Document:

Exhibit

Exhibit 10.33
*** Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. §§ 200.80(b)(4)

LICENSE AGREEMENT

THIS LICENSE AGREEMENT (the “Agreement”) is dated as of September 21, 2016 (the “Effective Date”) by and among Ligand Pharmaceuticals Incorporated, a Delaware corporation (“Ligand”), Neurogen Corporation, a Delaware corporation (“Neurogen”) and CyDex Pharmaceuticals, Inc., a Delaware corporation (“CyDex”), and Seelos Therapeutics, Inc., a Delaware corporation (“Seelos”). It is understood that Neurogen and CyDex are wholly-owned subsidiaries of Ligand; that the technology being licensed hereunder toward Aplindore Licensed Products and H3 Receptor Licensed Products is owned or in-licensed by Neurogen (it being possible that some components of the Aplindore Program and/or the H3 Receptor Program are instead owned by Ligand) and that the technology being licensed hereunder toward CEA Licensed Products is owned or in-licensed by CyDex (it being possible that some components of the CEA Program are instead owned by Ligand). Ligand, Neurogen and CyDex are referred to collectively herein as “Licensor”; where the context so requires, such term shall be deemed to refer to Neurogen and to rights and/or obligations of Neurogen; where the context so requires, such term shall be deemed to refer to CyDex and to rights and/or obligations of CyDex; and in all other cases such term shall be deemed to refer to Ligand and to rights and/or obligations of Ligand. (Also, where the context requires that such term refer to Neurogen and Ligand and to rights and/or obligations of Neurogen and Ligand collectively, such term shall be deemed to so refer, and where the context requires that such term refer to CyDex and Ligand and to rights and/or obligations of CyDex and Ligand collectively, such term shall be deemed to so refer.) Each of Neurogen and CyDex hereby agree that any notice, action or consent given hereunder by Ligand shall be deemed to have been given or done by Ligand on behalf of Neurogen/CyDex as well as on behalf of Ligand itself, pursuant to the authority hereby granted.  Seelos, on the one hand, and Licensor, on the other hand, shall each be referred to herein as a “Party” or, collectively, as the “Parties.”

RECITALS:

WHEREAS, Seelos proposes to engage in the research, development, manufacturing and commercialization of pharmaceutical products, and Seelos is interested in Developing and Commercializing products containing or comprising the Compounds; and 

WHEREAS, Seelos desires to license from Licensor and Licensor wishes to license to Seelos, on an exclusive basis, the rights to use, develop and commercialize Licensor Technology in and for a defined field of use.

NOW, THEREFORE, in consideration of the foregoing and of the various promises and undertakings set forth herein, the Parties agree as follows:

ARTICLE I
DEFINITIONS

Unless otherwise specifically provided herein, the following terms shall have the following meanings:

1

1.1     “Acquisition” means a transaction occurring before the third anniversary of the Effective Date in which Seelos, its successor company (if applicable), its parent company or all or substantially all of its assets is acquired; provided, that a transaction immediately following which the securityholders of Seelos as of immediately before such transaction own, as such and as a result of such transaction, a majority of the equity securities or voting power of Seelos or its successor company (if applicable) or its parent company shall be deemed not to constitute an Acquisition.

1.2     “Affiliate” means a Person or entity that controls, is controlled by or is under common control with a Party, but only for so long as such control exists. For the purposes of this Section 1.2, the word “control” (including, with correlative meaning, the terms “controlled by” or “under common control with”) means the actual power, either directly or indirectly through one or more intermediaries, to direct the management and policies of such Person or entity, whether by the ownership of at least 50% of the voting stock of such entity, or by contract or otherwise.

1.3    “Aplindore” means a small molecule partial agonist for the D2 dopamine receptor (historically developed by Neurogen for indications such as for the treatment of Restless Leg Syndrome and Parkinson’s disease) or any salts, solvates, esters, metabolites, hydrates, intermediates, stereoisomers, polymorphs, and derivatives, all of the foregoing of such small molecule partial agonist for the D2 dopamine receptor.

1.4    “Aplindore Licensed Product” means a Licensed Product for which the applicable Compound is Aplindore.

1.5    “Aplindore Primary Licensed Product” means an Aplindore Licensed Product which is Developed or Commercialized for the indication of Parkinson’s disease and/or the indication of Restless Leg Syndrome.

1.6    “Aplindore Program” means Licensor’s program for the Development of Aplindore, including all related Licensor Technology, and all clinical and non-clinical data compiled by Licensor, in each case arising from Licensor’s operation of such program.

1.7    “Aplindore Secondary Licensed Product” means an Aplindore Licensed Product which is not an Aplindore Primary Licensed Product (and includes without limitation an Aplindore Licensed Product Developed or Commercialized for the indication of schizophrenia).

1.8    “Application” means a 505(b)(2) application, an abbreviated new drug application or a new drug application or any amendment or supplement thereto, pursuant to and/or as defined in the United States Federal Food, Drug and Cosmetic Act and the regulations promulgated thereunder submitted to the FDA, or a similar application filed with an equivalent foreign regulatory agency or body in another country or multinational region.  

1.9    “Calendar Quarter” means each three month period commencing January 1, April 1, July 1 or October 1, provided however that (a) the first Calendar Quarter of the Term shall extend from the Effective Date to the end of the first full Calendar Quarter thereafter, and (b) the last Calendar Quarter of the Term shall end upon the termination or expiration of this Agreement.

1.10    “Calendar Year” means the period beginning on the 1st of January and ending on the 31st of December of the same year, provided however that (a) the first Calendar Year of the Term shall commence on the Effective Date and end on December 31 of the same calendar year as the Effective Date, and (b) the 

2

last Calendar Year of the Term shall commence on January 1 of the Calendar Year in which this Agreement terminates or expires and end on the date of termination or expiration of this Agreement.

1.11    “Captisol” means sulfobutylether ẞ(beta) cyclodextrin, sodium salt.  CyDex supplies a uniquely modified form of such material under the Captisol® brand.  For avoidance of doubt, the uniquely modified form of such material supplied by CyDex under the Captisol® brand shall be deemed to be included among the products which are within the defined term “Captisol.” 

1.12     “Captisol Data Package” means (a) all toxicology/safety and other relevant scientific safety data owned, licensed or developed by CyDex and its Affiliates relating to Captisol; (b) all toxicology/safety and other relevant scientific data owned, licensed or developed by the licensees or sublicensees of CyDex or its Affiliates or other Third Parties (to the extent permitted in the applicable license or other agreements between CyDex and/or its Affiliates and such licensees, sublicensees or other Third Parties); and (c)  the open portion of the DMF for Captisol®, in each case to the extent relating to Captisol® alone (and not in conjunction with a product formulation).

1.13     “CEA Licensed Product” means a Licensed Product which is to be administered by any method in any form including without limitation injection and intravenously, the sole active pharmaceutical ingredient of which is acetaminophen (as it may have been or may be modified by Licensor or Seelos for use in a CEA Licensed Product), and in which such sole active pharmaceutical ingredient is prepared, formulated or combined with Captisol.

1.14    “CEA Licensed Product Adverse Event” means an undesirable experience or occurrence in a patient or clinical investigation subject administered Captisol or a CEA Licensed Product (whether or not necessarily having a causal relationship with Captisol or a CEA Licensed Product).

1.15    “CEA Program” means the program conducted by Licensor intended to create a CEA Licensed Product. 

1.16    “Combination Product” means a product containing a Licensed Product together with one or more other active ingredients, or with one or more other products, devices, pieces of equipment or components, but sold for a single price.

1.17    “Commercialization” or “Commercialize” means any and all activities undertaken at any time for a particular Licensed Product and that relate to the manufacturing, marketing, promoting, distributing, importing or exporting for sale, offering for sale, and selling of the Licensed Product, and interacting with Regulatory Authorities regarding the foregoing.

1.18    “Commercially Reasonable Efforts” means, with respect to the efforts to be expended by any Party with respect to any objective, such reasonable, diligent, and good faith efforts normally used to accomplish a similar objective under similar circumstances and conditions then prevailing, including taking into account (to the extent relevant to the objective and to the nature of the efforts), without limitation, commercial, legal and regulatory factors, target product profiles, product labeling, past product performance, the regulatory environment and competitive market conditions in the therapeutic area, safety and efficacy of such Licensed Product, the strength of its proprietary position and such other factors as such Party may reasonably consider. Commercially Reasonable Efforts will not mean that a Party commits that it or such Party’s applicable Affiliate will actually accomplish the applicable task.  

3

1.19    “Competent Authority” means any court, tribunal or regulatory agency of any Governmental Body.

1.20    “Compounds” means Aplindore, acetaminophen (as it may have been or may be modified by Licensor or Seelos for use in a CEA Licensed Product), an H3 receptor antagonist, or either or both of Licensor’s two proprietary CRTh2 antagonists set forth on Schedule 1.

1.21    “Competitive Product” means with respect to a given Licensed Product in a given jurisdiction, (a) any product, not covered by any license granted hereunder, that incorporates Aplindore, an H3 receptor antagonist, or either or both of Licensor’s two proprietary CRTh2 antagonists set forth on Schedule 1 as an active pharmaceutical ingredient or a generic version of any of the foregoing or (b) any product, not covered by any license granted hereunder, the sole active pharmaceutical ingredient of which is acetaminophen (or a modification thereof) and in which such sole active pharmaceutical ingredient is prepared, formulated or combined with Captisol.

1.22    “Controlled” means with respect to (a) Patent Rights and other Intellectual Property Rights, (b) Know-How or (c) physical materials constituting Know-How, that a Party or one of its Affiliates owns, has a license or sublicense, or, in the case of material, has the right to physical possession of such material and has the ability to grant a license or sublicense to, or assign its right, title and interest in and to, such Patent Rights and other Intellectual Property Rights, Know-How or material as provided for in this Agreement without violating the terms of any agreement or other arrangement with any Third Party.

1.23    “Copyrights” means all copyrights, and all right, title and interests in all copyrights, copyright registrations and applications for copyright registration, certificates of copyright and copyrighted rights and interests throughout the world, and all right, title and interest in related applications and registrations throughout the world.

1.24    “Covered” means, with respect to a Licensed Product, that the manufacturing, importing, using, selling, or offering for sale of such Licensed Product would, but for ownership of or a license granted hereunder under Licensor Patents, infringe a Valid Claim of Licensor Patents in the country in which the activity occurs.

1.25    “CRTh2” means a Chemoattractant Receptor-homologous molecule expressed on Th2 cells.

1.26    “CRTh2 Antagonist Licensed Product” means a Licensed Product for which the applicable Compound is either or both of Licensor’s two proprietary CRTh2 antagonists set forth on Schedule 1 or any salts, solvates, esters, metabolites, hydrates, intermediates, stereoisomers, polymorphs, and derivatives, all of the foregoing of either of Licensor’s two proprietary CRTh2 antagonists set forth on Schedule 1.

1.27    “CRTh2 Antagonist Program” means the antagonist program conducted by Licensor intended to create a CRTh2 Antagonist Licensed Product. 

4

1.28     “Development” or “Develop” means, with respect to a Licensed Product, the performance of all preclinical and clinical development (including, without limitation, toxicology, pharmacology, test method development and stability testing, process development, formulation development, quality control development, statistical analysis), clinical trials, and manufacturing and regulatory activities that are required to obtain Regulatory Approval of such Licensed Product.

1.29    “DMF” means a Drug Master File submitted to the FDA (or similar dossier filed with an equivalent Governmental Body in another jurisdiction) for Captisol®, as filed as of the Effective Date, or as hereafter updated from time to time during the Term, by CyDex with the FDA (or equivalent Governmental Body in another jurisdiction) from which Seelos is permitted by this Agreement to incorporate the DMF information by reference when submitting an Application to the FDA or an equivalent Governmental Body in another country or multinational region. 

1.30    All references in this Agreement to “Dollars” or “$” shall mean United States Dollars.

1.31    “EMA” means the European Medicines Agency or any successor agency.

1.32    “European Commission” means the authority within the European Union that has the legal authority to grant Regulatory Approvals in the European Union based on input received from the EMA or other competent Regulatory Authorities.

1.33    “FDA” means the United States Food and Drug Administration, or a successor federal agency thereto.

1.34    “Field” means all therapeutic uses in humans; provided that for CEA Licensed Products the Field expressly excludes the indications of (a) ocular treatment of any disease or condition with a formulation including a hormone; (b) topical ocular treatment of inflammatory conditions; (c) treatment and prophylaxis of fungal infections in humans; and (d) any ocular treatment for retinal degeneration.

1.35    “First Commercial Sale” means, with respect to a Licensed Product in any country, the first commercial transfer or disposition for value of such Licensed Product in such country to a Third Party by Seelos or a Sublicensee of Seelos after Regulatory Approval therefor has been obtained in such country.

1.36    “GAAP” means United States generally accepted accounting principles.

1.37    “Governmental Body” means any: (a) nation, principality, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign or other government; (c) governmental or quasi-governmental authority of any nature (including any governmental division, subdivision, department, agency, bureau, branch, office, commission, council, board, court, tribunal, instrumentality, officer, official, representative, organization, unit, body or entity); (d) authoritative multi-national or supranational organization or body; or (e) individual, entity, or body exercising, or entitled to exercise, any executive, legislative, judicial, administrative, regulatory, police, military or taxing authority or power of any nature.

1.38    “H3 Receptor Licensed Product” means a Licensed Product for which the applicable Compound is an H3 receptor antagonist drug.

5

1.39    “H3 Receptor Program” means the antagonist program conducted by Licensor intended to create an H3 Receptor Licensed Product.

1.40    “Intellectual Property Rights” means, collectively, Patent Rights, Copyrights, Trade Secrets, moral rights and all other intellectual property and proprietary rights. 

1.41    “IPO” means the consummation by Seelos of its first firm commitment underwritten public offering of common stock.

1.42    “Know-How” means any scientific or technical information, results and data of any type whatsoever, in any tangible or intangible form whatsoever, that is not in the public domain, including, without limitation, discoveries, inventions, trade secrets, databases, practices, protocols, regulatory filings, methods, processes, techniques, software, works of authorship, plans, concepts, ideas, biological and other materials, reagents, specifications, formulations, formulae, case reports forms, data analyses, reports, studies and procedures, designs for experiments and tests and results of experimentation and testing (including results of research or development), summaries and information contained in submissions to and information from ethical committees, the FDA or other Regulatory Authorities, manufacturing process and Development information, results and data, specifications, instructions, materials, expertise and other technology applicable to compounds, formulations, compositions or products or to their manufacture, Development, registration, use or Commercialization or methods of assaying or testing them or processes for their manufacture, formulations containing them, compositions incorporating or comprising them and including all biological, chemical, pharmacological, biochemical, toxicological, pharmaceutical, physical and analytical, safety, stability, quality control, manufacturing, preclinical and clinical data, expertise and information, regulatory filings and copies thereof, including without limitation those that relate to or are directed to Captisol or its manufacture and/or use.  Notwithstanding the foregoing, the defined term Know-How (and derivative defined terms thereof) shall not include Licensor Patents or inventions claimed thereby, nor any portion of the DMF not within the definition of Captisol Data Package. 

1.43    “Law” or “Laws” means all applicable laws, statutes, rules, regulations, ordinances and other pronouncements having the binding effect of law of any Governmental Body.

1.44    “Licensed Other Intellectual Property Rights” means Intellectual Property Rights Controlled by Licensor, other than Licensor Patents. 

1.45    “Licensed Product” means any pharmaceutical product, in any dosage form, preparation, composition, formulation, presentation or package configuration, that contains or comprises a Compound (and, in the case of a CEA Licensed Product, is prepared or combined with or formulated using Captisol, and that is Covered by a Valid Claim or that is developed with the assistance of or incorporates any component of the Captisol Data Package).  For clarity: if a product is described by the foregoing sentence it is a “Licensed Product” for all purposes hereof whether or not it is Covered and whether or not the manufacturing, importing, using, selling, or offering for sale of such product would, but for a license granted under this Agreement under the Licensor IP, infringe any Licensor IP in the country in which the activity occurs.

1.46    “Licensor IP” means any and all Licensor Patents and Licensed Other Intellectual Property Rights in and to the Licensor Technology or the use thereof.  

6

1.47    “Licensor Know-How” means any and all Know-How that (a) is Controlled by Licensor or any of its Affiliates as of the Effective Date or at any time thereafter during the Term and (b) pertains directly and primarily to, is necessary for or actually is or was used in or for (i) the Compounds or to Captisol, (ii) the preparation, combination and/or formulation of acetaminophen (as it may have been or may be modified by Licensor or Seelos for use in a CEA Licensed Product) with Captisol, including proprietary and confidential information contained in the Captisol Data Package, (iii) the Development and Commercialization of the Licensed Products and (c) any other Know-How that is transferred to Seelos pursuant to Section 3.2 below.  The Licensor Know-How shall include, but not be limited to, the Know-How listed on Schedule 2 hereto. 

1.48     “Licensor Patents” means all Patent Rights that are Controlled by Licensor or any of its Affiliates as of the Effective Date or at any time thereafter during the Term and that Cover or pertain directly and primarily to the Compounds (or, in the case of CEA Licensed Products, to Captisol). The Licensor Patents shall include, but not be limited to, all Patent Rights set forth on Schedule 3 hereto.  

1.49    “Licensor Technology” means the Licensor Know-How and the inventions described in the Licensor Patents.  

1.50    “Major Market” means any of the (a) United States, (b) the European Union (either in its entirety or including at least one of France, Germany or, if at the time the United Kingdom is a member of the European Union, the United Kingdom), (c) the United Kingdom, if at the time the United Kingdom is not a member of the European Union, (d) Japan or (e) the People’s Republic of China.

1.51    “Net Sales” means the gross amount invoiced or otherwise charged by Seelos and its Sublicensees to Third Parties for the sale of a Licensed Product, on a Licensed Product-by-Licensed Product basis, less:

		
	(a)
	Trade, quantity and cash discounts;

		
	(b) 
	Discounts, refunds, rebates, chargebacks, retroactive price adjustments, and any other allowances given and taken which effectively reduce the net selling price (other than such which have already diminished the gross amount invoiced), including, without limitation, Medicaid rebates and institutional rebates;

		
	(b)
	Product returns and allowances;

		
	(c) 
	Administrative fees paid to group purchasing organizations (e.g., Medicare) and government-mandated rebates;

		
	(d)
	Shipping, handling, freight, postage, insurance and transportation charges, but all only to the extent included as a separate line item or otherwise separately identified in the gross amount invoiced; 

		
	(e)
	Any tax, tariff or duties imposed on the production, sale, delivery or use of the Licensed Product, including, without limitation, sales, use, excise or value added taxes and customs and duties, but all only to the extent included as a separate line item or otherwise separately identified (e.g., “taxes”) in the gross amount invoiced; and

7

		
	(f)
	Bad debt actually written off during the accounting period (provided, that any bad debt write-off so taken which is later reversed shall be added back to Net Sales in the accounting period in which the reversal occurs). 

Notwithstanding the foregoing, amounts invoiced by Seelos and its Sublicensees for sales of Licensed Products among Seelos and its Sublicensees and their respective Affiliates for resale shall not be included in the computation of Net Sales.

In the event that a Licensed Product is Commercialized as part of a Combination Product for a single price, then Net Sales shall be calculated by multiplying the sales price of such Combination Product by the fraction A/(A+B) where A is the fair market value of the Licensed Product and B is the fair market value of the other product(s) in the Combination Product; and the applicable deductions from the gross amount invoiced or otherwise charged by Seelos shall be allocated between the Licensed Product and the other product(s) in the Combination Product in the same proportion.    

1.52    “Patent Right” means: (a) an issued or granted patent, a pending patent application and any patents that may be issued or granted therefrom and including any extension, supplemental protection certificate, registration, confirmation, reissue, reexamination, extension, renewal, any continuation, divisional, continuation-in-part, substitute or provisional application of any of the foregoing; and (b) all counterparts or foreign equivalents of any of the foregoing issued by or filed in any country or other jurisdiction.  

1.53    “Person” means any natural person, corporation, limited liability company, firm, business trust, joint venture, association, organization, company, partnership or other business entity, or any government or agency or political subdivision thereof.

1.54    “Quality Agreement” means a formal agreement to be entered into hereafter between CyDex and Seelos that shall set forth the quality expectations, responsibilities, rights (including, as applicable and agreed upon, audit requirements) and quality measures and good manufacturing practices relating to the manufacture and supply of Captisol to assure drug quality, safety and efficacy consistent with FDA guidance or equivalent foreign Governmental Body requirements for Quality Agreements.  Any such agreement may be amended from time to time by written agreement between the parties.  

1.55    “Regulatory Approval” means all approvals, licenses, registrations, or authorizations of the relevant Regulatory Authority necessary for the Development, manufacture, use, storage, import, transport and Commercialization of a given Licensed Product in a particular country or jurisdiction.  For the avoidance of doubt, Regulatory Approval outside of the United States shall include any pricing or marketing approval needed before the sale of a Licensed Product in the Field. 

1.56     “Regulatory Authority” means (a) the FDA, (b) the EMA or the European Commission, or (c) any regulatory body with similar regulatory authority over pharmaceutical or biotechnology products in any other jurisdiction anywhere in the world. 

8

1.57     “Reverse Merger” means a “reverse merger” type of transaction as a result of which Seelos’ business becomes owned or controlled by (or Seelos merges into) an existing issuer with a class of securities registered under the Securities Exchange Act of 1934, as amended, and immediately after such transaction the security holders of Seelos as of immediately before such transaction own, as such and as a result of such transaction, at least 35% of the equity securities or voting power of such issuer.

1.58     “Reverse Merger Raise” means a capital-raising transaction for (in whole or in part) the benefit of Seelos’ business consummated in conjunction with a Reverse Merger.

1.59    “Royalty Term” means, on a Licensed Product-by-Licensed Product and country-by-country basis, the period from the first commercial transfer or disposition for value of such Licensed Product in such country to a Third Party by Seelos or a Sublicensee of Seelos until the later of (a) [* * *] years after the expiry, invalidation, revocation, unenforceability or other lapse of the last Licensor Patent Covering the applicable Licensed Product in such country or (b) the [* * *] anniversary of the First Commercial Sale in such country.  

1.60    “Securities Act” means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

1.61     “Sublicensee” means a Person, other than an Affiliate of Seelos, to which Seelos (or its Affiliate) has, pursuant to Section 2.2, granted sublicense rights under any of the license rights granted under Section 2.1. “Sublicense” shall be construed accordingly.

1.62    “Supply Agreement” means a Supply Agreement entered into contemporaneously herewith between Seelos and CyDex for the supply of Captisol® sulfobutylether ẞ(beta) cyclodextrin, sodium salt from CyDex to Seelos.

1.63    “Tax” or “Taxes” means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.

1.64    “Third Party” means any Person other than Licensor, Seelos or Affiliates of any of them, or any Sublicensees.

1.65    “Third Party Action” means any claim or action made by a Third Party against either Party that claims that a Licensed Product, or its use, Development, manufacture, sale or Commercialization infringes such Third Party’s Intellectual Property Rights.

1.66    “Trade Secrets” means all right, title and interest in all trade secrets and trade secret rights arising under common law, state law, federal law or laws of foreign countries, provided that any Trade Secret disclosed to the other Party both (a) without obtaining the other Party’s prior written consent and without being marked as “trade secret” or with a similar designation and (b) in a manner that a reasonable person would not regard as being provided under circumstances indicating that it is a trade secret shall not be deemed a Trade Secret pursuant to applicable Laws, but will be treated as Confidential Information of the disclosing Party. 
* Confidential Treatment Requested

9

1.67    “Trademarks” means all trademarks, service marks, trade names, rights in trade dress, logos, symbols, brand names and all trademark rights and interests throughout the world, and all right, title and interest in related applications and registrations throughout the world under common law, state law, federal law or laws of foreign countries. 

