Document:

Exhibit 10.13

 

ETON PHARMACEUTICALS, INC.

21925 Field Parkway

Suite 235

Deer Park, IL 60010

 

June 23, 2017

 

Wilson Troutman

1038 E. Adams Street

Lombard, IL 60148

 

		Re:	Employment Terms

 

Dear Wilson:

 

On behalf of Eton Pharmaceuticals, Inc.
(the “Company”), I am pleased to offer you employment in the position of Chief Financial Officer of the Company,
on the terms set forth in this offer letter agreement (the “Agreement”).

 

1.           Employment
Position; Duties. As Chief Financial Officer of the Company, you will report to the Chief Executive Officer of the Company,
and you will have those duties and responsibilities as customary for this position and as may be directed by the Chief Executive
Officer of the Company. Your work duties may include work for, or on behalf of, Affiliates of the Company (as defined below).
You will primarily work from your current location in Chicago, Illinois, although you understand that reasonable travel shall
be required in the performance of your position with the Company. During your employment, you will devote your full-time best
efforts to the business of the Company and its Affiliates. Your commencement of employment pursuant to this Agreement will start
on or around July 17, 2017 (such actual date of your commencement of employment, the “Start Date”).

 

2.           Employee
Base Salary; Employee Benefits and Business Expenses.

 

(a)         Base
Salary. Your base salary will be paid at the annual rate of $200,000, less required payroll deductions and tax withholdings,
paid on the Company’s normal payroll schedule (which shall initially be bi-weekly). As an exempt salaried employee, you
will be required to work the Company’s normal business hours, and such additional time as appropriate for your work assignments
and position. You will not be eligible for extra payment under the overtime laws. Your base salary may otherwise be adjusted from
time to time at the Company’s discretion.

 

    	 	A-1	 

     

    

 

(b)         Employee
Benefits. As a regular full-time employee, you will be eligible to participate in the Company’s standard employee benefits
(pursuant to the terms and conditions of the benefit plans and applicable policies), as they may be terminated or changed from
time to time within the Company’s discretion.

 

(c)         Business
Expenses. Your legitimate and documented business expenses will be reimbursed by the Company as provided under its business
expense reimbursement policies.

 

3.           Annual
Performance Bonus. In addition to base salary, you will be eligible to earn discretionary incentive compensation at a total
annual target amount of forty percent (40%) of your base salary in effect during the bonus year (“Performance Bonus”),
based on the achievement of corporate and/or individual performance targets to be determined and approved by the Board of Directors
(the “Board”) or the Compensation Committee of the Board (the “Compensation Committee”).
The Performance Bonus, if earned, will be paid on an annual basis, less required payroll deductions and tax withholdings, after
the close of the fiscal year and after determination by the Board (or the Compensation Committee thereof) of the level of achievement
of the applicable performance targets and metrics and the level of the Performance Bonus amount (if any). No Performance Bonus
amount is guaranteed and, in addition to the other conditions for earning such Performance Bonus, you must remain an employee
in good standing of the Company on the Performance Bonus payment date in order to earn any Performance Bonus. You will be eligible
for a Performance Bonus for the initial year of your employment with the Company, pro-rated based on when your Start Date occurs.

 

4.           Equity
Award. Following your commencement of employment with the Company, you will be granted an option under the Company’s
2017 Equity Incentive Plan (the “Plan”) to purchase 150,000 shares of common stock of the Company (the “Option”).
The Option shall vest with respect to 25% of the shares underlying the Option on the one-year anniversary of your Start Date,
and in equal yearly installments thereafter, subject to your continued services to the Company. The Option shall be subject to
approval by the Board (or authorized committee thereof) and to the terms and conditions of the Plan, stock option grant notice
and option agreement to be entered into between you and the Company. The Option shall have an exercise price per share equal to
the fair market value of the Company’s common stock on the grant date of the Option, as determined by the Board (or authorized
committee thereof) in its sole, good faith discretion.

 

5.           Compliance
With Confidential Information Agreement and Company Policies. As a condition of employment, you shall sign and comply with
the Company’s form of Confidential Information and Inventions Agreement (or similarly termed agreement) (the “Confidential
Information Agreement”) which will be provided by the Company. In addition, you are required to abide by the Company’s
policies and procedures, as may be modified from time to time within the Company’s discretion.

 

    	 	2.	 

     

    

 

6.           Protection
of Third Party Information and Outside Activities.

 

(a)         Third
Party Information. In your work for the Company or its Affiliates, you will be expected not to make any unauthorized use or
disclosure of any confidential information or materials, including trade secrets, of any former employer or other third party;
and not to violate any lawful agreement that you may have with any third party. By signing this Agreement, you represent that
you are able to perform your job duties within these guidelines, and you are not in unauthorized possession or control of any
confidential documents, information, or other property of any former employer or third party. In addition, you represent that
you have disclosed to the Company in writing any agreement you may have with any third party (e.g., a former employer) which may
limit your ability to perform your duties to the Company or its Affiliates, or which could present a conflict of interest with
the Company or its Affiliates, including but not limited to disclosure (and a copy) of any contractual restrictions on solicitations
or competitive activities, and are not bound by any such restrictions which would restrict or prevent you from accepting employment
with the Company.

 

(b)         Outside
Activities. During your employment with the Company, you may engage in civic and not-for-profit activities, act as a trustee
for estate planning purposes and engage in, and manage, personal investments, so long as such activities do not interfere with
the performance of your duties hereunder or present a conflict of interest with the Company or its Affiliates. Subject to the
restrictions set forth herein, and only with prior written disclosure to and consent of the Board, you may engage in other types
of business or public activities. Your service on any board of directors (or similar) of an outside entity or organization shall
be subject to prior written approval of the Board (or an authorized committee thereof). The Board may rescind approval of outside
services, if the Board determines, in its sole discretion, that such activities compromise or threaten to compromise the Company’s
or its Affiliates’ business interests or conflict with your duties to the Company or its Affiliates.

 

(c)         Duty
of Loyalty. During your employment with the Company, you will not, without the express written consent of the Board, directly
or indirectly serve as an officer, director, stockholder, employee, partner, proprietor, investor, joint venturer, associate,
representative or consultant of any person or entity engaged in, or planning or preparing to engage in, business activity competitive
with any line of business engaged in (or, to your knowledge, immediately planned to be engaged in) by the Company or its Affiliates;
provided, however, that you may purchase or otherwise acquire up to (but not more than) five percent (5%) of any class of securities
of any enterprise (without participating in the activities of such enterprise) if such securities are listed on any national or
regional securities exchange. In addition, you will be subject to certain restrictions (including restrictions continuing after
your employment ends) under the terms of your Confidential Information Agreement.

 

    	 	3.	 

     

    

 

7.           At-Will
Employment Relationship. Your employment relationship with the Company is at-will. Accordingly, you may terminate your employment
with the Company at any time and for any reason whatsoever simply by notifying the Company, and the Company may terminate your
employment at any time with or without Cause or prior notice. In addition, the Company retains the discretion to modify your other
employment terms from time to time, including but not limited to your position, duties, authority, reporting relationship, work
location, compensation, and benefits.

 

8.           Severance
Benefits.

 

(a)         Severance
Benefits for Covered Termination. If, beginning on or after the six (6) month anniversary of your Start Date, (A) your employment
is terminated due to (1) a termination by the Company without Cause (other than as a result of your death or Disability) or (2)
your resignation for Good Reason (collectively, a “Covered Termination”), (B) you satisfy the Release Requirement
and (C) you continue to abide by the terms of your Confidential Information Agreement and the provisions of this Agreement that
survive your termination, including the Non-Competition provisions set forth in Section 11 (the requirements set forth in (B)
and (C), the “Severance Requirements”), then you will receive the “Severance Benefits” as
set forth in this Section 8(a) as your sole severance benefits, and you will not be eligible for severance benefits under any
other policy, plan or agreement except to the extent required by law. Specifically, you will receive:

 

(i)          Severance
Payments. Severance pay in the form of continuation of your base salary at the time of your Covered Termination (but ignoring
any decrease that forms the basis of your resignation for Good Reason, if applicable) for a period of six (6) months, subject
to required payroll deductions and tax withholdings (the “Severance Payments”). Subject to Section 9, the Severance
Payments shall be made on the Company’s regular payroll schedule in effect following your termination date, provided, however,
that any such payments that are otherwise scheduled to be made prior to the Release Effective Date (as defined below) shall instead
accrue and be made on the first regular payroll date following the Release Effective Date; and

 

(ii)         Health
Care Continuation Coverage Payments.

