Document:

ASSET PURCHASE AGREEMENT

 Exhibit 10.14 
  
 ASSET PURCHASE AGREEMENT 
  
 THIS ASSET PURCHASE AGREEMENT is executed as of the 28th day of June, 2002, by and between LAYTON BIOSCIENCE, INC., a Delaware corporation with its headquarters at 709 East Evelyn Avenue, Sunnyvale, CA 94086
(“Layton”), and TARGACEPT, INC., a Delaware corporation with its headquarters at 200 East First Street, Suite 300, Winston-Salem, North Carolina 27101-4165 (“Targacept”). 
  
 ARTICLE I - DEFINITIONS 
  
 The following terms as used in this Agreement shall have the meanings set
forth below: 
  
 SECTION 1.1 “Acquired Assets” means:
(i) the Intellectual Property; (ii) the Documentation; (iii) the Regulatory Documentation; (iv) the Contracts; and (v) the Inventory. 
  
 SECTION 1.2 “Affiliate” means, as to any Person: (i) any other Person of which more than fifty percent (50%) of the voting stock or other equity
interest is owned, directly or indirectly, by such Person; (ii) any other Person that, directly or indirectly, owns more than fifty percent (50%) of the voting stock or other equity interest of such Person; or (iii) any other Person under the direct
or indirect control of a Person described in clause (i) or clause (ii). 
  
 SECTION 1.3 “Agreement” means this Asset Purchase Agreement, as may be amended from time to time, including all Schedules hereto. 
  
 SECTION 1.4 “Assumed Liabilities” means: (i) all obligations of Layton under the Contracts that accrue for, or are attributable to, periods
after the Closing Date; and (ii) all liabilities arising out of the research, development, manufacture, production, sales, marketing, distribution, license, exploitation and/or commercialization of the Product by Targacept after the Closing Date
(except as provided in Section 8.2). 
  
 SECTION 1.5 “Closing
Date” means the date on which the “Closing” (as defined in Section 3.1) occurs. 
  
 SECTION 1.6 “Contracts” means all contracts, commitments, agreements, licenses, understandings and obligations, whether written or oral, to which Layton is party and that relate to the research, development,
manufacture, production, sales, marketing, distribution, license, exploitation and/or commercialization of the Product or by which any of Acquired Assets is bound or affected. 
  
 SECTION 1.7 “Documentation” means all records, asset ledgers, books of account, inventory records, customer and
supplier lists, sales literature and advertising and promotional materials relating to the Product or any of the Acquired Assets. 
  
 SECTION 1.8 “Excluded Assets” means all assets, properties, rights and interests of Layton other than the Acquired Assets. 
  
 SECTION 1.9 “Excluded Liabilities” means all liabilities,
obligations, commitments and debts of Layton that are not Assumed Liabilities. Without limiting the generality of the 

 
foregoing and by way of example only, all liabilities, obligations, commitments or debts: (i) under the Contracts that accrue for, or are attributable to,
periods prior to the Closing Date; (ii) related to the Acquired Assets and incurred prior to, or attributable to periods occurring prior to, the Closing Date; or (iii) arising out of the research, development, manufacture, production, sales,
marketing, distribution, license, exploitation and/or commercialization of the Product on or prior to the Closing Date (including, without limitation, liabilities for returns made at any time within six (6) months after the Closing Date of Product
sold prior to the Closing Date, not to exceed $100,000) or the consumption, use or sale of Product sold or otherwise transferred by Layton after the Closing Date to Persons other than Targacept are Excluded Liabilities. 
  
 SECTION 1.10 “FDA” means the United States Food and Drug
Administration. 
  
 SECTION 1.11 “IND” means the
Investigative New Drug Application (reference no. 58,680) for the Product previously filed with the FDA for neuropsychiatric indications included in the Regulatory Documentation, together with any supplements thereto, and all legal rights and
privileges belonging or accruing to the owner or holder thereof. 
  
 SECTION 1.12 “Intellectual Property” means all of the intellectual properties and property rights that are owned, leased or licensed by Layton as of the Closing Date and used in or related to the research, development,
manufacture, production, sales, marketing, distribution, license, exploitation and/or commercialization of the Product, including without limitation: (i) the trademarks listed on Schedule 4.11 and all United States, foreign and state
registrations and applications for registration relating thereto; and (ii) the United States and foreign patents and applications for patent relating thereto listed on Schedule 4.11 (together with all continuations, continuations-in-part,
divisions, patents of addition, reissues, renewals or extensions thereof and all SPCs with respect thereto, the “Patents”). 
  
 SECTION 1.13 “Inventory” means all supplies and quantities of Layton as of the Closing Date, wherever located, of: (i) the chemical compound
mecamylamine hydrochloride; (ii) the formulated tablet containing mecamylamine hydrochloride as marketed by Layton in the United States under the trademark INVERSINE®; (iii) the materials and supplies to be used or consumed in the production of the chemical compound mecamylamine
hydrochloride or the formulated tablet containing mecamylamine hydrochloride; and (iv) all packaging materials related to any of the foregoing. 
  
 SECTION 1.14 “Know-how” means any and all confidential technical information and know-how which relates to the Product and is in the possession
of Layton as of the Closing Date, including, without limitation, biological, chemical, pharmacological, toxicological, clinical, assay, control, sales and manufacturing data. 
  
 SECTION 1.15 “Liens” means mortgages, liens, pledges, charges, security interests or encumbrances of any kind
whatsoever. 
  
 SECTION 1.16 “NDA” means the
application(s) previously filed with the FDA for marketing authorization of the Product within the United States included in the Regulatory Documentation, together with any supplements thereto, and all legal rights and privileges belonging or
accruing to the owner or holder thereof. 
  

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 SECTION 1.17 “Person” means an individual, a corporation, a partnership, a limited liability
company, an association, a trust, or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. 
  
 SECTION 1.18 “Product” means: (i) the chemical compound mecamylamine hydrochloride (including, but not limited to, any stereoisomers, either
separated or combined, any hydrates, any solvates and any crystal forms); (ii) as of the Closing Date, the formulated tablet containing mecamylamine hydrochloride as heretofore marketed by Layton in the United States under the trademark
INVERSINE®; and/or (iii) as of the Closing Date,
any tablet or other formulation of mecamylamine hydrochloride (including, but not limited to, any stereoisomers, either separated or combined, any hydrates, any solvates and any crystal forms). 
  
 SECTION 1.19 “Recorded Information” means information or data that
is physically recorded or stored in a readable or retrievable form (e.g., writing, microfiche, computer disk, etc.). 
  
 SECTION 1.20 “Regulatory Documentation” means all regulatory filings, submissions, notices (of approval and otherwise), correspondence and
supporting materials and safety data for the Product owned by Layton or to which Layton has rights as of the Closing Date, including without limitation (i) all NDAs, the IND and all applications regarding the “Orphan Drug” classification
of mecamylamine hydrochloride and all approvals thereof, all of which in existence as of the date hereof and as of the Closing Date are set forth on Schedule 1.20, and (ii) all clinical data contained or related to any of the foregoing, and
all legal rights and privileges belonging or accruing to the owner or holder thereof. 
  
 SECTION 1.21 “Required Notice” means notification to the FDA of the transfer of the NDA, IND and Orphan Drug classification of mecamylamine hydrochloride. 
  
 SECTION 1.22 “SPC” means a right based upon a patent to exclude
others from making, using or selling the Product, such as a Supplementary Protection Certificate. 
  
 SECTION 1.23 “Specified Consents” means the written consents of Merck & Co., Inc., the University of South Florida Research
Foundation and the University of South Florida to the sale, transfer, assignment and conveyance of the Acquired Assets to Targacept. 
  
 SECTION 1.24 “Technical Package” means Recorded Information relating to the manufacture and sale of the product by Layton prior to the date of
this Agreement, which shall contain such items bulk drug specifications and finished product specifications. 
  
 SECTION 1.25 “Territory” means all the countries and territories of the world. 
  
 SECTION 1.26 “Third Party” means any Person other than a party to this Agreement or an Affiliate of either party.

  
 ARTICLE II - PURCHASE AND SALE 
  
 SECTION 2.1 Purchase and Sale. Subject to the terms and conditions set
forth in this Agreement, Layton agrees to sell, convey, assign and transfer to Targacept, and Targacept agrees 

  

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to purchase, on the Closing Date, all of the Acquired Assets. Layton shall retain the Excluded Assets. 
  
 SECTION 2.2 Assumption of Liabilities. Subject to the terms and
conditions of this Agreement, Targacept agrees to assume the Assumed Liabilities. Layton expressly understands and agrees that Targacept does not assume, and shall not be liable for, any Excluded Liabilities and that Layton shall retain all Excluded
Liabilities. 
  
 SECTION 2.3 Purchase Price. 
  