1.68    “United States” or “US” means the United States of America and its territories and possessions.

1.69    “Valid Claim” means a claim of an issued patent which has not expired or lapsed, which claim (or patent as a whole) has not been held or declared revoked, unenforceable or invalid by a decision of a Competent Authority of competent jurisdiction which decision is unappealable or unappealed within the time allowed for appeal, and which claim (or patent as a whole) is not admitted to be invalid or unenforceable through reissue, reexamination or disclaimer or otherwise.

1.70    The definition of each of the following terms is set forth in the section of the Agreement indicated below:

“Action” has the meaning set forth in Section 7.5(b).

“Claim” has the meaning set forth in Section 10.1. 

“Confidential Information” has the meaning set forth in Section 8.1.

“Contract Manufacturer” has the meaning set forth in Section 2.3.

“Controlling Party” has the meaning set forth in Section 7.6(c). 

“Development Program” has the meaning set forth in Section 3.1.

“Disclosing Party” has the meaning set forth in Section 8.1. 

“Indemnified Party” has the meaning set forth in Section 10.4.

“Indemnifying Party” has the meaning set forth in Section 10.4.

“Licensor Indemnitees” has the meaning set forth in Section 10.1.

“Notice” has the meaning set forth in Section 8.6.

“Publishing Party” has the meaning set forth in Section 8.6.

“Qualifying Financing” has the meaning set forth in Section 5.1(b).

 “Receiving Party” has the meaning set forth in Section 8.1. 

“Securities” has the meaning set forth in Section 9.2.

“Seelos Background Technology” has the meaning set forth in Section 7.1.

10

“Seelos Foreground Technology” has the meaning set forth in Section 7.1.

 “Seelos Indemnitees” has the meaning set forth in Section 10.2. 

“Study” has the meaning set forth in Section 11.2(b).

“Term” has the meaning set forth in Section 12.1.

“Willful Breach” has the meaning set forth in Section 12.2.

ARTICLE II
LICENSES AND OTHER RIGHTS

2.1    Grant of License to Seelos. 

(a)    Subject to the terms and conditions of this Agreement, Licensor hereby grants to Seelos, and Seelos hereby accepts, an exclusive (even as to Licensor), perpetual, irrevocable (both of the immediately foregoing, subject to Section 12 below), worldwide, royalty-bearing, nontransferable (except with respect to the assignment provision in Section 13.2) right and license (with the right to sublicense, and to further sublicense, subject to the provisions of Section 2.2) under the Licensor IP, to research, Develop, manufacture, have manufactured (pursuant to Section 2.3), use, import and Commercialize and have Commercialized the Licensed Products in and for the Field.  Licensor grants no licenses or rights to use other than as expressly set forth in this Agreement.  

(b)    Notwithstanding Section 2.1(a), with respect to the Licensor Patents identified on Schedule 3 as licensed to CyDex or its Affiliates by Pfizer Inc. on a nonexclusive basis, CyDex hereby grants to Seelos a nonexclusive, perpetual, irrevocable (both of the immediately foregoing, subject to Section 12 below), worldwide, royalty-bearing, nontransferable (except with respect to the assignment provision in Section 13.2) right and license (with the right to sublicense, and to further sublicense, subject to the provisions of Section 2.2) under the Licensor IP to research, Develop, manufacture, have manufactured (pursuant to Section 2.3), use, import and Commercialize and have Commercialized the CEA Licensed Products in and for the Field.  

(c)    Except as otherwise set forth in this Agreement or the Supply Agreement, CyDex grants no rights to Seelos to manufacture, import, sell or offer for sale bulk Captisol; provided, however, that Seelos may provide Captisol to bona fide collaborators in order to help Seelos to develop, make, have made (pursuant to Section 2.3), use, sell, offer for sale, import or otherwise commercially exploit the CEA Licensed Products in the Field. Seelos shall not attempt to reverse engineer, deconstruct or in any way determine the structure or composition of Captisol.  

(d)    Licensor shall not be liable to Seelos for violation of Seelos’ exclusive rights hereunder by parties other than Licensor or Affiliates of Licensor, licensees or sublicensees or contractors of Licensor with respect to the subject matter of this Agreement, or licensees or sublicensees, contractors, distributors, resellers or agents of any of the foregoing, except if Licensor has materially contributed to such violation.  

2.2    Sublicensing.    Seelos shall have the right to grant sublicenses (collectively “Sublicenses”) under the licenses granted to Seelos pursuant to Section 2.1; provided, however, that the granting by Seelos 

11

of a Sublicense shall not relieve Seelos of any of its obligations hereunder and provided, further, that Seelos’ right to grant a Person a Sublicense shall be subject to the condition that Seelos shall advise such Sublicensee of the restrictions set forth in this Agreement with respect to the rights sublicensed to such Sublicensee, shall include within such Sublicense express provisions binding the Sublicensee to all of the duties, obligations, restrictions and acknowledgements hereunder of Seelos (with Licensor being an express third-party beneficiary thereof to the extent (a) that any Sublicense is a sublicense of a CEA Licensed Products and (b) of audit rights and records retention, in each case unless upon Company’s request Licensor consents in a particular instance to waive such requirement that Licensor be an express third-party beneficiary, which consent Licensor will consider in good faith and not unreasonably withhold or delay) and stating that the Sublicense shall automatically terminate upon the expiration or earlier termination of this Agreement. Seelos shall reasonably promptly deliver to Licensor a true and complete copy of the relevant portions of such Sublicense, provided that Seelos may redact any financial information and any sensitive or proprietary information that is not necessary to ascertain such Sublicensee’s compliance with the terms and conditions of this Agreement.  Notwithstanding the foregoing sentence, it is not required that a Sublicense include provisions for the Sublicensee to pay royalties or make milestone payments or other payments directly to Licensor or to provide royalty reports directly to Licensor.  Seelos shall require that all of its Sublicensees shall comply with the terms and conditions of this Agreement (as applicable to them) and Seelos shall be and remain fully responsible to Licensor for the compliance by such Sublicensees with the terms and conditions of this Agreement (as applicable to them) as if the Sublicensee were Seelos hereunder.  

In addition, Licensor hereby agrees that, for the express benefit of each Sublicensee whose Sublicense would be automatically terminated as a result of termination of this Agreement under Section 12.2 for Seelos’ breach (so long as such breach does not arise from any act or omission of such Sublicensee) or as a result of termination of this Agreement under Section 12.3 for Seelos’ bankruptcy or similar event, upon such termination Licensor shall negotiate in good faith with such Sublicensee to enter into a new direct license agreement with such Sublicensee which would contain terms and conditions that are substantially the same as those contained in the sublicense agreement subject to the following: (a) such direct license agreement shall carry forward any limitations or restrictions from Seelos’ full rights which had been effected in such Sublicense (e.g., limitations or restrictions as to duration, type of Licensed Product, method of administration, type of commercialization right, geographic territory, field of use, etc.), (b) if the rights granted by Seelos to such Sublicensee and another Sublicensee had been inconsistent (e.g., the two Sublicensees’ exclusive territories in fact overlapped), Licensor shall be entitled to negotiate so as to cause the elimination in the direct license agreements of any such inconsistency, and (c) such direct license agreement, together with any and all other direct license agreements entered into with other former Sublicensees on account of this Section 2.2, shall afford to Licensor the economic benefit as to the milestone payments and royalties to the extent that such milestone payment and royalties have a proportionate relation to such Sublicensees’ rights and arise after the date of termination of this Agreement as if this Agreement were still in effect, provided that Licensor shall not be entitled to any such milestone payment or royalties payment to the extent that Licensor already has received or recovered or later receives and recovers from, on behalf of or because of Seelos or its successors or assigns any damages, settlement amounts or other amounts for or otherwise in connection with such milestone payments and royalties. As an illustration of subsection (c): if there are four such Sublicensees, the obligations of the former Sublicensees under the four (or, as the case may be, fewer) direct license agreements to pay a particular milestone payment shall in the aggregate, somehow, equal the amount of the particular milestone payment to the extent to which such milestone has a proportionate relation to such Sublicensees’ rights and arises after the date of termination of this Agreement as if this Agreement were still in effect. (As an example, for clarity:  the rights of a Sublicensee whose rights are limited to CEA Licensed Products in South America would not “have a proportionate relation” to any of the milestones hereunder except the ones identified in Section 5.3(c)(iii) and Section 5.3(c)(vii).)  As another illustration of subsection (b): if there are four such Sublicensees, the obligations of the former Sublicensees under the 

12

four (or, as the case may be, fewer) direct license agreements to pay royalties shall be based on the same royalty tiers as set forth in this Agreement, and as to each such direct license agreement the achievement of the applicable tier threshold shall be based not on such former Sublicensee’s Net Sales alone, but rather on the combined Net Sales of all former Sublicensees under their direct license agreements plus the Net Sales of Licensed Products under any other direct license agreement which Licensor may at any time enter into with anyone else (e.g., if the direct license agreements with former Sublicensees did not in the aggregate cover all geographies in the world).  

Except for Sublicenses as expressly allowed herein, Seelos acknowledges that it has no right to, and agrees not to purport to, grant to anyone a sublicense under the Licensor IP.

2.3    Contracting.  Seelos may manufacture the Licensed Products or contract the manufacture of the Licensed Products (but in each case, may not manufacture bulk Captisol) with Third Party manufacturers (collectively “Contract Manufacturers”).  To the extent necessary to engage a Contract Manufacturer for a Licensed Product, Seelos shall be permitted under this Agreement to grant any such Contract Manufacturer a sublicense under the licenses granted to Seelos pursuant to Section 2.1 solely for such purposes; provided, however, that such permission is subject to the conditions that (a) any such Contract Manufacturer shall first be advised of the restrictions set forth in this Agreement with respect to the rights licensed to Seelos and its Sublicensees hereunder and (b) any such Contract Manufacturer shall enter into an agreement with Seelos (with Licensor being an express third-party beneficiary thereof to the extent that any such agreement is for the manufacture of CEA Licensed Product unless upon Company’s request Licensor consents in a particular instance to waive such requirement that Licensor be an express third-party beneficiary, which consent Licensor will consider in good faith and not unreasonably withhold or delay) pursuant to which such Contract Manufacturer shall acknowledge and agree to observe and be bound by the applicable restrictions set forth in this Agreement and (c) Seelos shall reasonably promptly deliver to Licensor a true and complete copy of the relevant portions of such agreement, provided that Seelos may redact any financial information and any sensitive or proprietary information that is not necessary to ascertain such Sublicensee’s compliance with the terms and conditions of this Agreement.  Seelos shall require that all of its Contract Manufacturers shall comply with the terms and conditions of this Agreement and shall remain fully responsible to Licensor for the compliance by such Contract Manufacturers with the terms and conditions of this Agreement as if such Contract Manufacturers were Seelos hereunder.

ARTICLE III
DEVELOPMENT, MANUFACTURE AND COMMERCIALIZATION 

3.1    Diligence by Seelos.  Seelos shall use, and shall require its Affiliates and Sublicensees to use, Commercially Reasonable Efforts: (a) to Develop the Licensed Products within each Compound category; (b) to obtain Regulatory Approval in the Major Markets for the Licensed Products; and (c) to Commercialize Licensed Products thereafter in each country in which Regulatory Approval is obtained.  In connection therewith, Seelos shall formulate and execute a preclinical and clinical development program to Develop Licensed Products within each Compound category in and for the Field (the “Development Program”).

13

3.2    Technology Transfer. As soon as reasonably practicable after the Effective Date, but in no event later than 30 days following the Effective Date or such later date Seelos requests, Licensor shall, at Licensor’s cost and expense, communicate and transfer the Licensor Know-How to Seelos. Such technology transfer shall occur in an orderly fashion and in a manner such that the value, usefulness and confidentiality of the transferred Licensor Know-How are preserved in all material respects. Such technology transfer shall not include information related to the manufacture of bulk Captisol. Seelos shall confirm in writing having received the Licensor Know-How. Except as otherwise provided in Section 9.2 and without limiting Licensor’s obligations under this Section 3.2, Seelos acknowledges that the Licensor Know-How is provided on an “as-is, with all faults” basis.  For a period of 18 months after the Effective Date, Licensor shall make its personnel (as applicable) available to Seelos and its Contract Manufacturers to respond to informational inquiries and provide technical assistance related to the Licensor Know-How at no charge to Seelos. Thereafter, Seelos shall compensate the applicable Licensor at the rate of $[* * *] per hour for the time its personnel incur to provide such services. Licensor and its personnel shall not be required to develop new information or analysis, nor to provide more assistance than is commercially reasonable.  Notwithstanding the foregoing and in addition to and not in lieu or in limitation of the foregoing, Licensor shall continue to provide Seelos with any updates to the transferred Licensor Know-How and supplemental information and Seelos shall have the right to reasonably request, and Licensor shall use Commercially Reasonable Efforts to provide, additional Licensor Know-How then in existence and information relating to the transferred Licensor Know-How including any Licensor Know-How or other information that is missing or necessary to correct previously provided Licensor Know-How or other information. 

3.3    No Guaranty of Favorable Results.  Licensor does not warrant that the Development Program, Seelos’ preclinical studies and evaluation (if any) and/or Seelos’ clinical studies (if any) will produce any particular results or any favorable results, or that Licensed Products can ever be successfully or profitably Commercialized. 

3.4    Seelos Responsibility and Authority for Development.  Seelos shall have the exclusive right, and sole responsibility and decision-making authority, to research and Develop any Licensed Products in and for the Field and to conduct (either itself or through its agents, subcontractors and/or Sublicensees) all clinical trials and non-clinical studies Seelos believes appropriate to obtain Regulatory Approvals for Licensed Products in and for the Field. The Parties acknowledge that the Parties may choose in the future to negotiate toward a research agreement in support of the Development Program; however, no Party shall be obligated to negotiate toward, or to enter into, such a research agreement, and in the absence of any such definitive written research agreement Licensor shall have no obligation to assist Seelos’ research and development except to the extent expressly set forth in this Agreement or the Supply Agreement.

3.5    Commercialization. Seelos shall have the exclusive right, and sole responsibility and decision-making authority, to Commercialize any Licensed Products in and for the Field itself or through one or more Sublicensees or other Third Parties selected by Seelos and shall have the sole decision-making authority and responsibility in all matters relating to the Commercialization of Licensed Products. 

3.6    Manufacturing. Subject to Section 2.3 as to CEA Licensed Products, Seelos shall have the exclusive right, and sole responsibility and decision-making authority, to manufacture or have manufactured, at the clinical and/or commercial stage, any Licensed Product in and for the Field itself or through one or more Sublicensees selected by Seelos.

14

3.7    Reporting to Licensor. Seelos shall, at least once each Calendar Year, provide to Licensor an updated report regarding the progress of all research and Development efforts toward Licensed Products and regarding the progress of Commercialization of Licensed Products.

3.8    Right to Subcontract of Seelos. Subject to any required compliance with Section 2.2, Seelos may exercise any of the rights or obligations that Seelos may have under this Agreement (including, without limitation, any of the rights licensed in Section 2.1 hereof) by sublicensing, but any Sublicense granted or entered into by Seelos as contemplated by this Section 3.8 or any Sublicensee’s exercise or performance of all or any portion of the rights or obligations that Seelos may have under this Agreement shall not relieve Seelos from any of its obligations under this Agreement. 

3.9    Compliance with Law. Licensor undertakes and agrees that the transfer of the Licensor Know-How and its performance of its obligations and exercise of its rights under this Agreement shall comply in all respects with all applicable international, federal, state and local laws, rules and regulations, including, but not limited to, environmental, occupational safety/health, safety and import/export restrictions, laws, rules and regulations. Seelos undertakes and agrees that the conduct of the Development Program, the use of the Licensor Technology, and all Development, manufacturing and Commercialization of Licensed Products by it and its Sublicensees shall comply in all material respects with all applicable international, federal, state and local laws, rules and regulations, including, but not limited to, environmental, occupational safety/health, safety and import/export restrictions, laws, rules and regulations.    

3.10    Costs and Expenses. Except as otherwise expressly provided herein, as between Licensor and Seelos, Seelos shall be solely responsible for all costs and expenses related to Development, manufacturing and Commercialization of the Licensed Products, including without limitation costs and expenses associated with all preclinical activities and clinical trials, and all regulatory filings and proceedings relating to Licensed Products.

3.11    .Patent Marking. Seelos agrees that with respect to each unit or package of Licensed Products sold in a given country, Seelos shall comply with the customary patent marking laws and practices of such country as to the applicable Licensor Patents.

3.12    Trademarks. As between Licensor and Seelos, Seelos shall have the sole authority to select Trademarks for Licensed Products and shall own all such Trademarks.  Licensor does not grant Seelos the right to use any Trademarks of Licensor or its Affiliates provided that, for the avoidance of doubt and notwithstanding anything in this Agreement or otherwise, Seelos and any of its Sublicensees shall have the right to use any Trademarks in factual statements about the Licensed Products and its relationship with and the role of Licensor, for Regulatory Approvals and regulatory filings or as required by Law or in the exercise of fair use.

ARTICLE IV
REGULATORY MATTERS

4.1    Regulatory Filings. As between Seelos and Licensor, Seelos shall own and maintain all regulatory filings made after the Effective Date for Licensed Products and all Regulatory Approvals for Licensed Products.

4.2    Communications with Authorities. As between Seelos and Licensor and except to the extent, if any, otherwise expressly provided in this Agreement or the Supply Agreement, Seelos shall be responsible for and act as the sole point of contact for communications with Regulatory Authorities in 

15

connection with the Development, Commercialization, and manufacturing of Licensed Products. At the request of Seelos, Licensor shall make available to Seelos, at no more than a reasonable charge, a qualified representative who shall, together with the representatives of Seelos, participate in and contribute to meetings with the Regulatory Authorities with respect to regulatory matters relating solely to the Licensor Technology or the Licensor IP.  

(a)    Seelos shall provide CyDex with copies of the portions of all regulatory submissions containing Captisol data alone (and not in conjunction with any CEA Licensed Product) 14 days before submission and shall allow CyDex to review and comment upon said submissions.  CyDex shall provide its input regarding any such submission within 7 days of receipt of such submission from Seelos. The contents of each such submission shall be deemed to be Confidential Information of Seelos, subject to the terms and provisions of Article VIII.  Seelos shall promptly inform CyDex of meetings with the FDA (or equivalent foreign Governmental Bodies) regarding Captisol. If Seelos submits written responses to the FDA, or an equivalent foreign Governmental Body, which include data on Captisol alone, CyDex shall be permitted to review such written materials 14 days before submission. If CyDex reasonably objects to the contents of such written responses relating to Captisol, the Parties agree to cooperate in working toward a reasonable and mutually agreeable response.  

4.3    Adverse Event Reporting. 

(a)    Each Party agrees to comply with any and all Laws that are applicable to it as of the Effective Date and thereafter during the Term relating to Licensed Product safety data collection and reporting (and, if applicable, recalls). Each Party shall provide annually to the other Party a listing of each serious untoward medical occurrence in a patient or subject who is administered a Licensed Product and shall, should such other Party expressly so request, provide such other Party with additional detail as to such ones of such occurrences as such other Party  may designate.  

(b)    Each Party shall adhere, and shall require that its Affiliates, Sublicensees, Contract Manufacturers, co-marketers and distributors adhere, to all requirements of applicable law and regulations that relate to the investigation and reporting of any CEA Licensed Product Adverse Event, including without limitation an unfavorable and unintended diagnosis, symptom, sign (including an abnormal laboratory finding), syndrome or disease, whether or not considered Captisol or CEA Licensed Product­ related, which occurs or worsens following administration of Captisol or a CEA Licensed Product.  Each Party shall provide the other with copies of all relevant reports it obtains (either directly or through any Sublicensee or licensee) of any CEA Licensed Product Adverse Event which is serious (e.g., any such CEA Licensed Product Adverse Event that results in death, is life-threatening, requires or prolongs inpatient hospitalization, results in disability, congenital anomaly or is medically important (i.e., may require other medical or surgical intervention to prevent other serious criteria from occurring)) which such Party has reason to believe are associated with Captisol within 14 days following (a) submission of any such report to the FDA or an equivalent foreign Governmental Body, or (b) receipt from such Party’s Sublicensee, licensee, co-marketer or distributor of any such report to the FDA or an equivalent foreign Governmental Body.  Seelos shall also advise CyDex regarding any proposed labeling, Application supplements or registration dossier changes affecting Captisol arising from CEA Licensed Product Adverse Event reports.  Reports from Seelos shall be delivered to the attention of Chief Scientific Officer, CyDex, with a copy to Chief Executive Officer, CyDex, at the address set forth in Section 13.7.  Reports from CyDex shall be delivered to the attention of Chief Operating Officer, Seelos, with a copy to Chief Executive Officer, Seelos, at the address set forth in Section 13.7.  The Parties shall mutually cooperate with regard to investigation of any such serious CEA Licensed Product Adverse Event, whether experienced by Seelos, CyDex or any other Affiliate, Sublicensee, sublicensee, co-marketer or distributor of CyDex or Seelos.

16

ARTICLE V
FINANCIAL PROVISIONS

5.1    Option Fee and Upfront Fee.  

(a)    Seelos becomes obligated on the Effective Date to pay Ligand a $25,000 option fee.  Seelos shall pay such option fee to Ligand in cash by no later than 60 days after the Effective Date.

(b)    As further partial consideration for Licensor’s grant of the rights and licenses to Seelos hereunder, Seelos shall pay to Ligand the following non-creditable, non-refundable upfront payments (payable in the form of consideration set forth in Section 5.1(d)) within 30 days after the closing of the issuance and sale by Seelos, in one transaction or a series of integrated transactions, of debt and/or equity securities of Seelos for gross proceeds to Seelos of at least $7,500,000 in cash (a “Qualifying Financing”).

(i)    $450,000 in respect of the Aplindore Program;

(ii)    $150,000 in respect of the CEA Program;

(iii)    $350,000 in respect of the H3 Receptor Program; and 

(iv)    $350,000 in respect of the CRTh2 Antagonist Program.

(c)    The Section 5.1(a) $25,000 option fee shall be creditable pro rata against the Section 5.2(b)(i)-(iv) upfront payment amounts, but otherwise the Section 5.1(a) $25,000 option fee shall be non-creditable and non-refundable.

(d)    The Section 5.1(b)(i)-(iv) upfront payment amounts shall be payable by Seelos (i) in cash, (ii) in shares of Seelos common stock at the fair market value per share of Seelos common stock based upon a valuation agreed upon by Seelos and Licensor or, in the absence of such agreement, an independent valuation thereof made by  an appraisal expert jointly selected by Seelos and Licensor, with the costs of such appraisal borne equally by Seelos and Licensor, in either case as of immediately following completion of the Qualifying Financing, rounded down to the nearest whole share, or (iii) by a combination of such two methods, all as determined by Seelos at the time in Seelos’ sole and absolute discretion.

5.2    Financing Milestone Payments.    

(a)    As further partial consideration for Licensor’s grant of the rights and licenses to Seelos hereunder, Seelos shall pay to Ligand the following non-creditable, non-refundable milestone payment in the case of an IPO or a Reverse Merger Raise (payable in the form of consideration set forth in Section 5.2(d) and within the time period specified in Section 5.2(e)): the lesser of (i) $3,500,000 or (ii) 10% of the net proceeds of such IPO or Reverse Merger Raise.

