Document:

eXHIBIT
10.3

 

Patent
License Agreement

 

 

This Patent License Agreement (this “Agreement”)
is between The Penn State Research Foundation, a Pennsylvania nonprofit corporation (“PSRF”), and TNI BioTech, Inc.,
a publicly traded corporation organized and existing under the laws of Florida (“Company”). This Agreement will become
effective on the date of last signature (the “Effective Date”).

 

BACKGROUND

 

WHEREAS, Dr. Ian Zagon,
Dr. Patricia J. McLaughlin and Dr. Jill P. Smith, employees of The Pennsylvania State University (the “University”)
have made inventions entitled “Opioid Growth Factor and Cancer,” filed as The Pennsylvania State University Invention
Disclosure No. 96-1565; “Combination Therapy with Opioid Growth Factor and Taxanes for the Treatment of Cancer,” filed
as The Pennsylvania State University Invention Disclosure No. 2003-2839; and “Combined Therapy with Opioid Growth Factor
and Gemcitabine for the Treatment of Cancer,” filed as The Pennsylvania State University Invention Disclosure No. 2004-2890
pertaining to the methods, therapies, compounds and research of the inventions listed on Exhibit A (the “Inventions”);

 

WHEREAS, PSRF, a wholly
owned subsidiary of the University, is dedicated to fostering and advancing scientific research within the Commonwealth of Pennsylvania
and, in particular, within the University and is responsible for developing inventions made by employees of the University by evaluating
invention disclosures, pursuing patents, and pursuing licensing arrangements;

 

WHEREAS, PSRF is the
owner of Inventions as defined above;

 

WHEREAS, Company has
received and evaluated details of the Inventions and has represented to PSRF an interest in obtaining an exclusive license to Patent
Rights within the Field of Use (as those terms are defined in Section 1.2 herein) upon the terms and conditions hereinafter set
forth;

 

WHEREAS, the Company
desires to obtain a license for all of the Patent Rights (as hereinafter defined), to exploit the Inventions;

 

WHEREAS, PSRF has
determined that the exploitation of the Inventions by Company is in the interest of PSRF and is consistent with its educational
and research missions and goals; and

 

In consideration of the mutual obligations
contained in this Agreement, and intending to be legally bound, the parties agree as follows:

 

	1.	
        LICENSE

         

1.1 License Grant. Subject
to the preexisting rights, if any, of the Government of the United States created by the use of Government funding, and contingent
upon the execution of this License Agreement by both parties and Company’s payment of fee(s) described in Section 3.1.1,
PSRF grants to Company an exclusive, world-wide license (the “License”) to make, have made, use, lease, import, offer
for sale and sell Licensed Products under Patent Rights, to the extent not prohibited by other patents, in the Field of Use during
the Term (as such terms may be defined in Sections 1.2 and 6.1), unless this License Agreement shall be earlier terminated according
to the terms and conditions contained herein. The License includes the right to sublicense as permitted by this Agreement. No other
rights or licenses are granted by PSRF.

 

1.2 Related Definitions. The
term “Licensed Products” means products that are made, made for, used, imported, offered for sale or sold by Company
or its Affiliates or sublicensees as covered by the Patent Rights under this License Agreement and that would (i) in the absence
of the License, infringe (or, in the case of pending patent applications, upon issuance, would infringe) at least one claim of
the Patent Rights or (ii) use a process or method covered in whole or in part by a claim of the Patent Rights, whether the
claim is issued or pending.

 

The term “Field of Use” also
referred herein as the “Field” means development, production, use, and storage of Licensed Products, alone or in combination
with other treatments, for the prevention and/or treatment of oncology.

 

The term “Patent Rights” means
all of PSRF’s patent rights represented by or issuing from: (a) the United States patents and patent applications listed
in Exhibit A that have not been irretrievably lapsed, revoked or abandoned; (b) any continuation, continuation-in-part (to
the extent that the claims are directed to inventions which are fully supported by the patents and applications (a) or (b),
divisional, re-issue applications, renewals and re-examinations of (a) or (b); and (c) any foreign counterparts and extensions
of (a) or (b).

 

The term “Affiliate” means
a legal entity that is controlling controlled by or under common control with Company and that has executed either this Agreement
or a written joinder agreement agreeing to be bound by all of the terms and conditions of this Agreement. For purposes of this
Section 1.2, the word “control” means (x) the direct or indirect ownership of more than Fifty Percent (50%) of
the outstanding voting securities of a legal entity, (y) the right to receive Fifty Percent (50%) or more of the profits
or earnings of a legal entity, or (z) the right to determine the policy decisions of a legal entity.

 

The term “Sublicensee” shall
mean any third party licensed by Company and where the third party holds Five Percent (5%) or less equity in Company or where Company
holds less than Five Percent (5%) equity in the third party. In those cases where the equity exceeds Five Percent (5%), the third
party may only become a “Sublicensee” with the prior, written approval of PSRF, which shall not be unreasonably withheld.

 

The term “Sale” means any
bona fide transaction for which consideration is received or expected by Company or its Affiliate or sublicensee for the sale,
use, lease, transfer or other disposition of a Licensed Product to an independent third party. A Sale is deemed completed at the
time that Company or its Affiliate or sublicensee invoices, ships or receives payment for a Licensed Product, whichever occurs
first.

 

The term “Quarter” means each
three-month period beginning on January 1, April 1, July 1 and October 1.

 

The term “Net Sales” means
the consideration received or expected from, or the fair market value attributable to, each Sale, less Qualifying Costs that are
directly attributable to a Sale, specifically identified on an invoice or other documentation and actually borne by Company or
its Affiliates or sublicensees. For purposes of determining Net Sales, the term “fair market value” means the cash
consideration that Company or its Affiliates or sublicensees would realize from an unrelated buyer in an arm’s length sale
of an identical item sold in the same quantity and at the time and place of the transaction.

 

The term “Qualifying Costs”
means: (a) normal and customary discounts in the trade for quantity purchased; (b) credits or refunds for claims or returns
that do not exceed the original invoice amount; (c) Company’s bad debt actually written off, net of subsequent recoveries;
provided that such Licensed Products do not represent more than Five Percent (5%) of Sales.

 

1.3 Reservation of Rights by PSRF.
PSRF reserves the right to use and to permit others, including itself and the University, to use, for any purpose, the Patent Rights
outside the Field of Use. PSRF reserves the right to use, and to permit other non-commercial entities, including but not limited
to itself and the University, to use, the Patent Rights in the Field of Use for educational and research purposes.

 

1.4 U.S. Government Rights.
The parties acknowledge that the United States Government retains rights in intellectual property funded under any grant or similar
contract with a Federal agency as governed by the applicable provisions of the Federal funding agreements, including the 35 U.S.C.
Chapter 18 (the “Bayh-Dole Act”), 37 C.F.R. Part 401. The License is expressly subject to all applicable United States
Government rights, including, but not limited to, any applicable requirement that products, which result from such intellectual
property and are sold in the United States, must be substantially manufactured in the United States.

 

1.5 Sublicense Conditions.
The Company’s right to sublicense any aspects granted by PSRF under the License is subject to each of the following conditions:

 

(a) In each sublicense agreement, the
Company will prohibit the Sublicensee from further sublicensing and require the Sublicensee to comply with the terms and conditions
of this Agreement, including the payment of running royalties at amounts at least equal to the levels specified for payments by
Company to PSRF in Section 3. Each sublicense agreement granted by Company shall include an audit right by PSRF of the same scope
as provided in Section 4 with respect to Company. Company shall forward to PSRF a copy of reports received by Company from its
Sublicensees under the sublicenses as shall be pertinent to a royalty accounting under said sublicense agreements. No such sublicense
agreement shall contain any provision, which would cause it to extend beyond the term of this License Agreement. Company shall
not receive from sublicensees anything of value in lieu of cash payments in consideration for any sublicense under this
License Agreement, without the express prior written permission of PSRF.

 

(b) Until Company has reached a capitalization
of [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Dollars
(US $[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*])
as referenced in Section 3, Company is expressly prohibited from sublicensing, except that Company may petition PSRF for PSRF’s
prior written approval to sublicense. Only after receiving the prior written approval of PSRF may Company enter into sublicense
agreements with third parties wherein the Sublicensee(s) shall make, use, have made and have use of Patent Rights within the Field
of Use. After Company has attained a capitalization of [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Dollars (US $[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]), the Company may enter into sublicensing arrangements. Within Ten (10)
business days after the Company fully executes any sublicense agreement, the Company will deliver to PSRF a complete and accurate
copy of the entire sublicense agreement written in the English language. PSRF’s receipt of the sublicense agreement, however,
will constitute neither an approval of the sublicense nor a waiver of any right of PSRF or obligation of Company under this Agreement.

 

(c) In the event that Company causes or
experiences a Trigger Event (as defined in Section 6.4), all payments due to Company from its Affiliates or sublicensees under
the sublicense agreement will, upon notice from PSRF to such Affiliate or sublicensee, become payable directly to PSRF for the
account of Company. Upon receipt of any such funds, PSRF will remit to Company the amount by which such payments exceed the amounts
owed by Company to PSRF.

 

(d) Company’s execution of a sublicense
agreement will not relieve Company of any of its obligations under this Agreement. Company is primarily liable to PSRF for any
act or omission of an Affiliate or sublicensee of Company that would be a breach of this Agreement if performed or omitted by Company,
and Company will be deemed to be in breach of this Agreement as a result of such act or omission. In the event Sublicensee commits
a breach of this License Agreement, Sublicensee shall have a period of Twenty (20) days to cure said breach. In the event Sublicensee
does not fully cure the breach within this Twenty (20) day period, the sublicense shall be automatically terminated.

 

1.6 No License by Implication.
Nothing in this Agreement confers by estoppel implication or otherwise, any license or rights under any PSRF patent other than
the Patent Rights, regardless of whether such patents are dominant or subordinate to the Patent Rights.

 

	2.	
        DILIGENCE

         

2.1 Business Plan. Company
will deliver to PSRF, within Thirty (30) days after the Effective Date, a copy of an initial business plan for the use of
the Patent Rights (the “Business Plan”). Thereafter, Company will deliver to PSRF an annual updated Business Plan no
later than December 1 of each year during the Term. The Business Plan will include, at a minimum, the amount of money, number
and kind of personnel, and time, budgeted and planned for each phase of the development of the Patent Rights and the Licensed Product(s).
The Business Plan shall include a description of Company’s current funding efforts towards commercialization of the Patent
Rights, and the level of funding in each specific therapeutic indication of the Licensed Product(s).

 

2.2  INTENTIONALLY LEFT BLANK

 

2.3 Company’s Efforts.
Company will: (a) use commercially reasonable efforts to develop, commercialize, market and sell Licensed Products in a manner
consistent with the Business Plan; (b) will expend a minimum of [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Dollars (US $[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY
WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]) (per annum) to develop and commercialize Licensed Products
as soon as practicable, consistent with sound business practices and judgment; (c) be responsible for obtaining all requisite regulatory
approvals needed to use or sell Licensed Products in the Field of Use; and (d) make the first commercial sale of a Licensed Product
by December 31, 2016.

 

2.3.1 A Development
Committee (the “Committee”) shall be organized to monitor the clinical progress of the Licensed Products at the Company’s
expense. The Committee will consist of independent scientific and technical thought leaders that are highly regarded by the scientific
community in the Field of Use of each Licensed Product and at least one representative from each of PSRF and the Company. The Committee
will be responsible for (i) making recommendations to the Company’s management relating to the pre-clinical and clinical
development strategy; (ii) analysis and assessment of ongoing pre-clinical and clinical development of each Licensed Product; and
(iii) assisting the Company to prepare pre-clinical and clinical development budgets. The actions and opinions of the Committee
will be confidential, however, the PSRF representative may report clinical updates to a designated senior official at PSRF who
will agree to keep such information confidential. The Committee will meet at least Two (2) times per year. Said Committee shall
first meet within Three (3) months of the Effective Date and include one or more of the University inventors.

 

2.3.2 Diligence
Events. The Company will use commercially reasonable efforts to achieve each of the diligence events by the applicable completion
date listed in the table below for the first Licensed Product.

 

	DILIGENCE EVENT      	COMPLETION DATE
	Delivery to PSRF a completed initial business plan in a form acceptable to PSRF	February 28, 2013
	First dosing of first patient in a Phase III or other pivotal clinical trial for first licensed product	Thirty (30) months from completion of Phase II trials
	Filing of NDA for first Licensed Product	December 31, 2015
	First Sale of the first Licensed Product as covered by the NDA  	December 31, 2016

 

2.3.3Prior to
the Effective Date of this License Agreement, Company shall have provided documentation in the form of bank statements or an attorney
escrow account balance evidencing that it has capitalization of at least [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY
WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Dollars (US $[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY
WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]) such that Company can support a thorough, vigorous and diligent
program within the first Three (3) months after the Effective Date, properly supported financially and with appropriate and qualified
personnel and consultants as outlined in its Business Plan and is consistent with this stage of development. Capitalization may
consist of paid-in-capital to Company from the sale of capital stock to a group of investors, including angel investors, venture
capitalists and corporate partners. Capitalization may also include, but not be limited to, cash, line(s) of credit, retained earnings,
awards as well as grants and research contracts except those which are subcontracted from or to the University. Capitalization
is required to undertake the activities set forth in Company’s Business Plan, the minimum contents of which is attached as
Exhibit B. Failure to achieve the capitalization milestones listed hereinafter shall be a breach of this License Agreement.

 

2.3.4Company shall
provide to PSRF a copy of any private placement memoranda, offering documents or other materials provided to potential private
investors, whether said offering is pursuant to Regulation D of the Securities Act of 1933 or otherwise. PSRF shall treat and maintain
such documents as confidential.

 

2.3.5By July 1,
2013, Company shall have provided to PSRF documentation in the form of bank statements or an attorney escrow account balance evidencing
that it has a Capitalization of at least [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT*] Dollars (US $[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT*]) such that Company can support a thorough, vigorous and diligent program, properly supported
financially and with appropriate and qualified personnel and consultants as outlined in its Business Plan.

 

2.3.6Within Three
(3) years of the Effective Date of this License Agreement, Company shall have executed at least one (1) partnership agreement having
a monetary value of [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT*] Dollars (US $[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT*]) with a Corporate Partner having a market capitalization of at least [*CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Dollars (US $[*CONFIDENTIAL PORTION
OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]). The company shall be a for-profit
biopharmaceutical entity having a portfolio of therapeutic drugs and drug candidates. The objective of said partnership is to provide
Company with the ability to successfully manage the clinical and regulatory requirements as well as marketing, distribution and
manufacturing capacity to successfully commercialize Licensed Products and support additional clinical developments.

 

2.3.7Within Five
(5) years of the Effective Date of this License Agreement, Company shall have executed at least Three (3) partnership agreements
with at least Two (2) separate third-party Corporate Partners each having a market capitalization of at least [*CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Dollars (US $[*CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]) to fund operations described
in Business Plan and/or to leverage additional investment dollars via private placement or an initial public offering of Company’s
stock.

 

2.3.8“Corporate
Partner” shall mean: a) any biopharmaceutical entity which agrees to compensate (either in cash or non-cash) Company for
any one or more of the rights to market, distribute, sell, use, and/or transfer Licensed Product(s) or the completion of a milestone
resulting in a Milestone Payment. Any Corporate Partner that receives a sublicense of the Patent Rights shall also be a sublicensee.
“Corporate Partner Milestone Payment” shall mean a payment to Company from a Corporate Partner due upon achievement
of agreed upon regulatory or business milestones. Illustrative examples of these milestones include, but are not limited to: obtaining
permission from the regulatory authority of a Major Country to start human clinical trials with a Licensed Product, and meeting
agreed upon sales targets for a Licensed Product. “Major Country” shall mean the United States of America, Japan, Germany,
France, Great Britain, China or India.

