Document:

Security Agreement

 Exhibit 10.2 
 SECURITY AGREEMENT 
 Security Agreement (this
“Agreement”), dated as of March 15, 2011, between Titan Pharmaceuticals, Inc (“Obligor”) in favor of Deerfield Private Design Fund II, L.P., Deerfield Private Design International II LP., Deerfield Special
Situations Fund, L.P. and Deerfield Special Situations Fund International Limited (together, the “Secured Party”). 
 W I T N E S S E T H: 
 WHEREAS, Obligor has entered into a Facility
Agreement, dated as of the date hereof (the “Facility Agreement”), with the Secured Party; 
 NOW,
THEREFORE, in consideration of the mutual agreements set forth herein, Obligor and the Secured Party agree as follows: 
 1.
Grant of Security Interest. 
 (a) To secure payment and performance of the Obligations (as hereafter defined), Obligor
hereby grants to Secured Party a security interest in all property and interests in property of Obligor, whether now owned or hereafter acquired or existing, and wherever located (together with all other collateral security for the Obligations at
any time granted to or held or acquired by Secured Party, collectively, the “Collateral”), including, without limitation, the following: 
  

	 	(i)	all Accounts; 

  

	 	(ii)	all Receivables; 

  

	 	(iii)	all Equipment; 

  

	 	(iv)	all General Intangibles; 

  

	 	(v)	all Inventory; 

  

	 	(vi)	all Investment Property ; and 

  

	 	(vii)	all proceeds and products of (i), (ii), (iii), (iv) (v) and (vi). 

 Notwithstanding the foregoing, the term “Collateral” shall expressly exclude any interest of the Borrower in Probuphine which has been licensed, transferred, assigned, sold and/or contributed by
the Borrower to any Person (other than an Affiliate) at any time. 
 (b) Perfection of Security Interests. 

(i) Obligor authorizes Secured Party (or its agent) to file at any time and from time to time such financing statements with respect to
the Collateral naming Secured Party or its designee as the secured party and Obligor as debtor, as Secured Party may require, and including any other information with respect to Obligor or otherwise required by part 5 of

 
Article 9 of the UCC of such jurisdictions as Secured Party may determine, together with any amendment and continuations with respect thereto, which authorization shall apply to all financing
statements filed on or after the date hereof. Except as otherwise permitted by Section 9-509(d)(2) of the UCC, in no event shall Obligor at any time file, or permit or cause to be filed, any correction statement or termination statement with
respect to any financing statement (or amendment or continuation with respect thereto) naming Secured Party or its designee as secured party and Obligor or any affiliate of Obligor as debtor without the prior written consent of Secured Party.

 (ii) Obligor shall take any other actions reasonably requested by Secured Party from time to time to cause the attachment
and perfection of, and the ability of Secured Party to enforce, the security interest of Secured Party in the Collateral. 
 2.
Covenants. Obligor covenants that: 
 (a) it shall at all times: (i) be the sole owner of each and every item of
Collateral and (ii) defend the Collateral against the claims and demands of all persons except for Permitted Liens as defined in the Facility Agreement; 
 (b) it will comply with the requirements of all agreements relating to premises where any Collateral is located except where the necessity of compliance therewith is contested in good faith by appropriate
proceedings or where the failure to so comply, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect; 
 (c) it will give Secured Party at least twenty (20) days’ prior written notice of any change to its legal name; 
 (d) it will give Secured Party at least twenty (20) days’ prior written notice of any change to its chief executive office or its mailing address; and 

(e) it will give Secured Party twenty (20) days’ prior written notice of any change to its type of organization, jurisdiction
of organization or other legal structure. 
 (f) in the event Obligor exercises the election described in Section 2.2(b) of
the Facility Agreement, it shall direct the applicable payors under all agreements that generate Prepayment Revenue (as defined in the Facility Agreement) to remit 75% of such Prepayment Revenue to a collection account structured in a manner
reasonably satisfactory to Secured Party which will be swept monthly to Secured Party and the proceeds thereof applied by Secured Party to repay the Loan pursuant to such Section. 

3. Remedies. 
 (a) Upon the occurrence and during the continuance of an Event of Default (as defined in the Facility Agreement), (i) Secured Party shall have the right to exercise any right and remedy provided for
herein, under the UCC and at law or equity generally, including, without limitation, the right to foreclose the security interests granted herein and to realize upon any Collateral by any available judicial procedure and/or to take possession of and
sell any or all of the Collateral with or without judicial process; and (ii) with or without having the Collateral at 

  
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the time or place of sale, Secured Party may sell the Collateral, or any part thereof, at public or private sale, at any time or place, in one or more sales, at such price or prices, and upon
such terms, either for cash, credit or future delivery, as Secured Party may elect in compliance with the UCC. 
 4.
Representations and Warranties. Obligor hereby represents and warrants to Secured Party that: 

(a)      (i) Obligor is a corporation duly organized and validly existing under the laws of Delaware.