(b)    As further partial consideration for Licensor’s grant of the rights and licenses to Seelos hereunder, Seelos shall pay to Ligand the following non-creditable, non-refundable milestone payment in the case of an Acquisition (payable in the form of consideration set forth in Section 5.2(d) and within the time period specified in Section 5.2(e)): the lesser of (i) $3,500,000 or (ii) 10% of the net proceeds actually payable to Seelos or its equity holders (in their capacity as such) in the Acquisition; provided that earnout or other contingent or deferred Acquisition consideration shall be payable by Seelos promptly upon its actual receipt by Seelos based on the amount actually received by Seelos.  If the Acquisition is by an 

17

equity holder of Seelos, the 10% shall be calculated on the basis that Acquisition consideration is deemed also paid to such equity holder’s shares on the same per-share basis as other equity holders receive for similar shares.

(c)    If Seelos has incurred and paid the Section 5.2(a) milestone payment, the Section 5.2(b) milestone payment is excused, and Seelos shall have no obligation to make any payments to Ligand under Section 5.2(b); and if Seelos has incurred and paid the Section 5.2(b) milestone payment, the Section 5.2(a) milestone payment is excused, and Seelos shall have no obligation to make any payments to Ligand under Section 5.2(b).

(d)    The Section 5.2 financing milestone payment amounts shall be payable by Seelos (i) in cash, (ii) (A) in the case of an IPO, in shares of Seelos common stock valued at the “price to public” per share of Seelos common stock in such IPO, rounded down to the nearest whole share, (B) in the case of a Reverse Merger Raise, in the form of the consideration received per share of Seelos common stock in the Reverse Merger by holders of Seelos common stock, valued at the fair market value per share of Seelos common stock indicated by the volume weighted average price of the common stock of the counterparty to the Reverse Merger whose shares are registered under the Securities Exchange Act of 1934, as amended, for the 10 trading days beginning on the date immediately following the date of such Reverse Merger, or (C) in the case of an Acquisition, in the form of the consideration received per share of Seelos common stock in the Acquisition by holders of Seelos common stock, valued at the fair market value per share of Seelos common stock as determined by Seelos’ board of directors in good faith in connection with such Acquisition, or (iii) by a combination of such methods set forth in subsections (i) and (ii), all as determined by Seelos at the time in Seelos’ sole discretion.

(e)    The Section 5.2 financing milestone payment shall be payable in full no more than 30 days after the closing of the event giving rise to such financing milestone payment.

5.3    Commercial Milestone Payments.

(a)    As further partial consideration for Licensor’s grant of the rights and licenses to Seelos hereunder, Seelos shall pay to Ligand the following non-creditable, non-refundable milestone payments with regard to each respective Licensed Product (other than an Aplindore Primary Licensed Product) to achieve the respective Licensed Product milestone event, for each respective indication for which a Licensed Product (other than an Aplindore Primary Licensed Product) achieves the respective Licensed Product milestone event. Seelos shall promptly, but in no event later than 10 days following Seelos’ receipt of actual knowledge of each achievement of a milestone event, notify Ligand in writing of the achievement of such milestone event and shall pay the relevant milestone payment within 30 days after such notice or, to the extent that such milestone payment is initially to be paid by a Sublicensee to Seelos, the earlier of (a) 40 days after achievement of such milestone and (b) 10 days from receipt of the relevant milestone payment from a Sublicensee.  

18

	
			
	 
	Milestone Event 
	Milestone Payment 

	(i)
	Submission of an Application 
 in the United States for a particular Licensed Product
	$750,000 

	(ii)
	United States  FDA approval of an Application for a particular Licensed Product
	$3,000,000 

	(iii)
	Regulatory Approval in or for a Major Market (outside the United States) for a particular Licensed Product
	$1,125,000

	(iv)
	Regulatory Approval in or for a second Major Market (outside the United States) for a particular Licensed Product
	$1,125,000

(b)    As further partial consideration for Licensor’s grant of the rights and licenses to Seelos hereunder, Seelos shall pay to Ligand the following non-creditable, non-refundable milestone payments with regard to each Aplindore Primary Licensed Product to achieve the respective Aplindore Primary Licensed Product milestone event, for each respective indication for which an Aplindore Primary Licensed Product achieves the respective Aplindore Primary Licensed Product milestone event. Seelos shall promptly, but in no event later than 10 days following Seelos’ receipt of actual knowledge of each achievement of a milestone event, notify Ligand in writing of the achievement of such milestone event and shall pay the relevant milestone payment within 30 days after such notice or, to the extent that such milestone payment is initially to be paid by a Sublicensee to Seelos, the earlier of (a) 40 days after achievement of such milestone and (b) 10 days from receipt of the relevant milestone payment from a Sublicensee.

	
			
	 
	Milestone Event 
	Milestone Payment 

	(i)
	Submission of an Application in the United States for a particular Aplindore Primary Licensed Product
	$100,000 

	(ii)
	United States FDA approval of an Application for a particular Aplindore Primary Licensed Product
	$350,000 

	(iii)
	Regulatory Approval in or for a Major Market (outside the United States) for a particular  Aplindore Primary Licensed Product
	$125,000

	(iv)
	Regulatory Approval in or for a second Major Market (outside the United States) for a particular  Aplindore Primary Licensed Product
	$125,000

19

(c)    As further partial consideration for Licensor’s grant of the rights and licenses to Seelos hereunder, Seelos shall pay to Ligand the following non-creditable, non-refundable milestone payments with regard to each Licensed Product category to achieve the respective Licensed Product milestone event. Seelos shall promptly, but in no event later than 10 days following Seelos’ receipt of actual knowledge of each achievement of a milestone event, notify Ligand in writing of the achievement of such milestone event and shall pay the relevant milestone payment within 30 days after such notice or, to the extent that such milestone payment is initially to be paid by a Sublicensee to Seelos or, to the extent that such milestone payment is initially to be paid by a Sublicensee to Seelos, the earlier of (a) 40 days after achievement of such milestone and (b) 10 days from receipt of the relevant milestone payment from a Sublicensee.

	
			
	 
	Milestone Event 
	Milestone Payment 

	(i)
	$1,000,000,000 of cumulative worldwide Net Sales of Aplindore Licensed Products since the First Commercial Sale of the first Aplindore  Licensed Product to have a First Commercial Sale
	$10,000,000 

	(ii)
	$1,000,000,000 of cumulative worldwide Net Sales of H3 Receptor Licensed Products since the First Commercial Sale of the first H3 Receptor Licensed Product to have a First Commercial Sale 
	$10,000,000

	(iii)
	$1,000,000,000 of cumulative worldwide Net Sales of CEA Licensed Products since the First Commercial Sale of the first CEA Licensed Product to have a First Commercial Sale
	$10,000,000

	(iv)
	$1,000,000,000 of cumulative worldwide Net Sales of CRTh2 Antagonist Licensed Products since the First Commercial Sale of the first CRTh2 Antagonist Licensed Product to have a First Commercial Sale
	$10,000,000

	(v)
	$2,000,000,000 of cumulative worldwide Net Sales of Aplindore Licensed Products since the First Commercial Sale of the first Aplindore Licensed Product to have a First Commercial Sale
	$20,000,000

	(vi)
	$2,000,000,000 of cumulative worldwide Net Sales of H3 Receptor Licensed Products since the First Commercial Sale of the first H3 Receptor Licensed Product to have a First Commercial Sale
	$20,000,000

	(vii)
	$2,000,000,000 of cumulative worldwide Net Sales of CEA Licensed Products since the First Commercial Sale of the first CEA Licensed Product to have a First Commercial Sale
	$20,000,000

	(viii)
	$2,000,000,000 of cumulative worldwide Net Sales of CRTh2 Antagonist Licensed Products since the First Commercial Sale of the first CRTh2 Antagonist Licensed Product to have a First Commercial Sale
	$20,000,000

  

20

5.4    Royalty, Etc. Payments for Licensed Products.

(a)    With respect to Net Sales of all Licensed Products (other than Aplindore Primary Licensed Products) in a country in which such Licensed Products are Covered under a Licensor Patent as of the time of the Net Sales: As further consideration for Licensor’s grant of the rights and licenses to Seelos hereunder, Seelos shall pay to Ligand a [* * *]% royalty on all such Net Sales by Seelos and its Sublicensees (but, with respect to all of the foregoing, excluding Net Sales of a given Licensed Product (other than an Aplindore Primary Licensed Product) after the applicable Royalty Term).

(b)    With respect to Net Sales of all Aplindore Primary Licensed Products in a country in which such Licensed Products are Covered under a Licensor Patent as of the time of the Net Sales: As further consideration for Licensor’s grant of the rights and licenses to Seelos hereunder, Seelos shall pay to Ligand a royalty on all such Net Sales by Seelos and its Sublicensees (but, with respect to the foregoing, excluding Net Sales of a given Aplindore Primary Licensed Product after its applicable Royalty Term), at the percentage rates set forth below:

	
		
	Annual (Calendar Year) Combined Worldwide Net Sales of All (Covered) Aplindore Primary Licensed Products 
	Incremental Royalty Rate

	For combined annual Net Sales of such Aplindore Primary Licensed Products from $0 up to and including $[* * *]
	[* * *]%

	For that portion of combined annual Net Sales of such Aplindore Primary Licensed Products that is greater than $[* * *] but less than or equal to $[* * *]
	[* * *]%

	For that portion of combined annual Net Sales of such Aplindore Primary Licensed Products that is greater than $[* * *]
	[* * *]%

By way of illustration, assume that aggregate worldwide cumulative Net Sales of all such Aplindore Primary Licensed Products in calendar 2019 total $[* * *]. The total royalties due and payable by Seelos to Ligand for such Net Sales would be $[* * *], calculated as follows:

[* * *]
[* * *]
[* * *]
[* * *]

(c)    With respect to Net Sales of all Licensed Products (other than Aplindore Primary Licensed Products) in a country in which such Licensed Products are not Covered under any Licensor Patent as of the time of the Net Sales: In addition, as further consideration for Licensor’s grant of the Licensed Know-How rights and licenses to Seelos hereunder, Seelos shall pay to Ligand a payment in the nature of royalties equal to [* * *]% on all such Net Sales by Seelos and its Sublicensees during the applicable Royalty Term. 

* Confidential Treatment Requested

21

(d)    With respect to Net Sales of all Aplindore Primary Licensed Products in a country in which such Licensed Products are not Covered under any Licensor Patent as of the time of the Net Sales: In addition, as further consideration for Licensor’s grant of the Licensed Know-How rights and licenses to Seelos hereunder, Seelos shall pay to Ligand a payment in the nature of royalties on all such Net Sales by Seelos and its Sublicensees during the applicable Royalty Term, at the percentage rates set forth below: 

	
		
	Annual (Calendar Year) Combined Worldwide Net Sales of All (Uncovered) Aplindore Primary Licensed Products 
	Incremental Royalty Rate

	For combined annual Net Sales of such Aplindore Primary Licensed Products from $0 up to and including $[* * *]
	[* * *]%

	For that portion of combined annual Net Sales of such Aplindore Primary Licensed Products that is greater than $[* * *] but less than or equal to $[* * *]
	[* * *]%

	For that portion of combined annual Net Sales of such Aplindore Primary Licensed Products that is greater than $[* * *]
	[* * *]%

 
(e)    In establishing the royalty/payment in the nature of royalties structure hereunder, the Parties recognize, and Seelos acknowledges, the substantial value of the various obligations being undertaken by Licensor under this Agreement, in addition to the grant of the license under the Licensor Patents, to enable the rapid and effective market introduction of the Licensed Products. The Parties have agreed to the payment structure set forth herein as a convenient and fair mechanism to compensate Licensor for these obligations.

(f)    For purposes of determining whether a Section 5.4(b) or Section 5.4(d) royalty/payment in the nature of royalties threshold has been attained, only Net Sales that are subject to a Section 5.4(b) payment or a Section 5.4(d) payment, respectively, shall be included in the total amount of Net Sales and any Net Sales that are not subject to such a respective payment shall be excluded. For clarity, Seelos’ obligation to pay royalties to Ligand under Section 5.4(a) or Section 5.4(b) is imposed only once with respect to the same unit of Licensed Product regardless of the number of Licensor Patents pertaining thereto.

(g)    Notwithstanding anything to the contrary in this Agreement, (i) Seelos will have no obligation to pay a royalty under Sections 5.4(c) and 5.4(d) for any exercise of a right under the license granted in Sections 2.1(a) and 2.1(b) with respect to a unit of Licensed Product if Seelos has an obligation to pay a royalty under Sections 5.4(a) and 5.4(b) for any exercise of a right under the license granted in Sections 2.1(a) and 2.1(b) with respect to such same unit of Licensed Product and (ii) Seelos shall pay only one royalty on each Licensed Product regardless of how many rights Seelos exercises in any jurisdiction under the license granted in Sections 2.1(a) and 2.1(b) with respect to such Licensed Product.

(h)    Seelos’ obligation to pay royalties under Section 5.4 on Net Sales of a particular Licensed Product in a jurisdiction made after sales of a Competitive Product to such Licensed Product in such jurisdiction have resulted in the reduction of sales of such Licensed Product in such jurisdiction by [* * *]% or more shall be reduced by [* * *]% from the applicable rate of Section 5.4. 

* Confidential Treatment Requested

22

5.5    Timing of Payment. Royalties/payments in the nature of royalties payable under Section 5.4 shall be payable on actual Net Sales and shall accrue at the time provided therefor by GAAP.  Royalty/payment in the nature of royalties obligations that have accrued during a particular Calendar Quarter shall be paid, on a Calendar Quarter basis, within 45 days after the end of each Calendar Quarter and within 60 days in the case of Seelos’ fiscal year ending Calendar Quarter, all of the foregoing during which the royalty/payment in the nature of royalties obligation accrued; provided that within 60 days after the conclusion of each Calendar Year Seelos shall provide notice to Ligand of any adjustments necessary to account for any royalties/payment in the nature of royalties which were overpaid or underpaid for such prior Calendar Year’s Calendar Quarters, and the Parties shall promptly true-up based on such adjustments.   

5.6    Royalty (Etc.) Reports and Records Retention. Within 45 days after the end of each Calendar Quarter and within 60 days in the case of Seelos’ fiscal year ending Calendar Quarter, all of the foregoing during which Licensed Products have been sold, Seelos shall deliver to Ligand, together with the applicable royalty/payment in the nature of royalties payment due, a written report, on a Licensed Product-by-Licensed Product (and specifying non-Covered status, as applicable) and country-by-country basis, of (a) the gross amount charged by Seelos and its Sublicensees to Third Parties for Licensed Products, subject to royalty payments for such Calendar Quarter (and, if non-Covered, subject to royalty/payment in the nature of royalties payments for such Calendar Quarter), (b) amounts deducted by category (following the definition of Net Sales) from such gross amount invoiced or otherwise charged to calculate Net Sales, (c) Net Sales subject to royalty or royalty/payment in the nature of royalties payments for such Calendar Quarter and Calendar Year to date and (d) the corresponding royalty or royalty/payment in the nature of royalties. Such report shall be deemed “Confidential Information” of Seelos subject to the obligations of Article VIII of this Agreement. For three years after each sale of a Licensed Product (whether Covered or not), Seelos shall keep (and shall ensure that its Sublicensees shall keep) complete and accurate records of such sale in sufficient detail to confirm the accuracy of the royalty or royalty/payment in the nature of royalties calculations hereunder.

5.7    Audits.

(a)    From the First Commercial Sale (of the first Licensed Product to have a First Commercial Sale) until one Calendar Year after the conclusion of the final Royalty Term, upon the written request of Ligand, and not more than once in each Calendar Year, Seelos shall permit, and shall cause each Sublicensee to permit, an independent certified public accounting firm of nationally recognized standing selected by Ligand (who has not been engaged by Ligand or any of its Affiliates to provide services in any other capacity at any time during the three-year period before such selection), and reasonably acceptable to Seelos, to have access to and to review, during normal business hours upon reasonable prior written notice, the applicable records of Seelos and its Sublicensees to verify the accuracy of the royalty and payment in the nature of royalties reports and payments under this Article V. Such review may cover: (i) the records for sales made in any Calendar Year ending not more than three years before the date of such request, and (ii) only those periods that have not been subject to a prior audit.

(b)    If such accounting firm reasonably concludes that additional royalties and/or royalties/payment in the nature of royalties were owed during such period, Seelos shall pay the additional royalties and/or royalties/payment in the nature of royalties within 30 days after the date such public accounting firm delivers to Seelos such accounting firm’s written report. If such accounting firm concludes that an overpayment was made, such overpayment shall be fully creditable against amounts payable in subsequent payment periods or at Seelos’ request, shall be reimbursed to Seelos within 30 days after the date such accounting firm delivers such report to Seelos. If Seelos disagrees with such calculation, Seelos 

23

may initiate a court action to seek to recover the additional payment or to increase the amount of credit or reimbursement.  Ligand shall pay for the cost of any audit by Ligand, unless Seelos has underpaid Ligand by [* * *]% or more for a specific royalty period, in which case Seelos shall pay for the reasonable costs of audit.  If Seelos has so paid for the reasonable costs of the audit but a court of competent jurisdiction thereafter determines that Seelos had not underpaid Ligand by [* * *]% or more for such specific royalty period, Ligand shall forthwith refund such costs to Seelos.

(c)    Each Party shall treat all information that it receives under this Section 5.7 in accordance with the confidentiality provisions of Article VIII of this Agreement, and shall cause its accounting firm to enter into an acceptable confidentiality agreement with the audited Party obligating such firm to retain all such financial information in confidence pursuant to such confidentiality agreement, except to the extent necessary for a Party to enforce its rights under the Agreement.

5.8    Annual Milestone Reports.  By November 1 of each calendar year during the Term, Seelos shall provide Ligand with written reports that describe in reasonable detail Seelos’ progress made toward achievement of the milestones specified in Sections 5.2 and 5.3 above during such calendar year and summarize Seelos’ activities, progress and outlook in developing Licensed Products.  Seelos shall also provide updates regarding any material changes to the expected completion of any such milestones outlined in the annual report or any change that may materially affect the Supply Agreement or orders placed thereunder.

5.9    Mode of Payment and Currency. All payments to Ligand under this Agreement, whether or not in respect of Net Sales or milestone events, shall be made by deposit of Dollars in the requisite amount to such bank account as Ligand may from time to time designate by advance written notice to Seelos. Conversion of sales or expenses recorded in local currencies to Dollars will be performed in a manner consistent with Seelos’ normal practices used to prepare its audited financial statements for external reporting purposes, provided that such practices use a widely accepted source of published exchange rates. Based on the resulting Net Sales in Dollars, the then applicable royalties/payment in the nature of royalties shall be calculated.

5.10    Late Payments. If a Party does not receive payment of any sum due to it on or before the due date therefor, simple interest shall thereafter accrue on the sum due to such Party from the due date until the date of payment at a rate equal to the lesser of (a) the U.S. Prime Rate for the date payment was due as reported by the Wall Street Journal, plus [* * *] basis points, or (b) the maximum rate permissible under applicable Law.  Accrual and payment of interest shall not be deemed to excuse or cure breaches of contract arising from late payment or nonpayment.

5.11    Taxes. All amounts due hereunder exclude all applicable withholding, sales, use, and other taxes and duties, and Seelos shall be responsible for payment of all such taxes (other than taxes based on Ligand’s income) and duties and any related penalties and interest, arising from the payment of amounts due under this Agreement. The Parties agree to cooperate with one another and use Commercially Reasonable Efforts to avoid or reduce tax withholding or similar obligations in respect of royalties, payments in the 

* Confidential Treatment Requested

24

nature of royalties, milestone payments, and other payments made by Seelos to Ligand under this Agreement. To the extent Seelos is required to withhold taxes on any payment to Ligand under this Agreement Seelos shall pay the amounts of such taxes to the proper governmental authority in a timely manner and promptly transmit to Ligand official receipts issued by the appropriate taxing authority and/or an official tax certificate, or such other evidence as Ligand may reasonably request, to establish that such taxes have been paid.  Ligand shall provide Seelos any tax forms that may be reasonably necessary in order for Seelos to not withhold tax or to withhold tax at a reduced rate under an applicable bilateral income tax treaty.  Ligand shall use Commercially Reasonable Efforts to provide any such tax forms to Seelos at least 45 days before the due date for any payment for which Ligand desires that Seelos apply a reduced withholding rate. Each Party shall provide the other with reasonable assistance to enable the recovery, as permitted by applicable law, of withholding taxes, value added taxes, or similar obligations resulting from payments made under this Agreement, such recovery to be for the benefit of the Party bearing such withholding tax or value added tax. Each of Ligand, Neurogen and CyDex (jointly and severally) shall indemnify and hold Seelos harmless from and against any penalties, interest or other tax liability arising from any failure by Seelos (at the express request of Ligand, Neurogen or CyDex) to withhold or by reduction (at the express request of Ligand, Neurogen or CyDex) in its withholding.

ARTICLE VI
PROMISSORY NOTES

6.1    Initial Note Purchase.  Ligand shall lend $250,000 cash to Seelos, against a Convertible Note in substantially the form attached hereto as Exhibit A, but only if, as and when each of the following conditions is satisfied:

     (a)    Seelos requests such a loan in writing; and

(b)    Seelos has raised equity capital (not including convertible debt) from one or more investors, but of which one single investor has invested at least $250,000 of equity capital.

6.2    Second Note Purchase.  Ligand shall, on or before the first anniversary of the loan described in Section 6.1, lend an additional $250,000 cash to Seelos, against a Convertible Note in substantially the form attached hereto as Exhibit A, but only if, as and when (on or before such first anniversary but in no event thereafter) each of the following conditions is satisfied:

(a)    Seelos requests such a loan in writing;

(b)    The loan described in Section 6.1 was made and is not in default;    

(c)    Seelos has raised equity capital (not including convertible debt) from one or more investors, but of which one single investor has invested an aggregate of at least $500,000 of equity capital; and

(d)    Seelos has dosed the first patient in a human clinical trial of an Aplindore Licensed Product in a Major Market, and has filed at least two Investigational New Drug Applications with the FDA (and/or equivalent applications with the applicable Regulatory Authority in any other Major Market) for CRTh2 Antagonist Licensed Products, H3 Receptor Licensed Products and/or CEA Licensed Products.

25

6.3    Effect on Term.  In the event an Article VI Convertible Note is outstanding and either (a) such     Article VI Convertible Note is not paid in full in cash or automatically converted within 20 days after it becomes due upon either scheduled or accelerated maturity or (b) Seelos or its successor liquidates, dissolves or winds up, then (in addition to and cumulatively with any and all other rights and remedies of Licensor), upon written notice from Licensor to Seelos, this Agreement shall automatically and immediately terminate.

ARTICLE VII
INVENTIONS AND PATENTS

7.1    Ownership.  As between the Parties, Licensor shall own all right, title and interest in and to the Licensor Technology. As between the Parties, Seelos shall own all right, title and interest in and to any Know-How created or acquired by it separate or apart from this Agreement (“Seelos Background Technology”) or created or acquired solely or jointly by Seelos after the Effective Date in connection with this Agreement (“Seelos Foreground Technology”), including without limitation all Intellectual Property Right therein. To the extent necessary to implement the foregoing, Licensor hereby irrevocably assigns to Seelos any right, title and interest worldwide in and to the Seelos Foreground Technology effective immediately upon the inception, conception, creation or development thereof. 

7.2    Patent Prosecution and Maintenance.

(a)    Licensor Patents. Licensor shall have the first right to file, prosecute and maintain Licensor Patents in Licensor’s name. 