 

(A)       COBRA
Premiums. If you timely elect continued coverage under COBRA, the Company will pay your COBRA premiums to continue your coverage
(including coverage for your eligible dependents, if applicable) (“COBRA Premiums”) through the period starting
on the termination date and ending six (6) months after the termination date (the “COBRA Premium Period”);
provided, however, that the Company’s provision of such COBRA Premium benefits will immediately cease if during the COBRA
Premium Period you become eligible for group health insurance coverage through a new employer or you cease to be eligible for
COBRA continuation coverage for any reason, including plan termination. In the event you become covered under another employer's
group health plan or otherwise cease to be eligible for COBRA during the COBRA Premium Period, you must immediately notify the
Company of such event. For purposes of this Section, references to COBRA premiums shall not include any amounts payable you under
a Section 125 health care reimbursement plan under the Internal Revenue Code of 1986, as amended (the “Code”).

 

    	 	4.	 

     

    

 

(B)       Special
Cash Payments in Lieu of COBRA Premiums. Notwithstanding the foregoing, if the Company determines, in its sole discretion,
that it cannot pay the COBRA Premiums without potentially incurring financial costs or penalties under applicable law (including,
without limitation, Section 2716 of the Public Health Service Act), regardless of whether you or your dependents elect or are
eligible for COBRA coverage, the Company instead shall pay to you, on the first day of each calendar month following the time
the Company determines it cannot pay such COBRA Premiums, a fully taxable cash payment equal to the applicable COBRA premiums
for that month (including the amount of COBRA premiums for your eligible dependents), subject to applicable tax withholdings (such
amount, the “Special Cash Payment”), for the remainder of the COBRA Premium Period. You may, but are not obligated
to, use such Special Cash Payments toward the cost of COBRA premiums.

 

(b)         Severance
Benefits for Covered Termination during Change in Control Period. Notwithstanding the foregoing, if your Covered Termination
occurs during the period commencing one (1) month prior to the Closing of a Change in Control and ending twelve (12) months
following the Closing of a Change in Control, in addition to the Severance Benefits described in Section 8(a), you shall also
be eligible to receive the following, subject to satisfaction of the Severance Requirements:

 

(i)         Equity
Acceleration. The vesting and exercisability of each outstanding unvested stock option and other stock award, as applicable,
that you hold covering Company common stock (each, an “Equity Award”) shall be accelerated in full and any
reacquisition or repurchase rights held by the Company in respect of common stock issued pursuant to any Equity Award granted
to you shall lapse in full. For purposes of determining the number of shares that will vest pursuant to the foregoing provision
with respect to any Equity Award that vests based on performance goals for which the performance period has not ended and that
has multiple vesting levels depending upon the level of performance, vesting acceleration with respect to any ongoing performance
period(s) shall occur with respect to the number of shares subject to the award as if the applicable performance criteria had
been attained at a 100% level or, if greater, based on actual performance as of your Covered Termination. If necessary to give
effect to this Section 8(b)(i), if your Covered Termination occurs prior to a Change in Control, all of the Equity Awards you
hold as of immediately prior to your Covered Termination shall remain outstanding after your Covered Termination for at least
until the earlier of (i) thirty (30) days after your Covered Termination or (ii) the Closing, if sooner. Notwithstanding anything
to the contrary set forth herein, your Equity Awards shall remain subject to the terms of the applicable Company plan and award
documents under which such Equity Award was granted, including any provision for earlier termination of such Equity Awards.

 

    	 	5.	 

     

    

 

(c)         Release
Requirement. To be eligible for the Severance Benefits pursuant to Sections 8(a) and 8(b) above, you must satisfy the following
release requirement (the “Release Requirement”): return to the Company a signed and dated general release of
all known and unknown claims, in such form as provided by the Company (the “Release and Waiver”) within the
applicable deadline set forth therein, and permit the Release and Waiver to become effective and irrevocable in accordance with
its terms, which must occur no later than sixty (60) days following your termination date (such effective date of the Release
and Waiver, the “Release Effective Date”). You may be asked to provide reasonable transitional services as
a condition of payment of Severance Benefits.

 

(d)         Definitions.

 

(i)         “Affiliate”
means, at the time of determination, any “parent” or “majority-owned subsidiary” of the Company, as such
terms are defined in Rule 405 promulgated under the Securities Act of 1933, as amended. The Board will have the authority to determine
the time or times at which “parent” or “majority-owned subsidiary” status is determined within the foregoing
definition.

 

(ii)         “Cause”
means the occurrence of any one or more of the following: (i) your conviction of, or plea of no contest with respect to, any felony,
or of any misdemeanor involving dishonesty or moral turpitude; (ii) your participation in a fraud or act of dishonesty (or an attempted
fraud or act of dishonesty) that results in (or could result in) material harm to the Company or its Affiliates, including but
not limited to material harm to reputational interests; (iii) your violation of a fiduciary duty owed to the Company or its Affiliates;
(iv) your material breach of any fully executed agreement between you and the Company or any of its Affiliates, including but not
limited to this Agreement or your Confidential Information Agreement, or any applicable Company policies; (v) persistent, unsatisfactory
performance or neglect of your job duties, which is not cured within ten (10) business days after you are provided written notice
by the Company specifically identifying the manner of your performance or neglect (provided, that, such written notice and
opportunity to cure are not required if your performance or neglect is not reasonably susceptible to being cured); (vi) your gross
misconduct or material failure to comply with a written instruction of the Company; or (vii) your inability to perform your job
duties for any consecutive thirty (30) day period for any reason that is not the result of death or Disability.

 

(iii)        “Change
in Control” means the occurrence, in a single transaction or in a series of related transactions, of any one or more
of the following events:

 

    	 	6.	 

     

    

 

(A)       any
Exchange Act Person1 (excluding Imprimis Pharmaceuticals, Inc. and any of its Affiliates (“Imprimis”))
becomes the Owner2, directly or indirectly, of securities of the Company representing more than fifty percent (50%)
of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation
or similar transaction. Notwithstanding the foregoing, a Change in Control will not be deemed to occur (A) on account of the acquisition
of securities of the Company directly from the Company, (B) on account of the acquisition of securities of the Company by an investor,
any affiliate thereof or any other Exchange Act Person that acquires the Company’s securities in a transaction or series
of related transactions the primary purpose of which is to obtain financing for the Company through the issuance of equity securities
or (C) solely because the level of Ownership held by any Exchange Act Person (the “Subject Person”) exceeds
the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting
securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of voting securities by the Company, and after such share acquisition,
the Subject Person becomes the Owner of any additional voting securities that, assuming the repurchase or other acquisition had
not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over the designated
percentage threshold, then a Change in Control will be deemed to occur;

 

(B)       there
is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after
the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto
do not Own, directly or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%) of the
combined outstanding voting power of the surviving entity in such merger, consolidation or similar transaction or (B) more than
fifty percent (50%) of the combined outstanding voting power of the parent of the surviving entity in such merger, consolidation
or similar transaction, in each case in substantially the same proportions as their Ownership of the outstanding voting securities
of the Company immediately prior to such transaction;

 

(C)       the
stockholders of the Company approve or the Board approves a plan of complete dissolution or liquidation of the Company, or a complete
dissolution or liquidation of the Company will otherwise occur, except for a liquidation into a parent corporation; or

 

 

1
“Exchange Act Person” means any natural person, entity or “group” (within the meaning
of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” will not include (i) the Company
or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee
or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an
underwriter temporarily holding securities pursuant to an offering of such securities, (iv) an entity Owned, directly or indirectly,
by the stockholders of the Company in substantially the same proportions as their Ownership of stock of the Company; or (v) any
natural person, entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as
of the Effective Date, is the Owner, directly or indirectly, of securities of the Company representing more than fifty percent
(50%) of the combined voting power of the Company’s then outstanding securities. “Exchange Act” means
the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

2
“Own,” “Owned,” “Owner,” “Ownership” A person or entity
will be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership”
of securities if such person or entity, directly or indirectly, through any contract, arrangement, understanding, relationship
or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities.

 

    	 	7.	 

     

    

 

(D)       there
is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of
the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated
assets of the Company and its Subsidiaries to Imprimis or to an entity, more than fifty percent (50%) of the combined voting power
of the voting securities of which are Owned by stockholders of the Company in substantially the same proportions as their Ownership
of the outstanding voting securities of the Company immediately prior to such sale, lease, license or other disposition.

 

Notwithstanding the foregoing definition
or any other provision of this Agreement, the term Change in Control will not include a sale of assets, merger or other transaction
effected exclusively for the purpose of changing the domicile of the Company.

 

(iv)         “Closing”
means the initial closing of the Change in Control as defined in the definitive agreement executed in connection with the Change
in Control. In the case of a series of transactions constituting a Change in Control, “Closing” means the first closing
that satisfies the threshold of the definition for a Change in Control.

 

(v)         “Disability”
means your inability to perform the essential functions of your position, with or without reasonable accommodation, by reason of
any medically determinable physical or mental impairment, where such inability has continued for at least a period of 60 days in
any consecutive 365 day period, as determined by the Company in its sole discretion.