 

2.3.9If PSRF determines
that Company has not fulfilled its obligations under this Section 2, PSRF shall furnish Company with written notice of the determination.
Within Sixty (60) days after receipt of the notice, Company shall either (i) fulfill the relevant obligation or (ii) negotiate
with PSRF a mutually acceptable schedule of revised diligence obligations, failing which PSRF may, immediately upon written notice
to Company, terminate this Agreement or grant additional licenses to third parties to the Patent Rights in the Field of Use pursuant
to Section 14 hereof.

 

	3.	
        FEES AND ROYALTIES

         

3.1 License Initiation Fee.
In partial consideration of the rights granted by this License Agreement, Company will pay to PSRF on the Effective Date a non-refundable,
non-creditable license initiation fee of [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT*] Dollars (US $[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT*]) and the immediate transfer of [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY
WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] ([*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH
THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]) shares of restricted common stock of TNI BioTech, Inc. 

 

3.2All stock issued has been duly authorized
by Company, as set forth in the corporate minutes, capitalization table, and Certificate of Incorporation attached as Appendix
A. PSRF’s shares of stock may not be diluted until Company has received total capital investment of [*CONFIDENTIAL PORTION
OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Dollars (US $[*CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]) (“Non-Dilution
Cap”). Company shall issue such additional non-voting shares to PSRF as are necessary for PSRF to maintain its initial percentage
equity interest, up to the Non-Dilution Cap. In the event the Company offers shareholder’s rights and preferences to other
Shareholders prior to the Company achieving capitalization equal to the Non-Dilution Cap, PSRF shall receive substantially similar
rights, with the exception of voting rights.

 

3.3 In the event Company proposes to sell
and issue its equity securities in any transaction after it achieves capitalization which exceeds the Non-Dilution Cap, PSRF shall
be entitled, but not obligated, to purchase its pro-rata share of such securities on substantially the same terms and conditions
as are then applicable to the holders of Company’s stock. The right of PSRF to receive additional securities due to dilutive
issuance and to participate in future equity financing of Company shall terminate immediately prior to the closing of a firm commitment
underwritten public offering including stock of at least [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Dollars (US $[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]), pursuant to an effective registration statement under applicable securities
laws then in effect covering the offering and sale of common stock for the account of Company to the public or the closing of the
sale of the Company or its assets to an independent third party.

 

3.4 Company’s failure to issue stock
to PSRF in accordance with Sections 3.1 or 3.2 shall constitute a material breach or default and shall be grounds for termination
of this Agreement pursuant to Section 6 hereof.

 

3.5 License Maintenance Fees.
In partial consideration of the License, Company will pay to PSRF, on each anniversary of the Effective Date a license maintenance
fee of [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]
Dollars (US $[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]).
License maintenance fees relate to the twelve-month period immediately prior to the anniversary date on which they are due.

 

3.6 Milestone Payments. In
partial consideration of the License, Company will pay to PSRF the applicable milestone payment listed in the table below after
achievement of each milestone event for each Licensed Product, whether such milestone event is achieved by Company, its Affiliates
or sublicensees. Company will provide PSRF with written notice within Thirty (30) days after achieving each milestone.

 

	 	a.	One Hundred Thousand Dollars ($100,000.00) upon initiation of each Phase II trial

 

	 	b.	Two Hundred Fifty Thousand Dollars ($250,000.00) upon initiation of each Phase III trial

 

	 	c.	One Million Dollars ($1 ,000,000.00) paid as follows: Two Hundred Fifty Thousand ($250,000.00) when NDA is accepted for review by the FDA and Seven Hundred Fifty Thousand ($750,000.00) when FDA approval to market is approved.

 

 

 

	MILESTONE	 	PAYMENT
	First dosing of first patient in a Phase II trial for each Licensed Product	 	25,000 shares
	 	 	 
	First dosing of first patient in a Phase III clinical trial for each Licensed Product	 	50,000 shares
	 	 	 
	First Sale of each Licensed Product	 	100,000 shares
	 	 	 
	Achievement of Twenty Million Dollars ($20,000,000) in cumulative Sales each Licensed Product covered by NDA's	 	200,000 shares

 

 

The term “Phase III clinical trial”
means a human clinical trial in any country that provides for randomized controlled trials of a product on a sufficient number
of patients to establish the safety and efficacy of a product and generate, if required, data to support regulatory approval in
the proposed therapeutic indications as more fully defined in 21 C.F.R. (S) 312.21(c) or equivalent in a foreign country.
For clarity, each time a milestone is achieved with respect to a Licensed Product, and then any other milestone payments with respect
to earlier milestones that have not yet been paid for said Licensed Product will be due and payable together with the milestone
payment for the milestone that is actually achieved. For additional clarity, milestones are due and payable on Licensed Products
and on products that, upon FDA approval, would become Licensed Products.

 

3.7Company shall ensure that each
of the relevant patent serial number(s) of Patent Rights appears on all Licensed Product(s) or their labels.

 

3.8 Earned Royalties. In partial
consideration of the License, Company will pay to PSRF during each Quarter a running royalty of [*CONFIDENTIAL PORTION
OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Percent ([*CONFIDENTIAL PORTION
OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]%) of Net Sales for each Licensed
Product. Such running royalty shall be payable as provided in Section 4.1 and 4.2.

 

3.9 Minimum Royalties. In partial
consideration of the License, Company will pay to PSRF the amount, if any, that the applicable minimum royalty listed in the table
below is greater than the Company’s actual aggregate earned royalties for all Licensed Products under Section 3.8 for
each year after the first Sale of each Licensed Product December 30, 2012.

 

	 	 	 
	Year:	 	Each Year
	MINIMUM:	 	Aggregate of $[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]

 

3.10 Sublicense
Fees. In partial consideration of the License, Company will pay to PSRF a sublicense fee of (i) [*CONFIDENTIAL PORTION
OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Percent ([*CONFIDENTIAL PORTION
OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]%) of the sum of all payments plus
the fair market value of all other consideration of any kind, (alternatively, Additional Sublicensing Revenue) received by Company
from sublicensees for sublicenses involving solely Patent Rights and (ii) [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY
WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Percent ([*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY
WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]%) of the sum of all payments plus the fair market value of
all other consideration of any kind, received by Company for all other sublicenses, including, but not limited to, sublicenses
involving Patent Rights together with non-PSRF Company owned or controlled intellectual property during the Quarter, other than:
(a) royalties paid to Company by a sublicensee based upon Sales by the sublicensee; (b) milestone payments paid to Company
by a sublicensee which Company pays to PSRF pursuant to Section 3.6 as a pass through; (c) equity investments in Company
by a sublicensee up to the amount of the fair market value of the equity purchased on the date of the investment; (d) loan
proceeds paid to Company by a sublicensee in an arms length, full recourse debt financing to the extent that such loan is not forgiven;
and (e) sponsored research funding, including clinical research funding, paid to Company by a sublicensee in a bona fide transaction
for future research to be performed by Company.

 

3.11 “Additional Sublicensing Revenue”
shall mean all cash, sublicensing fees, option fees, maintenance fees, other lump sum payments and all other payments (including
equity instruments and/or securities) and the cash equivalent thereof paid or transferred to Company by each sublicensee, of Company
or third party in consideration for license rights and/or technology rights covering manufacturing, marketing or distribution provided
under this License Agreement. Company shall provide documentation of any such payment(s), as provided under Section 4. For the
purposes of clarity, Additional Sublicensing Revenue represents all additional forms of consideration paid by sublicensee to Company,
but excluding those royalties paid by sublicensee on Net Sales for Licensed Products.

 

3.12In the event
Company, and/or Sublicensee, in its sole discretion, decides to market a Licensed Product within the Field of Use in any country,
then Company and/or Sublicensee shall exert reasonable efforts to have such Licensed Product cleared for marketing by the responsible
government agencies of that country requiring such clearance. Should Company terminate this License Agreement, Company agrees to
assign its full right, title, and interest in and to such market clearance application, including all data relating thereto, to
PSRF at no cost to PSRF. Any materials assigned to PSRF under this Section 3.12 shall be done so free of any warranties regarding
content of the materials, testing or any conclusions and opinions thereto. PSRF represents and warrants that it and its assignees
will receive such information without any reliance upon the accuracy or reliability of the information, data and opinions contained
therein.

3.13Notwithstanding the above, should Company
bring an action seeking to invalidate any patent included in the Patent Rights, Company will pay royalties to PSRF at a rate double
that provided in Section 3.8 for Net Sales of Licensed Product(s) sold during the pendency of such action. Moreover, should the
outcome of such action determine that any claim of the patent challenged by Company is both valid and infringed by a Licensed Product,
Company will pay royalties at a rate triple that provided in Section 3.8 for any Net Sales of Licensed Product sold after the effective
date of the outcome.

 

3.13.1In the event
Company brings a validity challenge during the term of the Agreement; Company agrees to pay directly to PSRF all royalties due
under this Section 3.13 during the period of challenge. For the sake of clarity, Company shall not pay such amounts into any escrow
or other account.

 

3.13.2In the event
that a validity or non-infringement challenge of a Licensed Product brought by Company is successful, Company will have no right
to recoup any royalties paid before or during the challenge period.

 

	4.	
        REPORTS AND PAYMENTS

         

4.1 Royalty Reports. Within
Forty-Five (45) days after the end of each Quarter following the first Sale (or Sixty (60) days after the end of each
Quarter following the first Sale if Company has sublicensed the License), Company will deliver to PSRF a report, certified by the
chief financial officer of Company, detailing the calculation of all royalties, fees and other payments due to PSRF for such Quarter.
The report will include, at a minimum, the following information for the Quarter, each listed by product, by country: (a) the
number of units of Licensed Products constituting Sales; (b) the consideration invoiced, billed or received for Sales minus
any documented Qualifying Costs; (c) the amount of any payments and other consideration received by Company from sublicensees
and the amounts of any deductions permitted by this Agreement; (d) the royalties, fees and other payments owed to PSRF, listed
by category; and (e) the computations for any applicable currency conversions. Each royalty report will be substantially in
the form of the sample report attached as Exhibit C.

 

4.2 Payments. Company will
pay all royalties, fees and other payments due by Company, Affiliate(s) and/or Sublicensee(s) to PSRF under Sections 3.1, 3.2,
3.5, 3.8, 3.9 and 3.10, and within Sixty (60) days after the end of the Quarter in which the royalties, fees or other payments
accrued. If no royalties, fees or other payments are owed during a Quarter, the Company shall provide to PSRF a report documenting
that. Company’s failure to perform in accordance with this Section shall constitute a material breach or default and shall
be grounds for termination of this License Agreement pursuant to Section 6 hereof.

 

4.3 Records. Company will maintain,
and will cause its Affiliates and sublicensees to maintain, complete and accurate books, records and related background information
to verify Sales, in accordance with generally accepted accounting principles and procedures, and all of the royalties, fees, and
other payments due or paid under this Agreement, as well as the various computations reported under Section 4.1. The records
for each Quarter will be maintained at Company’s principal place of business or the principal place of business of the appropriate
division of Company to which this License Agreement relates and for at least Five (5) years after submission of the applicable
report required under Section 4.1.

 

4.4Audit Rights. Upon Company’s
receipt of reasonable prior written notice, Company and its Affiliates and sublicensees will provide PSRF and its accountants and/or
agents with access to all of the books, records, key personnel and related background information required by Section 4 to
conduct a review or audit of Sales, and all of the royalties, fees, and other payments payable under this Agreement. Access will
be made available: (a) during normal business hours; (b) in a manner reasonably designed to facilitate PSRF’s review
or audit without unreasonable disruption to Company’s business; and (c) no more than once each calendar year during
the Term (as defined below) and for a period of Five (5) years thereafter. Company will promptly pay to PSRF the amount of
any underpayment determined by the review or audit, plus accrued interest. If the review or audit determines that Company has underpaid
any payment by Five Percent (5%) or more, then Company will also promptly pay the costs and expenses of PSRF and its accountants
in connection with the review or audit. In addition, once Sales of Licensed Products exceed [*CONFIDENTIAL PORTION OMITTED AND
FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Dollars (US $[*CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]) annually, Company will conduct, at PSRF’s
request, no more than once every Two (2) years, at its own expense, an independent audit of Sales, and all of the royalties,
fees, and other payments due or paid under this Agreement. Promptly after completion of the audit, Company will provide to PSRF
a copy of the report of the independent auditors along with any underpayments and interest thereon.

 

4.5 Currency. All dollar amounts
referred to in this Agreement are expressed in United States dollars. All payments will be made in United States dollars. If the
Company receives payment from a third party in a currency other than United States dollars for which a royalty or fee is owed under
this Agreement, then (a) the payment will be converted into United States dollars at the conversion rate for the foreign currency
as published in the eastern edition of the Wall Street Journal as of the last business day of the Quarter in which the payment
was received by Company, and (b) the conversion computation will be documented by Company in the applicable report delivered
to PSRF under Section 4.1.

 

4.6 Place of Payment. All payments
by Company are payable to “The Penn State Research Foundation” and will be made to the following address:

 

 

	By Electronic Transfer:	 	By Check (direct mail):
	 	 	 
	 	Withheld for confidentiality	 

 

 

4.7 Interest. All amounts that are
not paid by Company when due will accrue interest from the date due until paid at a rate equal to [*CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Percent ([*CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]%) per month (or the maximum allowed
by law, if less). The payment of such interest shall not foreclose PSRF from exercising any other rights it may have as a consequence
of the lateness of any payment.

 

	5.	
        CONFIDENTIALITY AND USE OF PSRF’S
        NAME

         

5.1 Confidentiality Agreement.
Has been waived by both parties.

 

5.2 Other Confidential Matters.
The Company is not obligated to provide any confidential information, except for the reports required by Sections 2.1, 4.1, 4.4
and 6.6. PSRF, acting through its Office of Technology Management and finance offices, will use reasonable efforts not to disclose
to any third party outside of PSRF any confidential information of Company contained in those reports, for so long as such information
remains confidential. PSRF bears no institutional responsibility for maintaining the confidentiality of any other information of
Company. Company may elect to enter into confidentiality agreements with individual investigators at PSRF that comply with PSRF’s
internal policies. The provisions of this Section 5.2 shall not limit PSRF’s obligations to Company or Company’s
obligations to PSRF under any other agreement, including confidentiality agreement, between the parties relating to transactions
other than the License.

 

5.3 Use of PSRF’s Name.
Company and its Affiliates, sublicensees, employees, and agents may not use the name, image, logo, seal, trademark, or service
mark (including any adaptation of them) of PSRF or any University, University school, organization, employee, student or representative,
without the prior written consent of PSRF.

 

	6.	
        TERM AND TERMINATION

         

6.1 Term. This Agreement will
commence on Effective Date and terminate upon the expiration or abandonment of the last patent to expire or become abandoned
of the Patent Rights (the “Term”). Upon the expiration or abandonment of all Patent Rights in any country during the
Term no royalties shall be payable under this Agreement thereafter based on Sales in that country of Licensed Product manufactured
in a country not covered by Patent Rights.

 

6.2 Early Termination by Company.
Company may terminate this Agreement at any time effective upon completion of each of the following conditions: (a) providing
at least Sixty (60) days prior written notice to PSRF of such intention to terminate; thereby (i) ceasing to make, have
made, use, import, offer for sale and sell all Licensed Products; (ii) terminating all sublicenses and causing all Affiliates
and sublicensees to cease making, using, importing, offering for sale and selling all Licensed Products; and (iii) paying
all amounts owed to PSRF under this Agreement related to the Patent Rights, through the effective date of termination.