(b)    New or Revised Applications.  Licensor will, upon forming an intention to file or revise one or more patent applications which would become or are Licensor Patents subject to the License grant in Article II, promptly inform Seelos of such intention, and will provide Seelos with the opportunity to comment on the content of such Licensor patent application before so filing or revising.  Licensor shall consider any such reasonable Seelos comments in good faith.  

(c)    Liaising.  Licensor shall keep Seelos promptly and regularly informed of the course of the filing and prosecution of Licensor Patents or related proceedings (e.g. interferences, oppositions, reexaminations, reissues, revocations or nullifications) in a timely manner, and to take into consideration the advice and recommendations of Seelos.   

(d)    Election Not to File/Prosecute/Maintain Licensor Patents. Seelos acknowledges and agrees that Licensor shall not be required to file, prosecute or maintain Patent Rights for the Licensor Patents, provided, however, if Licensor decides to not pursue or maintain any such Patent Rights in a particular country then Licensor shall provide Seelos with at least 60 days’ notice before discontinuing the filing, prosecution or maintenance of such Patent Rights in such country so that Seelos may assume responsibility for such activities in such country in Licensor’s name and at Seelos’ expense, and Licensor shall give Seelos reasonable cooperation in connection therewith; provided that Seelos’ royalty obligations to Licensor under this Agreement with respect to the applicable Licensed Products in the applicable country shall, except for the expenses for the prosecution of a patent application initially filed by Seelos which application does not issue as a patent, be reduced by the reasonable and documented expenses incurred by Seelos in pursuing the filing or supporting the continued prosecution or maintenance of such Licensor Patent in such Major Market pursuant to this Section 7.2(d).   

26

7.3    Certification under Drug Price Competition and Patent Restoration Act. Each Party shall immediately give written notice to the other Party of any certification of which they become aware filed pursuant to 21 U.S.C. Section 355(b)(2)(A) (or any amendment or successor statute thereto) claiming that any Licensor Patents Covering a Compound or a Licensed Product, or the manufacture or use of each of the foregoing, are invalid or unenforceable, or that infringement will not arise from the manufacture, use or sale in the US of a Licensed Product by a Third Party.

7.4    Listing of Patents. Seelos shall have the sole right to determine which of the Licensor Patents, if any, shall be listed for inclusion in the Approved Drug Products with Therapeutic Equivalence Evaluations publication pursuant to 21 U.S.C. Section 355, or any successor Law in the United States, together with any comparable Laws in any other country.  Licensor will co-operate with Seelos to list any of said Licensor Patents.

7.5    Enforcement of Patents.

(a)    Notice. If either Licensor or Seelos believes that a Licensor Patent is being infringed in the Field, or that Licensor Know-How has been misappropriated in the Field, by a Third Party or if a Third Party claims that any Licensor Patent is invalid or unenforceable, the Party possessing such knowledge or belief shall notify the other and provide it with details of such infringement, misappropriation or claim that are known by such Party.  

(b)    Right to Bring an Action for Licensor’s Patents. If such infringement, misappropriation or claim is in one or more of the Major Markets in respect of Licensor Patents, Licensor shall have the right to attempt to resolve such infringement, misappropriation or claim, including by filing an infringement suit, defending against or bringing a declaratory judgment action as to such claim or taking other similar action (each, “initiation” of an “Action”) and (subject to Section 7.5(d)) to compromise or settle such infringement or claim. Seelos may, in its sole discretion and at its expense, join in any such Action and in such case shall reasonably cooperate with Licensor.  If Licensor does not intend to initiate an Action, Licensor shall promptly inform Seelos. If Licensor does not initiate an Action with respect to such an infringement or claim within 180 days following notice thereof, Seelos shall have the right to attempt to resolve such infringement, misappropriation or claim, including by initiating an Action, and (subject to Section 7.5(d)) to compromise or settle such infringement, misappropriation or claim. At Seelos’ request, Licensor shall immediately provide Seelos with all relevant documentation (as may be requested by Seelos) evidencing that Seelos is validly empowered by the Licensor to initiate an Action. Licensor shall be under the obligation to join Seelos in its Action if Seelos determines that this is necessary to demonstrate “standing to sue.” The Party initiating such Action shall have the sole and exclusive right to select counsel for any suit initiated by it pursuant to this Section 7.5. If a Party initiates an Action but then elects not to pursue the Action, the other Party shall have the right (but not the obligation) to take over the Action, in which case the second Party shall be deemed to have been the initiating Party.

(c)    Costs of an Action. Subject to the respective indemnity obligations of the Parties set forth in Article X and subject to Section 7.5(f), each Party involved in an Action under Section 7.5(b) shall pay its own costs and expenses incurred in connection with such Action. Each Party shall have the right to join at its own expense an Action relating to a Licensor Patent or Licensor Know-How initiated by the other Party.

27

(d)    Settlement. No Party shall settle or otherwise compromise (or resolve by consent to the entry of judgment upon) any Action by admitting that any Licensor Patent is to any extent invalid or unenforceable, or that any Licensor Know-How is not protected or has not been misappropriated,  without the other Party’s prior written consent, and, in the case of Licensor, Licensor may not settle or otherwise compromise (or resolve by consent to the entry of judgment upon) an Action in a way that adversely affects or would be reasonably expected to adversely affect any of Seelos’ rights or benefits hereunder with respect to any Licensor IP, Licensor Technology or any Licensed Product, without Seelos’ prior written consent.  

(e)    Reasonable Assistance. Each Party (if it is not the Party enforcing or defending Licensor’s Patent Rights) shall provide reasonable assistance to the other Party, including providing access to relevant documents and other evidence and making its employees and consultants available, subject to the other Party’s reimbursement of any reasonable out-of-pocket expenses incurred on an on-going basis by the non-enforcing or non-defending Party in providing such assistance.

(f)    Distribution of Amounts Recovered. Any amounts recovered by the Party initiating an Action pursuant to this Section 7.5, whether by settlement or judgment, shall be allocated in the following order: (i) to reimburse the Party initiating such Action for any out-of-pocket costs incurred; (ii) to reimburse the Party not initiating such Action for its out-of-pocket costs incurred in such Action, if it joins or cooperates (as opposed to taking over) such Action; and (iii) the remaining amount of such recovery shall (A) if Seelos rightfully initiated the Action, be allocated to Seelos and the portion thereof attributable to “lost sales” shall be deemed to be Net Sales for the Calendar Quarter in which the amount is actually received by Seelos and Seelos shall pay to Licensor a royalty on such portion based on the royalty rates set forth in Section 5.4(a), and the portion thereof not attributable to “lost sales” shall be allocated to Seelos and (B) if Licensor initiated the Action, 60% shall be allocated to Licensor and 40% to Seelos.

7.6    Third Party Actions Claiming Infringement.

(a)    Notice. If either Licensor or Seelos becomes aware of any Third Party Action, such Party shall promptly notify the other of all details regarding such claim or action that is reasonably available to such Party.

(b)    Right to Defend. Seelos shall have the right, at its sole expense, but not the obligation, to defend a Third Party Action described in Section 7.6(a) and (subject to Section 7.6(f)) to compromise or settle such Third Party Action. If Seelos declines or fails to assert its intention to defend such Third Party Action within 40 days of receipt/sending of notice under Section 7.6(a), then Licensor shall have the right, at its sole expense, to defend such Third Party Action and (subject to Section 7.6(f)) to compromise or settle such Third Party Action. The Party defending such Third Party Action shall have the sole and exclusive right to select counsel for such Third Party Action.

(c)    Consultation. The Party defending a Third Party Action pursuant to Section 7.6(b) shall be the “Controlling Party”. The Controlling Party shall consult with the non-Controlling Party, pursuant to an appropriate joint defense or common interest agreement, on all material aspects of the defense. The non-Controlling Party shall have a reasonable opportunity for meaningful participation in decision-making and formulation of defense strategy. The Parties shall reasonably cooperate with each other in all such actions or proceedings. The non-Controlling Party will be entitled to join the Third Party Action and be represented by independent counsel of its own choice at its own expense.

28

(d)    Appeal. In the event that a judgment in a Third Party Action is entered against any Party and an appeal is available, the Controlling Party shall have the first right, but not the obligation, to file such appeal. In the event the Controlling Party does not desire to file such an appeal, it will promptly, in a reasonable time period (i.e., with sufficient time for the non-Controlling Party to take whatever action may be necessary) before the date on which such right to appeal will lapse or otherwise diminish, permit the non-Controlling Party to pursue such appeal at such non-Controlling Party’s own cost and expense. If applicable Law requires the other Party’s involvement in an appeal, the other Party shall be a nominal party in the appeal and shall provide reasonable cooperation to such Party at such Party’s expense.

(e)    Costs of an Action. Subject to the respective indemnity obligations of the Parties set forth in Article X, the Controlling Party shall pay all costs and expenses associated with such Third Party Action other than the expenses of the other Party if the other Party elects to join such Third Party Action (as provided in the last sentence of Section 7.6(c)).

(f)    No Settlement without Consent. Neither Licensor or Seelos shall settle or otherwise compromise (or resolve by consent to the entry of judgment upon) any Third Party Action by admitting that any Licensor Patent is to any extent invalid or unenforceable or that any Licensed Product, or its use, Development, importation, manufacture or sale infringes such Third Party’s Intellectual Property Rights, in each case without the other Party’s prior written consent, and, in the case of Licensor, Licensor may not settle or otherwise compromise (or resolve by consent to the entry of judgment upon) a Third Party Action in a way that adversely affects or would be reasonably expected to adversely affect Seelos’ rights and benefits hereunder with respect to any Licensor IP or any Licensed Product, without Seelos’ prior written consent.  

ARTICLE VIII
CONFIDENTIALITY

8.1    Definitions.  Seelos and Licensor each recognizes that during the Term, it may be necessary for a Party (the “Disclosing Party”) to provide Confidential Information (as defined herein) to another Party (the “Receiving Party”) that is highly valuable, the disclosure of which would be highly prejudicial to such Party.  The disclosure and use of Confidential Information shall be governed by the provisions of this Article VIII.  Neither Seelos nor Licensor shall use the other’s Confidential Information except as expressly permitted in this Agreement.  For purposes of this Agreement, “Confidential Information” means all information (including information relating to the business, operations and products of a Party or any of its Affiliates) disclosed by the Disclosing Party to the Receiving Party which is obviously proprietary and confidential, or which is designated in writing by the Disclosing Party as “Confidential” (or equivalent), or which when disclosed orally to the Receiving Party is declared to be confidential by the Disclosing Party and is so confirmed in a writing delivered to the Receiving Party within 30 days after such oral disclosure, including but not limited to any technical information, Know-How, trade secrets, or inventions (whether patentable or not), that such Party discloses to another Party under this Agreement.  

29

8.2    Obligation.  Licensor and Seelos agree that they will disclose the other Party’s Confidential Information to its own (or its respective Affiliate’s, or with respect to Seelos, its Sublicensees’) officers, employees, consultants and agents only if and to the extent necessary to carry out their respective responsibilities under this Agreement or in accordance with the exercise of their rights under this Agreement, and such disclosure shall be limited consistent with such responsibilities and rights.  Except as set forth in the foregoing sentence, no Party shall disclose Confidential Information of the other to any Third Party without the other’s prior written consent.  In all events, however, any and all disclosure to a Third Party (or to any such Affiliate or Sublicensee) shall be pursuant to the terms of a non-disclosure/nonuse agreement no less restrictive than this Article VIII.  The Party which disclosed Confidential Information of the other to any Third Party (or to any such Affiliate or Sublicensee) shall be responsible and liable for any disclosure or use by such Third Party, Affiliate or Sublicensee (or its disclosees) which would have violated this Agreement if committed by the Party itself.  No Party shall use Confidential Information of the other except to carry out its responsibilities and exercise its rights under and otherwise as expressly allowed by and for the purposes of this Agreement.  Each Party shall take such action to preserve the confidentiality of each other’s Confidential Information as it would customarily take to preserve the confidentiality of its own Confidential Information (but in no event less than a reasonable standard of care).  Upon expiration or termination of this Agreement, each Party, upon the other’s request, shall return or destroy (at Disclosing Party’s discretion) all the Confidential Information disclosed to the other Party pursuant to this Agreement, including all copies and extracts of documents, within 60 days after the request, except for one archival copy (and such electronic copies that exist as part of the Party’s computer systems, network storage systems and electronic backup systems) of such materials solely to be able to monitor its obligations that survive under this Agreement. 

8.3    Exceptions.  The non-use and non-disclosure obligations set forth in this Article VIII shall not apply to any Confidential Information, or portion thereof, that the Receiving Party can demonstrate by competent evidence:

(a)    at the time of disclosure is in the public domain;

(b)    after disclosure, becomes part of the public domain, by publication or otherwise, through no fault of the Receiving Party or its disclosees;

(c)    is made available to the Receiving Party by an independent Third Party without obligation of confidentiality; provided, however, that to the Receiving Party’s knowledge, such information was not obtained by said Third Party, directly or indirectly, from the Disclosing Party hereunder; or

(d)    is independently developed by an employee of the Receiving Party not accessing or utilizing the Disclosing Party’s information.

In addition, the Receiving Party may disclose information that is required to be disclosed by law or by a valid order of a Competent Authority including but not limited to regulations of the United States Securities and Exchange Commission or the FDA or any other Regulatory Authority or in the course of arbitration or litigation; provided, however, that in all cases the Receiving Party shall give the other party prompt notice of the pending disclosure and make a reasonable effort to obtain, or to assist the Disclosing Party in obtaining, a protective order or confidential-treatment order preventing or limiting (to the greatest possible extent and for the longest possible period) the disclosure and/or requiring that the Confidential Information so disclosed be used only for the purposes for which the law or regulation required, or for which the order was issued.  

30

Notwithstanding anything else to the contrary in this Agreement, (a) Seelos and its Sublicensees may disclose Confidential Information of Licensor for or otherwise in connection with Regulatory Approval and (b) Seelos may disclose Confidential Information of Licensor to prospective debt and equity investors and intermediaries, whom Seelos believes in its reasonable discretion are responsible and bona fide, in connection with pitches and other private and public fundraising activities including but not limited to road shows; except that in no event shall Seelos make any such disclosure which would deprive any Trade Secret of Licensor within the DMF of legal protection as a trade secret. Seelos shall use Commercially Reasonable Efforts to require such debt and equity investors and intermediaries to sign a non-disclosure/non-use agreement containing the confidentiality protections herein with respect to Confidential Information provided by Licensor to Seelos.     

8.4    Third Party Information.  

(a)    Seelos acknowledges that CyDex’s Confidential Information includes information developed by Pfizer Inc. that is confidential to both CyDex and Pfizer, and which is predominantly set forth in the Type V DMF.  Only to the extent that confidential information of Pfizer is disclosed to Seelos hereunder, and only as required by CyDex’s pre-existing contractual obligations to Pfizer, then Pfizer is a limited third party beneficiary of with respect to the enforcement of the confidentiality obligation of such Pfizer confidential information and may seek remedies pursuant to it, but only in accordance with its terms.  

(b)    The Parties acknowledge that the defined term “Confidential Information” shall include not only a Disclosing Party’s own Confidential Information but also Confidential Information of a Third Party which is in the possession of a Disclosing Party.  All Parties agree not to disclose to the other Party any Confidential Information of a Third Party which is in the possession of such Party, unless the other Party has given an express prior written consent (which specifies the owner of such Confidential Information) to receive such particular Confidential Information.  

8.5      Press Releases and Disclosure. Any Party may make press releases or public announcements regarding this Agreement or any matter covered by this Agreement, including the Development or Commercialization of Licensed Products, but such Party, except to the extent legally obligated to do so otherwise, shall use Commercially Reasonable Efforts to provide the text of such planned disclosure to the other Party no less than 48 hours before disclosure, and shall consider all reasonable comments of the other Party regarding such disclosure. (Provided, that no Party shall use the trademark, trade name or logo of the other Party or its Affiliates or the name of their respective employee(s) in any publicity, promotion, news release or public disclosure relating to this Agreement or its subject matter, except as may be required by Law or required by the rules of an applicable US national securities exchange or except with the prior express written permission of such other Party, such permission not to be unreasonably withheld.)  Notwithstanding the above, once a public disclosure has been made, any Party shall be free to disclose to third parties any information contained in said public disclosure, without further pre-review.

8.6    Publication Rights.  During the Term, the following restrictions shall apply with respect to possible disclosure by any Party of any other Party’s Confidential Information relating to Licensed Products in any publication or presentation.  A Party (the “Publishing Party”) shall provide the other Party with a copy of any proposed publication or presentation at least 30 days before submission for publication by the Publishing Party or its Affiliates so as to provide such other Party with an opportunity to recommend any changes it reasonably believes are necessary to continue to maintain the Confidential Information disclosed by the other Party to the Publishing Party in accordance with the requirements of this Agreement.  The incorporation of such recommended changes shall not be unreasonably refused; and if such other Party notifies (“Notice”) the Publishing Party in writing, within 30 days after receipt of the copy of the proposed 

31

publication or presentation, that such publication or presentation in its reasonable judgment (a) contains an invention, solely or jointly conceived or reduced to practice by the other Party, for which the other Party reasonably desires to obtain patent protection or (b) could be expected to have a material adverse effect on the commercial value of any Confidential Information disclosed by the other Party to the Publishing Party, the Publishing Party shall prevent such publication or delay such publication for a mutually agreeable period of time.  In the case of inventions, a delay shall be for a period reasonably sufficient to permit the timely preparation and filing of a patent application(s) on such invention, and in no event less than 90 days after the date of the Notice.  In the case of Confidential Information, any of the non-publishing Party’s Confidential Information shall be deleted as requested.  The Parties hereby agree that the need for such publication review may diminish over time and agree, every six months, to discuss and attempt to agree upon whether and/or when the obligations under this Section 8.6 may be discontinued.  

ARTICLE IX
REPRESENTATIONS, WARRANTIES AND COVENANTS

9.1    Representations and Warranties. Seelos represents and warrants to each of Ligand, Neurogen and CyDex, and each of Ligand, Neurogen and CyDex represents and warrants to Seelos, in each case as of the Effective Date:

(a)    Such Party is a corporation duly organized and validly existing under the Laws of the jurisdiction of its incorporation;

(b)    Such Party has all right, power and authority to enter into this Agreement, and to perform its obligations under this Agreement;

(c)    Such Party has taken all action necessary to authorize the execution and delivery of this Agreement and the performance of its obligations under this Agreement;

(d)    This Agreement has been duly authorized, executed and delivered by such Party and is (and upon issuance by Seelos each of the Article VI Convertible Notes will be) a legal and valid obligation of such Party, binding upon such Party and enforceable against such Party in accordance with the terms of this Agreement, except as enforcement may be limited by applicable bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other Laws relating to or affecting creditors’ rights generally and by general equitable principles; 

(e)    The execution, delivery and performance of this Agreement by such Party does not and will not conflict with, breach or create in any Third Party the right to accelerate, terminate or modify any agreement or instrument to which such Party is a party or by which such Party is bound; 

(f)    All consents, approvals and authorizations from all Governmental Bodies or other Third Parties required to be obtained by such Party in connection with the execution and delivery of this Agreement and/or the consummation by such Party of the transactions contemplated hereby have been obtained; and the execution, delivery and performance of this Agreement by such Party does not and will not violate any Law of any Governmental Body having authority over such Party;

32

(g)    No person or entity has or will have, as a result of the execution and delivery of or as a result of the transactions contemplated by this Agreement, any right, interest or valid claim against or upon such Party for any commission, fee or other compensation as a finder or broker because of any act by such Party or its Affiliates, agents or Sublicensees; and

(h)    No agreement between it and any Third Party is in conflict with the rights granted to any other Party pursuant to this Agreement.

9.2    Additional Representations and Warranties of Licensor. Each of Ligand, Neurogen and CyDex (jointly and severally) represents and warrants to Seelos that:

(a)    Licensor has the right to grant the rights granted to Seelos under this Agreement, and no rights granted to Seelos under this Agreement are in violation of any agreement between Licensor or any of its Affiliates and any Third Party; 

(b)    No claims have been asserted or threatened by any Person, and Licensor does not believe that there is a valid basis for, (i) challenging the validity, effective status or ownership of Licensor IP or Licensor Technology, or (ii) to the effect that the use, development, reproduction, modification, manufacturing, distribution, commercialization, licensing, sublicensing, sale or any other exercise of rights in or under any Licensor IP or Licensor Technology infringes on or misappropriates or will infringe on or misappropriate any intellectual property right of any Person;

(c)    The Licensor Patents are subsisting and, to the knowledge of Licensor, valid and are not the subject of any litigation, discovery process, interference, reissue, reexamination, revocation, opposition, appeal proceedings or any other legal or administrative dispute or action;

(d)    Licensor does not Control Patent Rights that Cover any Compound, Licensor Know-How or Licensed Products other than Licensor Patents;

(e)    The Licensor Patents constitute all Patent Rights owned or licensed-in by Licensor that pertain directly and primarily to or are necessary for or are or were actually used for the use, research, Development, manufacture, Commercialization and other exercise of rights with respect to the Compounds or Licensed Products as currently envisioned by Licensor or as envisioned by express provisions of this Agreement; 

(f)    All Licensor Patents are listed on Schedule 2; 

(g)    None of CyDex, its Affiliates, or any of their employees, consultants, contractors or subcontractors (i) is debarred under Section 335a of the Food, Drug and Cosmetic Act or by the analogous applicable laws of any regulatory agency or body, (ii) has been charged with, or convicted of, any felony or misdemeanor within the ambit of 42 U.S.C. §§ 1320a-7(a), 1320a-7(b)(l)-(3), or pursuant to the analogous applicable laws of any regulatory agency or body, or is proposed for exclusion, or the subject of exclusion or debarment proceedings by a regulatory agency or body, (iii) is or has been excluded, suspended or debarred from participation, or otherwise ineligible to participate, in any United States or non-United States health care programs (or has been convicted of a criminal offense that falls within the scope of 42 U.S.C. §1320a-7, but not yet excluded, debarred, suspended, or otherwise declared ineligible) or (iv) is or has been excluded, suspended or debarred by a regulatory agency or body from participation, or is otherwise ineligible to participate, in any procurement or non-procurement programs; 

33

(h)    Through the Effective Date CyDex has filed and maintained and during the Term will (subject to Section 6.1(b) of the Supply Agreement) file and maintain with the appropriate regulatory agencies or bodies in all Major Markets all permits, licenses, regulatory filings (including the DMF), registration and approvals related to Captisol and the manufacture and sale thereof, necessary for CyDex to carry out its obligations and for Seelos to exercise its rights under this Agreement and the Supply Agreement;

(i)    Ligand is acquiring the Article VI Convertible Notes, any Seelos equity securities underlying the Article VI Convertible Notes, any Seelos common stock upon conversion of such Seelos equity securities, any Seelos common stock issued to Ligand pursuant to Section 5.1 and any Seelos common stock issued to Ligand pursuant to Section 5.2 (collectively, the “Securities”) for its own account for the purpose of investment and not with a view to distribution. Ligand does not have any contract, agreement or arrangement with any person to sell, transfer or grant participations, to such person or to any third person with respect to the Securities. Notwithstanding this subsection (i), Ligand can intend to transfer and can in fact transfer the Securities to any accredited investor who is an Affiliate of Ligand and who gives Seelos representations, warranties, acknowledgements and agreements similar to those which Ligand is giving in subsections (i)-(m) of this Section 9.2 and in Section 9.3;

(j)    At no time was Ligand or any of its officers, employees or agents  presented with or solicited by, directly or indirectly, any form of general solicitation or any general advertising as to the Securities, including, but not limited to, any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media or broadcast over television or radio or presented at any seminar or meeting whose attendees have been invited by any general solicitation or general advertising;

(k)    Ligand is able, without impairing Ligand’s financial condition, to hold the Securities for an indefinite period of time and suffer a complete loss of the investment;

(l)    Ligand, by reason of Ligand’s business or financial experience or the business or financial experience of Ligand’s professional advisors who are unaffiliated with and who are not compensated by Seelos, directly or indirectly, has the capacity to protect Ligand’s interests in connection with the investment in the Securities, including without limitation to evaluate the merits and risks of an investment in the Securities and to make an informed investment decision with respect thereto. Ligand is able to bear the economic risk of this investment for an indefinite period of time; and

(m)    Ligand is an “accredited investor” as defined by the rules and regulations of the Securities and Exchange Commission pursuant to the Securities Act.

