APRICUS BIOSCIENCES, INC. (Form: 8-K, Received: 10/20/2014 08:02:44)

Apricus Biosciences, Inc.

Date: October 20, 2014

/s/ Steve Martin

Name: Steve Martin

Title: Senior Vice President, Chief Financial

Officer and Secretary

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): October 17, 2014

Apricus Biosciences, Inc.

(Exact name of registrant as specified in its charter)

Nevada

0-22245

87-0449967

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(I.R.S. Employer

Identification No.)


11975 El Camino Real, Suite 300, San Diego, CA		92130
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (858) 222-8041

(Former name or former address, if changed, since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13a-4(c))

Item 1.01.

Entry into a Material Definitive Agreement.

On October 17, 2014, Apricus Biosciences, Inc. (the “Company”), through its wholly-owned subsidiary NexMed (U.S.A.), Inc., entered into a License Agreement (the “License Agreement”) and Stock Issuance Agreement (the “Stock Issuance Agreement”) with Forendo Pharma Ltd. (“Forendo”), under which the Company was granted certain exclusive rights to develop and commercialize certain molecules, including fispemifene, a tissue-specific selective estrogen receptor modulator designed to treat secondary hypogonadism, chronic prostatitis and lower urinary tract symptoms in men (the “Licensed Products”), in the United States, as further described below.

In partial consideration of the licenses granted under the License Agreement, the Company will issue to Forendo and its designee approximately 3.6 million shares of its common stock, par value $0.001 per share (“Common Stock”), computed based on the 360-day average price of the Company’s Common Stock of $2.08 per share, and will make an upfront cash payment of $5.0 million within ten days of execution of the License Agreement. The Company may also be obligated to pay Forendo up to a total of $45.0 million upon the achievement of clinical and regulatory milestones for the Licensed Products and up to $260 million in commercial milestones.

The Company will pay tiered low double digit royalties to Forendo on net sales of any Licensed Products sold by the Company. The royalties are subject to reduction in certain circumstances, including in the event of market launch in the United States of a generic version of a Licensed Product. The Company’s obligation to pay the specified royalties under the License Agreement will continue until the later of (i) ten years from the first commercial sale of a Licensed Product and (ii) the later of the expiration of the of the last valid claim of a patent covering the Licensed Product or the expiration or termination of regulatory exclusivity of the Licensed Product in the United States (the “Royalty Term”).

The Company has agreed to use commercially reasonable efforts to develop and commercialize at least one Licensed Product in the United States. The Company will be responsible for performing the clinical activities necessary for regulatory approval in the United States including filing a New Drug Application.

The Company will be solely responsible for manufacturing and supplying the active pharmaceutical ingredient, drug substance and finished dosage form of any Licensed Product for commercialization in the United States.

During the Royalty Term, each of the Company and Forendo have agreed not to develop, market, sell, in-license or otherwise acquire an oral dosage form of any selective estrogen receptor modulator indicated for or being developed for the treatment of male secondary hypogonadism, chronic prostatitis or lower urinary tract symptoms in men.

The term of the License Agreement will continue until the expiration of the last-to-expire Royalty Term of such Licensed Product in the United States. After expiration of the Royalty Term for a Licensed Product, no further royalties will be payable in respect of sales of such License Agreement, and the license granted to the Company will be a fully paid-up, perpetual, irrevocable, royalty-free license with respect to such Licensed Product in the United States. In addition, either party may terminate the License Agreement in the event of the other party’s uncured material breach.

The Company may withdraw from the License Agreement in its entirety or on a Licensed Product-by-Licensed Product basis upon 90 days prior written notice to Forendo after completion of a Phase 2 clinical trial for at least one Licensed Product or for any reason after the grant of the first regulatory approval in the United States of a Licensed Product upon 180 days’ advance written notice to Forendo. The Company may also terminate the License Agreement by providing written notice to Forendo if, prior to a regulatory approval in the United States of a Licensed Product, there are material concerns regarding the safety of any Licensed Products or failure to substantially achieve any of the primary efficacy endpoints of any clinical trial involving the Licensed Product.

Under the License Agreement, Forendo and its designee have agreed to limit selling of shares on any given day to not more than ten percent of the Company’s average trading volume for the previous five trading days. The License Agreement requires the Company to file a registration statement on Form S-3 with respect to the resale of shares of Common Stock issued pursuant to the Stock Issuance Agreement within 60 days following the date of the License Agreement and to use reasonable commercial efforts to have such registration statement declared effective by the Securities and Exchange Commission as promptly as practicable.

The License Agreement and Stock Issuance Agreement, which are filed as Exhibit 10.1 and Exhibit 10.2, respectively, to this Current Report on Form 8-K, are incorporated herein by reference. The foregoing description of the terms of the License Agreement and the Stock Issuance Agreement does not purport to be complete and is qualified in its entirety by reference to such exhibits.

The information set forth in Item 2.03 of this Current Report on Form 8-K is incorporated herein by reference in this Item 1.01.

Item 1.02.

Termination of a Material Definitive Agreement.

On October 17, 2014, the Company entered into an Amendment Agreement (“Amendment”) with The Tail Wind Fund Ltd., Solomon Strategic Holdings, Inc., and Tail Wind Advisory & Management Ltd. (collectively, the “Holders”), such Holders being the holders of an aggregate principal amount of $1,225,000 of its 7% Convertible Notes Due December 31, 2014 (the “Notes”). Pursuant to the Amendment, the Company repaid the Notes in full and issued warrants to the Holders to purchase up to an aggregate of 480,392 shares of Common Stock, at an exercise price of $2.55 per share. The warrants are exercisable through December 31, 2015.

The form of warrant agreement, which is filed as Exhibit 4.1, to this Current Report on Form 8-K, is incorporated herein by reference. The foregoing description of the form of warrant agreement does not purport to be complete and is qualified in its entirety by reference to such exhibit.

Item 2.03.

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

Effective as of October 17, 2014 (the “closing date”), the Company entered into a loan and security agreement (the “credit facility”) with Oxford Finance LLC (“Oxford”), as collateral agent and a lender, and the lenders party thereto from time to time (the “Lenders”), including Oxford and Silicon Valley Bank (“SVB”), pursuant to which the Lenders agreed to make term loans available to the Company in order to pay off existing indebtedness and for working capital and general business purposes, in a principal amount of up to $10 million. The first term loan was funded on the closing date of the credit facility in an aggregate principal amount of $5 million. A second term loan of up to a principal amount of $5 million will be funded at the Company’s request prior to April 30, 2015, subject to initiation of a Phase 2b trial of the Company’s fispemifene program and other customary conditions to funding. Upon the entry into the credit facility, the Company was required to pay the Lenders a facility fee of $100,000 in conjunction with the funding of the first term loan. The credit facility is secured by substantially all of the Company’s assets other than its intellectual property.

Each term loan under the credit facility bears interest at an annual rate equal to the greater of (i) 7.95% or (ii) the sum of (a) the three-month U.S. LIBOR rate reported in the Wall Street Journal three business days prior to the funding date of the applicable term loan (which shall not be less than 0.23%), plus (b) 7.72%, such rate to be fixed at the time of borrowing. The first term loan bears interest at an annual rate of 7.95%. The Company is required to make interest-only payments following the funding of each term loan through November 1, 2015 or, under certain circumstances, through May 1, 2016. All outstanding term loans under the credit facility will begin amortizing at the end of the applicable interest-only period, with monthly payments of principal and interest being made by the Company to the Lenders in consecutive monthly installments following such interest-only period. Each term loan under the credit facility matures on October 1, 2018. Upon repayment of each term loan, the Company is also required to make a final payment to the Lenders equal to 6.00% of the original principal amount of such term loan funded.

At the Company’s option, the Company may prepay the outstanding principal balance of the term loans in whole but not in part, subject to a prepayment fee of 3% of any amount prepaid if the prepayment occurs on or prior to the first anniversary of the funding date of such term loan, 2% of the amount prepaid if the prepayment occurs after the first anniversary of the funding date through and including the second anniversary of the funding date of such term loan, and 1% of any amount prepaid after the second anniversary of the funding date of such term loan.

The credit facility includes affirmative and negative covenants applicable to the Company and any subsidiaries it creates in the future. The affirmative covenants include, among others, covenants requiring the Company to maintain its legal existence and governmental approvals, deliver certain financial reports and maintain insurance coverage. The negative covenants include, among others, restrictions on the Company’s transferring collateral, incurring additional indebtedness, engaging in mergers or acquisitions, paying dividends or making other distributions, making investments, creating liens, selling assets, and suffering a change in control, in each case subject to certain exceptions.

The credit facility also includes events of default, the occurrence and continuation of which provide Oxford, as collateral agent, with the right to exercise remedies against the Company and the collateral securing the term loans under the credit facility, including foreclosure against the Company’s properties securing the credit facilities, including the Company’s cash. These events of default include, among other things, the Company’s failure to pay any amounts due under the credit facility, a breach of covenants under the credit facility, the Company’s insolvency, a material adverse change, the occurrence of any default under certain other indebtedness in an amount greater than $250,000, and a final judgment against the Company in an amount greater than $250,000.

On the closing date of the credit facility, in connection therewith, the Company issued to Oxford and SVB, as the sole Lenders on the closing date, a warrant to purchase up to 193,798 shares of Common Stock, at an exercise price of $1.29 per share. Upon the funding of the second term loan under the credit facility, the Company will issue additional warrants to the applicable Lenders entitling them to purchase additional shares of Common Stock equal to 5.0% of the funded amount divided by the exercise price, which will be equal to the lower of (i) the closing price per share on the day prior to the funding date of the second term loan or (ii) the ten-day average closing price per share prior to the funding date of the second term loan. The warrants may be exercised either for cash or on a cashless basis. The warrants expire ten years from each date of issuance. Additionally, in the event of the Company’s acquisition for cash or marketable securities, either the Lenders shall exercise their warrants or such warrants will expire immediately prior to the consummation of such acquisition.

The form of warrant agreement and the loan and security agreement, which are filed as Exhibit 4.2 and Exhibit 10.3, respectively, to this Current Report on Form 8-K, are incorporated herein by reference. The foregoing description of the credit facility, form of warrant agreement and loan and security agreement does not purport to be complete and is qualified in its entirety by reference to such exhibits.

Item 3.02.

Unregistered Sale of Equity Securities.

The stock described in Item 1.01 above and the warrants described in Items 1.02 and 2.03 above were offered and sold in reliance upon the exemption from registration provided by Section 4(2) under the Securities Act of 1933 (the “Securities Act”). The License Agreement, Stock Issuance Agreement and warrant agreement contain representations to support the Company’s reasonable belief that each of the recipients of such securities had access to information concerning the Company’s operations and financial condition, that each such recipient is acquiring the securities for its own account and not with a view to the distribution thereof, and that each such recipient is an “accredited investor” as defined by Rule 501 promulgated under the Securities Act.

Item 7.01.

Regulation FD Disclosure.

On October 20, 2014, the Company issued a press release. The press release is currently available on the Company’s website and filed herewith as Exhibit 99.1.

The information set forth in this Item 7.01, including Exhibit 99.1, is being furnished pursuant to Item 7.01 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and it shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or under the Exchange Act, whether made before or after the date hereof, except as expressly provided by specific reference in such a filing.

By filing this Current Report on Form 8-K and furnishing the information in this Item 7.01, the Company makes no admission as to the materiality of Item 7.01 in this report or the press release attached hereto as Exhibit 99.1. The information contained in the press release is summary information that is intended to be considered in the context of the Company’s filings with the SEC and other public announcements that the Company makes, by press release or otherwise, from time to time. The Company undertakes no duty or obligation to publicly update or revise the information contained in this Item, although it may do so from time to time as its management believes is appropriate. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure.

The Company cautions you that this Current Report on Form 8-K and the press release attached hereto as Exhibit 99.1 contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, as amended. Statements in the press release that are not purely historical are forward-looking statements. Such forward-looking statements include, among other things: references to the timing of planned launches and initial shipments of Vitaros ^® in various countries by the Company’s commercial partners; the planned launch strategy for Vitaros in the United Kingdom, Sweden, Germany and other countries; the planned commencement of clinical trials and an approved pathway for RayVa™ and fispemifene; the size of the commercial opportunity for fispemifene and the potential for fispemifene to achieve commercial success; the ability to build a focused commercial organization for fispemifene; the expected funding under the credit facility of a second term loan subject to initiation of a Phase 2b trial or the Company’s fispemifene Program; the planned out-license of Femprox ^® and RayVa in Europe; the potential for Vitaros or a room temperature version of Vitaros to achieve commercial success generally or in any specific territory, such as the United Kingdom, Sweden or Germany; and the Company’s 2014 financial outlook, including cash projections. Actual results could differ from those projected in any forward-looking statements due to a variety of reasons that are outside the control of the Company, including, but not limited to: its ability to further develop its product Vitaros for the treatment of erectile dysfunction (“ED”), such as the room temperature version of Vitaros, and its product candidates RayVa for the treatment of Raynaud’s

phenomenon and fispemifene for the treatment of secondary hypogonadism, chronic prostatitis and lower urinary tract symptoms in men, as well as the timing of such events; the Company’s ability to carry out clinical studies for RayVa and fispemifene, as well as the timing and success of the results of such studies; the Company’s dependence on its commercial partners to carry out the commercial launch of Vitaros in various territories, such as the United Kingdom, Sweden and Germany, and the potential for delays in the timing of commercial launch; competition in the ED market and other markets in which the Company and its partners operate; the Company’s ability to obtain and maintain intellectual property protection for Vitaros, RayVa, fispemifene or any other product candidates; the Company’s ability to raise additional funding that it may need to continue to pursue its commercial and business development plans; the Company’s ability to draw the second term loan under the credit facility when expected, or at all, including the Company’s failure to meet the conditions required to draw under the loan and security agreement; the Company’s ability to remain in compliance with the terms and restrictions under the credit facility; the Company’s ability to obtain the requisite governmental approval for Femprox, RayVa and fispemifene; fluctuations and volatility in our stock price, including as a result of the issuance and possible resale of the shares granted as partial consideration for the fispemifene license; and market conditions. These forward-looking statements are made as of the date of this report, and the Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Readers are urged to read the risk factors set forth in the Company’s most recent annual report on Form 10-K, subsequent quarterly reports filed on Form 10-Q, and other filings made with the SEC. Copies of these reports are available from the SEC’s website at www.sec.gov or without charge from the Company.

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits.


Exhibit No.		Description

4.1		Form of Warrant issued to the Holders under the Amendment Agreement, dated as of October 17, 2014, by and among Apricus Biosciences, Inc., The Tail Wind Fund Ltd., Solomon Strategic Holdings, Inc., and Tail Wind Advisory & Management Ltd.

4.2		Form of Warrant issued to the lenders under the Loan and Security Agreement, dated as of October 17, 2014, by and among Apricus Biosciences, Inc., NexMed (U.S.A.), Inc., NexMed Holdings, Inc. and Apricus Pharmaceuticals USA, Inc., as borrowers, Oxford Finance LLC, as collateral agent, and the lenders party thereto from time to time including Oxford Finance LLC and Silicon Valley Bank.

10.1†		License Agreement by and between NexMed (U.S.A.), Inc. and Forendo Pharma Ltd., dated as of October 17, 2014.

10.2		Stock Issuance Agreement, by and among Apricus Biosciences, Inc., Forendo Pharma Ltd. and Birch & Lake Partners, LLC, dated as of October 17, 2014.

10.3		Loan and Security Agreement by and among Apricus Biosciences, Inc., NexMed (U.S.A.), Inc., NexMed Holdings, Inc. and Apricus Pharmaceuticals USA, Inc., as borrowers, Oxford Finance LLC, as collateral agent, and the lenders party thereto from time to time, including Oxford Finance LLC and Silicon Valley Bank, dated as of October 17, 2014.

99.1		Press Release, dated October 20, 2014.

† Confidential treatment has been requested for portions of this exhibit. These portions have been omitted and filed separately with the Securities and Exchange Commission.

* * *

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Exhibit 4.1

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

COMMON STOCK PURCHASE WARRANT

APRICUS BIOSCIENCES, INC.


Warrant Shares:		Issue Date: October 17, 2014

THIS COMMON STOCK PURCHASE WARRANT (the “ Warrant ”) certifies that, for value received, (together with its successors, assigns and transferees, the “ Holder ”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the Issue Date (as defined above) and on or prior to 11:59 PM on December 31, 2015 (the “ Termination Date ”) but not thereafter, to subscribe for and purchase from APRICUS BIOSCIENCES, Inc., a Nevada corporation (the “ Company ”), up to shares (the “ Warrant Shares ”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

Section 1 . Definitions . Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Amendment (the “ Amendment ”), dated on or about the date hereof, between the Company and the original Holder hereof, pursuant to which this Warrant is being issued.

Section 2 . Exercise .

a) Exercise of Warrant . Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time and from time to time on or after the Issue Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (“ Notice of Exercise ”) (which delivery may be made by email or facsimile); and, within 3 Trading Days of the date said Notice of Exercise is delivered to the Company, the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank, unless payment is being made by cashless exercise as provided in Section 2(c) below.

Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case the Holder shall surrender this Warrant to the Company for cancellation within 3 Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

b) Exercise Price . The exercise price per share of the Common Stock under this Warrant shall be $2.55 , subject to adjustment hereunder (the “ Exercise Price ”).

c) Cashless Exercise . This Warrant may be exercised by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:


(A) =		the volume weighted average sale price per share of Common Stock on the principal market on which the Common Stock is traded (“ VWAP ”) on the trading day immediately preceding the date of exercise;

(B) =		the Exercise Price of this Warrant (as adjusted); and

(X) =		the number of Warrant Shares issuable upon exercise of this Warrant in accordance with the terms of this Warrant by means of a cash exercise rather than a cashless exercise.

Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).

d) Holder’s Restrictions . The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s affiliates, and any other person or entity acting as a group together with the Holder or any of the Holder’s affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude

the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other options, warrants or securities convertible into or exercisable for Common Stock) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates. Except as set forth in the preceding sentence, for purposes of this Section 2(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act of 1934, as amended (“ Exchange Act ”), and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 2(d) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation. The “ Beneficial Ownership Limitation ” shall be 9.9% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. By written notice to the Company, the Holder may at any time and from time to time increase or decrease the Beneficial Ownership Limitation to any other percentage specified in such notice (or specify that the Beneficial Ownership Limitation shall no longer be applicable), provided, however, that any such increase (or inapplicability) shall not be effective until the sixty-first (61st) day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

Mechanics of Exercise .

Delivery of Certificates Upon Exercise . Certificates for shares purchased hereunder shall be transmitted by the transfer agent of the Company to the Holder by crediting the account of the Holder’s prime broker with the Depository Trust Company through its Deposit Withdrawal Agent Commission (“ DWAC ”) system or Fast Automated Securities Transfer systems if the Company is a participant in such systems and either (x) there is an effective Registration Statement permitting the resale of the Warrant Shares by the Holder, or (y) such shares may be sold pursuant to Rule 144, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise, within 3 Trading Days from the delivery to the Company of the Notice of Exercise Form, surrender of this Warrant (if required) and payment of the aggregate Exercise Price as set forth above (“ Warrant Share Delivery Date ”). This Warrant shall be

deemed to have been exercised on the date the Exercise Price is received by the Company. The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price (or by cashless exercise) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(e)(vi) prior to the issuance of such shares, have been paid.

ii. Delivery of New Warrants Upon Exercise . If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

iii. Rescission Rights . If the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Shares (or otherwise transmit such shares via DWAC to the Holders DTC account) pursuant to this Section 2(e) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

iv. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise . In addition to any other rights available to the Holder, if the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Shares (or otherwise transmit such shares via DWAC to the Holders DTC account) pursuant to an exercise on or before the Warrant Share Delivery Date and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “ Buy-In ”), then the Company shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000

to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver the Warrant Shares or certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

v. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

vi. Charges, Taxes and Expenses . Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided , however , that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

vii. Closing of Books . The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

Section 3 . Certain Adjustments .

a) Stock Dividends and Splits . If the Company, at any time while this Warrant is outstanding: (A) pays a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (B) subdivides outstanding shares of Common Stock into a larger number of

shares, (C) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

b) [Intentionally Omitted] .

c) Subsequent Rights Offerings . If the Company, at any time while the Warrant is outstanding, shall issue rights, options or warrants to all holders of Common Stock (and not to Holders) entitling them to subscribe for or purchase shares of Common Stock (the “ Purchase Rights ”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

d) Pro Rata Distributions . If the Company, at any time while this Warrant is outstanding, shall distribute to all holders of Common Stock (and not to Holders of the Warrants) evidences of its indebtedness or assets (other than cash) or rights or warrants to subscribe for or purchase any security, then (1) upon exercise of this Warrant, for each Warrant Share acquired, Holder shall receive, without additional cost to Holder, the total number and kind of securities and property which Holder would have received had Holder owned the Warrant Shares of record as of the date the dividend or distribution occurred, and (2) upon such distribution to all holders of Common Stock, the Company shall place in escrow, for the benefit of the Holder, such amount, number and kind of securities and property to which Holder may become entitled to receive upon exercise hereof pursuant to the terms of this paragraph.

e) Fundamental Transaction . If, at any time while this Warrant is outstanding, (A) the Company effects any merger or consolidation of the Company with or into another Person, (B) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (D) the Company effects any reclassification of the Common Stock or any

compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (each “ Fundamental Transaction ”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “ Alternate Consideration ”) receivable as a result of such merger, consolidation or disposition of assets by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder’s right to exercise such warrant into Alternate Consideration.

f) Calculations . All calculations under this Section 3 shall be made to the nearest four decimal places or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

g) Notice to Holder .

i. Adjustment to Exercise Price . Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. If the Company enters into a variable rate transaction, the Company shall be deemed to have issued Common Stock or Convertible Securities at the lowest possible conversion or exercise price at which such securities may be converted or exercised.

ii. Notice to Allow Exercise by Holder . If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock or of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; (D) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 7 business days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the

Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder is entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice.

Section 4 . Transfer of Warrant .

a) Transferability . Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

b) New Warrants . This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the original Issue Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

c) Warrant Register . The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “ Warrant Register ”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

d) Transfer Restrictions . If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or eligible for resale under Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, comply with the provisions of Section 5.7 of the Purchase Agreement.

Section 5 . Representations, Warranties of the Holder

The Holder represents and warrants to the Company as follows:

a) Purchase for Own Account . This Warrant and the securities to be acquired upon exercise of this Warrant by Holder are being acquired for investment for Holder’s account, not as a nominee or agent, and not with a view to the public resale or distribution within the meaning of the Securities Act. Holder also represents that it has not been formed for the specific purpose of acquiring this Warrant or the Warrant Shares.

b) Disclosure of Information . Holder is aware of the Company’s business affairs and financial condition and has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of this Warrant and its underlying securities. Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of this Warrant and its underlying securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to Holder or to which Holder has access.

c) Investment Experience . Holder understands that the purchase of this Warrant and its underlying securities involves substantial risk. Holder has experience as an investor in securities of companies in the development stage and acknowledges that Holder can bear the economic risk of such Holder’s investment in this Warrant and its underlying securities and has such knowledge and experience in financial or business matters that Holder is capable of evaluating the merits and risks of its investment in this Warrant and its underlying securities and/or has a preexisting personal or business relationship with the Company and certain of its officers, directors or controlling persons of a nature and duration that enables Holder to be aware of the character, business acumen and financial circumstances of such persons.

d) Accredited Investor Status . Holder is an “accredited investor” within the meaning of Regulation D promulgated under the Act.

e) The Act . Holder understands that this Warrant and the Warrant Shares issuable upon exercise hereof have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the Holder’s investment intent as expressed herein. Holder understands that this Warrant and the Warrant Shares issued upon any exercise hereof must be held indefinitely unless subsequently registered under the Act and qualified under applicable state securities laws, or unless exemption from such registration and qualification are otherwise available. Holder is aware of the provisions of Rule 144 promulgated under the Act.

f) No Rights as Shareholder Until Exercise . This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof as set forth in Section 2(e)(i).