 

6.3 Early Termination by PSRF.
PSRF may terminate this Agreement if: (a) Company is more than Thirty (30) days late in paying to PSRF any amounts owed
under this Agreement and does not immediately pay PSRF in full, including accrued interest, upon written demand (a “Payment
Default”) and failure to pay the amounts outstanding within Thirty (30) days of receipt of the Payment Default; (b) other
than a Payment Default, Company or its Affiliate or sublicensee materially breaches this Agreement and does not cure the breach
within Forty-Five (45) days after written notice of the breach; or (c) Company or its Affiliates or sublicensee experiences
a Trigger Event, and in the case of sublicensee, Company has not terminated the sublicense prior to or automatically upon the occurrence
of the Trigger Event. If a sublicensee materially breaches the applicable sublicense agreement, Company will take reasonable steps
to enforce the terms of such sublicense agreement against such sublicensee

 

6.4 Trigger Event. The term
“Trigger Event” means any of the following: (a) a material default by Company under any agreement between Company
and PSRF related to the Patent Rights (whether entered prior to, contemporaneous with, or subsequent to the Effective Date) that
is not cured within the cure period, if any, set forth in such agreement; (b) if Company or its Affiliate or sublicensee (i) becomes
insolvent, bankrupt or fails to pay its debts as such debts become due, (ii) is adjudicated insolvent or bankrupt; (iii) admits
in writing its inability to pay its debts, (iv) suffers the appointment of a custodian, receiver or trustee for it or its
property and, if appointed without its consent, not discharged within Thirty (30) days; (v) makes an assignment for the
benefit of creditors; or (vi) suffers proceedings being instituted against it under any law related to bankruptcy, insolvency,
liquidation or the reorganization, readjustment or release of debtors and, if contested by it, not dismissed or stayed within Ten
(10) days; (c) the institution or commencement by Company or its Affiliate or sublicensee of any proceeding under any law
related to bankruptcy, insolvency, liquidation or the reorganization, readjustment or release of debtors; (d) the entering
of any order for relief relating to any of the proceedings described in Section 6.4(b) or (c) above; (e) the calling
by Company or its Affiliate or sublicensee of a meeting of its creditors with a view to arranging a composition or adjustment of
its debts; (f) the act or failure to act by Company or its Affiliate or sublicensee indicating its consent to, approval of
or acquiescence in any of the proceedings described in Section 6.4(b) – (e) above; (g) failure by Company
to pay patent expenses; or (h) the commencement by Company of any action against PSRF, including an action for declaratory
judgment, to declare or render invalid or unenforceable the Patent Rights, or any claim thereof.

 

6.5 Effect of Termination.
Upon the termination of this Agreement for any reason: (a) the License terminates; (b) Company and all its Affiliates
and sublicensees will cease all making, using, importing, offering for sale and selling all Licensed Products, except to extent
permitted by Section 6.6; (c) Company will pay to PSRF all amounts, including accrued interest, owed to PSRF under this
Agreement related to the Patent Rights, through the date of termination, including royalties on Licensed Products invoiced or shipped
through the date of termination and any sell off period permitted by Section 6.6, within Thirty (30) days of the termination
or expiration of the sell off period permitted by Section 6.6; (d) Company will, at PSRF ’s request, return to
PSRF all confidential information of PSRF and provide to PSRF a development summary directly related to Licensed Products generated
by Company during the Term that will facilitate the further development of the technology licensed under this Agreement; and (e) in
the case of termination under Section 6.3, all duties of PSRF and all rights (but not duties) of Company under this Agreement
immediately terminate without further action required by either PSRF or Company.

 

6.6 Inventory & Sell Off.
Upon the termination of this Agreement for any reason, Company will cause physical inventories to be taken immediately of: (a) all
completed Licensed Products on hand under the control of Company or its Affiliates or sublicensees; and (b) such Licensed
Products as are in the process of manufacture and any component parts on the date of termination of this Agreement. Company will
deliver promptly to PSRF a copy of the written inventory, certified by an officer of the Company. Upon termination of this Agreement
for any reason, Company will promptly remove, efface or destroy all references to PSRF from any advertising, labels, web sites
or other materials used in the promotion of the business of Company or its Affiliates or sublicensees, and Company and its Affiliates
and sublicensees will not represent in any manner that it has rights in or to the Patent Rights or the Licensed Products. Upon
the termination of this Agreement for any reason other than pursuant to Section 6.3(a) or (c), Company may sell off its inventory
of Licensed Products existing on the date of termination for a period of Six (6) months and pay PSRF royalties on Sales of
such inventory within Thirty (30) days following the expiration of such Six (6) month period.

 

6.7 Survival. Company’s
obligation to pay all amounts, including accrued interest, owed to PSRF under this Agreement will survive the termination of this
Agreement for any reason. Sections 4, 5, 6, 9, 10, 11, 14.9, 14.10 and 14.11 will survive the termination of this Agreement for
any reason in accordance with their respective terms.

 

	7.	PATENT PROSECUTION AND MAINTENANCE

 

7.1 Patent Control. PSRF controls
the preparation, prosecution and maintenance of the Patent Rights and the selection of patent counsel, with input from Company.
For purposes of this Section 7, the word “maintenance” includes any interference negotiations, claims, or proceedings,
in any forum, brought by PSRF, Company, a third party, or the United States Patent and Trademark Office, and any requests by PSRF
or Company that the United States Patent and Trademark Office reexamine or reissue any patent in the Patent Rights.

 

7.2 Payment and Reimbursement.
The Company will reimburse PSRF for all documented attorney’s fees, expenses, official fees and all other charges after the
Effective Date incident to the preparation, filing, prosecution, and maintenance of the Patent Rights, within Thirty (30) days
after Company’s receipt of invoices for such fees, expenses and charges. PSRF reserves the right to require the Company to
provide a deposit in advance of incurring out of pocket foreign patent expenses estimated by counsel not to exceed [*CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Dollars (US $[*CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]) the amount necessary
to file, prosecute, and/or maintain the Patents Rights. If Company fails to reimburse patent expenses under Section 7.2, provide
a requested deposit with respect to a Patent Right, or fails to prepare, prosecute or maintain any Patent Rights that may be in
PSRF’s best interest to prepare, prosecute or maintain then Company shall provide PSRF with reasonable prior written notice
of such intended abandonment or decline of responsibility. In the event of such failure of Company with respect to such expenses,
deposit or preparation, prosecution or maintenance of any Patent Rights, regardless of notice, PSRF will be free at its discretion
and expense to either abandon such applications or patents related to such Patent Right or to continue such preparation, prosecution
and/or maintenance activities, and any patent rights associated with such patent action will be automatically excluded from the
term “Patent Rights” hereunder, on a patent by patent or country by country basis, as applicable.

 

7.3Accrued Expenses. As
of the date of this Agreement, the University has accrued Seventy-Eight Thousand Five Hundred Sixty-Two Dollars and Five Cents
($78,562.05) of unreimbursed expenses in connection with the licensing of the Patent Rights to the Company. The Company shall reimburse
the University for these expenses within Ten (10) days of the Effective Date of this Agreement.

 

	8.	
        INFRINGEMENT

         

8.1 Notice. Company and PSRF
will notify each other promptly of any infringement of the Patent Rights by a third party that may come to their attention. Company
and PSRF will consult each other in a timely manner concerning any appropriate response to the infringement.

 

8.2 Prosecution of Infringement.
Company may prosecute any infringement of the Patent Rights at Company’s expense, including defending against any counterclaims
or cross claims brought by any party against Company or PSRF regarding the Patent Rights and defending against any claim that any
Patent included in the Patent Rights are invalid in the course of any infringement action or in a declaratory judgment action.
PSRF reserves the right to intervene voluntarily and join Company in any such infringement litigation. If PSRF chooses not to intervene
voluntarily, but PSRF is a necessary party to the action brought by Company, then Company may join PSRF in the infringement litigation.
If Company decides not to prosecute any infringement of the Patent Rights, PSRF may elect to prosecute such infringement independently
of Company in PSRF’s sole discretion.

 

8.3 Cooperation. In any litigation
under this Section 8, either party, at the request and sole expense of the other party, will cooperate to the fullest extent reasonably
possible. This Section 8.3 will not be construed to require either party to undertake any activities, including legal discovery,
at the request of any third party, except as may be required by lawful process of a court of competent jurisdiction. If, however,
either party is required to undertake any activity, including legal discovery, as a right of lawful process of a court of competent
jurisdiction, then Company will pay all expenses incurred by Company and by PSRF.

 

8.4 Control of Litigation.
Company controls any litigation or potential litigation involving the prosecution of infringement claims regarding the Patent Rights
in which PSRF is not a party, including the selection of counsel, all with input from PSRF. Company must not settle or compromise
any such litigation in a manner that imposes any obligations or restrictions on PSRF, reduces payments to PSRF, or grants any rights
to the Patent Rights, other than any permitted sublicenses, without PSRF’s prior written permission. PSRF controls any litigation
or potential litigation involving the prosecution of infringement claims regarding the Patent Rights in which PSRF has elected
to prosecute the infringement independently of Company or has voluntarily or involuntarily joined Company in the infringement litigation,
including the selection of counsel, all with input from Company. In all instances in which PSRF is a party, PSRF reserves the right
to select its own counsel. If PSRF is involuntarily joined as a party, PSRF retains the right to select its own counsel, but Company
will be responsible for all litigation expenditures as set forth in Section 8.5.

 

8.5 Recoveries from Litigation.
If Company prosecutes any infringement claims either without PSRF as a party or with PSRF involuntarily joined as a party, then
Company will reimburse PSRF for PSRF’s litigation expenditures, including any attorneys’ fees, expenses, official fees
and other charges incurred by PSRF, even if there are no financial recoveries from the infringement action. Company will reimburse
PSRF within Thirty (30) days after receiving each invoice from PSRF. After reimbursing PSRF for its expenditures, Company
will use the financial recoveries from such claims, if any, (a) first, to reimburse Company for its litigation expenditures;
and (b) second, shared between Company and PSRF with the Company receiving [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY
WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Percent ([*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY
WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]%) and PSRF receiving [*CONFIDENTIAL PORTION OMITTED AND
FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Percent ([*CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]%) as to any remainder. If Company prosecutes
any infringement claims with PSRF joined as a voluntary party, then any financial recoveries from such claims will be (x) first,
shared between Company and PSRF in proportion with their respective shares of the aggregate litigation expenditures by Company
and PSRF; and (y) second, shared [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT*] Percent ([*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT*]%) each by Company and PSRF as to any remainder after Company and PSRF have fully recovered their
aggregate litigation expenditures. If PSRF prosecutes any infringement claims independent of Company, then PSRF will prosecute
such infringement at PSRF’s expense and will retain any financial recoveries in their entirety.

 

	9.	
        REPRESENTATIONS; DISCLAIMER OF WARRANTIES

         

9.1 PSRF Representations. PSRF
represents to Company that, to the knowledge of the current staff of the Office of Technology Management, without investigation,
as of the Effective Date, PSRF: (a) is sole owner of PSRF’s Patent Rights; (b) has the right to grant the License
to Company; and (c) has not received any written notice of any third party claim for infringement by PSRF relating to the
PSRF Patent Rights.

 

9.2 Disclaimer. THE PATENT
RIGHTS, LICENSED PRODUCTS AND ANY OTHER TECHNOLOGY LICENSED UNDER THIS AGREEMENT ARE PROVIDED ON AN “AS IS” BASIS.
PSRF MAKES NO REPRESENTATIONS (EXCEPT AS SET FORTH IN SECTION 9.1 ABOVE) OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED
TO ANY WARRANTY OF ACCURACY, COMPLETENESS, PERFORMANCE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, COMMERCIAL UTILITY,
NON INFRINGEMENT OR TITLE AS WELL AS VALIDITY OF PATENT RIGHTS CLAIMS, ISSUED OR PENDING.

 

	10.	LIMITATION OF LIABILITY

 

10.1 Limitation of Liability.
PSRF, THE PENNSYLVANIA STATE UNIVERSITY, THEIR TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES AND AFFILIATES WILL NOT BE LIABLE TO COMPANY,
ITS AFFILIATES, SUBLICENSEES, SUCCESSORS OR ASSIGNS, OR ANY THIRD PARTY WITH RESPECT TO ANY CLAIM: ARISING FROM COMPANY’S,
AFFILIATES’ OR SUBLICENSEES’ USE OF THE PATENT RIGHTS, LICENSED PRODUCTS OR ANY OTHER TECHNOLOGY LICENSED UNDER THIS
AGREEMENT; OR ARISING FROM THE DEVELOPMENT, TESTING, MANUFACTURE, USE OR SALE OF LICENSED PRODUCTS. PSRF WILL NOT BE LIABLE TO
COMPANY, ITS AFFILIATES, SUBLICENSEES, SUCCESSORS OR ASSIGNS, OR ANY THIRD PARTY FOR LOST PROFITS, BUSINESS INTERRUPTION, OR INDIRECT,
SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, AS WELL AS VALIDITY OF PATENT RIGHTS CLAIMS, ISSUED OR PENDING.

 

	11.	INDEMNIFICATION

 

11.1 Indemnification. Company
will defend, indemnify, and hold harmless each Indemnified Party from and against any and all Liabilities with respect to an Indemnification
Event. The term “Indemnified Party” means each of PSRF, University, their trustees, directors, officers, faculty, students,
employees, contractors, agents and affiliates. The term “Liabilities” means all damages, awards, deficiencies, settlement
amounts, defaults, assessments, fines, dues, penalties, costs, fees, liabilities, obligations, taxes, liens, losses, lost profits
and expenses (including, but not limited to, court costs, interest and reasonable fees of attorneys, accountants and other experts)
that are incurred by an Indemnified Party or awarded or otherwise required to be paid to third parties by an Indemnified Party.
The term “Indemnification Event” means any Claim against one or more Indemnified Parties arising out of or resulting
from: (a) the development, testing, use, manufacture, promotion, sale or other disposition of any Patent Rights, or Licensed
Products by Company, its Affiliates, sublicensees, assignees or vendors or third parties, including, but not limited to, (x) any
product liability or other Claim of any kind related to use by a third party of a Licensed Product, (y) any Claim by a third
party that the practice of any of the Patent Rights or the design, composition, manufacture, use, sale or other disposition of
any Licensed Product infringes or violates any patent, copyright, trade secret, trademark or other intellectual property right
of such third party, and (z) any Claim by a third party relating to clinical trials or studies for Licensed Products; (b) any
material breach of this Agreement by Company or its Affiliates or sublicensees; (c) the enforcement of this Section 11 by
any Indemnified Party, (d) arising out of the death of or injury to any person or persons or out of any damage to property, resulting
from the production, manufacture, sale, use, lease, consumption or advertisement of the Licensed Products or arising from any obligation
of Company hereunder. The term “Claim” means any charges, complaints, actions, suits, proceedings, hearings, investigations,
claims or demands.

 

11.2 Reimbursement of Costs.
Company will pay directly all Liabilities incurred for defense or negotiation of any Claim or will reimburse PSRF for all documented
Liabilities incident to the defense or negotiation of any Claim within Thirty (30) days after Company’s receipt of invoices
for such fees, expenses and charges.