9.3    Additional Acknowledgements of Ligand. Ligand acknowledges to Seelos as follows:

34

(a)    Ligand understands that the Securities have not been, and may not be, registered under the Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act, which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of Ligand’s representations as expressed in this Agreement. Transferability by Ligand of the Securities is and will be restricted in accordance with applicable federal and state securities laws; the Securities may be sold, transferred or assigned only upon registration thereof pursuant to the Securities Act, or an exemption from the Securities Act; and Seelos is under no obligation to effect any such registration. Ligand understands that no public market now exists for the Securities and that Seelos has made no assurances that a public market will ever exist for the Securities. Ligand further acknowledges that, if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Securities, and on requirements relating to Seelos which are outside of Ligand’s control and which Seelos is under no obligation and may not be able to satisfy.

(b)    The Securities are being offered and sold without the delivery of any particular offering or disclosure materials.  Ligand has had, during the course of this transaction and before the sale of the Securities to Ligand, the opportunity to ask questions of, and receive answers from, management of Seelos concerning Seelos, its financing, operations, business and prospects, and the terms and conditions of this investment, and to obtain any additional information. Ligand acknowledges that it has received such information as it deems necessary to enable it to make its investment decision.

(c)    The purchase of the Securities is and would be a highly speculative investment.

(d)    Ligand agrees that it will not sell or transfer any of the Securities without registration under applicable federal and state securities laws, or the availability of exemptions therefrom.  Ligand agrees that the documents evidencing the Securities may each bear a restrictive legend stating that the securities represented thereby have not been registered under applicable federal and state securities laws and referring to restrictions on their transferability and sale.

(e)    Ligand agrees that it shall not, to the extent requested by Seelos or an underwriter of securities of Seelos, sell or otherwise transfer or dispose of the Securities or other securities of Seelos then or thereafter owned by Ligand for up to 180 days following the date of the final prospectus filed with the Securities and Exchange Commission relating to Seelos’ IPO.  For purposes of this 9.3(e), the term “Seelos” shall include any wholly-owned subsidiary of Seelos into which Seelos merges or consolidates.  Ligand further agrees to enter into any agreement reasonably required by any underwriter to implement the foregoing provisions within any reasonable timeframe so requested.

9.4    Disclaimer. Notwithstanding the representations and warranties set forth in this Article IX, Seelos acknowledges and accepts the uncertainty inherent in attempting to Develop and Commercialize any pharmaceutical product. There is no implied representation that the Compounds or (if any) Licensed Products can be successfully Developed or Commercialized. The representations and warranties set forth in this Article IX and the Supply Agreement are provided in lieu of, and EACH PARTY HEREBY DISCLAIMS, all other warranties, express and implied, relating to the subject matter of this Agreement, the Licensor Technology, the Licensor IP, the Compounds and/or the Licensed Products, including but not limited to the implied warranties of merchantability and fitness for a particular purpose, title and non-infringement of third party rights. Each Party’s representations and warranties under this Agreement are solely for the benefit of the other Party and may be asserted only by the other Party and not by any Affiliate, Sublicensee or any customer of the other Party, its Affiliates or Sublicensees. Each Party, its Affiliates and Sublicensees shall be solely 

35

responsible for all representations and warranties that it, its Affiliates or Sublicensees make to any customer, Affiliates or Sublicensees.

ARTICLE X
INDEMNIFICATION; LIMITATION OF LIABILITY; INSURANCE

10.1    Indemnification by Seelos. Seelos shall indemnify, defend and hold Ligand, Neurogen and CyDex and each of their respective employees, officers, directors and agents (all together, the “Licensor Indemnitees”) harmless from and against any and all actions, judgments, settlements, liabilities, damages, penalties, fines, losses, costs and expenses (including reasonable attorneys’ fees and expenses) to the extent arising out of any third party claim, demand, action or other proceeding (each, a “Claim”) related to (a) the Development by Seelos or a Sublicensee; (b) the Commercialization by Seelos or a Sublicensee; (c) Seelos’ performance of its obligations or exercise (by it or its Sublicensees) of its rights under this Agreement or the Supply Agreement; (d) Seelos’ breach or violation of any applicable Laws in connection with this Agreement or the Supply Agreement; (e) breach by Seelos of its express representations, warranties or covenants set forth in this Agreement or the Supply Agreement; (f) any Study conducted by or for Seelos; (g) infringement (including, for clarification, infringement by the combination itself of Licensor Know-How as delivered by Licensor with Seelos Background Technology or Seelos Foreground Technology or modification of the Licensor Know-How as delivered by Licensor by or for Seelos) of a Third Party’s Intellectual Property Rights in the making, having made, using, selling, offering for sale and importing of Licensed Products, but only to the extent that any such infringement Claim is unrelated to Captisol or the Licensor Technology; (g) interactions and communications by Seelos, its Affiliates, Sublicensees, Contract Manufacturers or agents with governmental authorities, physicians or other Third Parties relating to Licensed Products and/or Captisol; or (h) the negligent or willful misconduct of Seelos or its Affiliates, Sublicensees, Contract Manufacturers or agents or any of their respective officers, directors, managers, employees or agents in connection with this Agreement or the Supply Agreement; provided, however, that, notwithstanding the foregoing, Seelos’ obligations pursuant to this Section 10.1 shall not apply at all if a Claim clearly arises substantially all from, and otherwise shall not apply to the extent that a Claim arises from, a Licensor Indemnitee’s breach of applicable law, breach of this Agreement or the Supply Agreement, negligence or willful misconduct or from the Licensor Technology or other information and materials delivered or made available by or for Licensor to or for Seelos as delivered or made available.

10.2    Indemnification by Licensor. Licensor shall indemnify, defend and hold Seelos and its Affiliates and Sublicensees and each of their respective agents, employees, officers and directors (all together, the “Seelos Indemnitees”) harmless from and against any and all actions, judgments, settlements, liabilities, damages, penalties, fines, losses, costs and expenses (including reasonable attorneys’ fees and expenses) to the extent arising out of any and all Claims related to (a) Licensor’s performance of its obligations or exercise (by it or its Affiliates) of its or their rights under this Agreement or the Supply Agreement; (b) Licensor’s breach or violation of any applicable Laws in connection with this Agreement or the Supply Agreement; (c) breach by Licensor of its express representations, warranties or covenants set forth in this Agreement or the Supply Agreement; (d) infringement of a Third Party’s intellectual property rights by Captisol or the Captisol-related Licensor Technology as delivered or made available by or for Licensor; (e) any Study conducted by or for Licensor or its Affiliates or sublicensees; (g) interactions and communications by Licensor, its Affiliates, sublicensees, contractors or agents with governmental authorities, physicians or other third parties relating to Licensed Products and/or Captisol; or (h) the negligence or willful misconduct of Licensor or its Affiliates or agents or any of their respective officers, directors, managers, employees or agents in connection with this Agreement or the Supply Agreement; provided, however, that Licensor’s obligations pursuant to this Section 10.2 shall not apply at all if a Claim clearly arises substantially all from, and otherwise shall not apply to the extent that a Claim arises from, a Seelos Indemnitee’s breach of applicable law, breach of this 

36

Agreement or the Supply Agreement, negligence or willful misconduct or infringement by the combination itself of Captisol with acetaminophen (modified or not) or by the combination itself of Licensor Know-How as delivered by Licensor with Seelos Background Technology or Seelos Foreground Technology or modification of the Licensor Know-How as delivered by Licensor by or for Seelos.

10.3    No Consequential, Etc. Damages. EXCEPT FOR DAMAGES FOR WHICH A PARTY IS RESPONSIBLE PURSUANT TO ITS INDEMNIFICATION OBLIGATIONS SET FORTH IN ARTICLE X OR FOR WHICH CYDEX IS RESPONSIBLE UNDER SECTION 3.9 OF THE SUPPLY AGREEMENT, EACH PARTY SPECIFICALLY DISCLAIMS ALL LIABILITY FOR AND SHALL IN NO EVENT BE LIABLE TO ANY OTHER PARTY OR TO ANY OTHER PARTY’S AFFILIATES FOR ANY INCIDENTAL, SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR EXPENSES, LOST PROFITS, LOST SAVINGS, OR INTERRUPTIONS OF BUSINESS ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE DEVELOPMENT PROGRAM OR THE LICENSED TECHNOLOGY OR RESULTING FROM THE MANUFACTURE, HANDLING, MARKETING, SALE, DISTRIBUTION OR USE OF LICENSED PRODUCTS, REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, EVEN IF SUCH PARTY WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

10.4    Procedure.

(a)    The Party or other Person intending to claim indemnification under this Article X (an “Indemnified Party”) shall promptly notify the opposed Party (the “Indemnifying Party”) of any Claim in respect of which the Indemnified Party intends to claim such indemnification (provided, that no delay or deficiency on the part of the Indemnified Party in so notifying the Indemnifying Party will relieve the Indemnifying Party of any liability or obligation under this Agreement except to the extent the Indemnifying Party has suffered actual prejudice directly caused by the delay or other deficiency), and the Indemnifying Party shall assume the defense thereof (with counsel selected by the Indemnifying Party and reasonably satisfactory to the Indemnified Party) whether or not such Claim is rightfully brought; provided, however, that an Indemnified Party shall have the right to retain its own counsel and to participate in the defense thereof, with the fees and expenses to be paid by the Indemnified Party unless the Indemnifying Party does not assume the defense or unless a representation of both the Indemnified Party and the Indemnifying Party by the same counsel would be inappropriate due to the actual or potential differing interests between them, in which case the reasonable fees and expenses of counsel retained by the Indemnified Party shall be paid by the Indemnifying Party.  (Provided, that in no event shall the Indemnifying Party be required to pay for more than one separate counsel no matter the number or circumstances of all Indemnified Parties.)

(b)    If the Indemnifying Party shall fail to timely assume the defense of and reasonably defend such Claim, the Indemnified Party shall have the right to retain or assume control of such defense and the Indemnifying Party shall pay (as incurred and on demand) the fees and expenses of counsel retained by the Indemnified Party.

37

(c)    The Indemnifying Party shall not be liable for the indemnification of any Claim settled (or resolved by consent to the entry of judgment) without the written consent of the Indemnifying Party.  Also, if the Indemnifying Party shall control the defense of any such Claim, the Indemnifying Party shall have the right to settle such Claim; provided, that the Indemnifying Party shall obtain the prior written consent (which shall not be unreasonably withheld or delayed) of the Indemnified Party before entering into any settlement of (or resolving by consent to the entry of judgment upon) such Claim unless (i) there is no finding or admission of any violation of law or any violation of the rights of any person by an Indemnified Party, no requirement that the Indemnified Party admit negligence, fault or culpability, and no adverse effect on any other claims that may be made by or against the Indemnified Party and (ii) the sole relief provided is monetary damages that are paid in full by the Indemnifying Party and such settlement does not require the Indemnified Party to take (or refrain from taking) any action.

(d)    The Indemnified Party, and its employees and agents, shall cooperate fully with the Indemnifying Party and its legal representatives in the investigations of any Claim.  

(e)    Regardless of who controls the defense, each Party hereto shall reasonably cooperate in the defense as may be requested.

10.5    Expenses. As the Parties intend complete indemnification, all costs and expenses of enforcing any provision of this Article X shall also be reimbursed by the Indemnifying Party.

10.6    Limitation of Liability. EXCEPT WITH RESPECT TO THE INDEMNIFICATION SPECIFICALLY PROVIDED IN ARTICLE X, LIABILITY FOR WHICH CYDEX IS RESPONSIBLE UNDER SECTION 3.9 OF THE SUPPLY AGREEMENT OR CLAIMS FOR NON-PAYMENT, IN NO EVENT SHALL A PARTY’S TOTAL AGGREGATE LIABILITY FOR ALL CLAIMS ARISING OUT OF OR RELATED TO THIS AGREEMENT AND/OR THE SUPPLY AGREEMENT EXCEED THE GREATER OF THE AMOUNT PAID, PAYABLE OR OWED BY SEELOS TO LICENSOR UNDER THIS AGREEMENT AND THE SUPPLY AGREEMENT IN THE immediately preceding 12 months and $7,500,000. NO ACTION, REGARDLESS OF FORM, ARISING OUT OF OR RELATED TO THIS AGREEMENT AND/OR THE SUPPLY AGREEMENT MAY BE BROUGHT BY ANY PARTY MORE THAN TWO YEARS AFTER SUCH PARTY HAS KNOWLEDGE OF THE OCCURRENCE THAT GAVE RISE TO THE CAUSE OF ACTION OR AFTER EXPIRATION OF THE APPLICABLE STATUTORY LIMITATIONS PERIOD, WHICHEVER IS SOONER.

10.7    Insurance. During the Term and for three years thereafter, each Party shall obtain and maintain, at its own cost and expense, product liability insurance (or each Party’s parent company shall obtain and maintain coverage for such Party under its own product liability insurance policies) in amounts, that are reasonable and customary in the United States pharmaceutical and biotechnology industry for companies engaged in comparable activities, with the other Party identified as an additional named insured. It is understood and agreed that this insurance shall not be construed to limit each respective Party’s liability with respect to its indemnification obligations hereunder. Each Party shall upon request provide to the other Party a certificate evidencing the insurance such Party is required to obtain and keep in force under this Section 10.7.

38

ARTICLE XI
FURTHER PROVISIONS AS TO CAPTISOL AND CEA LICENSED PRODUCTS

11.1    Supply Agreement; Quality Agreement.  Concurrent with the execution of this Agreement, CyDex and Seelos are entering into the Supply Agreement.  The provisions of the Supply Agreement and the Quality Agreement shall govern the manufacture and supply of Captisol for use in the preparation, formulation and production of the CEA Licensed Products.  

11.2    Development and Commercialization by Seelos.

(a)    Responsibility.  As between CyDex and Seelos, from and after the Effective Date, Seelos shall be responsible for all non-clinical and clinical development of the CEA Licensed Products, all commercialization of the CEA Licensed Products, and all storage, handling and use of physical quantities of the Compounds and/or the Compounds prepared, combined and/or formulated with Captisol.      

(b)    In Vivo Studies.  If Seelos wishes to conduct any in vivo study (preclinical or clinical, in animals or in humans, each a “Study”) of a CEA Licensed Product utilizing Captisol, the following provisions shall apply:  

(i)    Dosing.  Except as agreed to by the FDA or an equivalent foreign regulatory agency or body, Seelos shall not exceed the maximum allowable dosing levels of Captisol specified in CyDex’s then-current clinical dosing matrix (which shall be provided by CyDex to Seelos from time to time) without the written consent of CyDex, which consent shall not be unreasonably withheld or delayed.  

(ii)    Compliance with Laws.  Seelos agrees that each Study performed by or for it shall be performed in accordance with all applicable laws, regulations and requirements.  Seelos shall provide or cause to be provided all appropriate information and warnings to participants enrolled in each Study and obtain or cause to be obtained appropriate documentation of informed consent from all participants in each such Study. CyDex shall provide Seelos with sufficient Captisol-specific information and warnings text for Study participants.

(iii)    Adverse Events.  CyDex agrees to use Commercially Reasonable Efforts to inform Seelos as promptly as possible if any adverse effects are hereafter observed and ascribed to Captisol in any Study; provided, that this shall not be construed to require CyDex to violate any contractual confidentiality obligation.  Seelos agrees to use Commercially Reasonable Efforts to inform CyDex as promptly as possible if any adverse effects are observed and ascribed to Captisol in any Study it or its Affiliates or Sublicensees conduct in accordance with Section 4.3(b) hereof.  To accurately track adverse events and preserve the validity of each Study, Seelos agrees that, for so long as CyDex is providing supply pursuant to the Supply Agreement, it shall only use Captisol® supplied by CyDex for each such Study conducted under the scope of this Agreement, and shall not use any other cyclodextrin product supplied by a Third Party in the same Study as Seelos uses Captisol® unless CyDex cannot supply a sufficient amount of Captisol® for the Study.

(iv)    Reporting and Study Data.  Within three months after receipt of the final Study report for a Study, Seelos shall provide to CyDex a summary of the data and results of each Study that pertain solely to Captisol, and subject to Article VIII, Seelos hereby grants to CyDex a nonexclusive, royalty-free license (with the right to sublicense provided sublicensee is subject to the terms and conditions of this Agreement) to use and disclose such data solely as necessary to update its regulatory filings, including without limitation to update the DMF for Captisol®.  

39

(v)    Responsibility.  Seelos has the freedom to design each Study conducted by or for it, and (as between Seelos and CyDex) Seelos is solely responsible for executing each such Study (subject to Section 3.2); and so it is reasonable that, and the parties agree that, as between the parties, Seelos shall be solely responsible therefor and for any effects or consequences of the design and execution of each such Study, except to the extent any such effects or consequences arise out of or result from the actions of CyDex.  

(vi)    Review of Regulatory Filings and Publications.  Seelos shall provide to CyDex at least 14 days before a submission of any proposed written publication material or regulatory submission (which shall also be subject to the restrictions of Article VIII hereof, including Section 8.6, if applicable) which references a Study, for CyDex’s review and comment a copy of any proposed written publication, material or regulatory submission reporting results of a Study where such publication material refers to Captisol.  CyDex shall provide its input, if any, regarding any such publication or submission within 10 days of receipt of such publication or submission from Seelos.  Seelos shall be obligated to reasonably consider such comments but not be obligated to insert such comments into the publication or submission.

(c)    Right of Reference.  Seelos shall have the right to reference the DMF solely in connection with Seelos’ regulatory filings (including Applications) submitted in connection with obtaining Regulatory Approval for a CEA Licensed Product.  CyDex shall keep its DMF in good standing throughout the Term.  

(d)    Access to Seelos’ Data.  Subject to Article VIII, CyDex shall have the right to reference and utilize all toxicology/safety and other relevant scientific data developed on Captisol alone (and not in conjunction with a CEA Licensed Product) by Seelos, its Sublicensees or Affiliates. Upon request by CyDex, Seelos shall either provide CyDex, at CyDex’s sole expense, with a copy of all such data or shall make such data accessible to CyDex at times and locations reasonably agreeable to CyDex and Seelos subject to the provisions of Article VIII. CyDex shall reimburse Seelos for any costs or expenses incurred by Seelos in providing or providing access to such data (including any costs or expenses incurred by Seelos in generating, developing, organizing or analyzing such data but only to the extent that Seelos is incurring such costs or expenses due to the foregoing obligations).

11.3    Regulatory Matters.  

(a)    Material Safety.  CyDex shall provide, and promptly update, Seelos, in writing, from time to time, with (a) all material information currently known to it regarding handling precautions, toxicity and hazards with respect to Captisol; and (b) the then-current material safety data sheet for Captisol®.  Except as may be otherwise expressly set forth in this Agreement, Seelos is solely responsible for (i) use of all documentation provided by CyDex, including without limitation, use in any regulatory submission to the FDA or an equivalent foreign Regulatory Authority, (ii) document control and retention after receipt of such documentation from CyDex, and (iii) determining the suitability of any documentation provided by CyDex hereunder for use in any regulatory submission.  

40

(b)    Pharmacovigilance.     At least 90 days before anticipated dosing of the first patient in a pivotal clinical trial of a CEA Licensed Product, the parties shall negotiate in good faith and enter into a Safety Data Exchange Agreement in a mutually agreed format in order for Seelos to monitor the safety of the CEA Licensed Products and to meet reporting requirements with any applicable regulatory authority.

ARTICLE XII
TERM AND TERMINATION

12.1    Term and Expiration. The term of this Agreement (the “Term”) shall commence on the Effective Date and, unless earlier terminated as provided in Section 6.3 or this Article XII, shall continue in full force and effect until expiration of this Agreement upon the expiration of every Royalty Term in all jurisdictions. The Parties confirm that subject to the foregoing sentence, this Agreement shall not be terminated or invalidated by any future determination that any or all of the Licensor Patents have expired or been invalidated. 

12.2    Remedies and Termination upon Material Breach. If a Party breaches any of its material obligations under this Agreement, the Party not in default shall give to the breaching Party written notice specifying the nature of the default. If the breaching Party does not cure a breach of an obligation to pay money, which obligation to pay is not disputed in good faith, within 20 days after the receipt of notice thereof and any other breach within 60 days after the receipt of notice thereof, then the Party not in default shall be entitled at its option to (a) extend the cure period, (b) continue this Agreement in full force and effect and seek any legal or equitable remedies that the Party not in default may have or (c) solely in the case of (i) a breach of an obligation to pay money, which obligation to pay is not disputed in good faith or (ii) a willful breach for which the legal remedies of the Party not in default would not, as a practical matter, be reasonably expected to make the Party not in default whole, terminate this Agreement for that Program where breach is primarily related to only that Program and, in all other cases, either, in the sole and absolute discretion of the Party not in default, the Agreement in its entirety or only as to the Program(s)/Licensed Product(s) related to the breach immediately by written notice to the other Party (in addition to and not in lieu of all other available rights and remedies).  

12.3    Termination for Bankruptcy.  Licensor may terminate this Agreement immediately upon written notice to Seelos in the event that Seelos has a petition in bankruptcy filed against it that is not dismissed within 60 days after such filing, files a petition in bankruptcy, or makes an assignment for the benefit of creditors. Seelos may terminate this Agreement immediately upon written notice to Licensor in the event that Licensor has a petition in bankruptcy filed against it that is not dismissed within 60 days after such filing, files a petition in bankruptcy, or makes an assignment for the benefit of creditors.

12.4    Termination of the Supply Agreement.  If the Supply Agreement is terminated in accordance with its terms (except a termination of the Supply Agreement by CyDex for convenience or by Seelos for CyDex’s material breach or bankruptcy), Licensor shall have the right to terminate the Section 2.1 licenses as to CEA Licensed Products with five days’ prior written notice to Seelos.

12.5    Effects of Termination/Expiration.

(a)    Articles I (Definitions), VIII (Confidentiality), X (Indemnification; Limitation of Liability; Insurance) and XIII (Miscellaneous Provisions) and Sections 4.3 (Adverse Event Reporting), 5.6 (Royalty Reports and Records Retention), 5.7 (Audits), 5.10 (Late Payments), 5.11 (Taxes), 9.4 (Disclaimer), 

41

11.2(b)(iv) (Reporting and Study Data), 11.2(d) (Access to Seelos’ Data) and 12.5 (Effects of Termination/Expiration) hereof shall survive the expiration or termination of this Agreement for any reason. In addition, upon termination of this Agreement by Seelos pursuant to Sections 12.2 or 12.3, then Section 7.6 (Third Party Actions Claiming Infringement) shall survive the expiration or termination of this Agreement.

(b)    Termination or expiration of this Agreement shall not relieve the Parties of any liability that accrued hereunder before the effective date of such termination or expiration.  In addition, termination or expiration of this Agreement shall not preclude any Party from pursuing all rights and remedies it may have hereunder or at Law or in equity with respect to any breach of this Agreement nor prejudice any Party’s right to obtain performance of any obligation.

