, but not less than all, of the Shares for which the Offer was made at the price and upon the terms and conditions set forth in the Offer. Such option shall be deemed to be exercised if any or all Other Shareholders provide written notice to the selling Shareholder (the “Notice of Exercise”), within thirty (30) days after receipt of the Shareholder’s Notice, agreeing to purchase all, but not less than all, of the Shares for which the Offer was made at the price and upon substantially the terms and conditions set forth in the Offer. If one or more Other Shareholders so exercises such option, then each such Other Shareholder, unless they otherwise agreed, shall be obligated to purchase, a portion of the Shares subject to the Offer, which portion shall equal the product of (A) the total number of shares proposed to be sold by the selling Shareholder and (B) a percentage expressed as a fraction (i) the numerator of which is equal to the amount of Shares held by such Other Shareholder, and (ii) the denominator of which is equal to the total amount of Shares then owned by the Other Shareholders who have indicated a desire to buy from the selling Shareholder. Each Other Shareholder who intends to exercise the option granted to it hereunder shall advise (in writing) the Other Shareholders of such intention to exercise the option at least seven (7) days before the time prescribed for providing the Notice of Exercise pursuant to this Section 8.1.

 

8.2     Expiration of Option. If the Other Shareholders fail to exercise the option provided for in Section 8.1 within thirty (30) days after receipt of the Shareholder’s Notice, their option shall expire, and the selling Shareholder shall obtain board approval and thereafter shall have the right (for a period of thirty (30) days following the board approval) to sell all of the Shares subject to the Offer to the Offeror pursuant to the terms of the Offer, subject the restrictions or other limitations of this Shareholders Agreement; provided, however, that; the Offeror shall agree in writing to be bound by all of the terms and conditions of this Shareholders Agreement which apply to the selling Shareholder. If such Shares are not sold pursuant to the provisions of this Section 8.2 prior to the expiration of the thirty (30) day period specified herein, such Shares shall not be transferred to anyone without again being subject to the provisions and restrictions of this Section 8.

 

8.3     Shareholder’s Notice. Information contained in any Shareholder’s Notice given to the Other Shareholders (including, without limitation, the identity of the Offeror and the offered price) shall be deemed to be confidential information and shall be maintained by the Other Shareholders in confidence and shall not be divulged by them except (a) as may be required by law, or (b) in confidence to any third party providing advice or financing for the Other Shareholder’s purchase pursuant to Section 8.1. The only use of information contained in a Shareholder’s Notice shall be to enable the Other Shareholders to determine if they wish to exercise the option granted to them pursuant to Section 8.1.

 

11

 

 

9.     Corporate Governance Provisions.

 

9.1     Governance. The Company Bylaws shall contain the provisions of this Section 9.1, so that:

 

(a)     the number of members of Company’s Board of Directors (the “Board” and each member of the Board, a “Director”) shall be three (3) and their respective alternates. Each owners of Series A Shares, Series B Shares and Series C Shares shall have the right to appoint, remove and replace one (1) Director and its alternate;

 

(b)     the Board shall have a chairman and a secretary (the secretary may or may not be a Director);

 

(c)     except in the case of the initial appointments (which shall end December 31, 2020), the chairman and secretary will each serve for a period of one (1) year;

 

(d)     each Director shall have at least ten (10) days prior notice of every Board meeting unless otherwise agreed by such Director;

 

(e)     the removal from the Board of a Director shall be effected only at the written request of the party or parties who designated such Director;

 

(f)     the Board shall meet quarterly, with 2 (two) meetings each calendar year to be held in person, virtual, video or telephonically.

 

(g)     two Directors shall constitute a quorum, as long as INVO designated Director is present;

 

(h)     any Transfer of capital stock of Company will require the unanimous approval of the Board;

 

(i)     actions of the type specified on Annex I (the “Fundamental Decisions”) will require approval of all three members of the Board or approval of the holders of at least 75% of Company’s outstanding Shares;

 

(j)     (i) each Share shall be entitled to one vote per share and Series A Shares, Series B Shares and Series C Shares shall vote together as a single class on all matters to be voted on by shareholders of Company other than the election and removal of Directors or as expressly provided by applicable law, (ii) except at any shareholder meeting, the presence (either in person or by proxy) of shareholders holding a majority of the shares then outstanding shall be necessary in order to constitute a quorum, (iii) except as otherwise provided in this Shareholders Agreement, any action required to be taken by the shareholders shall be authorized by a majority of the votes cast, and (iv) any action requiring approval of shareholders under Mexican law may be approved by written consent in lieu of a shareholder meeting (to the extent permitted by Mexican law);

 

(k)     any Transfer of Shares effected in compliance with the terms of this Shareholders Agreement will be approved by a vote of shareholders to the extent such Transfer requires shareholder approval under Mexican law; and

 

(l)     The granting of any powers of attorney for acts of domain by Company shall require approval of at the members of the Board or approval of the holders of 75% of Company’s outstanding Shares; with respect to acts of domain, only the Board or the Shareholders at a shareholders meeting shall have the powers to authorize such acts.

 

12

 

 

9.2     Management. Arredondo, with the other Shareholders approval, will appoint, ratify and remove, when needed, the officers to be responsible for managing Company’s activities and day-to-day operations and training of physicians as may be required for the Business;

 

9.3     Inconsistent Terms. In case of any discrepancy between the provisions of this Shareholders Agreement and the Company Bylaws relating to any matter that in accordance with the Mexican Ley General de Sociedades Mercantiles may be agreed upon by the Shareholders, this Shareholders Agreement shall prevail. The Shareholders acknowledge that a corresponding provision has been placed in the Company Bylaws. To the extent that any of the terms and conditions of the Company Bylaws are inconsistent with any of the terms and conditions of this Shareholders Agreement, the Shareholders agree to take all actions necessary to effect such amendments to the Company Bylaws as may be necessary and appropriate to give full effect to the terms and conditions of this Shareholders Agreement, subject to the approval of the Shareholders.

 

10.     Business Plan: Financing of Company.

 

10.1     Business Plan. The Shareholders acknowledge that the Initial Business Plan includes a three-year capital budget for Company, sets forth the growth plans, amount and estimated date of Company’s capital funding needs, which shall be payable by the Shareholders in proportion to the ownership of Shares in Company in accordance with Section 10.2. Following the three-year term of the Initial Business Plan and at least annually thereafter, the Business Plan and related budgets shall be updated by the Board of Directors in accordance with Section 4.9. A failure or refusal by Directors representing either INVO, Arredondo or Ramirez, to approve an update of the Business Plan and related budgets shall not constitute a Default under this Shareholders Agreement, nor shall such failure or refusal constitute a Dispute subject to resolution under Section 12 of this Shareholders Agreement.

 

10.2     Capital Funding. The capital funding needs of Company, as set forth in the Initial Business Plan approved in accordance with Section 4.9, shall be provided by the subscription by each Shareholder of additional Series A Shares in the case of INVO, Series B Shares in the case of Arredondo and Series C Shares in the case of Ramirez, pro rata based on the number of Shares held by each Shareholder

 

11.     Anti-Corruption Policies.

 

Arredondo, Ramirez and INVO shall cause Company to comply, and Arredondo, Ramirez and INVO shall themselves comply, in respect of any action taken on behalf of Company or any Company Subsidiary, with the following obligations:

 

13

 

 

11.1     Anti-Corruption Principles. Company for itself, and Arredondo, Ramirez and INVO, in respect of any action taken on behalf of Company shall cause each of their respective officers, directors, employees, agents, representatives or contractors to, at all times, comply in all respects with the following operating principle: No money or other thing of value shall be offered, promised or given to:

 

(a)     any governmental official,

 

(b)     any political party or official thereof,

 

(c)     any candidate for political office, or

 

(d)     any person, while knowing or having reason to know that all or a portion of such money or thing of value will be offered, promised or given, directly or indirectly, to any of those listed above in (a), (b) or (c) inclusive,

 

for the purpose of influencing any action, omission or decision by the recipient in order to obtain or retain business for Company, or to direct business to another.

 

11.2     US Foreign Corrupt Practices. Company shall comply with the terms of the US Foreign Corrupt Practices Act (“FCPA”), and with any reasonable guidance provided in writing by INVO as to specific steps required in order to comply with the terms of the FCPA.

 

11.3     Corrective Actions. Upon receiving information that provides reasonable certainty that any such payment has been made, or action has been taken, in violation of the foregoing operating principle, Company shall;

 

(a)     advise INVO, Arredondo and Ramirez of the occurrence; and

 

(b)     take all actions reasonably necessary to mitigate, correct and report such occurrence, under law or otherwise (such steps may include termination or severance of the individual(s) involved).

 

12.     Arbitration.

 

12.1     Exclusive Method for Resolution of Disputes. Each of the Shareholders, on behalf of itself and its Affiliates, agrees that the arbitration procedure set forth below shall be the sole and exclusive method for resolving and remedying claims arising out of, pertaining to or otherwise concerning this Shareholders Agreement (the “Disputes,” and individually a “Dispute”).

 

12.2     Applicable Rules. The Shareholders hereby agree and acknowledge that, except as otherwise provided in this Section 12, the arbitration shall be conducted pursuant to the International Chamber of Commerce Rules of Arbitration (“ICC Rules”), as in effect at the date on which the request for arbitration is submitted to the Secretariat of the International Court of Arbitration of the International Chamber of Commerce (“Secretarial”).

 

14

 

 

12.3     Procedures for Initiation of Arbitration. In the event that any Shareholder asserts that there exists a Dispute, such Shareholder shall deliver a written notice to each other party involved therein specifying the nature of the asserted Dispute. A meeting to attempt to resolve the Dispute shall take place among representatives of the parties to the Dispute within ten (10) Business Days after the date on which the written notice is delivered to the other parties to the Dispute, and if no resolution is reached within ten (10) Business Days after the last day on which the meeting is to be held, the matter will be referred to the representatives of INVO, Arredondo, and Ramirez for good faith discussions to resolve the Dispute. If said individuals cannot resolve the Dispute, any party (the “Disputing Person”) to the Dispute may thereafter commence arbitration hereunder by delivering to the Secretariat a Request for Arbitration (a “Request for Arbitration”) in the form, and containing the information, set forth in Article 4 of the ICC Rules.