 (ii) the exact legal name of Obligor is as set forth on the signature page of this Agreement. Obligor has not, during the
past five years, been known by or used any other composite or fictitious name or been a party to any merger or consolidation, or acquired all or substantially all of the assets of any Person, or acquired any of its properties or assets out of the
ordinary course of business. 
 (iii) the chief executive office and mailing address of Obligor are located only at the address
identified as such on Schedule 4(a)(iii) and its only other places of business and the only other locations of Collateral, (other than Collateral in transit or out for repair), if any, are at the addresses set forth on Schedule 4(a)(iii).

 5. Expenses of Obligor’s Duties; Secured Party’s Right to Perform on Obligor’s Behalf. 

(a) Obligor’s agreements hereunder shall be performed by it at its sole cost and expense. 

(b) If Obligor shall fail to do any act which it has covenanted to do hereunder which such failure is not cured within thirty
(30) days following notice of such failure by Secured Party to Obligor, Secured Party may (but shall not be obligated to) do the same or cause it to be done, either in its name or in the name and on behalf of Obligor, and Obligor hereby
irrevocably authorizes Secured Party so to act. 
 6. No Waivers of Rights hereunder; Rights Cumulative. 

(a) No delay by Secured Party in exercising any right hereunder, or in enforcing any of the Obligations, shall operate as a waiver
thereof, nor shall any single or partial exercise of any right preclude other or further exercises thereof or the exercise of any other right. No waiver of any of the Obligations shall be enforceable against Secured Party unless in writing and
signed by an officer of Secured Party, and unless it expressly refers to the provision affected; any such waiver shall be limited solely to the specific event waived. 
 (b) All rights granted Secured Party hereunder shall be cumulative and shall be supplementary of and in addition to those granted or available to Secured Party under any other agreement with respect to
the Obligations or under applicable law and nothing herein shall be construed as limiting any such other right. 

  
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 7. Termination and Release. 

(a) This Agreement shall continue in full force and effect until all Obligations (other than contingent indemnification obligations)
shall have been paid and satisfied in full. Upon the payment in full of all Obligations (other than contingent indemnification obligations) and the termination or expiration of the Secured Party’s obligation to make Loans under the Facility
Agreement, the security interest granted hereby shall terminate automatically and all rights to the Collateral shall automatically revert to the Obligor. Upon any such termination, the Secured Party shall, at the Obligor’s expense, promptly
execute and deliver to the Obligor all releases and other documents as the Obligor shall reasonably request to evidence such termination and shall take such other action reasonably necessary for the release of the Liens created hereby on the
Collateral. For purposes of this Section 7(a), the term “Obligations” shall expressly exclude any obligations and/or liabilities of the Obligor to the Secured Party under the Royalty Agreement dated as of the date hereof by and
between the Obligor and the Secured Party (the “Royalty Agreement”) and under the Warrants. Accordingly, and for the avoidance of doubt, this Agreement and the related Lien of Secured Party in the Collateral shall terminate
simultaneously with payment in full of all obligations and liabilities of the Obligor to the Secured Party under the Notes, notwithstanding that any obligations and/or liabilities of the Obligor to the Secured Party shall continue to exist under the
Royalty Agreement and/or the Warrants. 
 (b) If any Collateral shall be sold, transferred or otherwise disposed of by the
Obligor in a transaction permitted by the Facility Agreement, then the Secured Party, at the request and sole expense of the Obligor, shall promptly execute and deliver to the Obligor all releases and other documents, and take such other action,
reasonably necessary for the release of the Liens created hereby on such Collateral. 
 8. Governing Law; Jurisdiction;
Certain Waivers. 
 (a) This Agreement shall be governed by and construed in accordance with the laws of the State of New
York applied to contracts to be performed wholly within such State. Any judicial proceeding brought by or against Obligor with respect to any of the Obligations or this Agreement may be brought in any court of competent jurisdiction in such State,
and, by execution and delivery of this Agreement, Obligor accepts for itself and in connection with its properties, generally and unconditionally, the non-exclusive jurisdiction of such court and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement. Obligor hereby waives personal service of any and all process upon it and consents that all such service of process may be made by certified or registered mail (return receipt requested) directed
to Obligor at its address set forth in Section 10, and service so made shall be deemed completed five (5) days after the same shall have been so deposited in the mails of the United States of America. Nothing herein shall affect the
right to serve process in any manner permitted by law or shall limit the right of Secured Party to bring proceedings against Obligor in the courts of any other jurisdiction. Obligor waives any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. Any judicial proceeding by Obligor against Secured Party involving, directly or indirectly, any matter or claim
in any way arising out of, 

  
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related to or connected with this Agreement or any related agreement, shall be brought only in a federal or state court located in The City of New York, State of New York. 

(b) EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CAUSE OF ACTION ARISING UNDER THIS AGREEMENT
OR ANY OTHER AGREEMENT DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE, AND EACH PARTY HEREBY CONSENTS THAT
ANY SUCH CAUSE OF ACTION SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO
THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. 
 9. Additional Definitions. As used herein: 

(a) All terms used herein which are defined in Article 1 or Article 9 of the UCC shall have the meanings given therein unless otherwise
defined in this Agreement. All references to the plural herein shall also mean the singular and to the singular shall also mean the plural unless the context otherwise requires. All references to Obligor and Secured Party pursuant to the definitions
set forth in the recitals hereto, or to any other person herein, shall include their respective successors and assigns. The words “hereof”, “herein”, “hereunder”, “this Agreement” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not any particular provision of this Agreement and as this Agreement now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.
The word “including” when used in this Agreement shall mean “including, without limitation”. 