 

11.3 Control of Litigation.
Company controls any litigation or potential litigation involving the defense of any Claim, including the selection of counsel,
with input from PSRF. PSRF reserves the right to protect its interest in defending against any Claim by selecting its own counsel.
If such separate representation is based on PSRF’s reasonable determination that Company cannot adequately defend PSRF’s
interests, or if the interests of the Indemnified Party and Company with respect to such Claim are sufficiently adverse to
prohibit the representation by the same counsel of both parties under applicable law, ethical rules or equitable principals, then
any attorneys’ fees and litigation expenses incurred by PSRF for such separate representation will be paid for by Company,
pursuant to Sections 11.1 and 11.2.

 

11.4 Other Provisions. Company
will not settle or compromise any Claim giving rise to Liabilities in any manner that imposes any restrictions or obligations on
PSRF, reduces payments to PSRF, or grants any rights to the Patent Rights or the Licensed Products without PSRF’s prior written
consent, which shall not be unreasonably withheld. If Company fails or declines to assume the defense of any Claim within Thirty
(30) days after notice of the Claim, or fails to reimburse an Indemnified Party for any Liabilities pursuant to Sections 11.1
and 11.2 within the Thirty (30) day time period set forth in Section 11.2, then PSRF may assume the defense of such Claim
for the account and at the risk of Company, and any Liabilities related to such Claim will be conclusively deemed a liability of
Company. The indemnification rights of the Indemnified Parties under this Section 11 are in addition to all other rights that an
Indemnified Party may have at law, in equity or otherwise.

 

	12.	INSURANCE

 

12.1 Coverage. Company will
procure and maintain insurance policies for the following coverage with respect to personal injury, bodily injury and property
damage arising out of Company’s performance under this Agreement: (a) during the Term, comprehensive general liability,
including broad form and contractual liability, in a minimum amount of [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH
THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Dollars (US $[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY
WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]) combined single limit per occurrence and in the aggregate;
(b) prior to the commencement of clinical trials involving Licensed Products, clinical trials coverage in a minimum amount
of [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Dollars
(US $[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*])
combined single limit per occurrence and in the aggregate; and (c) prior to the Sale of the first Licensed Product, product
liability coverage, in a minimum amount of [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT*] Dollars (US $[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT*]) combined single limit per occurrence and in the aggregate. PSRF may review periodically
the adequacy of the minimum amounts of insurance for each coverage required by this Section 12.1, and PSRF reserves the right
to require Company to adjust the limits accordingly. Any PSRF required increase in coverage shall be based upon a reasonable determination
by PSRF of reasonable and customary levels of coverage, taking into account factors that will include, but not be limited to, the
size of the market, the FDA established safety profile of the product and insurance separately maintained by the manufacturer.
The required minimum amounts of insurance do not constitute a limitation on Company’s liability or indemnification obligations
to PSRF under this Agreement.

 

12.2 Other Requirements. The
policies of insurance required by Section 12.1 will be issued by an insurance carrier with an A.M. Best rating of “A”
or better and will name PSRF as an additional insured with respect to Company’s performance under this Agreement. Company
will provide PSRF and UNIVERSITY with insurance certificates evidencing the required coverage within Thirty (30) days after
the Effective Date and the commencement of each policy period and any renewal periods. Each certificate will provide that the insurance
carrier will notify PSRF in writing at least Thirty (30) days prior to the cancellation or material change in coverage.

 

 

	13.	EXPORT CONTROL

 

 

13.1 Company acknowledges that it
is subject to United States laws and regulations controlling the export of technical data, computer software, laboratory prototypes
and other commodities. The transfer of such items may require a license from the cognizant agency of the United States Government
and/or written assurances by Company that Company shall not export data or commodities to certain foreign countries without prior
approval of such agency. PSRF neither represents that a license shall not be required nor that, if required, it shall be issued,
and all costs thereof shall be borne by Company.

 

	14.	ADDITIONAL PROVISIONS

 

14.1 Independent Contractors.
The parties are independent contractors. Nothing contained in this Agreement is intended to create an agency, partnership or joint
venture between the parties. At no time will either party make commitments or incur any charges or expenses for or on behalf of
the other party

 

14.2 No Discrimination. Neither
PSRF nor Company will discriminate against any employee or applicant for employment because of race, color, sex, sexual or affectional
preference, age, religion, national or ethnic origin, handicap, or veteran status.

 

14.3 Compliance with Laws.
Company must comply with all prevailing laws, rules and regulations that apply to its activities or obligations under this Agreement.

 

14.4 Modification, Waiver &
Remedies. This Agreement may only be modified by a written amendment that is executed by an authorized representative of each
party. Any waiver must be express and in writing. No waiver by either party of a breach by the other party will constitute a waiver
of any different or succeeding breach. Unless otherwise specified, all remedies are cumulative.

 

14.5 Assignment & Hypothecation.
This Agreement is binding upon the parties and their respective heirs, successors, assigns, and personal representatives. Company
may not assign this Agreement or any part of it, either directly or by merger or operation of law, without the prior written consent
of PSRF, except in connection with a merger or the sale, or other transfer of all or substantially all of its assets or all of
its business or the business unit holding its cancer drug products and technology to a biopharmaceutical company with a market
capitalization or annual revenues of at least [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT*] Dollars (US $[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT*]), provided that (a) at least Ten (10) days before the proposed transaction,
Company gives PSRF written notice and such background information as may be reasonably requested by PSRF; (b) the assignee
agrees in writing to be legally bound by this Agreement and to deliver to PSRF an updated Business Plan within Forty-Five (45) days
after the closing of the proposed transaction; and (c) Company provides PSRF with a copy of assignee’s undertaking.
Any permitted assignment will not relieve Company of responsibility for performance of any obligation of Company that has accrued
at the time of the assignment. Company will not grant a security interest in the License or this Agreement during the Term. Any
prohibited assignment or security interest will be null and void.

 

14.6 Notices. Any notice or
other required communication (each, a “Notice”) must be in writing, addressed to the party’s respective Notice
Address listed on the signature page, and delivered: (a) personally; (b) by certified mail, postage prepaid, return receipt
requested; (c) by recognized overnight courier service, charges prepaid; or (d) by facsimile. A Notice will be deemed
received: if delivered personally, on the date of delivery; if mailed, Five (5) days after deposit in the United States mail;
if sent via courier, One (1) business day after deposit with the courier service; or if sent via facsimile, upon receipt of
confirmation of transmission.

 

14.7 Severability & Reformation.
If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, then the remaining
provisions of this Agreement will remain in full force and effect. Such invalid or unenforceable provision will be automatically
revised to be a valid or enforceable provision that comes as close as permitted by law to the parties’ original intent.

 

14.8 Headings & Counterparts.
The headings of the sections included in this Agreement are inserted for convenience only and are not intended to affect the meaning
or interpretation of this Agreement. This Agreement may be executed in several counterparts, all of which taken together will constitute
the same instrument.

 

14.9 Governing Law. This Agreement
will be governed in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to the conflict of law
provisions of any jurisdiction.

 

14.10 Dispute Resolution. Except
for the right of either party to apply to a court of competent jurisdiction for a temporary restraining order, a preliminary injunction,
or other equitable relief to preserve the status quo or prevent irreparable harm, any and all claims, disputes or controversies
arising under, out of, or in connection with this License Agreement, including any dispute relating to patent validity or infringement,
which the parties shall be unable to resolve within Sixty (60) days, shall be mediated in good faith. The party raising such dispute
shall promptly advise the other party of such claim, dispute or controversy in a writing, which describes in reasonable detail
the nature of such dispute. By not later than Five (5) business days after the recipient has received such notice of dispute, each
party shall have selected for itself a representative who shall have the authority to bind such party, and shall additionally have
advised the other party in writing of the name and title of such representative. By not later than Ten (10) business days after
the date of such notice of dispute, the party against whom the dispute shall be raised shall select a mediation firm in Pennsylvania
and such representatives shall schedule a date with such firm for a mediation hearing. The parties shall enter into good faith
mediation and shall share the costs equally. If the representatives of the parties have not been able to resolve the dispute within
Fifteen (15) business days after such mediation hearing, the parties shall have the right to pursue any other remedies legally
available to resolve such dispute in either the Centre County Court of Common Pleas or in the United States District Court for
the Middle District of Pennsylvania, to whose jurisdiction for such purposes PSRF and the Company each hereby irrevocably consents
and submits.

 

Notwithstanding the foregoing, nothing in this
Section 14 shall be construed to waive any rights or timely performance of any obligations existing under this License Agreement.

 

14.11 Integration. This Agreement
with its Exhibits, and the Confidentiality Agreement, contain the entire agreement between the parties with respect to the Patent
Rights and the License and supersede all other oral or written representations, statements, or agreements with respect to such
subject matter.

 

14.12 Product Marking. Company agrees
to mark the Licensed Products sold in the United States with all applicable United States patent numbers. All Licensed Products
shipped to or sold in other countries shall be marked in such a manner as to conform to the patent laws and practices of the country
of manufacture or sale.

 

14.13Non-Refundable Payments. All
amounts paid to PSRF by Company under this License Agreement shall be nonrefundable.

 

 

[SIGNATURE PAGE TO FOLLOW]

 

 

 

 

    	(1)

    	 

     

Each party has caused this Agreement to
be executed by its duly authorized representative.

 

	 	 	 	 	 	 	 	 	 
	THE PENN STATE RESEARCH FOUNDATION 	 	 	 	TNI BioTech, Inc. 
	 	 	 	 	 
	By:	 	/s/	 	 	 	By:	 	/s/
	 	 	Name: David E. Branigan	 	 	 	 	 	Name: Noreen Griffin
	 	 	Title:   Treasurer	 	 	 	 	 	Title:  Chief Executive Officer
	 	 	 	 	 
	Address:	 	 	 	 	 	Address:	 	 
	 	 	 	 

Date: ________________ Date: _________________

 

 

APPENDICES INDEX 

 

	Appendix A	Corporate minutes, capitalization table and articles of incorporation of the Company.*

 

 

EXHIBIT INDEX 

 

	 	 	 
	 	 
	Exhibit A	 	Patent Applications in Patent Rights
	 	 
	Exhibit B	 	Minimum Contents of Business Plan*
	 	 
	Exhibit C	 	Format of Royalty Report*
	 	 
	 	 	 

 

 

* not attached for confidentiality purposes

 

    	(2)

    	 

     

Appendix A

Corporate Minutes, Capitalization Table and
Articles of Incorporation of the Company

 

 

 

    	(3)

    	 

     

Exhibit A

Patent Applications in Patent Rights

 

 

    	(4)

    	 

     

PSU Invention Disclosures 96-1565, 2003-2839
and 2004-2890 History

 

 

 

PSU Invention Disclosure No. 96-1565

Title: Opioid Growth Factor and Cancer

Inventors: Ian S. Zagon, Patricia J. McLaughlin, and Jill P. Smith

 

 

 

 

 

 

 

 

 

  

 

PSU Invention Disclosure No. 2003-2839

Title: Combination Therapy with Opioid Growth Factor and Taxanes
for the Treatment of Cancer

Inventors: Ian S. Zagon, Patricia J. McLaughlin, and Jill P. Smith

 

PSU Invention Disclosure No. 2004-2890

Title: Combined Therapy with Opioid Growth Factor and Gemcitabine
for the Treatment of Cancer

Inventors: Ian S. Zagon and Patricia J. McLaughlin

 

 

 

 

All three inventors are listed as inventors on the three applications

 

 

 

 

 

 

 

 

 

 

 

 

 

    	(5)

    	 

     

Exhibit B

Minimum Contents of Business Plan

 

 

 

 

    	(6)

    	 

     

Exhibit C

Format of Royalty ReportEXHIBIT 10.5

 

Patent License Agreement

 

This Patent License Agreement (this
“Agreement”) is between Dr. Jill P. Smith and LDN Research Group LLC (the “Licensor Parties”), and TNI
BioTech, Inc., a publicly traded corporation organized and existing under the laws of Florida (“Company”). This Agreement
is being signed on 24th December 2012 (the “Execution Date”). This Agreement will become effective on December
24th, 2012 (the “Effective Date”). The Company and the Licensor Parties may be referred to collectively
as the “parties” and singularly as a “party.”

 

BACKGROUND

 

WHEREAS, The Licensor
Parties are the owners of US Method Patent No. 7,879,870 and a pending patent in Israel entitled “Treatment of Inflammatory
and Ulcerative Diseases of the Bowel with Opioid Antagonists” and Dr. Jill P. Smith is the owner/Sponsor of IBD FDA IND#,
FDA orphan drug designation #09-2969 and a pending Israeli patent for “Treatment of Inflammatory and Ulcerative Diseases
of the Bowel with Opioid Antagonists;”

 

WHEREAS, certain aspects
of the above listed intellectual property may include methods and formulations for treatment of the inflammatory and ulcerative
diseases of the bowel, including patient data, and letters pertaining to the intellectual property (as defined hereinafter as “Technical
Information”), and which is included on Exhibit A;

 

WHEREAS, Company has
received and evaluated details of the above listed intellectual property and has represented to the Licensor Parties an interest
in obtaining an exclusive license to the Patent Rights within the Field of Use (as those terms are defined in Section 1.2 herein)
for the intellectual property upon the terms and conditions hereinafter set forth;

 

WHEREAS, the Company
desires to obtain a license for all of the relevant Patent Rights (as hereinafter defined) and documents and to exploit the portfolio
of intellectual property;

 

WHEREAS, The Licensor
Parties have determined that the exploitation of the intellectual property by Company is in the interest of the Licensor Parties;

 

In consideration of the mutual obligations
contained in this Agreement, and intending to be legally bound, the parties agree as follows:

 

	1.	
        LICENSE

         

1.1 License Grant. Contingent
upon the execution of this License Agreement by both parties and Company’s payment of fee(s) described in Section 3.1, the
Licensor Parties grant to the Company an exclusive, world-wide license (the “License”) to make, have made, use, lease,
import, offer for sale and sell Licensed Products and to use the method under Patent Rights and Technical Information, to the extent
not prohibited by other patents, in the Field of Use during the Term (as such terms may be defined in Sections 1.2 and 6.1), unless
this License Agreement shall be earlier terminated according to the terms and conditions contained herein. The License includes
the right to sublicense as permitted by this Agreement. No other rights or licenses are granted by the Licensor Parties. The parties
agree this License is subject to the terms of the Petition for Assignment of Patent Rights to Inventor Agreement attached hereto
as Exhibit E.

 

1.2 Related Definitions.

 

“Technical Information”
means any and all proprietary technical information, know-how, procedures, protocols, methods, data, prototypes, designs, patient
data and records permitted to be transferred or if patient data and records cannot be transferred then the deidentified files that
were sent to IRB and/or the FDA plus protocols, etc., and reports, which are not readily available to others through public means,
and which are owned, generated or developed through experiments or testing by the Licensor Parties, which the respective scientist,
at his/her own sole discretion, determines may be necessary or useful in the development of the Licensed Product(s) and which relate
to the License Product(s), but which are not subject of the Patent Rights including a copy of the Investigational New Drug(s) (“IND”)
application and copies of all other relevant regulatory correspondence. The parties will work together to facilitate the timing
of the copying and transferring and which copies of which documents will be needed and will agree on coverage of any costs associated
with such document copying.

 

The term “Licensed Products”
means products that are made, made for, used, imported, offered for sale or sold by Company or its Affiliates or sublicensees as
covered by the Patent Rights and Technical Information under this License Agreement and that would (i) in the absence of the
License, infringe (or, in the case of pending patent applications, upon issuance, would infringe) at least one claim of the Patent
Rights or (ii) use or are used in or with a process or method covered in whole or in part by a claim of the Patent Rights,
whether the claim is issued or pending, or (iii) is covered under Technical Information.

 

The term “Field of Use”
also referred herein as the “Field” means development, production, use, and storage of Licensed Products, alone
or in combination with other treatments, for the prevention and/or treatment of Crohn’s disease and other inflammatory and
ulcerative diseases of the bowel.