 

(vi)         “Good
Reason” for your resignation means the occurrence of any of the following events, conditions or actions taken by the
Company without Cause and without your written consent: (i) a material reduction of your annual base salary; provided, however,
that Good Reason shall not be deemed to have occurred in the event of a reduction in your annual base salary that is pursuant to
a salary reduction program affecting substantially all of the executive employees of the Company; (ii) a material reduction in
your authority, duties or responsibilities; (iii) a relocation of your principal place of employment with the Company to a place
that increases your one-way commute by more than fifty (50) miles as compared to your then-current principal place of employment
immediately prior to such relocation (excluding regular travel in the ordinary course of business); or (iv) a material breach by
the Company of any provision of this Agreement; provided, however, that in each case above, in order for your resignation to be
deemed to have been for Good Reason, you must first give the Board written notice of the action or omission giving rise to “Good
Reason” within thirty (30) days after the first occurrence thereof; the Company must fail to reasonably cure such action
or omission within thirty (30) days after receipt of such notice (the “Cure Period”), and your resignation from
all positions you hold with the Company must be effective not later than thirty (30) days after the expiration of such Cure Period.

 

    	 	8.	 

     

    

 

(vii)         “Subsidiary”
means, with respect to the Company, (i) any corporation of which more than fifty percent (50%) of the outstanding capital stock
having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the
time, stock of any other class or classes of such corporation will have or might have voting power by reason of the happening of
any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited liability company
or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits
or capital contribution) of more than fifty percent (50%).

 

(e)         Other.
You will not be eligible for any Severance Benefits under any circumstances other than those described herein, including circumstances
in which your employment is terminated by the Company for Cause, you terminate your employment for any reason at any time, or
your employment terminates due to your death or Disability. In addition, if you materially breach any continuing obligations to
the Company (including but not limited to any material breach of the Confidential Information Agreement and the Non-Competition
terms set forth in Section 11) during the period of time that you are receiving any Severance Benefits, you will forfeit your
entitlement to any then unpaid Severance Benefits, and the Company’s obligation to continue to pay or provide such Severance
Benefits will immediately terminate as of the date of your material breach.

 

9.           Section
409A. It is intended that all of the benefits and other payments payable under this Agreement satisfy, to the greatest extent
possible, an exemption from the application of Section 409A of the Code and the regulations and other guidance thereunder and
any state law of similar effect (collectively “Section 409A”), and this Agreement will be construed to the
greatest extent possible as consistent with those provisions, and to the extent no so exempt, this Agreement (and any definitions
hereunder) will be construed in a manner that complies with Section 409A, and any ambiguities herein shall be interpreted accordingly.
Specifically, the benefits under this Agreement are intended to satisfy the exemptions from application of Section 409A provided
under Treasury Regulations Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9) and each installment of severance benefits,
if any, is a separate “payment” for purposes of Treasury Regulations Section 1.409A-2(b)(2)(i). However, if such exemptions
are not available and you are, upon your “separation from service” with the Company (within the meaning of Treasury
Regulation Section 1.409A-1(h) (without regard to any permissible alternative definition thereunder) (“Separation from
Service”), a “specified employee” for purposes of Section 409A, then, solely to the extent necessary to
avoid adverse personal tax consequences under Section 409A, the timing of the severance benefits payments shall be delayed until
the earlier of (i) six (6) months and one (1) day after your Separation from Service, or (ii) your death. Severance benefits shall
not commence until you have a Separation from Service. If the severance benefits are not covered by one or more exemptions from
the application of Section 409A and the Release and Waiver could become effective in the calendar year following the calendar
year in which your Separation from Service occurs, the Release Effective Date will not be deemed effective, for purposes of payment
of severance, any earlier than the first day of the second calendar year. Except to the minimum extent that payments must be delayed
because you are a “specified employee” or until the Release Effective Date, all severance amounts will be paid as
soon as practicable in accordance with this Agreement and the Company’s normal payroll practices.

 

    	 	9.	 

     

    

 

10.         Section
280G.

 

(a)         If
any payment or benefit you would receive from the Company or otherwise in connection with a change in control of the Company or
other similar transaction (“Payment”) would (1) constitute a “parachute payment” within the meaning
of Section 280G of the Code, and (2) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the
“Excise Tax”), then such Payment will be equal to the Reduced Amount. The “Reduced Amount”
will be either (x) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise
Tax, or (y) the largest portion, up to and including the total, of the Payment, whichever amount ((x) or (y)), after taking into
account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest
applicable marginal rate), results in your receipt, on an after-tax basis, of the greater amount of the Payment notwithstanding
that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in payments or benefits constituting “parachute
payments” is necessary so that the Payment equals the Reduced Amount, reduction will occur in the manner (the “Reduction
Method”) that results in the greatest economic benefit for you. If more than one method of reduction will result in the
same economic benefit, the items so reduced will be reduced pro rata (the “Pro Rata Reduction Method”).

 

(b)         Notwithstanding
the foregoing, if the Reduction Method or the Pro Rata Reduction Method would result in any portion of the Payment being subject
to taxes pursuant to Section 409A that would not otherwise be subject to taxes pursuant to Section 409A, then the Reduction Method
and/or the Pro Rata Reduction Method, as the case may be, shall be modified so as to avoid the imposition of taxes pursuant to
Section 409A as follows: (A) as a first priority, the modification shall preserve to the greatest extent possible, the greatest
economic benefit for you as determined on an after-tax basis; (B) as a second priority, Payments that are contingent on future
events (e.g., being terminated without cause), shall be reduced (or eliminated) before Payments that are not contingent on future
events; and (C) as a third priority, Payments that are “deferred compensation” within the meaning of Section 409A shall
be reduced (or eliminated) before Payments that are not deferred compensation within the meaning of Section 409A.

 

(c)         The
independent registered public accounting firm engaged by the Company for general audit purposes as of the day prior to the effective
date of the event described in Section 280G(b)(2)(A)(i) of the Code will perform the foregoing calculations. If the independent
registered public accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group
effecting the change in control or similar transaction, the Company will appoint a nationally recognized independent registered
public accounting firm to make the determinations required hereunder. The Company will bear all expenses with respect to the determinations
by such independent registered public accounting firm required to be made hereunder. The independent registered public accounting
firm engaged to make the determinations hereunder will make its determination with input from you (or your counsel) and provide
its calculations, together with detailed supporting documentation, to the Company and you within fifteen (15) calendar days after
the date on which your right to a Payment is triggered (if requested at that time by the Company or you) or such other time as
reasonably requested by the Company or you.

 

    	 	10.	 

     

    

 

11.         Non-Competition.
You agree that during the period of your employment and for the period of 12 months after the date your employment ends for any
reason, including but not limited to voluntary termination by you or involuntary termination by the Company, you will not perform
services for, or in any way manage, operate, join, control or participating in the ownership, management, operation or control
of, or be connected to as an employee, shareholder, director, manager, member, consultant, adviser, volunteer, or partner to,
whether for compensation or not, any entity (including for your own account), that engages in a Competing Business anywhere in
the world where the Company conducts business. You and the Company agree that for purposes of this Agreement, “Competing
Business” means any product, creative solution, or service that contains the same active ingredient and which is sold
or provided in competition with a product, creative solution, or service that: (a) you sold or provided on behalf of the Company;
(b) one or more Company employees or business units managed, supervised, or directed by you sold or provided on behalf of the
Company; (c) was designed, developed, tested, distributed, marketed, provided, or produced by you (individually or in collaboration
with other Company employees) or one or more Company employees or business units you managed, supervised, or directed; or (d)
that was designated, tested, developed, distributed, marketed, produced, sold, or provided by the Company with management or executive
support from you. This provision does not prohibit you from being a passive investor of not more than 5% of the outstanding stock
of any Competing Business, so long as you have no active participation in the business of such Competing Business.

 

12.         Dispute
Resolution. To ensure the rapid and economical resolution of disputes that may arise in connection with your employment with
and services for the Company, you and the Company agree that any and all disputes, claims, or causes of action, in law or equity,
including but not limited to statutory claims, arising from or relating to the enforcement, breach, performance, or interpretation
of this Agreement, your employment with and services for the Company, or the termination of your employment with and services
for the Company, will be resolved pursuant to the Federal Arbitration Act, 9 U.S.C. §§1-16, and to the fullest extent
permitted by law, by final, binding and confidential arbitration conducted in Chicago, Illinois (or such other location as mutually
agreed by the parties) by JAMS, Inc. (“JAMS”) or its successors by a single arbitrator. Both you and
the Company acknowledge that by agreeing to this arbitration procedure, you each waive the right to resolve any such dispute through
a trial by jury or judge or administrative proceeding. Any such arbitration proceeding will be governed by JAMS’
then applicable rules and procedures for employment disputes, which will be provided to you upon request. In any such proceeding,
the arbitrator shall (a) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief
as would otherwise be permitted by law; and (b) issue a written arbitration decision including the arbitrator’s essential
findings and conclusions and a statement of the award. You and the Company each shall be entitled to all rights and remedies that
either would be entitled to pursue in a court of law. Nothing in this Agreement is intended to prevent either the Company or you
from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration pursuant
to applicable law. The Company shall pay all filing fees in excess of those that would be required if the dispute were decided
in a court of law, and shall pay the arbitrator’s fees and any other fees or costs unique to arbitration. Any awards or
orders in such arbitrations may be entered and enforced as judgments in the federal and state courts of any competent jurisdiction.