Section 6 . Miscellaneous .

a) Loss, Theft, Destruction or Mutilation of Warrant . The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

b) Saturdays, Sundays, Holidays, etc . If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

c) Authorized Shares .

The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the principal market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

d) Jurisdiction . All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

e) Restrictions . The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

f) Nonwaiver and Expenses . No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

g) Notices . All notices and other communications hereunder from the Company to the Holder, or vice versa, shall be deemed delivered and effective (i) when given personally, (ii) on the third (3 ^rd ) Business Day after being mailed by first-class registered or certified mail, postage prepaid, (iii) upon actual receipt if given by facsimile or electronic mail and such receipt is confirmed in writing by the recipient, or (iv) on the first Business Day following delivery to a reliable overnight courier service, courier fee

prepaid, in any case at such address as may have been furnished to the Company or Holder, as the case may be, in writing by the Company or such Holder from time to time in accordance with the provisions of this Section. All notices to Holder shall be addressed as follows until the Company receives notice of a change of address in connection with a transfer or otherwise:

[ l ]

Notice to the Company shall be addressed as follows until Holder receives notice of a change in address:

APRICUS BIOSCIENCES, INC.

11975 El Camino Real, Suite 300

San Diego, CA 92130

Attn: Steve Martin, Chief Financial Officer

Telephone: (858) 222-8041

Facsimile: (858) 436-8155

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

Latham & Watkins LLP

12670 High Bluff Drive

San Diego, CA 92130

Attn: Cheston Larson, Esq.

Facsimile: (858) 523-5450

Email: cheston.larson@lw.com

h) Limitation of Liability . No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

i) Remedies . Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

j) Successors and Assigns . Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

k) Amendment . This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

l) Severability . Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

m) Headings . The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

********************

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

APRICUS BIOSCIENCES, INC.

By:

Name: Steve Martin

Title: Senior Vice President and Chief Financial Officer

NOTICE OF EXERCISE

TO:	APRICUS BIOSCIENCES, INC.

RE:	Warrant originally issued on or about October , 2014 to [ ] for Warrant Shares.

(1) The undersigned hereby elects to purchase Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2) Payment shall take the form of (check applicable box):

[ ] in lawful money of the United States; or

[ ] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

(3) Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:

(4) By its execution below and for the benefit of the Company, Holder hereby restates each of the representations and warranties in Section 5 of the Warrant as of the date hereof.

[SIGNATURE OF HOLDER]

Name of Warrant Holder:

Signature of Authorized Signatory of Warrant Holder :

Name of Authorized Signatory:

Title of Authorized Signatory:

Date:

ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, [ ] all of or [ ] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to



whose address is

.

Dated: ,


Holder’s Signature:

Holder’s Address:

Signature Guaranteed:

By its execution below, and for the benefit of the Company, [ ] makes each of the representations and warranties set forth in Section 5 of the Warrant and agrees to all other provisions of the Warrant as of the date hereof.


Signature:

Address:

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

Exhibit 4.2

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN SECTIONS 5.3 AND 5.4 BELOW, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

WARRANT TO PURCHASE STOCK


Company:		APRICUS BIOSCIENCES, INC., a Nevada corporation
Number of Shares:		[5.00% of the funded Term Loan/Warrant Price]
Type/Series of Stock:		Common Stock
Warrant Price:		$1.29
Issue Date:		October 17, 2014
Expiration Date:		October 17, 2024 See also Section 5.1(b).
Credit Facility:		This Warrant to Purchase Stock (“ Warrant ”) is issued in connection with that certain Loan and Security Agreement of even date herewith among Oxford Finance LLC, as Lender and Collateral Agent, the Lenders from time to time party thereto, including Silicon Valley Bank and the Company (as modified, amended and/or restated from time to time, the “ Loan Agreement ”).

THIS WARRANT CERTIFIES THAT, for good and valuable consideration, [SILICON VALLEY BANK][OXFORD FINANCE LLC] ([ “Oxford ” and,] together with any successor or permitted assignee or transferee of this Warrant or of any shares issued upon exercise hereof, “ Holder ”) is entitled to purchase the number of fully paid and non-assessable shares (the “ Shares ”) of the above-stated Type/Series of Stock (the “ Class ”) of the above-named company (the “ Company ”) at the above-stated Warrant Price, all as set forth above and as adjusted pursuant to Section 2 of this Warrant, subject to the provisions and upon the terms and conditions set forth in this Warrant. [ for SVB, add : Reference is made to Section 5.4 of this Warrant whereby Silicon Valley Bank shall transfer this Warrant to its parent company, SVB Financial Group.]

SECTION 1. EXERCISE.

1.1 Method of Exercise . Holder may at any time and from time to time exercise this Warrant, in whole or in part, by delivering to the Company the original of this Warrant together with a duly executed Notice of Exercise in substantially the form attached hereto as Appendix 1 and, unless Holder is exercising this Warrant pursuant to a cashless exercise set forth in Section 1.2, a check, wire transfer of same-day funds (to an account designated by the Company), or other form of payment acceptable to the Company for the aggregate Warrant Price for the Shares being purchased.

1.2 Cashless Exercise . On any exercise of this Warrant, in lieu of payment of the aggregate Warrant Price in the manner as specified in Section 1.1 above, but otherwise in accordance with the requirements of Section 1.1, Holder may elect to receive Shares equal to the value of this Warrant, or portion hereof as to which this Warrant is being exercised. Thereupon, the Company shall issue to the Holder such number of fully paid and non-assessable Shares as are computed using the following formula:


	X = Y(A-B)/A

where:

	X =	the number of Shares to be issued to the Holder;

	Y =	the number of Shares with respect to which this Warrant is being exercised (inclusive of the Shares surrendered to the Company in payment of the aggregate Warrant Price);

1.3 Fair Market Value . If the Company’s common stock is then traded or quoted on a nationally recognized securities exchange, inter-dealer quotation system or over-the-counter market (a “ Trading Market ”) and the Class is common stock, the fair market value of a Share shall be the closing price or last sale price of a share of common stock reported for the Business Day immediately before the date on which Holder delivers this Warrant together with its Notice of Exercise to the Company. If the Company’s common stock is not traded in a Trading Market, the Board of Directors of the Company shall determine the fair market value of a Share in its reasonable good faith judgment.

1.4 Delivery of Certificate and New Warrant . Within a reasonable time after Holder exercises this Warrant in the manner set forth in Section 1.1 or 1.2 above, the Company shall deliver to Holder a certificate representing the Shares issued to Holder upon such exercise and, if this Warrant has not been fully exercised and has not expired, a new warrant of like tenor representing the Shares not so acquired.

1.5 Replacement of Warrant . On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form, substance and amount to the Company or, in the case of mutilation, on surrender of this Warrant to the Company for cancellation, the Company shall, within a reasonable time, execute and deliver to Holder, in lieu of this Warrant, a new warrant of like tenor and amount.

1.6 Treatment of Warrant Upon Acquisition of Company .

(a) Acquisition . For the purpose of this Warrant, “ Acquisition ” means any transaction or series of related transactions involving: (i) the sale, lease, exclusive license, or other disposition of all or substantially all of the assets of the Company (ii) any merger or consolidation of the Company into or with another person or entity (other than a merger or consolidation effected exclusively to change the Company’s domicile), or any other corporate reorganization, in which the stockholders of the Company in their capacity as such immediately prior to such merger, consolidation or reorganization, own less than a majority of the Company’s (or the surviving or successor entity’s) outstanding voting power immediately after such merger, consolidation or reorganization (or, if such Company stockholders beneficially own a majority of the outstanding voting power of the surviving or successor entity as of immediately after such merger, consolidation or reorganization, such surviving or successor entity is not the Company); or (iii) any sale or other transfer by the stockholders of the Company of shares representing at least a majority of the Company’s then-total outstanding combined voting power.

(b) Treatment of Warrant at Acquisition . In the event of an Acquisition in which the consideration to be received by the Company’s stockholders consists solely of cash, solely of Marketable Securities or a combination of cash and Marketable Securities (a “ Cash/Public Acquisition ”), either (i) Holder shall exercise this Warrant pursuant to Section 1.1 and/or 1.2 and such exercise will be deemed effective immediately prior to and contingent upon the consummation of such Acquisition or (ii) if Holder elects not to exercise the Warrant, this Warrant will expire immediately prior to the consummation of such Acquisition.

(c) The Company shall provide Holder with written notice of its request relating to the Cash/Public Acquisition (together with such reasonable information as Holder may reasonably require regarding the treatment of this Warrant in connection with such contemplated Cash/Public Acquisition giving rise to such notice), which is to be delivered to Holder not less than seven (7) Business Days prior to the closing of the proposed Cash/Public Acquisition. In the event the Company does not provide such notice, then if, immediately prior to the Cash/Public Acquisition, the fair market value of one Share (or other security issuable upon the exercise hereof) as determined in accordance with Section 1.3 above would be greater than the Warrant Price in effect on such date, then this Warrant shall automatically be deemed on and as of such date to be exercised pursuant to Section 1.2 above as to all Shares (or such other securities) for which it shall not previously have been exercised, and the Company shall promptly notify the Holder of the number of Shares (or such other securities) issued upon such exercise to the Holder and Holder shall be deemed to have restated each of the representations and warranties in Section 4 of the Warrant as the date thereof.

(d) Upon the closing of any Acquisition other than a Cash/Public Acquisition defined above, the acquiring, surviving or successor entity shall assume the obligations of this Warrant, and this Warrant shall thereafter be exercisable for the same securities and/or other property as would have been paid for the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were outstanding on and as of the closing of such Acquisition, subject to further adjustment from time to time in accordance with the provisions of this Warrant.

(e) As used in this Warrant, “ Marketable Securities ” means securities meeting all of the following requirements: (i) the issuer thereof is then subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and is then current in its filing of all required reports and other information under the Act and the Exchange Act; (ii) the class and series of shares or other security of the issuer that would be received by Holder in connection with the Acquisition were Holder to exercise this Warrant on or prior to the closing thereof is then traded in a Trading Market, and (iii) following the closing of such Acquisition, Holder would not be restricted from publicly re-selling all of the issuer’s shares and/or other securities that would be received by Holder in such Acquisition were Holder to exercise or convert this Warrant in full on or prior to the closing of such Acquisition, except to the extent that any such restriction (x) arises solely under federal or state securities laws, rules or regulations, and (y) does not extend beyond six (6) months from the closing of such Acquisition.

SECTION 2. ADJUSTMENTS TO THE SHARES AND WARRANT PRICE.

2.1 Stock Dividends, Splits, Etc . If the Company declares or pays a dividend or distribution on the outstanding shares of the Class payable in common stock or other securities or property (other than cash), then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without additional cost to Holder, the total number and kind of securities and property which Holder would have received had Holder owned the Shares of record as of the date the dividend or distribution occurred. If the Company subdivides the outstanding shares of the Class by reclassification or otherwise into a greater number of shares, the number of Shares purchasable hereunder shall be proportionately increased and the Warrant Price shall be proportionately decreased. If the outstanding shares of the Class are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased and the number of Shares shall be proportionately decreased.

2.2 Reclassification, Exchange, Combinations or Substitution . Upon any event whereby all of the outstanding shares of the Class are reclassified, exchanged, combined, substituted, or replaced for, into, with or by Company securities of a different class and/or series, then from and after the consummation of such event, this Warrant will be exercisable for the number, class and series of Company securities that Holder would have received had the Shares been outstanding on and as of the consummation of such event, and subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant. The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, combinations substitutions, replacements or other similar events.

2.3 No Fractional Share . No fractional Share shall be issuable upon exercise of this Warrant and the number of Shares to be issued shall be rounded down to the nearest whole Share. If a fractional Share interest arises upon any exercise of the Warrant, the Company shall eliminate such fractional Share interest by paying Holder in cash the amount computed by multiplying the fractional interest by (i) the fair market value (as determined in accordance with Section 1.3 above) of a full Share, less (ii) the then-effective Warrant Price.

2.4 Notice/Certificate as to Adjustments . Upon each adjustment of the Warrant Price, Class and/or number of Shares, the Company, at the Company’s expense, shall notify Holder in writing within a reasonable time setting forth the adjustments to the Warrant Price, Class and/or number of Shares and facts upon which such adjustment is based. The Company shall, upon written request from Holder, furnish Holder with a certificate of its Chief Financial Officer, including computations of such adjustment and the Warrant Price, Class and number of Shares in effect upon the date of such adjustment.

SECTION 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.

3.1 Representations and Warranties . The Company represents and warrants to, and agrees with, the Holder as follows:

(a) All Shares which may be issued upon the exercise of this Warrant, and all securities, if any, issuable upon conversion of the Shares, shall, upon issuance, be duly authorized, validly issued, fully paid and non-assessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws. The Company covenants that it shall at all times cause to be reserved and kept available out of its authorized and unissued capital stock such number of shares of the Class, common stock and other securities as will be sufficient to permit the exercise in full of this Warrant and the conversion of the Shares into common stock or such other securities.

3.2 Notice of Certain Events . If the Company proposes at any time to:

(a) declare any dividend or distribution upon the outstanding shares of the Class or common stock, whether in cash, property, stock, or other securities and whether or not a regular cash dividend;

(b) offer for subscription or sale pro rata to the holders of the outstanding shares of the Class any additional shares of any class or series of the Company’s stock (other than pursuant to contractual pre-emptive rights);

(c) effect any reclassification, exchange, combination, substitution, reorganization or recapitalization of the outstanding shares of the Class; or

(d) effect an Acquisition or to liquidate, dissolve or wind up;

then, in connection with each such event, the Company shall give Holder:

(1) at least seven (7) Business Days prior written notice of the date on which a record will be taken for such dividend, distribution, or subscription rights (and specifying the date on which the holders of outstanding shares of the Class will be entitled thereto) or for determining rights to vote, if any, in respect of the matters referred to in (a) and (b) above; and

(2) in the case of the matters referred to in (c) and (d) above at least seven (7) Business Days prior written notice of the date when the same will take place (and specifying the date on which the holders of outstanding shares of the Class will be entitled to exchange their shares for the securities or other property deliverable upon the occurrence of such event).

Reference is made to Section 1.6(c) whereby this Warrant will be deemed to be exercised pursuant to Section 1.2 hereof if the Company does not give written notice to Holder of a Cash/Public Acquisition as required by the terms hereof. Company will also provide information requested by Holder that is reasonably necessary to enable Holder to comply with Holder’s accounting or reporting requirements.

SECTION 4. REPRESENTATIONS, WARRANTIES OF THE HOLDER.

The Holder represents and warrants to the Company as follows:

4.1 Purchase for Own Account . This Warrant and the securities to be acquired upon exercise of this Warrant by Holder are being acquired for investment for Holder’s account, not as a nominee or agent, and not with a view to the public resale or distribution within the meaning of the Act. Holder also represents that it has not been formed for the specific purpose of acquiring this Warrant or the Shares.

4.2 Disclosure of Information . Holder is aware of the Company’s business affairs and financial condition and has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of this Warrant and its underlying securities. Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of this Warrant and its underlying securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to Holder or to which Holder has access.

4.3 Investment Experience . Holder understands that the purchase of this Warrant and its underlying securities involves substantial risk. Holder has experience as an investor in securities of companies in the development stage and acknowledges that Holder can bear the economic risk of such Holder’s investment in this Warrant and its underlying securities and has such knowledge and experience in financial or business matters that Holder is capable of evaluating the merits and risks of its investment in this Warrant and its underlying securities and/or has a preexisting personal or business relationship with the Company and certain of its officers, directors or controlling persons of a nature and duration that enables Holder to be aware of the character, business acumen and financial circumstances of such persons.

4.4 Accredited Investor Status . Holder is an “accredited investor” within the meaning of Regulation D promulgated under the Act.

4.5 The Act . Holder understands that this Warrant and the Shares issuable upon exercise hereof have not been registered under the Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the Holder’s investment intent as expressed herein. Holder understands that this Warrant and the Shares issued upon any exercise hereof must be held indefinitely unless subsequently registered under the Act and qualified under applicable state securities laws, or unless exemption from such registration and qualification are otherwise available. Holder is aware of the provisions of Rule 144 promulgated under the Act.

4.6 No Voting Rights . Holder, as a Holder of this Warrant, will not have any voting rights until the exercise of this Warrant.

SECTION 5. MISCELLANEOUS.

5.1 Term; Automatic Cashless Exercise Upon Expiration .

(a) Term . Subject to the provisions of Section 1.6 above, this Warrant is exercisable in whole or in part at any time and from time to time on or before 6:00 PM, [ for SVB : Pacific][ for Oxford : Eastern] Time, on the Expiration Date and shall be void thereafter.

(b) Automatic Cashless Exercise upon Expiration . In the event that, upon the Expiration Date, the fair market value of one Share (or other security issuable upon the exercise hereof) as determined in accordance with Section 1.3 above is greater than the Warrant Price in effect on such date, then this Warrant shall automatically be deemed on and as of such date to be exercised pursuant to Section 1.2 above as to all Shares (or such other securities) for which it shall not previously have been exercised, and the Company shall, within a reasonable time, deliver a certificate representing the Shares (or such other securities) issued upon such exercise to Holder.

5.2 Legends . Each certificate evidencing Shares (and each certificate evidencing the securities issued upon conversion of any Shares, if any) shall be imprinted with a legend in substantially the following form:

THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN THAT CERTAIN WARRANT TO PURCHASE STOCK ISSUED BY THE ISSUER TO [SILICON VALLEY

BANK][OXFORD FINANCE LLC] DATED [DATE], MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

5.3 Compliance with Securities Laws on Transfer . This Warrant and the Shares issued upon exercise of this Warrant (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) may not be transferred or assigned in whole or in part except in compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company). The Company shall not require Holder to provide an opinion of counsel if the transfer is to [ for SVB : SVB Financial Group (Silicon Valley Bank’s parent company) or any other][ for Oxford : an] affiliate of Holder, provided that any such transferee is an “accredited investor” as defined in Regulation D promulgated under the Act. Additionally, the Company shall also not require an opinion of counsel if there is no material question as to the availability of Rule 144 promulgated under the Act.

5.4 [ for SVB : Transfer Procedure . After receipt by Silicon Valley Bank of the executed Warrant, Silicon Valley Bank will transfer all of this Warrant to its parent company, SVB Financial Group. By its acceptance of this Warrant, SVB Financial Group hereby makes to the Company each of the representations and warranties set forth in Section 4 hereof and agrees to be bound by all of the terms and conditions of this Warrant as if the original Holder hereof. Subject to the provisions of Section 5.3 and upon providing the Company with written notice, SVB Financial Group and any subsequent Holder may transfer all or part of this Warrant or the Shares issuable upon exercise of this Warrant (or the securities issuable directly or indirectly, upon conversion of the Shares, if any) to any transferee, provided, however, in connection with any such transfer, SVB Financial Group or any subsequent Holder will give the Company notice of the portion of the Warrant being transferred with the name, address and taxpayer identification number of the transferee and Holder will surrender this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable); and provided further, that any subsequent transferee other than SVB Financial Group shall agree in writing with the Company to be bound by all of the terms and conditions of this Warrant.] [ for Oxford : Transfer Procedure . After receipt by Oxford of the executed Warrant, Oxford may transfer all or part of this Warrant to one or more of Oxford’s affiliates (each, an “ Oxford Affiliate ”), by execution of an Assignment substantially in the form of Appendix 2. Subject to the provisions of Section 5.3 and upon providing the Company with written notice, Oxford, any such Oxford Affiliate and any subsequent Holder, may transfer all or part of this Warrant or the Shares issuable upon exercise of this Warrant (or the Shares issuable directly or indirectly, upon conversion of the Shares, if any) to any other transferee, provided, however, in connection with any such transfer, the Oxford Affiliate(s) or any subsequent Holder will give the Company notice of the portion of the Warrant being transferred with the name, address and taxpayer identification number of the transferee and Holder will surrender this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable).]

5.5 Notices . All notices and other communications hereunder from the Company to the Holder, or vice versa, shall be deemed delivered and effective (i) when given personally, (ii) on the third (3rd) Business Day after being mailed by first-class registered or certified mail, postage prepaid, (iii) upon actual receipt if given by facsimile or electronic mail and such receipt is confirmed in writing by the recipient, or (iv) on the first Business Day following delivery to a reliable overnight courier service, courier fee prepaid, in any case at such address as may have been furnished to the Company or Holder, as the case may be, in writing by the Company or such Holder from time to time in accordance with the provisions of this Section 5.5. All notices to Holder shall be addressed as follows until the Company receives notice of a change of address in connection with a transfer or otherwise:

[SVB Financial Group

Attn: Treasury Department

3003 Tasman Drive, HA 200

Santa Clara, CA 95054

Telephone: 408-654-7400

Facsimile: 408-496-2405

Email: warradmi@svb.com]

[Oxford Finance LLC

133 N. Fairfax Street

Alexandria, VA 22314

Attn: Legal Department

Telephone: (703) 519-4900

Facsimile: (703) 519-5225

Email: LegalDepartment@oxfordfinance.com]

Notice to the Company shall be addressed as follows until Holder receives notice of a change in address:

Apricus Biosciences, Inc.

11975 El Camino Real, Suite 300

San Diego, CA 92130

Attn: Steve Martin, Chief Financial Officer

Telephone: (858) 222-8041

Facsimile: (858) 436-8155

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

Latham & Watkins LLP

12670 High Bluff Drive

San Diego, CA 92130

Attn: Cheston Larson, Esq.

Facsimile: (858) 523-5450

Email: cheston.larson@lw.com

5.6 Waiver . This Warrant and any term hereof may be changed, waived, discharged or terminated (either generally or in a particular instance and either retroactively or prospectively) only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.

5.7 Attorneys’ Fees . In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys’ fees.

5.8 Counterparts; Facsimile/Electronic Signatures . This Warrant may be executed in counterparts, all of which together shall constitute one and the same agreement. Any signature page delivered electronically or by facsimile shall be binding to the same extent as an original signature page with regards to any agreement subject to the terms hereof or any amendment thereto.

5.9 Governing Law . This Warrant shall be governed by and construed in accordance with the laws of the State of California, without giving effect to its principles regarding conflicts of law.

5.10 Headings . The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant.

5.11 Business Days . “ Business Day ” is any day that is not a Saturday, Sunday or a day on which [Silicon Valley Bank is][banks in California are] closed.

[Remainder of page left blank intentionally]

[Signature page follows]

IN WITNESS WHEREOF, the parties have caused this Warrant to Purchase Stock to be executed by their duly authorized representatives effective as of the Issue Date written above.

“COMPANY”

APRICUS BIOSCIENCES, INC.


By:

Name:
		(Print)
Title:

“HOLDER”

[SILICON VALLEY BANK] [OXFORD FINANCE LLC]

By:

Name:
		(Print)
Title:

[ Signature Page to Warrant to Purchase Stock ]

APPENDIX 1

NOTICE OF EXERCISE

1. The undersigned Holder hereby exercises its right purchase shares of the Common Stock of APRICUS BIOSCIENCES, INC. (the “ Company ”) in accordance with the attached Warrant To Purchase Stock, and tenders payment of the aggregate Warrant Price for such shares as follows:

[ ]

check in the amount of $ payable to order of the Company enclosed herewith

[ ]

Wire transfer of immediately available funds to the Company’s account

[ ]

Cashless Exercise pursuant to Section 1.2 of the Warrant

[ ]

Other [Describe]

2. Please issue a certificate or certificates representing the Shares in the name specified below:




		Holder’s Name




		(Address)

3. By its execution below and for the benefit of the Company, Holder hereby restates each of the representations and warranties in Section 4 of the Warrant to Purchase Stock as of the date hereof.