 

12.4     Venue, Language. All arbitrations commenced pursuant to this Article 16 shall be held in Monterrey, Nuevo León, México, and shall be conducted in the English language provided that translations into Spanish (and translators) shall be made available if requested by any party to the Dispute.

 

12.5     Selection of Arbitrators. The Arbitral Tribunal shall be composed of one arbitrator, selected as provided in accordance with the ICC Rules.

 

12.6     Award/Confirmation, Vacation and Enforcement. The Arbitral Tribunal shall conduct the arbitration proceedings with all deliberate speed such that a final award (the “Award”) is published to the parties expeditiously. The Award shall be final and binding on all parties and subject to confirmation proceedings, proceedings to vacate and proceedings to enforce the Award as provided in the United Nations Convention on the Enforcement of Foreign Arbitral Awards; and, each party hereby consents to personal jurisdiction before any courts of competent jurisdiction in all such locations for the purposes of confirmation proceedings, proceedings to vacate and proceedings to enforce the Award.

 

13.     Confidentiality.

 

Arredondo, Ramirez and INVO or their respective Affiliates, shall have the rights and obligations with respect to Confidential Information as set forth in this Section 13, if either Shareholder or its Affiliates discloses Confidential Information to or receives Confidential Information from the (i) other Shareholder or its Affiliates, or (ii) Company. In addition, Company shall, and Shareholders shall cause Company to, have the rights and obligations with respect to Confidential Information as set forth in this Section 13, if Company discloses Confidential Information to or receives Confidential Information from the Shareholders, or either of them, or their respective Affiliates.

 

13.1     Confidential Information. “Confidential Information” shall mean information disclosed by a Shareholder or its Affiliates, or Company (the “Disclosing Party”) to any of Company or Shareholders, or its Affiliates, who is not the Disclosing Party (the “Recipient”) in connection with the discussions and negotiation leading up to the execution of this Shareholders Agreement, and in connection with matters arising out of, pertaining to or otherwise concerning this Shareholders Agreement and the related agreements and documents including but not limited to the Contracts and the Company Bylaws (collectively, the “Purpose”), even if before the date first written above, which is in written, electronic, photographic, or other tangible form, and which is marked “Confidential,” “Proprietary,” “Private,” or in any other manner indicating its confidential and/or proprietary nature, including, without limitation: sales data, product data, and customer data/information (e.g. INVO IVC data). If any information is disclosed orally or visually and the Disclosing Party intends that information to be subject to this Shareholders Agreement, the Disclosing Party must promptly notify the Recipient summarizing such information. Confidential Information made available hereunder may include information of third parties, such as Affiliates.

 

15

 

 

13.2     Restrictions on Disclosure and Use. Recipient may use the Confidential Information solely for the Purpose and shall not disclose Confidential Information except as expressly set forth herein and provided that Recipient shall be liable for any breach of the provisions hereof by any party to whom Recipient has disclosed the Confidential Information. Recipient may disclose the Confidential Information within its organization only to those having a need to know for the Purpose and having an obligation to protect information as required by this Agreement. The Confidential Information may be disclosed to Recipient’s legal counsel. In addition, Confidential Information of the Disclosing Party may be disclosed to Recipient’s Affiliates, financial institutions, or subcontractors which, in each case, has a need to know for the Purpose and to Disclosing Party’s knowledge, after reasonable inquiry, does not have an interest competitive or adverse to Disclosing Party, provided the financial institution or subcontractor is subject to a written agreement, substantially in accordance with this Shareholders Agreement, including the restrictions on use and disclosure, and provided such recipient warrants its affiliate’s compliance with the terms of this Agreement. In no case shall Recipient or its Affiliates, financial institution, or subcontractor use the Confidential Information from Disclosing Party to produce services or products competitive with those of the Disclosing Party, except that Company shall have the right to use the Confidential Information from Disclosing Party to produce services or products competitive in the Territory subject to and in accordance with the terms of this Shareholders Agreement.

 

13.3     Exceptions. Recipient’s obligation of confidentiality and restriction on use shall not apply to information when it is: (a) known to Recipient before receipt from Disclosing Party, (b) generally available to the public (or becomes so) without the fault or negligence of Recipient; (c) received by Recipient from a source other than Disclosing Party without breach of an obligation of confidentiality owed by the Disclosing Party; or (d) independently developed by Recipient without any use of Disclosing Party’s Confidential Information.

 

13.4     Required Disclosures. Recipient is permitted to disclose Confidential Information as required by law or regulation provided, however, that Recipient shall (a) give Disclosing Party written notice promptly upon receipt of a disclosure requirement and before the disclosure is made to allow the Disclosing Party the opportunity to take appropriate legal measures to protect the Confidential Information, (b) take reasonable actions and provide reasonable assistance to the Disclosing Party to secure confidential treatment of the Confidential Information, and (c) disclose only such Confidential Information as is required. Recipient shall make only such copies of the Confidential Information as in its reasonable judgment are necessary for the Purpose. Any such copies shall reproduce proprietary marking included therein.

 

16

 

 

13.5     No Rights Granted. Nothing herein shall be construed as granting to Recipient any proprietary rights, express or implied, including but not limited to copyright, patent, trade secret, or trademark rights in Disclosing Party’s Confidential Information, other than the right to use it for the mutual Purpose of this Agreement.

 

13.6     Enforcement by Government Action In Mexico. The parties acknowledge that Confidential Information may include industrial secrets (secretos industrials) for purposes of Mexico’s Industrial Property Law (Ley de Propiedad Industrial), to the extent such Confidential Information is reflected in documents or other media or instruments, as required by Mexico’s Industrial Property Law, and that any unauthorized use or disclosure of Confidential Information, insofar as it constitutes industrial secrets under Mexican law, may be subject to enforcement action by the Mexican Institute of Industrial Property (Institute Mexicano de Propiedad Industrial) or other agencies or instrumentalities of the Mexican government.

 

14.     Notices.

 

Any notice required or permitted to be given hereunder shall be in writing and shall be served upon the other by express carrier and shall be considered delivered two (2) business days after deposit with the express carrier, whether or not the addressee signs for such. Such notices may alternatively be made by facsimile transmission, or by express mail with confirmation by express carrier. Any notice to INVO shall be addressed to:

 

INVO

5582 Broadcast Court

Sarasota, FL 34240

U.S.A.

Attention: Christopher Myer

 

and to

 

Sheppard Mullin Richter & Hampton, LLP

12275 El Camino Real

San Diego, CA 92130

U.S.A.

Attn.: Laura Nava, Esq.

Jerry Gumpel

 

.

 

Any notice to Arredondo all be addressed to:

 

Francisco Arredondo, M.D. PLLC

4 Chipping Glen,

San Antonio, Texas, USA, 78257

Attention: Francisco Arredondo

 

Any notice to Ramirez all be addressed to:

 

Security and Health, LLC

2000 South Main Street, Suite 585

McAllen, Texas, 78503

Attention: Ramiro Ramirez

 

17

 

 

15.     Successors and Assigns.

 

This Shareholders Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, including each subsequent holder of the Shares. Except for its rights to subscribe for additional Shares under Section 10.2, the parties to this Shareholders Agreement may assign (in whole or in part) any of its respective rights hereunder at any time without the prior written consent of the other party to this Shareholders Agreement. Each of INVO, Arredondo and Ramirez may transfer its rights to the Shares subject to the provisions of this Shareholders Agreement.

 

16.     Governing Law.

 

This Shareholders Agreement, and all rights and obligations of the parties relating to this Shareholders Agreement, shall be governed by and construed in accordance with the laws of Mexico, without giving effect to any choice-of-law or conflict-of-law provision or rule that would cause the application of the laws of any other jurisdiction.

 

17.     Interpretation.

 

This Shareholders Agreement is executed in the English language. The headings contained in this Shareholders Agreement are for convenience only and shall not affect the interpretation of this Shareholders Agreement. In this Shareholders Agreement, the word “including” shall not be taken to limit a more general preceding term or phrase, the words “hereof” and “herein” and “hereunder” refer to this Shareholders Agreement as a whole, and a reference to a Section shall mean a reference to a Section of this Shareholders Agreement.

 

18

 

 

18.     Waiver.

 

The failure of one party hereto to enforce at any time any of the provisions of this Shareholders Agreement, or any rights in respect thereto, or to exercise any election herein provided, shall in no way be considered to be a waiver of such provision, rights or elections or in any way to affect the validity of this Shareholders Agreement. Any waiver must be in writing.

 

19.     Survival of Representations and Warranties.

 

All representations and warranties contained herein shall survive the execution and delivery of this Shareholders Agreement and the consummation of the transactions contemplated hereby.

 

20.     Amendment.

 

This Shareholders Agreement may be amended only by a written agreement embodying the full terms of the amendment signed by authorized representatives of each party hereto.

 

21.     Counterparts.

 

This Shareholders Agreement may be executed in one or more counterparts, any one of which need not contain the signatures of more than one party, but all of which, taken together, shall constitute one and the same agreement.

 

22.     Specific Performance.

 

Each of INVO, Arredondo and Ramirez acknowledges that money damages would not be a sufficient remedy for any breach by it of this Shareholders Agreement and agrees that the other party hereto shall be entitled to specific performance and injunctive relief as remedies for any such breach.

 

[The remainder of this page is intentionally left blank; signature page follows.]

 

 

 

19

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Shareholders Agreement on the date first written above.

 

	 	
			INVO Centers, LLC.

			 

			 

			 

			By: /s/ Chris Myer

			Name: Chris Myer

			Title: Vice President Business Development

			 

			
	
			 

			 

			 

			 

			 

			 

			 

				
			Francisco Arredondo, M.D. PLLC

			 

			 

			 

			By: /s/Francisco Arredondo, M.D. PLLC

			Name: Francisco Arendondo

			Title: MD MPH

			
	 	
			Security and Health, LLC.