 

    	 	11.	 

     

    

 

13.         Indemnification.
Upon your Start Date, you shall be eligible for indemnification by the Company in your role as Chief Financial Officer to the
fullest extent as provided for pursuant to Section 8.1 of the Company’s By-Laws, as may be amended and restated from time
to time.

 

14.         Miscellaneous.
This Agreement, along with the Confidential Information Agreement, forms the complete and exclusive statement of your agreement
with the Company regarding the subject matter hereof. It supersedes and replaces any other agreements or promises made to you
by anyone concerning your employment terms with the Company or any Affiliate thereof, whether oral or written. This Agreement
may not be amended or modified except by a written modification signed by you and a duly authorized member of the Board, with
the exception of those changes expressly reserved to the Company’s discretion in this Agreement. This Agreement is governed
by the laws of the state of Illinois without reference to conflicts of law principles, and it is intended to bind and inure to
the benefit of and be enforceable by the Company and its successors and assigns. If any provision of this Agreement shall be held
invalid or unenforceable in any respect, such invalidity or unenforceability shall not affect the other provisions of this Agreement,
and such provision will be reformed, construed and enforced so as to render it valid and enforceable consistent with the general
intent of the parties insofar as possible under applicable law. With respect to the enforcement of this Agreement, no waiver of
any right hereunder shall be effective unless it is in writing. Any ambiguity in this Agreement shall not be construed against
either party as the drafter. This Agreement may be executed in counterparts which shall be deemed to be part of one original,
and facsimile and electronic signatures shall be equivalent to original signatures. To the extent required by law, your employment
with the Company will be subject to satisfactory proof of your identity and right to work in the United States.

 

To accept our offer of employment under
the terms set forth herein, please sign and date this Agreement and return the fully signed documents to me at your earliest convenience
and no later than within fifteen business days from the date listed above.

 

Please let me know if you have any questions.

 

    	 	12.	 

     

    

 

	Sincerely,
	 
	ETON PHARMACEUTICALS, INC.

 

	By:  	/s/ Sean Brynjelsen	 
	 	Sean Brynjelsen	 

 

	Reviewed, Understood, and Accepted:	 	 
	 	 	 
	/s/ Wilson Troutman	 	June 25, 2017
	Wilson Troutman	 	Date
	 	 	 
	Accepted by Company:	 	 
	 	 	 
	/s/ Sean Brynjelsen	 	June 25, 2017
	Sean Brynjelsen, Chief Executive Officer	 	Date

 

    	 	13.Exhibit 10.14

 

EXCLUSIVE
LICENSE AND

SUPPLY
AGREEMENT

 

This Exclusive
License and Supply Agreement (“Agreement”) is made and entered into as of August 3, 2018 (“Effective Date”),
between ETON PHARMACEUTICALS, INC., a Delaware corporation (“ETON”), with a place of business at 21925 Field Parkway,
Suite 235, Deer Park, IL 60010, LIQMEDS WORLDWIDE LIMITED, a private company limited by shares, registered in England and Wales
(“LMW”), with a place of business at 65 Delamere Road, Hayes, Middlesex, United Kingdom, UB4 0NN, and LM MANUFACTURING,
LTD. (“LM”), each a “Party” and collectively the “Parties”).

 

RECITALS

 

WHEREAS,
LMW has developed a proprietary solution designated as *** Oral Solution (the “Product”);

 

WHEREAS,
ETON is engaged in the business of licensing, developing, marketing, distributing and selling pharmaceutical drug products;

 

WHEREAS,
LM is engaged in the business of manufacturing the Product;

 

WHEREAS,
the Parties desire to enter into a license and supply agreement for the development, manufacture and marketing of the Product within
the Territory (as defined below) subject to the terms set out in this Agreement.

 

NOW,
THEREFORE, in consideration of the respective covenants, agreements, representations, warranties and indemnities herein contained
and for other good and valuable consideration (the receipt and sufficiency of which are acknowledged by each Party), the Parties
agree to the following terms and conditions:

 

AGREEMENT

 

		1.	Definitions.

 

“Accounting Standards” shall mean, with
respect to a Person, the current applicable Generally Accepted Accounting Principles (GAAP) in the United States of America consistently
applied by such a Person.

 

____________________________

***Text has been omitted pursuant to Registrant’s
confidential treatment request filed with the Securities and Exchange Commission (“Commission”) pursuant to Rule 406
under the Securities Act of 1933. The omitted text has been filed separately with the Commission

\ 

 

    	 	 	 

    	 	 

    

 

“Affiliate” means with respect to any Party,
any party controlling, controlled by or under common control with any such Party. For purposes hereof, “control” and
its derivatives means the possession, directly or indirectly, of the power to direct or cause the direction of the management and
policies of a Party, whether through the ownership of voting securities or voting interests, by contract or otherwise.

 

“ANDA” means an Abbreviated New Drug Application,
or similar application for marketing approval of a Product submitted to the FDA.

 

“API” means the active pharmaceutical ingredient
in unfinished form.

 

“Applicable Law” means as to any person
or entity, any treaty, constitution, statute, ordinance, law, rule or regulation, guidance issued by a governmental or regulatory
authority, or order or other determination of an arbitrator or a court or other governmental or regulatory authority, in each case
applicable to or binding upon such person or entity or any of its property or to which such person or entity or any of its property
is subject (including, without limitation, the U.S. Act and cGMPs).

 

“Calendar Quarter” means the three-month
period beginning on January 1, April 1, July 1, and October 1 of each calendar year.

 

“cGMP” generally means current Good Manufacturing
Practices in the Territory. With respect specifically to the Registration (NDA or ANDA), cGMP means the current Good Manufacturing
Practices as established by FDA as the same may be amended from time to time.

 

“CMO” means the acronym, Contract Manufacturing
Organization, a third-party contract manufacturer. The initial CMO is LM Manufacturing, Ltd. (“LM”)

 

“Commercial Launch” means the first shipment
of the Product in commercial quantities for commercial sale to a third party in the Territory after receipt of all applicable regulatory
approvals therefor.

 

“Components” means raw materials for use
in manufacturing of the API and/or the Product.

 

“FDA” means the United States Food and Drug
Administration and its successors.

 

“NDA” shall mean a New Drug Application,
or similar application for marketing approval of a Product submitted to the FDA.

 

“Insignia” means trademarks, trade names,
logos, symbols, badges, labels, decorative designs, packaging designs or similar trade dress.

 

    	 	 	 

    	 	 

    

 

“Net Profit” shall mean Net Sales less (i)
ETON’s Transfer Price paid for the Product, (ii) the cost of any customs duties, tariffs, freight, recall fees, patient assistance/copay
programs and insurance for shipment of the Product, and (iii) supply marketing and management fee (“SMM Fee”) in connection
therewith billed to a Third Party by ETON or any of its Affiliates or sublicensees and before income taxes. Net Profits shall be
calculated in accordance with U.S. generally accepted accounting principles.

 

“Net Sales” shall mean, with respect to
any Calendar Quarter, the actual total gross sales of the Product (number of units times the invoice price per unit) by ETON or
its Affiliates in the Territory to Third Party customers (including hospital sales, mail orders, retail sales, and sales to governmental
entities, wholesalers, and medical institutions) less the following deductions: (i) cash or prompt payment discounts, credits or
allowances actually granted upon claims, damaged goods, rejections or returns of the Product; (ii) services fees, distribution
fees or commissions payable to Third Party customers; (iii) Freight, postage shipping and insurance charges for the delivery of
the Product to Third Party customers if separately stated on the invoice; (iv) taxes (excluding income taxes) or duties levied
on, absorbed or otherwise imposed on the sale of the Product; (v) adjustments on account of price adjustments or one-time per customer
stocking allowances; (vi) chargebacks resulting from resales by wholesalers and distributors to other Third Parties; (vii) rebates,
promotional allowances, administrative fee agreements and similar buying groups, health care insurance carriers, pharmacy benefit
management companies, health maintenance organizations, Medicaid or Medicare or similar type programs, professional allowances,
trade spend and payments to public or private third party payers; and (viii) other programs of monetary value usual or customary
in the pharmaceutical industry in the Territory provided to customers and (ix) any invoiced amounts which are not collectable by
ETON or its Affiliates (including bad debts), the entire set of aforementioned deductions (i through ix inclusive) as solely in
connection with the sale of the Product and as determined in accordance with U.S. generally accepted accounting principles.

 

“Person” shall mean an individual, a corporation,
a company, a firm, a joint venture, a partnership, an association, a trust or other business entity or organization, including
a government or agency or political subdivision thereof.

 

“Product” means *** Oral Solution.