 

The term “Patent Rights”
means all of the Licensor Parties’ method patent rights represented by or issuing from: (a) the United States patents
and patent applications listed in Exhibit A that have not been irretrievably lapsed, revoked or abandoned; (b) any continuation,
continuation-in-part (to the extent that the claims are directed to inventions or intellectual property which are fully supported
by the patents and applications (a) or (b), divisional, re-issue applications, renewals and re-examinations of (a) or
(b); and (c) any foreign counterparts and extensions of (a) or (b); (d) the Israeli patent still pending; and (e) the
patents and pending patents listed in the Background section of this Agreement.

 

The term “Affiliate”
means a legal entity that is controlling, controlled by or under common control with Company and that has executed either this
Agreement or a written joinder agreement agreeing to be bound by all of the terms and conditions of this Agreement. For purposes
of this Section 1.2, the word “control” means (x) the direct or indirect ownership of more than Fifty Percent
(50%) of the outstanding voting securities of a legal entity, (y) the right to receive Fifty Percent (50%) or more
of the profits or earnings of a legal entity, or (z) the right to determine the policy decisions of a legal entity.

 

The term “Sublicensee”
shall mean any third party licensed by Company and where the third party holds Five Percent (5%) or less equity in Company or where
Company holds less than Five Percent (5%) equity in the third party. In those cases where the equity exceeds five percent (5%),
the third party may only become a “Sublicensee” with the prior, written approval of the Licensor Parties, which shall
not be unreasonably withheld, conditioned or delayed.

 

The term “Sale” means
any bona fide transaction for which consideration is received or expected by Company or its Affiliate or sublicensee for the sale,
use, lease, transfer or other disposition of a Licensed Product to an independent third party. A Sale is deemed completed at the
time that Company or its Affiliate or Sublicensee invoices, ships or receives payment for a Licensed Product, whichever occurs
first.

 

The term “Quarter”
means each three-month period beginning on January 1, April 1, July 1 and October 1.

 

The term “Net Sales”
means the consideration received or expected from, or the fair market value attributable to, each Sale, less Qualifying Costs that
are directly attributable to a Sale, specifically identified on an invoice or other documentation and actually borne by Company
or its Affiliates or Sublicensees. For purposes of determining Net Sales, the term “fair market value” means
the cash consideration that Company or its Affiliates or sublicensees would realize from an unrelated buyer in an arms length sale
of an identical item sold in the same quantity and at the time and place of the transaction.

 

The term “Qualifying Costs”
means: (a) normal and customary discounts in the trade for quantity purchased; (b) credits or refunds for claims or returns
that do not exceed the original invoice amount; (c) Company’s bad debt actually written off, net of subsequent recoveries;
provided that such Licensed Products do not represent more than [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] ([*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]%) of Sales.

 

“FDA” means the Food
and Drug Administration of the United States and “IRB” is the Institutional Review Board.

 

1.3 Grant-Back. Immediately
following the grant of the License pursuant to Section 1.1 hereof, the Company hereby grants to the Licensed Parties a perpetual,
non-exclusive, royalty-free right and license to use, and to permit others to use, the Patent Rights and Technical Information
in the Field of Use for educational and research purposes only.

 

1.4 Sublicense Conditions.
The Company’s right to sublicense any aspects granted by the Licensor Parties under the License is subject to each of the
following conditions:

 

(a) In each sublicense agreement, Company
will prohibit the Sublicensee from further sublicensing and require the Sublicensee to comply with the terms and conditions of
this Agreement, including the payment of running royalties at amounts at least equal to the levels specified for payments by Company
to the Licensor Parties in Section 3. Each sublicense agreement granted by Company shall include an audit right by the Licensor
Parties of the same scope as provided in Section 4 with respect to Company. Company shall forward to the Licensor Parties a copy
of reports received by Company from its Sublicensees under the sublicenses as shall be pertinent to a royalty accounting under
said sublicense agreements. No such sublicense agreement shall contain any provision that would cause it to extend beyond the term
of this License Agreement.

 

(b) Until Company has reached a capitalization
of [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] (US
$[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]) as
referenced in Section 3, Company is expressly prohibited from sublicensing, except that Company may petition the Licensor Parties
for the Licensor Parties’ prior written approval to sublicense. such consent shall not be unreasonably held, delayed or conditioned.
Only after receiving the prior written approval of the Licensor Parties may Company enter into sublicense agreements with third
parties wherein the Sublicensee(s) shall make, use, have made and have use of Patent Rights and Technical Information within the
Field. After Company has attained a capitalization of [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT*] (US $[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT*]); the Company may enter into sublicensing arrangements subject to the provisions
set forth herein. Within Five (5) business days after the Company fully executes any sublicense agreement, the Company will
deliver to the Licensor Parties a complete and accurate copy of the entire sublicense agreement written in the English language.
The Licensor Parties’ receipt of the sublicense agreement, however, will constitute neither an approval of the sublicense
nor a waiver of any right of the Licensor Parties or obligation of Company under this Agreement.

 

(c) In the event that Company causes or
experiences a Trigger Event (as defined in Section 6.4), all payments due to Company from its Affiliates or Sublicensees under
the sublicense agreement will, upon notice from the Licensor Parties to such Affiliate or Sublicensee, become payable directly
to the Licensor Parties for the account of Company. Upon receipt of any such funds, the Licensor Parties will remit to Company
the amount by which such payments exceed the amounts owed by Company to the Licensor Parties.

 

(d) Company’s execution of a sublicense
agreement will not relieve Company of any of its obligations under this Agreement. Company is primarily liable to the Licensor
Parties for any act or omission of an Affiliate or sublicensee of Company that would be a breach of this Agreement if performed
or omitted by Company, and Company will be deemed to be in breach of this Agreement as a result of such act or omission. In the
event Sublicensee commits a breach of this License Agreement, Sublicensee shall have a period of Twenty (20) calendar days to cure
said breach. In the event Sublicensee does not fully cure the breach within this Twenty (20) calendar day period, the sublicense
shall be automatically terminated.

 

1.5 No License by Implication.
Nothing in this Agreement confers by estoppel implication or otherwise, any license or rights under the Licensor Parties’
other patents other than the Patent Rights and Technical Information, regardless of whether such patents are dominant or subordinate
to the Patent Rights and Technical Information.

 

1.6 Data. The Licensor Parties
will deliver or cause to be delivered within Thirty (30) days of the Effective Date of this Agreement all of the relevant documents
including but not limited to those described in the Background Section of the Agreement to Company.

 

	2.	
        DILIGENCE

         

2.1 Business Plan. Company
will deliver to the Licensor Parties, within Thirty (30) calendar days after the Effective Date, a copy of an initial business
plan for the use of the Patent Rights and Technical Information (the “Business Plan”). Thereafter, Company will
deliver to the Licensor Parties an annual updated Business Plan no later than December 1 of each year during the Term. The
Business Plan will include, at a minimum, the amount of money, number and kind of personnel, and time, budgeted and planned for
each phase of the development of the Patent Rights Technical Information and the Licensed Product(s). The Business Plan shall include
a description of Company’s current funding efforts towards commercialization of the Patent Rights and Technical Information
and the level of funding in each specific therapeutic indication of the Licensed Product(s). The Business Plan will include the
commitment of the Company to maintain an ongoing relationship with Target Health or a similar contract research organization (“CRO”)
at least until One (1) Licensed Product is brought to market

 

2.2  The Licensor Parties’
efforts. The Licensor Parties will deliver to Company, within Thirty (30) calendar days following Company’s request,
a copy of all documents related to the Patent Rights, including but not limited to all INDs, communications with regulatory agencies,
any patient data and records permitted to be transferred or if patient data and records cannot be transferred then the deidentified
files that were sent to IRB and/or the FDA plus protocols, etc., Technical Information and letters relating to the intellectual
property.

 

2.3 Company’s Efforts.
Company will: (a) use commercially reasonable efforts to develop, commercialize, market and sell Licensed Products in a manner
consistent with the Business Plan; (b) will expend a minimum of [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] ($[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]) per annum to develop and commercialize Licensed Products as soon as practicable,
consistent with sound business practices and judgment; (c) be responsible for obtaining all requisite regulatory approvals needed
to use or sell Licensed Products in the Field of Use; and (d) make all reasonable efforts to complete the first commercial sale
of a Licensed Product by March of 2017.

 

2.3.1
A Development Committee (the “Committee”) shall be organized to monitor the clinical progress of the Licensed
Products at the Company’s expense. The Committee will consist of independent scientific and technical thought leaders that
are highly regarded by the scientific community in the Field of Use of each Licensed Product and at least one representative from
the Licensor Parties and one representative from the Company. The Committee will be responsible for (i) making recommendations
to the Company’s management relating to the pre-clinical and clinical development strategy; (ii) analysis and assessment
of ongoing pre-clinical and clinical development of each Licensed Product; and (iii) assisting the Company to prepare pre-clinical
and clinical development budgets. The actions and opinions of the Committee will be confidential. The Committee will meet at least
Six (6) times per year. Said Committee shall first meet within Three (3) months of the Effective Date and include (a) one
or more of the original inventors of the underlying Patent Rights, and (b) one or more individuals responsible for managing the
commercial affairs of the Licensor Parties (collectively, the “Licensor Parties Appointees”). The Committee
will continue to meet regularly with the Licensor Parties Appointees during the clinical trials.

 

2.3.2 Diligence
Events. The Company will use commercially reasonable efforts to achieve each of the diligence events by the applicable completion
date listed in the table below for the first Licensed Product.

 

	DILIGENCE EVENT	COMPLETION DATE
	Delivery of a completed initial Business Plan to the Licensor Parties in a form acceptable to the Licensor Parties	January 20, 2013
	First dosing of first patient in a Phase III or other pivotal clinical trial for first licensed product	Fifteen (15) months from the Execution Date of the Agreement
	Filing of NDA for first Licensed Product	Thirty Nine (39) months from the Execution Date of the Agreement
	First Sale of the first Licensed Product as covered by the NDA	
        March of 2017

        (unless the Company is able to fast track
        FDA approval with the orphan designation)

 

2.3.3Prior to
the Effective Date of this License Agreement, Company shall have provided documentation in the form of bank statements or an escrow
account balance statement evidencing that it has capitalization of at least [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY
WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] (US $[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY
WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]) such that Company can support a thorough, vigorous and diligent
program within the first Three (3) months after the Effective Date, properly supported financially and with appropriate and qualified
personnel and consultants as outlined in its Business Plan and is consistent with this stage of development. Capitalization may
consist of paid-in-capital to Company from the sale of capital stock to a group of investors, including angel investors, venture
capitalists and corporate partners. Capitalization may also include, but not be limited to, cash, line(s) of credit, retained earnings,
awards as well as grants and research contracts; provided, however, such capitalization is not comprised of short term loans granted
to the Company bearing maturity dates of less than Twelve (12) months from the Effective Date hereof. Capitalization is required
to undertake the activities set forth in Company’s Business Plan, the minimum contents of which is attached as Exhibit B.
Failure to achieve the capitalization milestones listed hereinafter shall be a breach of this License Agreement.

 

2.3.4Company shall
provide to the Licensor Parties a copy of any private placement memoranda, offering documents or other materials provided to potential
private investors, whether said offering is pursuant to Regulation D of the Securities Act of 1933 or otherwise. The Licensor Parties
shall treat and maintain such documents as confidential. Without limiting any other provision hereunder, the Licensor Parties shall
fully comply with all applicable securities laws associated with any Regulation D offering.

 

2.3.5By July 1,
2013, Company shall have provided to the Licensor Parties documentation in the form of bank statements or an escrow account balance
statement evidencing that it has a capitalization of at least [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Dollars (US $[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH
THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]) such that Company can support a thorough, vigorous and diligent
program, properly supported financially and with appropriate and qualified personnel and consultants as outlined in its Business
Plan.

 

2.3.6Within Three
(3) years of the Effective Date of this License Agreement, Company shall have executed at least one (1) partnership, joint venture
or outbound license agreement having a monetary value of not less than [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH
THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Dollars (US $[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY
WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]) with a “Corporate Partner” having
a market capitalization of at least [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT*] Dollars (US $[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT*]). The company shall be a for-profit biopharmaceutical entity having a portfolio of therapeutic
drugs and drug candidates. The objective of said commercial agreement is to provide Company with the ability to successfully manage
the clinical and regulatory requirements as well as marketing, distribution and manufacturing capacity to successfully commercialize
Licensed Products and support additional clinical developments.

 

2.3.7“Corporate
Partner” shall mean: a) any biopharmaceutical entity which agrees to compensate (either in cash or non-cash) Company
for any one or more of the rights to market, distribute, sell, use, and/or transfer Licensed Product(s) or the completion of a
milestone resulting in a Milestone Payment. Any Corporate Partner that receives a sublicense of the Patent Rights shall also be
a sublicensee.

 

2.3.8If the Licensor
Parties unanimously agree and determine that Company has not fulfilled its obligations under this Section 2, the Licensor Parties
shall furnish Company with written notice of the determination. Within Sixty (60) days after receipt of the notice, Company
shall either (i) fulfill the relevant obligation or (ii) negotiate with the Licensor Parties to execute a mutually acceptable
schedule of revised diligence obligations. Upon the failure to achieve either (i) or (ii) above in the allowed time period, the
Licensor Parties may, immediately, upon written notice to Company, terminate this Agreement or grant additional licenses to third
parties to the Patent Rights in the Field of Use.

 

	3.	
        FEES AND ROYALTIES

         

3.1 License Initiation Fee.
In partial consideration of the rights granted by this License Agreement, on the Effective Date the Company will pay:

	 	(i)	A non-refundable, non-creditable license initiation fee of One Hundred Thousand Dollars ($1 00,000.00) to the Licensor Parties;

	 	(ii)	Fifty-Nine Thousand Five Hundred Sixty-Six Dollars and Fifty-One Cents ($59,566.51) directly to Jill Smith for patent expenses paid;

 

	 	(iii)	Five thousand and eight hundred and seventeen dollars ($5,817) to be paid directly to LDN Research Group, LLC for expenses; and

	 	(iv)	After the date of last signature of this License Agreement, a total of Three Hundred Thousand (300,000) shares of restricted common stock of TNI BioTech, Inc., issued to the Licensor Parties to be divided between them whereas Dr. Smith shall receive Twenty Five Percent (25%) of the stock issued and LDN Research Group, LLC shall receive Seventy-Five Percent (75%) of the stock issued to the Licensor Parties.

 

3.2All stock issued has been duly authorized
by Company, as set forth in the corporate minutes, capitalization table, and Certificate of Incorporation attached as Appendix
B. The Company’s common stock is publicly traded. The Licensor Parties’ shares of stock may not be diluted until Company
has received total capital investment of [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT*] Dollars (US$[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT*]) (“Non-Dilution Cap”). Company shall issue such additional shares to
the Licensor Parties as are necessary for the Licensor Parties to maintain its percentage of equity interest calculated on the
date of issuance of the common stock pursuant to Section 3.1, up to the Non-Dilution Cap. In the event the Company offers shareholder’s
rights and preferences to other Shareholders prior to the Company achieving capitalization equal to the Non-Dilution Cap, the Licensor
Parties shall receive substantially similar rights, with the exception of voting rights.