HOLDER:

By:

Name:

Title:

Date:

Appendix 1

insert Appendix 2 for Oxford Warrants:

APPENDIX 2

ASSIGNMENT

For value received, Oxford Finance LLC hereby sells, assigns and transfers unto


Name:		[OXFORD TRANSFEREE]

Address:

Tax ID:

that certain Warrant to Purchase Stock issued by APRICUS BIOSCIENCES, INC. (the “ Company ”), on [DATE] (the “ Warrant ”) together with all rights, title and interest therein.

OXFORD FINANCE LLC

By:

Name:

Title:

Date:

By its execution below, and for the benefit of the Company, [OXFORD TRANSFEREE] makes each of the representations and warranties set forth in Section 4 of the Warrant and agrees to all other provisions of the Warrant as of the date hereof.

[OXFORD TRANSFEREE]

By:

Name:

Title:

Appendix 2

Exhibit 10.1

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE EXCHANGE ACT OF 1934.

LICENSE AGREEMENT

by and between

FORENDO PHARMA LTD.

and

NEXMED (U.S.A.), INC.,

a wholly owned subsidiary of APRICUS BIOSCIENCES, INC.

October 17, 2014

[***]Confidential Information, indicated by [***], has been omitted by this filing and filed separately with the Securities and Exchange Commission.

TABLE OF CONTENTS

CONTENTS


		Page

ARTICLE 1	DEFINITIONS		1

ARTICLE 2	LICENSES AND INTELLECTUAL PROPERTY OWNERSHIP		13

2.1	License Grants		13
2.2	Sublicenses		13
2.3	Exclusivity		14
2.4	Ownership of and Rights to Intellectual Property		15
2.5	No Other Rights		15
2.6	Cross Territory Sales		15
2.7	Third Party Technology		16
2.8	[***] Side Letter		16

ARTICLE 3	TRANSITION ASSISTANCE		17

3.1	Transition Assistance		17

ARTICLE 4	JOINT STEERING COMMITTEE		18

4.1	Joint Steering Committee		18

ARTICLE 5	DEVELOPMENT AND RELATED DILIGENCE		20

5.1	Development of the Licensed Product		20
5.2	Updates to Development Plan		20
5.3	Development Responsibilities for Licensed Products		20
5.4	Records		21
5.5	Third Parties		22

ARTICLE 6	COMMERCIALIZATION AND RELATED DILIGENCE		22

6.1	Diligence in Commercialization		22
6.2	Commercialization		22
6.3	Commercialization Plan		22
6.4	Commercial Manufacturing and Supply		22
6.5	Medical and Scientific Affairs		23

ARTICLE 7	FINANCIAL PROVISIONS		23

7.1	Initial License Fee		23

[***]Confidential Information, indicated by [***], has been omitted by this filing and filed separately with the Securities and Exchange Commission.


7.2	Development Costs	23
7.3	Milestones	23
7.4	Royalties	24
7.5	Licensee Responsible in the Event of Sublicensing	25
7.6	Payment Provisions Generally	25
7.7	Maintenance of Records; Audits	26

ARTICLE 8	INTELLECTUAL PROPERTY PROTECTION AND RELATED MATTERS	27

8.1	Filing, Prosecution and Maintenance of Patent Rights	27
8.2	Enforcement of Patent Rights	30
8.3	Claimed Infringement of Third Party Rights	32
8.4	Product Trademarks	34
8.5	Patent Term Extensions in the Territory	34

ARTICLE 9	CONFIDENTIALITY	34

9.1	Confidential Information	34
9.2	Public Announcements and Use of Names	35

ARTICLE 10	TERM AND TERMINATION	35

10.1	Term	35
10.2	Termination for Cause	35
10.3	Termination for Convenience	37
10.4	Termination for Clinical Failure	37
10.5	Rights in Bankruptcy	38
10.6	Return of Confidential Information	39
10.7	Effect of Expiration or Termination; Survival	39

ARTICLE 11	REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION	39

11.1	Mutual Representations and Warranties	39
11.2	Forendo Representations and Warranties	41
11.3	Warranty Disclaimer	43
11.4	No Consequential Damages	43
11.5	Indemnification and Insurance	43

ARTICLE 12	MISCELLANEOUS PROVISIONS	45

12.1	Governing Law	45
12.2	Jurisdiction; Venue; Service of Process	45
12.3	Assignment	46
12.4	Amendments	46
12.5	Notices	46

[***]Confidential Information, indicated by [***], has been omitted by this filing and filed separately with the Securities and Exchange Commission.


12.6	Force Majeure	47
12.7	Compliance with Export Regulations	47
12.8	Independent Contractors	48
12.9	Further Assurances	48
12.10	No Strict Construction	48
12.11	Headings	48
12.12	No Implied Waivers; Rights Cumulative	48
12.13	Severability	48
12.14	No Third Party Beneficiaries	48
12.15	Dispute Resolution	49
12.16	Execution in Counterparts	49
12.17	Specific Performance	49
12.18	Parent Guaranty	49

Schedules

Schedule 1.33 — Forendo Patent Rights

Schedule 9.2 — Press Release

Schedule 11.2.6 — Upstream License Agreements

Exhibits

Exhibit 2.8 — [***] Side Letter

Exhibit 5.1 — Abbreviated Development Plan

iii

[***]Confidential Information, indicated by [***], has been omitted by this filing and filed separately with the Securities and Exchange Commission.

LICENSE AGREEMENT

This License Agreement (this “ Agreement ”) dated the 17th day of October 2014 (the “ Effective Date ”) is by and between Forendo Pharma Ltd., a company organized under the laws of Finland (“ Forendo ”) and NexMed (U.S.A.), Inc., a Delaware corporation, with its principal place of business at 11975 El Camino Real, Suite 300, San Diego, CA 92130, United States of America (“ Licensee ”) and, for purposes of Sections 12.1, 12.2, 12.5, 12.13, 12.17 and 12.18 only, Apricus Biosciences, Inc., a Nevada corporation, with its principal place of business at 11975 El Camino Real, Suite 300, San Diego, CA 92130, United States of America (“ Guarantor ”). Forendo and Licensee (and, solely with respect to references in Sections 12.1, 12.2, 12.5, 12.13, 12.17 and 12.18 only, Guarantor) may each be referred to herein individually as a “ Party ” and collectively as the “ Parties ”.

INTRODUCTION

WHEREAS, Forendo is a drug discovery and development company with a focus on tissue-specific regulation of sex hormone effects;

WHEREAS, Forendo owns, has licenses to, or otherwise controls certain intellectual property relating to fispemifene, a selective estrogen receptor modulator being developed for treatment of symptoms of male secondary hypogonadism;

WHEREAS, Licensee is a specialty pharmaceutical company with a focus on developing and commercializing products for men’s health; and

WHEREAS, Licensee is interested in developing and commercializing Licensed Products for the treatment of diseases, on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth below and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:

ARTICLE 1

DEFINITIONS

When used in this Agreement, each of the following terms shall have the meanings set forth in this Article 1 :

1.1 “ Acquirer Intellectual Property ” means the Patent Rights and Know-How owned or controlled by a Third Party acquirer of Forendo or Licensee, as the case may be, immediately prior to a Change of Control transaction, and Improvements thereto following the effective date of such Change of Control.

1.2 “ Affiliate ” means, with respect to any Person, any other Person which controls, is controlled by, or is under common control with such Person. A Person shall be regarded as in

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[***]Confidential Information, indicated by [***], has been omitted by this filing and filed separately with the Securities and Exchange Commission.

control of another entity if it owns or controls more than fifty percent (50%) of the equity securities of the subject entity entitled to vote in the election of directors (or, in the case of an entity that is not a corporation, for the election of the corresponding managing authority). Notwithstanding the foregoing, with respect to Forendo, “ Affiliate ” does not include a purchaser or holder of Forendo’s equity securities that acquired or acquires such equity securities solely for investment purposes such as a venture capital fund or private equity fund.

1.3 “ Annual Net Sales ” shall mean the combined Net Sales that occur for all Licensed Products in the Territory within each calendar year

1.4 “ API ” means active pharmaceutical ingredient.

1.5 “ Applicable Law ” means the laws, rules and regulations applicable to either Party, including any rules, regulations, guidelines or other requirements of the Regulatory Authorities applicable to the Development, Manufacturing or Commercialization of Licensed Products, that may be in effect from time to time in the Territory.

1.6 “ Bankruptcy Code ” means Title 11, United States Code, as amended, or analogous provisions of Applicable Law outside the United States.

1.7 “ Blocking Patent ” means any Patent Rights owned or controlled by a Third Party with respect to which Patent Rights an assertion is made by such Third Party that (i) the composition of FIS, (ii) the formulation of the Licensed Product transferred to Licensee under Article 3 , or (iii) the use of FIS for the treatment of male secondary hypogonadism infringes such Third Party’s Patent Rights in the Territory in the Field.

1.8 “ Branded Royalty Period ” mean with respect to a Licensed Product, the period commencing with the First Commercial Sale of such Licensed Product in the Territory until the later of [***], provided, however , that the Branded Royalty Period shall immediately expire as provided in Section 7.4.2 .

1.9 “ Business Day ” means (a) in the case of Licensee, a day on which banking institutions in New York, New York are open for business and (b) in the case of Forendo, a day on which banking institutions in Turku, Finland are open for business.

1.10 “ Change of Control ” means, with respect to a Party, (a) a merger or consolidation of such Party with a Third Party which results in the stockholders or equity holders of such Party not owning at least fifty percent (50%) of the combined voting power of the surviving entity immediately after such merger or consolidation, or (b) except in the case of a bona fide equity or debt financings, whether private or public, in which a Party issues new shares of its capital stock or securities convertible into shares of such Party, a transaction or series of related transactions in which a Third Party, together with its Affiliates, becomes the beneficial owner of fifty percent (50%) or more of the combined voting power of the outstanding securities of such Party, or (c) the sale or other transfer to a Third Party of all or substantially all of such Party’s business to which the subject matter of this Agreement relates.

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[***]Confidential Information, indicated by [***], has been omitted by this filing and filed separately with the Securities and Exchange Commission.

1.11 “ CMC ” means chemistry, manufacturing and controls.

1.12 “ Commercialization ” means any and all activities constituting using, marketing, promoting, distributing, offering for sale and selling a Licensed Product or a Competing Product, as the context requires, in the Field and shall include, but not be limited to, promotion, as well as activities required to fulfill ongoing post-approval regulatory obligations, including adverse event reporting and sales force training. When used as a verb, “ Commercialize ” shall mean to engage in Commercialization.

1.13 “ Commercially Reasonable Efforts ” means [***].

1.14 “ Competing Product ” means [***].

1.15 “ Confidential Information ” means, with respect to each Party, proprietary data or information that belong in whole or in part to such Party, its Affiliates or sublicensees, including, without limitation, (a) all Forendo Intellectual Property and Licensee Intellectual Property, (b) any information designated as Confidential Information of such Party hereunder, in all cases that, if disclosed in writing, is marked with the words “Confidential,” “Proprietary” or words of similar import, and if disclosed orally or visually, is described in reasonable detail in a written notice sent by the Disclosing Party to the Receiving Party within thirty (30) days of the oral or visual disclosure requesting that such information be treated as Confidential Information hereunder and (c) all information that a reasonable person would understand to be confidential or proprietary in nature, whether or not marked as such.

1.16 “ Confidentiality Agreement ” means the Confidentiality Agreement dated March 11, 2014 between Forendo and Licensee.

1.17 “ Contract Quarters ” means the successive three (3) month periods in each Contract Year ending on March 31, June 30, September 30 or December 31.

1.18 “ Contract Year ” means the twelve (12) month period beginning on January 1 and ending on December 31 of each calendar year, provided , however , that the first Contract Year shall be the period of time beginning on the Effective Date and ending on December 31, 2014. Each Contract Year, except the first Contract Year, shall be divided into four (4) Contract Quarters.

1.19 “ Control ” or “ Controlled ” means with respect to any (a) material, item of information, method, data or other Know-How, or (b) intellectual property right, the possession (whether by ownership or license, other than pursuant to this Agreement) by a Party or its Affiliates of the ability to grant to the other Party access and/or a license as provided herein under such item or right without violating any Third Party rights thereto or the terms of any agreement or other arrangement with any Third Party existing before or after the Effective Date.

1.20 “ Data and Safety Monitoring Board ” means an independent monitoring board established by Licensee to assess at intervals the progress of a clinical trial, including the safety

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[***]Confidential Information, indicated by [***], has been omitted by this filing and filed separately with the Securities and Exchange Commission.

data and the critical efficacy endpoints, and to recommend to Licensee whether to continue, modify, or stop a trial.

1.21 “ Development ” means all pre-clinical, clinical, CMC and regulatory activities with respect to a Licensed Product or a Competing Product, as the context requires, in the Field and in the Territory from the Effective Date until Regulatory Approval of such Licensed Product or Competing Product, as the context requires, is obtained for the indication under study. When used as a verb, “ Develop ” shall mean to engage in Development.

1.22 “ Development Costs ” means, with respect to a Licensed Product, the costs and expenses incurred in conducting Development activities from the Effective Date through the later of (a) the date of the last Regulatory Approval obtained in the Territory for such Licensed Product, or (b) the date of termination of Development of the final indication for which Regulatory Approval is to be sought in the Territory.

1.23 “ Development Plan ” means Licensee’s (a) written plan in reasonable detail covering the period from the Effective Date through Regulatory Approval for (i) the Development of any Licensed Product, including, but not limited to, activities designed to generate the preclinical, process development/manufacturing/scale-up, clinical and regulatory plans and information required for (1) filing Regulatory Approval Applications in the Territory and (2) being able to supply sufficient quantities of the Licensed Product upon the commercial launch, and (ii) the preparation and submission of Regulatory Approval Applications and (b) estimated annual budget for Development Costs setting forth both internal and external resources and expenses for the then-current Contract Year.

1.24 “ Executive Officers ” means the Chief Executive Officer and President of Licensee (or an executive of Licensee designated by such person(s)) and the Chief Executive Officer of Forendo (or an executive of Forendo designated by such Chief Executive Officer).

1.25 “ FD&C Act ” means the U.S. Federal Food, Drug, and Cosmetic Act, as amended from time to time (21 U.S.C. Section 301 et seq.), together with any rules and regulations promulgated thereunder.

1.26 “ FDA ” means the United States Food and Drug Administration, or a successor agency in the United States with responsibilities comparable to those of the United States Food and Drug Administration.

1.27 “ Field ” means all indications treatable with the Licensed Product including, but not limited to secondary male hypogonadism.

1.28 “ First Commercial Sale ” means, with respect to a given Licensed Product in the Territory, the first commercial sale in an arms-length transaction of such Licensed Product to a Third Party by or on behalf of Licensee, its Affiliate or its sublicensee in the Territory following receipt of applicable Regulatory Approval of such Licensed Product to Commercialize such Licensed Product in the Territory.

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1.29 “ FIS” means fispemifene and/or other compound(s) claimed in the Patent Rights described in clauses (a) and/or (b) of Section 1.33 (other than ospemifene) and all possible metabolites (other than ospemifene), salts, hydrates, polymorphs, crystalline forms, solvates and prodrugs thereof.

1.30 “ Forendo Improvements ” means any and all Improvements to the Forendo Patent Rights or Forendo Know-How created, conceived or reduced to practice solely by Forendo, or its Affiliates, agents, or sublicensees (other than Licensee or its Affiliates) or by Third Parties acting on their behalf.

1.31 “ Forendo Intellectual Property ” means Forendo Patent Rights, Forendo Know-How and Forendo Improvements, excluding Acquirer Intellectual Property.

1.32 “ Forendo Know-How ” means Know-How that is (a) either (i) Controlled by Forendo or any of its Affiliates on the Effective Date, (ii) owned by Forendo or any of its Affiliates after the Effective Date or (iii) comes within Forendo’s or any of its Affiliates’ Control after the Effective Date and is elected by Licensee pursuant to Section 2.7.1 , (b) related to the Licensed Product, and (c) is necessary or useful in connection with the Development, Manufacture, use or Commercialization of any Licensed Product

1.33 “ Forendo Patent Rights ” means (a) the United States patents and patent applications listed in Schedule 1.33 , (b) all Patents Rights in the Territory (i) to which any of the Patents set forth in Schedule 1.33 claim or share priority or (ii) for which any of the Patents on Schedule 1.33 form a basis for priority, (c) any other Patent Rights in the Territory that are Controlled by Forendo or any of its Affiliates as of the Effective Date or at any time during the Term with claims covering any composition, process, methods of formulation, manufacture and/or use of the Licensed Product or are otherwise useful or necessary in connection with the Development, Manufacture, or Commercialization of a Licensed Product, provided that solely with respect to Patent Rights that are in-licensed by Forendo and/or its Affiliates from a Third Party after the Effective Date, such Patent Rights shall only be included if such Patent Rights are elected by Licensee pursuant to Section 2.7.1 .

1.34 “ Hatch-Waxman Act ” means the U.S. Drug Price Competition and Patent Term Restoration Act, as amended from time to time.

1.35 “ Improvements ” means any and all ideas, information, Know-How, data research results, writings, inventions, discoveries, modifications, enhancements, derivatives, new uses, developments, techniques, materials, compounds, products, designs, processes or other technology or intellectual property, whether or not patentable or copyrightable, and all Patent Rights and other intellectual property rights in any of the foregoing.

1.36 “ IND ” means an Investigational New Drug Application, as defined in the FD&C Act, or similar application or submission that is required to be filed with any Regulatory Authority before beginning clinical testing of a Licensed Product in human subjects.

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1.37 “ Initiation ” means the administration of the first dose of Licensed Product to a human being in a Phase II Clinical Trial or Phase III Clinical Trial for which Licensee or one of its Affiliates or sublicensees is the sponsor.

1.38 “ Joint Invention ” means an invention that is invented jointly by an employee of, or Person under an obligation of assignment to, each of Licensee and Forendo or their respective Affiliates.

1.39 “ Know-How ” means any non-public, proprietary invention, discovery, process, method, composition, formula, procedure, protocol, technique, result of experimentation or testing, information, data, material, drawings, illustrations or other artwork, technology or other know-how, whether or not patentable or copyrightable.

1.40 “ Licensee Improvements ” means any and all Improvements to the Forendo Intellectual Property, Licensee Patent Rights or Licensee Know-How created, conceived or reduced to practice solely by Licensee, or its Affiliates, agents, or sublicensees or by Third Parties acting on its behalf, while performing activities under this Agreement.

1.41 “ Licensee Intellectual Property ” means Licensee Know-How, Licensee Patent Rights and Licensee Improvements, and any Joint Collaboration Patents that have been assigned to Licensee under Section 8.1.1 , excluding Acquirer Intellectual Property.

1.42 “ Licensee Know-How ” means Know-How that is (a) either (i) Controlled by Licensee or any of Affiliates on the Effective Date, (ii) owned by Licensee or any of its Affiliates during the Term or (iii) comes within Licensee’s or any of its Affiliates’ Control during the Term (other than Forendo Know-How pursuant to the licenses granted hereunder) and is elected by Forendo pursuant to Section 2.7.2 , (b) related to FIS or the Licensed Product, and (c) is necessary or useful in connection with Development, Manufacture, use or Commercialization of any Licensed Product.

1.43 “ Licensee Patent Rights ” means any Patent Rights claiming any composition or method of making or method of use of FIS or otherwise necessary in connection with the Development, Manufacture, use or Commercialization of any Licensed Product, which are (a) Controlled by Licensee or any its Affiliates as of the Effective Date, (b) owned by Licensee or any of its Affiliates during the Term or (c) comes within Licensee’s or any of its Affiliates’ Control during the Term (other than Forendo Patent Rights pursuant to the licenses granted hereunder) and is elected by Forendo pursuant to Section 2.7.2 .

1.44 “ Licensed Products ” means all dosage forms (including any current or future dosages, formulations, and/or Improvements) of the compound(s) claimed in the Patent Rights described in clauses (a) and/or (b) of Section 1.33 (other than ospemifene) and all possible metabolites (other than ospemifene), salts, hydrates, polymorphs, crystalline forms, solvates and prodrugs thereof.

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1.45 “ Manufacturing ” means, as applicable, all activities associated with the production, manufacture, processing, filling, finishing, packaging, labeling, shipping, and storage of Licensed Products and its API, including process and formulation development, process validation, stability testing, manufacturing scale-up, pre-clinical, clinical and commercial manufacture and analytical development, product characterization, quality assurance and quality control, whether such activities are conducted by a Party, its Affiliates or a Third Party contractor of such Party. When used as a verb, “ Manufacture ” shall mean to engage in Manufacturing.

1.46 “ NDA ” has the meaning set forth in the definition of Regulatory Approval Application.

1.47 “ Net Sales ” means the amount invoiced or otherwise billed by Licensee or its Affiliates or sublicensees (the “Selling Party”) for sales of Licensed Products to a Third Party purchaser, less the following (collectively, “ Net Sales Deductions ”):

(a) discounts given or accrued on Licensed Products, including cash, trade and quantity discounts, price reduction or incentive programs (including sales coupons and co-payment programs), retroactive price adjustments with respect to sales of such Licensed Products, and charge-back payments;

(b) credits, refunds, returns or allowances allowed, accrued, paid, received or given, including credits, allowances, discounts and rebates to, and chargebacks from the account of customers for nonconforming, damaged, rejected, out-dated and returned, withdrawn or recalled Licensed Products or on account of retroactive price reductions affecting the Licensed Products;

(c) rebates, reimbursements, administrative fees or similar allowances granted or accrued to managed health care organizations or to federal, state and local governments in the Territory or any other organization that utilizes any governmental discount program with respect to the Licensed Products;

(d) freight, postage, shipping and insurance charges allowed, accrued or paid for delivery of Licensed Products, to the extent billed as a separate line item by the Selling Party to the Third Party purchaser; and

(e) taxes, duties or other governmental charges imposed on the sale of Licensed Products and actually paid or accrued by the Selling Party (as adjusted for rebates and refunds, but specifically excluding taxes based on net income of the Selling Party), to the extent billed as a separate line item by the Selling Party to the Third Party purchaser;

provided that all of the foregoing deductions shall be calculated in accordance with then-current generally accepted accounting principles in the Unites States, consistently applied during the applicable calculation period throughout the Selling Party’s organization ( “GAAP” ). To the extent that Net Sales Deductions are based on estimates, such estimates will be adjusted to actual

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on a periodic basis. Notwithstanding the foregoing, the supply of the Licensed Product for (a) samples, (b) charitable donations or compassionate use, or (c) any clinical study materials used in any clinical study shall not be included within the computation of Net Sales.

A sale of a Licensed Product is deemed to occur in accordance with GAAP.

For sake of clarity and avoidance of doubt, the transfer of a Licensed Product by a Selling Party to another Affiliate of such Selling Party or to a sublicensee of such Selling Party for resale shall not be considered a sale; in such cases, Net Sales shall be determined based on the amount invoiced or otherwise billed by such Affiliate or sublicensee to an independent Third Party, less the Net Sales Deductions allowed under this Section.

In the event that a Licensed Product is Commercialized in combination with one or more products which are themselves not Licensed Products under this Agreement for a single price, the Net Sales for such Licensed Product shall be calculated by multiplying the sales price of such combination sale by the fraction A/(A+B) where A is the fair market value of the Licensed Product and B is the fair market value of the other product(s) in the combination sale. If the fair market value for any product sold in combination with a Product cannot be reasonably determined, the price attributed to such product will be based on the relative cost of goods for such product, as determined in accordance with GAAP.

1.48 “ Orange Book Listed ” means, with respect to a Licensed Product, a Patent Right which covers the composition, formulation or method of use of such Licensed Product and is listed in the then-current edition of the “Approved Drug Products with Therapeutic Equivalence Evaluations” published by the FDA (the “ Orange Book ”) with respect to such Licensed Product.

1.49 “ Patent Rights ” means all patents (including all reissues, extensions, substitutions, confirmations, re-registrations, re-examinations, revivals or revalidations, supplementary protection certificates and patents of addition) and patent applications (including all provisional applications, continuations, continuations-in-part and divisions).