“Obligations” means: 
 (1) the full and prompt payment by Obligor when due of all obligations and liabilities to Secured Party, whether now existing or hereafter arising, under the Financing Documents and the due performance
and compliance by Obligor with the terms thereof; 
 (2) any and all sums advanced in accordance with the terms
of the Financing Documents or applicable law by Secured Party in order to preserve the Collateral or to preserve the Secured Party’s security interest in the Collateral; and 

(3) in the event of any proceeding for the collection or enforcement of any obligations or liabilities of Obligor referred
to in the immediately preceding clauses (1) and (2) the reasonable expenses of re-taking, holding, preparing for sale, selling or otherwise disposing of or realizing on the Collateral, or of any other exercise by Secured Party of its
rights hereunder, together with reasonable and documented attorneys’ fees and court costs. 

  
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 “Person” or “person” shall mean any individual, sole
proprietorship, partnership, corporation limited liability company, limited liability partnership, business trust, unincorporated association, joint stock corporation, trust, joint venture or other entity or any government or any agency or
instrumentality or political subdivision thereof. 
 “UCC” shall mean the Uniform Commercial Code as in effect
in the State of New York and any successor statute, as in effect from time to time (except that terms used herein which are defined in the Uniform Commercial Code as in effect in the State of New York on the date hereof shall continue to have the
same meaning notwithstanding any replacement or amendment of such statute except as Secured Party may otherwise determine) or, when the context implies, the Uniform Commercial Code as in effect from time to time in any other applicable jurisdiction.

 The words “it” or “its” as used herein shall be deemed to refer to individuals and to business entities.

 10. Notices. Any communication required or permitted pursuant to this Agreement shall be deemed given (a) when
personally delivered to any officer of the party to whom it is addressed, (b) on the earlier of actual receipt thereof or five (5) days following posting thereof by certified or registered mail, postage prepaid, return receipt requested,
or (c) upon actual receipt thereof when sent by a recognized overnight delivery service, or (d) upon actual receipt thereof when sent by telecopier to the number set forth below with telephone communication confirming receipt and
subsequently confirmed by registered or certified mail, return receipt requested, or by recognized overnight delivery service to the address set forth below, in each case addressed to the applicable party at its address set forth below or at such
other address as has been furnished in writing by such party to the other by like notice: 
  

	 	(A)	If to Obligor: 

 400 Oyster
Point Road 
 Suite 506 
 South San Francisco, CA 94080 
 Attention: Chief Executive Office 

Telecopier: (650) 244-4956 
 With a copy to: 
 Loeb & Loeb LLP 

345 Park Avenue 

New York, NY 10154 
 Attention: Fran Stoller 
 Facsimile: (212) 214-0706 

 

	 	(B)	If to Secured Party: 

 Deerfield
Private Design Fund II, L.P. 
 780 Third Avenue,
37th Floor 

New York, New York 10017 

  
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 Attention: Structured Products 

Facsimile: (212) 599-3075 
 With a copy to: 
 Katten Muchin Rosenman LLP 

575 Madison Avenue 
 New York, New York 10022-2585 
 Attention: Mark I. Fisher 

Facsimile: (212) 940-6621 
 Any requirement under applicable law of reasonable notice by Secured Party to Obligor of any event shall be met if notice is given to Obligor in the manner prescribed above at least five (5) days
before (a) the date of such event or (b) the date after which such event will occur. 
 11. General.

 (a) This Agreement shall be binding upon the assigns or successors of Obligor and shall inure to the benefit of and be
enforceable by Secured Party and its successors, permitted transferees and permitted assigns. 
 (b) Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof in that jurisdiction or
affecting the validity or enforceability of such provision in any other jurisdiction. 
 [REMAINDER OF PAGE INTENTIONALLY LEFT
BLANK] 

  
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 Dated in New York, New York as of the date first above written. 

 

			
	OBLIGOR:
	
	TITAN PHARMACEUTICALS, INC.
		
	By:	 	 /s/ Sunil Bhonsle

		 	Name: Sunil Bhonsle
		 	Title: President
	
	SECURED PARTY:
	
	DEERFIELD PRIVATE DESIGN FUND II, L.P.
	
	By: Deerfield Capital, L.P., General Partner
	By: J. E. Flynn Capital LLC, General Partner
		
	By:	 	 /s/ David Clark

		 	Name: David Clark
		 	Title: Authorized Signatory
	
	 DEERFIELD PRIVATE DESIGN
 INTERNATIONAL II, L.P.

	
	By: Deerfield Capital, L.P., General Partner
	By: J. E. Flynn Capital LLC, General Partner
		
	By:	 	 /s/ David Clark

		 	Name: David Clark
		 	Title: Authorized Signatory

 SIGNATURE PAGE TO

 SECURITY AGREEMENT 

			
	DEERFIELD SPECIAL SITUATIONS FUND, L.P.
	