 

3.3 In the event Company proposes to sell
and issue its equity securities in any transaction after it achieves capitalization which exceeds the Non-Dilution Cap, the Licensor
Parties shall be entitled, but not obligated, to purchase its pro-rata share of such securities on substantially the same terms
and conditions as are then applicable to the investors or holders of Company’s stock. The right of the Licensor Parties to
receive additional securities due to dilutive issuance and to participate in future equity financing of Company shall terminate
immediately prior to the closing of a firm commitment underwritten public offering including stock of at least [*CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Dollars (US $[*CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]), pursuant to an effective
registration statement under applicable securities laws then in effect covering the offering and sale of common stock for the account
of Company to the public or the closing of the sale of the Company or its assets to an independent third party.

 

3.4 Company’s failure to issue stock
to the Licensor Parties within Thirty (30) business days of its due date in accordance with Sections 3.1 or 3.2 shall constitute
a material breach or default and shall be grounds for termination of this Agreement pursuant to Section 6 hereof.

 

3.5 Annual License Fees. In
partial consideration of the License, Company will pay to the Licensor Parties, on each anniversary of the Effective Date an annual
licensing fee of [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]
Dollars (US$[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]).

 

3.6 Milestone Payments.
In partial consideration of the License, Company will pay to the Licensor Parties the applicable milestone payment listed in the
table below after substantial achievement of each milestone event for each Licensed Product, whether such milestone event is achieved
by Company, its Affiliates or Sublicensees. Company will provide the Licensor Parties with written notice within Thirty (30) days
after achieving each milestone.

 

	MILESTONE	
          

        PAYMENT

	Upon initiation of each Phase III trial	 
	Positive Completion of each Phase 3 clinical trial of the therapeutic use of an LDN compound in the Field of Use. “Positive Completion” is defined as achieving the primary endpoint of the Phase 3 trial in accordance with established agreement with FDA or equivalent health authority.	 
	When an NDA is accepted for review by the FDA	 
	FDA approval to market the NDA is approved	)

 

	MILESTONE	
          

        PAYMENT

	
        First dosing of first patient in a Phase III clinical trial for
        each Licensed Product

         
	  [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] shares
	
        First Sale of each Licensed Product

         
	[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] shares
	Achievement of [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Dollars ($[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]) in cumulative Sales for each Licensed Product covered by NDAs	   [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] shares

 

The term “Phase III clinical trial”
means a human clinical trial in any country that provides for randomized controlled trials of a product on a sufficient number
of patients to establish the safety and efficacy of a product and generate, if required, pharmacoeconomics data to support regulatory
approval in the proposed therapeutic indications as more fully defined in 21 C.F.R. (S) 312.21(c) or equivalent in a foreign
country. For clarity, each time a milestone is achieved with respect to a Licensed Product, and then any other milestone payments
with respect to earlier milestones that have not yet been paid for said Licensed Product will be due and payable together with
the milestone payment for the milestone that is actually achieved. For additional clarity, milestones are due and payable on Licensed
Products and on products that, upon FDA approval, would become Licensed Products.

 

3.7Company shall ensure that each
of the relevant patent serial number(s) of Patent Rights appears on all Licensed Product(s) or their labels.

 

3.8 Earned Royalties. In partial
consideration of the License, Company will pay to the Licensor Parties during each Quarter a running royalty of [*CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Percent ([*CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]%) of Net Sales for each
Licensed Product.

 

3.9 Minimum Royalties. In partial
consideration of the License, Company will pay to the Licensor Parties the amount, if any, that the applicable minimum royalty
listed in the table below exceeds Company’s actual aggregate earned royalties for all Licensed Products under Section 3.8
for each year after the first Sale of each Licensed Product  

	 	 	 
	Year:	 	Each Year
	MINIMUM:	 	Aggregate of $[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]

 

3.10 Sublicense
Fees. In consideration for the right to sublicense the License, Company will pay to the Licensor Parties a sublicense fee of:
(i) [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]
Percent ([*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]%)
of the sum of all payments plus the fair market value of all other consideration of any kind, (alternatively, “Additional
Sublicensing Revenue” received by Company from Sublicensees for sublicenses solely involving Patent Rights and (ii) [*CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Percent ([*CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]%) of the sum of all payments
plus the fair market value of all other consideration of any kind, received by Company for all other sublicenses, including, but
not limited to, sublicenses involving Patent Rights together with patents or intellectual property not owned by the Licensing Parties
or patents or intellectual property owned or controlled by the Company during the Quarter, other than: (a) milestone payments
paid to Company by a Sublicensee which Company pays to pursuant to Section 3.6 as a pass through; (b) equity investments
in Company by a Sublicensee up to the amount of the fair market value of the equity purchased on the date of the investment; and
(c) loan proceeds paid to Company by a sublicensee in an arms length, full recourse debt financing to the extent that such
loan is not forgiven; and (d) sponsored research funding, including clinical research funding, paid to Company by a sublicensee
in a bona fide transaction for future research to be performed by Company.

 

3.11 “Additional Sublicensing
Revenue” shall mean all cash, sublicensing fees, option fees, maintenance fees, other lump sum payments and all other
payments (including equity instruments and/or securities) and the cash equivalent thereof paid or transferred to Company by each
sublicensee of Company or third party in consideration for license rights and/or technology rights covering manufacturing, marketing
or distribution provided under this License Agreement. Company shall provide documentation of any such payment(s), as provided
under Section 4. For the purposes of clarity, Additional Sublicensing Revenue represents all additional forms of consideration
paid by sublicensee to Company, but excluding those royalties paid by sublicensee on Net Sales for Licensed Products.

 

3.12In the event
Company, and/or Sublicensee, in its sole discretion, decides to market a Licensed Product within the Field in any country, then
Company and/or Sublicensee shall exert reasonable efforts to have such Licensed Product cleared for marketing by the responsible
government agencies of that country requiring such clearance. Should Company terminate this License Agreement, Company agrees to
assign its full right, title, and interest in and to such market clearance application, including all data relating thereto, to
the Licensor Parties at no cost to the Licensor Parties. Any materials assigned to the Licensor Parties under this Section 3.12
shall be done so free of any warranties regarding content of the materials, testing or any conclusions and opinions thereto. The
Licensor Parties represent and warrant that they and their assignees will receive such information without any reliance upon the
accuracy or reliability of the information, data and opinions contained therein.

	4.	
        REPORTS AND PAYMENTS

         

4.1 Royalty Reports. Within
Forty-Five (45) days after the end of each Quarter following the first Sale (or Sixty (60) days after the end of each
Quarter following the first Sale if Company has sublicensed the License), Company will deliver to the Licensor Parties a report,
certified by the chief financial officer of Company, detailing the calculation of all royalties, fees and other payments due to
the Licensor Parties for such Quarter. The report will include, at a minimum, the following information for the Quarter, each listed
by product, by country: (a) the number of units of Licensed Products constituting Sales; (b) the consideration invoiced,
billed or received for Sales minus any documented Qualifying Costs; (c) the amount of any payments and other consideration
received by Company from Sublicensees and the amounts of any deductions permitted by this Agreement; (d) the royalties, fees
and other payments owed to the Licensor Parties, listed by category; and (e) the computations for any applicable currency
conversions. Each royalty report will be substantially in the form of the sample report attached as Exhibit C.

 

4.2 Payments. Company will
pay all royalties, fees and other payments due by Company, Affiliate(s) and/or Sublicensee(s) to the Licensor Parties under Sections
3.5, 3.6, 3.8, and 3.9, within Sixty (60) days after the end of the Quarter in which the royalties, fees or other payments
accrued. If no royalties, fees or other payments are owed during a Quarter, the Company shall provide to the Licensor Parties a
report documenting that. Company’s failure to perform in accordance with this Section shall constitute a material breach
or default and shall be grounds for termination of this License Agreement pursuant to Section 6 hereof.

 

4.3 Records. Company will maintain,
and will cause its Affiliates and Sublicensees to maintain, complete and accurate books, records and related background information
to verify Sales, in accordance with generally accepted accounting principles and procedures, and all of the royalties, fees, and
other payments due or paid under this Agreement, as well as the various computations reported under Section 4.1. The records
for each Quarter will be maintained at Company’s principal place of business or the principal place of business of the appropriate
division of Company to which this License Agreement relates and for at least Five (5) years after submission of the applicable
report required under Section 4.1.

 

4.4Audit Rights. Upon Company’s
receipt of reasonable prior written notice, Company and its Affiliates and Sublicensees will provide the Licensor Parties and their
accountants and/or agents with access to all of the books, records, key personnel and related background information required by
Section 4 to conduct a review or audit of Sales, and all of the royalties, fees, and other payments payable under this Agreement.
Access will be made available: (a) during normal business hours; (b) in a manner reasonably designed to facilitate the
Licensor Parties ’s review or audit without unreasonable disruption to Company’s business; and (c) no more than
once each calendar year during the Term (as defined below) and for a period of Five (5) years thereafter. Company will promptly
pay to the Licensor Parties the amount of any underpayment determined by the review or audit, plus accrued interest. If the review
or audit determines that Company has underpaid any payment by Five Percent (5%) or more, then Company will also promptly pay
the costs and expenses of the Licensor Parties and its accountants in connection with the review or audit. In addition, once Sales
of Licensed Products exceed [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT*] Dollars ($[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT*]) annually, Company will conduct, at the Licensor Parties’ request, no more than once every Two (2) years,
at its own expense, an independent audit of Sales, and all of the royalties, fees, and other payments due or paid under this Agreement.
Promptly after completion of the audit, Company will provide to the Licensor Parties a copy of the report of the independent auditors
along with any underpayments and interest thereon.

 

4.5 Currency. All dollar amounts
referred to in this Agreement are expressed in United States dollars. All payments will be made in United States dollars. If the
Company receives payment from a third party in a currency other than United States dollars for which a royalty or fee is owed under
this Agreement, then (a) the payment will be converted into United States dollars at the conversion rate for the foreign currency
as published in the eastern edition of the Wall Street Journal as of the last business day of the Quarter in which the payment
was received by Company, and (b) the conversion computation will be documented by Company in the applicable report delivered
to the Licensor Parties under Section 4.1.

 

4.6 Place of Payment. All payments by Company are payable
to the following parties at the following addresses until advised differently:

 

	Party:	By Check (direct mail):	By Electronic Transfer:
	Jill P Smith, MD	 	 
	
        LDN Research Group LLC

         
	 	 
	Penn State University	 	 

 

4.7 Interest. All amounts that
are not paid by Company when due will accrue interest from the date due until paid at a rate equal to One and One-Half Percent
(1.5%) per month (or the maximum allowed by law, if less), plus the costs and expenses associated with any collections efforts
(including without limitation, attorneys’ fees and disbursements) which the Licensor Parties are required to undertake. The
payment of such interest shall not foreclose the Licensor Parties from exercising any other rights it may have as a consequence
of the lateness of any payment.

 

4.8Payment Allocations.All
cash payments remitted by the Company under this Agreement shall be allocated among the Licensor Parties as follows: [*CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]% to be paid to Penn State
University1; [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]%
to be paid to Dr. Jill P. Smith; and [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT*]% to be paid to LDN Research Group, LLC. Should Penn State University confirm that it is entitled
to [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]%
of cash proceeds of this agreement, LDN Research Group LLC agrees that an additional [*CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]% of cash proceeds shall be allocated to Penn State
University and same percentage deducted from LDN Research Group LLC’s proceeds. All shares issued by the Company under this
Agreement shall be allocated as detailed in Section 3.1 (iv).

 

 

	5.	
        CONFIDENTIALITY AND USE OF The
        Licensor Parties’ NAME

         

5.1 Confidentiality Agreement.
In connection with the execution of this Agreement, the parties will enter into a Confidential Disclosure Agreement substantially
similar to the Company’s standard form as attached hereto as Exhibit D.

 

5.2 Other Confidential Matters.
The Company is not obligated to provide any confidential information, except for the reports required by Sections 2.1, 4.1, 4.4
and 6.6. The Licensor Parties, acting through any of its offices, research facilities or finance offices, will use reasonable efforts
not to disclose to any third party outside of the Licensor Parties any confidential information of Company contained in those reports,
for so long as such information remains confidential; provided, however, the Licensor Parties may disclose such information/reports
to their accountants, attorneys, consultants and advisors so long as any and all recipients are required to similarly maintain
the confidentiality of the information.. Company may elect to enter into confidentiality agreements with individual investigators,
scientists, researchers, or others working for or with the Licensor Parties that comply with the Licensor Parties’ internal
policies. The provisions of this Section 5.2 shall not limit the Licensor Parties’ obligations to Company or Company’s
obligations to the Licensor Parties under any other agreement, including confidentiality agreement, between the parties relating
to transactions other than the License.

 

5.3 Use of the Licensor Parties’
Name. Company and its Affiliates, Sublicensees, employees, and agents may not use the name, image, logo, seal, trademark, or
service mark (including any adaptation of them) of the Licensor Parties, without the prior written consent of the Licensor Parties.
In addition, Company shall not publicize or cause to be publicized the existence of this Agreement without the Licensor Parties’
express prior written consent except as required under Company’s regulatory disclosure obligations.

 

	6.	
        TERM AND TERMINATION

         

6.1 Term. This Agreement will
commence on Effective Date and unless terminated sooner pursuant to the terms herein, terminate upon the later of: (a) the
expiration or abandonment of the last patent to expire or become abandoned of the Patent Rights; or (b) Ten (10) years
after the first Sale of the first Licensed Product (as the case may be, the “Term”).

 

6.2 Early Termination by Company.
Company may terminate this Agreement at any time effective upon completion of each of the following conditions: (a) providing
at least Ninety (90) days prior written notice to the Licensor Parties of such intention to terminate; thereby (i) ceasing
to make, have made, use, import, offer for sale and sell all Licensed Products; (ii) terminating all sublicenses and causing
all Affiliates and Sublicensees to cease making, using, importing, offering for sale and selling all Licensed Products; and (iii) paying
all amounts owed to the Licensor Parties under this Agreement and any sponsored agreement between the Licensor Parties and Company
related to the Patent Rights, through the effective date of termination. Upon Company’s termination of this Agreement pursuant
to this Section 6.2, nothing herein shall prevent or preclude the Licensor Parties from consummating license agreements directly
with any of the Sublicensees, in which event no consideration shall be due and owing to Company.

 

6.3 Early Termination by the Licensor
Parties. The Licensor Parties may terminate this Agreement if: (a) Company is more than Ten business (10) days late
in paying to the Licensor Parties any amounts owed under this Agreement and does not immediately pay the Licensor Parties in full,
including accrued interest and costs of collection, upon written demand (a “Payment Default”) and failure to
pay the amounts outstanding within Ten business (10) days of receipt of the Payment Default; (b) other than a Payment Default,
Company or its Affiliate or Sublicensee materially breaches this Agreement and does not cure the breach within Ten business (10) days
after written notice of the breach; or (c) Company or its Affiliates or Sublicensee experiences a Trigger Event (as defined
in Section 6.4 below), and in the case of Sublicensee, Company has not terminated the sublicense prior to or automatically upon
the occurrence of the Trigger Event. If a sublicensee materially breaches the applicable sublicense agreement, Company will take
reasonable steps to enforce the terms of such sublicense agreement against such Sublicensee in the capacity of a third party beneficiary.
Upon the occurrence of a Trigger Event, unless provided otherwise in Section 6.4 below, The Licensor Parties may terminate this
Agreement upon Twenty (20) days notice to the Company. If the Trigger Event is dismissed, avoided or is corrected within such Twenty
(20) day period, this Agreement shall continue in full force and effect.