			 

			 

			 

			By: /s/ Ramiro Ramirez Guiterrez

			Name: Ramiro Ramirez Guiterrez

			Title: MD

			

 

 

 

 

Annex

 

Annex I - List of Fundamental Decisions

 

 

 

Exhibits

 

Exhibit A     -     Form of Company Bylaws

 

Exhibit B     -     Business Plan

 

Exhibit C     -     Form of INVO Purchase Order

 

Exhibit D     –     Form Independent Contractor Agreement

 

 

 

Annex/Exhibits

 

 

Annex 1

 

List of Fundamental Decisions

 

	
			1.

				
			The Business Plan and its amendments.

			

 

	
			2.

				
			Annual budget of the Company.

			

 

	
			3.

				
			Any merger or joint venture involving Company;

			

 

	
			4.

				
			The expansion of the business of Company beyond the Territory, or the engagement in any business unrelated to the Business;

			

 

	
			5.

				
			Liquidation, dissolution or bankruptcy filing by Company;

			

 

	
			6.

				
			Other than a capitalization contemplated by the Business Plan or the annual budget, approving (a) any fixed or variable capital increase, (b) the issuance of shares, or options, warrants or rights of any kind to acquire Shares, or any instruments or obligations convertible into securities of Company, (c) the issuance to a person other than Company or a Subsidiary of Company of securities of any Subsidiary of Company, or options, warrants or rights of any kind to acquire securities of any Subsidiary of Company, or any instruments or obligations convertible into securities of any Subsidiary of Company, (d) or the purchase by Company or any of its Subsidiaries or Affiliates of any of Company’s issued and outstanding shares or the shares of any of its Subsidiaries;

			

 

	
			7.

				
			The declaration of dividends by Company other than pursuant to a Shareholders’ resolution or a dividend policy approved by the Shareholders;

			

 

	
			8.

				
			Any disposition of all or substantially all of the assets of the Company;

			

 

	
			9.

				
			The granting of liens on any property of the Company or its subsidiaries which are outside the ordinary course of business;

			

 

	
			10.

				
			The amendment of the governing documents (estatutos sociales) of Company or any of the Subsidiaries;

			

 

	
			11.

				
			Hiring the Company’s accountants and/or auditors;

			

 

	
			12.

				
			All other matters which require shareholder approval at an extraordinary shareholders meeting under Mexican corporation law;

			

 

	
			13.

				
			Capital expenditures or the disposition of assets in any fiscal year, in each case greater than US$5,000 individually or US$5,000 in the aggregate, unless specifically approved in the Business Plan or the annual budget; and

			

 

	
			14.

				
			Entering into any agreements outside of Company’s normal course of business which provide for payments or assumption of liabilities in excess of US$5,000 unless specifically approved in the Business Plan.Exhibit 10.1

 

CERTAIN PORTIONS OF THE EXHIBIT THAT
ARE NOT MATERIAL AND WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED HAVE BEEN REDACTED PURSUANT TO ITEM 601(B)(10)(IV) OF
REGULATION S-K. [***] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

 

SETTLEMENT AGREEMENT

 

This Settlement Agreement
(including Exhibits A, B and C, the “Agreement”) is made and entered into this 29th day of September,
2020 (the “Effective Date”), by and between, on the one hand, COLLEGIUM
PHARMACEUTICAL, INC., a corporation organized under the laws of the Commonwealth of Virginia, having its principal place
of business at 100 Technology Center Drive, Suite 300, Stoughton, MA 02072 (“Collegium”), and on the other hand,
TEVA PHARMACEUTICALS USA, INC., a corporation organized under the laws of the state of Delaware, having its principal place of
business at 400 Interpace Parkway, #3, Parsippany, NJ 07054 (“Teva”) (collectively Collegium and Teva may be
referred to as the “Parties,” or each separately, a “Party”).

 

RECITALS

 

A.         
WHEREAS, Collegium owns and has the exclusive right to enforce U.S. Patent Nos. 7,399,488; 7,771,707; 8,449,909; 8,557,291;
8,758,813; 8,840,928; 9,044,398; 9,248,195; 9,592,200; 9,682,075; 9,737,530; 9,763,883; 9,968,598; 10,004,729; and 10,188,644 (the
 “Patents-In-Suit”), which are listed in the U.S. Food and Drug Administration’s (“FDA”)
publication, Approved Drug Products with Therapeutic Equivalence Evaluations (“Orange Book”), in connection
with Collegium’s approved New Drug Application (“NDA”) No. 208090 for XTAMPZA® ER (oxycodone)
capsules, 9 mg, 13.5 mg, 18 mg, 27 mg, and 36 mg;

 

B.           
WHEREAS, Teva has filed with FDA Abbreviated New Drug Application (“ANDA”) No. 209431 for approval to
market a generic version of XTAMPZA® ER (oxycodone) capsules, 9 mg, 13.5 mg, 18 mg, 27 mg, and 36 mg (as amended,
supplemented or replaced, “Teva ANDA”);

 

C.           
WHEREAS, the Parties are parties to a lawsuit in the United States District Court for the District of Delaware (the “Court”),
captioned Collegium Pharmaceutical, Inc. v. Teva Pharmaceuticals USA, Inc., Civ. A. No. 18-cv-0300-LPS-CJB (D. Del), consolidated
with Civ. A. No. 18-cv-1900-LPS-CJB and Civ. A. No. 19-876-LPS-CJB (D. Del.), relating to the alleged infringement and validity
of the Patents-In-Suit (the “Litigation”);

 

D.           
WHEREAS, subject to the terms and conditions herein, Collegium has agreed to grant Teva a non-exclusive license to manufacture,
use, offer for sale, and sell the generic products described in the Teva ANDA upon the terms and conditions set forth in this Settlement
Agreement and in the License Agreement attached hereto as Exhibit B (“License Agreement”);

 

E.            
WHEREAS, the Parties recognize the risks, unpredictability and expense of litigation and wish to resolve their dispute through
a negotiated and consensual agreement;

 

F.             
WHEREAS, as a result of this Agreement, there may be an opportunity for pro-competitive U.S. competition for oxycodone products,
which competition otherwise may not have existed until the expiration of the patents licensed under the License Agreement; and

 

    

     

    

 

G.           
WHEREAS, the Parties wish to settle the Litigation and all current and potential claims and counterclaims relating to the
Teva ANDA and the generic products described therein, on the terms set forth herein in an effort to avoid further litigation and
contain associated fees, costs, and expenses.

 

NOW THEREFORE, in consideration
of the promises and mutual covenants set forth herein, the sufficiency of which is hereby acknowledged, the Parties hereby agree
as follows.

 

1.           
Definitions. All capitalized terms used, but not otherwise defined in this Settlement Agreement,
shall have the meanings set forth in the License Agreement.

 

2.           
License Agreement. Contemporaneously with the execution of this Settlement Agreement, Collegium and Teva shall
enter into the License Agreement.

 

3.            
Costs and Expenses. Each Party shall bear its own fees and costs in connection with the preparation and execution
of this Agreement.

 

4.            
Consent Judgment. In consideration of the mutual benefits of entering into this Agreement, the Parties will enter
into and cause to be filed with the Court in the Litigation, within three (3) business days after the Effective Date, the Consent
Judgment and Order of Permanent Injunction (“Consent Judgment”) in the form attached hereto as Exhibit A. If
for any reason the Court raises an objection to the Consent Judgment as drafted or requires that the Parties modify the Consent
Judgment, the Parties agree to confer promptly and in good faith in order to take action consistent with the Agreement to secure
entry of the Consent Judgment as drafted or with agreed-upon modifications, provided that nothing contained herein shall be deemed
to require a Party to agree to a modification of the Agreement or Consent Judgment that materially affects the benefits to be obtained
by, or burdens imposed upon, such Party under this Agreement as originally executed. If, after forty-five (45) days have elapsed
from the date on which the Consent Judgment was filed, such efforts have failed to secure entry of the Consent Judgment as originally
filed or with agreed-upon modifications, notwithstanding anything herein to the contrary, this Agreement shall be null and void
and have no further legal effect.

 

5.              
Legal Compliance. The Parties shall submit the Agreement to the Federal Trade Commission (“FTC”)
and the Antitrust Division of the Department of Justice (“DOJ”) as soon as practicable after the Effective Date,
and in no event later than ten (10) business days after the Effective Date. To the extent that any legal or regulatory issues or
barriers arise with respect to the Agreement, or any subpart thereof, the Parties shall use commercially reasonable efforts to:
(i) respond promptly and in good faith to any requests for additional information made by either of such Agencies, (ii) coordinate
any necessary or desirable joint presentation; and (iii) amend the Agreement to address any such objections in a way that is consistent
with the Parties’ intent. No Party shall be obliged to accept any modifications that frustrate the purpose of this Agreement
or materially impair its value to such Party. Each Party reserves the right to communicate with the FTC or DOJ regarding such filings
as it believes appropriate. Each Party shall keep the other Parties reasonably informed of such communications and, subject to
the Confidentiality section below, shall not disclose any confidential information of the other Party without such other Party’s
consent, which shall not be unreasonably withheld or delayed.