	By: Deerfield Capital, L.P., General Partner
	By: J. E. Flynn Capital LLC, General Partner
		
	By:	 	 /s/ David Clark

			
	Name:	 	David Clark
	Title:	 	Authorized Signatory

			
	
	DEERFIELD SPECIAL SITUATIONS FUND INTERNATIONAL LIMITED
		
	By:	 	 /s/ David Clark

		 	Name: David Clark
		 	Title: Authorized Signatory

  
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 SCHEDULE 4(a)(iii) 
 TO 
 SECURITY AGREEMENT 
 Chief Executive Office and Mailing Address of Obligor: 
 400 Oyster Point Blvd. 

Suite 505 
 South San Francisco, CA 94080

 Other Collateral Locations: 

NoneRoyalty Agreement

 Exhibit 10.3 
 ROYALTY AGREEMENT 
 This ROYALTY AGREEMENT (this
“Agreement”), dated March 15, 2011, is made by and between Deerfield Private Design Fund II, L.P., a Delaware limited partnership (“Design Fund II”), Deerfield Special Situations Fund, L.P., a
Delaware limited partnership (“DSS”), Deerfield TTNP Corporation, a Delaware corporation (“DTTNP” and together with Design Fund II and DSS, “Deerfield”) and Titan Pharmaceuticals,
Inc., a Delaware corporation (“Titan”). 
 Background Statement 

Whereas, pursuant to the Worldwide License Agreement between Hoechst Marion Roussel, Inc. (“Sanofi”) and Titan, having
an effective date of December 31, 1996, as amended by one amendment dated April 26, 2004 (as amended, the “Sanofi License”), Titan is the exclusive worldwide licensee of certain intellectual property relating to the
pharmaceutical compound Iloperidone; 
 Whereas, pursuant to the Sublicense Agreement between Titan and Novartis Pharma A.G.
(“Novartis”), having an effective date of November 20, 1997, as amended by three amendments dated November 30, 1998, April 10, 2001, and June 4, 2004 (as amended, the “Novartis Sublicense”),
Novartis is the exclusive sublicensee of certain of Titan’s rights and obligations under the Sanofi License; 
 Whereas,
pursuant to the Amended and Restated Sublicense Agreement between Novartis and Vanda Pharmaceuticals Inc. (“Vanda”), having an effective date of October 12, 2009 (the “Vanda Sublicence”), Vanda and Novartis
have entered into an agreement with respect to the sublicense of certain of Novartis’ rights under the Novartis Sublicense, as well as certain other rights of each of Vanda and Novartis, as described more fully in the Vanda Sublicense; and

 Whereas, in consideration of a one-time payment of $3,000,000 made by Deerfield to Titan on the Effective Date, Deerfield is
acquiring the right to receive certain payments as set forth herein; 
 Now, therefore, in consideration of the covenants and
obligations expressed herein, and intending to be legally bound, Deerfield and Titan agree as follows: 
 Statement of
Agreement 
 1. Definitions. Capitalized terms shall have the meaning set forth in this section. Unless the context requires
otherwise, words in the singular include the plural, words in the plural include the singular, and words importing any gender shall be applicable to all genders. If a term is defined as one part of speech (such as a noun), it shall have a
corresponding meaning when used as another part of speech (such as a verb). 
 (a) “Affiliate” means with
respect to any Person, each other Person that directly or indirectly, through one or more intermediaries, owns or controls, is controlled by or is under common control with, such Person. For the purpose of this Agreement, “control”
means the 

 
possession, directly or indirectly, of the power to direct or cause the direction of management and policies, whether through the ownership of voting securities, by contract or otherwise.

 (b) “Agreement” has the meaning set forth in the introductory paragraph. 

(c) “Business Day” means any day other than Saturday, Sunday or a day on which banks in the City of New York are
authorized or required to be closed. 
 (d) “Compound” has the meaning given such term in the Sanofi License as
of the date hereof. 
 (e) “DTTNP” has the meaning set forth in the introductory paragraph. 

(f) “Deerfield” has the meaning set forth in the introductory paragraph. 

(g) “Design Fund II” has the meaning set forth in the introductory paragraph. 

(h) “DSS” has the meaning set forth in the introductory paragraph. 

(i) “Earnings Report” means, during any period when Titan is obligated to file reports under the provisions of the
Securities Exchange Act of 1934, the Form 10-Q filed by Titan following each of the first three Quarters of its fiscal year and the Form 10-K filed by Titan following the fourth Quarter of its fiscal year, as long as such reports are timely filed.
If such reports are not timely filed, then the “Earnings Report” means the press release, Form 8-K or other form of public communication issued by Titan whereby it reports revenue for such period. 

(j) “Effective Date” has the meaning set forth in Section 3. 

(k) “Facility Agreement” means that Facility Agreement, dated as of the date hereof, between Design Fund II, DSS,
Deerfield Special Situations Fund International, Limited, Deerfield Private Design Fund International II, L.P. and Titan, as amended, supplemented and replaced from time to time. 

(l) “Fanapt Intellectual Property” means (i) all inventions, patents, patent applications, trade secrets, know-how,
technical data, laboratory results, clinical results, manufacturing methods, copyrights, trademarks and other data, know-how and intellectual property owned, licensed or controlled by Titan, whenever acquired, that are necessary to develop,
manufacture, have manufactured, use, promote, distribute, import, sell and offer for sale any Fanapt Product and (ii) any “Patents” or “Know-How” not otherwise included in subsection (i) of this definition. 

