Document:

Agreement

 Exhibit 10.1 
 EXECUTION COPY 
 AGREEMENT 

This AGREEMENT (this “Agreement”) is entered into as of this 27th day of January, 2012, by and among Red Oak Partners, LLC, a New York
limited liability company, and the persons and entities affiliated with it and listed on the signature page hereof (“Red Oak”), and Planar Systems, Inc., an Oregon corporation (the “Company”). 

WHEREAS, the Company has been discussing with David Sandberg, an affiliate of Red Oak, a shareholder of the Company, the merits of making
certain corporate governance changes to more closely align the Company’s posture with current best practices as supported by a growing number of shareholder advocacy organizations; 

WHEREAS, the Company is undertaking actions to obtain shareholder approval to remove the staggered director term structure presently in
place, a change that the Company and Mr. Sandberg agree is in the best interests of the Company and its shareholders; 

WHEREAS, the Company’s board of directors (the “Board”) invited Mr. Sandberg to consider serving as one of the
Company’s nominees for election to the Board at the Company’s 2012 Annual Meeting of Shareholders (“2012 Annual Meeting”), and he agreed to do so; and 
 WHEREAS, the Company and Mr. Sandberg and his affiliates desire to memorialize their agreements relating to eliminating the staggered director term structure of the Board and Mr. Sandberg’s
nomination for election to the Board. 
 NOW, THEREFORE, in consideration of the foregoing, the parties hereto agree as follows:

 1. Director Nominees. The Company and Red Oak agree that the nominees for director to be proposed by the Board for
election at the 2012 Annual Meeting shall be Gerald K. Perkel and David Sandberg, each for a three-year term. The Company’s Proxy Statement will recommend election of both the nominees. 

2. Number of Directors. There shall be no restrictions on the number of directors authorized by the Board in accordance with the
Bylaws of the Company. The parties understand that Oregon law provides that the term of any director elected by the Board to fill a vacancy on the Board expires at the next meeting of shareholders at which directors are elected. The Company
acknowledges the merits of reasonable periodic rotation of Board membership. 
 3. Board Committees. 

(a) David Sandberg, if elected, shall be appointed to serve on the Compensation Committee and the Governance Committee, with such
appointments to extend at least until the day after the 2013 Annual Meeting. Mr. Sandberg shall be permitted to serve on not less than two committees, and shall be permitted to serve on the same number of committees as the director serving on
the most committees of the Board, provided that he is eligible to serve on each such committee. 

  
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 (b) In order to provide an opportunity for Mr. Sandberg, prospectively a newly
appointed member of the Compensation Committee, to better understand the Company’s equity incentive programs and to share his thoughts about such incentive programs, the Company agrees that, prior to the first meeting of the Compensation
Committee after the appointment of David Sandberg to the Committee, no additional equity awards will be granted to the Company’s directors or its three executive officers. 

(c) The Company hereby represents that the Board has not appointed an Executive Committee or other committee with similar Board
authority, and hereby agrees that from the date of this Agreement until the day after the 2013 Annual Meeting, no such committee shall be appointed, except by unanimous approval of all members of the Board. 

4. Amendment to Articles of Incorporation. The Board will adopt and recommend to the shareholders of the Company for approval at
the 2012 Annual Meeting an amendment to Article VI of the Company’s Second Amended and Restated Articles of Incorporation (the “Articles of Incorporation”) in substantially the form of the draft provided to Red Oak on January 23,
2012 (the “Articles Amendment”). 
 5. Voting Agreement and Solicitation. 

(a) Red Oak agrees that it will cause all shares of voting stock beneficially owned by it and its affiliates to be present for quorum
purposes and to be voted at the 2012 Annual Meeting (i) in favor of each of those individuals nominated as directors as set forth in Section 1 above, (ii) in favor of approval of the Articles Amendment, (iii) in favor of approval
of the ratification of the appointment of the Company’s independent registered public accounting firm, and (iv) in favor of each other proposal consistent with the terms hereof contained in the Proxy Statement in the manner that the Board
recommends in the Proxy Statement (the “Proposals”). 
 (b) The Company’s proxy statement for the 2012 Annual
Meeting (the “Proxy Statement”) shall include the Board’s recommendation for approval of the Proposals. The Company shall permit Mr. Sandberg to review the Company’s Proxy Statement before it is mailed to shareholders and
shall reasonably consider any changes requested by Mr. Sandberg. The Company shall retain The Proxy Advisory Group, LLC to assist in the Board’s solicitation of proxies for approval of the Proposals, and shall use its best efforts to
obtain approval of the Proposals. 
 (c) Mr. Sandberg agrees that if the Articles Amendment is adopted at the
Company’s 2012 Annual meeting, he will, to the extent necessary to implement such Articles Amendment, resign from the Company’s board of directors on the date of the 2013 Annual Meeting, subject to the right of the Company to nominate, and
its shareholders to elect, him for a one-year term commencing on the date of the 2013 Annual Meeting. 
 6. Company
Representations and Warranties. The Company represents and warrants to Red Oak as follows: 
 (a) The Company is a
corporation duly organized, validly existing and in good standing under the laws of the State of Oregon. The Company has the full power and 

  
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authority to execute, deliver and carry out the terms and provisions of this Agreement, and has taken all necessary action to authorize the execution, delivery and performance of this Agreement;
and 
 (b) This Agreement has been duly and validly authorized by the Board, and executed and delivered by the Company and
constitutes a valid and binding obligation of the Company, enforceable in accordance with its terms, and no other proceeding on the part of the Company is necessary to authorize the execution, delivery and performance of this Agreement. 