 (a) Targacept shall pay, in consideration for the Acquired Assets, the
following amounts: 
  
 (i) on the Closing Date,
the sum of One Million Three Hundred Thousand Dollars ($1,300,000) to Layton (the “Initial Layton Payment”), and the sum of One Million Seven Hundred Thousand Dollars ($1,700,000) to a Layton escrow account for payment of payables relating
to the Acquired Assets (the “Escrow Payment” and, together with the Initial Layton Payment, the “Closing Payments”); and 
  
 (ii) within two (2) business days after Targacept receives written notice that Layton has submitted the Required Notice to FDA, the sum of
Five Hundred Thousand Dollars ($500,000) to Layton (the “Final Layton Payment”). 
  
 (b) The Closing Payments and the Final Layton Payment will be tendered by Targacept to Layton by Federal wire of funds to: 
  

	 	(i)	with respect to the Initial Layton Payment and the Final Layton Payment, 

  
 Chase Manhattan Bank, routing # 021-000-021 
 Account #066296390, for further credit to account #AQX951591; and 
  

	 	(ii)	with respect to the Escrow Payment, 

  
 Bank of America, routing #121-000-358 
 Account #04133-16823. 
  
 SECTION 2.4 Legal
Tender. All payments required to made under this Agreement shall be made in lawful money of the United States of America. 
  
 ARTICLE III - EXECUTION, CLOSING AND EFFECTIVENESS 
  

SECTION 3.1 Execution; Closing; Deliveries. 
  
 (a) The transactions contemplated by this Agreement shall be consummated at a closing (the “Closing”) to occur on or before July 12, 2002, at
Targacept’s offices in Winston-Salem, North Carolina or at such other time or location as the parties may mutually agree. 
  

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 (b) On or before the Closing Date, Layton shall deliver to Targacept, by hand delivery at the Closing or
by shipping such items to a destination in the United States specified by Targacept: (i) all tangible portions of the Acquired Assets (including, without limitation, the Documentation, the Regulatory Documentation and the Contracts), except that the
Inventory shall remain at its current location(s) pending further instruction from Targacept; and (ii) the Technical Package. 
  
 (c) At the Closing, Layton shall deliver to Targacept appropriately executed and authenticated Trademark Assignments to Targacept substantially in the
form of Schedule A hereto (collectively, the “Trademark Assignments”) selling, assigning, transferring and conveying to Targacept all of the trademarks included in the Intellectual Property (the “Trademarks”). 

 
 (d) At the Closing, Layton shall execute and deliver to Targacept a Bill
of Sale and Assignment and Assumption Agreement substantially in the form of Schedule B (the “Bill of Sale and Assignment”) selling, assigning, transferring and conveying the Acquired Assets to Targacept. 
  
 (e) At the Closing, Layton shall deliver a certificate of its Board of
Directors certifying: (i) that the conditions set forth in Sections 3.2(b)(ii), 3.2(b)(iii) and, if the Closing Date is after the date hereof, 3.2(b)(i) have been satisfied; (ii) that the corporate resolutions authorizing the execution, delivery and
performance of the Layton Agreements (as defined in Section 4.1(b)) the consummation of the transactions contemplated therein, attached thereto are in full force and effect and have not been amended, modified or rescinded; and (iii) as to the
incumbency and authority of the officers of Layton executing the Layton Agreements and acting on its behalf in connection with the transactions contemplated thereby. 
  
 (f) At the Closing, Layton shall deliver to Targacept evidence that all Specified Consents have been obtained. 

 
 (g) At the Closing, Layton shall cause its counsel, Ken Moseley, to
deliver to Targacept certain legal opinions relating to corporate matters, dated the Closing Date, in the form of Schedule C. 
  
 (h) At the Closing, Targacept shall make the Closing Payments to Layton as described in Section 2.3(b). 
  
 (i) At the Closing, Targacept shall deliver a certificate of its Chief
Executive Officer certifying: (i) that the conditions set forth in Sections 3.2(a)(ii) and, if the Closing Date is after the date hereof, 3.2(a)(i) have been satisfied; (ii) that the corporate resolutions authorizing the execution, delivery and
performance of this Agreement, and the consummation of the transactions contemplated herein, attached thereto are in full force and effect and have not been amended, modified or rescinded; and (iii) as to the incumbency and authority of the officers
of Targacept executing this Agreement and acting on its behalf in connection with the transactions contemplated hereby. 
  
 (j) Targacept shall pay or cause to be paid any and all third-party costs and expenses relating to the transfer and assignment to Targacept of the
Trademarks, including, without 

  

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limitation, all costs and taxes with respect to recordation of transfer. Recordation of transfer and assignment of the Trademarks shall be the responsibility
of Targacept. 
  
 SECTION 3.2 Conditions Precedent to
Closing. 
  
 (a) Conditions Precedent to Obligations of
Layton. The obligation of Layton to consummate the transactions contemplated by this Agreement to be consummated at the Closing shall be subject to the reasonable satisfaction, or to the waiver by Layton in writing, on or before the Closing
Date, of the following conditions, all of which are for the sole benefit of Layton: 
  
 (i) all representations and warranties of Targacept set forth in Article V or elsewhere in this Agreement shall have been true, correct
and complete when made and shall be true, correct and complete as of the Closing Date; 
  
 (ii) Targacept shall have performed and complied in all material respects with each and every covenant, agreement and condition required
by this Agreement to be performed or complied with by Targacept prior to or on the Closing Date; 
  
 (iii) all actions required to be taken, and deliveries required to be made or caused to be made, by Targacept at Closing pursuant to
Section 3.1 shall have been taken or made; and 
  
 (iv) all Specified Consents shall have been obtained on terms satisfactory to Layton. 
  
 (b) Conditions Precedent to Obligations of Targacept. The obligation of Targacept to consummate the transactions contemplated by this Agreement to be consummated at the Closing shall be subject to the
reasonable satisfaction, or to the waiver by Targacept in writing, on or before the Closing Date, of the following conditions, all of which are for the sole benefit of Targacept: 
  
 (i) all representations and warranties of Layton set forth in Article IV or elsewhere in this Agreement
shall have been true, correct and complete when made and shall be true, correct and complete as of the Closing Date; 
  
 (ii) Layton shall have performed and complied in all material respects with each and every covenant, agreement and condition required by
this Agreement to be performed or compiled with by Layton prior to or on the Closing Date; 
  
 (iii) all Specified Consents shall have been obtained on terms satisfactory to Targacept; and 
  
 (iv) all actions required to be taken, and deliveries
required to be made or caused to be made, by Layton at Closing pursuant to Section 3.1 shall have been taken or made. 
  
 SECTION 3.3 Further Assurances. From time to time within one (1) year after the Closing Date, Layton shall, at Targacept’s expense, execute
and deliver any further instruments 

  

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or documents as Targacept may reasonably request in order to accomplish transfer of the Acquired Assets to Targacept as contemplated hereby. 
  
 SECTION 3.4 No Brokers. Layton and Targacept mutually represent and
warrant to each other that they have not negotiated with any broker or finder in connection with this Agreement or the subject matter hereof. Each party agrees that should any claim be made against the other party for any broker’s commission or
finder’s fee by reason of the acts of such party, the party upon whose acts such claim is adjudicated shall hold the other party harmless from and against all liability and expense in connection therewith. 
  
 ARTICLE IV - LAYTON’S REPRESENTATIONS AND WARRANTIES

  
 Layton represents and warrants as of the date hereof and
as of the Closing Date that 
  
 SECTION 4.1 Corporate Existence
and Authorization; No Contravention; Specified Consents. 
  
 (a) Layton is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Layton has the requisite corporate power and authority to own, lease and license the Acquired Assets. 
  
 (b) Layton has the requisite corporate power and authority to execute and
deliver this Agreement and the related Bill of Sale and Assignment and Trademark Assignments (collectively, the “Layton Agreements”) and to perform the transactions contemplated hereby and thereby. The execution, delivery and performance
of each of the Layton Agreements has been duly and validly authorized by all necessary corporate and stockholder action on the part of Layton. Each Layton Agreement has been, or will be at the Closing, duly executed and delivered by Layton and each
constitutes, or will constitute when executed and delivered, a valid and binding obligation of Layton, enforceable against Layton in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
the rights and remedies of creditors, and subject to the further qualification that the remedy of specific performance or injunctive relief is discretionary with the court before which any proceeding therefor may be brought. 
  
 (c) The execution, delivery and performance by Layton of the Layton
Agreements do not and will not: 
  
 (i) conflict
with or constitute a violation of the Certificate of Incorporation or Bylaws of Layton; 
  
 (ii) conflict with or constitute a violation of any law, statute, judgment, order, decree or regulation of any legislative body, court,
administrative agency, governmental authority or arbitrator applicable to or relating to Layton or the Acquired Assets; 
  
 (iii) conflict with, constitute a default under, result in a breach or acceleration of or, except as set forth on Schedule 4.1,
require notice to or the consent of 

  

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any third party under any contract, agreement, commitment, lease, mortgage, note, license or other instrument or obligation to which Layton is party or by
which it is bound or by which the Acquired Assets are affected; or 
  
 (iv) result in the creation or imposition of any Lien or Encumbrance of any nature whatsoever on any of the Acquired Assets. 
  