 

_____________________________

 

*** Text has been omitted pursuant to Registrant’s
confidential treatment request filed with the Securities and Exchange Commission (“Commission”) pursuant to Rule 406
under the Securities Act of 1933. The omitted text has been filed separately with the Commission

 

    	 	 	 

    	 	 

    

 

“Territory” means collectively all the territories
and possessions of the United States of America.

 

“US Regulatory Agent” means, the party responsible
for all communications with the FDA for the NDA or ANDA, including but not limited to compiling and submission of Annual Reports,
any necessary Pharmacovigilance, and AE reporting.

 

		2.	License Grants and Financial Terms.

 

		a.	License Grants. Subject to the terms of this Agreement, LMW hereby grants to ETON an exclusive
license of the Product for the development, manufacture, importation, use, sale and offer for sale of the Product, including any
and all intellectual property related to the Product, in the Territory.

 

____________________________

 

		b.	Milestone Payments. Within thirty (30) days following the first achievement of each of the
following milestone events, ETON shall pay to LMW the corresponding non-reimbursable milestone payments, not to exceed four million
six hundred thousand dollars ($4,600,000.00 US), as follows:

 

	Milestone Event	   	Milestone Payment
	 	 	 
	Upon execution of this exclusive license and supply agreement (“Agreement”)	 	Three hundred fifty thousand dollars ($350,000.00 US)
	 	 	 
	Upon FDA acceptance of NDA filing for review	 	
        One million five hundred thousand dollars

        ($1,500,000.00 US)

	 	 	 
	Upon FDA approval of NDA, provided that the approval is received prior to December 31, 2020	 	
        One million dollars

        ($1,000,000.00 US)

	 	 	 
	Upon issuance of Product patent listed in the FDA’s Orange-Book	 	
        One million two hundred fifty thousand dollars

        ($1,250,000.00 US)

	 	 	 
	If Product sales exceed $10 million US within a calendar year	 	
        Five hundred thousand dollars

        ($500,000.00 US)

 

		c.	Profit Sharing. Subject to the terms of this Agreement, ETON shall pay to LMW thirty-five
(35%) of the Net Profit, payable on a quarterly calendar basis; provided however, that if during any Calendar Quarter the Net Profits
are negative (less than zero) then a negative balance will accrue and will be offset by future milestone or profit share payments
owed to LMW. Profit sharing payments, accompanied by a statement reasonably setting forth the basis for the calculation, shall
be tendered by ETON to LMW within forty-five (45) days following the end of the Calendar Quarter. Deductions under Net Profits,
if any, shall be summarized in reasonable detail with corresponding supporting documentation.

 

    	 	 	 

    	 	 

    

 

		3.	Product NDA/ANDA.

 

		a.	NDA/ANDA. Subject to the terms and conditions of this Agreement, LMW hereby grants to ETON
the exclusive right to develop, obtain regulatory approval for, make, have made, use, sell, offer to sell, import and otherwise
commercialize Products in the Territory. ETON will be the owner of the NDA/ANDA and shall take all reasonably necessary steps to
obtain an NDA/ANDA for the Product in the Territory by performing such development and obtaining such data and information as reasonably
necessary therefor.

 

		b.	NDA/ ANDA Submission Fees. ETON shall be responsible for the submission fees for the NDA/ANDA.
ETON shall have the right to recoup thirty-five (35%) any such fees from initial profits prior to any profit sharing with LMW.
Both Parties shall cooperate in the performance of the regulatory obligations and shall provide each other, in a timely manner
(for the Annual Report this is defined as 40 days after the anniversary date for approval of the NDA or ANDA) with such information,
assistance, documents and reports reasonably required to perform such obligations.

 

		c.	Pre-IND Meeting. Within forty-five (45) days after the Effective Date, ETON will request
a Pre-IND meeting with the FDA. LMW agrees to cooperate with ETON’s requests for information required in preparation for
the meeting and preparation of the briefing package.

 

		d.	Bioequivalence Study. LMW shall be solely responsible for the coordination and management
of the bioequivalence study, subject to ETON’s written approval of the study design, protocols, clinical research organizations
prior to initiation of the study. LMW shall be solely responsible for the cost of the bioequivalence study, except that ETON shall
reimburse LMW for forty (40%) of the costs actually incurred by LMW in the performance of the study. The study shall be completed
by no later than December 31, 2018.

 

		e.	Quality Agreement. As soon as practicable following the Effective Date, but not later than
ninety (90) days, the Parties shall enter into the Quality Agreement. The Quality Agreement shall be substantially similar to ETON’s
standard quality agreement, and shall contain provisions consistent with the provisions in this Agreement and such other provisions
as otherwise required for compliance with cGMP and all other applicable FDA requirements.

 

    	 	 	 

    	 	 

    

 

		4.	Manufacturing and Supply.

 

		a.	Manufacturer. The Product shall be manufactured by LM MANUFACTURING, LTD. (“LM”), exclusively for ETON in
conformity with the applicable requirements and specifications (for both the API or the Product, as applicable) as set forth in
this Agreement (including, but not limited to, the Specifications and Applicable Law). ETON shall be granted rights of inspection
and audit over the manufacturing facility. LM shall be responsible for maintaining applicable governmental licenses and permits,
including Finished Dosage Form facility fee, at its own expense. LM shall purchase raw materials and Components through vendors
approved for the API and the Product by the FDA pursuant to the NDA or ANDA. LMW shall be responsible for ensuring that LM complies
with the terms of this Agreement and delivers Product in conformance with the requirements of (i) all Applicable Law; (ii) cGMP;
(iii) the Quality Agreement; and (iv) the Agreement. Any and all manufacturers manufacturing the Product or any component thereof
must have received and continue to maintain satisfactory cGMP inspection status. Under no circumstances whatsoever, may the API
or any Component of the Product manufactured under this Agreement be manufactured at a facility that fails to maintain the inspection
status or requirements of this Agreement.

 

		b.	Secondary Supply. If LM does not receive FDA approval by June 30, 2019 or if ETON believes LM will have issues meeting
Product demand, ETON shall have the right to transfer manufacturing of the Product to an alternate manufacturer of its sole and
exclusive choosing, however LMW will be informed about this within appropriate time. Any costs incurred by ETON for the qualification
of a manufacturer pursuant to this section shall be deducted from any profit share or milestone payment owed to LMW pursuant to
this Agreement.

 

		c.	Purchase Orders. This Agreement applies to all Purchase Orders that ETON, and/or any of its current or future Affiliates,
may place with LM for the purchase of Product. The terms and conditions of this Agreement including those presented in all exhibits
attached hereto shall apply to any Purchase Order, regardless whether this Agreement or its terms and conditions are expressly
referenced in such Purchase Order. Any term or condition set forth in (i) any Purchase Order; or (ii) any acknowledgment or sale
document from LM that is inconsistent or not provided in this Agreement shall not be applicable to any orders for the Product placed
by ETON during the Term, unless expressly agreed to by the Parties in writing. LM shall be deemed to have accepted a Purchase Order
for which LM does not notify ETON in writing within seven (7) business days after its receipt, provided that LM may only reject
such Purchase Order to the extent it is inconsistent with the terms of this Agreement. LM shall be deemed to have accepted all
Purchase Orders that are consistent with this Agreement. Product will be delivered in the timeframe set forth in the applicable
Purchase Order; provided, however, that: (a) if no timeframe is specified in the Purchase Order, Product will be delivered ninety
(90) days after the Purchase Order date and (b) unless otherwise agreed by the Parties, any delivery date specified in a Purchase
Order will not be earlier than ninety (90) days after the Purchase Order date.

 

    	 	 	 

    	 	 

    

 

		d.	No Minimum Orders or Forecasts. ETON shall not be subject to any minimum order requirements. Eton will be required to
provide annual forecasts of upcoming Product purchases with six months’ firm forecast.

 

		e.	Transfer Price. ETON shall pay to LM a transfer price equal to LM’s actual direct costs to manufacture the product,
including API, material, and direct labor costs (the “Transfer Price”). LM shall provide ETON with an itemized calculation
of the Transfer Price. The initial Transfer Price is estimated at approximately twenty dollars $20.00 US per bottle.

 

		f.	Invoices. Except as mutually agreed by the Parties, LM will invoice ETON for the Transfer Price of Product purchased
under this Agreement and any applicable freight costs owed for such Product. Payments are due within thirty (30) days after invoice
receipt for Product purchased by ETON.

 

		g.	SMM Fees. ETON shall be entitled to compensation for managing the supply and marketing of the Product in the Territory
(the “SMM Fee”), as follows:

 

		·	Fifteen percent (15%) of Net Sales realized in the first twelve (12)
months following the Commercial Launch of the Product.

 

		·	For each subsequent twelve (12) month period thereafter:

		·	Fifteen percent (15%) of Net Sales, for Net Sales between $0 and $15,000,000
US;

		·	Twelve and one-half percent (12.5%) of Net Sales, for Net Sales between
$15,000,001 and $30,000,000 US;

		·	Ten percent (10%) of Net Sales, for Net Sales of greater than $30,000,000
US.