 

    2

     

    

 

6.            
Released Claims. In addition to entry of the Consent Judgment, Collegium and Teva make the following releases,
which shall be effective upon entry of the Consent Judgment by the Court: (a) Teva for itself and its Affiliates hereby irrevocably
releases and discharges Collegium and its Affiliates, successors, assigns, directors, officers, employees, agents, suppliers, distributors,
and customers from all causes of action, demands, claims, damages, and liabilities of any nature, whether known or unknown, arising
between Teva and/or its Affiliates and any of Collegium and/or its Affiliates from or in connection with the Litigation, the Teva
ANDA, and/or the generic products described by the Teva ANDA and accruing or occurring prior to the Effective Date, including,
without limitation, all claims, defenses, demands, and/or counterclaims that Teva and/or its Affiliates have asserted or could
have asserted in the Litigation or in any other proceeding that any of the Licensed Patents is somehow invalid, unenforceable,
not properly listed in the Orange Book, and/or not infringed by the filing of the Teva ANDA and/or the sale of the generic products
described by the Teva ANDA in the Territory (all of the above collectively, “Teva Released Claims”); (b) Collegium
for itself and its Affiliates hereby irrevocably releases and discharges Teva and its Affiliates, successors, assigns, directors,
officers, employees, agents, suppliers, distributors, and customers from all causes of action, demands, claims, damages, and liabilities
of any nature, whether known or unknown, arising between Collegium and/or its Affiliates and any of Teva and/or its Affiliates
from or in connection with the Litigation, the Teva ANDA, and/or the generic products described by the Teva ANDA and accruing or
occurring prior to the Effective Date, including, without limitation, all claims that Collegium and/or its Affiliates have asserted
or could have asserted in the Litigation or in any other proceeding that any of the Licensed Patents is infringed by the Teva ANDA
and/or the sale of the generic products described by the Teva ANDA in the Territory (all of the above collectively, the “Collegium
Released Claims”); (c) this Agreement shall constitute a final settlement between the Parties in the Territory in connection
with the Litigation and the Teva ANDA, and neither Teva nor its Affiliates shall institute any new challenge or litigation against
Collegium and/or its Affiliates with respect to any of the Licensed Patents and the Teva ANDA, or actively assist or cooperate
with any Third Party in any challenge or litigation against Collegium or its Affiliates with respect to the Licensed Patents unless
so ordered by the Court or compelled by law; (d) Teva shall not allow any attorney, including outside counsel, to disclose or use
any work product developed for or on behalf of Teva on or before the Effective Date; (e) no Party shall release any attorney who
represented such Party in the Litigation from maintaining the confidentiality of non-public information to which such attorney
had access in connection with the Litigation or grant any waivers with respect to such maintenance unless so ordered by the Court
or compelled by law; and (f) to the extent necessary, Teva shall permit and cooperate with Collegium to enforce the obligations
of such attorneys referred to under Sections 6(d) and 6(e). The Collegium Released Claims do not preclude Collegium from asserting
infringement of any of the Licensed Patents in any action or proceeding against Teva and/or its Affiliates involving any product
other than the Licensed Products. Notwithstanding anything to the contrary in this Section 6 or otherwise in this Agreement, nothing
shall preclude a Teva API Affiliate or Teva Wholesaler Affiliate from contesting the infringement, validity and/or enforceability
of the Licensed Patents – or assisting or cooperating with a Third Party to do the same -- in connection with a litigation
or administrative proceeding concerning any product other than the Teva ANDA Products.

 

    3

     

    

 

7.            
No Challenge. During the term of this Agreement, Teva, on behalf of itself and its Affiliates (but not including
a Teva API Affiliate or Teva Wholesaler Affiliate with respect to a product other than the Teva ANDA Products), covenants and agrees
that Teva and its Affiliates will not: (i) challenge, dispute or contest, directly or indirectly, the validity, enforceability,
patentability, priority of invention or other claim to priority, or patent term adjustment of any of the Licensed Patents, or assert
the non-infringement of the Licensed Patents, in each case, in any reexamination, inter partes proceeding, protest, observation,
comment, third-party submission, opposition, post grant proceeding, inter partes review, post grant review, covered business
method review, derivation proceeding, interference or other action or proceeding in the United States Patent and Trademark Office
or in any court of law, or before any other government agency or tribunal, or submit or cause, in any manner, to be submitted,
any filing, correspondence or communication in connection with any such action or proceeding; and (ii) assist, encourage, finance,
or otherwise provide any information to, any Third Party in any such action or proceeding with respect to the Licensed Products
or a Generic Equivalent under the foregoing clause. Notwithstanding the foregoing, nothing herein shall prevent Teva from maintaining
a “Paragraph IV Certification” under 21 U.S.C. § 355(j)(2)(A)(vii)(IV) (as amended or replaced) within
the Teva ANDA with respect to the Licensed Patents that may be listed in the Orange Book for the NDA Products.

 

8.            
Admissions. Teva acknowledges and agrees for itself and its Affiliates that, solely in connection with the Teva
ANDA and Teva ANDA Products, (i) the Licensed Patents are valid and enforceable, and (ii) the Licensed Patents would be infringed
by the manufacture, importation, use, offer for sale, or sale of the Teva ANDA Products in the Territory.

 

9.            
ACKNOWLEDGMENTS. Collegium and Teva acknowledge as follows:

 

(a)           
COLLEGIUM ACKNOWLEDGES THAT IT MAY HEREAFTER DISCOVER CLAIMS OR FACTS IN
ADDITION TO OR DIFFERENT FROM THOSE WHICH IT NOW KNOWS OR BELIEVES TO EXIST WITH RESPECT TO THE COLLEGIUM
RELEASED CLAIMS, THE FACTS AND CIRCUMSTANCES ALLEGED, AND/OR THE SUBJECT MATTER OF THIS AGREEMENT, WHICH, IF KNOWN OR SUSPECTED
AT THE TIME OF EXECUTING THIS AGREEMENT, MAY HAVE MATERIALLY AFFECTED THIS AGREEMENT. NEVERTHELESS, UPON THE EFFECTIVENESS OF THE
RELEASE OF THE COLLEGIUM RELEASED CLAIMS AS SET FORTH IN SECTION 6 ABOVE, COLLEGIUM
HEREBY ACKNOWLEDGES THAT THE COLLEGIUM RELEASED CLAIMS INCLUDE WAIVERS OF ANY RIGHTS,
CLAIMS OR CAUSES OF ACTION THAT MIGHT ARISE AS A RESULT OF SUCH DIFFERENT OR ADDITIONAL CLAIMS OR FACTS. COLLEGIUM
ACKNOWLEDGES THAT IT UNDERSTANDS THE SIGNIFICANCE AND POTENTIAL CONSEQUENCES OF SUCH A RELEASE OF UNKNOWN UNITED STATES JURISDICTION
CLAIMS AND OF SUCH A SPECIFIC WAIVER OF RIGHTS. COLLEGIUM INTENDS THAT THE CLAIMS
RELEASED BY IT UNDER THIS RELEASE BE CONSTRUED AS BROADLY AS POSSIBLE TO THE EXTENT THEY RELATE TO UNITED STATES JURISDICTION CLAIMS.
COLLEGIUM IS AWARE OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:

 

“A general release does not extend
to claims that the creditor or released party does not know or suspect to exist in his or her favor at the time of executing the
release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.”

 

    4

     

    

 

COLLEGIUM
AGREES TO EXPRESSLY WAIVE ANY RIGHTS IT MAY HAVE UNDER THIS CODE SECTION OR UNDER FEDERAL, STATE OR COMMON LAW STATUTES OR JUDICIAL
DECISIONS OF A SIMILAR NATURE, AND KNOWINGLY AND VOLUNTARILY WAIVES SUCH UNKNOWN CLAIMS.

 

(b)          
TEVA ACKNOWLEDGES THAT IT MAY HEREAFTER DISCOVER CLAIMS OR FACTS IN ADDITION TO OR DIFFERENT FROM THOSE WHICH IT NOW KNOWS
OR BELIEVES TO EXIST WITH RESPECT TO THE TEVA RELEASED CLAIMS, THE FACTS AND CIRCUMSTANCES ALLEGED, AND/OR THE SUBJECT MATTER OF
THIS AGREEMENT, WHICH, IF KNOWN OR SUSPECTED AT THE TIME OF EXECUTING THIS AGREEMENT, MAY HAVE MATERIALLY AFFECTED THIS AGREEMENT.
NEVERTHELESS, UPON THE EFFECTIVENESS OF THE RELEASE OF THE TEVA RELEASED CLAIMS AS SET FORTH IN SECTION 6 ABOVE, TEVA HEREBY ACKNOWLEDGES
THAT THE TEVA RELEASED CLAIMS INCLUDE WAIVERS OF ANY RIGHTS, CLAIMS OR CAUSES OF ACTION THAT MIGHT ARISE AS A RESULT OF SUCH DIFFERENT
OR ADDITIONAL CLAIMS OR FACTS. TEVA ACKNOWLEDGES THAT IT UNDERSTANDS THE SIGNIFICANCE AND POTENTIAL CONSEQUENCES OF SUCH A RELEASE
OF UNKNOWN UNITED STATES JURISDICTION CLAIMS AND OF SUCH A SPECIFIC WAIVER OF RIGHTS. TEVA INTENDS THAT THE CLAIMS RELEASED BY
IT UNDER THIS RELEASE BE CONSTRUED AS BROADLY AS POSSIBLE TO THE EXTENT THEY RELATE TO UNITED STATES JURISDICTION CLAIMS. TEVA
IS AWARE OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:

 

“A general release does not extend
to claims that the creditor or released party does not know or suspect to exist in his or her favor at the time of executing the
release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.”

 

TEVA AGREES TO EXPRESSLY WAIVE ANY RIGHTS
IT MAY HAVE UNDER THIS CODE SECTION OR UNDER FEDERAL, STATE OR COMMON LAW STATUTES OR JUDICIAL DECISIONS OF A SIMILAR NATURE, AND
KNOWINGLY AND VOLUNTARILY WAIVES SUCH UNKNOWN CLAIMS.

 

10.         
Confidentiality. The terms of the Agreement shall be maintained in strict confidence by the Parties except: (a)
as provided by Section 5 of this Settlement Agreement; (b) that any Party may disclose such terms if and as required by law, including,
without limitation, SEC reporting requirements, or by the rules or regulations of any stock exchange that the Parties are subject
to; (c) Collegium may disclose such terms as may be necessary in connection with any settlement discussions relating to the Licensed
Patents, NDA Products, or Xtampza® ER NDA, (d) Collegium may issue a press release in the form attached hereto at
Exhibit C, or (e) as otherwise agreed to by the Parties. If a Party is disclosing information relating to the Agreement because
it is required to do so to comply with statutory, regulatory or legal process requirements, including its reporting requirements
under the SEC rules, or any national securities exchange on which it is listed, such Party intending to make such disclosure shall
give the other Party at least two (2) business days prior notice in writing of the text of the intended disclosure, unless such
statutory, regulatory or legal process requirements would require earlier disclosure, in which event, the notice shall be provided
as early as practicable. A disclosing Party agrees to request confidential treatment with respect to the terms of the Agreement
and to use commercially reasonable efforts to have redacted such provisions of the Agreement as the Parties may agree from any
copies filed pursuant to such statutory, regulatory or legal process requirements. If either Party determines that it will be required
to file the Agreement as provided above, promptly after the giving of notice by such Party as contemplated above, the Parties will
use commercially reasonable efforts to agree on those provisions of the Agreement that the Parties will seek to have redacted as
provided above. If the Parties are unable to agree on the provisions of the Agreement that the Parties will seek to have redacted,
the disclosure shall be limited to the minimum required, as determined by the Party required to make such disclosure in consultation
with its legal counsel. Each Party may disclose the terms of the Agreement to its respective Affiliates, and each of its and their
insurers, lenders, attorneys, auditors, accountants, licensors, licensees, prospective licensees, prospective assignees, and potential
investors, acquirors or transferees, subject to such Affiliates, insurers, lenders, attorneys, auditors, accountants, licensors,
licensees, prospective licensees, prospective assignees, and potential investors, acquirors or transferees, being bound by confidentiality
obligations at least as stringent as those set forth in this Section 10.