 (d) Schedule 4.1 sets forth the Specified Consents, to include the Required Notice, in substantially the form attached hereto as Schedule D.

  
 SECTION 4.2 Status of Acquired Assets. 
  
 (a) Layton has good and marketable title to all of the Acquired Assets, free
and clear of any Liens. 
  
 (b) To Layton’s knowledge, no
product, formula, formulation, Trademark, process, method, substance, or other material that is part of the Acquired Assets infringes any rights owned or held by any Person, and, to the knowledge of Layton, no item currently being manufactured,
distributed, sold or used by any Person infringes any rights of Layton to the Acquired Assets. 
  
 SECTION 4.3 Financial Statement. Layton has previously delivered to Targacept a true and complete copy of its unaudited Monthly Income Statement relating to the revenues and expenses relating to the Product for
October 1999 through March 2002 (the “Financial Statement”). The Financial Statement: (a) is true, correct and complete; (b) is in accordance with the books and records of Layton; and (c) presents fairly Layton’s results of operations
with respect to the Product for the periods shown. 
  
 SECTION 4.4
Litigation. There are no claims, actions, suits, arbitration proceedings, inquiries, hearings, injunctions or investigations (“Claims”) pending, or to the knowledge of Layton, threatened, against Layton relating to the Product or
any of the Acquired Assets. No Claims have been brought within the last two years against Layton relating to the Product or any of the Acquired Assets. To Layton’s knowledge, there are no facts or circumstances which could serve as the basis
for any Claim against Layton involving the Product or any of the Acquired Assets, or, by virtue of the execution, delivery and performance of this Agreement, against Targacept. 
  
 SECTION 4.5 Compliance with Laws. There is not outstanding or, to the knowledge of Layton, threatened any order,
writ, injunction or decree of any court, governmental agency or arbitration tribunal against or involving the Product or the Acquired Assets. Layton is currently in full compliance with all laws, statutes, rules, regulations, orders and licensing
requirements (“Rules”) of federal, state, local and foreign agencies and authorities applicable to the research, development, manufacture, production, sales, marketing, distribution, license, exploitation and/or commercialization of the
Product or any of the Acquired Assets. To the knowledge of Layton, there has been no allegation of any violation of any such Rules, and no investigation or review by any federal, state or local body or agency is pending, threatened or planned with
respect to the Product or any of the Acquired Assets. 
  

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 SECTION 4.6 Utilization of Acquired Assets. The Acquired Assets constitute all of the assets,
tangible and intangible, of any nature whatsoever, currently used by Layton in connection with the research, development, manufacture, production, sales, marketing, distribution, license, exploitation and/or commercialization of the Product.

  
 SECTION 4.7 Inventory. Except as otherwise described on
Schedule 4.7, all items included in the Inventory are: (i) in good condition and not obsolete or defective; and (ii) useable or saleable in the ordinary course of business consistent with Layton’s past practice. All of the Inventory is
described, and the location of all such Inventory is set forth, on Schedule 4.7. 
  
 SECTION 4.8 Contracts. All of the Contracts that (i) are not terminable by either party without penalty on 30 days notice or (ii) are material to the research, development, manufacture, production, sales,
marketing, distribution, license, exploitation and/or commercialization of the Product by Layton are listed on Schedule 4.8. Layton has delivered to Targacept true and complete copies of all written Contracts, including any and all amendments
and other modifications thereto. Each of the Contracts is valid, binding and enforceable in accordance with its terms and is in full force and effect. Layton has not waived any of its rights under, or modified the terms of, any Contract orally or by
a pattern of practice or otherwise. There are no existing defaults, and no events or circumstances have occurred which, with or without notice or lapse of time or both, would constitute defaults, under any of the Contracts. The assignment of the
Contracts by Layton to Targacept will not, with respect to any Contract: (i) constitute a default therunder; (ii) require the consent of any person or party, except for the Specified Consents; or (iii) affect the continuation, validity and
effectiveness thereof or the terms thereof. 
  
 SECTION 4.9
Suppliers and Customers. Each supplier of goods or services to Layton in respect of the Product to which Layton paid any amount during the 12 months ended on March 31, 2002, and each customer of Layton in respect of the Product who paid
Layton any amount during such period, are listed on Schedule 4.9 and Schedule 4.7, respectively, which Schedules reflect in each case the amounts so paid. Layton is not engaged in any dispute with any of such suppliers or customers.

  
 SECTION 4.10 Adverse Experiences. Layton has provided
Targacept with all information concerning side effects, injury, toxicity or sensitivity reaction, or unexpected incidents, whether or not serious or unexpected, relating to the Product (“Adverse Experiences”), which Layton or Merck &
Co., Inc. reported or are to be reported to the FDA. Any additional information regarding Adverse Experiences received by Layton before the Closing Date but not yet reported to the FDA will be provided to Targacept on or before the Closing Date. For
purposes of this Section 4.7, “serious” and “unexpected” have the meanings set forth in Section 6.6. 
  
 SECTION 4.11 Intellectual Property. All items of Intellectual Property are described in reasonable detail on Schedule 4.11. Except as
otherwise specified in Schedule 4.11, Layton represents that each of the Trademarks has been in continuous use since October 1, 2001, and to the knowledge of Layton each of the Trademarks is now in use in interstate or intrastate commerce, in
each case as specified in Schedule 4.11, on or in connection with all of the goods or services set forth on such Schedule. Layton has not disclosed any information included in the 

  

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Acquired Assets to any third party, except to its advisors, attorneys and consultants and except pursuant to confidentiality arrangements and has taken
reasonable measures to protect all such information as confidential. Layton owns all right, title and interest in and to each item included in the Intellectual Property, free and clear of any Liens. Layton is the record owner of each of the
Trademark Registrations, each of which is in full force and effect, and all required maintenance filings, tax payments, annuities and maintenance fee payments have been timely completed with respect to each. Except as otherwise disclosed in
Schedule 4.11, Layton has not licensed any of the Intellectual Property to any third party, and to Layton’s knowledge no third party otherwise has any right to use any of the Intellectual Property. There are no claims or suits against
Layton challenging Layton’s ownership of or right to use any of the Intellectual Property, nor to Layton’s knowledge does there exist any basis therefor. There are no claims or suits against Layton alleging that any of the Intellectual
Property or any of Layton’s use of the Intellectual Property infringes any rights of any third parties, nor to Layton’s knowledge does there exist any basis therefor. 
  
 SECTION 4.12 Tax Matters. In all respects relating to the Product or any of the Acquired Assets: (i) Layton has filed
all federal, state, local and foreign tax returns required to be filed; (ii) each such return is complete, accurate and in compliance with applicable law and regulations in all material respects; and (iii) Layton has paid or provided for all such
taxes of any nature whatsoever, with any related penalties, interest and liabilities, that are or would be shown on such tax returns as due and payable on or before the date hereof, other than such taxes as are being contested in good faith.

  
 SECTION 4.13 Characteristics of Product. All Recorded
Information in the possession of, or readily obtainable by, Layton reflecting quality, toxicity, safety and/or efficacy characteristics of the Product has been disclosed to Targacept in writing prior to the date hereof or will be disclosed to
Targacept on the Closing Date. 
  
 SECTION 4.14 Solvency.
Layton is not now insolvent, and will not be rendered insolvent by any of the transactions contemplated by this Agreement. In addition, immediately after giving effect to the consummation of the transactions contemplated by this Agreement: (i)
Layton will be able to pay its debts as they become due; and (ii) Layton will not have unreasonably small assets with which to conduct its present or proposed business. As used in this Section, (i) “insolvent” means that the sum of the
present fair saleable value of Layton’s assets does not and will not exceed its debts and other probable liabilities; and (ii) “debts” includes any legal liability, whether matured or unmatured, liquidated or unliquidated, absolute,
fixed or contingent, disputed or undisputed or secured or unsecured. 
  
 SECTION 4.15 Disclosure. No representation, warranty or statement made by Layton in any of the Layton Agreements, or any document furnished or to be furnished to Targacept pursuant to any of the Layton Agreements, contains or will
contain any untrue statement of a material fact, or omits or will omit to state any material fact necessary to make the statements contained herein or therein not misleading. 
  

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 ARTICLE V - TARGACEPT’S REPRESENTATIONS AND WARRANTIES 
  
 Targacept represents and warrants as of the date hereof and as of the Closing
Date that: 
  
 SECTION 5.1 Corporate Existence. Targacept
is a corporation duly organized and validly existing under the laws of the State of Delaware. 
  