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

1.51 “ Phase II Clinical Trial ” means a human clinical trial of a Licensed Product that is designed to evaluate either or both dosing requirements or the effectiveness of the Licensed Product for a particular indication or indications in patients with the disease or condition under study, as described under 21 C.F.R. §312.21(b) (as hereafter modified or amended).

1.52 “ Phase III Clinical Trial ” means a human clinical trial of a Licensed Product that is designed to establish that the Licensed Product is safe and efficacious for its intended use, and to define warnings, precautions, and adverse reactions that are associated with the Licensed Product in the dosage range to be prescribed, and to support Regulatory Approval of the Licensed Product or label expansion of the Licensed Product conducted in accordance with 21

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C.F.R. § 312.21(c) or other corresponding and similar regulatory requirements prescribed by the Regulatory Authorities outside of the US.

1.53 “ Product Labels and Inserts ” means (a) all labels and other written, printed or graphic matter affixed to any container, packaging or wrapper utilized with the Licensed Product, or (b) any written material physically accompanying the Licensed Product, including, without limitation, product package inserts.

1.54 “ Product Trademarks ” means the trademark(s), service mark(s), accompanying logos, trade dress and/or indicia of origin used in connection with the distribution, marketing, promotion and Commercialization of each Licensed Product in the Territory. For purposes of clarity, the term Product Trademark(s) shall not include, without limitation, the corporate names and logos of either Party.

1.55 “ Promotional Materials ” means all written, printed or graphic material, other than Product Labels and Inserts, and all premium items and other materials provided by Licensee for use by sales representatives during details relating to a Licensed Product.

1.56 “ Regulatory Approval ” means the approval of the applicable Regulatory Authority necessary for the testing, commercial manufacture, distribution, marketing, promotion, offer for sale, use, import, export and sale of a Licensed Product in a regulatory jurisdiction in the Territory, including, where required, separate pricing and/or reimbursement approvals.

1.57 “ Regulatory Approval Application ” means an application submitted to the appropriate Regulatory Authority seeking Regulatory Approval of a Licensed Product in the Territory, including, without limitation, a New Drug Application (“ NDA ”) and an sNDA in the United States.

1.58 “ Regulatory Authority ” means any applicable supranational, national, regional, state or local regulatory agency, department, bureau, commission, council or other government entity involved in granting of Regulatory Approval for a Licensed Product in a jurisdiction within the Territory, including, without limitation, the FDA.

1.59 “ Regulatory Materials ” means regulatory applications, submissions, notifications, communications, correspondence, registrations, Regulatory Approvals and/or other filings made to, received from or otherwise conducted with a Regulatory Authority that are necessary in order to Develop, Manufacture, or Commercialize any Licensed Product in the Territory.

1.60 “ Related Party ” means Licensee’s Affiliates and permitted sublicensees.

1.61 “ Relevant Market ” shall mean the total prescriptions of a Licensed Product together with the total prescriptions of all generic competitors for the Licensed Product as determined by a Third Party Prescription Data Service.

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1.62 “ Royalty Term ” means, with respect to each Licensed Product, the period of time commencing on the date of First Commercial Sale of such Licensed Product in the Territory and extending until the earlier of (a) the termination of this Agreement, pursuant to and to the extent set forth in Article 10 , or (b) the later of (i) the Branded Royalty Period and (ii) ten (10) years from the First Commercial Sale in the Territory.

1.63 “ Step-Down Period ” means, with respect to a Licensed Product, the period during the Royalty Term occurring immediately following expiration of the Branded Royalty Period.

1.64 “ sNDA ” has the meaning set forth in the definition of Regulatory Approval Application.

1.65 “ Territory ” means the US and its territories and possessions.

1.66 “ Third Party ” means any Person other than a Party or any of its Affiliates.

1.67 “ Third Party Technology ” means any Patent Rights, Know-How, inventions, or other intellectual property owned or controlled by a Third Party but not Controlled by a Party or its Affiliates.

1.68 “ Third Party Prescription Data Service ” shall mean (i) any of the following selected by Licensee in its sole discretion: IMS Health, Verispan or Wolters Kluwer Health; or (ii) any other source which is mutually agreed in writing by Licensee and Forendo.

1.69 “ US ” means the United States of America, including its territories and possessions.

1.70 “ US GAAP ” means the US generally accepted accounting principles, as consistently applied.

1.71 “ Valid Claim ” means [***].

1.72 Additional Definitions. The following terms have the meanings set forth in the corresponding Sections of this Agreement:



Defined Term		Section Reference

“Action”		12.2.1

“Acquirer Competing Product”		2.3.1(c)

“Acquiring Third Party”		2.3.1(c)

“Agreement”		Preamble

“Anti-Bribery Laws”		11.1.5

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“Audited Party”		7.7.2

“Blocking Patent Claims”		8.3.3(b)

“Breaching Party”		10.2.1(a)

“Co-Chairperson”		4.1.1(b)

“Commercialization Plan”		6.3

“Date of Notice”		10.2.1(a)

“Disclosing Party”		9.1

“Divested Product”		2.3.2(b)(1)

“Early Termination”		10.3.1(b)

“Effective Date”		Preamble

“Efficacy Failure”		10.4.1

“embodiments of intellectual property”		10.5

“Forendo Acquirer”		2.3.2(b)

“Forendo Acquirer Generic Competing Product”		2.3.2(b)(2)

“Forendo Acquirer Competing Product”		2.3.2(b)

“Forendo Election Deadline”		2.3.2(b)(1)

“Forendo Indemnitees”		11.5.1

“Forendo”		Preamble

“Generic Entry”		7.4.2

“Indemnitee”		11.5.3

“Infringement Claim”		8.3.1

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“Infringement Defense Costs”		8.3.3(c)

“IP”		10.5

“Joint Collaboration Patents”		8.1.1(b)

“Joint Steering Committee”		4.1.1

“JSC”		4.1.1

“Licensee”		Preamble

“Licensee Election Deadline”		2.3.1(c)

“Licensee Indemnitees”		11.5.2

“Losses”		11.5.1

“Milestone Event”		7.3

“Milestone Payment”		7.3

“Obligations”		12.18.1

“Orange Book”		1.48

“Party”		Preamble

“Post-Approval Termination”		10.3.1(c)

“Product Records”		5.4

“Receiving Party”		9.1

“Safety Failure”		10.4.1

“Term”		10.1

“Transition Assistance”		3.1.2

“Transition Term”		3.1.1

“Upstream License Agreements”		11.2.6(a)

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ARTICLE 2

LICENSES AND INTELLECTUAL PROPERTY OWNERSHIP

2.1

License Grants.

2.1.1 License Grant to Licensee . Subject to the terms and conditions of this Agreement, Forendo hereby grants Licensee: (a) an exclusive license (even as to Forendo), with the right to sublicense as provided in Section 2.2 , under the Forendo Intellectual Property to (i) Develop, have Developed, Commercialize and have Commercialized the Licensed Products in the Field in the Territory and (ii) Manufacture and have Manufactured the Licensed Products worldwide for Development and Commercialization of the Licensed Products in the Field in the Territory; provided that Forendo reserves for itself and its Affiliates and licensees the right to Manufacture and have Manufactured the Licensed Products worldwide for Development and Commercialization of the Licensed Products outside the Territory; and (b) a non-exclusive, fully paid up, royalty-free license, with the right to sublicense as provided in Section 2.2 , under the Forendo Intellectual Property to Develop and have Developed the Licensed Products outside the Territory.

2.1.2 License Grants to Forendo . [***].

2.2

Sublicenses.

2.2.1 Right to Sublicense . Licensee may sublicense the rights granted to it under Section 2.1 to one or more of its Affiliates or Third Parties at any time. Licensee shall remain responsible for the performance of its sublicensees under this Agreement, including for all payments due hereunder, whether or not such payments are made by Licensee, its Affiliates or its sublicensees. All such notices of sublicenses provided by Licensee under this Section 2.2.1 shall be deemed to be Confidential Information of Licensee subject to the provisions of Article 9 whether or not so marked, and Forendo shall not disclose such Confidential Information to any Third Party or use such Confidential Information for any purpose other than for the purposes of Section 2.2.3 , except (a) to the extent required under applicable securities and other laws, and (b) to attorneys, accountants and other advisors, and to existing and prospective investors, lenders, licensees or collaborators, subject to commercially reasonable precautions to protect the confidentiality of the information.

2.2.2 Terms . Each sublicense granted by Licensee under this Agreement shall be subject and subordinate to the terms and conditions of this Agreement and shall contain terms and conditions consistent with those in this Agreement. Agreements with any Commercializing sublicensee shall contain the following provisions: (a) a requirement that such sublicensee submit applicable sales or other reports consistent with those required hereunder; (b) an audit requirement similar to the requirement set forth in Section 7.7 ; and (c) a requirement that such sublicensee comply with the confidentiality and non-use provisions of Article 9 with respect to both Parties’ Confidential Information.

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2.2.3 Effect of Termination on Sublicenses . If this Agreement terminates for any reason, Licensee shall use its Commercially Reasonable Efforts to assign to Forendo or its designee and Forendo shall use Commercially Reasonable Efforts to assume Licensee’s rights, obligations, and interest under and in any agreement it has with a sublicensee from the effective date of such termination; provided , however , that such sublicensee is not in breach of its sublicense agreement and such sublicensee agrees to comply with all of the terms of this Agreement to the extent applicable from the rights originally sublicensed to it by Licensee; and provided , further , that Forendo shall not be liable for, and shall be indemnified and held harmless by Licensee against, any and all liability arising under the sublicense agreement prior to the effective date of such termination.

2.3

Exclusivity.

2.3.1 As to Licensee .

(a) Non-Compete . Subject to Sections 2.3.1(b) and 2.3.1(c), beginning on the Effective Date and continuing until the completion of the Royalty Term, neither Licensee nor any of its Affiliates or sublicensees shall Develop or Commercialize, directly or indirectly, or in-license or otherwise acquire any Competing Product (excluding any Licensed Products hereunder) in the Territory.

(b) Sunset Provision . Notwithstanding Section 2.3.1(a) , no earlier than twelve (12) months after the First Commercial Sale of the first Licensed Product in the Territory, Licensee and its Affiliates and sublicensees may Develop or in-license or otherwise acquire for Development a Competing Product in the Territory, provided , however , that Licensee and its Affiliates and sublicensees shall not Commercialize such Competing Product in the Territory for any indication for which the Licensed Product has been Developed or is in active Development by Licensee or any of its Affiliates or sublicensees until the expiration of the Royalty Term for such Licensed Product.

(c) Spin-Off of Competing Business . If Licensee experiences a Change of Control and the Third Party involved in such Change of Control or any of its Affiliates immediately prior to such Change of Control (collectively, the “ Acquiring Third Party ”) is Developing or Commercializing a Competing Product in the Territory, [***].

2.3.2 As to Forendo .

(a) Non-Compete . Subject to Section 2.3.2(b) , beginning on the Effective Date and continuing until the completion of the Royalty Term, neither Forendo nor any of its Affiliates shall Develop or Commercialize, directly or indirectly, or in-license or otherwise acquire or grant any Third Party rights to any product that is a Competing Product in each case in the Territory.

(b) Spin-Off of Competing Business . If Forendo experiences a Change of Control and the Third Party involved in such Change of Control or any of its Affiliates

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immediately prior to such Change of Control (collectively, the “ Forendo Acquirer ”) is Developing or Commercializing in the Territory a Competing Product (“ Forendo Acquirer Competing Product ”), then notwithstanding Section 2.3.2(a) , the Forendo Acquirer (but not Forendo or any of its Affiliates immediately prior to the Change of Control) may continue to Develop and Commercialize such Forendo Acquirer Competing Product in the Territory, except as follows:

(1) [***]

(2) [***]

(c) Reservation of Rights . For the avoidance of doubt, this Section 2.3 does not restrain the activities of Forendo or its Affiliates outside of the Territory. For the further avoidance of doubt, this Section does not grant to or reserve on behalf of Forendo, its Affiliates and/or acquirers any right or license to Exploit any Licensee Intellectual Property in the Territory nor does it grant to or reserve on behalf of Forendo, its Affiliates and/or acquirers any license back to any Forendo Intellectual Property. Licensee shall have the right to enforce the Licensee Intellectual Property and/or Forendo Intellectual Property, as applicable, at any and all times (including prior to, during and after any divestiture period referenced above) against any potential infringer in the Territory in accordance with Section 8.2 , including with respect to any Forendo Acquirer Generic Competing Product.

2.4 Ownership of and Rights to Intellectual Property.

2.4.1 Licensee Intellectual Property . Licensee is and shall remain the sole owner of the Licensee Intellectual Property.

2.4.2 Forendo Intellectual Property . Forendo is and shall remain the sole owner of the Forendo Intellectual Property.

2.5 No Other Rights. Except as otherwise expressly provided in this Agreement, under no circumstances shall a Party, as a result of this Agreement, obtain any ownership interest or other right in any Improvement, Know-How or Patent Rights of the other Party, including items Controlled or developed by the other Party, or provided by the other Party to the receiving Party at any time pursuant to this Agreement.

2.6 Cross Territory Sales.

2.6.1 Forendo Restrictions . Forendo shall not Commercialize or authorize the Commercialization of any Licensed Product in the Territory. Forendo shall not, itself or through other Persons, directly solicit, advertise, sell, distribute, ship, consign, or otherwise transfer any Licensed Product inside the Territory; provided that Forendo may ship, consign, or otherwise transfer any Licensed Product inside the Territory for purposes of Manufacturing the Licensed Products for Development and Commercialization of the Licensed Products outside the

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Territory. Forendo shall use its best efforts to ensure that Licensed Products sold outside the Territory are not used in the Territory, including use via reimportation from a country or jurisdiction outside of the Territory. Without limiting the generality of the foregoing, Forendo shall not permit any of its Affiliates or sublicensees to sell any Licensed Product to a purchaser if it knows, or has reason to believe, that such purchaser intends to facilitate the use of such Licensed Product in the Territory. Forendo shall use its Commercially Reasonable Efforts to ensure that its Affiliates, sublicensees, distributors, and wholesalers comply with all of the foregoing obligations, including via the enforcement of Forendo’s contracts with any of the foregoing.

2.6.2 Licensee Restrictions . Licensee shall not Commercialize or authorize the Commercialization of any Licensed Product outside the Territory. Licensee shall not, itself or through other Persons, directly solicit, advertise, sell, distribute, ship, consign, or otherwise transfer any Licensed Product outside the Territory; provided that Licensee may ship, consign, or otherwise transfer any Licensed Product outside the Territory for purposes of Manufacturing the Licensed Products and/or Developing the Licensed Products for Commercialization inside the Territory. Licensee shall use its best efforts to ensure that Licensed Products sold in the Territory are not used outside the Territory. Without limiting the generality of the foregoing, Licensee shall not permit any of its Affiliates or sublicensees to sell any Licensed Product to a purchaser if it knows, or has reason to believe, that such purchaser intends to facilitate the use of such Licensed Product outside the Territory. Licensee shall use its Commercially Reasonable Efforts to ensure that its Affiliates, sublicensees, distributors, and wholesalers comply with all of the foregoing obligations, including via the enforcement of Licensee’s contracts with any of the foregoing.

2.7 Third Party Technology.

2.7.1 Obtained by Forendo . If after the Effective Date Forendo or any of its Affiliates (i) acquires a license with right to sublicense under Third Party Technology (other than Blocking Patents) for use in connection with the Development, Commercialization or Manufacture of Licensed Products in or for the Territory, and (ii) would be subject to payment obligations to such Third Party on account of Licensee’s exploitation of such Third Party Technology in connection with the Development, Commercialization or Manufacture of Licensed Products in or for the Territory, [***]

2.7.2 Obtained by Licensee . If after the Effective Date Licensee or any of its Affiliates (i) acquires a license with right to sublicense under, Third Party Technology (other than Blocking Patents) for use in connection with the Development, Commercialization or Manufacture of Licensed Products in the Field for use outside the Territory, and (ii) would be subject to payment obligations to such Third Party on account of Forendo’s exploitation of such Third Party Technology in connection with the Development, Commercialization or Manufacture of Licensed Products for use outside the Territory, [***].

2.8 [***] Side Letter. Forendo shall use Commercially Reasonable Efforts to obtain an executed copy of a letter with the substances set forth in Exhibit 2.8 .

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ARTICLE 3

TRANSITION ASSISTANCE

3.1

Transition Assistance.

3.1.1 Transition Term . During the six (6) month period following the Effective Date (the “ Transition Term ”), Forendo will provide Transition Assistance to Licensee. The Transition Term may be extended by the mutual, written consent of both Parties upon terms including compensation to be negotiated in good faith.

3.1.2 Transition Assistance . During the Transition Term, Forendo shall use its Commercially Reasonable Efforts to provide assistance to Licensee, at no out-of-pocket cost to Licensee (except as set forth below), to effect the orderly transfer of the Licensed Product and related documentation to Licensee (the “ Transition Assistance ”). Without limiting the foregoing, such Transition Assistance shall include:

(a) the transfer by Forendo to Licensee of the existing IND for the Licensed Product;

(b) the transfer to Licensee of mutually agreed quantities of API already available to Forendo at Forendo’s actual cost;

(d) the identification of all sublicensees, consultants, physicians, and other Third Parties who materially participated in the development of the Licensed Products by Forendo; and

(e) the translation to English of any documents pertaining to any Forendo Know-How and any documents necessary or useful in connection with the submission for, or maintenance of, any Regulatory Approval in the Territory, including without limitation:

•

transfer of copies of the results of and data from the pre-clinical and clinical studies conducted prior to and as of the Effective Date relating to any Licensed Product (including all regulatory information, clinical data, pre-clinical data, hard-copy case report forms and reports to the extent they exist);

•

transfer of copies of any written communications with the FDA and other Regulatory Authorities in the Territory and any relevant written communications with other Regulatory Authorities, and the minutes of any meetings with the FDA and any such other Regulatory Authority, in each case relating to any Licensed Product; and

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•

transfer of copies of the data and results of any relevant manufacturing activities (including CMC activities incident to the Licensed Product.

To the extent any documentation to be transferred as part of the Transition Assistance exists in an electronic format, including scanned versions of a hardcopy, Forendo shall provide to Licensee an electronic copy of such documentation. For Documentation which exists only as hardcopy, Forendo shall provide to Licensee a physical copy of such documentation.

3.1.1 Continuing Obligation to Deliver Forendo Intellectual Property . During the Term, Forendo shall continue to provide to Licensee any additional Licensed Intellectual Property, including any Improvements thereto and all other data and information (whether positive or negative) that is in or comes into existence during the Term and that is necessary or useful to enable Licensee to Develop, manufacture and/or Commercialize Licensed Products or which is otherwise related to Licensor’s prior Development or manufacture of Licensed Products.

ARTICLE 4

JOINT STEERING COMMITTEE

4.1

Joint Steering Committee.

4.1.1 Establishment of JSC . As soon as practicable and no later than thirty (30) days after the Effective Date, the Parties shall establish a committee to facilitate monitoring certain activities relating to Developing and Commercializing Licensed Products (the “ Joint Steering Committee ” or “ JSC ”) as follows:

(a) Composition of the Joint Steering Committee . The JSC shall be comprised of two (2) representatives from each of the Parties. Each representative shall be an individual of suitable authority and seniority with significant experience or expertise in biopharmaceutical drug development. Each Party shall appoint its respective initial representatives to the JSC within thirty (30) days after the Effective Date, and may from time to time substitute its representatives, in its sole discretion, effective upon written notice to the other Party of such change. Additional representatives or consultants may from time to time, by mutual consent of the Parties or the JSC, be invited to attend JSC meetings, subject to such representatives’ and consultants’ being bound by confidentiality obligations at least as strict as those contained in Article 9 . Each Party shall bear its own expenses relating to attendance at such meetings by its representatives and consultants.

(b) Chairperson . Each Party shall designate one of its representatives to be a Co-Chairperson. Each Co-Chairperson shall conduct the following activities of the Joint Steering Committee cooperatively (the “ Co-Chairperson ”): (i) scheduling meetings of the JSC; (ii) setting agendas for meetings with solicited input from representatives of each Party; (iii) preparing and confirming minutes of the meetings, which shall provide a

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description in reasonable detail of the discussions held at the meeting and a list of any actions, decisions or determinations made by the JSC; and (iv) conducting effective meetings, including ensuring that objectives for each meeting are set and achieved.

(c) Meetings . The JSC shall meet in accordance with a schedule established by mutual written agreement of the Parties, but no less frequently than twice per Contract Year, at such locations as are determined by the JSC. Alternatively, the JSC may meet by means of teleconference, videoconference or other similar communications equipment.

(d) Responsibilities . The JSC shall have the following responsibilities:

(1)

reviewing Development Plans and amendments and updates thereto;

(2)

reviewing regulatory strategy and clinical development strategy;

(3)

monitoring Development activities for Licensed Products undertaken by Licensee, including, without limitation, monitoring the progress in its conduct of the Development Plans;

(4)

reviewing Commercialization Plans and amendments and updates thereto;

(5)

monitoring Commercialization activities for Licensed Products undertaken by Licensee; and

(6)

performing such other activities that the Parties mutually agree shall be the responsibility of the JSC.

4.1.2 Appointment of Subcommittees and Project Teams . The JSC shall be empowered to create such subcommittees of itself and other additional project teams as it may deem appropriate or necessary and may elect to delegate responsibilities to such subcommittees or additional project teams as it may from time to time deem appropriate. Each such subcommittee and project team shall report to the JSC, which shall have authority to approve or reject recommendations or actions proposed thereby, subject to the terms of this Agreement. Notwithstanding the foregoing, no subcommittee or project team shall have authority to make any decision binding upon the JSC or the Parties.

4.1.3 Decision-Making . With respect to any matter over which the JSC has responsibility pursuant to Section 4.1.1(d) , the JSC should use reasonable efforts to reach agreement on a mutually acceptable resolution. If the JSC is unable to reach agreement, such matter shall be referred to the Executive Officers to be resolved by negotiation in good faith as soon as is practicable but in no event later than thirty (30) days after referral. If the Executive Officers are unable to resolve such dispute within such thirty (30) day period, Licensee shall

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have final decision-making authority. In no event will any disagreements within the JSC relating to the Development, Manufacture, or Commercialization of any Licensed Product be subject to the dispute resolution provisions of Section 12.15 .

ARTICLE 5

DEVELOPMENT AND RELATED DILIGENCE

5.1 Development of the Licensed Product . Subject to the terms and conditions of this Agreement, Licensee shall use its Commercially Reasonable Efforts to Develop, and to obtain Regulatory Approval for, at least one Licensed Product in the Territory. Attached to this Agreement as Exhibit is an abbreviated Development Plan containing the anticipated and required studies and the timelines for the same, believed by Licensee to be reasonably necessary to support the submission of a NDA to the FDA for the first Licensed Product. Within ninety (90) days after the Effective Date, Licensee shall provide Forendo with a true and correct copy of its comprehensive Development Plan for the first Licensed Product, which Development Plan shall be consistent with the Development Plan attached to this Agreement as Exhibit 5.1 . The Development Plan shall cover the material Development activities and estimated timelines believed by Licensee to be reasonably necessary to support the submission of a NDA to the FDA for the Licensed Product. The Development Plan, and any updates thereto, shall contain in reasonable detail the Development objectives to be achieved during the then-current Contract Year, the Development activities to be performed and estimated timeline for performing such Development activities. Licensee’s achievement, by itself or through its Affiliates or Sublicensees, of any objectives set forth in the Development Plan by the date set forth therein shall be deemed sufficient to satisfy the requirement to use Commercially Reasonable Efforts under this Section 5.1 as of such date; provided, however, the failure to meet such objectives shall not in and of itself be deemed to be a breach of Licensee’s Commercially Reasonable Efforts, though it may be a factor in such determination.