 

    5

     

    

 

11.         
Term and Termination. This Settlement Agreement shall continue from the Effective Date until the earlier of:
(a) the expiration of the last to expire of the Licensed Patents; or (b) the date of a final decision by a United States court
or administrative agency, from which no appeal has been or can be taken, that all claims of the Licensed Patents are invalid or
unenforceable. The releases and discharges set forth in Section 6 of this Settlement Agreement shall survive the expiration, but
not termination, of the Agreement and the confidentiality obligations set forth in Section 10, above, shall survive for a period
of twenty (20) years from the Effective Date, notwithstanding any earlier expiration or termination of the Agreement. In addition,
this Section 11 and Sections 7, 8, 14, 15 and 16 shall survive the expiration or termination of the Settlement Agreement, the License
Agreement, or the Agreement as a whole. The License Agreement shall remain in full force and effect pursuant to its own terms notwithstanding
the expiration or termination of this Settlement Agreement. Notwithstanding the foregoing, if Teva or its Affiliates, directly
or indirectly, breaches any of its obligations and restrictions under Section 7 of this Settlement Agreement, then Collegium may
terminate this Settlement Agreement or the Agreement as a whole, including all licenses and covenants granted by Collegium under
the License Agreement, without prior notice or an opportunity to cure, and Teva hereby stipulates to the entry of a preliminary
injunction (without bond or other security) and permanent injunction (without a showing of irreparable harm or that legal remedies
are inadequate) to prevent such a breach or the continuance of such breach.

 

12.           
No Assignment. The Agreement may not be assigned or transferred to a Third Party without the express prior written
consent of the other Party, such consent not to be unreasonably withheld, delayed or otherwise conditioned. Notwithstanding the
above, Collegium may, without such consent, assign or transfer the Agreement (a) to an Affiliate, or (b) to a successor to all
or substantially all of the business of Collegium to which the Agreement pertains (i.e., the Licensed Patents or the NDA
Product), whether by sale of stock, merger, transfer, consolidation or otherwise, in which case Collegium shall assign the Agreement,
in full, to such successor. Further, notwithstanding the above, Teva may, without such consent, assign or transfer the Agreement
(a) to an Affiliate, or (b) to a successor to all or substantially all of Teva’s generics business, whether by sale of stock,
merger, transfer, consolidation or otherwise, in which case Teva shall assign the Agreement, in full, to such successor. Any attempted assignment
or transfer in violation of the provisions of this Section shall be null and void. The covenants, rights and obligations
of a Party under this Agreement shall remain binding upon the transferring Party and shall inure to the benefit of and be binding
upon any successor or permitted assignee of the Party. For the avoidance of doubt, any assignment of this Agreement must be made
in full, inclusive of both the Settlement Agreement and License Agreement, and any attempted assignment of the Settlement Agreement,
alone, or the License Agreement, alone, shall be null and void.

 

    6

     

    

 

13.         
Representations and Warranties. Each Party represents and warrants to the other Party as follows:

 

(a)         the Party
has obtained the advice of legal counsel prior to such Party’s execution and delivery of the Agreement, and that such Party’s
execution and delivery of the Agreement, including the releases set forth above, are made voluntarily, with full knowledge of their
significance, and with the express intention of performing all obligations;

 

(b)         the Agreement
has been duly executed and delivered and constitutes the legal, valid, and binding obligations of such Party, enforceable in accordance
with their terms;

 

(c)          the execution,
delivery and performance of the Agreement does not and will not violate or conflict with any provision of such Party’s organizational
documents or bylaws as in effect on the date hereof;

 

(d)          it has
the power and authority to enter into the Agreement and has taken all necessary corporate action to authorize its performance under
the Agreement;

 

(e)          no consent
or authorization of any governmental authority is required in connection with its performance under the Agreement;

 

(f)           to its knowledge,
its entering into the Agreement or performance by it under the Agreement will not violate any federal, state or local licensing
or other statute, rule or regulation, or any contractual obligation of such Party;

 

(g)           the Party:
(i) has read the Agreement, (ii) fully understands all the terms and conditions thereof and the meaning of each provision thereof
(including specifically the releases and covenants contained herein) and (iii) has entered into the Agreement of its own free will
and volition, and that it has been advised to consult counsel, that it has had the opportunity to consult with an attorney concerning
the Agreement and that it freely and voluntarily enters into the Agreement;

 

(h)            the Agreement
was negotiated by the Parties on an arms’ length basis; and

 

(i)             Each
Party represents and warrants to the other Parties that the rights and obligations exchanged pursuant to the Agreement constitute
the sole consideration being exchanged between or among any of the Parties in connection with the Agreement and no other form of
compensation or other accommodation has been made between or among any of the Parties.

 

    7

     

    

 

14.             Notice. Any notice required or permitted to be given or sent under this Agreement shall be hand delivered or
sent by express delivery service or certified or registered mail, postage prepaid, to the Parties at the addresses indicated below.

 

	 	If to Collegium, to:
	 	Collegium Pharmaceutical, Inc.
	 	100 Technology Center Drive
	 	Suite 300
	 	Stoughton, MA 02072
	 	Attention: Senior Counsel, Head of Intellectual Property
	 
	 	with copies (which shall not constitute notice hereunder) to:
	 
	 	Robins Kaplan LLP
	 	800 LaSalle Avenue
	 	Suite 2800
	 	Minneapolis, MN 55402
	 	Attention: Jake M. Holdreith
	 
	 	Rakoczy Molino Mazzochi Siwik LLP
	 	6 W. Hubbard Street
	 	Suite 500
	 	Chicago, Illinois 60654
	 	Attention: William A. Rakoczy
	 
	 	If to Teva, to:
	 
	 	Teva Pharmaceuticals USA, Inc.
	 	400 Interpace Parkway, #3
	 	Parsippany, NJ 07054
	 	Attention: Chief IP Counsel

 

    	 	8	 

     

    

 

	with copies (which shall not constitute notice hereunder) to:
	 
	 	Greenberg Traurig, LLP
	 	MetLife Building
	 	200 Park Avenue
	 	New York, NY 10166
	 	Attention: Scott Bornstein

 

Any such notice shall be deemed to have
been received on the date actually received. Either Party may change its address by giving the other Party written notice, delivered
in accordance with this Section.

 

15.             Entire Agreement. This Agreement, once duly executed by all Parties, constitutes the complete, final and exclusive
agreement between the Parties with respect to the subject matter hereof and supersedes and terminates any prior or contemporaneous
agreements and/or understandings between the Parties, whether oral or in writing. There are no other covenants, promises, agreements,
warranties, representations, conditions or understandings, either oral or written, between the Parties other than as are set forth
in the Agreement. No subsequent alteration, amendment, change, waiver or addition to the Agreement shall be binding upon the Parties
unless reduced to writing and signed by an authorized officer of each Party. Each Party in deciding to execute the Agreement has
retained counsel and has not relied on any understanding, agreement, representation or promise by the other Party that is not explicitly
set forth herein.

 

16.             Governing
Law. The Agreement shall be governed, interpreted and construed in accordance with the laws of the State of Delaware,
without giving effect to choice of law principles. The Parties irrevocably agree that the federal district court in the State
of Delaware shall have exclusive jurisdiction to deal with any disputes arising out of or in connection with the Agreement and
that, accordingly, any proceedings arising out of or in connection with the Agreement shall be brought in the United States District
Court for the District of Delaware. Notwithstanding the foregoing, if there is any dispute for which the federal district court
in the State of Delaware does not have subject matter jurisdiction, the state courts in Delaware shall have jurisdiction. In connection
with any dispute arising out of or in connection with the Agreement, each Party hereby expressly consents and submits to the personal
jurisdiction of the federal and state courts in the State of Delaware.

 

17.             Severability.
Subject to Section 5 above, if any provision of the Agreement is declared illegal, invalid or unenforceable by a court having
competent jurisdiction, it is mutually agreed that the Agreement shall endure except for the part declared invalid or unenforceable
by order of such court; provided, however, that in the event that the terms and conditions of the Agreement are materially altered,
the Parties will, in good faith, renegotiate the terms and conditions of the Agreement to reasonably replace such invalid or unenforceable
provisions in light of the intent of the Agreement.

 

    	 	9	 

     

    

 

18.             Amendments. No amendment, modification or supplement of any provisions of the Agreement shall be valid or effective
unless made in writing and signed by a duly authorized officer of each Party.

 

19.             Waiver. Any delay or failure in enforcing a Party’s rights under the Agreement, or any acquiescence as
to a particular default or other matter, shall not constitute a waiver of such Party’s rights to the enforcement of such
rights, nor operate to bar the exercise or enforcement thereof at any time or times thereafter, except as to an express written
and signed waiver as to a particular matter for a particular period of time.