 SECTION 5.2 Due Authorization; Binding Agreement. Targacept has the requisite corporate power and authority to execute, deliver and perform this Agreement and any related agreements to which Targacept is a
party (collectively, the “Targacept Agreements”) and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of the Targacept Agreements, and the consummation of the transactions contemplated
hereby and thereby, have been duly and validly authorized by all necessary corporate action on the part of Targacept. The Targacept Agreements have been or, with respect to Targacept Agreements to be executed at the Closing, will be duly executed
and delivered by Targacept and each constitutes or will constitute when executed and delivered a valid and binding obligation of Targacept, enforceable against Targacept in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the rights and remedies of creditors, and subject to the further qualification that the remedy of specific performance or injunctive relief is discretionary with the court before which any
proceeding therefor may be brought. 
  
 SECTION 5.3 No
Contravention. The execution, delivery and performance of the Targacept Agreements do not and will not: (i) conflict with or constitute a violation of the Certificate of Incorporation or Bylaws of Targacept; or (ii) conflict with or constitute a
violation of any law, statute, judgment, order, decree or regulation of any legislative body, court, administrative agency, governmental authority or arbitrator applicable to or relating to Targacept. 
  
 SECTION 5.4 No Government Action. To Targacept’s knowledge,
except for the requirement that both Targacept and Layton provide written notice, in the form attached hereto as Schedule D, of the transfer of the Regulatory Documentation from Layton to Targacept, the execution, delivery and performance by
Targacept of this Agreement and each of the documents contemplated hereby to which Targacept is a party require no action by or in respect of, or filing with, any governmental body, agency or official. 
  
 SECTION 5.5 Disclosure. No representation, warranty or statement made
by Targacept in this Agreement, or any document furnished or to be furnished to Layton pursuant to this Agreement, contains or will contain any untrue statement of a material fact, or omits or will omit to state any material fact necessary to make
the statements contained herein or therein not misleading. 
  
 ARTICLE VI - LAYTON’S COVENANTS 
  
 Layton covenants and agrees as follows: 
  
 SECTION 6.1
Filings. Layton will use commercially reasonable efforts in good faith to file or cause to be filed with the FDA, as soon as practicable after the Closing Date, the Required Notice (substantially in the form attached hereto as Schedule
D). 
  
 SECTION 6.2 No Liens. Any Liens with respect to
any of the Acquired Assets shall be satisfied of record on or prior to the Closing Date by Layton. 
  

 11 

 SECTION 6.3 Confidentiality. Until one year following the Closing Date, Layton will, and will
cause each of its employees to, use commercially reasonable efforts to preserve the confidentiality of all confidential and proprietary information used in connection with the research, development, manufacture, production, sales, marketing,
distribution, license, exploitation and/or commercialization of the Product or any of the Acquired Assets (the “Product Information”), provided that Layton may use and disclose any such information which has been publicly disclosed (other
than by Layton in breach of its obligations under this Agreement) or to the extent that Layton may become legally compelled to disclose any of such information, in which case Layton shall, prior to disclosure, first use commercially reasonable
efforts in good faith, and afford Targacept the opportunity, to obtain an appropriate protective order, or other satisfactory assurance of confidential treatment, for the information required to be so disclosed. 
  
 SECTION 6.4 Removal of Information from Website. Not later than the
Closing Date, Layton shall delete from any and all of its websites (including, without limitation, laytonbio.com) all references to, any and all information pertaining to, the Product. Without limiting the generality of the foregoing, Layton shall
specifically remove from any and all of its websites any and all information regarding the sale, distribution or procedure to order INVERSINE®. 
  
 SECTION 6.5 Limited Commercialization. Layton hereby agrees that, at all times after the Closing Date, Layton will not, and will not establish any
Affiliate to, market, sell, manufacture, produce, license or in any way exploit or commercialize the Product, except that such covenant shall not restrict Layton or an Affiliate from administering mecamylamine hydrochloride to humans in combination
with human or animal cells, tissue, and cellular or tissue-based products. For the avoidance of doubt, nothing contained in this Section 6.5 is intended to grant to Layton a license to, or to permit the infringement of, any intellectual property of
Targacept. 
  
 SECTION 6.6 Adverse Experience and Reaction
Reporting. For one (1) year after the Closing Date, Layton shall notify Targacept of any information concerning any serious or unexpected side effects, injuries, toxicities, sensitivity reactions, adverse experiences, or other incidents relating
to the Product, of which Layton receives notice on or after the Closing Date, including providing copies of all such adverse experience or reaction reports to Targacept’s Chief Medical Officer within seven (7) days of Layton’s receipt of
such reports. For purposes of this Section 6.6: (i) “serious” means an experience or reaction which is fatal or life threatening, results in persistent or significant disability, requires inpatient hospitalization or prolongation of
existing inpatient hospitalization, is a congenital anomaly, cancer, or the result of an overdose, or is another important medical event (even if not life-threatening, resulting in death, or requiring hospitalization) if, based upon appropriate
medical judgments, such medical event may jeopardize the patient’s or subject’s health or may require medical or surgical intervention to prevent one of the other outcomes listed previously, and (ii) “unexpected” means a
condition or development not listed in the then-current FDA-approved labeling for the Product, and includes those experiences or reactions that show a significant increase in incidence or severity over what appears an the labeling of the Product or
in NDA trials or that represent a failure of the Product to achieve claimed activity. 
  

 12 

 SECTION 6.7 Notification of Orders Received. Commencing on the Closing Date and continuing for six
(6) months after the Closing Date, Layton will notify Targacept of all orders for the Product actually received by Layton, if any, by promptly forwarding such orders to Targacept. 
  
 ARTICLE VII - TARGACEPT’S COVENANTS 
  
 Targacept covenants and agrees as follows: 
  
 SECTION 7.1 FDA Filings. Targacept will use commercially reasonable efforts in good faith promptly to file or cause
to be filed with the FDA, any notice, document and/or other materials required to be filed by it in connection with its purchase of the Acquired Assets (including, without limitation, the filings required by 21 CFR Section 314.72) and to make
promptly any further filings and take any actions required of it as may be necessary to consummate the transactions contemplated hereby. 
  
 SECTION 7.2 Cooperation in Litigation. From and after the Closing Date, Targacept agrees that, in the defense by Layton of any litigation, hearing,
regulatory proceeding or investigation or other similar matter relating to the Acquired Assets or the Excluded Liabilities, Targacept will make available to Layton at Layton’s expense during normal business hours, but without unreasonably
disrupting its business, all records as to the Acquired Assets held by Targacept and reasonably necessary to permit the effective defense or investigation of such matters. 
  
 ARTICLE VIII - SURVIVAL; INDEMNIFICATION 
  
 SECTION 8.1 Survival. All representations and warranties of the parties contained herein shall survive the Closing
Date until one (1) year after the Closing Date. The covenants and agreements (including, without limitation, the indemnification obligations) of Layton and Targacept hereunder that require by their express terms performance or compliance on and
after the Closing Date shall continue in force thereafter in accordance with their terms. 
  
 SECTION 8.2 Indemnification by Layton. Layton shall indemnify, defend and hold harmless Targacept and its officers, directors and affiliates (collectively, the “Targacept Indemnitees”) from, against
and with respect to any action or cause of action, loss, damage, claim, obligation, liability, penalty, fine, cost and expense (including, without limitation, reasonable attorneys’ and consultants’ fees and costs and expenses incurred in
investigating, preparing, defending against or prosecuting any litigation, claim, proceeding, demand or request for action by any governmental or administrative entity), of any kind or character, but expressly excluding all foreseeable and
unforeseeable consequential damages (a “Loss”): (i) arising out of or in connection with any breach of any of the representations or warranties of Layton contained in this Agreement; (ii) arising out of or in connection with any failure by
Layton to perform or observe any covenant, agreement, obligation or condition to be performed or observed by it pursuant to this Agreement; or (iii) constituting an Excluded Liability. Notwithstanding anything whatsoever to the contrary, in no event
shall Layton’s total indemnification obligation exceed Two Million Five Hundred Thousand Dollars ($2,500,000). 
  

 13 

 SECTION 8.3 Indemnification by Targacept. Targacept shall indemnify, defend and hold harmless
Layton and its officers, directors and affiliates (collectively, the “Layton Indemnitees”) from, against and with respect to any Loss: (i) arising out of or in connection with any breach of any of the representations or warranties of
Targacept contained in this Agreement; (ii) arising out of or in connection with any failure by Targacept to perform or observe any covenant, agreement, obligation or condition to be performed or observed by it pursuant to this Agreement; (iii)
constituting an Assumed Liability; or (iv) any failure by Targacept to fully comply with the performance obligations contained in the Layton Bioscience-Merck & Co. agreement dated March 19, 1998. Notwithstanding any other provision in this
Agreement, the Targacept indemnification obligation under Section 8.3(iv) shall continue in effect for as long as Layton may incur any liability arising out of Targacept’s non-performance under said Merck agreement. 
  