(c) The Company has obtained the written agreement of each of its directors and executive officers to vote in favor of the Proposals at
the 2012 Annual Meeting and, if the Articles Amendment is adopted at such meeting, to take all other steps which may be necessary, to implement such Articles Amendment, including an agreement from each director whose term would expire after the 2013
Annual Meeting to resign effective on the date of such meeting, subject to the right of the Company to nominate, and its shareholders to elect, such resigning director for a one-year term commencing on the date of the 2013 Annual Meeting. The
Company will not alter or amend such written agreements without Red Oak’s consent. True copies of each such agreement have been provided to Red Oak. 
 7. Red Oak Representations and Warranties. Each member of Red Oak represents and warrants to the Company as follows: 
 (a) To the extent that Red Oak is an entity, it is duly organized, validly existing and in good standing under the laws of the state in which it was incorporated or organized. It has the full power and
authority to execute, deliver and carry out the terms and provisions of this Agreement, and has taken all necessary action to authorize the execution, delivery and performance of this Agreement; and 

(b) This Agreement has been duly and validly authorized by Red Oak’s governing bodies, and executed and delivered by Red Oak and
constitutes its valid and binding obligation, enforceable against Red Oak in accordance with its terms, and no other proceeding on its part is necessary to authorize the execution, delivery and performance of this Agreement. 

8. Standstill Agreement. 
 (a) Standstill Period. Red Oak agrees that, for a period commencing on the date of this Agreement and ending on the day after the Company’s 2013 Annual Meeting (the “Standstill
Period”), it will not in any manner, and will cause its affiliated entities and Representatives, not to in any manner, directly or indirectly, effect or seek, offer or propose (whether publicly or otherwise) to effect, or cause or participate
in or in any way assist any other person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in any of the following: 
 (i) any tender offer or exchange offer involving the Company or any of its subsidiaries or affiliates, provided that this clause (i) shall not prohibit Red Oak from (A) tendering in any tender
offer or exchange offer by parties not affiliated with Red Oak unless Red Oak has induced or assisted such parties to make such offer, or (B) tendering or supporting, opposing or proposing an alternative to any such tender offer or exchange
offer approved or recommended by the Company’s Board of Directors; 

  
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 (ii) any merger or any other form of business combination or acquisition or other
transaction relating to a material amount of assets or securities of the Company or any of its subsidiaries or affiliates, but this clause (ii) shall not prohibit Red Oak from (A) voting on any such transaction proposed by a non-affiliated
party, or (B) voting on, supporting, opposing or proposing an alternative to any such proposal approved by the Company’s Board of Directors; 
 (iii) any form of restructuring, recapitalization, liquidation, dissolution or other extraordinary or similar transaction with respect to the Company or any of its subsidiaries or affiliates, but this
clause (iii) shall not prohibit Red Oak from (A) voting on any such transaction proposed by a non-affiliated party, or (B) voting on, supporting, opposing or proposing an alternative to any such proposal approved by the Company’s
Board of Directors; 
 (iv) initiate, announce, propose, submit or otherwise make any proposal to the Company or its
shareholders or engage in any “solicitation” of “proxies” (as such terms are defined in the rules of the Securities and Exchange Commission) or consents to vote any voting securities of the Company or any of its subsidiaries, or
otherwise seek to influence any vote of voting securities of the Company, with respect to any matter other than: (A) any matter described in clauses (i)-(iii) above as to which Red Oak is permitted to take action; (B) the election of
directors at the 2013 Annual Meeting; and (C) if the Articles Amendment is not approved at the 2012 Annual Meeting, a shareholder proposal on the same subject at the 2013 Annual Meeting. 