 

20.             Construction.
 The Agreement has been jointly negotiated and drafted by the Parties through their respective counsel and no provision shall
be construed or interpreted for or against any of the Parties on the basis that such provision, or any other provision, or the
Agreement as a whole, was purportedly drafted by the particular Party. As used in the Agreement, neutral pronouns and any variations
thereof shall be deemed to include the feminine and masculine and all terms used in the singular shall be deemed to include the
plural, and vice versa, as the context may require. The words “herein,” “hereof” and “hereunder”
and other words of similar import refer to the Agreement as a whole, as the same may from time to time be amended or supplemented,
and not to any particular subdivision contained in the Agreement. The word “including” when used herein is not intended
to be exclusive, or to limit the generality of the preceding words, and means “including, without limitation.” Where
a Party’s consent is required hereunder, except as otherwise specified herein, such Party’s consent may be granted
or withheld in such Party’s sole discretion.

 

21.             Counterparts. This Settlement Agreement shall become binding when any one or more counterparts hereof, individually
or taken together, bears the signatures of each of the Parties hereto. The Settlement Agreement may be executed simultaneously
in any number of counterparts (including facsimile or e-mail counterparts), each of which will be deemed an original as against
a Party whose signature appears thereon, but all of which together will constitute one and the same instrument.

 

22.             Captions. The captions of this Settlement Agreement are solely for convenience of reference and will not affect
its interpretation.

 

23.             Negation of Agency. Nothing contained herein will be deemed to create any relationship, whether in the nature
of agency, joint venture, partnership or otherwise, between Collegium and Teva. No Party will be authorized to bind or obligate
the other Party in any manner.

 

[Signature page follows]

 

    	 	10	 

     

    

 

IN WITNESS WHEREOF,
this Settlement Agreement has been executed by the duly authorized representatives of the Parties as of the date and year first
above written.

 

	COLLEGIUM
    PHARMACEUTICAL, INC.  	 
	 	 
	By:  	/s/
    Shirley Kuhlmann	 
	Name:  	Shirley
    Kuhlmann	 
	Title:	EVP and
    General Counsel	 
	 	 	 
	TEVA
    PHARMACEUTICALS USA, INC.	 
	 	 
	By:  	/s/ Christine
    Baeder 	 
	Name:  	Christine
    Baeder	 
	Title:  	SVP Customer
    Operations 	 
	 	 
	By:  	/s/ Colman
    Ragan	 
	Name:  	Colman
    Ragan 	 
	Title:  	VP and
    GC North America IP Litigation 	 

 

    	 	11	 

     

    

 

EXHIBIT A

 

Consent Judgment

 

    	 		 

     

    

 

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

 

	COLLEGIUM PHARMACEUTICAL, INC.,
     	 	C.A. No. 18-300-LPS-CJB
	 	 	 
	 	Plaintiff, 	 	C.A. No. 18-1900-LPS-CJB
	 	 	CONSOLIDATED
	 	 	 
	 	v.	 	C.A. No. 19-876-LPS-CJB
	 	 	 	 
	TEVA PHARMACEUTICALS USA, INC.,
     	 	
	 	 	 
	 	Defendant.  

 

CONSENT JUDGMENT AND ORDER OF PERMANENT
INJUNCTION

 

This action for patent
infringement having been brought by Plaintiff Collegium Pharmaceutical, Inc. (“Collegium”) against Defendant Teva Pharmaceuticals
USA, Inc. (“Teva”) for infringement of United States Patent Nos. 7,771,707; 8,449,909; 8,557,291; 8,758,813; 8,840,928;
9,044,398; 9,248,195; 9,592,200; 9,682,075; 9,737,530; 9,763,883; 9,968,598; 10,004,729; 10,188,644 (the “Asserted Patents”);

 

In response to Collegium’s
assertions of patent infringement, Teva has alleged certain defenses, claims and counterclaims relating to the Asserted Patents
and United States Patent No. 7,399,488 (collectively with the Asserted Patents, the “Litigated Patents”);

 

Collegium and Teva have
entered into a Settlement Agreement and License Agreement (collectively, the “Agreement”), under which Collegium will
grant Teva a license to the Litigated Patents (the “License”), pursuant to the terms and conditions in the Agreement
and License;

 

    	 		 

     

    

 

Teva acknowledges that,
solely in connection with the Teva ANDA and Teva ANDA Product, the Litigated Patents, and all claims contained therein, are valid
and enforceable; and

 

Teva acknowledges that
using, making, offering for sale, selling, and/or importing in or into the United States any oxycodone extended-release capsule
product under Abbreviated New Drug Application No. 209431 (“Teva’s ANDA Product”) would infringe each of the
Litigated Patents in the absence of a license.

 

Collegium
and Teva now consent to this Judgment and Order.

 

IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED:

 

		1.	This Court has jurisdiction over the parties and the subject matter of this action.
	 	 	 

		2.	Teva would infringe each of the Litigated Patents by using, making, offering to sell, selling,
and/or importing Teva’s ANDA Product in or into the United States.
	 	 	 

		3.	The Litigated Patents, and all claims contained therein, are valid and enforceable, solely with
respect to the Teva ANDA and Teva ANDA Product.
	 	 	 

		4.	All affirmative defenses, claims, and counterclaims which have been or could have been raised by
Teva in this action with respect to the Litigated Patents are dismissed with prejudice.
	 	 	 

		5.	Except as authorized and licensed by Collegium under the License, Teva, its officers, agents, employees,
affiliates, successors and all persons in active concert or participation with Teva, are permanently enjoined from using, making,
offering for sale, or selling in the United States, or importing into the United States, Teva’s ANDA Product and/or inducing
or assisting others to use, make, offer for sale, or sell in the United States, or import into the United States, Teva’s
ANDA Product.

 

    	 	2	 

     

    

 

		6.	In any other or future cause of action or litigation in the United States, Teva shall not dispute
that any of the Litigated Patents are infringed by using, making, offering to sell, or selling in the United States, or importing
into the United States, Teva’s ANDA Product.
	 	 	 

		7.	In any other or future cause of action or litigation in the United States involving Teva’s
ANDA Product, Teva shall not dispute that all claims of the Litigated Patents are valid and enforceable in all respects.
	 	 	 

		8.	The foregoing injunctions against Teva shall take effect immediately upon entry of this Judgment
and Order by the Court, and shall continue until the expiration of the Litigated Patents.
	 	 	 

		9.	Nothing herein prohibits or is intended to prohibit Teva from maintaining and/or (e.g. in the case
of a recertification pursuant to 21 C.F.R. § 314.96(d)) filing a “Paragraph IV Certification” pursuant to 21 U.S.C.
 § 355(j)(2)(A)(vii)(IV) or pursuant to 21 C.F.R. § 314.94(a)(12) with respect to any of the Litigated Patents, and/or
filing a “Paragraph IV Certification” pursuant to 21 U.S.C. § 355(j)(2)(A)(vii)(IV) or pursuant to 21 C.F.R. §
314.94(a)(12) with respect to any other patents which may be listed in the Orange Book for Xtampza ER.
	 	 	 

		10.	Nothing herein prohibits or is intended to prohibit the FDA from granting final approval of the
Teva ANDA at any time.

 

    	 	3	 

     

    

 

		11.	This Judgment and Order is binding upon and constitutes claim preclusion and issue preclusion between
the parties in this action or in any other action in the United States between the parties with respect to: (i) the validity and
enforceability of the Litigated Patents, solely in connection with the Teva ANDA and Teva ANDA Product, and (ii) infringement of
the Litigated Patents by using, making, selling, offering to sell, and/or importing Teva’s ANDA Product.
	 	 	 

		12.	The parties waive all right to appeal from this Judgment and Order.
	 	 	 

		13.	This Court shall retain jurisdiction of this action and over the parties for purposes of enforcing
the provisions of this Judgment and Order and the terms of the parties’ Agreement and License, and any disputes that may
arise thereunder.
	 	 	 

		14.	Each party is to bear its own costs and attorneys’ fees.

 

Dated: __________
__, 2020

 

    	 	4	 

     

    

 

	s/	 	s/
	 	 	 
	Frederick L. Cottrell, III (No. 2555)	 	John W. Shaw (No. 3362)
	Kelly E. Farnan (No. 4395)	 	Karen E. Keller (No. 4489)
	Christine D. Haynes (No. 4697)	 	SHAW KELLER LLP
	RICHARDS, LAYTON & FINGER, P.A.	 	I.M. Pei Building
	920 N. King Street	 	1105 North Market Street, 12th Floor
	Wilmington, DE 19081	 	Wilmington, DE 19801
	(302) 651-7700	 	(302) 298-0700
	cottrell@rlf.com	 	jshaw@shawkeller.com
	farnan@rlf.com	 	kkeller@shawkeller.com
	haynes@rlf.com	 	 
	 	 	 
	Attorneys for Plaintiff	 	Attorneys for Defendant

 

SO ORDERED this __ day of ________, 2020_____________________________

 

United States District Judge

 

    	 	5	 

     

    

 

EXHIBIT B

 

License Agreement

 

    	 		 

     

    

 

 

CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND WOULD BE COMPETITIVELY

HARMFUL IF PUBLICLY DISCLOSED HAVE BEEN REDACTED PURSUANT TO ITEM 601(B)(10)(IV) OF

REGULATION S-K. [***] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

LICENSE AGREEMENT

 

This License Agreement
(the “License Agreement”) is made and entered into this 29th day of September, 2020 (the “Execution
Date”), by and between, on the one hand, COLLEGIUM PHARMACEUTICAL, INC., a
corporation organized under the laws of the Commonwealth of Virginia, having its principal place of business at 100 Technology
Center Drive, Suite 300, Stoughton, MA 02072 (“Collegium”), and on the other hand, TEVA PHARMACEUTICALS USA,
INC., a corporation organized under the laws of the state of Delaware, having its principal place of business at 400 Interpace
Parkway, #3, Parsippany, NJ 07054 (“Teva”) (collectively, Collegium and Teva may be referred to as the “Parties,”
or each separately, a “Party”).