 SECTION 8.4 Indemnification; Notice and Settlements. A party seeking
indemnification pursuant to Section 8.2 or 8.3 (an “indemnified party”) shall give prompt notice to the party from whom such indemnification is sought (the “indemnifying party”) in writing of any claim for recovery, specifying in
reasonable detail the nature of the Loss. The indemnified party shall provide to the indemnifying party as promptly as practicable thereafter all information and documentation reasonably requested by the indemnifying party to verify the claim
asserted; provided that, in the event of a third party claim giving rise to the Loss, the failure of the indemnified party to notify the indemnifying party on a timely basis will not relieve the indemnifying party of any liability that it may have
to the indemnified party, except to the extent that the indemnified party demonstrates that the defense of such action is materially prejudiced by the indemnifying party’s failure to give such notice. The indemnifying party shall have the right
to, and shall at the request of the indemnified party, assume the defense, with counsel reasonably satisfactory to the indemnified party, of any such suit, action or proceeding at its own expense. An indemnifying party shall not be liable under
Section 8.2 or 8.3 for any settlement effected without its consent of any claim, litigation or proceeding in respect of which indemnity may be sought hereunder, which consent shall not be unreasonably withheld. 
  
 SECTION 8.5 Other Remedies. The foregoing indemnification provisions
are in addition to, and not in derogation of, any statutory, equitable or common law remedy any party may have as a result of a Loss. 
  
 ARTICLE IX - MISCELLANEOUS 
  
 SECTION 9.1 Notices. All notices, demands and other communications made hereunder shall be in writing and shall be given either by personal
delivery, by nationally recognized overnight courier (with charges prepaid) or by facsimile (with telephone confirmation), and shall be deemed to have been given or made when delivered, addressed to the respective parties at the following addresses
(or such other address for a party as shall be specified by like notice): 
  
 if to Layton to: 
  
 Layton BioScience, Inc. 
  

 14 

 709 East Evelyn Avenue 
 Sunnyvale, CA 94086 
 Attention: General Manager 
 Tel. (408)616-1000 
 Fax (408)616-1005

  
 with a copy to: 
  
 Toucan Capital 
 7600 Wisconsin Avenue, 7th Floor 
 Bethesda, MD 20814 
 Attention: Linda Powers and Robert Hemphill 
 Tel. (240)497-4060 
 Tel. (240)497-4065 
  
 If to Targacept to: 
  
 Targacept, Inc. 
 200 East First Street, Suite
300 
 Winston-Salem, NC 27102-1465 
 Attention: Chief Executive Officer 
 Tel. (336)480-2100 
 Fax (336)480-2107 
  
 with a copy to: 
  
 Peter A. Zorn, Esq. 
 Womble Carlyle Sandridge
& Rice, PLLC 
 One West Fourth Street 
 Winston-Salem, NC 27101 
 Tel. (336)721-3634 
 Fax (336)726-6906 
  
 SECTION 9.2 Expenses. All legal and other costs and expenses incurred in connection herewith and the transactions contemplated hereby shall be paid
by the party incurring such expenses. 
  
 SECTION 9.3 Bulk
Sales Statutes. Targacept hereby waives compliance with applicable bulk sales statutes in any jurisdiction in connection with the transactions under this Agreement. 
  
 SECTION 9.4 Limitation on Layton’s Representations and Warranties. TARGACEPT ACKNOWLEDGES THAT, EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES OF LAYTON CONTAINED IN THIS AGREEMENT, TARGACEPT IS ACQUIRING THE ACQUIRED ASSETS ON AN “AS IS, WHERE IS” BASIS WITHOUT ANY EXPRESS OR IMPLIED WARRANTIES AS TO THE FITNESS FOR A PARTICULAR PURPOSE OR
MERCHANTABILITY. 
  

 15 

 SECTION 9.5 Successors and Assigns. This Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective successors and assigns; provided, however, that this Agreement may not be assigned by either party without the prior written consent of the other party hereto and any attempted assignment without such
consent shall be void. 
  
 SECTION 9.6 Entire Agreement;
Amendment. This Agreement, including without limitation the Schedules hereto, embodies the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes any and all prior agreements with respect thereto, except
for any prior confidentiality agreements which shall survive. In the event of any conflict between this Agreement and any such prior confidentiality agreement, the agreement imposing stricter confidentiality shall govern. No waiver, amendment or
modification of any provision hereof or of any right or remedy hereunder shall be effective unless in writing and signed by the party against whom such waiver, amendment or modification is sought to be enforced. 
  
 SECTION 9.7 Captions; Construction. Captions herein are inserted for
convenience of reference only and shall be ignored in the construction or interpretation of this Agreement. Unless otherwise specified, the words “herein,” “hereof” and terms of like import shall be deemed to refer to the
Agreement as a whole and not merely to a single part thereof. 
  
 SECTION 9.8 Public Announcement. Each of Layton and Targacept agrees it will not make any press releases or other public announcements with respect to the transactions contemplated hereby, except as required by applicable law,
without the prior approval of the other party not to be unreasonably withheld 
  
 SECTION 9.9 Efforts. Each party agrees to use commercially reasonable efforts to satisfy the conditions to the Closing set forth in this Agreement and otherwise to consummate the transactions contemplated by
this Agreement. 
  
 SECTION 9.10 Governing Law. This
Agreement shall be governed by, interpreted and construed, and all claims and disputes, whether in tort, contract or otherwise shall be resolved, in accordance with the substantive laws of the Commonwealth of Delaware, without regard to the
principles of conflicts of laws. 
  
 SECTION 9.11 Waiver.
No waiver by any party in one or more instances of any of the provisions of this Agreement or the breach thereof shall establish a precedent for any other instance with respect to that or any other provision. Furthermore, in case of waiver of a
particular provision, all other provisions of this Agreement will continue in full force and effect. 
  
 SECTION 9.12 Severability. If any provision of this Agreement is held to be invalid or unenforceable, all ether provisions shall nevertheless
continue in full force and effect. 
  
 SECTION 9.13
Counterparts. This Agreement may be executed in two counterparts, each of which shall be deemed to be an original and both of which, taken together, shall constitute but one and the same instrument. 
  
 SECTION 9.14 No Third Party Beneficiaries. Except for the rights of
the “Targacept Indemnitees” and the “Layton Indemnitees” under Article VIII, none of the provisions of this 

  

 16 

 
Agreement or any document contemplated hereby is intended to grant any right or benefit to any person or entity that is not a party to this Agreement.

  
 SECTION 9.15 Specific Performance. Layton agrees that,
after Targacept has paid the Three Million Five Hundred Thousand Dollar ($3,500,000) purchase price, if Layton fails to make the Required Notice, then Targacept shall be entitled, in addition to its other remedies at law or at equity, to specific
performance of this Agreement to the extent of the Required Notice. 
  
 [remainder of page intentionally left blank] 
  

 17 

 IN WITNESS WHEREOF, this Agreement has been signed by authorized representatives on behalf of each of the
parties hereto as of the day and year first above written. 
  

			
	 LAYTON BIOSCIENCE, INC.

		
	 By:
	 	 /s/ Linda F. Powers

	 	 	 Linda F. Powers,
 Member, Board of Directors

  

			
	 TARGACEPT, INC.

		
	 By:
	 	 /s/ J. Donald deBethizy

	 	 	 J. Donald deBethizy,
 President and CEO

  

 18 

 SCHEDULE 1.20 
 Regulatory Documentation 
  
 1.
Inversine NDA 10-251 
  
 2. Mecamylamine HCL Layton IND 58,680

  
 3. Mecamylamine HCL Orphan Drug Designation granted Oct. 14, 1998

 (NDC #17205-0626-01) 

 SCHEDULE 4.1 
 Specified Consents/Required Notice 
  
 1.
Consent of Merck & Co., Inc. 
  
 2. Consent of the University of South Florida
Research Foundation. 
  
 3. Consent of University of South Florida. 
  
 4. Notice to the FDA. 
  

 20 

 SCHEDULE 4.7 
 Inventory and Customers 
 Note: the information contained on this Schedule 4.7 is, on Layton’s
information 
 and belief, accurate as to status, quantity and quality; however, Layton has not 
 made an actual inspection of the wholesalers or distributor. 
  
 Inversine commercial lot numbers/ expiration date (bottles) 
  

														
	 Lot Number

	  	Quantity released

	  	Quantity In Inventory
At Cord

	 	 	Quantity shipped
To wholesalers

	  	Quantity returned

	  	Exp. Date

	  	Last ship date

	 08782A
	  	3,045	  	450	*	 	2,595	  	-257	  	Sep-01	  	Jun-01
	 06793A
	  	1,367	  	418	*	 	949	  	-264	  	Sep-01	  	Jun-01
	 M23324
	  	1,701	  	71	*	 	1630	  	-32	  	Sep-01	  	Jun-01
	 005B004
	  	3,619	  	740	*	 	2,679	  	-89	  	May-02	  	Feb-02
	 M531
	  	1,942	  	5	*	 	1,937	  	-2	  	Mar-03	  	Jan-03
	 M522
	  	1,094	  	7	*	 	1,087	  	-5	  	Mar-03	  	Jan-03
	 0103B034
	  	2,493	  	413	 	 	2,080	  	0	  	Mar-03	  	Jan-03

  

	*	no longer shipping these lots out. 