5.2 Updates to Development Plan . On an annual basis, Licensee shall update the Development Plan and submit such updated Development Plan, no later than January 20 of each Contract Year, to Forendo for its review.

5.3 Development Responsibilities for Licensed Products.

5.3.1 Clinical Development . Without limiting Licensee’s obligations in Section 5.1 , Licensee shall develop, and the JSC shall review, a clinical development strategy consistent with the Development Plan. Licensee shall be responsible for using its Commercially Reasonable Efforts to perform the clinical activities necessary for Regulatory Approval Applications that Licensee determines to file in the Territory, including, without limitation, submission of clinical protocols under (x) the IND and (y) the NDA for the Licensed Product in the Field.

5.3.2 Clinical Supplies; CMC Development . Licensee shall be responsible for the manufacturing and supply of Licensed Product required for clinical development including API, drug substance and the finished dosage form. Licensee shall be solely responsible for generating

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necessary CMC data on API, drug substance and the finished dosage form for regulatory filings, including any Regulatory Approval Application.

5.3.3 Regulatory Matters.

(a) Regulatory Strategy . Licensee shall develop, and the JSC shall review, a regulatory strategy for the Territory consistent with the Development Plan. Pursuant to and in accordance with such regulatory strategy, Licensee shall use its Commercially Reasonable Efforts to prepare and file Regulatory Approval Application or other submissions to Regulatory Authorities as Licensee determines to be appropriate.

(b) Communications with Regulatory Authorities . For all Licensed Products in any indication in the Territory, Licensee shall be solely responsible for: (1) all communications with Regulatory Authority; (2) label development, including negotiations with Regulatory Authority; (3) advisory committee meetings or their equivalent (if applicable); and (4) negotiation with Regulatory Authority regarding post-approval requirements/commitments; in each case provided that copies of material communications with any Regulatory Authority received or sent by Licensee which pertain to a Licensed Product are delivered promptly (and no later than five (5) days) to Forendo; and provided , further , that Forendo representatives may to the extent permitted by law and otherwise practicable, but not the obligation, to attend as an observer any material meeting (including conference calls) that Licensee has with any Regulatory Authority in the Territory relating solely to a Licensed Product. Licensee agrees to promptly inform Forendo about such meetings once scheduled with a Regulatory Authority.

(c) Regulatory Approvals . Regulatory Approval Applications for Licensed Product in the Territory for the treatment of male secondary hypogonadism shall be made by Licensee using its Commercially Reasonable Efforts, and in its sole discretion for all other indications, in Licensee’s name, and Licensee shall be the only Party responsible for (1) interfacing, corresponding and meeting with the applicable Regulatory Authorities in the Territory with respect to any and all Licensed Products, subject to the proviso in Section 5.3.3(b) , and (2) for overseeing, monitoring, coordinating and filing Regulatory Approval Applications for such Licensed Products in the Territory. Licensee shall hold in its name and maintain all Regulatory Approval for Licensed Products in the Territory.

5.4 Records. Licensee shall maintain written scientific records, consistent with its internal policies, which shall (a) reflect work done and results achieved in the performance of Development activities (including the status of Regulatory Approval processes), and (b) reflect steps taken toward, and the results of, Licensee’s obligatory regulatory activities under this Agreement in reasonable detail consistent with Licensee’s record keeping for its other products (as more detailed in Article 6 with respect to the Licensed Products on a Product-by-Product during the just-ended semiannual period (collectively, the “ Product Records ”). Upon request from Forendo, at no out-of-pocket expense to Licensee, Licensee shall provide a copy of or reasonable access to the Product Records to Forendo to the extent not previously provided to the

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JSC or Forendo, which requests may be made no more frequently than annually during the term of this Agreement. All Product Records and the information disclosed therein shall be maintained in confidence by Forendo in accordance with Article 9 .

5.5 Third Parties. Licensee and its Affiliates shall be entitled to utilize the services of Third Parties, including Third Party contract research organizations and service providers to perform their respective Development activities; provided , however , that Licensee shall remain at all times fully liable for its responsibilities under Development Plan and this Agreement. Any agreement with a Third Party to perform Licensee’s Development obligations under this Agreement shall include confidentiality and non-use provisions which are no less stringent than those set forth in Article 9 .

ARTICLE 6

COMMERCIALIZATION AND RELATED DILIGENCE

6.1 Diligence in Commercialization. Licensee shall use its Commercially Reasonable Efforts to Commercialize either itself, through an Affiliate or Sublicensee at least one (1) Licensed Product in the Territory including identifying and committing sufficient resources for pre-launch, launch and subsequent Commercialization activities.

6.2 Commercialization. Licensee shall be solely responsible for all, and, as between Forendo and Licensee, shall record all revenues in connection with, Commercialization activities relating to the Licensed Products in the Territory.

6.3 Commercialization Plan. Commencing at least twelve (12) months prior to the projected First Commercial Sale of a Licensed Product in the Territory, Licensee shall commence preparing a Commercialization Plan (“ Commercialization Plan ”) for such Licensed Product. No later than six (6) months prior to the projected First Commercial Sale of such Licensed Product in the Territory, Licensee shall submit such Commercialization Plan to the JSC for review. After the launch of such Licensed Product, on an annual basis, Licensee shall use its Commercially Reasonable Efforts to update the Commercialization Plan and submit such updated Commercialization Plan, no later than January 20 of each Contract Year, to the JSC for its review. Licensee’s achievement, by itself or through its Affiliates or Sublicensees, of any objectives set forth in the Commercialization Plan by the date set forth therein shall be deemed sufficient to satisfy the requirement to use Commercially Reasonable Efforts under this Section 6.3 as of such date; provided, however, the failure to meet such objectives shall not in and of itself be deemed to be a breach of Licensee’s Commercially Reasonable Efforts, though it may be a factor in such determination.

6.4 Commercial Manufacturing and Supply. Licensee shall develop a manufacturing and supply strategy for Licensed Product (including API, drug substance and finished dosage form) consistent with the Commercialization Plan. Pursuant to this strategy, Licensee shall be solely responsible for Manufacturing and supplying the API, drug substance and finished dosage form of any Licensed Product for Commercialization in the Territory. In this role, Licensee shall identify and manage Third Party contract manufacturers, as well as lead all supply chain

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management and quality control activities. Forendo acknowledges that Licensee has the final decision-making authority over Manufacturing activities in the Territory in its discretion.

6.5 Medical and Scientific Affairs. Licensee shall be solely responsible for medical and scientific affairs and programs, including professional symposia and other educational activities in the Territory. Licensee shall have the exclusive right to respond to all questions or requests for information about the Licensed Products made by any medical professionals or any other Person in the Territory.

ARTICLE 7

FINANCIAL PROVISIONS

7.1 Initial License Fee. In consideration of the licenses granted hereunder, Licensee shall pay Forendo the following non-refundable upfront consideration:

7.1.1 Five Million United States Dollars (USD $5,000,000) payable in cash within Ten Business Days after the Effective Date.

7.1.2 The equivalent of Seven Million Five Hundred Thousand United States Dollars (USD $7,500,000) payable in unregistered shares of common stock of Guarantor, Licensee’s parent corporation, the price per share being determined by the average daily closing price of Guarantor shares on NASDAQ during the 360 day period immediately preceding the Effective Date. The shares of Guarantor shall be issued to Forendo and its designee pursuant to the terms of that certain Stock Issuance Agreement to be entered into by Guarantor, Forendo and its designee on the Effective Date. In order to ensure an orderly sale of the shares over time, Forendo and its designee shall be limited in the aggregate to selling on any given day not more than ten percent (10%) of Guarantor’ average trading volume for the previous five trading days. Guarantor shall use reasonable commercial efforts to have a registration statement, covering the aforementioned shares to be registered for resale, declared effective as promptly as practicable; provided that (i) a S-3 registration will be utilized unless Guarantor is prohibited from using an S-3 registration, (ii) assuming use of a S-3 registration, Guarantor shall file such registration statement within sixty (60) days after the Effective Date and (iii) Licensee and/or Guarantor will bear all costs associated with preparation and filing the registration statement and maintaining the effectiveness of such registration statement. The registration statement requirements will terminate when all shares held by Forendo and its designee may be sold without volume restrictions pursuant to Rule 144 under the Securities Act of 1933.

7.2 Development Costs. Licensee shall be solely responsible for all Development Costs incurred after the Effective Date in Developing any Licensed Product for any indications in the Territory.

7.3 Milestones. Licensee shall pay to Forendo the amounts set forth below (each, a “ Milestone Payment ”) no later than thirty (30) days after the earliest date on which Licensee or any of its Related Parties receives written notification that the corresponding milestone event

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(each, a “ Milestone Event ”) has first been achieved with respect to a Licensed Product in the Territory:


[***]		[*] U.S. dollars ($[*])
[***]		[*] U.S. Dollars ($[*])
[***]		[*] U.S. Dollars ($[*])
[***]		[*] US Dollars ($[*])
[***]		[*] U.S. Dollars ($[*])
[***]		[*] US Dollars ($[*])
[***]		[*] US Dollars ($[*])
[***]		[*] US Dollars ($[*])
[***]		[*] US Dollars ($[*])

Once Licensee has made any particular Milestone Payment under this Section 7.3 , Licensee shall not be obligated to make any payment under this Section 7.3 with respect to the re-occurrence of the same Milestone Event, whether or not such re-occurrence is with respect to a different or the same Licensed Product. Notwithstanding anything to the contrary in this Agreement, only one (1) milestone payment due pursuant to this Section 7.3 shall be payable in any single calendar year during the Term. In the event that two (2) or more milestone payments become due to Forendo in any single calendar year during the Term pursuant to this Section 7.3 , the first milestone payment shall be due and payable by Licensee as set forth herein, and the payment date for any subsequent milestone payments accrued during the applicable calendar year shall be automatically delayed until the date that is thirty (30) days after the last day of the calendar year in which the immediately preceding accrued milestone payment has been paid.

7.4 Royalties.

7.4.1 Royalty Percentages . Licensee shall pay Forendo quarterly tiered royalty payments based on a percentage of Licensee’s and its sublicensees’ Annual Net Sales of Licensed Products in the Territory during the Royalty Term at the applicable rates set forth below, as determined by the applicable period in which Net Sales are earned (the Branded Royalty Period or the Step-Down Royalty Period):


Applicable Period during the Royalty Term	Annual Net Sales (millions)	Royalty %

Branded Royalty Period	[***]	[***]%

	[***]	[***]%

Step-Down Royalty Period	[***]	[***]%

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7.4.2 Generic Entry . Notwithstanding anything to the contrary herein, if at any time during the Royalty Term of this Agreement an AB rated generic of a Licensed Product is introduced into the Territory by a Third Party (“ Generic Entry ”) and Licensee’s market share of the Relevant Market is reduced by more than [***]%, then the Branded Royalty Period for such Licensed Product shall expire and the Royalty shall be reduced to the Step Down Royalty for the remainder of the Term for such Licensed Product (unless such Generic Entry is subsequently enjoined, in which case, the royalty rate shall be returned to the prior applicable royalty rate).

7.4.3 Reports and Royalty Payments . Within sixty (60) days after the end of each Contract Quarter commencing in the Contract Quarter immediately following the Contract Quarter in which there was the First Commercial Sale, Licensee shall deliver to Forendo a report setting forth for the previous Contract Quarter the following information on a Licensed Product-by-Licensed Product basis: (a) the gross sales and Net Sales of each Licensed Product, (b) the number of units sold by Licensee and all of its Affiliates and sublicensees, (c) the royalty due hereunder, (d) the applicable exchange rate as determined pursuant to Section 7.6.2; (e) the calculation of any true-up required with respect Net Sales reported and payments made in connection in the Contract Quarter(s). The total royalty due to Forendo for the sale of Licensed Products during such Contract Quarter shall be remitted at the time such report is made.

7.4.4 Setoff . Notwithstanding anything to the contrary in this Agreement, if Forendo breaches this Agreement and Licensee obtains a judgment against Forendo awarding Licensee damages, Licensee may setoff royalties payable under this Agreement against such damages until such time as Licensee has been paid such damages in full (net of setoff).

7.5 Licensee Responsible in the Event of Sublicensing. For the avoidance of doubt, to the extent that Licensee grants any sublicenses to sublicensees in the Territory in accordance with Section 2.2 , Licensee shall remain responsible for the payment to Forendo of the amounts required by this Article 7.

7.6 Payment Provisions Generally.

7.6.1 Taxes and Withholding . If Licensee is required to make a payment to Forendo subject to a deduction of tax or withholding tax, the sum payable by Licensee (in respect of which such deduction or withholding is required to be made) shall be made to Forendo after deduction of the amount required to be so deducted or withheld, which deducted or withheld amount shall be remitted in accordance with Applicable Laws. Any such withholding taxes required under Applicable Laws to be paid or withheld shall be an expense of, and borne solely by Forendo. To the extent Licensee is required to deduct and withhold taxes on any payments to Forendo, Licensee shall pay the amounts of such taxes to the proper governmental authority in a

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timely manner and promptly transmit to Forendo an official tax certificate or other evidence of such withholding sufficient to enable Forendo to claim such payments of taxes. Forendo shall provide to Licensee any tax forms that may be reasonably necessary in order for Licensee not to withhold tax or to withhold tax at a reduced rate under an applicable bilateral income tax treaty. Forendo shall use reasonable efforts to provide any such tax forms to Licensee at least thirty (30) days prior to the due date for any payments for which Forendo desires that Licensee apply a reduced withholding rate. Each Party will reasonably assist the other Party in claiming tax refunds, deductions, or credits at the other Party’s request and will reasonably cooperate to minimize the withholding tax, if available, under various treaties applicable to any payment made under this Agreement.

7.6.2 Payment and Currency Exchange . All amounts payable and calculations hereunder shall be in United States dollars and shall be paid by bank wire transfer in immediately available funds to such bank account as may be designated in writing by Forendo from time to time.

7.6.3 Overdue Payments . If any payment due under this Agreement (other than payments that are the subject of a good faith dispute between the Parties) is overdue by more than sixty (60) days, the overdue Party shall pay interest to the other at a rate per annum equal to the lesser of the prime rate of interest, as reported by New York edition of The Wall Street Journal on the last Business Day of the applicable Calendar Quarter, or the highest rate permitted by Applicable Law, calculated on the number of days such payments are paid after the date such payments are due.

7.7 Maintenance of Records; Audits.

7.7.1 Record-Keeping . Licensee shall keep, and shall cause its Affiliates and sublicensees to keep, books and accounts of record in connection with the sale of Licensed Products and in sufficient detail to permit accurate determination of all figures necessary for verification of royalties to be paid hereunder. Licensee shall maintain, and shall cause its Affiliates and sublicensees to maintain, such records for a period of at least three (3) years after the end of the Contract Year in which they were generated.

7.7.2 Audits . Upon thirty (30) days’ prior written notice from Forendo, Licensee or any of its Affiliates or sublicensees receiving the written notice (the “ Audited Party ”) shall permit an independent certified public accounting firm of nationally recognized standing selected by Forendo and reasonably acceptable to the Audited Party, to examine, at Forendo’s sole expense, the relevant books and records of the Audited Party and its Affiliates as may be reasonably necessary to verify the amounts reported in accordance with Section 7.4.3 and the payment of royalties hereunder. An examination by Forendo under this Section 7.7.2 shall occur not more than once in any Contract Year and shall be limited to the pertinent books and records for any Contract Year ended not more than two (2) years before the date of the request. The accounting firm shall be provided access to such books and records at the Audited Party’s facility(ies) where such books and records are normally kept and such examination shall be conducted during the Audited Party’s normal business hours. The Audited Party may require the accounting firm to

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sign a standard non-disclosure agreement before providing the accounting firm access to the Audited Party’s facilities or records. Upon completion of the audit, the accounting firm shall provide Licensee, Forendo and the Audited Party a written report disclosing any discrepancies in the reports submitted by the Audited Party or, as applicable, the royalties paid, and in each case, the specific details concerning any discrepancies. No other information pertaining to the Audited Party’s books and records shall be provided to Forendo.

7.7.3 Underpayments/Overpayments . If such accounting firm correctly concludes (such conclusion subject to the dispute resolution procedures set forth in Section 12.15 ) that additional royalties were due to Forendo, Licensee shall, if applicable, pay to Forendo the additional royalties within sixty (60) days of the date Licensee receives such accountant’s written report so correctly concluding (unless disputed in good faith hereunder). If such underpayment exceeds ten percent (10%) of the royalties that were to be paid, Licensee also shall reimburse Forendo for all out-of-pocket expenses incurred in conducting the audit. If such accounting firm correctly concludes that Licensee overpaid royalties to Forendo, then Forendo shall refund such overpayments to Licensee, within sixty (60) days of the date Forendo receives such accountant’s report so correctly concluding.

7.7.4 Confidentiality . All financial information of an Audited Party that is subject to review under this Section 7.7 shall be deemed to be Confidential Information of such Audited Party subject to the provisions of Article 9 , and Forendo shall not disclose such Confidential Information to any Third Party or use such Confidential Information for any purpose other than verifying payments to be made by Licensee to Forendo hereunder.

ARTICLE 8

INTELLECTUAL PROPERTY PROTECTION AND RELATED MATTERS

8.1 Filing, Prosecution and Maintenance of Patent Rights.

8.1.1 Forendo Patent Rights .

(a) Primary Responsibility .

(1)

Subject to Section 8.1.1(d) , Licensee through counsel currently prosecuting and maintaining the Forendo Patent Rights, or if Forendo consents, counsel reasonably acceptable to Forendo in the Territory, shall have primary responsibility for and control over obtaining, prosecuting (including any interferences, reissue proceedings and re-examinations), and maintaining throughout the Territory the Forendo Patent Rights in Forendo’s name, all at Licensee’s sole cost and expense. For purposes of this Section 8 , Forendo Patent Rights shall include, without limitation patents and applications only within the Territory, and any patentable Forendo Improvements and patentable Forendo Know-How in the Territory.

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For purposes of this Section 8 , Forendo Patent Rights shall not include patents and patent applications outside of the Territory.

(2)

Notwithstanding the foregoing, Licensee shall keep Forendo fully informed of patent prosecution and provide Forendo with copies of material correspondence (including, but not limited to, applications, office actions, responses, etc.) relating to prosecution and maintenance of any Forendo Patent Rights under this Section of the Agreement. Forendo may provide comments and suggestions with respect to any material actions to be taken by Licensee and Licensee shall reasonably consider all comments, suggestions and prosecution actions recommended by Forendo. Further, notwithstanding Section 8.1.1(a)(1) but subject to Section 8.1.1(d) , in no event shall Licensee take any action or fail to take any action (or instruct counsel to take any action or fail to take any action) with respect to the prosecution or maintenance of any of the Forendo Patent Rights, whether in connection with the original examination, continuing examination, post-grant review, re-examination, re-issue or otherwise) which would have the effect of narrowing the scope of or adversely impacting the validity of any issued or pending claim within the Forendo Patent Rights except with the prior written consent of Forendo, such consent not be unreasonably withheld.

(3)

In order to facilitate Forendo’s right to comment, Licensee shall provide copies of all such official correspondence and any proposed responses by Licensee at least thirty (30) days prior to any filing or response deadlines, or within five (5) Business Days of Licensee’s receipt of any official correspondence if such correspondence only allows for thirty (30) days or less to respond, and Forendo shall provide any comments promptly and in sufficient time to allow Licensee to meet applicable filing requirements. In no event shall Licensee be required to delay any submission, filing or response past any deadline that is not extendable. Licensee agrees to use its Commercially Reasonable Efforts to avoid extension fees, unless agreed to in advance by the Parties, and to take such action as deemed reasonably necessary to preserve pendency of the Forendo Patent Rights in the Territory, including, but not limited to, the filing of any new or continuing patent application and/or payment of any fee necessary to preserve pendency of a pending application.

(b) Common Interest . All information exchanged between the Parties regarding preparation, filing, prosecution or maintenance of the Forendo Patent Rights

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shall be deemed Confidential Information. In addition, the Parties acknowledge and agree that, with regard to such preparation, filing, prosecution and maintenance of the Forendo Patent Rights, the interests of the Parties as licensor and Licensee are to obtain the strongest patent protection possible, and as such, are aligned and are legal in nature. The Parties agree and acknowledge that they have not waived, and nothing in this Agreement constitutes a waiver of, any legal privilege concerning the Forendo Patent Rights, including, without limitation, privilege under the common interest doctrine and similar or related doctrines.

(c) Joint Inventions . With respect to any Joint Invention and any Patents claiming such Joint Invention (“ Joint Collaboration Patents ”), Forendo shall assign (and shall cause its Affiliates, sublicensees and subcontractors to assign), and hereby does assign, any and all of Forendo’s (and its Affiliates’, its sublicensees’ and subcontractors’) right, title and interest in and to such Joint Inventions and Joint Collaboration Patents to Licensee, such that Licensee shall solely own such Joint Inventions and Joint Collaboration Patents. In order to ensure that all potential Joint Inventions, Joint Collaboration Patents and any other patentable inventions for the Territory are identified and pursued by Licensee or Forendo, Forendo will provide Licensee with information, know-how and data (including pre-clinical and clinical data) related to the Field or FIS that come into its possession or control during the Term. Forendo shall provide such information, know-how and data to Licensee prior to permitting them to be published or otherwise publicly available, so that Licensee has the opportunity to identify and pursue any Joint Inventions, Joint Collaboration Inventions, or other Territory appropriate inventions to avoid jeopardizing potential patent rights in the Territory for the same.

(d) Election Not to Continue Prosecution; Abandonment . If Licensee elects (i) not to continue the prosecution (including any interferences and post-grant proceedings) or maintenance of a Forendo Patent Right in the Territory, or (ii) not to file and prosecute patent applications for the Forendo Patent Rights in the Territory following a written request from Forendo to file and prosecute in the Territory, then (1) Licensee shall so notify Forendo promptly in writing of its intention in good time to enable Forendo to meet any deadlines by which an action must be taken to establish or preserve any such rights in such patent in in the Territory and (2) Forendo shall have the right to file for, or continue to prosecute, maintain or enforce, or otherwise pursue such Forendo Patent Rights in the Territory, and Licensee shall cooperate with Forendo in regards thereto.

(e) Orange Book Listed Patent Rights . Prior to submission of a NDA or sNDA for any Licensed Product, Licensee shall consult with Forendo as to the Forendo Patent Rights the Licensee intends to list in the NDA or sNDA for inclusion in the Orange Book. Licensee agrees to include in the Orange Book all Forendo Patent Rights with Valid Claims (excluding those described in clause (b) of Section 1.71 ) that cover the composition or formulation of the Licensed Product or the use of the Licensed Product for its approved indication.

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8.1.2 Cooperation . Each Party hereby agrees: (a) to make its and its Affiliates’ employees, agents and consultants reasonably available to the other Party (or to the other Party’s authorized attorneys, agents or representatives), to the extent reasonably necessary to enable such Party to undertake patent prosecution as contemplated by this Agreement; (b) to cooperate, if necessary and appropriate, with the other Party in gaining patent term extensions wherever applicable to Patent Rights that are subject to this Agreement; and (c) to endeavor in good faith to coordinate its efforts with the other Party to minimize or avoid interference with the prosecution and maintenance of the other Party’s patent applications that are subject to this Agreement.

8.2

Enforcement of Patent Rights.

8.2.1 Notification . Each Party shall promptly report in writing to the other Party during the Term any (a) known or suspected infringement of any Forendo Patent Rights or (b) unauthorized use or misappropriation of any Confidential Information, including Forendo Intellectual Property, by a Third Party of which it becomes aware, and shall provide the other Party with all available evidence supporting such infringement or unauthorized use or misappropriation.