(v) form, join or in any way participate in a “group,” except any group composed solely of Red Oak affiliates, including newly
formed affiliates, or as a “participant” in any “solicitation” (as such terms are defined in the rules of the Securities and Exchange Commission) to do any of the foregoing, unless one of the exceptions in clauses
(i) through (iii) applies; 
 (vi) enter into any arrangements, understandings or agreements relating to the Company
(whether written or oral) with, or advise, finance, assist or encourage any other person not affiliated with Red Oak in connection with any of the foregoing, or make any investment in, or enter into any arrangement relating to the Company with, any
other person that Red Oak knows or has reason to know engages, or offers or proposes to engage, in any of the activities or transactions referenced in the foregoing unless one of the exceptions in clauses (i) through (iii) applies; or

 (vii) take or intentionally cause or actively induce others to take any action directly inconsistent with any of the
foregoing. 
 (b) Voting Restrictions. During the Standstill Period, in the event that David Sandberg or Red Oak seeks to
acquire the Company (by way of merger, tender offer or otherwise) or the foregoing are part of any group seeking such, David Sandberg agrees to either: (a) recuse himself from voting on such matter as a member of the Board or (b) if
necessary to 

  
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obtain a quorum, shall participate in such Board meeting such that a quorum exists and then subsequently abstain from voting on such matter. This subparagraph (b) shall not apply if the
Board has allowed any other director who is part of or affiliated with a group making a proposal to participate or vote. 
 9.
Compliance by Red Oak Affiliates. Red Oak agrees it will use its best efforts to cause its affiliates to comply with the terms of this Agreement, and will be responsible for any breach of any provision of this Agreement by its affiliates.

 10. Public Information. 
 (a) Press Release. Promptly following the execution of this Agreement, the Company shall file a Current Report on Form 8-K with the SEC disclosing this Agreement. The Company shall permit
Mr. Sandberg to review the Company’s Form 8-K prior to the time it is filed with the SEC and shall reasonably consider any changes requested by Mr. Sandberg regarding the disclosure in the Form 8-K that refers to Red Oak or
Mr. Sandberg. The parties may agree to issue a press release announcing this Agreement. Any such press release shall be mutually agreeable to the parties in form and substance. 

(b) Non-Disclosure. Neither the Company nor Red Oak, nor any of their respective affiliates, will disclose in any way any
information regarding this Agreement, the other party or discussions or negotiations between the parties regarding the preparation of this Agreement or the subject matter hereof, or that otherwise relates to, arises out of, or is in connection with
any matter related to this Agreement, except with the prior written consent of the other party or as required by federal securities laws. Notwithstanding the foregoing, each party may disclose such information to its respective employees, officers,
directors, agents, legal counsel, accountants and other representatives and advisors (“Representatives”), it being understood that the Representatives to whom such disclosure is made will be informed of the confidential nature of the
information so disclosed and instructed to keep such information confidential; provided, however, that each party, after consultation with counsel, may make any disclosure that it determines in good faith is required to be made under applicable law.

 (c) Non-Disparagement. Neither the Company, the members of the Company’s Board, nor Red Oak, nor any of their
respective affiliates will, directly or indirectly, make or issue or cause to be made or issued any disclosure, announcement or statement (including without limitation the filing of any document or report with the SEC (except for a document filed
with the SEC that complies with the SEC’s proxy rules) or any other governmental agency or any disclosure to any journalist, member of the media or securities analyst) concerning the other party or any of its affiliates, which disparages such
party or any of its affiliates, including as individuals (provided that each party, after consultation with counsel, may make any disclosure that it determines in good faith is required to be made under applicable law). 

11. Corporate Governance. All terms and provisions in this Agreement involving corporate governance and the duties and obligations
of the Board or the Company are intended to be binding on the Board and the Company to the maximum extent permitted by Oregon law, any NASDAQ or SEC rule or regulation applicable to the Company, or any applicable case law

  
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pertaining thereto (as based upon advice of counsel) (collectively, “Applicable Law”). However, in the event that any term or provision in this Agreement is found to directly conflict
or violate Applicable Law, such term or provision shall be limited and interpreted in a manner as minimally necessary so as to avoid such conflict or violation of Applicable Law. In the event that it is determined that the Articles Amendment is
prohibited by Applicable Law, all restrictions in Section 8 shall immediately lapse. 
 12. Amendments and Waivers.
No amendment or waiver of any provision of this Agreement shall be valid and binding unless it is in writing and signed, in the case of an amendment, by the Company and Red Oak, or in the case of a waiver, by the party against whom the waiver is to
be effective. No waiver by any party of any breach or violation or, default under or inaccuracy in any representation, warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent breach,
violation, default of, or inaccuracy in, any such representation, warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. No delay or omission on the part of any party in
exercising any right, power or remedy under this Agreement shall operate as a waiver thereof. 
 13. Successors and
Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this
Agreement. 
 14. Expiration of Agreement. Except for the provisions of Section 8, which shall terminate according
to their terms, and the provisions of Sections 9, 10(b) and 12 through 18, which shall not expire, this Agreement shall automatically expire and terminate on the day after the 2013 Annual Meeting. 

15. Counterparts. This Agreement may be executed in any number of counterparts, which may be exchanged by PDF or facsimile each of
which shall be deemed an original, but all of which together shall constitute but one and the same instrument. This Agreement shall become effective when duly executed by each party hereto. 

16. Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. In the event that any provision
hereof would, under applicable law, be invalid or unenforceable in any respect, each party hereto intends that such provision shall be construed by modifying or limiting it so as to be valid and enforceable to the maximum extent compatible with, and
possible under, applicable law. 
 17. Governing Law. This Agreement, the rights of the parties and all actions arising
in whole or in part under or in connection herewith, shall be governed by and construed in all respects, including validity, interpretation and effect, in accordance with the laws of Oregon, applicable to contracts executed and to be performed
wholly within such state without giving 

  
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effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction. Each of the parties hereto (a) consents to submit itself to
the personal jurisdiction of the state and federal courts in Oregon in the event any dispute arises out of this Agreement or the transactions contemplated by this Agreement, (b) agrees that it shall not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (c) agrees that it shall not bring any action relating to this Agreement or the transactions contemplated by this Agreement in any court other than the state or federal
courts in Oregon, (d) agrees to waive any bonding requirement under any applicable law, in the case any other party seeks to enforce the terms by way of equitable relief and (e) each of the parties irrevocably consents to service of
process by first class certified mail, return receipt requested, postage prepaid, to the address of such parties’ principal place of business or as otherwise provided by applicable law. 

18. Construction. Each party cooperated and participated in the drafting and preparation of this Agreement and the documents
referred to herein. Accordingly, any rule of law or any legal decision that would require interpretation of any ambiguities in this Agreement against any party that drafted or prepared it is of no application and is hereby expressly waived by each
of the parties hereto, and any controversy over interpretations of this Agreement shall be decided without regard to events of drafting or preparation. 
 [Next page is the signature page.] 

  
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 IN WITNESS WHEREOF, the undersigned parties have duly executed this Agreement as of the date
first written above. 
  

													
	PLANAR SYSTEMS, INC.	 	DAVID SANDBERG
					
	By: 	 	 	 		 	By: 	 	 
		 	Name: 	 	Gregory H. Turnbull	 		 		 	Name: 	 	David Sandberg
		 	Title: 	 	Chairman of the Board	 		 		 		 	

  

																	
	THE RED OAK FUND, LP	 		 	PINNACLE PARTNERS, LLC
					
	By: 	 	Red Oak Partners, LLC, its general partner	 		 	By: 	 	Pinnacle Capital, LLC, its investment manager
						
		 	By: 	 	 	 		 	By: 	 	Red Oak Partners, LLC, its managing member
		 		 	 Name: 

Title: 
	 	 David Sandberg
 Managing
Member
	 		 		 	  
 By: 
	 	 
		 		 		 		 		 		 		 	Name: 	 	David Sandberg
		 		 		 		 		 		 		 	Title: 	 	Managing Member
			
	RED OAK PARTNERS, LLC	 		 	PINNACLE FUND, LLLP
					
	By: 	 	Red Oak Partners, LLC, its general partner	 		 	By: 	 	Pinnacle Partners, LLC, its general manager
						
		 	By: 	 	 	 		 	By: 	 	Pinnacle Capital, LLC, its investment manager
		 		 	 Name: 

Title: 
	 	 David Sandberg
 Managing
Member
	 		 	  
 By: 
	 	  
 Red Oak Partners, LLC, its managing
member

								
		 		 		 		 		 	By: 	 	 	 	 
		 		 		 		 		 		 		 	Name: 	 	David Sandberg
		 		 		 		 		 		 		 	Title: 	 	Managing Member

  
 8PediatRx Inc.: Exhibit 10.1 - Filed by newsfilecorp.com

CONFIDENTIAL 

BINDING TERM SHEET FOR (1) GRANISOL® AND AQUORALTM US
CO-
PROMOTION AGREEMENT, (2) SALE OF EX-US RIGHTS FOR GRANISOL

AND 
NON-BINDING TERM SHEET FOR THE ACQUISITION OF PEDIATRX
INC. 
BY APRICUS BIOSCIENCES, INC. 

  January 26, 2012 

	
      1. Parties 
	
      (1) Apricus Biosciences, Inc., a Nevada corporation with
      its principal address at 11975 El Camino Real, Suite 300 San Diego, CA
      92130 (“APRICUS”); and 

	  	
      

	  	
      (2) PediatRx Inc., a Nevada corporation with its
      principal address at 405 Trimmer Rd., Suite 200, Califon, NJ 07830
      (“PEDIATRX”). 

	  	
      

	2. Co-Promotion
Agreement in U.S.
      for Granisol and Aquoral 	
      PEDIATRX owns or has co-promotion rights to the U.S.
      Products (as defined below), including (a) the U.S. Abbreviated New Drug
      Application (“ANDA”) to the branded generic drug Granisol (the “Granisol
      U.S. Regulatory Filing”) (granisetron HCl) oral solution, ANDA #078334 and
      (b) Aquoral (Oxidised Glycerol Triester (OGT) based liquid delivered by an
      oral spray for the management of Xerostomia) US NDC
      No. NHRIC 8546.0001.40 (collectively, the “U.S. Products”). 