 

RECITALS

 

A.            Collegium
owns and has the exclusive right to enforce U.S. Patent Nos. 7,399,488; 7,771,707; 8,449,909; 8,557,291; 8,758,813; 8,840,928;
9,044,398; 9,248,195; 9,592,200; 9,682,075; 9,737,530; 9,763,883; 9,968,598; 10,004,729; 10,188,644 (the “Patents-In-Suit”),
which are listed in the Orange Book (as hereinafter defined), in connection with Collegium’s approved New Drug Application
No. 208090 for XTAMPZA® ER (oxycodone) capsules, 9 mg, 13.5 mg, 18 mg, 27 mg, and 36 mg;

 

B.            Teva
has filed with the FDA (as hereinafter defined) Abbreviated New Drug Application No. 209431 for approval to market a generic version
of XTAMPZA® ER (oxycodone) capsules, 9 mg, 13.5 mg, 18 mg, 27 mg, and 36 mg;

 

C.            The
Parties are parties to a lawsuit in the United States District Court for the District of Delaware, captioned Collegium Pharmaceutical,
Inc. v. Teva Pharmaceuticals USA, Inc., Civ. A. No. 18-cv-0300-LPS-CJB (D. Del), consolidated with Civ. A. No. 18-cv-1900-LPS-CJB
and Civ. A. No. 19-876-LPS-CJB (D. Del.), relating to the alleged infringement and validity of the Patents-In-Suit;

 

D.            Pursuant
to a Settlement Agreement to which this License Agreement is Exhibit B (the “Settlement Agreement”), executed
contemporaneously with this License Agreement, Collegium and Teva have agreed to settle existing and potential claims and disputes
related to the Licensed Products (as hereinafter defined); and

 

E.             As
part of such settlement, Collegium and Teva agreed to enter into this License Agreement, which, upon the terms set forth herein,
grants Teva, inter alia, a non-exclusive license under the Licensed Patents to Manufacture and/or Market, as applicable,
in or for the Territory the Licensed Products (as such capitalized terms are hereinafter defined).

 

NOW THEREFORE, in consideration
of the promises and mutual covenants set forth herein, the sufficiency of which is hereby acknowledged, the Parties hereby agree
as follows.

 

    2

     

    

 

1.             Definitions.
As used herein, the following capitalized terms shall have the meanings ascribed to them below.

 

1.1             
“Affiliate” shall mean any person or entity that, directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such Party. For the purposes of this definition, “control”
(including the terms “controlled by” and “under common control with”) means (i) the direct or indirect
ownership of fifty percent (50%) or more of the voting stock or other voting interest in such entity, (ii) the right to appoint
fifty percent (50%) or more of the directors or management of such entity, or (iii) the power to otherwise control or direct
the decisions of the board of directors or similar body governing the affairs of such entity.

 

1.2             
“ANDA” shall mean an abbreviated new drug application under 21 U.S.C. § 355(j) (or equivalent
regulatory mechanism).

 

1.3             
“API” shall mean active pharmaceutical ingredient(s).

 

1.4             
“FDA” shall mean the U.S. Food and Drug Administration (and any successor organization or agency thereto).

 

1.5             
“Final Court Decision” shall mean a decision of a United States court or administrative agency from which
no appeal has been or can be taken, excluding any petition for a writ of certiorari or other proceedings before the Unites States
Supreme Court. For the avoidance of doubt, a decision of an appeals court is final upon entry of the mandate.

 

1.6             
“Generic Equivalent” shall mean a pharmaceutical product that is Marketed or intended for Marketing in the
Territory pursuant to an approved ANDA as an A-rated generic equivalent to any of the NDA Products.

 

1.7             
“Licensed Launch Date” shall mean the earlier of:

 

		(a)	September 2, 2033;

 

		(b)	[***];

 

		(c)	[***];

 

		(d)	[***].

 

1.8             
“Licensed Patents” shall mean, collectively, the Patents-In-Suit, and any other patents listed in the Orange
Book in connection with the Xtampza® ER NDA, along with any corrections, extensions, continuations, continuations-in-part,
divisionals, reissues, or reexaminations of the same.

 

1.9             
“Licensed Products” shall mean the Teva ANDA Products, as defined below.

 

1.10           
“Manufacture” shall mean to manufacture, and/or have manufactured, a pharmaceutical product.

 

    3

     

    

 

1.11          
“Market” shall mean to market, sell, have sold, offer to sell and have offered for sale, distribute and
have distributed, a pharmaceutical product and/or to import such product for such purposes, and “Marketing” shall have
a corresponding meaning.

 

1.12          
 “NDA” shall mean a new drug application under 21 U.S.C. § 355(b)(1) or 21 U.S.C. § 355(b)(2)
(or equivalent regulatory mechanism).

 

1.13           
“NDA Products” shall mean the products that are the subject of the Xtampza® ER NDA.

 

1.14          
 “Orange Book” shall mean “Approved Drug Products with Therapeutic Equivalence Evaluations”
published by FDA in connection with approved drug products, or any successor publication thereto.

 

1.15           
“Paragraph IV Certification” shall mean a certification under 21 U.S.C. § 355(j)(2)(A)(vii)(IV)
(as amended or replaced).

 

1.16           
“Person” shall mean an individual, partnership, corporation, limited liability company, business
trust, joint stock company, trust, unincorporated association, joint venture, governmental authority, or other entity of whatever
nature.

 

1.17           
“Proceeding” shall mean any action, audit, litigation, investigation, suit, or other proceeding.

 

1.18           
“Territory” shall mean the United States of America, including its territories, possessions and commonwealths.

 

1.19           
“Teva ANDA” shall mean Teva’s ANDA No. 209431 for oxycodone extended-release capsules, 9 mg, 13.5
mg, 18 mg, 27 mg, and 36 mg, including any amendments, supplements or replacements thereto.

 

1.20           
“Teva ANDA Products” shall mean the oxycodone extended-release capsules, 9 mg, 13.5 mg, 18 mg, 27 mg, and
36 mg, that are the subject of the Teva ANDA.

 

1.21           
“Teva API Affiliate” shall mean an Affiliate of Teva whose sole business is in the manufacture of API. For
the avoidance of doubt, a Teva API Affiliate shall not include any Affiliate of Teva that files, owns or maintains NDAs, ANDAs
or applications submitted under 21 U.S.C. § 355(b)(2).

 

1.22          
“Teva Wholesaler Affiliate” shall mean an Affiliate of Teva whose sole business is in the wholesale distribution
of pharmaceutical products. For the avoidance of doubt, a Teva Wholesaler Affiliate shall not include any Affiliate of Teva that
files, owns or maintains NDAs, ANDAs or applications submitted under 21 U.S.C. § 355(b)(2). For the further avoidance of doubt,
[***].

 

1.23           
“Third Party” shall mean any Person or entity other than a Party or its Affiliates.

 

    4

     

    

 

1.24           
“Trademark” shall mean the trademark XTAMPZA® and any replacement trademark.

 

1.25           
“Xtampza® ER NDA” shall mean NDA No. 208090 for XTAMPZA® ER (oxycodone)
capsules, 9 mg, 13.5 mg, 18 mg, 27 mg, and 36 mg, including any amendment or supplement thereto.

 

2.            
License and Covenants.

 

2.1             
License.  Collegium, for itself and its Affiliates, hereby grants Teva and its Affiliates, on and
after the Licensed Launch Date, a non-exclusive, non-sublicensable, non-transferable license under the Licensed Patents to Manufacture,
use, have used, and Market in or for the Territory the Licensed Products. For the avoidance of doubt, the right and license granted
under this Section 2.1 shall not apply to the Manufacture or distribution of Teva ANDA Products for sale to Third Parties for use
or consumption outside the Territory. For the further avoidance of doubt, the right and license granted under this Section 2.1
shall not apply to the Manufacture or distribution of any finished product aside from the Teva ANDA Products, or to the supply
of API or any other ingredients for any finished product aside from the Teva ANDA Products.

 

2.2             
Pre-Booking Activities. Notwithstanding anything to the contrary contained in Section 2.1, prior to the Licensed
Launch Date, Teva may engage in the following pre-booking activities:

 

		(a)	Manufacture of the Licensed Products inside the Territory, and/or importation of the Licensed Products
into the Territory, starting not earlier than [***] prior to the Licensed Launch Date;

 

		(b)	Discussions with potential customers to make them aware of the upcoming availability of the Licensed
Products from Teva, starting not earlier than [***] prior to the Licensed Launch Date;

 

		(c)	Non-binding offers for sale starting not earlier than [***] prior to the Licensed Launch Date.

 

2.3             
Limitations on License. Except to the extent permitted by the License of Section 2.1, and the permitted pre-booking
activities of Section 2.2, neither Teva nor any of its Affiliates, distributors or agents shall under any circumstances Manufacture
or Market any Generic Equivalent in or for the Territory prior to the expiration of the last to expire of the Licensed Patents.

 

2.4             
Collegium Covenant-Not-To-Sue. As of the Execution Date, Collegium hereby finally and irrevocably covenants,
for itself and its Affiliates, that it will not sue, assert any claim or counterclaim against, or otherwise participate in any
action or proceeding against Teva or any of its Affiliates, shareholders, customers, suppliers, importers, manufacturers, agents
or other personnel, insurers, or any heirs, administrators, executors, predecessors, or permitted successors and assigns of the
foregoing, or cause or authorize any Person or entity to do any of the foregoing, in each case claiming or otherwise asserting
that the Manufacture, use, and Marketing of the Licensed Products as of the Licensed Launch Date (or as otherwise permitted pursuant
to Section 2.2, above), in or for the Territory, infringes the Licensed Patents or any other United States patents owned or otherwise
controlled by Collegium or any of its Affiliates that cover the NDA Products and/or the Teva ANDA Products. For clarity, as used
herein, “controlled” means the ability to grant a license or sublicense to a patent without violating the terms of,
or incurring any royalty or other financial obligation under, any written agreement with an unaffiliated Third Party. Collegium
will impose the foregoing Covenant-Not-To-Sue on any Third Party to which Collegium may assign, exclusively license or otherwise
transfer any of the Licensed Patents or any other relevant patent.