(c)    Upon valid termination of this Agreement by Licensor pursuant to Section 12.2, all licenses granted to Seelos hereunder shall terminate. In the event of valid termination by Seelos pursuant to Section 12.2 or expiration of this Agreement, the licenses granted to Seelos hereunder shall continue in effect but become perpetual, fully paid-up and royalty-free, subject to post-termination or post-expiration termination by Licensor pursuant to this Article XII (and Article VII in its entirety shall survive).  

ARTICLE XIII
MISCELLANEOUS PROVISIONS

13.1    Relationship of the Parties. Nothing in this Agreement is intended or shall be deemed to constitute a partnership, agency, joint venture or employer-employee relationship between the Parties. No Party shall have any right or authority to commit or legally bind any other Party in any way whatsoever including, without limitation, the making of any agreement, representation or warranty and each Party agrees to not purport to do so.

13.2    Assignment.
(a)    Any assignment not in accordance with this Section 13.2 shall be void.

(b)    No assignment shall relieve the assigning Party of any of its responsibilities or obligations hereunder.

(c)    Seelos may not transfer or assign its rights or licenses or delegate its obligations under this Agreement, in whole or in part, by operation of law or otherwise, to any Third Party without the prior written consent of Licensor, which consent shall not be unreasonably withheld, conditioned or delayed; provided that, notwithstanding the foregoing, Seelos may assign its rights or licenses and/or delegate its obligations under this Agreement to an Affiliate or to any person in a transaction in which Seelos assigns all of its right, title and interest in all or substantially all of Seelos’ technology assets, including without limitation, Intellectual Property Rights, to the same party contemporaneous with the assignment of this Agreement, or to a successor to all or substantially all of Seelos’ assets, whether by way of merger, sale of all or substantially all of its assets, sale of stock or otherwise, without Licensor’s prior written consent. As a condition to any permitted assignment hereunder, the assignee must expressly assume, in a writing delivered to Licensor (and in a form reasonably acceptable to Licensor) all of Seelos’ obligations under this Agreement, whether arising before, at or after the assignment. 

42

(d)    Licensor may not delegate its obligations under this Agreement, in whole or in part, by operation of law or otherwise, to any Third Party without the prior written consent of Seelos, which consent shall not be unreasonably withheld, conditioned or delayed; provided that, notwithstanding the foregoing, Licensor may, without Seelos’ prior written consent, delegate its obligations under this Agreement to an Affiliate, or to any person in a transaction in which Licensor also assigns all of its right, title and interest in all or substantially all of its Licensor Technology assets, including without limitation, Intellectual Property Rights, to the same party contemporaneous with the assignment of this Agreement, or to a successor, whether by way of merger, sale of all or substantially all of its assets, sale of stock or otherwise.  As a condition to any permitted assignment hereunder, the assignee must expressly assume, in a writing delivered to Seelos (and in a form reasonably acceptable to Seelos) all of Licensor’s obligations under this Agreement, whether arising before, at or after the assignment. 

(e)     Seelos or any of Ligand, Neurogen or CyDex may assign its right to receive proceeds under this Agreement or grant a security interest in such right to receive proceeds to one or more financial institutions providing financing to such Party pursuant to the terms of a security or other agreement related to such financing.

13.3    Further Actions. Each Party agrees to execute, acknowledge and deliver such further instruments and to do all such other acts as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement and the Supply Agreement.

13.4    Force Majeure. No Party shall be liable to any other Party or be deemed to have breached or defaulted under this Agreement for failure or delay in the performance of any of its obligations under this Agreement (other than obligations for the payment of money) for the time and to the extent such failure or delay is caused by or results from acts of God, earthquake, riot, civil commotion, terrorism, war, strikes or other labor disputes, fire, flood, failure or delay of transportation, omissions or delays in acting by a governmental authority, acts of a government or an agency thereof or judicial orders or decrees or restrictions or any other like reason which is beyond the control of the respective Party. The Party affected by force majeure shall provide the other Party with full particulars thereof as soon as it becomes aware of the same (including its best estimate of the likely extent and duration of the interference with its activities), and shall use Commercially Reasonable Efforts to overcome the difficulties created thereby and to resume performance of its obligations hereunder as soon as practicable, and the time for performance shall be extended for a number of days equal to the duration of the force majeure.

13.5    Entire Agreement of the Parties; Amendments. This Agreement and the Supply Agreement and the schedules and exhibits hereto and thereto constitute and contain the entire understanding and agreement of the Parties respecting the subject matter hereof and of the Supply Agreement and cancel and supersede any and all prior or contemporaneous negotiations, correspondence, understandings and agreements between or among the Parties, whether oral or written, regarding such subject matter (provided, that any and all previous nondisclosure/nonuse obligations are not superseded and remain in full force and effect in addition to the nondisclosure/nonuse provisions hereof).  Each Party acknowledges that it has not relied, in deciding whether to enter into this Agreement and the Supply Agreement, on any representations, warranties, agreements, commitments or promises which are not expressly set forth within this Agreement and/or within the Supply Agreement. No modification or amendment of any provision of this Agreement shall be valid or effective unless made in a writing referencing this Agreement and signed by a duly authorized officer of each Party. For the avoidance of doubt, the Parties agree that to the extent Seelos hereafter receives from or has heretofore received from Montserrat Global Advisors, LP information which would be within this Agreement’s definition of Confidential Information of Licensor, which information Montserrat Global Advisors, LP had received in confidence under the Confidential Disclosure Agreement by and between 

43

Montserrat Global Advisors, LP and Ligand dated April 25, 2016, such information in Seelos’ hands shall for purposes of this Agreement be deemed to be Licensor Technology or Confidential Information and covered by Article VIII hereof with Licensor as the Disclosing Party and Seelos as the Receiving Party. 

13.6    Governing Law.  This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York, excluding application of any conflict of laws principles.  The Parties agree that the United Nations Convention on Contracts for the International Sale of Goods shall be inapplicable to this Agreement and the Supply Agreement and transactions hereunder and thereunder.  

13.7    Notices and Deliveries. Any notice, request, approval or consent required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been sufficiently given if and only if delivered in person or transmitted by email or by express courier service to the Party to which it is directed at its physical or email address shown below or such other physical or email address as such Party shall have last given by such written notice to the other Party.

If to Seelos, addressed to:

Seelos Therapeutics, Inc. 
c/o Montserrat Global Advisers, LP
535 Fifth Avenue, 25th Floor
New York, NY 10017
Attention: Raj Mehra
Email: raj.mehra@mgalp.com

If to Licensor (i.e., to any or all of the parties comprising Licensor), addressed to:

General Counsel
Ligand Pharmaceuticals Incorporated
3911 Sorrento Valley Boulevard, Suite 110
San Diego, CA 92121
Email:     cberkman@ligand.com

13.8    Waiver.  No waiver of any provision of this Agreement shall be valid or effective unless made in a writing referencing this Agreement and signed by a duly authorized officer of the waiving Party. A waiver by a Party of any of the terms and conditions of this Agreement in any instance shall not be deemed or construed to be a waiver of such term or condition for the future, or of any other term or condition hereof.

13.9    Rights and Remedies are Cumulative. Except to the extent expressly set forth herein, all rights, remedies, undertakings, obligations and agreements contained in or available upon violation of this Agreement or the Supply Agreement shall be cumulative and none of them shall be in limitation of any other remedy or right authorized in law or in equity, or any undertaking, obligation or agreement of any Party.

44

13.10    Severability.  When possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable Law, but if any provision of this Agreement is held to be to any extent prohibited by or invalid under applicable Law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement and/or the Supply Agreement (or of such provision). The Parties shall make a good faith effort to replace the invalid or unenforceable provision with a valid one which in its economic effect is most consistent with the invalid or unenforceable provision.

13.11    Third Party Beneficiaries.  Except for the rights of Indemnified Parties pursuant to Article X hereof, of Pfizer Inc. pursuant to Section 8.4 hereof, and Sublicensees pursuant to Section 2.2, the terms and provisions of this Agreement are intended solely for the benefit of each Party hereto and their respective successors or permitted assigns and it is not the intention of the Parties to confer third-party beneficiary rights upon any other person, including without limitation Sublicensees except as expressly set forth above. The enforcement of any obligation of Licensor under this Agreement shall only be pursued by Seelos or such Indemnified Party, and not Sublicensees.

13.12    No Implied License. No right or license is granted to Seelos hereunder by implication, estoppel, or otherwise to any know-how, patent or other Intellectual Property Right owned or controlled by Licensor or its Affiliates, except by an express license granted hereunder. No right or license is granted to Licensor hereunder by implication, estoppel, or otherwise to any know-how, patent or other Intellectual Property Right owned or controlled by Seelos, except by an express license granted hereunder.

13.13    No Right of Set-Off.  Seelos shall not have a right to set-off any royalties, milestone payments or other amount due to Licensor under this Agreement or the Supply Agreement against any damages incurred by Seelos for a breach by Licensor of this Agreement or the Supply Agreement.

13.14    Licensor Personnel Availability for Seelos Fundraising Activities. Notwithstanding anything else to the contrary in this Agreement, appropriate personnel of Ligand, CyDex and Neurogen shall be reasonably available to meet telephonically with prospective investors of Seelos and similar parties in connection with pitches and other private and public fundraising activities of Seelos.

13.15    Equitable Relief. Each Party recognizes that the covenants and agreements herein and their continued performance as set forth in this Agreement are necessary and critical to protect the legitimate interests of the other Party, that the other Party would not have entered into this Agreement in the absence of such covenants and agreements and the assurance of continued performance as set forth in this Agreement, and that a Party’s breach or threatened breach of such covenants and agreements will cause the opposed Party irreparable harm and significant injury, the amount of which will be extremely difficult to estimate and ascertain, thus making any remedy at law or in damages inadequate. Therefore, each Party agrees that an opposed Party shall be entitled to specific performance, an order restraining any breach or threatened breach of Article VIII and all other provisions of this Agreement, and any other equitable relief (including but not limited to temporary, preliminary and/or permanent injunctive relief), without the necessity of posting of any bond or security. This right shall be in addition to and not exclusive of any other remedy available to such other Party at law or in equity.

45

13.16    Interpretation. The language used in this Agreement is the language chosen by the Parties to express their mutual intent, and no provision of this Agreement shall be interpreted for or against a Party because that Party or its attorney drafted the provision.

13.17    Construction. (i) The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”; (ii) any reference to any Law herein shall be construed as referring to such Law as from time to time enacted, repealed or amended; (iii) any reference herein to any person shall be construed to include the person’s permitted successors and assigns; (iv) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and (unless the context requires otherwise) not to any particular provision hereof; (v) all references herein to Articles, Sections, or Schedules, unless otherwise specifically provided, shall be construed to refer to Articles, Sections or Schedules of this Agreement; (vi) provisions that require that a Party or the Parties hereunder “agree”, “consent” or “approve” or the like require that such agreement, consent or approval be specific and in writing, whether by written agreement, electronic mail, letter, approved minutes or otherwise (but excluding instant messaging); and (vii) the term “or” shall be interpreted in the inclusive sense commonly associated with the term “and/or”.  

13.18    Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original, and all of which together will be deemed to be one and the same instrument. A portable document format PDF) copy of this Agreement, including the signature pages, will be deemed an original.

13.19    Attorneys’ Fees. In the event any controversy, dispute or claim arising out of or in connection with or relating to this Agreement, or the breach, termination or validity hereof, is decided by a court, the court’s ruling shall provide for payment by the losing party of all fees and costs, including the reasonable attorneys’ fees and attorneys’ costs incurred by the prevailing party, in addition to any and all other rights and remedies to which the prevailing party is entitled.

13.20    Nature of Rights. The license rights granted to Seelos hereunder are rights in “intellectual property” within the scope of Section 101 of the United States Bankruptcy Code.  Seelos shall have the rights set forth in this Agreement with respect to the Licensor IP when and as developed or created. In addition, Seelos, as a licensee of Intellectual Property Rights hereunder, shall have and may fully exercise all rights available to a licensee under the United States Bankruptcy Code, including, without limitation, under Section 365(n) and its successors. In the event Licensor makes a general assignment for the benefit of its creditors; applies for or consents to the appointment of a receiver, trustee or liquidator for substantially all of its assets or such a receiver, trustee or liquidator is appointed; or Licensor has filed against it an involuntary petition of bankruptcy that has not been dismissed within 60 days thereof, or files a voluntary petition of bankruptcy, or a petition or answer seeking reorganization, or seeks to take advantage of any other law relating to relief of debtors; or has wound up or liquidated its business, Seelos shall have the right to obtain (and Licensor or any trustee for Licensor or its assets shall, at Seelos’ written request, deliver to Seelos) a copy of all embodiments (including, without limitation, any work in progress) of any Intellectual Property Rights granted under this Agreement, including, without limitation, all embodiments of the Licensor Technology or Licensor IP necessary or useful for Seelos to use or exploit any Licensor Technology or Licensor IP or to exercise its rights under this Agreement. 

[The remainder of this page has been left blank intentionally]

46

IN WITNESS WHEREOF, the Parties have caused this License Agreement to be executed and delivered by their respective duly authorized officers as of the day and year first above written.

Ligand Pharmaceuticals Incorporated

By: /s/ Matthew W. Foehr    

Name:     Matthew W. Foehr    

Title: President and Chief Operating Officer

NEUROGEN CORPORATION

By: /s/ Charles Berkman by Matthew W. Foehr    

Name:     Charles Berkman by Matthew W. Foehr    

Title: Vice President and Secretary

CYDEX Pharmaceuticals, Inc.

By: /s/ Matthew W. Foehr    

Name:     Matthew W. Foehr    

Title: Chief Operating Officer

SEELOS THERAPEUTICS, INC.    

By: /s/ Raj Mehra    

Name:     Raj Mehra

Title: Chief Executive Office

47Exhibit

Exhibit 10.34
*** Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. §§ 200.80(b)(4)

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is made as of March 6, 2018, by and between Vyera Pharmaceuticals AG f/k/a Turing Pharmaceuticals AG, a stock corporation organized under the laws of Switzerland (“Seller”), and Seelos Therapeutics, Inc., a Delaware corporation (“Buyer”).  Buyer and Seller may be referred to herein collectively as the “Parties” and individually as a “Party.”

RECITALS

WHEREAS, Seller owns the Assets (as defined below) related to a product candidate known as TUR-002 (intranasal ketamine) (the “Product”); and

WHEREAS, Seller desires to sell, assign, transfer, convey and deliver to Buyer the Assets, and Buyer desires to purchase, acquire and accept from Seller all of Seller’s right, title and interest in and to the Assets, subject to the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of these premises, the respective covenants of Buyer and Seller set forth below and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

Article 1
DEFINITIONS

1.1    Definitions.

  In addition to the other capitalized terms defined herein, the following capitalized terms shall have the following respective meanings:

“Action” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.

“Affiliate” means, with respect to any Party, any Person that, directly or indirectly, controls, is controlled by, or is under common control with such Party at any time during the period for which the determination of affiliation is being made.  For the purposes of this definition, “control” (with correlative meanings for the terms “controlled by” and “under common control with”) means the possession by the applicable Person, directly or indirectly, of the power to direct or cause the direction of the management, policies and business affairs of a Person, whether through ownership of voting securities or general partnership or managing member interests, by contract or otherwise.

“Applicable Laws” means any and all applicable federal, state, local, municipal, provincial, territorial, foreign or other law, statute, constitution, principle of common law, directive, resolution, ordinance, code, edict, decree, order (including executive orders), rule, 

1

judgment, injunction, writ, regulation (or similar provision have the force or effect of law), ruling, guidance, treaties or requirement issues, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Authority.

“Business Day” means any day other than a Saturday, Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.

“Change in Control” means the occurrence of any of the following:  (i) any Person or group of Persons acting in concert acquires, directly or indirectly, that percentage of the ownership interests of a Party or Person directly or indirectly controlling such Party (each, a “Target”) that represents a majority of the voting power of the Target; or (ii) any merger, consolidation or similar business combination of such Target into or with another Person as a result of which holders of the voting securities of such Target immediately prior to the consummation of the transaction hold, directly or indirectly, immediately following the consummation of the transaction, equity interests in the surviving entity in such transaction possessing less than a majority of the voting power of such surviving entity.

“Commercially Reasonable Efforts” means, with respect to the performance of development or commercialization activities concerning the Product, the carrying out of such activities using reasonable and diligent efforts and resources that a pharmaceutical company similar in size and scope to Buyer would typically devote to its co-lead product, and not less than the level of efforts that Buyer devotes to any other product; provided that, for the avoidance of doubt, whether any efforts constitute Commercially Reasonable Efforts shall be determined in light of regulatory considerations (including the likelihood of regulatory approval) and the market position and legal enforceability of the intellectual property rights related to the Product.

“Confidential Information” means any information that (i) in any way relates to a Party or Affiliate thereof, including its products, business, know-how, business strategies and technology and (ii) is furnished or disclosed to the other Party in connection with this Agreement, and is either identified as “confidential” (or words of similar import) upon such disclosure or is reasonably understood to be confidential due to the nature of the information and circumstances of disclosure; provided however, that the term “Confidential Information” shall not include any specific information that:

(A)    at the time of disclosure, is generally available to the public;

(B)    after disclosure hereunder, becomes generally available to the public, except as a result of a breach of this Agreement by the recipient of such information;

(C)    becomes available to the recipient of such information from a Third Party that is not legally or contractually prohibited by the disclosing Party from disclosing such Confidential Information; or

(D)    the recipient of which can demonstrate was developed by or for such recipient without the use of any of the Confidential Information of the disclosing Party or its Affiliates hereunder.

2

“Fundamental Representations” means, with respect to Seller, the representations and warranties contained in Section 4.1, Section 4.2, Section 4.3, Section 4.4, Section 4.6 and Section 4.11, and with respect to Buyer, the representations and warranties contained in Section 5.1, Section 5.2, Section 5.3, Section 5.4 and Section 5.6.

“GAAP” means United States generally accepted accounting principles as in effect from time to time.

“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of law), or any arbitrator, court or tribunal of competent jurisdiction.

“Knowledge” with respect to Seller means the actual knowledge, after reasonable investigation, of [* * *], [* * *] and [* * *].

“Liability” means, with respect to any Person, any liability or obligation of such Person of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined or determinable, and whether or not the same is required to be accrued on the financial statements of such Person.

“Liens” means any mortgages, security interests, liens, options, pledges, equities, claims, charges, restrictions, conditions, conditional sale contracts and any other encumbrances of any kind whatsoever, other than any such encumbrances disclosed on Schedule 1.1 attached hereto.

“Major Market” means any of the (a) the European Union (either in its entirety or including at least one of France, Germany or, if at the time the United Kingdom is a member of the European Union, the United Kingdom), (b) the United Kingdom, if at the time the United Kingdom is not a member of the European Union, (c) Japan or (d) the People’s Republic of China.

“Net Sales” means, with respect to the Product, the gross amount invoiced for sales of the Product by or on behalf of Buyer (including by Affiliates of Buyer, licensees of Buyer or Buyer’s Affiliates or such licensee’s sublicensees) to Third Parties worldwide, less the following deductions (to the extent such deductions are actually incurred and are reasonably necessary for sale of the Product), all in accordance with GAAP consistently applied, including the accounting methods for translating activity denominated in foreign currencies into United States dollar amounts:

(i)    customary trade, cash and quantity discounts actually given;

(ii)    discounts, refunds, rebates, chargebacks, retroactive price adjustments, and any other allowances given and taken which effectively reduce the net selling price (other than such which have already diminished the gross amount invoiced), including, without limitation, 

* Confidential Treatment Requested

3

Medicaid or Medicare rebates, institutional rebates and other similar rebates or payments mandated by Governmental Authorities and rebates or other similar allowances given to managed health care organizations or pharmaceutical benefit managers;

(iii)    amounts repaid or credits or allowances actually given or made for rejection, defect, damaged goods, recall or return of any Product or for retroactive price reductions and billing errors;

(iv)    administrative fees paid to group purchasing organizations;

(v)    costs of shipping, forwarding, freight, warehousing, postage, insurance, and other transportation charges to the extent itemized in the total amount invoiced, as well as any fees for services, including inventory management fees, provided by wholesalers and warehousing chains directly allocable to the distribution of the Product, identified as such in the invoice of the Third Party; and

(vi)    sales or excise Taxes, tariffs or duties relating to the sale of the Product, identified as such in the invoice of the Third Party or corresponding government documentation.

In no event will any particular amount identified above be deducted more than once in calculating Net Sales.  Sales of the Product between Buyer and its licensees and any of their respective Affiliates for resale to end users shall be excluded from the computation of Net Sales, but the subsequent resale of such Products to Third Party end users shall be included within the computation of Net Sales.  For purposes of determining Net Sales, a sale or other disposition shall not include sales, transfers or dispositions of any Product for research or clinical purposes or as samples, where the transfer price is at or below manufacturing cost.

If the Product either (a) is sold in the form of a combination product containing the Product and one or more other products or services, or (b) is sold bundled with one or more other products or services (in either case (clause (a) or (b)), a “Combination Product”), the Net Sales of the Product shall be determined as follows:  first, Buyer shall determine the actual Net Sales of such Combination Product (calculated using the conventions specified in this definition of Net Sales, as set forth above) and then (y) such amount shall be multiplied by the fraction A/(A+B), where A is the invoice price of the Product, if sold separately, and B is the total invoice price of the other products or services in the Combination Product, if sold separately, or (z) if the other product or services in the Combination Product are not sold separately, Net Sales shall be calculated by multiplying actual Net Sales of such Combination Product (calculated using the conventions specified in this definition of Net Sales, as set forth above) by the fraction A/C where A is the invoice price of the Product, if sold separately, and C is the invoice price of the Combination Product; in each case of clause (y) or (z), in the same country as the Combination Product during the applicable reporting period or, if sales of the Product sold separately and the other products or services in the Combination Product did not occur or did not occur in the same country during the applicable reporting period, then the respective invoice prices during the most recent reporting period in which sales of both occurred in the same country as the Combination Product described above.  If neither the Product nor any other product or service in the Combination Product is sold separately in the same country as the Combination Product, the adjustment to Net Sales shall be determined by Buyer and Seller in good faith to reasonably reflect the proportion of the Net Sales of such Combination Product that is attributable to the Product.  In addition, the applicable deductions from the gross amount invoiced or otherwise 

4

charged by Buyer shall be allocated between the Product and the other products or services in the Combination Product in the same proportion.

“Permits” means all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Authorities.

“Person” means any individual, partnership, association, corporation, limited liability company, trust or other legal person, entity or Governmental Authority.

“Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date.

“Taxes” means all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, documentary, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.

“Third Party” means any Person other than a Party and such Party’s Affiliates.

“Transaction Documents” means this Agreement, the Bill of Sale (as defined below), the Assignment and Assumption Agreement (as defined below), the Transition Services Agreement (as defined below), the Assignment of Patents (as defined below), the Assignment of Trademarks (as defined below) and the Assignment of Copyrights (as defined below) and all other agreements, instruments, certificates and other documents executed and delivered in connection with the transactions contemplated by this Agreement.

“Weg Agreement” means, collectively, that certain (i) Exclusive License Agreement dated December 12, 2013 between Stuart Weg, MD and Retrophin, Inc., (ii) Consent to Assignment of Exclusive License Agreement dated December 11, 2014 by Stuart Weg, MD., and (iii) Amendment No.1 To Exclusive License Agreement dated March 21, 2017 with Stuart Weg, MD.