	  	
      

	  	
      PEDIATRX desires to enhance the marketing of the U.S.
      Products in the U.S. by enlisting the support and participation of APRICUS
      in the U.S. Products promotion and detailing effort. 

	  	
      

	  	
      APRICUS and PEDIATRX agree to enter into a definitive Co-
      Promotion Agreement (“Co-Promotion Agreement”) for Granisol and to assign
      the PEDIATRX Co-Promotion Agreement with Bi-Coastal for Aquoral in the
      U.S. to APRICUS by February 13, 2012 according to the terms and conditions
      as described in Exhibit A attached hereto. 

	 
	
      

	  	
      The Co-Promotion Agreement shall also include a covenant
      by PEDIATRX not to license to any third party any additional co- promotion
      rights in the non-exclusive states as defined in Schedule A, Section 1,
      for a period of five (5) years from the Effective Date of the Co-Promotion
      Agreement if the Merger described in Section 4 herein does not occur. For
      clarity, APRICUS will continue to have full co- promotional rights in the
      non-exclusive territories. 

	 
	
      

	  	
      Upon execution of this Term Sheet by both Parties,
      PEDIATRX will place an order for a full commercial batch of Gransiol
      (“Commercial Batch”) that has three full years of shelf life left with
      Therapex. APRICUS will pay to Therapex directly the cost of the Commercial
      Batch. APRICUS will receive the Commercial Batch as soon as
  

1

CONFIDENTIAL 

	  	
      possible after the date of the closing of the
      Co-Promotion Agreement. APRICUS will provide to PEDIATRX up to 500 bottles
      of Granisol from the Commercial Batch for PEDIATRX to replace that product
      whose shelf-life will expire currently with distributors and wholesalers.
      

	
      
	
       

	
      3. Sale of Ex-US Rights to Granisol 
	
      PEDIATRX desires to sell and assign to APRICUS all
      non-U.S. Granisol intellectual property owned or controlled by PEDIATRX
      (including trade secrets, know-how, patent applications, patents,
      trademarks and trademark applications and all other intellectual property
      of any kind whatsoever) (collectively, the “Non-US IP”) and including the
      rights to all regulatory approvals and the rights to make, have made,
      offer to sell, sell, import, pursue regulatory filings and commercialize
      Granisol in all countries and territories of the world outside of the U.S.
      (“Non-US Rights”). 

	
	
       

	  	
      APRICUS and PEDIATRX agree to enter into a definitive
      Sale Agreement (“Sale Agreement”) for GRANISOL for the Non-US IP and the
      non-US Rights by February 13, 2012. 

	
	
       

	  	
      The Sale Agreement shall also include a covenant not to
      compete in the non-US Territory in the field of anti-emetic drugs by
      PEDIATRX, its officers and board members for a period of seven (7) years
      from the Effective Date of the Sales Agreement along with other terms and
      conditions that are standard for such agreements. 

	
      
	
       

	
      4. Merger of PEDIATRX and APRICUS      
	
      APRICUS is a public US company whose shares are traded on
      the NASDAQ Capital Market and PEDIATRX is a public US company whose shares
      trade on the OTCBB. 

	
	
       

	  	
      APRICUS expects to acquire 100% of the outstanding voting
      common stock of PEDIATRX from the PEDIATRX Shareholders (the “Shares”)
      through a merger (the “Merger”) that will occur in the following manner:
      

	
	
       

	  	
      (a) Signing of this Term Sheet by APRICUS and PEDIATRX
      (collectively, the “Parties”); 

	  	
      (b) Due diligence occurs and a definitive merger
      agreement (“Merger Agreement”) is negotiated and signed by the Parties;
      

	  	
      (c) APRICUS to prepare and file with the SEC a Form S-4
      registering its common shares to be exchanged for the Shares; 

	  	
      (d) PEDIATRX to prepare, file with the SEC and mail a
      proxy to send to its shareholders to approve the Merger; 

	
      
	
      (e) The PEDIATRX shareholders approve the Merger;
  

	
      
	
      (f) The Merger closes (the “Merger Closing”); and
  

	
      
	
      (g) PEDIATRX will become a wholly-owned subsidiary of
    APRICUS through a reverse triangular merger or in the most tax efficient
      method determined
    by PEDIATRX and APRICUS. 

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CONFIDENTIAL 

 

	  	
      Depending on whether or not SEC review occurs for the S-4
      or the Proxy, the Merger is currently estimated to close by no later than
      April 30, 2012, or another date as mutually agreed by APRICUS and
    PEDIATRX. 