  

			
	 Location of inventory:
	  	 
	 Product (labeled bottles of tablets):
 Labeling Materials:
 Bulk product:
 Tablets:
	  	 Cord Logistics and wholesalers
 Layton
 Poli (15kg)
 Siegfried (1.2 million)

  
 Inversine
Wholesaler Accounts 
  

	 	1.	AmeriSource Corp. 

 Accounts Payable 
 100 Friars Lane 
 PO Box 5916 
 Orange, CA 92863 
  

	 	2.	Bindley Western 

 Accounts Payable 
 PO Box 68977 
 Indianapolis, IN 46268

  

	 	3.	Cardinal Health 

 Accounts Payable 
 PO Box 182516 

	 	4.	H.D. Smith Wholesale Drug Co. 

	 	    	4650 Industrial Drive 

	 	    	Springfield, IL 62703 

  

	 	5.	McKesson 

	 	    	Accounts Payable 

	 	    	PO Box 8199067 

	 	    	Dallas, TX 753819067 

  

	 	6.	Motris and Dickson Co. 

	 	    	PO Box 51367 

	 	    	Shreveport, LA 71135 1367 

  

	 	7.	North Carolina Mutual Wholesale Drug 

	 	    	816 Ellis Road 

	 	    	Durham NC 27702 

  

	 	8.	Smith Drug 

	 	    	PO Box 1779 

	 	    	Spartamburg, SC 29304 

  

	 	9.	Walsh Hearland 

	 	    	PO Box 40 

	 	    	Texarkana, TX 75504 

  

	 	10.	Bergen Brunswig Drug Company 

	 	    	Accounts Payable 

	 	    	PO Box 5916 

	 	    	Orange, CA 92863 

  

 22 

 SCHEDULE 4.8 
 Contracts 
  
 1. Merck & Co.-Layton
Bioscience Inc., dated March 19, 1998 
  
 2. Layton Bioscience Inc.-USF, dated
October 13, 1997 
  
 3. Siegfried-Layton Bioscience Inc., dated July 20, 2000

  
 4. Poli-Layton Bioscience Inc., dated July 23, 2001 
  
 5. Layton Bioscience Inc.-Cord Logistics dated May 9, 2001 
  

 23 

 SCHEDULE 4.9 
 Suppliers 
  

			
	ACS State Healthcare	  	Agency for Healthcare Admin.
	Alabama Medicaid Agency	  	AmeriSource Corporation
	American Psychological Asso	  	Arkansas DHS Pharma Rebate
	Bergen Brunswig Corporation	  	Bindley Western
	Brown Resource Group	  	CA Dept. of Health Services
	Pharmaceutic Litho & Label Co.	  	CA Dept. of Health Services
	Cardinal Distribution	  	CMC Consulting Services
	CO Healthcare Policy Finance	  	Commonwealth of Massachusetts
	Commonwealth of PA/DRP	  	Connecticut Drug Rebate Program
	CORD Logistics	  	Dept of Health & Hospitals
	Dept of PHHS	  	Dept of Public Welfare
	Dept of SHS – Washington	  	DHS Drug Rebate – 050
	Drugs, Devices and Cosmetics Trust Fund	  	EDS/Indiana Drug Rebate
	Excerpts Medica Inc.	  	Ferdinand Gutmann & Co.
	Food and Drug Administration	  	FRACHT FWO Inc.
	GA Dept of Medical Assistance	  	GMP Labeling
	HCL Labels, Inc.	  	Howe Marketing Group. Inc.
	IBAH Pharmaceutics Services (Omnicare)	  	Icon Clinical Research, L.P
	Illinois Dept of Public Aid	  	IMS Health Inc.
	Interchem Corporation	  	J. Knipper & Co.
	Kentucky State Treasurer	  	KRELL ADVERTISING, INC.
	Label Master	  	Maine Medical Agency
	Malefyt, Thomas R., Ph.D.	  	McKesson Drug Company
	McKesson Health Solutions	  	MDS Harris
	Medical Economics	  	Merck & Co., Inc.
	N Carolina XIX Drug Rebate Pgm	  	North Dakota Dept of Human Services
	Norwood Marking Systems	  	Nor-Cal Moving Services
	Omnicare Pharmaceutics, Inc.	  	Oread, Inc.
	Owens-Brockway	  	Packaging Results, Inc.
	Penn-Wheeling Closure	  	PHARMout Laboratories, Inc.
	SCDHHS	  	Siegfried CMS
	So. Florida Univ Rsrch Found.	  	State of Alaska
	State of Ohio Treasurer	  	Texas Dept of Health
	The Tiemey Group	  	Tourette Syndrome Ass’n. Inc.
	US Healthworks Med Group	  	Ward-Bagby Pkg., Inc.
	Wisconsin DHFS	  	 

  

 24 

 SCHEDULE 4.11 
 Intellectual Property 
  
 Marks:

  
 US 0626116      INVERSINE 
  
 Ireland             
INVERSINE                     [Note: Layton disclaims any knowledge as to whether said mark exists, was ever in force or is enforceable now.
Targacept takes it “as-is”.] 
  
 Somalia             INVERSINE                     [Note: Layton disclaims any
knowledge as to whether said mark exists, was ever in force or is enforceable now. Targacept takes it “as-is”.] 
  
 License of patents and applications: 
  

							
	______________	  	___________________	  	_____________	 	__________
	 	  	NICOTINE ANTAGONISTS FOR NICOTINE-RESPONSIVE NEUROPSYCHIATRIC	  	PATENT#:	 	ISSUED
	LAY-003CIA	  	DISORDERS	  	US 6,034,079	 	07-Mar-2000
	 	  	NICOTINE ANTAGONISTS FOR NICOTINE-RESPONSIVE NEUROPSYCHIATRIC	  	 	 	 
	LAY-003TW	  	DISORDERS	  	087113218	 	04-Nov-1998
	 	  	NICOTINE ANTAGONISTS FOR NICOTINE-RESPONSIVE NEUROPSYCHIATRIC	  	 	 	 
	LAY-003CID	  	DISORDERS	  	09/526,403	 	15-Mar-2000
	 	  	NICOTINE ANTAGONISTS FOR NICOTINE-RESPONSIVE NEUROPSYCHIATRIC	  	 	 	 
	LAY-003PH	  	DISORDERS	  	1-1998-02-45	 	07-Nov-1998
	 	  	NICOTINE ANTAGONISTS FOR NICOTINE-RESPONSIVE NEROPSYCHIATRIC	  	 	 	 
	LAY-003CL	  	DISORDERS	  	1998-1934	 	11-Aug-1998
	 	  	NICOTINE ANTAGONISTS FOR NICOTINE-RESPONSIVE NEUROPSYCHIATRIC	  	 	 	 
	LAY-003PA	  	DISORDERS	  	PI/PA98/84573	 	11-Aug-1998
	 	  	NICOTINE ANTAGONISTS FOR NICOTINE-RESPONSIVE NEUROPSYCHIATRIC	  	 	 	 
	LAY-003CA	  	DISORDERS	  	2,300,148	 	11-Aug-1998
	 	  	NICOTINE ANTAGONISTS FOR NICOTINE-RESPONSIVE NEUROPSYCHIATRIC	  	 	 	 
	LAY-003AR	  	DISORDERS	  	980103965	 	11-Aug-1998

							
	 	  	NICOTINE ANTAGONISTS FOR NICOTINE-RESPONSIVE NEUROPSYCHIATRIC	  	 	  	 
	LAY-003JP	  	DISORDERS	  	2000-506968	  	07-Nov-1998
	 	  	NICOTINE ANTAGONISTS FOR NICOTINE-RESPONSIVE NEUROPSYCHIATRIC	  	 	  	 
	LAY-003VE	  	DISORDERS	  	1792/98	  	11-Aug-1998
	 	  	NICOTINE ANTAGONISTS FOR NICOTINE-RESPONSIVE NEUROPSYCHIATRIC	  	 	  	 
	LAY-003CIB	  	DISORDERS	  	09/398,720	  	20-Sep-1999
	 	  	EXO-R-MECAMYLAMINE FORMULATION AND USE IN	  	 	  	 
	LAY-011JP	  	TREATMENT	  	2000-587609	  	16-Dec-1999
	 	  	EXO-R-MECAMYLAMINE FORMULATION AND USE IN	  	 	  	 
	LAY-011CIA	  	TREATMENT	  	09/882,934	  	15-Jun-2001
	 	  	EXO-R-MECAMYLAMINE FORMULATION AND USE IN	  	 	  	 
	LAY-011CA	  	TREATMENT	  	 	  	16-Dec-1999
	 	  	EXO-R-MECAMYLAMINE FORMULATION AND USE IN	  	 	  	 
	LAY-011EP	  	TREATMENT	  	99967396.5	  	16-Dec-1999
	 	  	EXO-S-MECAMYLAMINE FORMULATION AND USE IN	  	 	  	 
	LAY-012CIA	  	TREATMENT	  	09/882,935	  	15-Jun-2001
	 	  	EXO-S-MECAMYLAMINE FORMULATION AND USE IN	  	 	  	 
	LAY-012EP	  	TREATMENT	  	99967401.3	  	16-Dec-1999
	 	  	EXO-S-MECAMYLAMINE FORMULATION AND USE IN	  	 	  	 
	LAY-012CA	  	TREATMENT	  	 	  	16-Dec-1999
	 	  	EXO-S-MECAMYLAMINE FORMULATION AND USE IN	  	 	  	 
	LAY-012JP	  	TREATMENT	  	2000-587608	  	16-Dec-1999