1.2    Interpretation.  Unless the context of this Agreement otherwise requires, (a) words of any gender include each other gender, (b) words using the singular or plural number also include the plural or singular number, respectively, (c) the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire Agreement, (d) the terms “Article,” “Section” and “Exhibit” refer to the specified Article, Section and Exhibit of this Agreement and (e) the terms “include,” “includes” or “including,” shall be deemed to be followed by the words “without limitation” unless otherwise indicated.  Whenever this Agreement refers to a number of days, unless otherwise specified, such number shall refer to calendar days.  The headings in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

5

Article 2
PURCHASE AND SALE OF ASSETS

2.1    Assets.  Upon the terms and subject to the conditions of this Agreement, at the Closing, Seller shall irrevocably sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase, acquire and accept, free and clear of any and all Liens, all right, title and interest of Seller in and to the Product and all assets of Seller relating to the Product, wherever located, including, without limitation, the following assets (collectively, the “Assets”):

(a)    All intellectual property rights required for the Product, including, without limitation, any inventions, patents, copyrights, domains, domain names or trademarks and any applications or registrations with respect or related thereto and the IP Rights and the Proprietary Information, except for Proprietary Information which is generally useful to products or services other than the Product; provided that, with respect to any Proprietary Information which is generally useful to products or services other than the Product, Seller shall grant and hereby grants to Buyer, as of the Closing, and subject to and in consideration for Buyer’s satisfaction of the payment obligations set forth in Article 3, a non-exclusive, irrevocable, perpetual, transferable, sublicenseable license under any and all such Proprietary Information for only such use or purpose related to the Product;

(b)    All Investigational New Drug Applications, New Drug Applications or any foreign equivalents related to the Product and all other regulatory filings and documents related thereto;

(c)    All correspondence between Seller and the United States Food and Drug Administration (the “FDA”) or foreign equivalents related to the Product or any Investigational New Drug Applications, New Drug Applications or any foreign equivalents related to the Product;

(d)    All pre-clinical and clinical data related to the Product or any Investigational New Drug Applications, New Drug Applications or any foreign equivalents related to the Product;

(e)    All Active Pharmaceutical Ingredients, ingredients, supplies, formulations and related items, products and matter of or related to the Product;

(f)    The contracts listed on Exhibit B attached hereto for informational purposes (the “Related Documents”), monitoring reports, audits, safety reports and all other written or documented materials and communications related to each study that has been or is being conducted under any Investigational New Drug Applications, New Drug Applications or any foreign equivalents related to the Product, and all related rights to conduct clinical trials with respect to the Product; 

(g)    The contracts listed on Exhibit A attached hereto (the “Assumed Contracts”);

6

(h)    Analytical and manufacturing methods and know-how owned, licensed or utilized by Seller in the development or manufacture of the Product and the design and packaging of the Product, including, without limitation, any trade secrets, know-how and confidential information related thereto; 

(i)    Seller’s entire current inventory of, or related to, the Product, including all clinical trial material (the “Product Inventory”);

(j)    Any and all other documentation, records, data, information and materials pertaining to the Assets and all related businesses;

(k)    All Permits which are held by Seller and required for the ownership and use of the Assets;

(l)    All rights to any Actions of any nature available to or being pursued by Seller to the extent related to the Product, whether arising by way of counterclaim or otherwise; 

(m)    All of Seller’s rights under warranties, indemnities and all similar rights against third parties to the extent related to the Product; and

(n)    All goodwill and the going concern value of the Product.

2.2    Liabilities.

(a)    Assumed Liabilities.  Subject to the terms and conditions set forth herein, at the Closing, Buyer shall assume and agree to pay, perform and discharge only the Liabilities arising out of or relating to Buyer’s ownership, operation or use of the Assets from and after the Closing (including the obligations from and after the Closing under or related to the Assumed Contracts), but only to the extent that such Liabilities are required to be performed from and after the Closing and do not relate to any failure to perform, breach, default or violation by Seller on or prior to the Closing (collectively, the “Assumed Liabilities”).

(b)    Excluded Liabilities.  Notwithstanding the provisions of Section 2.2(a) or any other provision in this Agreement to the contrary, Buyer shall not assume and shall not be responsible to pay, perform or discharge any Liabilities of Seller of any kind or nature whatsoever other than the Assumed Liabilities (the “Excluded Liabilities”).

2.3    Transfer Taxes and Fees; Bulk Sales.  Any and all sales, excise, use, transfer, value-added and similar Taxes, fees or duties assessed, imposed or incurred by reason of the sale by Seller and the purchase by Buyer of the Assets hereunder shall be paid by Seller (and not by Buyer), regardless of which Party against which such Taxes, fees or duties are assessed, imposed or incurred.  Each of the Parties hereby waives compliance with the notification and all other requirements of the bulk sales laws in force in the jurisdiction in which such laws are applicable to the Assets or the transactions contemplated by this Agreement.

2.4    Procedures for Assets Not Transferable.  With respect to any asset, property or right included in the Assets that is not assignable or transferable either by virtue of the provisions thereof or under applicable laws without the consent of any Person, and for which such consent is not obtained prior to the Closing, this Agreement shall not constitute an assignment or transfer thereof if an attempted assignment would constitute a breach thereof or be unlawful and, unless 

7

otherwise agreed between Buyer and Seller with respect to such Asset, Seller shall, at its expense, use its best efforts to obtain all such consents, as promptly as practicable after the Closing.  If any such consent shall not be obtained or if any attempted assignment pursuant hereto would be ineffective, Buyer and Seller shall negotiate an agency arrangement in good faith in order to obtain for Buyer the net benefits of such Asset.  Notwithstanding any provision in this Section 2.4 to the contrary, Buyer shall not be deemed to have waived its rights under Section 7.2(a)(iii) unless and until Buyer either provides a written waiver thereof.

Article 3
CONSIDERATION

Subject to the terms and conditions of this Agreement, Buyer will pay the following consideration to Seller for the transfer and conveyance of the Assets to Buyer in accordance with Article 2:

3.1    Upfront Payments.

(a)    At the Closing, Buyer shall pay to Seller a non-refundable amount in cash equal to $1,500,000, less $500,000 previously paid by Buyer to Seller pursuant to the “Exclusivity” provision of that certain TUR-002 Asset Purchase Summary of Terms and Conditions dated as of May 25, 2017 by and between the Parties, as amended (the “Closing Cash Consideration”) by wire transfer of immediately available funds; and 

(b)    At the Closing, Buyer shall issue to Seller 155,384 shares of common stock of Buyer (“Common Stock”) (subject to adjustment for stock splits, stock dividends, recapitalizations and the like), which represents $2,500,000 in shares of Common Stock based on a fully-diluted pre-money valuation of Buyer of $65,000,000 (the “Closing Share Consideration”).

3.2    Contingent Payments.  Seller may be entitled to certain additional payments from Buyer after the Closing, subject to the terms and conditions of this Section 3.2.

(a)    Milestone Payments.  Buyer shall pay, or cause to be paid, to Seller, each contingent payment described in this Section 3.2(a) upon the occurrence of the following corresponding events (each, a “Milestone”).  With respect to the achievement of each Milestone set forth in this Section 3.2(a) Buyer shall provide written notice to Seller of such occurrence no later than ten Business Days after the occurrence thereof.  Each contingent payment described in Sections 3.2(a)(i), 3.2(a)(ii), 3.2(a)(iii) or 3.2(a)(iv) shall be due within ten Business Days following the delivery by Buyer of a written notice of achievement of such Milestone pursuant to the preceding sentence.  Each contingent payment described in Sections 3.2(a)(v), 3.2(a)(vi), 3.2(a)(vii), 3.2(a)(viii) or 3.2(a)(ix) shall be due within 45 days after the last day of the calendar quarter in which each such Milestone is achieved;

(i)    upon dosing of the first patient in a Phase III clinical trial for the Product, a one-time contingent payment of $3,500,000;

8

(ii)    upon approval by the FDA of a New Drug Application with respect to the Product (“U.S. Regulatory Approval”), a one-time contingent payment of $10,000,000;

(iii)    upon approval by the European Medicines Agency (the “EMA”) or an equivalent foreign Governmental Authority of the equivalent to a New Drug Application with respect to the Product in a Major Market, a one-time contingent payment of $5,000,000;

(iv)    upon approval by the EMA or an equivalent foreign Governmental Authority of the equivalent to a New Drug Application with respect to the Product in a second Major Market (for avoidance of doubt, any Major Market other than a Major Market for which Buyer was or is required to pay Seller pursuant to Section 3.2(a)(iii)), a one-time contingent payment of $2,500,000; 

(v)    upon the achievement of $250,000,000 in cumulative Net Sales of the Product, a one-time contingent payment of $5,000,000;

(vi)    upon the achievement of $500,000,000 in cumulative Net Sales of the Product, a one-time contingent payment of $10,000,000;

(vii)    upon the achievement of $1,000,000,000 in cumulative Net Sales of the Product, a one-time contingent payment of $15,000,000;

(viii)    upon the achievement of $1,500,000,000 in cumulative Net Sales of the Product, a one-time contingent payment of $20,000,000; and

(ix)    upon the achievement of $2,000,000,000 in cumulative Net Sales of the Product, a one-time contingent payment of $25,000,000.

(b)    Royalty.  Buyer shall pay to Seller royalties on Net Sales of the Product at a rate of [* * *]%.  The royalties described in this Section 3.2(b) shall be payable each calendar quarter, within 45 days after the last day of such calendar quarter, commencing with the first calendar quarter following U.S. Regulatory Approval in which the Product is sold.

Article 4
REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby represents and warrants to Buyer as of the date of this Agreement and as of the Closing Date, as follows:

4.1    Organization.  Seller is a business entity duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is formed or incorporated.  Seller has the requisite power and authority to own, lease and operate the properties now owned, leased and operated by it and to carry on its business as currently conducted.  Seller is duly qualified to do business as a foreign entity in each jurisdiction in which the nature of its business or the character of its properties makes such qualification necessary, except where the failure to do so would not have a material adverse effect on Seller or any of the Assets.

* Confidential Treatment Requested

9

4.2    Authority and Enforceability.  Seller has the requisite power and authority to enter into this Agreement and the other Transaction Agreements to which it is a party, and to perform its obligations hereunder and thereunder.  Seller has taken all necessary action on its part to authorize the execution and delivery of this Agreement and the other Transaction Agreements to which it is a party and the performance of its obligations hereunder and thereunder.  This Agreement and the other Transaction Agreements to which it is a party have been duly and validly executed and delivered by Seller and are the legal, valid and binding obligations of Seller, enforceable against Seller in accordance with their terms.

4.3    No Violation, Etc.  The execution and delivery of this Agreement and the other Transaction Agreements to which it is a party, and the performance of Seller’s obligations hereunder and thereunder by Seller does not and will not (a) violate or conflict with any provision of the organizational documents of Seller, (b) violate, or conflict with, or result in a breach of any provision of, or constitute a default or give rise to any right of termination, cancellation or acceleration (with the passage of time, notice or both) under any agreement, lease, instrument, obligation, understanding or arrangement, oral or written, to which Seller is a party or by which any of Seller’s properties or assets is subject, including the Assets, (c) violate any Applicable Laws to which Seller or any of its properties or assets are subject or (d) result in any Lien on the Assets.  Without limiting the foregoing, Seller has not granted any right, Lien or other interest to any Third Party which would conflict with the conveyance of the Assets to Buyer.

4.4    No Consents and Approvals.  No Permit, consent, approval or authorization of, or notice, declaration, filing or registration with, any Governmental Authority or Third Party is or will be necessary in connection with the execution and delivery by Seller of this Agreement and the other Transaction Agreements to which it is a party or the performance by Seller of its obligations hereunder and thereunder, except where any Permit, consent, approval, authorization, notice, declaration, filing or registration so required has been obtained or made by Seller prior to or at the Closing.

4.5    Litigation.  There is no Action pending against Seller or, to Seller’s Knowledge, threatened, with respect to the Assets or the transactions contemplated herein.

4.6    Title to Assets.  Except as set forth  under the Weg Agreement, (a) Seller (i) owns and holds, free and clear of all Liens, all right, title and interest in and to the Assets, (ii) has good, valid and marketable title to the Assets; (iii) has the exclusive right to use, sell, license or dispose of the Assets, and (iv) has the exclusive right to bring action for the infringement of any Assets, (b) from and after the Closing, Buyer will own the Assets free and clear of all Liens and (c) Seller is not obligated to make any payments to any Person with respect to the Assets, whether by way of royalties, fees or otherwise, which obligation would be transferred to Buyer by operation of law or otherwise.

4.7    Product Inventory.  To Seller’s Knowledge, all of the Product Inventory meets the specifications therefor, are free from known defects and damage and are usable in the ordinary course.

10

4.8    Intellectual Property.

(a)    Exhibit C contains a true and complete list of all patents, patent applications, trade names, trademarks, service marks, trademark and service mark registrations and applications, copyright registrations and applications, and grants of a license or right to Seller with respect to any of the foregoing, owned or claimed to be owned by or licensed to Seller and related to or used in connection with the Product or the Assets (the “IP Rights”), all of which are included in the Assets.  Seller has taken reasonable security measures to protect the secrecy, confidentiality and value of the IP Rights and all of the Seller’s proprietary information which is required for the IP Rights, which may include, without limitation, trade secrets, know-how, processes, discoveries, developments, designs, toolings, techniques, supplier lists, purchasing strategies, inventions, processes and confidential data (collectively, “Proprietary Information”).  Seller has not sold, transferred, assigned, licensed or subjected to any Lien any IP Rights or Proprietary Information or any interest therein or entered into any agreement to do the foregoing.

(b)    To Seller’s Knowledge, no IP Rights or Proprietary Information is subject to any pending or threatened Action or other adverse claim of infringement by any other Person.  To Seller’s Knowledge, no Actions or claims have been asserted or are threatened by any Person alleging that the use of the IP Rights by Seller infringes upon any of such Person’s intellectual property rights.  To Seller’s Knowledge, there are no facts that would lead Seller to believe any other Person has infringed or otherwise misappropriated the IP Rights or the Proprietary Information.

(c)    The transactions contemplated by this Agreement will not violate or breach the terms of any license of intellectual property rights by Seller, or entitle any other party to any such license to terminate or modify it, or otherwise adversely affect Seller’s rights under it.

(d)    Subject to any necessary consents and to the terms of the Weg Agreement, after the Closing Buyer will be entitled to continue to use, practice and exercise rights in, all of the IP Rights to the same extent and in the same manner as Seller prior to Closing without financial obligation to any Person.

(e)    Following the Closing, neither Seller nor any of its Affiliates will retain or use any of the IP Rights or Proprietary Information except for the Proprietary Information which is generally useful to products or services other than the Product.

(f)    All current and former employees and consultants of Seller whose duties or responsibilities relate to the Assets have entered into confidentiality, intellectual property assignment and proprietary information agreements with and in favor of Seller.  Each such Person has waived its non-assignable rights to any IP Rights created by it on behalf of Seller.

4.9    Contracts.  True and complete copies of each of the Assumed Contracts listed on Exhibit A and Related Documents listed in Exhibit B have been provided to Buyer.  The Assumed Contracts constitute all of the contracts to which Seller is a party that relate to the Assets and which after the Closing will be (on identical terms), legal, valid, binding, enforceable and in full force and effect in the form delivered to Buyer.  Neither Seller nor, to Seller’s Knowledge, any other Person is in breach of or default under any Assumed Contract, and Seller has not received in writing or otherwise any claim or assertion that Seller is in material breach of 

11

or default under any Assumed Contract.  No event has occurred or, based on facts presently known to exist, is reasonably anticipated, which with notice or lapse of time or both would constitute a breach or default, or permit termination, acceleration or modification, under any Assumed Contract.  The execution and delivery of this Agreement or the other Transaction Agreements and the consummation of the transactions contemplated hereby or thereby will not result in any change or modification of any of the rights or obligations of any party under or violate or result in a breach or event of default under or result in termination of, any of the Assumed Contracts.

4.10    Regulatory Filings.  Seller has made all required registrations and filings with and submissions to all applicable Governmental Authorities relating to the Product or the Assets, including the IND.  All such registrations, filings and submissions were in compliance in all material respects with all Applicable Laws and other requirements when filed, no material deficiencies have been asserted by any such applicable Governmental Authorities with respect to such registrations, filings or submissions and no facts or circumstances exist which would indicate that a material deficiency may be asserted by any such authority with respect to any such registration, filing or submission.  Seller has delivered to Buyer copies of (a) all material reports of inspection observations, (b) all material establishment inspection reports, (c) all material warnings letters and (d) any other material documents received by Seller from the FDA or any other Governmental Authority relating to the Product or the Assets that assert ongoing material lack of compliance with any laws (including regulations promulgated by the FDA and any other Governmental Authorities) by Seller.

4.11    Brokers.  No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Seller.

4.12    No Insolvency.  Seller is not now insolvent and will not be rendered insolvent by the sale of the Assets.  As used in this section, “insolvent” means that the sum of the debts and other probable Liabilities of Seller exceeds the present fair saleable value of Seller’s assets.

4.13    Investment Representations.  Seller understands that the shares of Common Stock comprising the Closing Share Consideration (the “Shares”) have not been registered under the Securities Act of 1933, as amended (the “Securities Act”).  Seller also understands that the Shares are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon Seller’s representations contained in this Agreement.  Seller hereby represents and warrants as follows:

(a)    Seller has substantial experience in evaluating and investing in private placement transactions of securities of companies in a similar stage of development as Buyer so that it is capable of evaluating the merits and risks of its investment in Buyer and has the capacity to protect its own interests.  Seller can bear the economic risk of this investment indefinitely.  Seller understands that, except as contemplated by the Registration Rights Agreement, Buyer has no present intention of registering the Shares or any shares of its capital stock.  Seller also understands that there is no assurance that any exemption from registration under the Securities Act will be available and that, even if available, such exemption may not allow Seller to transfer all or any portion of the Shares under the circumstances, in the amounts or at the times Seller might propose.

12

(b)    Seller is acquiring the Shares for Seller’s own account for investment only, not as a nominee or agent, and not with a view towards their resale or distribution.  Seller has no present intent of selling, granting any participation in, or otherwise distributing the Shares.  By executing this Agreement, Seller further represents that Seller does not presently have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Shares.  Seller has not been formed for the specific purpose of acquiring the Shares.

(c)    Seller represents that by reason of its, or of its management’s, business or financial experience, Seller has the capacity to protect its own interests in connection with the transactions contemplated in this Agreement.  Neither Seller nor any of its officers, directors, employees, agents, stockholders or partners (i) has either directly or indirectly, including through a broker or finder, engaged in any general solicitation, (ii) has either directly or indirectly, including through a broker or finder, published any advertisement in connection with the offer and sale of the Shares, or (iii) is aware of any publication of any advertisement in connection with the transactions contemplated in this Agreement.

(d)    Seller represents that it is an accredited investor within the meaning of Regulation D under the Securities Act.

(e)    Seller has received all the information it considers necessary or appropriate for deciding whether to purchase the Shares.  Seller has had an opportunity to discuss Buyer’s business, management and financial affairs with directors, officers and management of Buyer and has had the opportunity to review Buyer’s operations and facilities.  Seller has also had the opportunity to ask questions of, receive answers from and obtain additional information from (to the extent Buyer possessed such information or could acquire it without unreasonable effort or expense) Buyer and its management regarding the terms and conditions of this investment.

(f)    Seller understands that, except as contemplated by the Registration Rights Agreement, the Shares have not been, and will not be, registered under the Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act, which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of Seller’s representations as expressed herein.  Seller acknowledges and agrees that, except as contemplated by the Registration Rights Agreement, the Shares are “restricted securities” as defined in Rule 144 promulgated under the Securities Act as in effect from time to time and must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available.  Seller has been advised or is aware of the provisions of Rule 144, which permits limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including, among other things:  the availability of certain current public information about Buyer, the resale occurring following the required holding period under Rule 144 and the number of shares being sold during any three-month period not exceeding specified limitations. 

13

(g)    Seller understands that no public market now exists for the Shares, and that Buyer has made no assurances that a public market will ever exist for the Shares.

(h)    The residency of Seller (or in the case of a partnership or corporation, such entity’s principal place of business) is correctly set forth on the signature pages hereto.  If Seller is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), Seller hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Shares or any use of this Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Shares, (ii) any foreign exchange restrictions applicable to such purchase, (iii) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale or transfer of the Shares.  Buyer’s offer and sale and Seller’s subscription and payment for and continued beneficial ownership of the Shares will not violate any applicable securities or other laws of Seller’s jurisdiction.

(i)    Neither (i) Seller; nor (ii) any of such Seller’s directors, executive officers, other officers that may serve as a director or officer of any company in which it invests, general partners or managing members, is subject to any of Disqualification Events, except for Disqualification Events covered by Rule 506(d)(2)(ii), or (iii) or (d)(3) under the Securities Act and disclosed reasonably in advance of the Closing Date in writing in reasonable detail to Buyer.

Article 5
REPRESENTATIONS AND WARRANTIES OF BUYER 

Buyer hereby represents and warrants to Seller as of the date of this Agreement and as of the Closing Date, as follows:

5.1    Organization.  Buyer is a business entity duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is formed or incorporated.  Buyer has the requisite power and authority to own, lease and operate the properties now owned, leased and operated by it and to carry on its business as currently conducted.  Buyer is duly qualified to do business as a foreign entity in each jurisdiction in which the nature of its business or the character of its properties makes such qualification necessary, except where the failure to do so would not have a material adverse effect on Buyer.

5.2    Authority and Enforceability.  Buyer has the requisite power and authority to enter into this Agreement and the other Transaction Documents to which it is a party and to perform its obligations hereunder and thereunder.  Buyer has taken all necessary action on its part to authorize the execution and delivery of this Agreement and the other Transaction Documents to which it is a party and the performance of its obligations hereunder and thereunder.  This Agreement and the other Transaction Documents to which it is a party have been duly and validly executed and delivered by Buyer and are the legal, valid and binding obligations of Buyer, enforceable against Buyer in accordance with their terms.

14

5.3    No Violation, Etc.  The execution and delivery of this Agreement and the performance of Buyer’s obligations hereunder does not and will not (a) violate or conflict with any provision of the organizational documents of Buyer, (b) violate, or conflict with, or result in a breach of any provision of, or constitute a default or give rise to any right of termination,  cancellation  or acceleration (with the passage of time, notice or both) under any agreement, lease, instrument, obligation, understanding or arrangement, oral or written, to which Buyer is a party or by which any of Buyer’s  properties or assets is subject or (c) violate any Applicable Laws to which Buyer or any of its properties or assets are subject.

5.4    No Consents and Approvals.  No Permit, consent, approval or authorization of, or notice, declaration, filing or registration with, any Governmental Authority or Third Party is or will be necessary in connection with the execution and delivery by Buyer of this Agreement or the performance by Buyer of its obligations hereunder.

5.5    Litigation.  There is no Action pending against Buyer or, to Buyer’s knowledge, threatened, with respect to the transactions contemplated herein.

5.6    Brokers.  No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Buyer.

Article 6
COVENANTS

6.1    Conduct Prior to the Closing.  From the date hereof until the Closing, except as otherwise provided in this Agreement or consented to in writing by Buyer, Seller shall operate the Assets in the ordinary course of business consistent with past practice, and shall not grant any Liens on any of the Assets or otherwise permit the Assets to become subject to any Liens.

6.2    Notices of Certain Events.

(a)    Each Party shall promptly (and in no event more than three Business Days after such Party becomes aware) notify the other Party of any notice or other communication from (i) any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement or any of the other Transaction Documents, and (ii) any Governmental Authority or Third Party in connection with the transactions contemplated by this Agreement or any of the other Transaction Documents; and

(b)    Each Party shall promptly (and in no event more than three Business Days after such Party becomes aware) notify the other Party of such Party’s material breach of any obligation, representation, warranty or covenant under this Agreement or any of the other Transaction Documents, or any fact that would cause any representation or other fact contained in this Agreement or any of the other Transaction Documents to be materially inaccurate or materially misleading.