	 	
       

	  	
      Pursuant to the Merger, all outstanding voting common
      stock of PEDIATRX will be exchanged for the right to receive APRICUS’s
      registered shares of common stock described in Paragraph 5(b) herein and
      PEDIATRX will receive certain cash consideration as described in Paragraph
      5(b) at the Merger Closing. David Tousley will terminate all 690,000 of
      his stock options and PEDIATRX will make best efforts to gain agreement to
      terminate the remaining 112,500 options and 515,000 warrants of PEDIATRX
      by or before the Merger Closing. In no case, however, will the Merger
      compensation described in Section 5 (b) herein increase. 

	 	
       

	  	
      APRICUS expects that PEDIATRX will have no other net
      company liabilities at the Merger Closing other than $675,000, which may
      include unpaid employment, consulting and PEDIATRX start-up costs, notes
      payable and other debt after considering working capital assets and
      working capital liabilities on a net basis. APRICUS agrees to assume up to
      $675,000 in net company liabilities and to pay such liabilities within a)
      with regard to the notes payable, 5 calendar days from the Merger Closing
      and, b) with regard to the other liabilities, 15 calendar days of the
      Merger Closing. 

	 	
       

	  	
      Within sixty days after the Merger Closing, APRICUS and
      PEDIATRX shall undertake a working capital adjustment and the Holdback
      Common Stock Merger Consideration (as defined in Section 5 herein) will be
      adjusted accordingly by the amount by which the current assets of PEDIATRX
      less the current liabilities of PEDIATRX at the time of the Closing Date
      (the “Net Working Capital”) differs from the $675,000. 

	 	
       

	5. Consideration 	
      (a) For Co-Promotion Agreement and Sale Agreement and
      No Shop Provision. PEDIATRX will receive the following
      consideration from APRICUS for the signing and closing of the Co-Promotion
      Agreement, Sale Agreement and as consideration for the No Shop Provision
      contained in Section 22: 

	 	
       

	  	
           (i) $325,000 in cash to be paid
      to PEDIATRX on the date that both the transactions described in the
  Co-Promotion Agreement and Sale Agreement have been executed.  

3

CONFIDENTIAL 

 

	  	
      (b) For Merger. PEDIATRX Shareholders will receive
      the following consideration from APRICUS for the Merger at the Merger
      Closing (unless indicated below) as follows: 

	 
    	
      

	  	
            (i) $3,600,000 in common
      stock of APRICUS (the “Common Stock Merger Consideration”); and 

	  	
            (ii) $400,000 in common
      stock of APRICUS that will be held back for a period of six (6) months
      (the “Holdback Period”) from the PEDIATRX shares held by Cameron Durrant
      and David Tousley (collectively the “Holdback Shareholders”) as an
      indemnity for breaches of PEDIATRX’s representations and warranties and
      for any shortfall in the Net Working Capital (the “Holdback Common Stock
      Merger Consideration”). 

	 
    	
      

	  	
      PEDIATRX Shareholders will receive $3,600,000 of the
      Common Stock Merger Consideration at the Merger Closing. Once the Holdback
      Period has expired, then PEDIATRX will be required to distribute the
      remaining portion of its Holdback Common Stock Consideration to the
      Holdback Shareholders, net of any claims or pending claims. 

	 
    	
      

	  	
      The share exchange ratio of the PEDIATRX Shares and the
      APRICUS shares will be set based on the average of the closing prices of
      APRICUS common stock on the Nasdaq Capital Market for the ten trading days
      from either as applicable (a) the fifteenth trading day before the agreed
      Merger Closing Date to the sixth trading day before the Merger Closing
      Date or (b) the fifteenth trading day before the termination day of the
      Holdback Period to the sixth trading day before the termination day of the
      Holdback Period. 

	 
    	
      

	6. Merger Agreement Non- Compete 	
      The Merger Agreement shall include a covenant not to
      compete in (a) the US Territory in the field of antiemetic drugs and (b)
      in the world in the field of Xerostomia or dry mouth by the PEDIATRX
      officers and board members each for a period of seven (7) years from the
      Effective Date of the Merger Agreement along with other terms and
      conditions that are standard for such agreements. 

	 
    	
      

	7. PEDIATRX and APRICUS Efforts 	
      PEDIATRX and APRICUS will make reasonable efforts to
      enter, sign and close the Co-Promotion Agreement, Sales Agreement and the
      Merger. 

	 
    	
      

	8. Conduct of PEDIATRX prior to the Merger
    	
      After the date of this Term Sheet, and until this Term
      Sheet either terminates or is replaced by the Merger Agreement, PEDIATRX
      shall continue to operate its business and its underlying assets in the
      ordinary course according to its past commercial practices and shall
    

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CONFIDENTIAL 

 

	  	
      not sell, license or otherwise dispose of any of its
      assets other than in the ordinary course of business according to its past
      commercial practices. 

	 
    	
      

	  	
      PEDIATRX shall not issue any additional securities or pay
      any dividends, bonuses or other distributions, or grant stock or stock
      options or warrants to its stockholders, employees, officers or directors
      or enter into any new employment, consulting, licensing, partnership or
      other agreements, or settlements or enter into any litigation outside the
      ordinary course of its business and according to its past commercial
      practices. 