(m) “Fanapt Products” means all products, including any bulk or finished pharmaceutical composition containing the
Compound, whether as a sole active ingredient or in combination with another active ingredient, and in any formulation, such as would constitute a “Product,” “Depot Product,” or “Compound,” under any definition of such
terms in any License Agreement as of the date hereof and as of any future date, or that practices any valid claim under any unexpired Patent or incorporates any Know-How. 

  
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 (n) “Fanapt Regulatory Rights” means any licenses, permits, approvals,
codes, certifications and other authorizations or identifiers granted or required by any Governmental Authority required to manufacture, have manufactured, use, promote, distribute, import, sell and offer for sale any Fanapt Product. 

(o) “Fanapt Rights” means any right, title or interest of Titan or its Affiliates in and to any Fanapt Intellectual
Property, Fanapt Products or Fanapt Regulatory Rights, including, without limitation, as acquired or held by Titan pursuant to any of the License Agreements. 
 (p) “Governmental Authority” means any nation or government, any state or other political subdivision thereof, any municipal, local, city or county government, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. 
 (q)
“Know-How” means everything that would constitute Know-How as such term is defined in any of the License Agreements. 
 (r) “Legal Requirement” means any statute, law, treaty, rule, regulation, guidance, approval, order, decree, writ, injunction or determination of any Governmental Authority, court or
arbitrator of competent jurisdiction; and, with respect to any Person, includes all such Legal Requirements applicable or binding upon such Person, its business or the ownership or use of any of its assets. 

(s) “Lien” means any reservations of title, mortgage, claim, lien, security interest, pledge, hypothecation, escrow,
charge, option or other restriction or encumbrance of any kind. 
 (t) “License Agreements” means the Sanofi
License, the Novartis Sublicense and the Vanda Sublicense, in each case as such agreement may be amended or restated from time to time 
 (u) “Net Sales” shall be calculated in the manner described in the definition of Net Sales set forth in the Novartis Sublicense; provided, however, that Net Sales shall
include, in addition to sales of Products (as defined in the Novartis Sublicense) by Novartis, all sales of Fanapt Products by Titan or any its Affiliates and all sales by any direct or indirect assignee or licensee of Titan or any of its
Affiliates; provided further, however, that Net Sales shall not include (i) sales of Products in the ROW Territory by Vanda, its Affiliates, assignees or licensees pursuant to the Vanda Sublicense and (ii) sales of
Fanapt Products by Persons other than Titan, Novartis or their Affiliates from which Titan receives, after the date hereof, no economic benefit. For purposes of the preceding sentence, Titan shall be deemed to receive an economic benefit from the
sale of Fanapt Products if (i) such sale is made pursuant to any assignment, license or sublicense of any Fanapt Rights by Titan or any of its Affiliates, and (ii) Titan or any of its Affiliates receives, after the date hereof, any
consideration for such sale or from any such assignment, license or sublicense of Fanapt Rights. 
 (v)
“Novartis” has the meaning set forth in the Background Statement. 
 (w) “Novartis Sublicense”
has the meaning set forth in the Background Statement. 

  
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 (x) “Party” means either Titan or Deerfield, and “Parties”
means both Titan and Deerfield. 
 (y) “Patents” means everything that would constitute Patents as such term is
defined in any of the License Agreements. 
 (z) “Person” means any natural person, corporation, limited
liability company, partnership, association, trust, organization, Governmental Authority or other legal entity. 
 (aa)
“Purchase Price” has the meaning set forth in Section 3. 
 (bb) “Quarter” means a
fiscal quarter of Titan. 
 (cc) “ROW Territory” has the meaning set forth in the Vanda Sublicense. 

(dd) “Royalty” has the meaning set forth in Section 2(a). 

(ee) “Royalty Term” means the period beginning on the Effective Date and ending December 31, 2019. 

(ff) “Sanofi” has the meaning set forth in the Background Statement. 

(gg) “Sanofi License” has the meaning set forth in the Background Statement. 

(hh) “Territory” means the world. 
 (ii) “Titan” has the meaning set forth in the introductory paragraph. 
 (jj) “Transfer” means any sale (or any transaction having the effect of a sale), assignment, conveyance of rights, deed of trust, Lien, license, sublicense, seizure or other transfer of
any sort and to any degree, voluntary or involuntary, including by operation of law. 
 (kk) “Vanda” has the
meaning set forth in the Background Statement. 
 (ll) “Vanda Sublicense” has the meaning set forth in the
Background Statement. 
 2. Royalty. 
 (a) Royalty Amount. In consideration of the payment of the Purchase Price by Deerfield, Titan shall pay to Deerfield a royalty (the “Royalty”) equal to 2.5% of Net Sales occurring
during the Royalty Term. 
 (b) Payment of the Royalty. No later than two Business Days following the later of
(i) the date Titan files its Earnings Report for each Quarter of its fiscal year (but in no event later than sixty days following the last day of each of the first three Quarters and one hundred twenty days following the fourth Quarter of each
fiscal year) and (ii) the date of receipt by Titan in immediately available funds of its royalty payment from Novartis for the applicable Quarter, Titan shall pay to Deerfield the Royalty for such Quarter. On the same day it makes a Royalty
payment pursuant to this Section 2(b), Titan shall deliver to Deerfield a written statement 