 

6.4 Trigger Event. The term
“Trigger Event” means any of the following: (a) a material default by Company under any sponsored research
agreement or option agreement between Company and the Licensor Parties related to the Patent Rights (whether entered prior to,
contemporaneous with, or subsequent to the Effective Date) that is not cured within the cure period, if any, set forth in such
agreement or a material default each by and between Company and the Licensor Parties; (b) if The Company is unable to carry out
it’s duties under the contract due to a judicial procedure or investigation ; (c) a Change in Control to Company without
the Licensor Party’s prior written consent; (d) if Company or its Affiliate or Sublicensee (i) becomes insolvent,
bankrupt or fails to pay its debts as such debts become due, (ii) is adjudicated insolvent or bankrupt; (iii) admits
in writing its inability to pay its debts, (iv) suffers the appointment of a custodian, receiver or trustee for it or its
property and, if appointed without its consent, not discharged within Thirty (30) days; (v) makes an assignment for the
benefit of creditors; or (vi) suffers proceedings being instituted against it under any law related to bankruptcy, insolvency,
liquidation or the reorganization, readjustment or release of debtors and, if contested by it, not dismissed or stayed within Ten
(10) days; (e) the institution or commencement by Company or its Affiliate or Sublicensee of any proceeding under any law
related to bankruptcy, insolvency, liquidation or the reorganization, readjustment or release of debtors; (f) the entering
of any order for relief relating to any of the proceedings described in Section 6.4(b) or (c) above; (g) the calling
by Company or its Affiliate or sublicensee of a meeting of its creditors with a view to arranging a composition or adjustment of
its debts; (h) the act or failure to act by Company or its Affiliate or sublicensee indicating its consent to, approval of
or acquiescence in any of the proceedings described in Section 6.4(b) – (e) above; (i) failure by Company
to pay patent expenses; or (j) the commencement by Company of any action against the Licensor Parties, including an action
for declaratory judgment, to declare or render invalid or unenforceable the Patent Rights, or any claim thereof. For purposes of
this Agreement, a “Change of Control” shall mean (i) the sale, lease, assignment or transfer, in one or a series of
related transactions, of all or a material portion of the assets of Company to any third party or group of parties; (b) the acquisition
by any third party or group of parties of a direct of Fifty Percent (50%) or more of (A) the economic interest in Company, or (B)
the voting power of the voting stock of Company, by way of purchase, merger, consolidation or otherwise; (c) any consolidation
of Company with, or merger of Company into, any other third party, or any merger of another party into Company (other than a merger
which does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of capital stock of Licensee
or its parent company, or reclassification, conversion or exchange of outstanding shares of capital stock of such third party solely
into shares of capital stock of Company or its parent company); or (d) any stockholder or other equity owner of Company or its
parent company who, on the date of this Agreement, has the right, power or authority to designate, elect or appoint a majority
of the members of the board of directors (or similar governing body) of Company, shall cease to have the right, power or authority,
to designate, elect or appoint a majority of the members of the board of directors (or similar governing body) of Company or its
parent company.

 

6.5 Effect of Termination.
Upon the termination of this Agreement for any reason: (a) the License terminates; (b) Company and all its Affiliates
and Sublicensees will cease all making, using, importing, offering for sale and selling all Licensed Products, except to extent
permitted by Section 6.6; (c) Company will pay to the Licensor Parties all amounts, including accrued interest, owed
to the Licensor Parties under this Agreement and any sponsored research agreement related to the Patent Rights, through the date
of termination, including royalties on Licensed Products invoiced or shipped through the date of termination and any sell off period
permitted by Section 6.6, within Thirty (30) days of the termination or expiration of the sell off period permitted by Section 6.6;
(d) Company will, at the Licensor Parties’ request, return to the Licensor Parties all confidential information of the
Licensor Parties and provide to the Licensor Parties a development summary directly related to Licensed Products generated by Company
during the Term that will facilitate the further development of the technology licensed under this Agreement; and (e) in the
case of termination under Section 6.3, all duties of the Licensor Parties and all rights (but not duties) of Company under
this Agreement immediately terminate without further action required by either the Licensor Parties or Company.

 

6.6 Inventory & Sell Off.
Upon the termination of this Agreement for any reason, Company will cause physical inventories to be taken immediately of: (a) all
completed Licensed Products on hand under the control of Company or its Affiliates or Sublicensees; and (b) such Licensed
Products as are in the process of manufacture and any component parts on the date of termination of this Agreement. Company will
deliver promptly to the Licensor Parties a copy of the written inventory, certified by an officer of the Company. Upon termination
of this Agreement for any reason, Company will promptly remove, efface or destroy all references to the Licensor Parties from any
advertising, labels, web sites or other materials used in the promotion of the business of Company or its Affiliates or Sublicensees,
and Company and its Affiliates and Sublicensees will not represent in any manner that it has rights in or to the Patent Rights
or the Licensed Products. Upon the termination of this Agreement for any reason other than pursuant to Section 6.3(a) or (c),
Company may sell off its inventory of Licensed Products existing on the date of termination for a period of Six (6) months
and pay the Licensor Parties royalties on Sales of such inventory within Thirty (30) days following the expiration of such
Six (6) month period.

 

6.7 Turn-Over of Data.Upon the
early termination of this Agreement by either party pursuant to this Section 6.8, Company shall immediately turn over to the Licensor
Parties and grant it an exclusive, perpetual and royalty-free license in and to all data gathered and developed during the Term
including regulatory data.

 

6.8Survival. Company’s
obligation to pay all amounts, including accrued interest, owed to the Licensor Parties under this Agreement will survive the termination
of this Agreement for any reason. Sections 14.9, 14.10 and 14.11 and Section 4, 5, 6, 9, 10, and 11 will survive the termination
of this Agreement for any reason in accordance with their respective terms.

 

	7.	PATENT PROSECUTION AND MAINTENANCE

 

7.1 Patent Control. The Company
will control the preparation, prosecution and maintenance of the Patent Rights and the selection of patent counsel, with agreement
from the Licensed Parties. For purposes of this Section 7, the word “maintenance” includes any interference
negotiations, claims, or proceedings, in any forum, brought by the Licensor Parties, Company, a third party, or the United States
Patent and Trademark Office, and any requests by the Licensor Parties or Company that the United States Patent and Trademark Office
reexamine or reissue any patent in the Patent Rights. If the Company fails to pay maintenance fees or take any other required action,
the Licensor parties will have the option to do so and recover all such fees from Company.

 

7.2 Payment and Reimbursement.
The Company will reimburse the Licensor Parties for all documented attorneys fees, expenses, official fees and all other charges
after the Effective Date incident to the preparation, filing, prosecution, and maintenance of the Patent Rights, within Thirty
(30) days after Company’s receipt of invoices for such fees, expenses and charges. The Licensor Parties reserve the
right to require the Company to provide a deposit in advance of incurring out of pocket foreign patent expenses estimated by counsel
not to exceed [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]
Dollars ($[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]),
the amount necessary to file, prosecute, and/or maintain the Patents Rights. If Company fails to reimburse patent expenses under
this Section 7.2, provide a requested deposit with respect to a Patent Right, or fails to prepare, prosecute or maintain any Patent
Rights that may be in the Licensor Parties’ best interest to prepare, prosecute or maintain then Company shall provide the
Licensor Parties with reasonable prior written notice of such intended abandonment or decline of responsibility. In the event of
such failure of Company with respect to such expenses, deposit or preparation, prosecution or maintenance of any Patent Rights,
regardless of notice, the Licensor Parties will be free at their discretion and expense to either abandon such applications or
patents related to such Patent Right or to continue such preparation, prosecution and/or maintenance activities, and any patent
rights associated with such patent action will be automatically excluded from the term “Patent Rights” hereunder,
on a patent by patent or country by country basis, as applicable.

 

	8.	
        INFRINGEMENT

         

8.1 Notice. Company and the
Licensor Parties will notify each other promptly of any infringement of the Patent Rights by a third party that may come to their
attention. Company and the Licensor Parties will consult each other in a timely manner concerning any appropriate response to the
infringement. Infringement is defined as a third party actively marketing an opioid antagonist for use in Inflammatory Bowel Disease.

 

8.2 Prosecution of Infringement.
Company shall prosecute any infringement of the Patent Rights at Company’s expense, including defending against any counterclaims
or cross claims brought by any party against Company or the Licensor Parties regarding the Patent Rights and defending against
any claim that any Patent included in the Patent Rights are invalid in the course of any infringement action or in a declaratory
judgment action. The Licensor Parties reserve the right to intervene voluntarily and join Company in any such infringement litigation.
If the Licensor Parties choose not to intervene voluntarily, but the Licensor Parties are a necessary party to the action brought
by Company, then Company may join the Licensor Parties in the infringement litigation. If Company decides not to prosecute any
infringement of the Patent Rights, then the Licensor Parties may elect to prosecute such infringement independently of Company
in the Licensor Parties’ sole discretion.

 

8.3 Cooperation. In any litigation
under this Section 8, the parties, at the sole expense of Company, will cooperate to the fullest extent reasonably possible. This
Section 8.3 will not be construed to require either party to undertake any activities, including legal discovery, at the request
of any third party, except as may be required by lawful process of a court of competent jurisdiction. If, however, either party
is required to undertake any activity, including legal discovery, as a right of lawful process of a court of competent jurisdiction,
then Company will pay all expenses incurred by Company and by the Licensor Parties.

 

8.4 Control of Litigation.
Company controls any litigation or potential litigation involving the prosecution of infringement claims regarding the Patent Rights
in which the Licensor Parties are not a party, including the selection of counsel, all with input from the Licensor Parties. Company
must not settle or compromise any such litigation in a manner that imposes any obligations or restrictions on the Licensor Parties
or grants any rights to the Patent Rights, other than any permitted sublicenses, without the Licensor Parties’ prior written
permission. The Licensor Parties control any litigation or potential litigation involving the prosecution of infringement claims
regarding the Patent Rights in which the Licensor Parties have elected to prosecute the infringement independently of Company or
have voluntarily or involuntarily joined Company in the infringement litigation, including the selection of counsel, all with input
from Company. In all instances in which the Licensor Parties are a party, the Licensor Parties reserve the right to select their
own counsel. If the Licensor Parties are involuntarily joined as a party, the Licensor Parties retain the right to select their
own counsel, but Company will be responsible for all litigation expenditures as set forth in this Section 8.

 

8.5 Recoveries from Litigation.
If Company prosecutes any infringement claims either without the Licensor Parties as a party or with the Licensor Parties involuntarily
joined as a party, then Company will reimburse the Licensor Parties for the Licensor Parties’ litigation expenditures, including
any attorneys’ fees, expenses, official fees and other charges incurred by the Licensor Parties, even if there are no financial
recoveries from the infringement action. Company will reimburse the Licensor Parties within Thirty (30) days after receiving
each invoice from the Licensor Parties. After reimbursing the Licensor Parties for their expenditures, Company will use the financial
recoveries from such claims, if any, (a) first, to reimburse Company for its litigation expenditures; and (b) second,
shared between Company and the Licensor Parties with the Company receiving [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY
WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Percent ([*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY
WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]%) and the Licensor Parties receiving [*CONFIDENTIAL PORTION
OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Percent ([*CONFIDENTIAL PORTION
OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]%) as to any remainder. If Company
prosecutes any infringement claims with the Licensor Parties joined as a voluntary party, then any financial recoveries from such
claims will be (x) first, shared between Company and the Licensor Parties in proportion with their respective shares of the
aggregate litigation expenditures by Company and the Licensor Parties; and (y) second, as provided in (b) above by Company
and the Licensor Parties as to any remainder after Company and the Licensor Parties have fully recovered their aggregate litigation
expenditures. If the Licensor Parties prosecute any infringement claims independent of Company, then the Licensor Parties will
prosecute such infringement at the Licensor Parties’ expense and will retain any financial recoveries in their entirety.

 

8.6Licensee’s Acknowledgement.The
provisions in this Agreement notwithstanding, Licensee warrants that it has done its due diligence on the Patent Rights licensed
hereunder, that Licensee has had an opportunity to consult with the Licensor Parties in regards to the Patent Rights, the Licensor
Parties have brought to Licensee’s attention all known prior art and/or conflicting claims (i.e., WO2007/053194 (UNIV CHICAGO),
WO2006132963 (UNIV CHICAGO), US 2009/0169508 and /US 8,017,622 (Wu),
US 2002/173466 (CRAIN), and the publications by Waisman in Gastroenterology vol. 89, no. 1, 1985, pages 86-91), and Licensee has
voluntarily decided to proceed with the execution of this Agreement and has committed to the terms and conditions set forth herein
unconditionally.

 

8.7No Right to Sue.Licensee
acknowledges and agrees that it may not commence a suit against the Licensor Parties for any reason related, directly or directly,
to the Patent Rights, except for the Licensor Parties’ material breach of this Agreement and failure to cure the same pursuant
to Section 6 hereof. This Section 8.7 constitutes a material provision in respect of the Licensor Parties’ agreement to execute
and enter into this Agreement and the transaction contemplated herein.

 

	9.	
        REPRESENTATIONS; DISCLAIMER OF WARRANTIES

         

9.1 The Licensor Parties’
Representations. The Licensor Parties represent to Company that, to their knowledge, without investigation, as of the Effective
Date, the Licensor Parties: (a) are the sole owner of the Licensor Parties’ Patent Rights; (b) have the right to
grant the License to Company; and (c) have not received any written notice of any third party claim for infringement by the
Licensor Parties relating to the Licensor Parties’ Patent Rights.

 

9.2 Disclaimer. THE PATENT
RIGHTS, LICENSED PRODUCTS AND ANY OTHER TECHNOLOGY LICENSED UNDER THIS AGREEMENT ARE PROVIDED ON AN “AS IS” BASIS.
THE LICENSOR PARTIES MAKE NO REPRESENTATIONS (EXCEPT AS SET FORTH IN SECTION 9.1 ABOVE) OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
BUT NOT LIMITED TO ANY WARRANTY OF ACCURACY, COMPLETENESS, PERFORMANCE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, COMMERCIAL
UTILITY, NON INFRINGEMENT OR TITLE AS WELL AS VALIDITY OF PATENT RIGHTS CLAIMS, ISSUED OR PENDING.

 

	10.	LIMITATION OF LIABILITY

 

10.1 Limitation of Liability.
THE LICENSOR PARTIES, THEIR TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES AND AFFILIATES WILL NOT BE LIABLE TO COMPANY, ITS AFFILIATES,
SUBLICENSEES, SUCCESSORS OR ASSIGNS, OR ANY THIRD PARTY WITH RESPECT TO ANY CLAIM: ARISING FROM COMPANY’S, AFFILIATES’
OR SUBLICENSEES’ USE OF THE PATENT RIGHTS, LICENSED PRODUCTS OR ANY OTHER TECHNOLOGY LICENSED UNDER THIS AGREEMENT; OR ARISING
FROM THE DEVELOPMENT, TESTING, MANUFACTURE, USE OR SALE OF LICENSED PRODUCTS. THE LICENSOR PARTIES WILL NOT BE LIABLE TO COMPANY,
ITS AFFILIATES, SUBLICENSEES, SUCCESSORS OR ASSIGNS, OR ANY THIRD PARTY FOR LOST PROFITS, BUSINESS INTERRUPTION, OR INDIRECT, SPECIAL
OR CONSEQUENTIAL DAMAGES OF ANY KIND, AS WELL AS VALIDITY OF PATENT RIGHTS CLAIMS, ISSUED OR PENDING.