 

Notwithstanding the foregoing, in the event the parties
launch an Authorized Generic of the Product (“AG”), the SMM Fee for such AG shall be seven and one-half (7.5%) of the
Net Sales attributable to such AG for each twelve (12) month period, following the Commercial Launch of the AG.

 

		5.	Delivery and Acceptance.

 

		a.	Deliveries. Failure to deliver the Product of the quality and quantity in accordance with this Agreement or by the scheduled
shipment date stated in the applicable Purchase Order shall, at the option of ETON, relieve it of any obligation to accept and
pay for any of the Product which is not of proper quality or quantity (product not delivered or shorted) under such Purchase Order,
as well as any undelivered shipments, if any. Any failure by ETON to exercise its option with respect to any shipment of the Product
as set forth in this section shall not be deemed to constitute a waiver with respect to subsequent shipments.

 

    	 	 	 

    	 	 

    

 

		b.	Batch Certifications. LM or a duly authorized representative (CMO) shall conduct quality control tests on the API and
the Product prior to shipment in accordance with all applicable laws, regulations and requirements set forth in the NDA/ANDA specifications,
and all applicable test methods; (ii) at ETON’s request, furnish samples of the API or Product to ETON; and (iii) deliver
with each shipment of Product, a Certificate of Analysis for each Product lot included in a shipment in accordance with the Specifications.

 

		c.	Acceptance of Product.

 

		(i)	ETON may examine and test Product as it sees fit and may reject Product provided hereunder by LM if such Product is defective
for any reason, adulterated or misbranded in any manner, or otherwise poses a threat of harm to the public (including, without
limitation, by failing to meet the requirements of this Agreement, the Quality Agreement, any Applicable Law, the Specifications
or the NDA/ANDA’s requirements) (collectively, a “Product Defect”); provided, however that ETON shall give written
notice to LM of its rejection of any Product hereunder, together with appropriate documentation for its decision (a “Rejection
Notice”), within fifteen (15) days after ETON’s receipt of shipment of such Product. The Rejection Notice shall specify
the grounds for rejection. If such Rejection Notice is not received within fifteen (15) days after ETON’s receipt of any
Product, such Product shall be deemed to be accepted by ETON. However, any Product Defect that would not be discoverable upon a
reasonable inspection of a Product (a “Hidden Defect”) will not be deemed accepted by ETON at any time. As soon as
possible but not exceeding the shelf life of any Product, if either Party becomes aware of a Hidden Defect in such Product, it
will, within five (5) business days of becoming aware of such Hidden Defect, notify the other Party in writing about all Product
involved (a “Hidden Defect Rejection Notice”). At ETON’s discretion, any Product subject to a Hidden Defect shall
be deemed rejected as of the date of any such Hidden Defect Rejection Notice.

 

		(ii)	LM may dispute a Rejection Notice or Hidden Defect Rejection Notice by providing written notice to ETON of the dispute within
fifteen (15) days after receipt of such Rejection Notice or Hidden Defect Rejection Notice (as applicable), which notice from LM
shall specify, in reasonable detail, the grounds for the dispute.

 

		(iii)	If a Rejection Notice or Hidden Defect Rejection Notice for any Product is not disputed by LM as set forth in this section
or if, in the event of a rejection dispute between the Parties, the contract laboratory referred to below gives a decision in favor
of ETON, then:

 

		a.	ETON may withhold all payment for the rejected Product;

 

    	 	 	 

    	 	 

    

 

		b.	Where payment for the rejected Product has been made, LM will promptly issue a full credit or pay a full refund (as selected
by ETON) to ETON for the rejected Product;

		c.	LM will promptly pay to ETON any and all reasonable out-of- pocket costs and expenses resulting from the Product Defect, Hidden
Defect or Product rejection, including but not limited to customer failure- to-supply penalties and destruction costs; and

		d.	LM will promptly supply ETON with conforming Product in replacement of the rejected Product.

 

		(iv)	If there is a dispute between the Parties with respect to the rejection of Product, the Parties will first seek to amicably
resolve the dispute among themselves. If, after thirty (30) days, the Parties believe that the dispute cannot be amicably resolved,
then the Parties shall mutually agree on a contract laboratory to conduct further testing of rejected Product in or order for the
laboratory to determine whether the rejected Product meets the requirements for rejection set forth in this section. The Party
whose conclusions are not borne out by the laboratory shall bear the cost of such testing. If the contract laboratory gives a decision
in favor of LM, ETON shall promptly pay for the Product subject to the dispute, if such payment had not earlier been made; if the
contract laboratory gives a decision in favor of ETON, LM shall immediately perform its obligations pursuant to this section. The
decision of the contract laboratory, to the extent dispositive of a Product rejection dispute between the Parties, shall be binding
upon the Parties with respect to such rejection dispute.

 

		6.	Commercialization, Marketing and Distribution.

 

		a.	ETON, its affiliates, or designated third-party marketing partner shall use reasonable commercial efforts consistent with normal
business practices to develop and commercialize the Product in the Territory. ETON shall be responsible, in its sole and absolute
discretion to direct the sale, marketing and promotional activities of the Product. Pricing, methods of distribution, contracting
and any other decisions related to the sales and marketing of the Product shall be solely decided by ETON.

 

		7.	Intellectual Property.

 

		a.	Licensing. LMW grants ETON, its affiliates or designated marketing partner an exclusive, royalty-free license to any
and all current and future intellectual property related to the Product in the Territory.

 

    	 	 	 

    	 	 

    

 

		b.	Branding of Product.

 

		(i)	LMW shall label and package all Product in accordance with the respective labeling approved by ETON and in accordance with
Applicable Laws. Once approved by ETON, LMW will not change in any manner any labeling of any Product manufactured by LM for ETON
without the prior written consent of ETON.

 

		(ii)	ETON’s Insignia shall be affixed to the Product as directed by ETON. All related sales brochures, marketing materials,
and packaging shall only bear ETON’s Insignia as directed by ETON.

 

		(iii)	ETON shall be responsible for submission of all marketing and promotional materials utilized by either Party to FDA as required
by Applicable Law.

		(iv)	LMW grants to ETON during the Term a non-exclusive, indivisible, revocable and terminable license, without the right to sublicense,
to use the LMW Insignia in the Territory as specifically directed by ETON in writing, and only to the extent necessary to label
and brand the Product and related sales brochures, marketing materials, and packaging pursuant to ETON’s specifications,
and for no other purposes.

 

		(v)	Notwithstanding any of the provisions of this Agreement, LMW shall not at any time do anything or act in any way that would
or might adversely affect the value or validity of any ETON Insignia or other Intellectual Property Rights belonging to ETON. LMW
shall immediately notify ETON in writing upon becoming aware of any infringement, misappropriation or imitation of any Intellectual
Property Rights of ETON or of any facts that LMW believes might constitute infringement, misappropriation or imitation thereof.
All uses of ETON’s Insignia shall inure exclusively to ETON’s sole benefit.

 

		8.	Non-Compete.

 

		a.	During the Term of this Agreement, and for a period of five (5) years thereafter, LMW will not research, develop, manufacture,
file, sell, market, or distribute any competitive product, nor will LMW directly or indirectly assist any other person or entity
in carrying out any such activities. “Competitive Product” means any product containing the same API as the Product(s)
which is marketed and sold for the oral route of administration.

 

    	 	 	 

    	 	 

    

 

		9.	Confidentiality.

 

		a.	The Receiving Party shall keep the Disclosing Party’s Confidential Information confidential
and shall not directly or indirectly, use, divulge, publish or otherwise disclose or allow to be disclosed any aspect of the Disclosing
Party’s Confidential Information, except (i) with the Disclosing Party’s prior written consent, (ii) as permitted
by this Agreement or (iii) to the Receiving Party’s Representatives (as defined below) who need to know such Confidential
Information for the purposes of this Agreement, provided that prior to such disclosure to such a Representative, the Representative
shall be bound by obligations of confidentiality to the Receiving Party at least as restrictive as those of this Agreement and
shall be advised of the confidential nature of such information. The Receiving Party will be responsible for any breach of this
section resulting from the conduct of its Representatives. “Representative” of a Party means such Party’s Affiliates
and its and their officers, directors, employees, agents and advisors. Upon written request by the Disclosing Party, the Receiving
Party shall promptly return to the Disclosing Party or, if elected by the Receiving Party, destroy, any Confidential Information
of the Disclosing Party in the possession or control of the Receiving Party or its Representatives, provided that the Receiving
Party may retain one (1) copy of such information to be used solely for determining the rights of the Parties hereunder or as required
by Applicable Law and may retain copies thereof in its information technology systems (all of which retained Confidential Information
will remain subject to the terms and conditions of this Agreement). Notwithstanding anything to contrary herein, Confidential Information
of the Disclosing Party shall not include any information that falls within any of the following exceptions, provided the Receiving
Party produces credible written evidence to establish or otherwise establishes that such information:

 

		(i)	is or becomes part of the public domain without breach of this Agreement by the Receiving Party or any of its Representatives;

		(ii)	is independently developed or discovered by or for the Receiving Party without use of or reference to Confidential Information
of the Disclosing Party;

		(iii)	is received from a third party who lawfully acquires such information without an obligation of confidentiality, and without
breach of this Agreement by the Receiving Party; or

		(iv)	was in the Receiving Party’s possession without an obligation of confidentiality to the Disclosing Party prior to the
disclosure by the Disclosing Party.