8.2.2 Rights to Enforce . In respect of Licensed Products in the Territory, Licensee shall have the first right, but not the obligation, to take any reasonable measures it deems appropriate to stop infringing activities in the Field in the Territory, including (a) initiating or prosecuting an infringement or other appropriate suit or action against, and (b) settling or ceasing any such infringement action or other suit, including, but not limited to, granting adequate rights and licenses necessary for continuing such activities in the Territory to any Third Party who at any time has infringed, or is suspected of infringing, any Forendo Patent Rights, or of using without proper authorization any Forendo Know-How claiming or relating to Licensed Products. In the event that Licensee elects not to take action pursuant to this Section 8.2.2 , Licensee shall so notify Forendo in writing of its intention within ninety (90) days of Licensee’s notice of such infringement activities to enable Forendo to meet any deadlines by which an action must be taken to establish or preserve any enforcement rights. Thereafter, the Parties shall consult with one another in an effort to determine whether a reasonably prudent licensee would institute litigation to enforce the Forendo Intellectual Property in question in light of all relevant business and economic factors (including, but not limited to, the projected cost of such litigation, the likelihood of success on the merits, the probable amount of any damage award, the prospects for satisfaction of any judgment against the alleged infringer, the possibility of counterclaims against the parties hereto or challenges to the scope or validity of the Forendo Intellectual Property in question, the impact of any possible adverse outcome on the Parties and the effect any publicity might have on the Parties’ respective reputations and goodwill). If, after such process, it is unanimously determined that a suit should be filed and Licensee does not file suit or commence settlement negotiations forthwith against the infringer, then Forendo shall have the right, at its own expense, to enforce the Forendo Intellectual Property in question on behalf of itself and Licensee and Forendo shall have the right, but not the obligation, to take any such reasonable measures to stop such infringing activities by such alleged infringer.

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8.2.3 Procedures; Expenses and Recoveries . The Party having the right to initiate any infringement suit under Section 8.2.2 shall have the sole and exclusive right to select counsel for any such suit and shall pay all expenses of the suit, including attorneys’ fees and court costs and reimbursement of the other Party’s reasonable out-of-pocket expenses in rendering assistance requested by the initiating Party. If required under Applicable Law in order for the initiating Party to initiate and/or maintain such suit, or if either Party is unable to initiate or prosecute such suit solely in its own name or it is otherwise advisable to obtain an effective legal remedy, in each case, the other Party shall join as a party to the suit and will execute and cause its Affiliates to execute all documents necessary for the initiating Party to initiate litigation to prosecute and maintain such action. Notwithstanding the foregoing, if Licensee is the initiating Party and so requests, then Forendo shall join as a party to the suit and will execute and cause its Affiliates to execute all documents necessary for Licensee to initiate litigation to prosecute and maintain such action. In addition, at the initiating Party’s request, the other Party shall provide reasonable assistance to the initiating Party in connection with an infringement suit at no charge to the initiating Party except for reimbursement by the initiating Party for reasonable out-of-pocket expenses incurred in rendering such assistance. The non-initiating Party shall have the right to participate and be represented in any such suit by its own counsel at its own expense. If the Parties obtain from a Third Party, in connection with such suit, any damages, license fees, royalties or other compensation (including any amount received in settlement of such litigation), such amounts shall be allocated as follows:

(a) in all cases, first to reimburse Licensee for all expenses of the suit, including attorneys’ fees and disbursements, court costs and other litigation expenses, and then to reimburse Forendo for its reasonable attorneys’ fees and disbursements, court costs and other litigation expenses; and

(b) any of the remaining amount that relates to Licensed Product shall be treated as if it were Net Sales of Licensee, with Forendo receiving a royalty on such remaining amount pursuant to the terms of Section 7.4 , and the balance being retained by Licensee.

8.2.4 Other Infringement Resolutions . In the event of a dispute or potential dispute that has not ripened into a demand, claim or suit of the types described in this Section 8.2 (e.g., actions seeking declaratory judgments and revocation proceedings), the same principles governing control of the resolution of the dispute, consent to settlements of the dispute, and implementation of the settlement of the dispute (including sharing in and allocating the payment or receipt of damages, license fees, royalties and other compensation) set forth in this Section 8.2 shall apply. Each Party shall immediately notify the other Party of any certification of which it becomes aware filed pursuant to 21 U.S.C. § 355(b)(2)(A) or § 355(j)(2)(A)(vii) (or any amendment or successor statute thereto) claiming that a Forendo Patent Right or a Licensee Patent Right is invalid or that infringement of such Patent Right will not arise from the development, manufacture, use or sale of any product by a Third Party. The provisions of this Section 8.2 shall thereafter apply as if such Third Party were an infringer or suspected infringer; provided that in the event that Licensee elects not to take action, Licensee shall so notify

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Forendo in writing of its intention within ten (10) days of Licensee’s notice of such infringement activities to enable Forendo to meet any deadlines by which an action must be taken to establish or preserve any enforcement rights.

8.3

Claimed Infringement of Third Party Rights.

8.3.1 Notice . In the event that a Third Party at any time provides written notice of a claim to, or brings an action, suit or proceeding against, any Party, or any of such Party’s respective Affiliates or sublicensees, claiming infringement of its Patent Rights (including with respect to a Blocking Patent) or unauthorized use or misappropriation of its Know-How, based upon an assertion or claim arising out of the Development, Manufacture or Commercialization of a Licensed Product in the Territory (“ Infringement Claim ”), such Party shall promptly notify the other Party of the Infringement Claim or the commencement of such action, suit or proceeding, enclosing a copy of the Infringement Claim and all papers served. Each Party agrees to make available to the other Party its advice and counsel regarding the technical merits of any such claim at no cost to the other Party and to offer reasonable assistance to the other Party at no cost to the other Party.

8.3.2 Obligation to Defend .

(a) Licensee shall have the obligation to defend all Infringement Claims brought in the Territory against either Party or any of its Affiliates or sublicensees arising out of the Development, Manufacture or Commercialization of a Licensed Product in the Territory; provided that the foregoing shall not be construed to require Licensee to defend (i) Forendo against a breach of Forendo’s representations and warranties set forth herein, or (ii) Forendo, its Affiliates or sublicensees with respect to Manufacturing activities by such parties in the Territory.

(b) Forendo shall have the obligation to defend all Infringement Claims brought against either Party or any of its Affiliates or sublicensees arising out of Forendo’s and/or its Affiliates and/or licensee’s Development, Manufacture or Commercialization of a Licensed Product and/or use or practice of any Forendo Intellectual Property and/or Licensee Intellectual Property outside the Territory; provided that the foregoing shall not be construed to require Forendo to defend (i) Licensee against a breach of Licensee’s representations and warranties set forth herein, or (ii) Licensee, its Affiliates or sublicensees with respect to Development or Manufacturing activities by such parties outside the Territory.

8.3.3 Procedure .

(a) To the extent that the Infringement Claim, whether in the form of an assertion by a Third Party or a filed litigation (or other formal dispute resolution procedure), directly relates to a Blocking Patent (a “ Blocking Patent Claim ”), Licensee shall have the first right to control any negotiations and discussions with the Third Party to resolve the Blocking Patent Claim in the Territory by acquiring a license under the

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Blocking Patent. If Forendo acquires any rights, including a license to any Blocking Patent in the Territory, such rights shall be considered Forendo Intellectual Property subject to the License Grant to Licensee provided herein. If Licensee is unable to resolve the Blocking Patent Claim by acquiring a license under the Blocking Patent on terms that are commercially reasonable to Forendo, in Forendo’s discretion and at no expense to Licensee, then Forendo may negotiate a license with the Third Party under the Blocking Patent in the Territory in the Field. Any expense incurred by Licensee in connection with obtaining rights under or to a Blocking Patent shall be offset against any royalties or other payments payable thereunder as Infringement Defense Costs under Section 8.3.3(c) .

(b) Licensee shall have the sole and exclusive right to select counsel to defend any Infringement Claim brought via litigation or other formal dispute resolution procedure; provided that it shall consult with Forendo with respect to selection of counsel for such defense. Licensee shall keep Forendo informed, and shall from time to time consult with Forendo regarding the status of any such claims and shall provide Forendo with copies of all material documents filed in, and all material written communications relating to, any suit brought in connection with such claims. Forendo shall also have the right to participate and be represented in any such claim or related suit, at its own expense. Licensee shall not settle any Infringement Claims that would adversely impact any of the Forendo Patent Rights (such as invalidation of or narrowing the scope of any claim of any of the Forendo Patent Rights) or purport to impose any obligations on Forendo, without obtaining the prior written consent of Forendo or its Affiliate, as applicable, which consent shall not be unreasonably withheld.

(c) Except to the extent Forendo owes an indemnification obligation to Licensee under this Agreement, all litigation costs and expenses incurred by Licensee in connection with such Infringement Claim, and all damages and settlement payments, including any ongoing royalties, payable by Licensee to the Third Party in respect of such Infringement Claims (“ Infringement Defense Costs ”) shall be borne by [***]:

(1) [***]; or

(2) [***].

(d) For any given Contract Quarter, the royalties and milestones payable to Forendo under Section 7.4 shall not be reduced by the application of Section 8.3.3(c) by more than [***] percent ([***]%) of the royalties otherwise payable to Forendo under Section 7.4 (with the un-deducted balance of Infringement Defense Costs applied against royalties and milestones payable to Forendo under Section 7.4 in successive Contract Quarters until fully recovered by Licensee).

8.3.4 Limitations . EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN SECTION 11.5 , THE FOREGOING STATES THE ENTIRE RESPONSIBILITY OF FORENDO AND LICENSEE, AND THE SOLE AND EXCLUSIVE REMEDY OF FORENDO OR LICENSEE, AS THE CASE MAY BE, IN THE CASE OF ANY CLAIMED

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INFRINGEMENT OF ANY THIRD PARTY PATENT RIGHTS OR UNAUTHORIZED USE OR MISAPPROPRIATION OF ANY THIRD PARTY’S KNOW-HOW.

8.4 Product Trademarks . Licensee and/or its Affiliates or sublicensees, as applicable, shall select and own the Product Trademarks for each Licensed Product and shall be solely responsible for filing and maintaining the Product Trademarks in the Territory (including payment of costs associated therewith). Licensee shall assume full responsibility, at its sole cost and expense, for any infringement of a Product Trademark for a Licensed Product by a Third Party, and shall defend and indemnify Forendo for and against any claims of infringement in the Territory of the rights of a Third Party by the use of a Product Trademark in connection with a Licensed Product.

8.5 Patent Term Extensions in the Territory . The Parties shall use reasonable efforts to obtain all available extensions of Patent Rights (including those available under the Hatch-Waxman Act). Each Party shall execute such authorizations and other documents and take such other actions as may be reasonably requested by the other Party to obtain such extensions. The Parties shall cooperate with each other in gaining such extensions wherever applicable to Patent Rights. The Party first eligible to seek extension of any such Patent Rights shall have the right to do so; provided that the first Party has an option to extend the patent term for only one of several patents, the first Party shall consult with the other Party before making the election. If more than one patent is eligible for extension, the Parties shall select, in good faith, a strategy that shall maximize patent protection and commercial value for each Licensed Product.

ARTICLE 9

CONFIDENTIALITY

9.1 Confidential Information . All Confidential Information disclosed by a Party (together with its Affiliates, the “ Disclosing Party ”) to the other Party (together with its Affiliates, the “ Receiving Party ”) before or during the Term shall be used by the Receiving Party solely in connection with the activities contemplated by this Agreement, shall be maintained in confidence by the Receiving Party and shall not otherwise be disclosed by the Receiving Party to any other Person, firm, or agency, governmental or private (other than a Party’s Affiliates), without the prior written consent of the Disclosing Party, except to the extent that the Confidential Information (as determined by competent documentation):

9.1.1 was known or used by the Receiving Party prior to its date of disclosure to the Receiving Party; or

9.1.2 either before or after the date of the disclosure to the Receiving Party, is lawfully disclosed to the Receiving Party by sources other than the Disclosing Party rightfully in possession of the Confidential Information; or

9.1.3 either before or after the date of the disclosure to the Receiving Party, becomes published or generally known to the public (including information known to the public through the sale of products in the ordinary course of business) through no fault or omission on the part of the Receiving Party or its sublicensees; or

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9.1.4 is independently developed by or for the Receiving Party without reference to or reliance upon the Confidential Information.

9.1.5 In addition, the provisions of this Section 9.1 shall not preclude the Receiving Party from disclosing Confidential Information to the extent such Confidential Information is required to be disclosed by the Receiving Party to comply with Applicable Laws, to defend or prosecute litigation or to comply with governmental regulations, provided that the Receiving Party provides prior written notice of such disclosure to the Disclosing Party and takes reasonable and lawful actions to avoid and/or minimize the degree of such disclosure. Forendo and Licensee each agree that they shall provide Confidential Information received from the other Party only to their respective employees, consultants and advisors, and to the employees, consultants and advisors of such Party’s Affiliates, who have a reasonable need to know and are bound by confidentiality obligations at least as strict as this Article 9. In addition, each Party may not disclose the terms of this Agreement (to the extent such terms are confidential) to any Third Party except as required by law and except to actual or prospective investors, acquirers, licensees or strategic partners or to a Party’s accountants, attorneys and other professional advisors; provided that such disclosures shall be subject to continued confidentiality obligations at least as strict as this Article 9.

9.2 Public Announcements and Use of Names . No public disclosure of the existence of, or the terms of, this Agreement may be made by either Party, and no Party shall use the name, trademark, trade name or logo of the other Party in any publicity, news release or public disclosure relating to this Agreement or its subject matter without the prior express written permission of the other Party, except as may be required by law or expressly permitted by the terms hereof. A press release, agreed upon by the Parties, is attached to this Agreement as Schedule 9.2 . If a public disclosure is required by any Applicable Law, including in a filing with a governmental authority or stock exchange, the disclosing Party shall provide copies of the disclosure reasonably in advance of such filing or other disclosure, but not later than three (3) Business Days prior to the filing, for the non-disclosing Party’s prior review and comment and to allow the other Party a reasonable time to object to any such disclosure or to request confidential treatment thereof.

ARTICLE 10

TERM AND TERMINATION

10.1 Term . This Agreement shall commence on the Effective Date and on a Licensed Product-by-Licensed Product basis, shall be in full force and effect until the expiration of the last-to-expire Royalty Term of such Licensed Product in the Territory (the “ Term ”). After expiration of the Royalty Term for a Licensed Product , no further royalties shall be payable in respect of sales of such Licensed Product , and the license granted to Licensee under Section 2.1.1 hereof shall be a fully paid-up, perpetual, irrevocable, royalty-free license with respect to such Licensed Product in the Territory.

10.2 Termination for Cause.

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10.2.1 Cause for Termination .

(a) This Agreement may be terminated in its entirety or on a Licensed Product -by-Licensed Product basis at any time during the Term upon sixty (60) days’ prior written notice by a Party if the other Party (the “ Breaching Party ”) is in breach of its material obligations under this Agreement as a whole or on a Licensed Product-by-Licensed Product basis and has not cured such breach for sixty (60) days, measured from the date written notice of such material breach is given to the Breaching Party (“ Date of Notice ”); provided , however , that if such alleged material breach is not reasonably susceptible of cure within such sixty (60) day period and the Breaching Party uses reasonable and diligent good faith efforts to cure such alleged material breach, such sixty (60) day period shall be extended as long as is reasonably necessary (but no more than six (6) months from the Date of Notice) and no such termination shall occur for so long as such efforts continue or if such breach is cured (but in each case for no longer than six (6) months from the Date of Notice).

(b) This Agreement may be terminated at any time during the Term by either Party upon the filing or institution of bankruptcy, reorganization, liquidation or receivership proceedings, or upon an assignment of a substantial portion of the assets for the benefit of creditors by the other Party; provided , however , that in the event of any involuntary bankruptcy or receivership proceeding, such right to terminate shall only become effective if the Party consents to the involuntary bankruptcy or receivership, or such proceeding is not dismissed within ninety (90) days after the filing thereof.

(c) In the event that Forendo believes that Licensee has failed to use its Commercially Reasonable Efforts to Develop, Manufacture, and/or Commercialize any Licensed Product at any time in the Territory, prior to providing a notice of breach under Section 10.2.1(a) , Forendo shall raise such issue by written notice to Licensee, which shall not constitute a notice of breach by Licensee. If within sixty (60) days following Licensee’s receipt of such notice from Forendo, Forendo believes that Licensee has not remedied the issues identified by Forendo in such notice, then (i) Licensee shall provide Forendo with a written response specifying, in reasonable detail, how it is using or has begun to use such Commercially Reasonable Efforts, and (ii) the Parties shall discuss such response. If Forendo continues to believe that Licensee has not used its Commercially Reasonable Efforts, it may then pursue the remedies provided to it under this Agreement, including Section 10.2.1 .

10.2.2 Effect of Termination by Forendo for Cause . [***].

10.2.3 Effect of Termination by Licensee for Cause . Without limiting any other legal or equitable remedies that Licensee may have, if Forendo is the Breaching Party with respect to the applicable Licensed Product(s) and Licensee terminates this Agreement in accordance with Section 10.2.1(a) , then in addition to any other remedies available to it at law and equity (i) Licensee may, upon its election to do so, terminate any agreements to which Licensee is a party providing for Development, Commercialization or Manufacturing services for the applicable

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Licensed Product(s) such as contract research organization contracts and contract manufacturing organization contracts, and Forendo shall indemnify and hold harmless Licensee from any liabilities or obligations arising under such agreements as a result of such terminations, and (ii) the licenses granted by Licensee to Forendo pursuant to Section 2.1.2 shall immediately.

10.3

Termination for Convenience.

10.3.1 Licensee’s Termination for Convenience .

(a) Licensee shall not have the right to terminate this Agreement, in its entirety or on a Licensed Product-by-Licensed Product, for convenience prior to completion of a Phase II Clinical Trial for at least one Licensed Product.

(b) Licensee shall have the right to terminate this Agreement, after completion of a Phase II Clinical Trial for at least one Licensed Product, for any reason, in its entirety or on a Licensed Product-by-Licensed Product , upon ninety (90) days’ advance written notice to Forendo (such termination, an “ Early Termination ”).

(c) Licensee shall have the right to terminate this Agreement for any reason, in its entirety or on a Licensed Product-by-Licensed Product , after the grant of the first Regulatory Approval of a Licensed Product but only upon one hundred eighty (180) days’ advance written notice to Forendo (such termination, a “ Post-Approval Termination ”).

(d) If, at any time, (x) Licensee publicly announces that it is abandoning the Development of the Licensed Product for all indications, or (y) Licensee ceases to use Commercially Reasonable Efforts to Develop the Licensed Product for male secondary hypogonadism for more than twelve (12) consecutive months, and such cessation of Commercially Reasonable Efforts is not due to Force Majeure or the action or inaction of a Regulatory Authority, then Forendo shall have the option, after it consults with Licensee for fifteen (15) days to confirm such abandonment or cessation of Commercially Reasonable Efforts, as applicable, to give Licensee a written notice that Forendo considers this Agreement to have been terminated by Licensee under this Section 10.3.1 for all purposes hereunder. Upon the giving of such notice by Forendo, this Agreement shall be deemed to have been terminated by Licensee under this Section 10.3.1 .

10.3.2 Effect of Termination for Convenience. If the Agreement is terminated or deemed to be terminated pursuant to Section 10.3.1 , the effects of termination set forth in Section 10.2.2 shall apply.

10.4

Termination for Clinical Failure.

10.4.1 Termination . Notwithstanding Section 10.3 , Licensee may terminate this Agreement in its entirety or on a Licensed Product-by-Licensed Product by providing written

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notice to Forendo if, prior to Regulatory Approval, Licensee determines in good faith using reasonable clinical judgment that there are material concerns regarding the safety of any Licensed Product(a “ Safety Failure ”) or (ii) the failure to substantially achieve any of the primary efficacy endpoints of any clinical trial involving the Licensed Product (an “ Efficacy Failure ”), provided that Licensee acts in good faith in making such determination and reasonably consults with Forendo prior to terminating this Agreement due to an Efficacy Failure.

10.4.2 Effect of Termination for Clinical Failure . In the event Licensee terminates this Agreement pursuant to this Section 10.4, the effects of termination set forth in Section 10.2.2 (b), (c), (d), (e) and (f) shall apply. A notice of termination by Licensee under this Section 10.3 cannot be rescinded by Licensee except with the consent of Forendo in its sole discretion.

10.5 Rights in Bankruptcy . All rights and licenses granted under or pursuant to this Agreement, including without limitation Article 2 , are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the Bankruptcy Code or analogous provisions of Applicable Law outside the United States, licenses of right to “intellectual property” as defined under Section 101 of the Bankruptcy Code or analogous provisions of Applicable Law outside the United States (hereinafter “ IP ”). Upon a Party which is a licensor or rights granted under this Agreement entering into any voluntary or involuntary insolvency proceeding during the Term of this Agreement, and notwithstanding any attempted termination of this Agreement by any trustee, administrator or executor of such Party or an applicable bankruptcy court, the Parties agree that: the other Party, as licensee of such rights under this Agreement, shall (i) retain and may fully exercise all of its rights and elections under the Bankruptcy Code or any other provisions of Applicable Law outside the United States that provide similar protection for IP and (ii) retain in perpetuity all rights and licenses herein grant provided such Party continues to pay any royalties otherwise due hereunder (subject to any right of set-off hereunder) and the Party which has entered such insolvency proceeding shall have, to the extent required by applicable bankruptcy laws in order to maintain the other Party’s license rights hereunder, no further obligations under this Agreement other than to not interfere with such other Party’s license rights hereunder. Each Party hereby grants to the other Party and its Affiliates a right to obtain possession of and to benefit from a complete duplicate of (or complete access to, as appropriate) any such IP and all embodiments of intellectual property, which, if not already in the other Party’s possession, shall be promptly delivered to it upon the other Party’s written request therefor. The term “ embodiments of intellectual property ” includes all tangible, electronic or other embodiments of rights and licenses hereunder, including all Licensed Products, all Regulatory Approval Applications and Regulatory Approvals and rights of reference therein, and all Information related to Licensed Products, Forendo Patent Rights and Forendo Know-How, or Licensee Patent Rights and Licensee Know-How, as applicable. Neither Party shall interfere with the exercise by the other Party or its Affiliates of rights and licenses to IP and embodiments of intellectual property licensed hereunder in accordance with this Agreement, and each Party agrees to reasonably assist the other Party and its Affiliates to obtain the IP and embodiments of intellectual property in the possession or control of Third Parties as reasonably necessary or desirable for the other Party or its Affiliates to exercise such rights and licenses in accordance with this Agreement. The parties agree that the terms of this Agreement are fair and reasonable,

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are not overly burdensome and have been negotiated in an arms-length transaction between unrelated parties with each party represented by legal counsel. If any provision herein is deemed onerous or otherwise unenforceable by any applicable bankruptcy court, the parties shall use good faith efforts to amend the Agreement (e.g., removing such onerous provision) so as to avoid any consequences thereof under applicable bankruptcy laws

10.6 Return of Confidential Information . Except to the extent otherwise required by Applicable Law, upon termination of this Agreement, each Party shall promptly return to the other Party, delete or destroy all relevant records and materials in such Party’s possession or control containing Confidential Information of the other Party; provided that such Party may keep one copy of such materials for archival purposes only or to otherwise enjoy its continuing rights under this Agreement.

10.7 Effect of Expiration or Termination; Survival . Expiration or termination of this Agreement shall not relieve the Parties of any obligation accruing prior to such expiration or termination. The provisions of Article 9 (Confidentiality), Article 11 (Representations and Warranties; Indemnification) and Article 12 (Miscellaneous Provisions) and Sections 2.2.3 (Effect of Termination on Sublicenses), Section 10.2.2 (Effect of Termination by Forendo for Cause), Section 10.2.3 (Effect of Termination by Licensee for Cause), Section 10.3.2 (Effect of Termination for Convenience) and Section 10.4.2 (Effect of Termination for Clinical Failure) shall survive any expiration or termination of this Agreement. Except as set forth in this Article 10 , upon termination or expiration of this Agreement all other rights and obligations cease. Any expiration or early termination of this Agreement shall be without prejudice to the rights of either Party against the other accrued or accruing under this Agreement before termination.