 BILL OF SALE AND 
 ASSIGNMENT AND ASSUMPTION AGREEMENT 
  
 THIS BILL OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT (the “Agreement”) is made and entered into as of August 5, 2002, by and between LAYTON BIOSCIENCE, INC., a Delaware corporation
(“Seller”), and TARGACEPT, INC., a Delaware corporation (“Buyer”). All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Asset Purchase Agreement dated as of June 28, 2002 between
Seller and Buyer (the “Purchase Agreement”). 
  
 WHEREAS, pursuant to the Purchase Agreement, Seller has agreed to sell, assign, convey and transfer the Acquired Assets to Buyer and Buyer has agreed to purchase the Acquired Assets and assume the Assumed Liabilities from Seller;

  
 NOW, THEREFORE, for value received and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration of the premises and mutual agreements set forth herein, the parties hereto agree as follows: 
  
 1. Transfer of Acquired Assets. Seller hereby sells, assigns, conveys
and transfers to Buyer, its successors and assigns, all of the Acquired Assets, which Acquired Assets are listed, described, included in or referred to in Exhibit A, the contents of which are incorporated herein by reference as if restated in
their entirety. Seller hereby represents and warrants to Buyer that: (i) it has good and marketable title to all of the Acquired Assets; and (ii) the Acquired Assets are sold, assigned, conveyed and transferred to Buyer hereunder free and clear of
any liens, encumbrances, security interests, claims, mortgages, pledges or charges of any kind whatsoever. 
  
 2. Assumption of Liabilities. Buyer hereby agrees to assume all obligations of Seller under the Contracts that accrue for, or are attributable to,
periods after the Closing Date and all liabilities arising out of the research, development, manufacture, production, sales, marketing, distribution, license, exploitation and/or commercialization of the Product by Buyer after the Closing Date
(except for those liabilities against which Seller is obligated to indemnify Buyer under Section 8.2 of the Purchase Agreement) including, without limitation, the Contracts listed, described, included in or referred to in Exhibit B attached
hereto (the “Assumed Liabilities”), the contents of which are incorporated herein by reference as if restated in their entirety. Seller expressly acknowledges and agrees that Buyer does not assume and shall not be liable for any, and
Seller retains responsibility for all, Excluded Liabilities. 
  
 3. Confirmatory Instruments. Seller and Buyer hereby mutually covenant and agree that each will, upon the request of the other, execute any and all further instruments confirmatory to the foregoing as may be reasonably required to
accomplish the purposes and benefits of this Agreement and the Purchase Agreement. 
  
 4. Counterparts. This Agreement may be executed in two counterparts, each of which shall be deemed to be an original and both of which, taken together, shall constitute but one and the same instrument.

 5. Governing Law. This Agreement shall be governed by, interpreted and construed, and all claims
and disputes, whether in tort, contract or otherwise shall be resolved, in accordance with the substantive laws of the State of Delaware, without regard to the principles of conflicts of laws. 
  
 [remainder of page intentionally left blank] 

 IN WITNESS WHEREOF, each of the undersigned has duly executed and delivered this Agreement as of the date
first written above. 
  

					
	SELLER:
	
	LAYTON BIOSCIENCES, INC.
		
	By:	 	 /s/ Annemarie Moseley

	 	 	 Name:
	 	 Annemarie Moseley

	 	 	 Title:
	 	 Pres/CEO, acting

  

					
	BUYER:
	
	TARGACEPT, INC.
		
	By:	 	 /s/ J. Donald deBethizy

	 	 	 Name:
	 	 J. Donald deBethizy

	 	 	 Title:
	 	 Pres. & CEO

 Exhibit A 
  

ACQUIRED ASSETS 
  
 1. Intellectual Property. All of the intellectual properties and property rights that are owned, leased or licensed by Seller as of the Closing
Date and used in or related to the research, development, manufacture, production, sales, marketing, distribution, license, exploitation and/or commercialization of the Product, including without limitation: (i) the trademarks listed on Schedule
4.11 to the Purchase Agreement and all United States, foreign and state registrations and applications for registration relating thereto; and (ii) the United States and foreign patents and applications for patent relating thereto listed on
Schedule 4.11 to the Purchase Agreement (together with all continuations, continuations-in-part, divisions, patents of addition, reissues, renewals or extensions thereof and all SPCs with respect thereto, the “Patents”). 

 
 2. Documentation. All records, asset ledgers, books of account,
inventory records, customer and supplier lists, sales literature and advertising and promotional materials relating to the Product or any of the Acquired Assets. 
  
 3. Regulatory Documentation. All regulatory filings, submissions, notices (of approval and otherwise), correspondence
and supporting materials and safety data for the Product owned by Seller or to which Seller has rights as of the Closing Date, including without limitation (i) all NDAs, the IND and all applications regarding the “Orphan Drug”
classification of mecamylamine hydrochloride and all approvals thereof, all of which in existence as of the date hereof and as of the Closing Date are set forth on Schedule 1.20 to the Purchase Agreement, and (ii) all clinical data contained
or related to any of the foregoing, and all legal rights and privileges belonging or accruing to the owner or holder thereof. 
  
 4. Contracts. All contracts, commitments, agreements, licenses, understandings and obligations, whether written or oral, to which Seller is a party
and that relate to the research, development, manufacture, production, sales, marketing, distribution, license, exploitation and/or commercialization of the Product or by which any of Acquired Assets is bound or affected. 
  
 5. Inventory. All supplies and quantities of Seller as of the Closing
Date, wherever located, of: (i) the chemical compound mecamylamine hydrochloride; (ii) the formulated tablet containing mecamylamine hydrochloride as marketed by Seller in the United States under the trademark INVERSINE®; (iii) the materials and supplies to be used or consumed in the production of
the chemical compound mecamylamine hydrochloride or the formulated tablet containing mecamylamine hydrochloride; and (iv) all packaging materials related to any of the foregoing. 

 Exhibit B 
  

CONTRACTS 
  

	1.	Merck & Co.-Layton Bioscience Inc., dated March 19, 1998 

	2.	Layton Bioscience Inc.-USF, dated October 13, 1997 

	3.	Siegfried-Layton Bioscience Inc., dated July 20, 2000 

	4.	Poli-Layton Bioscience Inc., dated July 23, 2001 

	5.	Layton Bioscience Inc.-Cord Logistics dated May 9, 2001 

 ASSIGNMENT OF TRADEMARKS 
  
 THIS ASSIGNMENT OF TRADEMARKS (this “Assignment”), dated as of August 5, 2002 is from Layton Bioscience, Inc., a
Delaware corporation (“Assignor”), to Targacept, Inc., a Delaware corporation (“Assignee”). 
  
 W I T N E S S E T H: 
  
 WHEREAS, in connection with that Asset Purchase Agreement dated June 28, 2002 between Assignor and Assignee, Assignor desires to assign to Assignee all right, title and interest in and to the trademarks identified on
Exhibit A attached hereto (the “Trademarks”), together with any and all goodwill of the business associated with the Trademarks; and 
  
 WHEREAS, Assignee desires to acquire the Trademarks and all goodwill of the business associated therewith from Assignor; and 
  
 WHEREAS, Assignor and Assignee desire to confirm of record the assignment of
the Trademarks to Assignee; 
  
 NOW, THEREFORE, for $1.00 and
other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee hereby agree as follows: 
  
 1. Assignor hereby assigns to Assignee all right, title and interest in and to the Trademarks, together with (i) the goodwill and the business symbolized
by the Trademarks and (ii) all causes of action, claims and demands and other rights for, or arising from, any infringement, including past infringements, of the Trademarks. 
  
 2. Assignor further agrees without further consideration to cause to be performed such other lawful acts and to be executed
such further assignments and other lawful documents as Assignee may from time to time reasonably request to effect fully this Assignment and to permit Assignee to be duly recorded as the registered owner of the Trademarks and all other rights hereby
conveyed. 
  
 IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed by their respective authorized officers, all as of the day and year first above written. 
  

									
	 ASSIGNOR:
	 	 	 	 ASSIGNEE:

			
	 LAYTON BIOSCIENCE, INC.
	 	 	 	 TARGACEPT, INC.

					
	 By:
	 	 /s/ Annemarie Moseley
	 	 	 	 By:
	 	 /s/    J. Donald deBethizy

	 Its:
	 	 President/CEO (acting)
	 	 	 	 Its:
	 	 President/CEO

 EXHIBIT A 
  

TRADEMARKS 
  

			
	 Mark

	 	 Registration No.

		
	INVERSINE	 	626,116 (U.S.)
		
	INVERSINE	 	5818 (Ireland)

 Schedule D 
  

SCHEDULE D 
  
 NOTICE TO FDA 
  
 Mr. Douglas Throckmorton, M.D. 
 Acting Director 
 Division of Cardio-Renal Drug Products 
 HFD-110, Room 16B-45 
 Office of Drug Evaluation I (CDER) 
 Food and Drug Administration 

1451 Rockville Pike 
 Rockville, Maryland 20852 
  
 Dear Mr. Throckmorton: 
  
 NDA 10-251: Tablets INVERSINE (Mecamylamine HCI) 
 IND 58,680:Orphan Drug Classification 17205-0626-01 
  
 Pursuant to 21 CFR 314.72, we are notifying you that as of
                    , Layton Bioscience, Inc. transferred ownership and all rights and responsibilities for NDA 10-251, IND 58,680 and Orphan
Drug classification 17205-0626-01 to Targacept, Inc. 
  
 Effective the date of
this letter, all communications to the sponsor should be addressed to: 
  
 George Hemsworth, Director Regulatory Affairs 
 Targacept, Inc. 
 200 East First Street, Suite 300 
 Winston-Salem, NC 27101-1465 
 (336) 480-2119 
  
 A letter and completed FDA Form 356h has been submitted to your office by Targacept, Inc.
under separate cover a copy of which is attached. Their letter certifies that they are assuming sponsorship of and have been provided a complete copy of NDA 10-251, IND 58,680 and Orphan Drug classification 17205-0626-01. 
  
 Please direct any questions regarding the transfer of NDA 10-251, IND 58,680 and Orphan Drug
classification 17205-0626-01
to                                       
                                      . 
  
 Sincerely, 
  
 Certified No. 
  

 31ASSET PURCHASE AND TRADEMARK ASSIGNMENT AGREEMENT

 Exhibit 10.15 
  
 [********] Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with
the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended. 
  
 ASSET PURCHASE AND TRADEMARK ASSIGNMENT AGREEMENT 
  
 ASSET PURCHASE AND TRADEMARK ASSIGNMENT AGREEMENT executed this 19th day of March, 1998, by and between LAYTON BIOSCIENCE, INC., a Delaware corporation (“Purchaser”) with an address at 105 Reservoir Road, Atherton, CA 94027 and MERCK & CO., Inc., a New
Jersey corporation (“Seller”) with an address at One Merck Drive, Whitehouse Station, New Jersey 08889. 
  
 ARTICLE 1- DEFINITIONS 
  
 The following terms as used in this Agreement shall have the meanings set forth below: 
  
 SECTION 1.1 “Acquired Assets” means (a) the Trademarks as set forth in Schedule A, (b) any and all of Seller’s worldwide right, title and
interest in the Intellectual Property as of the Closing Date, (c) the Documentation, and (d) all United States Food and Drug Administration New Drug Applications for the Product as set forth in Schedule B, but specifically excluding all Excluded
Assets. 
  
 SECTION 1.2 “Affiliate” of a person means
(i) any corporation or business entity fifty (50%) percent or more of the voting stock or other equity interest of which is owned directly or indirectly by such Person; or (ii) any corporation or business entity which directly or indirectly owns
fifty (50%) percent or more of the voting stock or other equity interest of such Person; or (iii) any corporation or business entity under the direct or indirect control of a Person described in clause (i) or (ii), but “Affiliate” shall
not include, as to Seller, any joint venture, partnership or similar entity in which Seller owns an equity interest of fifty percent (50%) or less and shall not include Banyu Pharmaceutical Co., Limited. 
  
 SECTION 1.3 “Agreement” or “this Agreement” means this
Asset Purchase and Trademark Assignment Agreement, including all Schedules hereto. 
  
 SECTION 1.4 “Assumed Liabilities” means the liabilities to be assumed by Purchaser pursuant hereto, namely all claims and complaints (including, without limitation, all damages, losses, expenses and
liabilities) relating to any or all of the Acquired Assets, made or brought after the Closing Date including, without limitation, (i) all liabilities arising out of the sale, purchase, consumption or use of the Product in the Territory and (ii) all
liabilities arising out of any generation, treatment, storage, transportation, disposal or release, of any hazardous material, substance, waste or any toxic or other material regulated by any federal, state, provincial or local environmental
statute, rule or regulation (except as provided in Section 8.2 hereof); provided, however that Assumed Liabilities shall not include claims and complaints (A) arising out of the sale, purchase, consumption or use of the Product prior to the Closing
Date, (B) arising out of the consumption or use of Product sold or otherwise transferred by Seller to Persons other 

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

 2 

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

  

 3 

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

 4 

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

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

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

  

 5 

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

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

  

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

  

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

  

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

  

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

  

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

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

  

 6 

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

 7 

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

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

  

 8 

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

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

 9 

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

 10 

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

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

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

 11 

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

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

 12 

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

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

  

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

  

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

  

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

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

  

 13 

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

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

  

 14 

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

  

 15 

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

 16 

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

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

  

 17 

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

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

 18 

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

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

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

 19 

 with a copy to: 
  

Bruce Hartman, Esq. 
 Legal Department

 WP53C-326 
 Tel. (215) 652-5642

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

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

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

  

 20 

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

 21 

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

 22 

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

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

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

  
 LAYTON BIOSCIENCE, INC. 
  

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

  

 23 

 INDEX TO SCHEDULES 
  

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

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

  

 24 

 SCHEDULE A 
  
 TRADEMARKS 
  

											
	 TRADEMARK

	  	LOCATION

	  	REG. NO.

	  	REG. DATE

	  	EXP. DATE

	  	 GOODS

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

  

 25 

 SCHEDULE B 
  
 NEW DRUG APPLICATION 
  
 INVERSINE® 
  

							
	 PROD. NO.

	  	STREGNTH

	  	FORM

	  	 INITIAL REG.DATE/NUMBER

	 3219
	  	2.5 mg	  	Tablet	  	01-Mar-55
	 	  	 	  	 	  	NDA 10251

  

 26 

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

 27 

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

 28 

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

									
	 TRADEMARK

	  	 REG. NO.

	  	 REG. DATE

	  	 EXP. DATE

	  	 GOODS

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

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

			
	 MERCK & CO., INC.

		
	 By:
	 	 
	 	 	 Name:
 Title:

  

			
	State of                                    
             	  	 
	 	  	 s.s.

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

  

 29 

 SCHEDULE E-2 
  
 TRADEMARK ASSIGNMENT- IRELAND 
  

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

									
	 TRADEMARK

	  	 REG. NO.

	  	 REG. DATE

	  	 EXP. DATE

	  	 GOODS

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

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

			
	 MERCK & CO., INC.

		
	 By:
	 	 
	 	 	 Name:
 Title:

  

			
	State of                                    
             	  	 
	 	  	 s.s.

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

  

 30 

 SCHEDULE E-3 
  
 TRADEMARK ASSIGNMENT- SOMALIA 
  

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

									
	 TRADEMARK

	  	 REG. NO

	  	 REG. DATE

	  	 EXP. DATE

	  	 GOODS

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

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

			
	 MERCK & CO., INC.

		
	 By:
	 	 
	 	 	 Name:
 Title:

  

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

  

 31 

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

							
	 PROD. NO.

	  	 STRENGTH

	  	 FORM

	  	 INITIAL REG.DATE/NO.

	 3219
	  	2.5 mg	  	Tablet	  	 01-Mar-55

	 	  	 	  	 	  	 NDA 10251

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

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

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

 32 

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

			
	 SELLER:

	
	 MERCK & CO., INC.

		
	By:	 	 
	 	 	 Name:
 Title:

			
		
	Witness:	 	 
	 	 	 Name:
 Title:

  

 33 

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

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

 Food and Drug Administration 
 1451 Rockville Pike 

Rockville, Maryland 20852 
  
 Dear Dr. Lipicky: 
  

	 	NDA	10-251: Tablets INVERSINE (Mecamylamine HCI) 

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

  

			
	 Sincerely,

	
	 
	 Larry P. Bell, M.D.

	 Senior Director, Regulatory Affairs

  
 Certified No. 
  

 34 

 SCHEDULE 5.7(b) 
  
 LIENS AND ENCUMBRANCES 
  
 None 
  

 35 

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

 36

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