  
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showing all Net Sales during such Quarter and Titan’s computation of the Royalty for such Quarter. All Royalty payments shall be made by wire transfer of immediately available funds to the
account previously designated in writing to Titan by Deerfield for each of Design Fund II, DSS and DTTNP, allocated pursuant to Section 2(c), or such new or additional account(s) as Deerfield shall designate in writing to Titan at least
five Business Days prior to the date such Royalty payment shall be due. Titan may withhold from any payment of Royalty withholding taxes that it is required to withhold that are levied upon the Royalty by the United States or any state thereof,
provided that Titan shall deliver to Deerfield copies of the filed tax return reporting such payments and official receipts (or such other evidence of payment reasonably acceptable to Deerfield) evidencing that such payments were in fact received by
the applicable Governmental Authority. 
 (c) Allocation between Design Fund II, DSS and DTTNP. Unless otherwise agreed
by all Parties, each payment of the Royalty shall be allocated and paid 37.28% to Design Fund II, 7.8% to DSS and 54.92 % to DTTNP, in each case rounded to the nearest cent ($0.01). 

(d) Royalty Payments Following Termination. The termination of this Agreement, including termination due to the expiration of the
Royalty Term, shall not terminate the obligation of Titan, or its Affiliates, licensees or assignees, to pay any Royalty accrued prior to termination. Upon termination of this Agreement, Deerfield shall have the right to retain any Royalty already
paid by Titan under this Agreement. 
 (e) Delinquent Royalty Payments. Any Royalty not paid when due shall bear interest
at a rate equal to the lower of (i) the highest rate permitted by applicable law, and (ii) one and one-half percent (1.5%) per month, compounded monthly. 
 (f) Audit Right. Upon not less than fourteen days’ written notice, Deerfield shall have the right to audit the books and records of Titan relating to sales or other transactions included in
the definition of Net Sales for the purposes of determining the correctness of Titan’s computation and payment of the Royalty. Such audit may not be conducted more than once in any calendar year and shall be conducted during normal business
hours by a national public accounting firm selected by Deerfield at its cost and reasonably acceptable to Titan, provided that such accounting firm enters into a reasonable confidentiality agreement prior to commencing any such audit. Titan
shall provide such accounting firm with access to all pertinent books and records and shall reasonably cooperate with such accounting firm’s efforts to conduct such audits. If there has been an underpayment of the aggregate Royalty due for the
period being audited of more than $25,000, Titan shall reimburse Deerfield for the reasonable out-of-pocket costs (including accountants’ fees) incurred by Deerfield in connection with such audit. In the event Deerfield claims that any such
audit reveals an underpayment of the Royalty, Deerfield will make the audit papers for the relevant period available to Titan. 

  
 5 

 3. Purchase Price. As consideration for Titan’s payment of the Royalty, Deerfield shall pay to
Titan a one-time purchase price of $3,000,000 (the “Purchase Price”), which amount shall be paid in immediately available funds to an account specified by Titan on or before the date that is fifteen Business Days following the date
hereof (such date, the “Effective Date”). 
 4. Covenants of Titan. 

(a) Net Sales Records. Titan shall keep, or obtain from its sublicensees, complete, true and accurate books and records of all Net
Sales of Fanapt Products. Titan shall, as determined in its good faith business judgment or as reasonably requested by Deerfield, enforce its audit and inspection rights under all of the License Agreements and any other agreement relating to Fanapt
Products to which it is a party or a third-party beneficiary, and shall take all other commercially reasonable steps, in order to compile and maintain such books and records of Net Sales and to ensure such books and records are reasonably capable of
being audited upon Deerfield’s exercise of its rights pursuant to Section 2(f). Titan shall keep such books and records of Net Sales, or cause them to be retained and available for purposes of this Agreement, for at least two
(2) years following the Quarter to which they pertain. 
 (b) Maintenance of Fanapt Rights. Titan shall not take any
action, or fail to take any action or enforce any right, that is intended to, or would have the effect of, reducing Net Sales. 

(c) Maintenance of Rights Under License Agreements. Without the prior written consent of Deerfield, Titan shall not take any
action that would, or fail to take any action if such failure would, (i) modify, relinquish, diminish or terminate, or provide any Person with the right to modify, relinquish, diminish or terminate, any of Titan’s rights under any of the
License Agreements or (ii) modify or terminate, or provide any Person with the right to modify or terminate, any of the License Agreements. 
 (d) No Transfer Without Consent. For so long as the Facility Agreement is in effect, Titan shall not Transfer or consent to the Transfer of any portion of its (i) Fanapt Rights or
(ii) rights in, under, or to any of the License Agreements (including any right to receive all or any portion of any royalty or other payment thereunder), without the prior written consent of Deerfield. Following termination or expiration of
the Facility Agreement, Titan shall not Transfer or consent to the Transfer of any portion of its (i) Fanapt Rights or (ii) rights in, under or to any of the License Agreement (including any right to receive all or any portion of any
royalty or other payment thereunder) that Titan is obligated to pay to Deerfield, or that is necessary for Titan to receive amounts that, if received, it would be obligated to pay to Deerfield, without the prior written consent of Deerfield.