ARTICLE 11

REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

11.1 Mutual Representations and Warranties . Each Party represents, warrants and covenants to the other Party that as of the Effective Date of this Agreement:

11.1.1 Corporate Existence and Authority . It is a corporation (in the case of Licensee) and a company (in the case of Forendo) duly organized, validly existing and in good standing (or its foreign equivalent) under the laws of its jurisdiction of organization, and has full power and authority to enter into this Agreement and to carry out the provisions hereof.

11.1.2 Authorized Execution; Binding Obligation .

(a) The execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized and approved by all necessary corporate action on its part; and

(b) This Agreement has been duly executed and delivered by it and constitutes a legal, valid, and binding obligation enforceable against it in accordance with this Agreement’s terms, except as the same may be limited by applicable bankruptcy,

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insolvency, reorganization, moratorium or other laws relating to or affecting creditors’ rights generally and by general equity principles, including judicial principles affecting the availability of injunction and specific performance.

11.1.3 No Conflicts . The execution, delivery and performance of this Agreement by it does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party and by which it or its assets may be bound.

11.1.4 All Consents and Approvals Obtained . Except as otherwise described in this Agreement, (a) all necessary consents, approvals and authorizations of, and (b) all notices to, and filings by such Party with, all governmental authorities and other Persons required to be obtained or provided by such Party in connection with the execution, delivery and performance of this Agreement have been obtained and provided, except for those government approvals, if any, not required at the time of execution of this Agreement.

11.1.5 Compliance with Law . It shall at all times comply with Applicable Laws in all material respects with respect to the Licensed Products. Neither it nor any of its Affiliates nor any director, officer, agent, employee, consultant of, or other person associated with, or acting on behalf of, it or its Affiliates has (a) made, authorized, offered or promised to make any payment or transfer of anything of value, directly, indirectly or through a third party, to any foreign government official, employee or other representative (including employees of a government owned or controlled entity or public international organization and including any political party or candidate for public office), in violation of any Anti-Bribery Laws, or any law of similar effect in any jurisdiction to which such Person is subject or (b) otherwise taken any action in violation of any Anti-Bribery Laws, or any law of similar effect in any jurisdiction to which such Person is subject. For the purposes of this Section 11.1.5 , the acts specified include (x) the making or payment of any illegal contributions, commissions, fees, gifts, entertainment, travel or other unlawful expenses relating to political activity, (y) the direct or indirect payment, gift, offer, promise or authorization to make a payment, gift, offer or promise of, anything of material value to any foreign government representative and (z) the making of any bribe, illegal payoff, influence payment, kickback or other unlawful payment. “ Anti-Bribery Laws ” means the United States Foreign Corrupt Practices Act of 1977 or any other anti-bribery laws, statutes, rules or regulations of any country that may be applicable to a Party, including the United Kingdom Bribery Act 2010 and any anti-bribery and related prohibitions implemented under the Organization for Economic Cooperation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

11.1.6 Representations Regarding Debarment and Compliance . Each Party represents, warrants and covenants that neither it nor any of its Affiliates nor any of their respective directors, officers, employees, or consultants, and, to its knowledge based upon reasonable inquiry, any Third Party (and its directors, officers, employees and consultants), in each case who were responsible for the development or whose responsibilities involve the Development or Commercialization of the Product as authorized by this Agreement:

(a) are debarred under Section 306(a) or 306(b) of the FD&C Act;

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(b) have been charged with, or convicted of, any felony or misdemeanor under Applicable Laws related to any of the following: (A) the development or approval of any drug product or the regulation of any drug product under the FD&C Act; (B) a conspiracy to commit, aid or abet the development or approval of any drug product or regulation of any drug product; (C) health care program-related crimes (involving Medicare or any state health care program); (D) patient abuse, controlled substances, bribery, payment of illegal gratuities, fraud, perjury, false statement, racketeering, blackmail, extortion, falsification or destruction of records; (E) interference with, obstruction of an investigation into, or prosecution of, any criminal offense; or (F) a conspiracy to commit, aid or abet any of these listed felonies or misdemeanors; and

(c) is excluded, suspended or debarred from participation, or otherwise ineligible to participate, in any United States federal or state health care programs (including convicted of a criminal offense that falls within the scope of 42 U.S.C. §1320a-7 but not yet excluded, debarred, suspended, or otherwise declared ineligible), or excluded, suspended or debarred from participation, or otherwise ineligible to participate, in any United States federal procurement or non-procurement programs.

11.2 Forendo Representations and Warranties . Forendo represents and warrants to Licensee that as of the Effective Date of this Agreement:

11.2.1 Forendo Intellectual Property . Forendo Controls the Forendo Intellectual Property existing as of the Effective Date and is entitled to grant the licenses specified herein. The Forendo Patent Rights existing as of the Effective Date constitute all of the Patent Rights Controlled by Forendo as of the Effective Date that are necessary or useful to practice the Forendo Intellectual Property and/or commercialize FIS. Forendo has not previously assigned, transferred, conveyed or otherwise encumbered its right, title and interest in the Forendo Intellectual Property in a manner that conflicts with any rights granted to Licensee hereunder and Forendo is under no obligation to make any such transfers, conveyances or encumbrances.

11.2.2 Infringement . To the knowledge of Forendo, there is no actual or threatened infringement of the Forendo Patent Rights in the Field in the Territory by any Third Party or any other infringement or threatened infringement that would adversely affect Licensee’s rights under this Agreement.

11.2.3 Forendo Patent Rights . The Forendo Patent Rights existing as of the Effective Date are subsisting and are not invalid or unenforceable, in whole or in part. There are no written claims asserted or, to Forendo’s knowledge, threatened against Forendo or judgments or settlements against or amounts with respect thereto owed by Forendo or any of its Affiliates relating to the Forendo Patent Rights or FIS. No patent or patent application within the Forendo Patent Rights is the subject of any pending or, to the knowledge of Forendo, threatened interference, opposition, cancellation, protest, or other challenge or adversarial proceeding. The Forendo Patent rights are free of any and all liens and encumbrances. No claim or litigation has been brought or, to Forendo’s knowledge, threatened by any Third Party alleging that (a) the Forendo Patent Rights are invalid or unenforceable or (b) the Forendo Patent Rights or the

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licensing or exploiting of the Forendo Patent Rights violates, infringes or otherwise conflicts or interferes with any intellectual property or proprietary right of any Third Party.

11.2.4 Claims; Judgments . To the knowledge of Forendo, there are no claims, judgments or set t lements against or owed by Forendo or pending or threatened claims or litigation relating to the Forendo Intellectual Property.

11.2.5 Conduct of Trials; Product Liability . All of the clinical trials of any Licensed Product conducted prior to, or being conducted as of, the date of this Agreement were conducted, or are being conducted, in accordance with Applicable Laws. Forendo represents and warrants that there is no actual, pending, alleged or, to the knowledge of Forendo, threatened product liability action with respect to any Licensed Product anywhere in the world and Forendo is not aware of any facts or circumstances that would cause Forendo to believe that there is a basis for such a product liability claim.

11.2.6 Upstream License Agreements .

(a) Attached to this Agreement as Schedule 11.2.6 are all of the agreements pursuant to which Forendo has acquired the Forendo Intellectual Property and pursuant to which Forendo has any ongoing or future obligations (the “ Upstream License Agreements ”). The Upstream License Agreements are valid, binding and in full force and effect and are enforceable by Forendo in accordance with their terms. Forendo has performed all obligations required to be performed by it to date under the Upstream License Agreements and is not in breach of or in default under the Upstream License Agreements, and no event has occurred which with the passage of time or giving of notice or both would constitute such a breach or default, and to Forendo’s knowledge, there is no existing breach or default by any counterparty to a Upstream License Agreement and to Forendo’s knowledge, no event has occurred which with the passage of time or giving notice of or both would constitute such a breach or default by such a counterparty. Forendo has not received any notice of breach under any Upstream License Agreement, whether or not cured or disputed.

(b) Forendo will not at any time during the Term take any action that it knows or should know, will result in a breach of any Upstream License Agreement and will throughout the Term comply with the terms and provisions of Upstream License Agreements in all material respects. Forendo will not at any time during the Term terminate any Upstream License Agreement without the prior written consent of Licensee. Forendo will not agree to any amendment, waiver of rights, or modification of any Upstream License Agreement that has, or would reasonably be expected to have, a material negative effect on the rights granted to Licensee under this Agreement or the obligations imposed on Licensee under this Agreement without the prior written consent of Licensee.

11.2.7 Disclosure . Forendo has disclosed to Licensee all material information and data (including without limitation all communications with or from the FDA or any other Regulatory

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Authority) relating to the results of all preclinical studies and clinical trials of any Licensed Product. Forendo has provided to Licensee all reports and data collections containing information about adverse safety issues (including adverse drug experiences) related to any Licensed Product of which Forendo has knowledge. Forendo represents that it has not failed to furnish Licensee with any information requested by Licensee, or intentionally concealed from Licensee any information in Forendo’s possession which would be reasonably likely to be material to Licensee’s decision to enter into this Agreement and undertake the commitments and obligations set forth herein.

11.3 Warranty Disclaimer . EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, TO THE OTHER PARTY WITH RESPECT TO ANY TECHNOLOGY OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING. EACH PARTY HEREBY DISCLAIMS ANY REPRESENTATION OR WARRANTY THAT THE DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF ANY LICENSED PRODUCT UNDER THIS AGREEMENT WILL BE SUCCESSFUL.

11.4 No Consequential Damages . EXCEPT IN THE EVENT OF THE GROSS NEGLIGENCE OR THE WILLFUL MISCONDUCT OF A PARTY, NEITHER PARTY HERETO WILL BE LIABLE FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING WITHOUT LIMITATION LOST PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES. NOTHING IN THIS SECTION 11.4 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY OR TO LIMIT A PARTY’S LIABILITY FOR BREACHES OF ITS OBLIGATION REGARDING CONFIDENTIALITY UNDERARTICLE 9.

11.5 Indemnification and Insurance .

11.5.1 Indemnification by Licensee . Licensee shall indemnify, hold harmless, and defend Forendo, its Affiliates, and their respective equity holders, partners (general and/or limited), managers, directors, officers, employees and agents (“ Forendo Indemnitees ”) from and against any and all Third Party claims, suits, losses, liabilities, damages, costs, fees and expenses (including reasonable attorneys’ fees) (collectively, “ Losses ”) arising out of or resulting from, directly or indirectly, (a) any material breach of, or inaccuracy in, any representation or warranty made by Licensee in this Agreement, or any breach or violation of any covenant or agreement of Licensee or any of its Affiliates or sublicensees in or pursuant to this Agreement, (b) the negligence or willful misconduct by or of Licensee or its Affiliates, and their respective directors, officers, employees and agents, and (c) the Development, Manufacturing and/or Commercialization of the Licensed Product by Licensee or its Affiliates or sublicensees (including product liability) during the Term. Furthermore, Licensee shall have no

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obligation to indemnify the Forendo Indemnitees to the extent that the Losses arise out of or result from, directly or indirectly, any material breach of, or inaccuracy in, any representation or warranty made by Forendo in this Agreement, or any breach or violation of any covenant or agreement of Forendo in or pursuant to this Agreement, or the negligence or willful misconduct by or of any of the Forendo Indemnitees, or the Development, Manufacturing and/or Commercialization of any Licensed Product by Forendo at any time.

11.5.2 Indemnification by Forendo . Forendo shall indemnify, hold harmless, and defend Licensee, its Affiliates and their respective equity holders, partners (general and/or limited), directors, managers, officers, employees and agents (“ Licensee Indemnitees ”) from and against any and all Losses arising out of or resulting from, directly or indirectly, (a) any material breach of, or inaccuracy in, any representation or warranty made by Forendo in this Agreement, or any breach or violation of any covenant or agreement of Forendo in or pursuant to this Agreement, (b) the negligence or willful misconduct by or of Forendo, its Affiliates, and their respective directors, officers, employees and agents, (c) the Development, Manufacture, and/or Commercialization of any Licensed Product by or on behalf of Forendo or its Affiliates or licensees (other than Licensee and its Affiliates) and (d) the use, reliance, practice or exploitation of any Licensee Intellectual Property by Forendo, its Affiliates and/or Licensees outside the Territory. Furthermore, Forendo shall have no obligation to indemnify the Licensee Indemnitees to the extent that the Losses arise out of or result from, directly or indirectly, any material breach of, or inaccuracy in, any representation or warranty made by Licensee in this Agreement, or any breach or violation of any covenant or agreement of Licensee in or pursuant to this Agreement, or the negligence or willful misconduct by or of any of the Licensee Indemnitees.

11.5.3 Indemnification Procedure . In the event of any such claim against any Licensee Indemnitee or Forendo Indemnitee (individually, an “ Indemnitee ”), the indemnified Party shall promptly notify the other Party in writing of the claim and the indemnifying Party shall manage and control, at its sole expense, the defense of the claim and its settlement; provided that the failure to so notify promptly shall not relieve the indemnifying Party of its obligations under this Section 11.5 except to the extent of the actual prejudice suffered by such Party as a result of such failure; and further provided that the indemnifying Party shall not have the right to assume the defense of such claim if such claim relates to an Infringement Claim. The Indemnitee shall cooperate with the indemnifying Party and may, at its option and expense, be represented in any such action or proceeding. The indemnifying Party shall not be liable for any settlements, litigation costs or expenses incurred by any Indemnitee without the indemnifying Party’s written authorization. Notwithstanding the foregoing, if the indemnifying Party believes that any of the exceptions to its obligation of indemnification of the Indemnitees set forth in Section 11.5.1 or Section 11.5.2 may apply, the indemnifying Party shall promptly notify the Indemnitees, which shall then have the right to be represented in any such action or proceeding by separate counsel at their expense; provided that the indemnifying Party shall be responsible for payment of such expenses if the Indemnitees are ultimately determined to be entitled to indemnification from the indemnifying Party. The indemnifying Party shall not effect any settlement of any such claims without the consent of the Indemnitee, which consent shall not be unreasonably withheld or delayed.

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11.5.4 Insurance . Licensee shall use its Commercially Reasonable Efforts to maintain insurance, including product liability insurance, with respect to its activities hereunder, which may include self-insurance. Such insurance shall be in such amounts and subject to such deductibles as Licensee may reasonably determine based upon standards prevailing in the industry at the time.

ARTICLE 12

MISCELLANEOUS PROVISIONS

12.1 Governing Law . This Agreement shall be construed and the respective rights of the Parties determined according to the substantive laws of the State of New York notwithstanding the provisions governing conflict of laws under such New York law to the contrary.

12.2 Jurisdiction; Venue; Service of Process .

12.2.1 Jurisdiction . Each Party by its execution hereof, (a) hereby irrevocably submits to the exclusive jurisdiction of the state courts of the State of New York or the United States District Court with jurisdiction over New York for the purpose of any claim, controversy, action, cause of action, suit or litigation (“ Action ”) between the Parties arising in whole or in part under or in connection with this Agreement, (b) hereby waives to the extent not prohibited by Applicable Law, and agrees not to assert, by way of motion, as a defense or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that any such Action brought in one of the above-named courts should be dismissed on grounds of forum non conveniens, should be transferred or removed to any court other than one of the above-named courts, or should be stayed by reason of the pendency of some other proceeding in any other court other than one of the above-named courts, or that this Agreement or the subject matter hereof may not be enforced in or by such court and (c) hereby agrees not to commence any such Action other than before one of the above-named courts. Notwithstanding the previous sentence, a Party may commence any Action in a court other than the above-named courts solely for the purpose of enforcing an order or judgment issued by one of the above-named courts or to obtain emergency or temporary injunctive relief.

12.2.2 Venue . Each Party agrees that for any Action between the parties arising in whole or in part under or in connection with this Agreement, such party may bring Actions only in the State of New York. Each Party further waives any claim and shall not assert that venue should properly lie in any other location within the selected jurisdiction.

12.2.3 Service of Process . Each Party hereby (a) consents to service of process in any Action between the parties arising in whole or in part under or in connection with this Agreement in any manner permitted by New York law, (b) agrees that service of process made in accordance with clause (a) or made by registered or certified mail, return receipt requested, at its address specified pursuant to Section 12.5 (Notices), shall constitute good and valid service of process in any such Action and (c) waives and agrees not to assert (by way of motion, as a

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defense, or otherwise) in any such Action any claim that service of process made in accordance with clause (a) or (b) does not constitute good and valid service of process.

12.3 Assignment . This Agreement may not be assigned or otherwise transferred, nor may any right or obligation hereunder be assigned or transferred, by either Party without the prior, written consent of the other Party. Notwithstanding the foregoing, (a) Forendo may monetize the value of its royalty stream, Milestone Payments and other payments under this Agreement by assigning to a Third Party the right to receive royalties, Milestone Payments and other payments and the right to receive royalty reports from Licensee; provided that Forendo gives sixty (60) days’ prior written notice to Licensee, and (b) either Party may, without the other Party’s consent, assign this Agreement and its rights and obligations hereunder in whole or in part to an Affiliate or pursuant to a Change of Control. The assigning Party shall remain responsible for the performance by its assignee of this Agreement or any obligations hereunder so assigned to such assignee. Without limiting the foregoing, Forendo shall not assign or transfer any of its rights in or to the Forendo Intellectual Property to any Third Party other than a Third Party to which it is assigning this Agreement in its entirety.

12.4 Amendments . This Agreement and the Schedules and Exhibits referred to in this Agreement constitute the entire agreement between the Parties with respect to the subject matter hereof, and supersede all previous arrangements with respect to the subject matter hereof, whether written or oral, including the Confidentiality Agreement. Any amendment or modification to this Agreement shall be made in writing signed by both Parties.

12.5 Notices . Any consent, notice or report required or permitted to be given or made under this Agreement by one of the Parties hereto to the other shall be in writing and (a) delivered by hand, (b) sent by internationally recognized delivery service, (c) sent by registered or certified mail, return receipt requested, postage prepaid, or (d) sent by facsimile transmission confirmed by prepaid, registered or certified mail letter, and shall be deemed to have been properly served to the addressee upon receipt of such written communication, in any event to the following addresses:


If to Forendo:		Forendo Pharma Ltd.
		Itäinen Pitkäkatu 4 B
		FI-20520 Turku Finland
		Attention: Chief Executive Officer
		Facsimile No.: + 358 42 310 8010

with a copy (which shall not constitute notice) to:
		Pepper Hamilton LLP
		400 Berwyn Park
		899 Cassatt Road
		Berwyn, PA 19312 United States of America

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		Attention: Timothy C. Atkins, Esq.
		Facsimile No.: (610) 640-7835

If to Licensee:		NexMed (U.S.A.), Inc. 11975 El Camino Real, Suite 300 San Diego, CA 92130 USA Attention: Chief Executive Officer Facsimile No.: (858) 866-0482

with a copy (which shall not constitute notice) to:
		Steven Chinowsky Latham & Watkins, LLP 12670 High Bluff Drive San Diego, CA 92130 USA Facsimile No.: (858) 523-5450

If to Guarantor:		Apricus Biosciences, Inc. 11975 El Camino Real, Suite 300 San Diego, CA 92130 USA Attention: Chief Executive Officer Facsimile No.: (858) 866-0482

Either Party may change its address to which notices shall be sent by giving notice to the other Party in the manner herein provided.

12.6 Force Majeure . The failure of either Party to timely perform any obligation under this Agreement by reason of epidemic, earthquake, riot, civil commotion, fire, act of God, war, terrorist act, strike, flood, or governmental act or restriction, or other cause that is beyond the reasonable control of and without the fault or negligence of the respective Party (such reasons or causes being “ Force Majeure ”), shall not be deemed to be a material breach of this Agreement, but shall be excused to the extent and for the duration of such Force Majeure, and the affected Party shall provide the other Party with full particulars thereof as soon as it becomes aware of the same (including its best estimate of the likely extent and duration of the interference with its activities) and shall use its Commercially Reasonable Efforts to avoid or remove such Force Majeure. If the performance of any such obligation under this Agreement is delayed owing to Force Majeure for any continuous period of more than one hundred eighty (180) days, the Parties hereto shall consult with respect to an equitable solution.

12.7 Compliance with Export Regulations . Neither Party shall export any technology licensed to it by the other Party under this Agreement except in compliance with US export laws and regulations.

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12.8 Independent Contractors . It is understood and agreed that the relationship between the Parties is that of independent contractors and that nothing in this Agreement shall be construed as authorization for either Forendo or Licensee to act as agent for the other. Nothing herein contained shall be deemed to create an employment, agency, joint venture or partnership relationship between the Parties or any of their agents or employees for any purpose, including tax purposes, or to create any other legal arrangement that would impose liability upon one Party for the act or failure to act of the other Party. Neither Party shall have any express or implied power to enter into any contracts or commitments or to incur any liabilities in the name of, or on behalf of, the other Party, or to bind the other Party in any respect whatsoever.

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

12.10 No Strict Construction . This Agreement has been prepared jointly and shall not be strictly construed against either Party.

12.11 Headings . The captions or headings of the sections or other subdivisions hereof are inserted only as a matter of convenience or for reference and shall have no effect on the meaning of the provisions hereof.

12.12 No Implied Waivers; Rights Cumulative . No failure on the part of Forendo or Licensee to exercise, and no delay in exercising, any right, power, remedy or privilege under this Agreement, or provided by statute or at law or in equity or otherwise, shall impair, prejudice or constitute a waiver of any such right, power, remedy or privilege or be construed as a waiver of any breach of this Agreement or as an acquiescence therein, nor shall any single or partial exercise of any such right, power, remedy or privilege preclude any other or further exercise thereof or the exercise of any other right, power, remedy or privilege.

12.13 Severability . If any provision hereof should be held invalid, illegal or unenforceable in any respect in any jurisdiction, the Parties hereto shall substitute, by mutual consent, valid provisions for such invalid, illegal or unenforceable provisions, which valid provisions in their economic effect are sufficiently similar to the invalid, illegal or unenforceable provisions that it can be reasonably assumed that the Parties would have entered into this Agreement with such valid provisions. In case such valid provisions cannot be agreed upon, the invalidity, illegality or unenforceability of one or several provisions of this Agreement shall not affect the validity of this Agreement as a whole, unless the invalid, illegal or unenforceable provisions are of such essential importance to this Agreement that it is to be reasonably assumed that the Parties would not have entered into this Agreement without the invalid, illegal or unenforceable provisions.

12.14 No Third Party Beneficiaries . No Person, other than Licensee, Forendo and their respective Affiliates and the Indemnitees under Article 11 and any permitted assignees hereunder, shall be deemed an intended beneficiary hereunder or have any right to enforce any obligation of this Agreement.

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12.15 Dispute Resolution . With respect to any disputes between the Parties concerning this Agreement, the dispute shall be submitted to escalating levels of Licensee and Forendo senior management for review. If the dispute cannot be resolved despite such escalation, then the matter may be referred by either Party to the Executive Officers to be resolved by negotiation in good faith as soon as is practicable but in no event later than thirty (30) days after referral. Such resolution, if any, by the Executive Officers shall be final and binding on the Parties. If the Executive Officers are unable to resolve such dispute within such thirty (30) day period, each Party will be free to pursue all rights available to it under law or equity, provided that it has complied with this Section 12.15 . Notwithstanding the foregoing, either Party may seek emergency or temporary injunctive relief in any court of competent jurisdiction.

12.16 Execution in Counterparts . This Agreement may be executed in any number of counterparts and by facsimile signature, each of which counterparts, when so executed and delivered, shall be deemed to be an original, and all of which counterparts, taken together, shall constitute one and the same instrument.