	 
    	
      

	  	
      PEDIATRX shall maintain the cash on the financial books
      of the company in the ordinary course and shall not dividend any cash to
      any party or declare any stock repurchase that is not in the ordinary
      course of business. 

	 
    	
      

	  	
      Prior to the Closing of the Merger, the Company shall
      terminate the lock-up of any shares of PEDIATRX held by Cameron Durrant
      and David Tousley and permit them to be exchanged for the Common Stock
      Merger Consideration described herein, subject to the Holdback. 

	  	
      

      

	9. Merger Tax & Accounting Treatment
    	
      It is expected that the Merger will constitute a tax-free
      reorganization for U.S. Federal income tax purposes. Final structure of
      the transaction may be modified as a part of tax planning but will not
      change any of the economic terms outlined in this term sheet. 

	 
    	
      

	10. Merger Securities Law Matters/Stock
      Sale Plan 	
      APRICUS and PEDIATRX will agree on a sale plan for the
      orderly distribution of the shares of APRICUS’s common stock to be sold by
      the officers and directors of PEDIATRX. 

	 	 
	11.
      Seller’s Board & Stockholder Approval 	
      PEDIATRX will obtain the approval of its Board to enter
      into a) the Co-Promotion Agreement and Sale Agreement, and b) the Merger
      and c) will be required to obtain the approval of its shareholders for the
      Merger. 

	 
    	
      

	  	
      APRICUS will obtain the approval of its Board to enter
      into the Co- Promotion Agreement and Sale Agreement and the Merger.
      APRICUS is not required to obtain approval from its stockholders for
      Co-Promotion Agreement, Sales Agreement or Merger.

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CONFIDENTIAL 

 
	12. Merger Agreement Representations,
      Warranties, Indemnities & Other Provisions 	
      In the Merger Agreement, each party will make customary
      representations and warranties (which would survive the Closing), and will
      provide customary indemnities relating to the business, financial
      condition, contracts, liabilities and employees as applicable. The Merger
      Agreement will also contain customary covenants, closing conditions,
      warrantees, indemnification and other provisions. 

	     	
       

	13. Due Diligence/Access   	
      The Parties shall use reasonable commercial efforts to
      conduct joint due diligence relating to the Co-Promotion Agreement and
      Sale Agreement and the Merger in a timely manner. 

	
        

	
      The Parties shall afford each other reasonable access to
      personnel, properties, contracts, books and records and all other
      documents and data, in each case, to the extent relating to their assets.      

	     	
       

	14. Consents 	
      The Parties agree to cooperate with each other and
      proceed, as promptly as is reasonably practicable, to use commercially
      reasonable efforts to prepare and file, if necessary, any notifications
      required by any governmental or private entity and to seek to obtain all
      necessary consents and approvals from lenders, landlords, government
      entities and any other thirty party whose consent to the Co-Promotion
      Agreement, Sale Agreement and Merger might be required, and to comply with
      all other legal or contractual requirements for, or preconditions to, the
      execution and consummation of the Co- Promotion Agreement, Sale Agreement
      and the Merger. 

	     	
       

	15. Confidentiality 	
      The Parties entered into a Confidentiality Agreement,
      dated November 18, 2011 (“CDA”). The existence, status and terms of their
      negotiations and agreements regarding the Co-Promotion Agreement, Sale
      Agreement and the Merger shall also be subject to the CDA. Upon the
      signing of this Term Sheet, the Parties would make a joint public
      announcement concerning the Co-Promotion Agreement, Sale Agreement and
      Merger. 

	     	
       

	16. Signings & Closings   	
      The date for the signing and closing of the Co-Promotion
      Agreement and Sale Agreement are described in Paragraphs 2 and 3 herein.      

	
         

	
      The Parties shall use their reasonable commercial
      efforts, subject to the terms and conditions contained herein and subject
      to uncertainties of review time, if any by the SEC, if any, to execute the
  Merger Agreement and to close the Merger at a mutually agreed date.  

	     	
       

	17. Governing Law/Venue 	
      This Term Sheet shall be governed by the law of the State
      of California, except for its conflicts of law provisions. All disputes
      hereunder shall be adjudicated by the applicable state and federal courts
      in San Diego County, California. 

   

6

CONFIDENTIAL 

 

	18. Binding/Non- binding Provisions       	
      Paragraphs 2, 3, 5(a), 7, 8, 11(a), 11(b), 13, 14, 15,
    17, 18, 19, 20, 21 and 22 shall be binding obligations of the Parties.    

	
       

	
      Except for the above paragraphs described in this
      Paragraph 18, the remaining paragraphs of this Term Sheet relating to the
      Merger should be viewed as an indication of good faith interest only
      regarding a transaction on the general terms and conditions outlined
      herein and does not create a binding obligation, fiduciary relationship or
      joint venture between the parties. 