 (e) Liquidated Damages. If Titan breaches any of Sections 4(c)–(d), Deerfield shall receive, as liquidated
damages for such breach, forty million dollars ($40,000,000). Titan and Deerfield agree that, in the event of a breach of any of Sections 4(c)-(d), actual damages would be impractical to compute and further agree that the damages set forth
herein are a reasonable estimate of the damages Deerfield would actually suffer due to such breach. 
 (f) Other
Covenants. Titan shall promptly furnish to Deerfield copies of all written notices sent or actually received by a member of senior management of Titan or any of its 

  
 6 

 
Affiliates relating to any alleged breach, default, amendment, waiver, or termination under any of the License Agreements. Titan shall, at no cost or expense to Deerfield, take all actions, and
refrain from taking any other actions, necessary to maintain the License Agreements in full force and effect, including, without limitation, promptly fulfilling all of its obligations and enforcing all of its rights under the License Agreements.

 5. Representations and Warranties of Titan. Titan represents and warrants to Deerfield, as of the date hereof, that: 

(a) Organization. Titan is a corporation duly organized, validly existing and in good standing under the laws of the State of
Delaware. Titan has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as is now being conducted. 
 (b) Authority; Execution; Enforceability. (i) Titan has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement, (ii) no consent
of any party, including Sanofi, Novartis or any of their Affiliates, is required for Titan to execute, deliver and perform its obligations under this Agreement, and (iii) the execution and delivery of this Agreement and the performance of all
of its obligations hereunder have been duly authorized by Titan. This Agreement has been duly executed and delivered by Titan and constitutes the legal, valid and binding obligation of Titan, enforceable against Titan in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or other laws of general application relating to or affecting creditors’ rights generally. 

(c) Current Effect. (i) The Sanofi License and Novartis Sublicense and (ii) to Titan’s knowledge, the Vanda
Sublicense, are in full force and effect and neither Titan nor, to Titan’s knowledge, any other Person is in breach or default of any obligation thereunder. Titan has not granted any license or sublicense with respect to, or entered into any
other agreement to Transfer or otherwise encumber, its Fanapt Rights other than a security interest therein in favor of Deerfield. To Titan’s knowledge, other than the License Agreements, there is no other license, sublicense or other agreement
that is, or that contains any term, condition or provision which would, if exercised, be reasonably likely to materially reduce or impair Titan’s Fanapt Rights. 
 (d) No Violation. The execution, delivery and performance of this Agreement by Titan, and Titan’s compliance with the terms and conditions hereof, is not prohibited or limited by, and do not
and will not conflict with or result in the breach of or a default under, any provision of the certificate of incorporation, bylaws or other formation documents of Titan, any contract, agreement or instrument binding on or affecting Titan, including
any of the License Agreements, or any Legal Requirement applicable to Titan. 
 (e) Financial Condition. No insolvency
proceeding of any character, including, without limitation, bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary, has been commenced by or against Titan or any of its assets or properties, nor
has any such proceeding been threatened. Titan does not contemplate and has not taken any action in contemplation of the institution of any such proceeding. 

  
 7 

 (f) No Known Infringement or Invalidity. Neither (i) Titan’s possession or
exercise of its Fanapt Rights nor (ii) the License Agreements, including any actions permitted or taken thereunder, violate any Legal Requirement or infringe the valid and enforceable intellectual property rights of any Person. 

6. Termination. This Agreement shall terminate upon expiration of the Royalty Term. Section 2(d) and Section 7 shall
survive the termination of this Agreement. 
 7. General Provisions. 

(a) Independent Contracting Parties. The Parties are not joint venturers, partners, principal and agent, master and servant, or
employer and employee, and have no relationship other than as independent contracting parties. Neither Party shall be a legal representative of the other or have the power to bind or obligate the other in any manner. 

(b) Amendment and Modification. This Agreement may be amended, modified or supplemented only by an instrument in writing signed by
the Party against whom such amendment, modification or supplement is sought to be enforced. 
 (c) Waiver of Compliance;
Consents. The rights and remedies of the Parties are cumulative and not alternative and may be exercised concurrently or separately. No failure or delay by any Party in exercising any right, power or privilege under this Agreement shall operate
as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege shall preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or
privilege. To the maximum extent permitted by applicable law, (i) no waiver that may be given by a Party shall be applicable except in the specific instance for which it is given, and (ii) no notice to or demand on one Party shall be
deemed to be a waiver of any obligation of such Party or of the right of the Party giving such notice or demand to take further action without notice or demand as provided in this Agreement. Any consent required or permitted by this Agreement is
binding only if in writing. 
 (d) Notices. All notices, consents, waivers, acceptances, rejections and other
communications hereunder shall be in writing and shall be (i) delivered by hand, (ii) sent by facsimile transmission, or (iii) sent certified mail or by a nationally recognized overnight delivery service, charges prepaid, to the
address set forth below (or such other address for a Party as shall be specified by like notice): 
  