 

    5

     

    

 

2.5            
Teva Covenant-Not-To-Sue. As of the Execution Date, Teva hereby finally and irrevocably covenants, for itself
and its Affiliates, that it will not sue, assert any claim or counterclaim against, or otherwise participate in any action or proceeding
against Collegium or any of its Affiliates, shareholders, customers, suppliers, importers, manufacturers, agents or other personnel,
insurers, or any heirs, administrators, executors, predecessors, or permitted successors and assigns of the foregoing, or cause
or authorize any Person or entity to do any of the foregoing, in each case claiming or otherwise asserting that the Manufacture,
use, and Marketing of the NDA Products, in or for the Territory, infringes any patents owned, licensed or otherwise controlled
by Teva or its Affiliates. Teva will impose the foregoing Covenant-Not-To-Sue on any Third Party to which Teva may assign, exclusively
license or otherwise transfer any such relevant patent.

 

2.6             
[***]

 

3.            
Notice and Acknowledgements.

 

3.1             
Except to the extent expressly permitted by Section 2.1 or Section 2.2 of this License Agreement, unless this License
Agreement is earlier terminated in accordance with the terms hereof, neither Teva nor any of its Affiliates shall under any circumstances
Manufacture or Market any Generic Equivalent in the Territory prior to the expiration of the Licensed Patents.

 

3.2             
Teva acknowledges that Manufacturing or Marketing the Teva ANDA Products outside the scope of the License and
other rights granted in this License Agreement would cause Collegium irreparable harm. Teva further acknowledges that Collegium
shall be entitled to specific enforcement of the terms and conditions set forth in this License Agreement and shall be entitled
to immediate injunctive relief (without bond or security, or any showing of irreparable harm) to prevent Teva and/or its Affiliates
from Manufacturing or Marketing the Teva ANDA Products outside the scope of this License Agreement.

 

4.            
Reservation of Rights.

 

4.1             
Notwithstanding anything to the contrary herein, Collegium and its Affiliates grant no rights to Teva and its
Affiliates under the Xtampza® ER NDA.

 

4.2             
All rights not expressly granted to Teva hereunder are expressly reserved to Collegium, and Collegium has no
obligation to make available any intellectual property rights or to take any other actions other than as expressly set forth herein.
Nothing in this License Agreement shall be construed as granting Teva or its Affiliates (i) any rights with respect to any
products outside the Territory; (ii) any rights with respect to any product other than the Teva ANDA Products; or (iii) except
as expressly provided herein, any license, sublicense or other right to any patents, any other intellectual property or any regulatory
exclusivities or approvals held by Collegium or any of its Affiliates. For the sake of clarity, this License Agreement does not
grant to Teva or its Affiliates any right to use any corporate names, logos or trademarks (including any Trademark) of Collegium
or any of its Affiliates inside or outside the Territory.

 

    6

     

    

 

5.             Representations and Warranties.

 

5.1             
Each Party represents and warrants to the other Party that the execution and delivery by such Party of this License
Agreement and the performance of its obligations hereunder have been duly authorized by all necessary corporate action and do not
conflict with the terms of any other contract, agreement, arrangement, or understanding to which such Party is a party.

 

5.2             
Collegium represents and warrants that it has the right to license the Licensed Patents to Teva under the terms and
conditions set forth in the Agreement. To the extent Collegium or any of its Affiliates assigns, licenses, sublicenses, or otherwise
transfers (by any means) to any Third Party any right, title or interest in or to the Licensed Patents that could be asserted against
the Teva ANDA Products after the Effective Date, Collegium, or such Affiliates, will make such assignment, license, sublicense
or other transfer subject to the license, covenants and other rights granted to Teva under Section 2.

 

5.3             
Teva represents, warrants, and covenants that, as of the Execution Date: (i) Teva is the true and sole owner of ANDA
No. 209431, and Teva and its Affiliates have not assigned or otherwise transferred ownership to any Third Party; (ii) Teva is the
sole “first applicant,” as described in 21 U.S.C. § 355(j)(5)(B)(iv)(II)(bb) (as amended or replaced), for a generic
version of the NDA Products; (iii) Teva and its Affiliates will undertake commercially reasonable efforts, as of and after the
Execution Date, to maintain Teva’s status as the “first applicant”; and (iv) Teva and its Affiliates will not
(until the expiration of the last to expire of the Licensed Patents) assist, authorize or cooperate with any Third Party in Manufacturing,
using, Marketing, or seeking regulatory approval for an unlicensed ANDA or NDA product referencing the Xtampza®
ER NDA.

 

6.             Term
and Termination.

 

6.1             
Expiration. Unless earlier terminated in accordance with the terms hereof, the term of this License Agreement
(the “Term”) shall extend from the Execution Date until the earlier of: (a) the expiration of the last to expire
of the Licensed Patents; or (b) the date of a Final Court Decision holding that all claims of the Licensed Patents are invalid
or unenforceable.

 

6.2             
Breach. Each Party may terminate this License Agreement and its obligations hereunder in the event of a material
breach by the other Party that remains uncured for five (5) business days after the other Party specifies in reasonable detail
in writing the nature of the breach and demands its cure.

 

		(a)	Notwithstanding the foregoing, the Parties acknowledge and agree that the Manufacture and/or Marketing by Teva or any of its
Affiliates of any Teva ANDA Products or (except in the case of a Teva API Affiliate or Teva Wholesaler Affiliate with respect to
a product other than the Teva ANDA Products) any Generic Equivalent in the Territory prior to the Licensed Launch Date, or as otherwise
permitted under Section 2.2, shall constitute an immediate material breach by Teva of this License Agreement for which Collegium
may elect to terminate this License Agreement without prior notice or an opportunity to cure.

 

    7

     

    

 

6.3             
 Accrued Obligations; Survival. Expiration or termination of this License Agreement shall not relieve the Parties
of any obligation accruing prior to such expiration or termination. Any expiration or early termination of this License Agreement
shall be without prejudice to the rights of any Party against any other Party accrued or accruing under this License Agreement
prior to such expiration or termination. The provisions of Sections 1, 3, 4, 5, 6, 7, and 8 of this License Agreement shall survive
any expiration or termination of this License Agreement.

 

7.             Notice.
Any notice required or permitted to be given or sent under this License Agreement shall be hand delivered or sent by express
delivery service or certified or registered mail, postage prepaid, to the Parties at the addresses indicated below.

 

		If to Collegium, to:	 
	 	 	 
	 	Collegium Pharmaceutical, Inc.	 
	 	100 Technology Center Drive	 
	 	Suite 300	 
	 	Stoughton, MA 02072	 
	 	Attention: Senior Counsel, Head of Intellectual
Property	 
	 	 	 
	 	with copies (which shall not constitute notice hereunder)
to:	 
	 	 	 
	 	Robins Kaplan LLP	 
	 	800 LaSalle Avenue	 
	 	Suite 2800	 
	 	Minneapolis, MN 55402	 
	 	Attention: Jake M. Holdreith	 
	 	 	 
	 	Rakoczy Molino Mazzochi Siwik LLP	 
	 	6 W. Hubbard Street	 
	 	Suite 500	 
	 	Chicago, Illinois 60654	 
	 	Attention: William A. Rakoczy	 

 

    8

     

    

 

	 	If to Teva, to:	 
	 	 	 
	 	Teva Pharmaceuticals USA, Inc.	 
	 	400 Interpace Parkway	 
	 	Parsippany, NJ 07054	 
	 	Attention: Chief IP Counsel	 
	 	 	 
	 	with copies (which shall not constitute notice hereunder)
to:	 
	 	 	 
	 	Greenberg Traurig, LLP	 
	 	MetLife Building	 
	 	200 Park Avenue	 
	 	New York, NY 10166	 
	 	Attention: Scott Bornstein	 

 

Any such notice shall be deemed to have
been received on the date actually received. Either Party may change its address by giving the other Party written notice, delivered
in accordance with this Section.

 

8.             Governing
Law. This License Agreement shall be governed, interpreted and construed in accordance with the laws of the State of Delaware,
without giving effect to choice of law principles. The Parties irrevocably agree that the federal district court in the State
of Delaware shall have exclusive jurisdiction to deal with any disputes arising out of or in connection with this License Agreement
and that, accordingly, any proceedings arising out of or in connection with this License Agreement shall be brought in the United
States District Court for the District of Delaware. Notwithstanding the foregoing, if there is any dispute for which the federal
district court in the State of Delaware does not have subject matter jurisdiction, the state courts in Delaware shall have jurisdiction.
In connection with any dispute arising out of or in connection with this License Agreement, each Party hereby expressly consents
and submits to the personal jurisdiction of the federal and state courts in the State of Delaware.

 

9.             Amendments.
No amendment, modification or supplement of any provisions of this License Agreement shall be valid or effective unless
made in writing and signed by a duly authorized officer of each Party.

 

10.          Counterparts. This License Agreement shall become binding when any one or more counterparts hereof, individually
or taken together, bears the signatures of each of the Parties hereto. The License Agreement may be executed simultaneously in
any number of counterparts (including facsimile or e-mail counterparts), each of which will be deemed an original as against a
Party whose signature appears thereon, but all of which together will constitute one and the same instrument.

 

11.          Captions. The captions of this License Agreement are solely for convenience of reference and will not affect
its interpretation.

 

12.          Negation
of Agency. Nothing contained herein will be deemed to create any relationship, whether in the nature of agency, joint
venture, partnership or otherwise, between Collegium and Teva. No Party will be authorized to bind or obligate the other Party
in any manner.

 

[Signature Page Follows]

 

    9

     

    

 

IN WITNESS WHEREOF,
the undersigned have executed this License Agreement as of the date and year first above written.

 

	 	COLLEGIUM PHARMACEUTICAL, INC.	 
	 	 	 	 
	 	By:	/s/ Shirley Kuhlmann	 
	 	Name:	Shirley Kuhlmann	 
	 	Title: 	EVP and General Counsel	 

 

	 	TEVA
        PHARMACEUTICALS USA, INC.	 
	 	 	 	 
	 	By:	/s/ Christine Baeder	 
	 	Name:	Christine Baeder	 
	 	Title: 	SVP Customer Operations	 

 

	 	By:	/s/ Colman Ragan	 
	 	Name:	Colman Ragan	 
	 	Title: 	VP and GC North America IP Litigation	 

 

    10

     

    

 

EXHIBIT C

 

Collegium Press Release

 

    11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00314-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00314-of-00352.parquet"}]]