 

		b.	If the Receiving Party or any of its Representatives becomes required pursuant to Applicable Law, any rule or regulation (including,
without limitation, subpoena, civil investigative demand, compulsory process or other legal requirement) to disclose any Confidential
Information of the Disclosing Party, then (i) the Receiving Party will promptly notify the Disclosing Party in writing thereof
and will cooperate with the Disclosing Party, at the Disclosing Party’s expense, in seeking a protective order or confidential
treatment and (ii) the Receiving Party and its Representatives may disclose such Confidential Information to the extent so required.

 

		c.	The Disclosing Party would be irreparably injured by a breach of this section by the Receiving Party, and such a breach would
not be compensable in money damages. Accordingly, in addition to any other rights and remedies of the Disclosing Party pursuant
to this Agreement and Applicable Law, the Disclosing Party shall be entitled to seek injunctive and other equitable relief with
respect to any breach or threatened breach of this section.

 

    	 	 	 

    	 	 

    

 

		d.	The rights and obligations of the Parties pursuant to this section will terminate five (5) years
after the termination or expiration of this Agreement.

 

		10.	Insurance. Each Party shall obtain, at its expense, the following minimum insurance coverages during the term of this Agreement
and for five (5) years thereafter:

 

		a.	For ETON, the following insurance coverages:

 

		(i)	Worker’s compensation insurance as required by applicable law;

		(ii)	Product liability insurance with respect to the Product with a minimum of Five Million Dollars ($5,000,000) per occurrence
and Five Million Dollars ($5,000,000) annual aggregate for bodily injury and property damage;

		(iii)	Commercial general liability insurance with a minimum of Five Million Dollars ($5,000,000) per occurrence and Five Million
Dollars ($5,000,000) annual aggregate; and

		(iv)	Property insurance (sufficient to fully cover the cost of replacement), through the designated freight carrier or otherwise,
on all of the Products at all times until receipt by ETON.

 

		b.	LMW shall be liable for any Product defects, to the extent of the maximum value of the defective goods or the aggregate amount
payable pursuant to this Agreement, whichever is greater.

 

		c.	Limitation of Liability.

 

NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN,
NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES, WHETHER FORESEEABLE OR
NOT, THAT ARE IN ANY WAY RELATED TO THIS AGREEMENT.

 

    	 	 	 

    	 	 

    

 

		11.	Indemnification.

 

		a.	LMW Indemnification Obligations. LMW shall indemnify, defend and hold harmless ETON, and its Affiliates, and their respective
officers, directors, shareholders, employees, agents and representatives (collectively “ETON Indemnitees”) for, from
and against all third-party claims, damages, liabilities, losses and other expenses, including but not limited to reasonable attorneys’
fees and costs (collectively, “Third Party Claims”), whether or not a lawsuit or other proceeding is filed, to the
extent arising out of or caused by (i) any dispute or claim that the Product, its design or any of its elements, or any LM manufacturing
processes or methods employed or to be employed by or on behalf of LM, infringe, misappropriate or violate any third party’s
Intellectual Property Rights; (ii) product liability claims, injury to or death of persons or damage to property that may have
been caused, or that may be alleged to have been caused, directly or indirectly, by LMW, LM or any the manufacturing, storage or
transportation processes or methods employed or to be employed at a manufacturing facility used by or on behalf of, LMW, LM, or
any Affiliate thereof, any subcontractor of LMW, LM or any of their Affiliates, or any of their respective employees or agents;
(iii) any defect in the Product, its design, manufacture, or other failure of the Product to comply with its respective Specifications,
Applicable Law (including, without limitation, cGMPs) or the other requirements of this Agreement, including but not limited to
any costs associated with Product recalls; (iv) any negligent act or omission, recklessness, willful misconduct or fraud of LMW,
LM, or any of their respective agents, or subcontractors; (v) any breach of any representation, warranty, or covenant of this Agreement
by LMW, whether resulting from the conduct of LMW, LM or otherwise; (vi) LMW’s or LM’s failure to fully conform to
all Applicable Laws, ordinances, rules and regulations which affect the Product, its use, or any part thereof or that are otherwise
applicable to LMW or LM (including, without limitation, cGMPs), or (vii) any claim of a third party that any right granted to ETON
under this Agreement is in conflict with any of the rights granted to such third party or otherwise infringes, conflicts with,
breaches or results in a default under any agreement to which such third party is or claims to be entitled; provided, however,
that LMW shall have no such obligation to indemnify, defend or hold harmless with respect to any Third Party Claim to the extent
such Third Party Claim is caused by the recklessness, willful misconduct or fraud of any ETON Indemnitee, or ETON’s breach
of this Agreement.

 

		b.	ETON Indemnification Obligations. ETON shall indemnify, defend and hold harmless LMW, and its affiliates, and their
respective officers, directors, shareholders, employees, agents and representatives (collectively “LMW Indemnitees”)
for, from and against all Third Party Claims, whether or not a lawsuit or other proceeding is filed, to the extent arising out
of or caused by (i) any dispute or claim that any of ETON Insignia or any of their elements infringe or violate any third party’s
Intellectual Property Rights; (ii) any negligent act or omission, recklessness, willful misconduct or fraud of ETON, its agents,
or Affiliates; (iii) any breach of any representation, warranty, or covenant of this Agreement by ETON; or (iv) ETON’s failure
to fully conform to Applicable Laws which affect the Product, its use, or any part thereof or that are otherwise applicable to
ETON; provided, however, that ETON shall have no such obligation to indemnify, defend or hold harmless with respect to any Third
Party Claim to the extent such Third Party Claim is caused by the recklessness, willful misconduct or fraud of any LMW Indemnitee,
or LMW’s breach of this Agreement.

 

    	 	 	 

    	 	 

    

 

		12.	Representations and Warranties.

 

		a.	ETON Representations and Warranties. ETON represents, warrants and covenants: (i) that it has the full power, right
and authority to execute and deliver this Agreement and that it shall use commercially reasonable best efforts to perform its obligations
hereunder; (ii) that it will assign to its performance of this Agreement professional personnel, qualified to perform the process
procedures consistent with the technical requirements of this Agreement; (iii) that none of the ETON personnel to be assigned to
this Agreement have or shall have been subject to debarment under the United States Generic Drug Enforcement Act or any other penalty
or sanction by FDA; and (iv) ETON will comply (and will cause any agents, subcontractors or other third parties conducting business
relating to the ANDA on ETON’s behalf to comply) with the requirements of GDUFA that are applicable to ETON.

 

		b.	LMW Representations and Warranties. LMW represents, warrants and covenants: (i) that it has the full power, right and authority
to execute and deliver this Agreement and that it shall use commercially reasonable best efforts to perform its obligations hereunder;
(ii) that it will assign to its performance of this Agreement professional personnel, qualified to perform the process procedures
consistent with the technical requirements of this Agreement; (iii) that none of the LMW personnel to be assigned to this Agreement
have or shall have been subject to debarment under the United States Generic Drug Enforcement Act or any other penalty or sanction
by FDA or under any U.S. Federal or State healthcare program; (iv) that it will manufacture and supply the Product in conformity
with, and otherwise perform its obligations hereunder in accordance with, and it will cause the CMO to perform in accordance with,
all Applicable Laws (including but not limited to cGMP and all applicable FDA regulatory requirements), the Quality Agreement,
this Agreement and generally accepted professional standards; (v) that all rights granted to ETON under this Agreement will not
conflict with those granted to any third-parties; (vi) that all data, information, results of experimentation and testing incorporated
by LMW into an NDA or ANDA prepared in accordance with this Agreement are accurate and complete in all respects; and (vii) that
LMW will comply (and will cause CMO, and any agents, subcontractors or other third parties conducting business relating to the
ANDA on LMW’s behalf to comply) with the requirements of GDUFA that are applicable to LMW, including, without limitation,
all provisions relating to self-identification. LMW will ensure the payment of all applicable GDUFA facility and DMF fees, whether
payable by LMW or CMO, its agent(s) or suppliers.

 

		c.	Product Warranties. LMW represents, warrants and covenants: (i) that the Product shall be free from defect in workmanship
and materials; (ii) that the Product shall meet its Specifications; (iii) that, upon delivery of a Product and during such time
as such Product was under LMW’s control, the Product will be in conformity with Applicable Law and the Quality Agreement,
and shall not be adulterated, misbranded, misused, contaminated, tampered with or otherwise altered, mishandled, or subjected to
negligence; and (iv) that title to all Products delivered hereunder shall pass to ETON concurrently with risk of loss, free and
clear of all liens, encumbrances and other adverse claims. LMW additionally warrants that the Product supplied hereunder shall
only be built using Components purchased from vendors approved by FDA pursuant to the ANDA.