6.3    Further Assurances.  Subject to the terms and conditions of this Agreement, each of the Parties will use reasonable best efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable under Applicable Laws for it to 

15

consummate and make effective the transactions contemplated by this Agreement and the other Transaction Agreements, including without limitation the execution and delivery of certificates, agreements and other documents as the other Party may reasonably request. 

6.4    Weg Agreement Royalties.  Buyer shall be solely and exclusively liable and responsible for all royalty and related obligations payable under the Weg Agreement (each, a “Weg Royalty Obligation”).

Article 7
CLOSING

7.1    Closing.  The consummation of the transactions contemplated herein (the “Closing”) will take place on the 45th day following the execution and delivery of this Agreement at the offices of Paul Hastings LLP, 1117 S. California Avenue, Palo Alto, CA 94304, or at such other time and place as mutually agreed to by Buyer and Seller.  The date on which the Closing actually occurs is referred to herein as the “Closing Date.”

7.2    Closing Conditions.

(a)    Conditions of Buyer.  Notwithstanding any other provision of this Agreement, the obligations of Buyer to consummate the transactions contemplated hereby shall be subject to the satisfaction, at or prior to the Closing Date, of the following conditions, which may be waived by Buyer in its sole discretion:

(i)    Each of the representations and warranties of Seller set forth in this Agreement shall be true and correct, in all material respects, as of the date hereof and as of the Closing Date as though made as of the Closing Date, and Seller shall have performed or complied with all obligations, conditions and covenants required to be performed by it under this Agreement prior to the Closing Date; 

(ii)    Buyer shall have received from Seller a closing certificate, in a form reasonably satisfactory to Buyer, signed by an executive officer of Seller and dated as of the Closing Date, certifying each of the matters set forth in Section 7.2(a)(i);

(iii)    Buyer shall have received evidence, to Buyer’s satisfaction, that Seller has received the consents and waivers listed on Exhibit D;

(iv)    Buyer shall have received a Bill of Sale, executed by Seller and dated as of the Closing Date, in the form of Exhibit E hereto (the “Bill of Sale”); 

(v)    Buyer shall have received an Assignment and Assumption Agreement, executed by Seller and dated as of the Closing Date, in the form of Exhibit F hereto (the “Assignment and Assumption Agreement”); 

(vi)    Buyer shall have received a Transition Services Agreement, executed by Seller and dated as of the Closing Date, in the form of Exhibit G hereto (the “Transition Services Agreement”); 

16

(vii)    Buyer shall have received an Assignment of Patents, executed by Seller and dated as of the Closing Date, in the form of Exhibit H hereto (the “Assignment of Patents”);

(viii)    Buyer shall have received an Assignment of Trademarks, executed by Seller and dated as of the Closing Date, in the form of Exhibit I hereto (the “Assignment of Trademarks”);

(ix)    Buyer shall have received an Assignment of Copyrights, executed by Seller and dated as of the Closing Date, in the form of Exhibit J hereto (the “Assignment of Copyrights”); 

(x)    Buyer shall have received a certificate pursuant to Treasury Regulations Section 1.1445-2(b) that Seller is not a foreign person within the meaning of Section 1445 of the Internal Revenue Code of 1986, as amended, duly executed by Seller; 

(xi)    Buyer shall have received a Registration Rights Agreement, executed by Seller and dated as of the Closing Date, in the form of Exhibit K hereto (the “Registration Rights Agreement”); and

(xii)    The proposed reverse merger (the “Merger”) to be effected with the Company and [* * *] (“[* * *]”) shall have closed. 

(xiii)    All consents, approvals, orders or authorizations of any Person required in connection with the execution, delivery or performance of this Agreement, as set forth on Schedule 7.2(a)(xii), shall have been obtained and shall be in full force and effect, in each case in form and substance reasonably satisfactory to Buyer.

(b)    Conditions of Seller.  Notwithstanding any other provision of this Agreement, the obligations of Seller to consummate the transactions contemplated hereby shall be subject to the satisfaction, at or prior to the Closing Date, of the following conditions, which may be waived by Seller in its sole discretion:

(i)    Each of the representations and warranties of Buyer set forth in this Agreement shall be true and correct, in all material respects, as of the date hereof and as of the Closing Date as though made as of the Closing Date, and Buyer shall have performed or complied with all obligations, conditions and covenants required to be performed by it under this Agreement prior to the Closing Date; 

(ii)    Seller shall have received from Buyer a closing certificate, in a form reasonably satisfactory to Seller, signed by an executive officer of Buyer and dated as of the Closing Date, certifying each of the matters set forth in Section 7.2(b)(i); 

(iii)    Seller shall have received the Closing Cash Consideration; 

(iv)    Seller shall have received the Closing Share Consideration; 

* Confidential Treatment Requested

17

(v)    Seller shall have received the Assignment and Assumption Agreement, executed by Buyer and dated as of the Closing Date; 

(vi)    Seller shall have received the Registration Rights Agreement, executed by Buyer and dated as of the Closing Date;

(vii)    Seller shall have received the Transition Services Agreement, executed by Buyer and dated as of the Closing Date; 

(viii)    The Merger shall have closed; and

(ix)    Seller shall receive all rights granted to other holders of Common Stock.

Article 8
POST-CLOSING COVENANTS AND AGREEMENTS

8.1    Additional Deliveries.  For no additional consideration, from time to time, on and after the Closing Date, at Buyer’s reasonable request, Seller shall execute and deliver such additional or confirmatory instruments, documents of conveyance, endorsements, assignments and acknowledgments as are necessary to evidence or vest in Buyer sole, exclusive, valid and marketable title in and to the Assets (subject to the terms of the licenses and contracts disclosed to Buyer).

8.2    Commercialization.  From and after the Closing, Buyer shall use Commercially Reasonable Efforts to seek U.S. Regulatory Approval and commercialize the Product.  If Buyer receives regulatory approval to commence a Phase III clinical trial for the Product, (the “Commercialization Condition”), Buyer shall commence a Phase III clinical trial for the Product by the date that is 18 months after the Closing Date.  If the Commercialization Condition is met and Buyer does not commence a Phase III clinical trial for the Product by the date that is 18 months after the Closing Date (which period shall be tolled and extended if such approval has been revoked, terminated or suspended as long as Buyer continues to use Commercially Reasonable Efforts to reinstate such approval), then Seller may elect (by notice to Buyer) to require Buyer to return all Assets and any related regulatory approvals, Confidential Information, data, studies, drug product, intellectual property including, without limitation, patents and patent applications (the “Reverted Assets”) and Assumed Liabilities to Seller for no consideration other than the acceptance by Seller of the Assumed Liabilities.  In the event Seller makes such election (i) Buyer shall, unless prohibited by law, rule or regulation, use Commercially Reasonable Efforts to take all action necessary or advisable (including obtaining consents and approvals as reasonably requested) as soon as practicable to transfer the Reverted Assets and the Assumed Liabilities to Seller, (ii) Seller shall use Commercially Reasonable Efforts to take all action necessary or advisable (including obtaining consents and approvals as reasonably requested) as soon as practicable to accept the Reverted Assets and the Assumed Liabilities and (iii) immediately upon such election, this Agreement shall terminate, except with respect to (a) this Section 8.2 (Commercialization), (b) Section 8.6 (Confidentiality), (c) Article 10 (Miscellaneous) and (d) any breaches of this Agreement by either Party occurring prior thereto.

18

8.3    Non-Competition.  For a period of 24 months following the Closing, Seller shall not and shall not permit any of its controlled Affiliates to directly or indirectly (a) acquire, develop, manufacture, sell or market any products containing the Product as the primary active pharmaceutical ingredient (the “Restricted Business”), (b) have an interest in any Person that engages directly or indirectly in the Restricted Business in any capacity, including as a partner, shareholder, member, employee, principal, agent, trustee or consultant; or (c) intentionally cause, induce or encourage any material client, customer, supplier or licensor of Buyer with respect to the Product (including any existing or former client or customer of Seller and any Person that becomes a client or customer of Buyer after the Closing), or any other Person who has a material business relationship with Buyer relating to the Product or the Assets, to terminate or modify any such relationship; provided however, that this Section 8.3 (Non-Competition) shall not apply with respect to ownership of up to one percent of the issued voting securities of any company listed on any registered securities exchange.

8.4    Resale of the Assets.  If at any time after the Closing Date, Buyer sells, directly or indirectly (including as a result of a Change in Control), all or substantially all of the Assets to a third party in one transaction or a series of related transactions, including in connection with a sale of any or all of the assets of Buyer (an “Asset Resale”), then, within 60 days of the closing of the Asset Resale, Buyer shall pay to Seller an amount equal to 4.0% of the net proceeds actually received by Buyer as an upfront payment for the sale of the Assets in the Asset Resale (including for this purpose, within 60 days after receipt thereof any contingent consideration, installment payments, earn outs or similar payments) (the “Resale Payment”) in cash by wire transfer of immediately available funds; provided that if Buyer receives securities or other non-cash consideration in the Asset Resale, then the Resale Payment shall be paid by Buyer to Seller in a form of cash, securities or other non-cash consideration, as applicable, as is proportional to the form of payment received by Buyer for the resale of the Assets in the Asset Resale; provided further, that in the event of an indirect Asset Resale (including as a result of a Change in Control), the Resale Payment shall reflect the fair market value of the Assets as determined by a mutually agreed upon valuation firm (the costs of which shall be borne 50% by each of Buyer and Seller); and further provided, that if any portion of the net proceeds is placed into escrow or subject to a holdback, any portion of the Resale Payment attributable to such funds placed in escrow or subject to a holdback, as applicable, shall instead be payable to Seller within 60 days of the release of such funds from escrow or termination of the holdback with respect to such funds, as applicable.

8.5    Reports; Recordkeeping and Audit.

(a)    Royalty Reports.  Within 30 days after the end of each calendar quarter in which a royalty payment under Section 3.2(b) is required to be made, Buyer shall send to Seller a report of Net Sales of the Product, which report sets forth for such calendar quarter the following information:  (i) total Net Sales, (ii) total gross sales of the Product, (iii) the quantity of Product sold, (iv) the exchange rate used to convert Net Sales from the currency in which they are earned to United States dollars; and (v) the total royalty payments due.

(b)    Recordkeeping and Audit.  Buyer shall keep complete and accurate production and accounting records relating to Net Sales of the Product and the calculation of royalties payable under Section 3.2(b).  Following the first calendar quarter in which Buyer is required to make a royalty payment under Section 3.2(b), upon at least twenty (20) days’ advance notice, Seller shall be entitled to audit such records through an internationally recognized independent accounting firm selected by Seller and approved by Buyer in writing, during 

19

Buyer’s normal business hours, to determine Buyer’s compliance with the provisions of Section 3.2(b).  Buyer shall reimburse Seller one hundred percent (100%) of any unpaid royalties resulting from any noncompliance discovered by such independent accounting firm as a result of any such audit.  Such audits shall be at Seller’s expense, shall cover sales made in any calendar year ending not more than three years before the date of such request to audit and only those periods that have not been subject to a prior audit and shall occur no more than once annually, except that in the case of any underpayment exceeding five percent (5%) of the amount actually paid:  (i) Buyer shall reimburse Seller for the cost of such audit; and (ii) Seller shall be entitled to conduct additional quarterly audits on the conditions set forth above, at Buyer’s expense, until any such audit demonstrates that Buyer is in compliance with its obligations.

8.6    Confidentiality.  Each Party will treat as confidential the Confidential Information of the other Party, and will take all commercially reasonable precautions to ensure the confidentiality of such Confidential Information.  Each Party agrees to return to the other Party upon the expiration or termination of this Agreement all Confidential Information acquired from such other Party, except as to such information it may be required to retain under Applicable Laws, and except for one copy of such information to be retained by such Party solely to enable it to assess its compliance with the confidentiality provisions of this Section 8.6.  From the date hereof through the period ending ten (10) years after the Closing Date, neither Party shall, without the other Party’s express prior written consent, use or disclose any such Confidential Information for any purpose other than to carry out its obligations hereunder.  Each Party, prior to disclosure of Confidential Information of the other Party to any employee, consultant or advisor shall ensure that such Person is bound in writing to observe the confidentiality of such Party’s Confidential Information on terms no less restrictive than those contained herein.  The obligations of confidentiality shall not apply to Confidential Information that the receiving Party is required by law or regulation to disclose; provided however, that the receiving Party shall so notify the disclosing Party of its intent and cooperate with the disclosing Party on reasonable measures to protect the confidentiality of the Confidential Information.  Seller hereby acknowledges and agrees that any information that is Confidential Information of Seller prior to the Closing that is included in the Assets shall be Buyer’s Confidential Information from and after the Closing. 

Article 9
INDEMNIFICATION

9.1    Survival.  Except as expressly set forth herein, the representations and warranties contained in this Agreement shall survive the Closing and shall remain in full force and effect for a period of 18 months following the Closing, at which time such representations and warranties shall expire.  Notwithstanding the foregoing, the representations and warranties contained in Section 4.8 shall survive until 30 months after the Closing and the Fundamental Representations shall survive the Closing until sixty (60) days after the expiration of the applicable statute of limitations, at which time such representations and warranties shall expire.  All covenants and obligations of the Parties contained herein or in any documents, certificate or instrument required to be delivered hereunder in connection with the transactions contemplated hereby shall survive the Closing and continue in full force until performed in accordance with their terms.

20

9.2    Indemnification.

(a)    Indemnification by Seller.  Seller shall defend, indemnify and hold harmless Buyer, its Affiliates and their respective stockholders, directors, officers and employees from and against all actual, out-of-pocket claims, actions, obligations, awards, judgments, fines, penalties, damages, liabilities, settlements, losses, costs and expenses, including attorneys’ fees and disbursements (collectively, “Losses”) arising from or related to:

(i)    Any inaccuracy in or breach of any of the representations and warranties of Seller contained in this Agreement or any of the other Transaction Documents to which it is a party;

(ii)    Any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Seller pursuant to this Agreement or any of the other Transaction Documents to which it is a party; 

(iii)    Any Excluded Liability; and

(iv)    Any claim related to the Assets based upon, resulting from or arising out of the business, operations, properties, assets or obligations of Seller or any of its Affiliates conducted, existing or arising on or prior to the Closing Date.

(b)    Indemnification by Buyer.  Buyer shall defend, indemnify and hold harmless Seller, its Affiliates and their respective stockholders, directors, officers and employees from and against all Losses arising from or related to:

(i)    Any inaccuracy in or breach of any of the representations and warranties of Buyer contained in this Agreement or any of the other Transaction Documents to which it is a party;

(ii)    Any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Buyer pursuant to this Agreement or any of the other Transaction Documents to which it is a party; and

(iii)    Any Assumed Liability.

(c)    Limitations on Indemnification.  The indemnification provided for in this Article 9 shall be subject to the following limitations:

(i)    The aggregate Liability of Seller for Losses under Section 9.2(a)(i) or Buyer under Section 9.2(b)(i), in each case, shall not exceed $600,000; provided that such limitations shall not apply to (A) any claim related to fraud, intentional misrepresentation or willful misconduct by a Person entitled to indemnification hereunder or (B) any claim of a breach of any Fundamental Representation;

21

(ii)    Except for any claim related to fraud, intentional misrepresentation or willful misconduct by a Person entitled to indemnification hereunder, the aggregate Liability of a Party for Losses, shall not, in the aggregate, exceed the value of all amounts actually paid by Buyer to Seller pursuant to this Agreement whether in cash, stock or other consideration (in the case of any stock or other consideration, such stock or other consideration shall be valued at the higher of (x) the fair market value as of the day such stock or other consideration was received by Seller and (y) the fair market value as of the day that the event causing such indemnification obligation occurred); and

(iii)    In no event shall any Party be entitled to recover for any amounts in respect of special, consequential, lost profit, diminution in value or punitive damages; provided, however, that the foregoing shall not apply to the extent any such damages are awarded in a proceeding brought or asserted by a third party against any Party.

9.3    Indemnification Procedures.

(a)    If a Party (the “Indemnified Party”) receives notice of the assertion by any third party of any claim or of the commencement by any such third party of any claim or action (any such claim or action being referred to herein as an “Indemnifiable Claim”) with respect to which the other Party (the “Indemnifying Party”) is obligated to provide indemnification, the Indemnified Party shall promptly (and in any event within 60 days) notify the Indemnifying Party in writing of the Indemnifiable Claim; provided that the failure to provide such notice shall not relieve or otherwise affect the obligation of the Indemnifying Party to provide indemnification hereunder, except to the extent that any Losses directly resulted or were caused by such failure.

(b)    The Indemnifying Party shall undertake, conduct and control, through counsel of its own choosing the settlement or defense of any Indemnifiable Claim, and the Indemnified Party shall reasonably cooperate with the Indemnifying Party  in connection therewith; provided that the Indemnifying Party shall permit the Indemnified Party to participate in such settlement or defense through counsel chosen by the Indemnified Party; provided further that (i) the fees and expenses of such counsel shall not be borne by the Indemnifying Party; and (ii) the Indemnifying Party shall not settle any Indemnifiable Claim without the Indemnified Party’s prior written consent, which consent shall not be unreasonably withheld if the settlement involves only the payment of money and no admission of liability.

9.4    Effect of Investigation.  The Indemnified Party’s right to indemnification or other remedy based on the representations, warranties, covenants and agreements of the Indemnifying Party contained herein will not be affected by any investigation conducted by the Indemnified Party with respect to, or any knowledge acquired by the Indemnified Party at any time, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant or agreement.

9.5    Exclusive Remedy.  Notwithstanding anything to the contrary contained in this Agreement, except with respect to claims based on fraud, intentional misrepresentation or willful misconduct, and except for equitable remedies, the indemnification provided for in this Article 9 will be the sole and exclusive remedy of the Parties, whether in contract, tort or otherwise, for any and all claims of inaccuracy in or breach of any representation, warranty, covenant or agreement of the Parties set forth in this Agreement.    

22

Article 10
MISCELLANEOUS

10.1    Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which shall constitute a single document.  Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

10.2    Entire Agreement.  This Agreement and the other Transaction Documents contain the entire agreement between the Parties with respect to the subject matter hereof and supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter.

10.3    Exhibits; Schedules.  The Exhibits and Schedules referenced herein and attached hereto are incorporated into this Agreement by reference.

10.4    Governing Law; Forum.  This Agreement and the relationship of the Parties shall be governed by and construed and interpreted in accordance with the laws of the State of New York irrespective of the choice of laws principles of the State of New York.  Any disputes relating to the transactions contemplated by this Agreement shall be heard in the State and Federal courts located in the County of New York in the State of New York.

10.5    Assignability.  This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.  Neither Party may assign its respective rights or delegate its respective obligations under this Agreement without the express prior written consent of the other Party.  Notwithstanding the foregoing, either Party may assign or transfer this Agreement to (a) an Affiliate or (b) a Third Party in connection with the sale or transfer of the business to which this Agreement relates; provided that such Third Party expressly agrees to be bound by and accept the obligations of the assigning Party under this Agreement; provided further that the assigning Party shall notify the other Party of any such permitted assignment within ten (10) days of such assignment; and provided further that such assigning Party shall remain liable for all payment and indemnification obligations pursuant to this Agreement in the event that the assignee defaults with respect to such obligations.

10.6    No Third Party Beneficiaries.  Nothing in this Agreement shall be deemed to create any third party beneficiary rights in or on behalf of any other Person.

10.7    Notices.  All notices required to be given hereunder shall be in writing and shall be given by personal delivery, by an internationally recognized overnight carrier, by registered or certified mail, postage prepaid with return receipt requested or by electronic mail.  All notices hereunder shall be addressed as follows:

		
	If to Seller, to:
	Vyera Pharmaceuticals AG

600 Third Avenue, 10th Floor
New York, New York 10016
Attention:  Legal Department
E-mail:  legal@vyera.com

23

With a copy (which shall not constitute notice) to:

Foley Hoag LLP
155 Seaport Boulevard
Boston, Massachusetts
Attention:  David Halstead, Esq.
E-mail:  dhalstead@foleyhoag.com

If to Buyer, to:
Seelos Therapeutics, Inc.
209 Lukes Wood Road
New Canaan, CT 06840
Attention:  Raj Mehra
E-mail:  Raj. Mehra@Seelostx.com

With a copy (which shall not constitute notice) to:

Paul Hastings LLP
1117 S. California Avenue
Palo Alto, California
Attention:  Jeffrey Hartlin, Esq.
E-Mail:  jeffhartlin@paulhastings.com

Either Party may, by notice to the other Parties given in the form specified in this Section 10.7, change the address to which such notices are to be given.  Notices delivered personally shall be deemed communicated as of actual receipt; notices sent via overnight courier shall be deemed received three (3) Business Days following sending; and notices mailed shall be deemed communicated as of seven (7) Business Days after mailing.  

10.8    Severability.  If any provision of this Agreement shall be held invalid, illegal or unenforceable, the validity, legality or enforceability of the other provisions of this Agreement shall not be affected thereby, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue.

10.9    No Implied Waiver.  No failure or delay on the part of any Party to exercise any right, power or privilege hereunder or under any instrument executed pursuant hereto shall operate as a waiver; nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The waiver by any Party of a breach of any provision of this Agreement shall not operate as a waiver of any subsequent breach.  Except as otherwise specifically provided herein, all rights and remedies hereunder are cumulative and are in addition to and not exclusive of any other rights and remedies provided by law.

24

10.10    Amendments.  Any amendment, modification or waiver of this Agreement shall only be valid if made in writing and signed by each of the Parties.

10.11    Expenses.  Except as expressly set forth herein, each Party shall pay all of its own fees and expenses (including all legal, accounting and other advisory fees) incurred in connection with the negotiation and execution of this Agreement and the arrangements contemplated hereby.

10.12    Representation By Counsel; Interpretation.  Seller and Buyer each acknowledge that it has been represented by its own legal counsel in connection with this Agreement and the transactions contemplated by this Agreement.  Accordingly, any rule of law, or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the Party that drafted it, has no application and is expressly waived.  The provisions of this Agreement shall be interpreted in a reasonable manner to effect the intent of Seller and Buyer.

10.13    Specific Performance.  The Parties agree that irreparable damage would occur in the event any of the provisions of this Agreement were not to be performed in accordance with the terms hereof.  It is accordingly agreed that the Parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity, and to thereafter cause the transaction contemplated by this Agreement to be consummated on the terms and subject to the conditions thereto set forth in this Agreement in the County of New York in the State of New York, this being in addition to any other remedy to which they are entitled at law or in equity subject to the terms hereof.

10.14    Other Remedies.  Except as otherwise provided herein, any and all remedies herein expressly conferred upon a Party shall be deemed cumulative with and not exclusive of any other remedy conferred hereby or by law on such Party, and the exercise of any one remedy shall not preclude the exercise of any other.

[Signature pages follow]

25

IN WITNESS WHEREOF, the Parties, intending to be bound hereby, have executed this Agreement as of the date first written above.

SELLER:

VYERA PHARMACEUTICALS AG

By:  /s/ Kevin P. Mulleady
Name: Kevin P. Mulleady
Title: CEO

BUYER:

SEELOS THERAPEUTICS, INC.

By:  /s/ Raj Mehra
		
	Name:
	Raj Mehra 

		
	Title:
	CEO

26

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00287-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00287-of-00352.parquet"}]]