	
       

	19. Termination 	
      This Term Sheet and the obligations hereunder relating
      hereto may be terminated: 

	     	
       

	  	
            (a) by mutual written
      consent of APRICUS and PEDIATRX; or 

	     	
       

	  	
            (b) by APRICUS by written
      notice to PEDIATRX if: 

	     	
       

	  	
                 
      (i) the Co-Promotion Agreement or Sale Agreement has not been signed and
      closed by
      February 
                
    13, 2012 or by a mutually agreed upon date by APRICUS and PEDIATRX; or    

	     	
       

	  	
                 
      (ii) APRICUS’s finding of a material adverse matter during its due
      diligence review; or 

	     	
       

	  	
                 
      (iii) APRICUS’s Board does not approve the Merger; or 

	     	
       

	  	
                 
      (iv) the Merger Agreement has not been signed by a mutually agreed upon
      date by APRICUS and PEDIATRX. 

	     	
       

	        	
            (c) by PEDIATRX by written
      notice to APRICUS if: 

	     	
       

	  	
                 
      (i) the Co-Promotion Agreement or Sale Agreement has not been signed and
      closed by
      February 
                
    13, 2012 or by a mutually agreed upon date by APRICUS and PEDIATRX; or    

	     	
       

	  	
                 
      (ii) the Merger Agreement has not been signed by a mutually agreed upon
      date by APRICUS and PEDIATRX; or 

	     	
       

	  	
                 
      (iii) the PEDIATRX Shareholders do not approve the Merger. 

	     	
       

	20. Consideration if No Merger Closing
      Occurs 	
      If the Merger does not occur then PEDIATRX shall keep the
      $325,000 to be paid to it pursuant to Paragraph 5(a) herein and it shall
      also receive a payment of $1,000,000 of APRICUS’s unregistered common
      stock, other than as a result of (a) 

7

CONFIDENTIAL 

 

	  	
      PEDIATRX filing for bankruptcy or (b) if the GRANISOL asset has otherwise
      been
      materially impaired, in which case the payment of $1,000,000 of APRICUS’s unregistered common
      stock shall not be paid.

	 	  
	  	The unregistered common stock will be
      issued pursuant to an exemption from the Securities Act of 1933, as
      amended, and will include resale S-3 registration rights if qualified or
      other registration rights if not. APRICUS and PEDIATRX will agree on a
      sale plan for the orderly distribution of the shares of APRICUS’s common
      stock to be sold by such persons or entities. 
	 	  
	  	The APRICUS shares will be set based
      on the average of the closing prices of APRICUS’s common stock on Nasdaq
      Capital Market for the ten trading days from the fifteenth trading day
      before the agreed Closing Date to the sixth trading day before the
      termination date of the Merger. 
	 	  
	  	If the Merger does not occur, then
      APRICUS will retain all rights it has under the Co-Promotion Agreement
      (including the assigned Bi- Coastal Co-Promotion Agreement) and the Sale
      Agreement. 
	 	  
	21. Expenses 	Each party will be responsible for
      their own business, legal and regulatory counsels and other expenses in
      consummating the Co- Promotion Agreement, Sale Agreement and the Merger
      and none of either Party’s expenses in consummating these transactions
      will become obligations of the other Party. 
	 	  
	22. No- Shop 	Seller agrees not to solicit any
      other offers from third parties and will discontinue any other business
      discussions regarding the Co- Promotion Agreement and the Sale Agreement
      until March 1, 2012 or sale of the Company or license of its assets until
      May 15, 2012 if the Merger closing has not yet occurred by that time (the
      “No-Shop Period”). 
	 	  
	  	In the case PEDIATRX receives an
      unsolicited offer during the No- Shop Period, PEDIATRX will send the
      received offer to APRICUS within 2 business days. 
	 	  
	23. Merger Agreement 	The Merger Agreement shall contain
      additional customary terms and conditions for merger agreements as agreed
      by the parties. 
	 	  
	24. Disclosure 	The existence and terms of the Term
      Sheet are confidential and shall not be publicly disclosed, except to the
      extent required under the Securities Exchange Act of 1934.

8

CONFIDENTIAL 

 

          Unless signed this Term Sheet will expire on January 26, 2012.
If the terms and conditions described above are acceptable to the parties below,
please so indicate by your signatures below.

APRICUS BIOSCIENCES, INC 

 

By:   ss/ Bassam
Damaj__________________ 
Name: Bassam Damaj, Ph.D. 
Title:
President and Chief Executive Officer 
Date: January 26, 2012 

 

Agreed and Accepted: 

PEDIATRX INC 

 

By:   ss/ Cameron
Durrant                                   

Name: Cameron Durrant, MD, MBA 
Title: President and Chief
Executive Officer 
Date: January 26, 2012

9

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