 

    	 	 	 

    	 	 

    

 

		13.	Further development of the product;

 

Both parties may agree to further develop the product
for new indications/usage and in such case, both parties will agree on further licensing agreement.

 

		14.	Term and Termination.

 

		a.	Term. This Agreement shall commence on the Effective Date and shall continue for a period of ten (10) years from the
first commercial sale of the Product in the Territory. Agreement shall auto-renew for two years’ terms unless either party
provides written notification of termination at least 12 months prior to expiration of the then current term.

 

		b.	Termination.

 

Material Breach. In the event of a material
breach of this Agreement by either Party, the non- breaching Party may provide written notice of such breach to the breaching Party,
including a description of the breach, and indicating the non-breaching Party’s intent to terminate this Agreement. The breaching
Party will have sixty (60) days from its receipt of such notice to cure the breach, provided the breach is capable of being cured
within the sixty (60) day period. If the breaching Party fails to cure the breach within such period, then unless otherwise agreed
by the non-breaching Party, this Agreement will terminate on the date that is sixty (60) days following the breaching Party’s
receipt of the notice of breach from the non- breaching Party. If the breach is not capable of being remedied within sixty (60)
days, the Agreement terminates upon the written notice.

 

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

 

Applicable Law. If the manufacture, distribution
or sale of the Product in the Territory would materially contravene any existing or new applicable law which cannot be brought
into compliance with such law within a reasonable period of time following a notice of non-compliance or violation. Or a violation
by any party of a trade control law and/or anti-corruption law.

 

    	 	 	 

    	 	 

    

 

Product Deficiencies. If there is a negative
outcome of a facilities cGMP audit where the Product is manufactured for which deficiencies are not cured within three (3) months.

 

Eton’s Option. ETON may, in its sole
and absolute discretion, terminate this Agreement at any time for regulatory or commercial reasons.

 

		c.	Effect of Termination. Termination of this Agreement shall not affect a Party’s entitlement to profit sharing
or milestone payments that accrue prior to the date of termination or that accrue after termination with respect to Product supplied
hereunder prior to the date of termination, provided that the uncured breach, status or actions of the Party causing such termination
do not impair its entitlement to such profit sharing or milestone payments. Upon termination of this agreement for any reason,
ETON shall retain sole and exclusive ownership of the NDA/ANDA filing.

 

		15.	General Terms.

 

		a.	Relationship of Parties. The relationship between LMW, LM and ETON, with respect to this Agreement, is only that of
independent contractors notwithstanding any activities set forth in this Agreement. Neither Party is the agent or legal representative
of the other Party, and neither Party has the right or authority to bind the other Party in any way. This Agreement creates no
relationship as partners or a joint venture, and creates no pooling arrangement.

 

		b.	Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York,
U.S.A., without reference to its conflict of laws principles.

 

		c.	Resolution of Disputes. Any and all disputes or claims arising or out of this Agreement shall be litigated exclusively
before a court of the State of New York, U.S.A. or, if subject matter jurisdiction exists, the United States District Court for
the District of New York. Each party hereto hereby irrevocably and unconditionally consents to the exclusive personal jurisdiction
and service of, and venue of, any such court, and further irrevocably and unconditionally waives and agrees not to plead or claim
that any action, lawsuit or proceeding brought in any such court has been brought in an inconvenient forum. Any judgment issued
by such a court may be enforced in any court having jurisdiction.

 

		d.	Assignment. Neither party shall assign its rights or obligations under this Agreement without the prior written consent
of the other party, which shall not be unreasonably withheld or delayed; provided, however, that a party may, without such consent,
assign this Agreement and its rights and obligations hereunder (a) to any Affiliate, or (b) in connection with the transfer or
sale of all or substantially all of its business to which this Agreement relates, or in the event of its merger, consolidation,
change in control or similar transaction. Any permitted assignee shall assume all obligations of its assignor under this Agreement.

 

    	 	 	 

    	 	 

    

 

		e.	Counterparts. This Agreement may be executed in several counterparts that together shall be originals and constitute
one and the same instrument.

 

		f.	Waiver. The failure of any Party to enforce any of its rights hereunder or at law shall not be deemed a waiver of any
of its rights or remedies against another Party, unless such waiver is in writing and signed by the Party to be charged. No such
waiver shall be deemed a waiver of any subsequent breach or default of the same or similar nature or any other breach or default
by such other Party.

 

		g.	Severability. If any provision of this Agreement, or part thereof, is declared by a court of competent jurisdiction
to be invalid, void or unenforceable, each and every other provision, or part thereof, shall nevertheless continue in full force
and effect.

 

		h.	Notices. All notices or communications given pursuant to this Agreement shall be in writing, if to ETON, addressed to
the attention of CEO, Eton Pharmaceuticals, Inc., 21925 Field Parkway, Suite 235, Deer Park, IL 60010, and if to LMW to the attention
of Mohammed Arsalaan Khan, Liqmeds Worldwide, Ltd., 65 Delamere Road, Hayes, Middlesex, United Kingdom, UB4 0NN, and shall be:
(a) hand delivered, (b) sent by prepaid express courier service, or (c) sent by electronic mail (e-mail) or facsimile transmission.
A Party may change its address for the receipt of notices and communications hereunder by providing the other Party with written
notice thereof given in accordance with this section. All notices and other communications shall be deemed given when received.

 

		i.	Further Assurances. The Parties agree to execute such additional documents and perform such acts as are reasonably necessary
to effectuate the intent of this Agreement.

 

		j.	Compliance With Laws. Each Party agrees to comply with all Applicable Laws, including, without limitation, GDUFA or
PDUFA, cGMPs and state licensing laws, in its performance under this Agreement.

 

		k.	Entire Agreement. This Agreement, including all exhibits and attachments, constitutes the entire agreement between the
Parties regarding the subject matter hereof, and supersedes all prior or contemporaneous understandings or agreements regarding
the subject matter hereof, whether oral or written. This Agreement shall be modified or amended only by a writing signed by both
ETON and LMW.

 

		l.	Authority. The parties executing this Agreement on behalf of ETON and LMW represent and warrant that they have the authority
from their respective governing bodies to enter into this Agreement and to bind their respective companies to all the terms and
conditions of this Agreement.

 

    	 	 	 

    	 	 

    

 

		m.	Force Majeure. Neither Party shall be liable for delays in its performance caused by events beyond its control, such
as fires, floods, labor shortages, strikes, epidemics, computer virus, earthquakes, riots, acts of terror, acts of God, storms,
acts of civil or military authority or similar occurrences, provided the affected Party gives the other Party written notice of
such event within three (3) business days of its occurrence. Such notice shall state the estimated duration of such event and the
cause thereof and the affected Party shall use commercially reasonable efforts to work around such event beyond its control.

 

		n.	Headings and Construction. No rule of construction will be applied to the disadvantage of a party because that party
was responsible for the preparation of this Agreement or any part of this Agreement. The Article and Section headings in this Agreement
are for convenient reference only, and will be given no substantive or interpretive effect. With respect to all terms used in this
Agreement, words used in the singular include the plural and words used in the plural include the singular. The word ‘including’
means including without limitation, and the words ‘herein’, ‘hereby’, ‘hereto’ and ‘hereunder’
refer to this Agreement as a whole. Unless the context otherwise requires, references found in this Agreement: (i) to Articles
and Sections mean the Articles and Sections of this Agreement, as amended, supplemented and modified from time to time; (ii) to
an agreement, instrument or other document means such agreement; (iii) to an agreement, instrument or other document means such
agreement, instrument or other document as amended, supplemented and modified from time to time, to the extent provided by the
provisions thereof and by this Agreement; and (iv) to a statute or a regulation mean such statute or regulation as amended from
time to time.

 

		o.	Drug Supply Chain Security Act. The Parties agree to strictly comply with the Drug Supply Chain Security Act, and all other
laws related to the subject matter of this Agreement.

 

    	 	 	 

    	 	 

    

 

IN WITNESS WHEREOF, the Parties have hereunto
set forth their hands and seals as of the Effective Date above.

 

	On behalf of:	 	On behalf of:
	ETON PHARMACEUTICALS, INC.	 	LIQMEDS WORLDWIDE LTD.
	 	 	 
	/s/ Sean Brynjelsen	 	/s/ Mohammed Arsalaan Khan
	By:	Sean Brynjelsen	 	By:	Mohammed Arsalaan Khan
	Its:	President	 	Its:	Director
	 	 	 
	 	 	On behalf of:
	 	 	LM MANUFACTURING, LTD.
	 	 	 
	 	 	/s/ Mohammed Arsalaan Khan
	 	 	By:	Mohammed Arsalaan Khan
	 	 	Its:	Director

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