					
	If to Deerfield, to	 	Deerfield Management	 	
		 	780 Third Avenue, 37th Floor	 	
		 	New York, New York 10017	 	
		 	Attention: Structured Products	 	
		 	Facsimile: (646) 536-5662	 	
			
	Copy to:	 	Robinson, Bradshaw & Hinson, P.A.	 	
		 	101 North Tryon Street, Suite 1900	 	
		 	Charlotte, North Carolina 28246	 	
		 	Attention: Mark O. Henry	 	
		 	Facsimile: (704) 339-3428	 	

  
 8 

					
	If to Titan, to:	 	Titan Pharmaceuticals, Inc.	 	
		 	400 Oyster Point Blvd., Suite 505	 	
		 	South San Francisco, CA 94080	 	
		 	Attention: Chief Executive Officer	 	
		 	Facsimile: (650) 244-4956	 	
			
	Copy to:	 	Loeb & Loeb LLP	 	
		 	345 Park Avenue	 	
		 	New York, NY 10154	 	
		 	Attention: Fran Stoller, Esquire	 	
		 	Facsimile: (212) 214-0706	 	

 Each such notice or other communication shall be deemed to have been duly given and to be effective (x) if
delivered by hand, immediately upon delivery if delivered on a Business Day during normal business hours and, if otherwise, on the next Business Day; (y) if sent by facsimile transmission, immediately upon confirmation that such transmission
has been successfully transmitted on a Business Day before or during normal business hours and, if otherwise, on the Business Day following such confirmation, or (z) if sent by certified mail or a nationally recognized overnight delivery
service, on the day of delivery if delivered during normal business hours on a Business Day and, if otherwise, on the first Business Day after delivery. Notices and other communications sent via facsimile must be followed by notice delivered by hand
or by certified mail or overnight delivery service as set forth herein within five Business Days. 
 (e) Publicity. No
Party shall issue any press release or any other form of public disclosure regarding the existence of this Agreement or the terms hereof, or use the name of another Party hereto in any press release or other public disclosure, without the prior
written consent of the other Party, except (i) for a press release announcing the execution of this Agreement, which will be mutually approved by the Parties, (ii) for those disclosures and notifications contemplated by this Agreement or
containing information previously approved for disclosure by the other Party, (iii) as required by any Legal Requirement and solely to the extent necessary to satisfy such Legal Requirement and (iv) as required by the rules of any
securities exchange on which any securities of a Party are traded. 
 (f) No Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned or delegated by Titan without Deerfield’s
prior written consent. 
 (g) Governing Law. The execution, interpretation and performance of this Agreement, and any
disputes with respect to the transactions contemplated by this Agreement, shall be governed by the internal laws and judicial decisions of the State of New York applicable to contracts made and to be performed entirely within the State of New York.

 (h) Severability. If any provision contained in this Agreement shall for any reason be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been
contained herein, unless the 

  
 9 

 
invalidity of any such provision substantially deprives either Party of the practical benefits intended to be conferred by this Agreement. Notwithstanding the foregoing, any provision of this
Agreement held invalid, illegal or unenforceable only in part or degree shall remain in full force and effect to the extent not held invalid or unenforceable, and the determination that any provision of this Agreement is invalid, illegal or
unenforceable as applied to particular circumstances shall not affect the application of such provision to circumstances other than those as to which it is held invalid, illegal or unenforceable. 

(i) Construction. Each Party acknowledges that it and its attorneys have been given an equal opportunity to negotiate the terms
and conditions of this Agreement and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party or any similar rule operating against the drafter of an agreement shall not be applicable to the
construction or interpretation of this Agreement. 
 (j) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may be executed on signature pages exchanged by facsimile, in which event each Party shall promptly
deliver to the other such number of original executed copies as the other Party may reasonably request. 
 (k) Entire
Agreement. This Agreement constitutes the entire agreement and understanding of the Parties hereto in respect of the subject matter hereof. This Agreement supersedes all prior agreements, understandings, promises, representations and statements
between the Parties and their representatives with respect to the Royalty contemplated by this Agreement. 
 [Signature Page
Follows] 

  
 10 

 IN WITNESS WHEREOF, the Parties have caused this Royalty Agreement to be executed by
their duly authorized representatives as of the date first set forth above. 
  

			
	DEERFIELD PRIVATE DESIGN FUND II, L.P.
	By: Deerfield Capital, L.P., General Partner
	By: J. E. Flynn Capital LLC, General Partner
		
	By:	 	 /s/ David Clark

	Name:	 	David Clark
	Title:	 	Authorized Signatory
	
	DEERFIELD SPECIAL SITUATIONS FUND, L.P.
	By: Deerfield Capital, L.P., General Partner
	By: J.E. Flynn Capital LLC, General Partner
		
	By:	 	 /s/ David J. Clark

	Name:	 	David J. Clark
	Title:	 	Authorized Signatory
	
	DEERFIELD TTNP CORPORATION
		
	By:	 	 /s/ Jeffrey Kaplan

	Name:	 	Jeffrey Kaplan
	Title:	 	Treasurer
	
	TITAN PHARMACEUTICALS, INC.
		
	By:	 	 /s/ Sunil Bhonsle

	Name:	 	 Sunil Bhonsle

	Title:	 	 President

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