 

	11.	INDEMNIFICATION

 

11.1 Indemnification. Company
will defend, indemnify, and hold harmless each Indemnified Party from and against any and all Liabilities with respect to an Indemnification
Event. The term “Indemnified Party” means each of the Licensor Parties, their trustees, officers, employees,
contractors, agents and affiliates. The term “Liabilities” means all damages, awards, deficiencies, settlement
amounts, defaults, assessments, fines, dues, penalties, costs, fees, liabilities, obligations, taxes, liens, losses, lost profits
and expenses (including, but not limited to, court costs, interest and reasonable fees of attorneys, accountants and other experts)
that are incurred by an Indemnified Party or awarded or otherwise required to be paid to third parties by an Indemnified Party.
The term “Indemnification Event” means any Claim against one or more Indemnified Parties arising out of or resulting
from: (a) the development, testing, use, manufacture, promotion, sale or other disposition of any Patent Rights, or Licensed
Products by Company, its Affiliates, sublicensees, assignees or vendors or third parties, including, but not limited to, (x) any
product liability or other Claim of any kind related to use by a third party of a Licensed Product, (y) any Claim by a third
party that the practice of any of the Patent Rights or the design, composition, manufacture, use, sale or other disposition of
any Licensed Product infringes or violates any patent, copyright, trade secret, trademark or other intellectual property right
of such third party, and (z) any Claim by a third party relating to clinical trials or studies for Licensed Products; (b) any
material breach of this Agreement by Company or its Affiliates or sublicensees; (c) the enforcement of this Section 11 by
any Indemnified Party, (d) arising out of the death of or injury to any person or persons or out of any damage to property, resulting
from the production, manufacture, sale, use, lease, consumption or advertisement of the Licensed Products or arising from any obligation
of Company hereunder. The term “Claim” means any charges, complaints, actions, suits, proceedings, hearings,
investigations, claims or demands.

 

11.2 Reimbursement of Costs.
Company will pay directly all Liabilities incurred for defense or negotiation of any Claim or will reimburse the Licensor Parties
for all documented Liabilities incident to the defense or negotiation of any Claim within Thirty (30) days after Company’s
receipt of invoices for such fees, expenses and charges.

 

11.3 Control of Litigation.
Company controls any litigation or potential litigation involving the defense of any Claim, including the selection of counsel,
with input from the Licensor Parties. The Licensor Parties reserve the right to protect their interest in defending against any
Claim by selecting their own counsel. If such separate representation is based on the Licensor Parties’ reasonable determination
that Company cannot adequately defend the Licensor Parties’ interests, or if the interests of the Indemnified Party
and Company with respect to such Claim are sufficiently adverse to prohibit the representation by the same counsel of both parties
under applicable law, ethical rules or equitable principals, then any attorneys’ fees and litigation expenses incurred by
the Licensor Parties for such separate representation will be paid for by Company, pursuant to Sections 11.1 and 11.2.

 

11.4 Other Provisions. Company
will not settle or compromise any Claim giving rise to Liabilities in any manner that imposes any restrictions or obligations on
the Licensor Parties or grants any rights to the Patent Rights or the Licensed Products without the Licensor Parties ’s prior
written consent, which shall not be unreasonably withheld. If Company fails or declines to assume the defense of any Claim within
Thirty (30) days after notice of the Claim, or fails to reimburse an Indemnified Party for any Liabilities pursuant to Sections
11.1 and 11.2 within the Thirty (30) day time period set forth in Section 11.2, then the Licensor Parties may assume
the defense of such Claim for the account and at the risk of Company, and any Liabilities related to such Claim will be conclusively
deemed a liability of Company. The indemnification rights of the Indemnified Parties under this Section 11 are in addition to all
other rights that an Indemnified Party may have at law, in equity or otherwise.

 

11.5 The Pennsylvania State University
(the “University”), Penn State Research Foundation (“PSRF”), the Licensor Parties’ respective directors,
officers, employees, affiliates and students (the “Protected Parties”) are to be third party beneficiaries of this
Agreement and of each Sublicense. The Protected Parties are and will be at all times during the Term of this Agreement and thereafter
indemnified, defended and held harmless against all claims, proceedings, demands and liabilities of any kind whatsoever, including
legal expenses and reasonable attorney’s fees, arising out of the death of or injury to any person or persons or out of any
damage to property, or resulting from the production, manufacture, sale, use, lease consumption, or advertisement of any product
incorporating the “invention” (described in PSU Inv. Disc. No 2005-3037) or which falls within the claims of any issued
or pending patent of the subject invention, or arising from any obligation thereof.

 

	12.	INSURANCE

 

12.1 Coverage. Company will
procure and maintain insurance policies for the following coverage in amounts that meet the Pennsylvania State Research Foundation
Requirements at all time set forth in the attached Exhibit E with respect to personal injury, bodily injury and property damage
arising out of Company’s performance under this Agreement: (a) during the Term, comprehensive general liability, including
broad form and contractual liability, in a minimum amount of [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Dollars ($[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]) combined single limit per occurrence and in the aggregate; (b) prior
to the commencement of clinical trials involving Licensed Products, clinical trials coverage in a minimum amount of [*CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Dollars ($[*CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]) combined single limit
per occurrence and in the aggregate; and (c) prior to the Sale of the first Licensed Product, product liability coverage,
in a minimum amount of [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT*] Dollars ($[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT*]) combined single limit per occurrence and in the aggregate. The Licensor Parties may review periodically the adequacy
of the minimum amounts of insurance for each coverage required by this Section 12.1, and the Licensor Parties reserve the
right to require Company to adjust the limits accordingly. Any requested increase in coverage by the Licensor Parties shall be
based upon a reasonable determination by the Licensor Parties of reasonable and customary levels of coverage, taking into account
factors that will include, but not be limited to, the size of the market, the FDA established safety profile of the product and
insurance separately maintained by the manufacturer. The required minimum amounts of insurance do not constitute a limitation on
Company’s liability or indemnification obligations to the Licensor Parties under this Agreement.

 

12.2 Other Requirements.

 

12.2.1The policies
of insurance required by Section 12.1 will be issued by an insurance carrier with an A.M. Best rating of “A” or
better and will name the Licensor Parties as additional insured parties with respect to Company’s performance under this
Agreement. Company will provide the Licensor Parties with insurance certificates evidencing the required coverage within Thirty
(30) days after the Effective Date and the commencement of each policy period and any renewal periods. Each certificate will
provide that the insurance carrier will notify the Licensor Parties in writing at least Thirty (30) days prior to the cancellation
or material change in coverage.

 

12.2.2Prior to
the first commercial sale of any product incorporating said invention (as defined in Section 11.5), full force and effect commercial,
general liability insurance which shall protect the Protected Parties (as defined in Section 11.5) shall be obtained. Such insurance
shall be written by a reputable insurance company authorized to do business in the Commonwealth of Pennsylvania, shall list the
Penn State Research Foundation (“PSRF”) and The Pennsylvania State University as an additional insured thereunder,
shall include product liability coverage and shall require Thirty (30) days written notice to be given to PSRF prior to any cancellation
or material change thereof. The limits of such insurance shall not be less than [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY
WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Dollars ($[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY
WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]) per occurrence with an aggregate of [*CONFIDENTIAL PORTION
OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] Dollars ($[*CONFIDENTIAL PORTION
OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]) for personal injury or death,
and [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]
Dollars ($[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*])
per occurrence with an aggregate of [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT*] Dollars ($[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT*]) for property damage.

 

13.EXPORT CONTROL

 

13.1 Company acknowledges that it
is subject to United States laws and regulations controlling the export of technical data, computer software, laboratory prototypes
and other commodities. The transfer of such items may require a license from the cognizant agency of the United States Government
and/or written assurances by Company that Company shall not export data or commodities to certain foreign countries without prior
approval of such agency. The Licensor Parties neither represent that a license shall not be required nor that, if required, it
shall be issued, and all costs thereof shall be borne by Company.

 

	14.	ADDITIONAL PROVISIONS

 

14.1 Independent Contractors.
The parties are independent contractors. Nothing contained in this Agreement is intended to create an agency, partnership or joint
venture between the parties. At no time will either party make commitments or incur any charges or expenses for or on behalf of
the other party.

 

14.2 No Discrimination. Neither
the Licensor Parties nor Company will discriminate against any employee or applicant for employment because of race, color, sex,
sexual or affectional preference, age, religion, national or ethnic origin, handicap, or veteran status.

 

14.3 Compliance with Laws.
Company must comply with all prevailing laws, rules and regulations that apply to its activities or obligations under this Agreement.
For example, Company will comply with applicable United States export laws and regulations. The transfer of certain technical data
and commodities may require a license from the applicable agency of the United States government and/or written assurances by Company
that Company will not export data or commodities to certain foreign countries without prior approval of the agency. The Licensor
Parties do not represent that no license is required, or that, if required, the license will issue.

 

14.4 Modification, Waiver &
Remedies. This Agreement may only be modified by a written amendment that is executed by an authorized representative of each
party. Any waiver must be express and in writing. No waiver by either party of a breach by the other party will constitute a waiver
of any different or succeeding breach. Unless otherwise specified, all remedies are cumulative.

 

14.5 Assignment & Hypothecation.
This Agreement is binding upon the parties and their respective heirs, successors, assigns, and personal representatives. Company
may not assign this Agreement or any part of it, either directly or by merger or operation of law, without the prior written consent
of the Licensor Parties. Any prohibited assignment or security interest will be null and void.

 

14.6 Notices. Any notice or
other required communication (each, a “Notice”) must be in writing, addressed to the party’s respective
“Notice Address” listed on the signature page, and delivered: (a) personally; (b) by certified mail,
postage prepaid, return receipt requested; (c) by recognized overnight courier service, charges prepaid; or (d) by facsimile.
A Notice will be deemed received: if delivered personally, on the date of delivery; if mailed, Five (5) days after deposit
in the United States mail; if sent via courier, One (1) business day after deposit with the courier service; or if sent via
facsimile, upon receipt of confirmation of transmission provided that a confirming copy of such Notice is sent by certified mail,
postage prepaid, return receipt requested.

 

14.7 Severability & Reformation.
If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, then the remaining
provisions of this Agreement will remain in full force and effect. Such invalid or unenforceable provision will be automatically
revised to be a valid or enforceable provision that comes as close as permitted by law to the parties’ original intent.

 

14.8 Headings & Counterparts.
The headings of the sections included in this Agreement are inserted for convenience only and are not intended to affect the meaning
or interpretation of this Agreement. This Agreement may be executed in several counterparts, all of which taken together will constitute
the same instrument.

 

14.9 Governing Law. This Agreement
will be governed in accordance with the laws of the state of New York, without giving effect to the conflict of law provisions
of any jurisdiction.

 

14.10 Dispute Resolution. If
a dispute arises between the parties concerning any right or duty under this Agreement, then the parties will confer, as soon as
practicable, in an attempt to resolve the dispute. If the parties are unable to resolve the dispute amicably, then the parties
will submit to the exclusive jurisdiction of, and venue in, the state and Federal courts located in New York with respect to all
disputes arising under this Agreement.

 

14.11 Integration. This Agreement
with its Exhibits, Appendices, and the Confidentiality Agreement, contain the entire agreement between the parties with respect
to the Patent Rights and the License and supersede all other oral or written representations, statements, or agreements with respect
to such subject matter.

 

14.12 Product Marking. Company agrees
to mark the Licensed Products sold in the United States with all applicable United States patent numbers. All Licensed Products
shipped to or sold in other countries shall be marked in such a manner as to conform to the patent laws and practices of the country
of manufacture or sale.

 

14.13Non-Refundable Payments. All
amounts paid to the Licensor Parties by Company under this License Agreement shall be nonrefundable.

  

 

[SIGNATURE PAGE TO FOLLOW]

 

    	 

    	 

     

IN WITNESS WHEREOF, the parties have arranged to have
this Agreement signed and executed by their respective authorized representatives as of the date and year set forth above
in the preamble of this Agreement.

 

	 	 	 	 	 	 	 	 	 
	 Dr. Jill P. Smith	 	 	 	TNI BioTech Inc. 
	 	
         

         

         
	 	 	 
	By:	 	/s/	 	 	 	By:	 	/s/
	 	 	Name: Dr. Jill P. Smith	 	 	 	 	 	Name: Noreen Griffin
	 	 	Title: Individual	 	 	 	 	 	Title:  Chief Executive Officer
	 	 	 	 	 
	Address:	 	
         

         
	 	 	 	Address:	 	
        6701 Democracy Blvd., Suite 300

        Bethesda, Maryland 20817

         

	 	 	 	 
	Required copy to:	 	 	 	 Required copy to:
	
        __________________________________

        __________________________________

         
	 	 	 	 	 	
        Brinen & Associates, LLC

        7 Dey Street, Suite 1503

        New York, New York 10007

	 	 	 	 	 	 	 	 	 
	LDN Research Group, LLC	 	 	 	 	 	 
	 	
         

         

         

         
	 	 	 	 	 	 	 
	By:	 	/s/	 	 	 	 	 	 
	 	 	Name: Moshe Rogosnitzky	 	 	 	 	 	 
	 	 	Title: Manager	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Address:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Required copy to:	 	 	 	 	 	 
	
        Greenberg Traurig, P.A.

        MetLife Building | 200 Park Avenue

        New York, NY 10166

         
	 	 	 	 	 	 

 

    	 

    	 

     

APPENDICES INDEX 

 

	Appendix A	
        Additional Terms, Conditions and Provisions

         

	Appendix B	Corporate minutes, capitalization table and articles of incorporation of the Company. *

 

 

 

EXHIBIT INDEX  

 

	Exhibit A	 	Patent Applications in Patent Rights
	 	 
	Exhibit B	 	Minimum Contents of Business Plan*
	 	 
	Exhibit C	 	Format of Royalty Report*
	 	 
	Exhibit D	 	Confidentiality Agreement*
	 	 	 
	Exhibit E	 	Petition for Assignment of Patent Rights to Inventor*

 

 

 

*[*Omitted for Confidentiality Purposes- Confidential Portion
Omitted and Filed Separately with the SEC Pursuant to a Request for Confidential Treatment*]

 

Appendix A

Additional Terms, Conditions and Provisions

 

The Company will commit the necessary funding
to commercialize the License granted in Section 1.1 of the Agreement, and to develop and bring to market a product within the Field
of Use (e.g., inflammatory bowel disease) based on naltrexone as the active
ingredient. Development of the licensed product is a priority and the company will within One Hundred Twenty (120) days
file an application to start the clinical trials. The Company will bring the licensed product to market first, in the licensed
territories of the United States and Israel, for a Crohn’s disease or IBD indication, before bringing a naltrexone product
to market for other indications. This does not preclude the Company from developing product or running trials for other indications
for which the Company has patents or IND for.

 

Once the Company has brought to market a naltrexone
product for an IBD indication, then until such time as the Company
brings to market a naltrexone product for a non-IBD indication, the Company shall regard all sales, in the United States and Israel,
of naltrexone products (including those sold for off-label usage) as incorporated into the “Field of Use” and royalty
payments shall be due for such sales.

 

Once Company brings to market a naltrexone
product for a non-IBD indication, whether covered by a separate patent or otherwise; the Company shall market it under a different
commercial name/brand in order to differentiate sales revenues for each respective product. Products sold for an IBD indication
will maintain their exclusive product/brand names and all sales of said product/brand name will accrue royalty payments regardless
of the indication sold/prescribed for.

 

If the Company uses Dr. Jill P. Smith’s
orphan drug designation to facilitate a filing with the FDA and such designation reduces or eliminates the FDA filing fee that
would apply in the absence of the orphan drug designation, then Company will pay Dr. Jill P. Smith additional consideration for
access and use of the orphan drug designation of [*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT*] (US$[*CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT*]) at the time of the FDA filing in which the orphan drug designation is applicable. The
Company will either assume responsibility for the copying of all of the documents relating to this application or will reimburse
Dr. Smith for the costs associated with all of the copying.

 

    	 

    	 

     

 

Exhibit A

Patent Applications in Patent Rights

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