12.17 Specific Performance . In addition to any and all other remedies that may be available at law or in equity, in the event of any breach or threatened breach of Section 2.3 or Article 9 of this Agreement Forendo and Licensee shall be entitled to seek, without the requirement of a bond be posted, specific performance of the agreements and obligations of the parties hereunder and to such other injunctive or other equitable relief as may be granted by a court of competent jurisdiction.

12.18 Parent Guaranty .

12.18.1 Guaranty . Guarantor hereby irrevocably (a) guarantees, as primary obligor and not merely as surety, the full and prompt payment of any and all monetary obligations and damages and the due and prompt performance of all covenants, agreements, obligations and liabilities that Licensee is or becomes liable to Forendo under the License Agreement (collectively, the “ Obligations ”) and (b) agrees to pay any and all reasonable expenses (including reasonable legal expenses and reasonable attorneys’ fees) incurred by Forendo in successfully enforcing any rights under this Section 12.18 .

12.18.2 Unconditional Guaranty . Subject to Section 12.18.4 , the obligation of Guarantor under this Section 12.18 shall be primary, direct, immediate, unconditional and absolute and, without limiting the generality of the foregoing, shall in no way be released, discharged or otherwise affected by:

(a) any extension of time for the payment of the Obligations, modification or amendment of the terms of the License Agreement or any forbearance as to time or performance or failure by Forendo to proceed promptly with respect to the Obligations or this Section 12.18 ; or

(b) any change in the corporate existence, structure or ownership of Licensee or Guarantor, or any insolvency, bankruptcy, reorganization, dissolution, liquidation,

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arrangement, assignment for the benefit of creditors or other similar proceeding against Licensee or its assets or any resulting release or discharge of any of the Obligations.

12.18.3 Waiver . Subject to Section 12.18.4 , Guarantor hereby unconditionally and irrevocably waives:

(a) diligence, presentment, demand for payment or performance, protest and notice of nonpayment or dishonor, marshalling of assets and all other notices and demands whatsoever relating to the Obligations or the requirement that Forendo proceed first against Licensee or any of Guarantor’s Affiliates, or any other Person to collect payment or enforce performance of the Obligations or otherwise exhaust any right, power or remedy under the License Agreement, or any other agreement giving rise to any such Obligations to collect payment or enforce performance of the Obligations before proceeding hereunder; and

(b) all suretyship defenses including all defenses based upon any statute or rule of law that provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal (other than payment in full of the Obligations).

12.18.4 Licensee Rights and Defenses . Notwithstanding anything to the contrary in Sections 12.18.2 or 12.18.3 , Guarantor may assert against Forendo any rights and defenses to the Obligations that Licensee would be entitled to assert against Forendo in any action brought by Forendo against Licensee in respect of the Obligations.

12.18.5 Action Against Guarantor . In the event of a default by Licensee under the License Agreement, Forendo shall have the right to proceed immediately thereafter against Guarantor for payment or performance, as applicable, of the Obligations without being required to make any demand upon, bring any proceeding, exhaust any remedies against or take any other action of any kind against Licensee.

12.18.6 Subrogation . Guarantor shall not exercise any rights against Forendo or its Affiliates or Licensee which Guarantor may acquire by way of subrogation, reimbursement, exoneration, contribution, indemnity, Applicable Law or otherwise, by any payment made under this Section 12.18 until all of the Obligations shall have been paid in full.

12.18.7 Representations and Warranties . Guarantor represents and warrants to Forendo that:

(a) Guarantor is a corporation duly incorporated, validly existing and in good standing under the laws of Nevada;

(b) the execution, delivery and performance by Guarantor of this Agreement and the transactions contemplated by Sections 12.1, 12.2, 12.5, 12.13, 12.17 and 12.18 are within its corporate powers, have been duly authorized by all necessary corporate

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action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a material default under, any provision of applicable law or regulation or of its organization and other constitutive documents or of any material agreement, judgment, injunction, order, decree or other instrument binding upon it or result in the creation or imposition of any lien or other encumbrance on any of its assets;

(c) the execution and delivery of the License Agreement is, and the consummation of the transactions contemplated by the License Agreement will be, of direct interest, benefit and advantage to Guarantor; and

(d) Sections12.1, 12.2, 12.5, 12.13, 12.17 and 12.18 constitute valid and binding obligations of Guarantor, enforceable against Guarantor in accordance with their respective terms.

12.18.8 Reinstatement of Guarantor’s Obligations . If at any time any payment of any of the Obligations is rescinded or is otherwise required by Applicable Law to be returned by Forendo upon the insolvency, bankruptcy, reorganization, dissolution, liquidation, arrangement, assignment for the benefit of creditors or other similar proceeding of Licensee or Guarantor, or otherwise, then Guarantor’s obligations under Sections 12.1, 12.2, 12.5, 12.13, 12.17 and 12.18 with respect to such payment shall be reinstated as though such payment had been due but not been made.

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IN WITNESS WHEREOF , the Parties have duly executed this Agreement as of the Effective Date.


FORENDO PHARMA LTD.

By:		/s/ Risto Lammintausta
Name:		Mr. Risto Lammintausta
Title:		Chief Executive Officer

NEXMED (U.S.A.), INC.

By:		/s/ Richard Pascoe
Name:		Mr. Richard Pascoe
Title:		Chief Executive Officer

Solely for purposes of Sections 12.1, 12.2, 12.5, 12.13, 12.17 and 12.18 , Guarantor has duly executed this Agreement as of the Effective Date.


APRICUS BIOSCIENCES, INC.

By:		/s/ Richard Pascoe
Name:		Mr. Richard Pascoe
Title:		Chief Executive Officer

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Schedule 1.33

Forendo Patent Rights

[***]

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Schedule 9.2

Press Release

Apricus Expands Development Pipeline

With the In-Licensing of U.S. Rights for Fispemifene, a Phase2b Ready Asset,

from Forendo Pharma

Targeting Urological Conditions in Men

— Apricus Funds Upfront License Fee and 2015 Phase 2b Development Cost with

$10 Million Venture Debt Financing —

— Conference Call Today, Monday, Oct. 20, at 8:00 a.m. ET —

SAN DIEGO, CA, October 20, 2014 — Apricus Biosciences, Inc. (Nasdaq: APRI), today announced that it has licensed the U.S. development and commercialization rights for a novel selective estrogen receptor modulator (“SERM”), fispemifene, an investigational treatment for urological conditions in men, from Forendo Pharma, a private therapeutics company based in Finland. This license agreement combines Apricus’ expertise in men’s health with Forendo’s established leadership in SERM drug discovery, to advance the development of fispemifene as an investigational treatment for urological conditions in men.

Fispemifene is an oral once-daily, new chemical entity SERM, with a unique profile that is ideally suited for use in men. Fispemifene is a tissue-specific SERM designed to treat secondary hypogonadism, chronic prostatitis and lower urinary tract symptoms in men. Two successful U.S.-based Phase 2 trials have demonstrated clinical proof-of-concept for the treatment of male secondary hypogonadism, without exhibiting the negative effects on prostate health often associated with testosterone replacement therapies. Apricus anticipates commencing a Phase 2b clinical trial during the first half of 2015 to confirm the optimal fispemifene doses to treat men with secondary hypogonadism, while assessing improvements in symptoms commonly associated with low serum testosterone levels, as well as lower urinary tract symptoms in aging men.

Apricus Chief Executive Office, Richard Pascoe, commented, “The in-licensing of fispemifene in the U.S. is a transformative event for Apricus. It marks the achievement of a primary corporate objective of diversifying our pipeline with a complementary drug candidate targeting multiple indications in urology, while building upon the clinical and commercial success of Vitaros, our marketed drug for erectile dysfunction. Importantly, Apricus has funded this major step using an attractive combination of equity, valued at a premium to our current stock price, and venture debt with a four year term.”

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Mr. Pascoe continued, “Fispemifene’s product profile offers an exciting next-generation treatment option for men suffering from urological conditions such as secondary hypogonadism, in an existing multi-billion dollar market. Moreover, with new chemical entity exclusivity and a patent estate extending to 2028 and beyond, we believe that fispemifene should deliver long-term value for all shareholders through future clinical development and commercial success.”

Risto Lammintausta, Chief Executive Officer, Forendo Pharma, stated, “Having previously developed and partnered two SERMS that are approved and marketed in the U.S., we are excited to work with the Apricus team, which has a demonstrated track record of innovation within men’s health and a strategy committed to addressing the unmet needs of these patients. Fispemifene, a unique SERM targeted for use in men, will offer both patients and physicians a differentiated alternative for treating urological conditions in aging men. As a partner and now a major shareholder, we look forward to the progress of Apricus’ portfolio of biopharmaceutical programs, including the advancement of fispemifene in U.S. clinical trials.”

License Terms

Under the terms of the agreement, Forendo and its advisors received an upfront license fee of $12.5 million comprised of a $5 million cash payment and the issuance of $7.5 million in Apricus common stock (approximately 3.6 million shares priced at the 360-day average market price of $2.08 per share).

The agreement includes additional potential clinical and regulatory milestones payments to Forendo of up to $45 million, including for potential FDA approval, as well as potential commercial milestone payments totaling up to $260 million, based on achieving specified annual net sales levels up to $1 billion in the U.S. Apricus will also pay tiered low double-digit royalties based on net sales once the product is commercialized. Apricus will be responsible for the clinical development of fispemifene in the U.S., as well as all future commercialization efforts in the U.S. and its territories.

Venture Debt Funding

Apricus also announced today that it has secured $10 million in venture debt financing from Oxford Finance LLC (Oxford) and Silicon Valley Bank (SVB), to fund the cash portion of the acquisition of fispemifene rights and to fund the Phase 2b clinical development program during 2015. With existing cash on-hand, access to the Company’s committed equity financing facility, and $10 million from this non-dilutive Oxford/SVB debt facility, Apricus has fully funded the up-front license fee and the Phase 2b trial costs expected to be incurred in 2015. The venture debt will include interest-only payments for 12 months, followed by payments of principal and interest for 36 months.

Conference Call Details

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audio webcast and associated slide presentation can be accessed via the Investor section of the Company’s website at www.apricusbio.com. The archived webcast will remain available for three months following the live call.

About Fispemifene

Fispemifene is a once-daily orally administered selective estrogen receptor modulator (SERM). A Phase 2b clinical trial is expected to commence during the first half of 2015 to confirm the optimal fispemifene doses to treat men with secondary hypogonadism, and provide proof-of-concept data to evaluate the anti-estrogenic and anti-inflammatory effects of reducing prostate volume and improving urodynamics. Fispemifene acts in secondary hypogonadism by inhibiting the negative feedback of testosterone production via an estrogen-blocking effect at the level of the pituitary, resulting in increased testosterone production in the testes, which in turn restores circulating testosterone levels to within, but not beyond, the normal range. In line with fispemifene’s mechanism of action, the treatment has been shown in Phase 2a studies involving a total of 149 hypogonadal men to normalize testosterone levels while retaining (and, in some cases restoring) testicular function, a feature of importance for infertile younger men with hypogonadal symptoms. Additionally, in line with fispemifene’s anti-estrogenic action on the lower urinary tract (LUT), no negative effects on prostate volume, prostate specific antigen (PSA), or urodynamic obstructive symptoms were observed. Expanding on these observations seen in three-month clinical studies in hypogonadal men, preclinical studies involving fispemifene have shown the potential beneficial anti-estrogenic effects of fispemifene of reducing prostate volume and inflammation and improving urodynamics, opening up additional potential indications for this SERM in men with obstructive LUT conditions and chronic prostatitis.

About Apricus Biosciences, Inc .

Apricus Biosciences, Inc. (APRI) is a biopharmaceutical company advancing innovative medicines to meet the needs of patients. The Company’s lead product, Vitaros ^® , for the treatment of erectile dysfunction, is approved in Europe and Canada and commercialized in several countries in Europe. Apricus’ marketing partners for Vitaros ^® include Abbott Laboratories Limited, Takeda Pharmaceuticals International GmbH, Hexal AG (Sandoz), Recordati Ireland Ltd. (Recordati S.p.A.), Bracco S.p.A. and Laboratoires Majorelle. The Company’s second-generation Vitaros room temperature device is under development and is expected to enhance the product’s commercial value. The Company recently initiated a Phase 2a trial for RayVa™, the Company’s product candidate for the treatment of Raynaud’s phenomenon. Femprox ^® , the Company’s product candidate for the treatment of female sexual interest/arousal disorder, has successfully completed an approximately 400-subject proof-of-concept study. The Company is currently seeking a strategic partner for Femprox. In October 2014, Apricus gained U.S. development and commercialization rights for fispemifene, a selective estrogen receptor modulator, in Phase 2 development.

For further information on Apricus, visit http://www.apricusbio.com .

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About Forendo Pharma Oy

Forendo Pharma is a drug development company based in Turku, Finland. Its core competence resides in organ specific hormone mechanisms, giving new opportunities to unmet needs in women’s and men’s health. Forendo Pharma’s key assets are fispemifene, a program with positive Phase II data aimed at treatment of low testosterone levels, and 17ß-HSD1 enzyme inhibitors, aimed at treatment of endometriosis and based on research at the University of Turku. The founding team includes leading academic professionals in endocrinology and pioneers within Finnish drug development. For more information, please visit www.forendo.com .

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act, as amended. Statements in this press release that are not purely historical are forward-looking statements. Such forward-looking statements include, among other things: references to the timing of the commencement of a Phase 2b clinical trial for fispemifene; the size of the commercial opportunity for fispemifene; the potential for fispemifene to achieve commercial success; the ability to build a focused commercial organization for fispemifene; and the expected funding under the venture debt facility subject to the initiation of the Phase 2b clinical trial for fispemifene. Actual results could differ from those projected in any forward-looking statements due to a variety of reasons that are outside the control of the Company, including, but not limited to: its ability to further develop its product fispemifene for the treatment of secondary hypogonadism, chronic prostatitis in men and lower urinary tract symptoms in men, as well as the timing of such events; Apricus’ ability to obtain and maintain intellectual property protection for fispemifene; Apricus’ ability to carry out clinical studies for fispemifene; Apricus’ ability to draw the additional amounts under the venture debt facility when expected, or at all, including Apricus’ failure to meet the conditions required to draw under the loan and security agreement; Apricus’ ability to remain in compliance with the terms and restrictions under the loan and security agreement; Apricus’ ability to obtain the requisite governmental approval for fispemifene; Apricus’ ability to raise additional funding that it may need to continue to pursue its commercial and business development plans; fluctuations and volatility in Apricus’ stock price, including as a result of the issuance and possible resale of the shares granted as partial consideration for the fispemifene license; and market conditions. These forward-looking statements are made as of the date of this press release, and Apricus assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Readers are urged to read the risk factors set forth in the Company’s most recent annual report on Form 10-K, subsequent quarterly reports filed on Form 10-Q, and other filings made with the SEC. Copies of these reports are available from the SEC’s website at www.sec.gov or without charge from the Company.

# # #

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CONTACT:

Steve Martin

Apricus Biosciences

Chief Financial Officer

ir@apricusbio.com

(858) 222-8041

Investors: Angeli Kolhatkar

akolhatkar@burnsmc.com

Media: Justin Jackson

jjackson@burnsmc.com

Burns McClellan

(212) 213-0006

Retail: Chris Eddy, David Collins

apri@catalyst-ir.com

Catalyst Global

(212) 924-9800

Forendo Pharma announces the US licensing of fispemifene to Apricus Biosciences targeting urological conditions in men

Turku, Finland, October 20th, 2014. Forendo Pharma Oy announced today that it has entered into a definitive agreement to out-license the US development and commercialization rights for fispemifene to Apricus Biosciences Inc. Fispemifene is a selective estrogen modulator (SERM), which has shown efficacy in phase II in patients with secondary hypogonadism and in disease models of obstructive urination and chronic prostatitis

Under the terms of the agreement, Apricus will be responsible for the clinical development and costs of the program, as well as all future commercialization in the US. Apricus anticipates to commence a Phase IIb clinical trial during the first half of 2015 to confirm the optimal fispemifene doses to treat men with secondary hypogonadism, and provide proof-of-concept data to evaluate the anti-estrogenic and anti-inflammatory effects on the lower urinary tract and prostate in aging men.

Forendo will receive an upfront license fee of $12.5 million comprised of a $5 million cash payment and the issuance of $7.5 million in Apricus common stock based on the 360-day average market price of the Apricus stock. The agreement includes clinical and regulatory milestones payments to Forendo for up to $45 million, including FDA approval, in addition to commercial milestone payments totaling a potential $260 million based on achieving specified annual net sales of fispemifene levels up to $1 billion in the US. Apricus will also pay tiered royalties based on net sales to be achieved in the future by Apricus.

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We are excited to work with the Apricus team, which has a demonstrated track record of innovation within men’s health and a strategy committed to addressing the unmet needs of these patients. Fispemifene, an unique SERM targeted for use in men, will offer both patients and physicians a differentiated alternative for treating urological conditions in ageing men”, said Risto Lammintausta, CEO, Forendo Pharma.

“The in-licensing of fispemifene in the United States is a transformative event for Apricus, signifying the achievement of a key corporate objective to build upon our current development pipeline with complementary, mid-staged clinical program,” “The agreement combines Forendo’s established leadership in SERM drug discovery with Apricus’ expertise in men’s health, and further underpins the potential for fispemifene to improve quality-of-life for the millions of men affected with hypogonadism and other male urological conditions” stated Richard Pascoe, CEO, Apricus Biosciences.

For further information, please contact:

Risto Lammintausta, CEO, Forendo Pharma OY

Tel: +358 (0)40 310 8010, e-mail: risto.lammintausta@forendo.com

TO THE EDITORS

About Fispemifene

Fispemifene is a once daily orally administered selective estrogen receptor modulator (SERM). A Phase 2b clinical trial is expected to commence during the first half of 2015 to confirm the optimal fispemifene doses to treat men with secondary hypogonadism, and provide proof-of-concept data to evaluate the anti-estrogenic and anti-inflammatory effects of reducing prostate volume and improving urodynamics. Fispemifene acts in secondary hypogonadism by inhibiting the negative feedback of testosterone production via an estrogen-blocking effect at the level of the pituitary, resulting in increased testosterone production in the testes, which in turn restores circulating testosterone levels to within, but not beyond, the normal range. In line with fispemifene’s mechanism of action, the treatment has been shown in Phase 2a studies involving a total of 149 hypogonadal men to normalize testosterone levels while retaining and, in some men,

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restoring testicular function, a feature of importance for infertile younger men with hypogonadal symptoms. Additionally, in line with fispemifene’s anti-estrogenic action on the lower urinary tract (LUT), no negative effects on prostate volume, prostate specific antigen (PSA), or urodynamic obstructive symptoms were observed. Expanding on these observations seen in three-month clinical studies in hypogonadal men, preclinical studies involving fispemifene have shown the potential beneficial anti-estrogenic effects of fispemifene of reducing prostate volume and inflammation and improving urodynamics, opening up additional potential indications for this SERM in men with obstructive LUT conditions and chronic prostatitis.

About Forendo Pharma

Forendo Pharma is a drug development company based in Turku, Finland. Its core competence resides in organ specific hormone mechanisms, giving new opportunities to unmet needs in women ?s and men ?s health. The key programs are fispemifene, a program with positive Phase II data in treatment of secondary hypogonadism, and HSD17B1 enzyme inhibitor FP-5677, aimed for a novel specific treatment of endometriosis and based on the research in University of Turku. The core team of Forendo includes pioneers within Finnish drug development and leading academic professionals in endocrinology. Forendo is supported by the leading Nordic VC investors Karolinska Development AB, Novo Seeds and Finnvera.

Forendo retained Birch & Lake Partners LLC ( www.birchandlake.com ) as their advisor for the transaction.

Further information is available at www.forendo.com .

About Apricus Biosciences, Inc .

For further information on Apricus, visit http://www.apricusbio.com .

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Schedule 11.2.6

Upstream License Agreements

[***]

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Exhibit 2.8

Form of [***] Side Letter

[***]

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Exhibit 5.1

Abbreviated Development Plan

[See Attached]

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[***]

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Exhibit 10.2

EXECUTION VERSION

APRICUS BIOSCIENCES, INC.

STOCK ISSUANCE AGREEMENT

T HIS S TOCK I SSUANCE A GREEMENT (“ Agreement ”) is made as of October 17, 2014 by and between Apricus Biosciences, Inc., a Nevada corporation (the “ Company ”), Forendo Pharma Ltd., a company organized under the laws of Finland (the “ Forendo ”), and Birch & Lake Partners LLC, a Pennsylvania limited liability company (“ B&L ”). Forendo and B&L are sometimes referred to in this Agreement individually as a “ Purchaser ” and collectively as the “ Purchasers ”. Any capitalized terms not defined in this Agreement shall have the meanings given to them in the License Agreement (as defined herein).

The parties agree as follows:

1. Sale of Stock . The Company hereby agrees to issue to Forendo and Forendo hereby agrees to accept 3,420,066 shares (the “ Forendo Shares ”) of the Company’s Common Stock (par value $0.001 per share) (“ Apricus Stock ”) as partial consideration for the licenses granted pursuant to that certain License Agreement dated as of the date hereof between NexMed (U.S.A.), Inc. and Forendo (as the same may be amended from time to time, the “ License Agreement ”). In addition, at the instruction of Forendo as partial consideration for the licenses granted pursuant to the License Agreement, the Company hereby agrees to issue to B&L and B&L hereby agrees to accept 180,004 shares of Apricus Stock (the “ B&L Shares ” and, together with the Forendo Shares, the “ Shares ”).

2. Sales Restriction . Each of the Purchasers acknowledges that sales of the Shares are subject to volume restrictions pursuant to Section 7.1.2 of the License Agreement.

3. Registration Rights . The Company acknowledges Purchasers’ registration rights pursuant to Section 7.1.2 of the License Agreement.

4. Company Representations . In connection with the issuance of the Shares, the Company represents to the Purchasers the following:

(a) All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution, delivery and performance of all obligations under this Agreement and for the issuance and delivery of the Shares has been taken, and this Agreement when executed and delivered, will constitute a valid and legally binding obligation of the Company enforceable in accordance with its terms.

(b) The Shares which are being issued hereunder, when issued, sold and delivered in accordance with the terms hereof for the consideration expressed herein, will be duly and validly issued, fully paid and nonassessable and, based in part upon the representations of the Purchaser in this Agreement, the Shares will be issued in compliance with all applicable federal and state securities laws.

5. Investment Representations . In connection with the issuance of the Shares, each Purchaser severally and not jointly represents to the Company the following solely as to such Purchaser:

(a) All corporate action on the part of each Purchaser, its officers and directors necessary for the authorization, execution and delivery of this Agreement, the authorization of the issuance of B&L Shares and the performance of all obligations of each Purchaser hereunder has been taken or will be taken prior to the date of this Agreement, and this Agreement constitutes a valid and legally binding obligation of each Purchaser enforceable against it in accordance with its terms.

(b) The Shares to be issued to Purchaser hereunder will be acquired for investment for each Purchaser’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof. Purchaser does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Shares issued to it.

(c) Purchaser understands that the acquisition of the Shares by it involves substantial risk. Purchaser acknowledges that it is able to fend for itself, can bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Shares. Purchaser has had an opportunity to discuss the Company’s business, management and financial affairs with the Company and believes it has received all the information it considers necessary or appropriate for deciding whether to acquire the Shares.

(d) Purchaser is an accredited investor within the meaning of Regulation D promulgated under the Securities Act of 1933, as amended (the “ Securities Act ”).

(e) Purchaser understands that the Shares are characterized as “restricted securities” under the Securities Act, in a transaction not involving a public offering and that under the Securities Act and applicable regulations thereunder such securities may be resold without registration under the Securities Act only in certain limited circumstances. Purchaser represents that it is familiar with Rule 144 of the Securities and Exchange Commission and understands the resale limitations imposed thereby and by the Securities Act.

6. Stock Certificate Legends . The Company shall issue or cause to be issued a duly executed stock certificate evidencing each of the Purchaser’s ownership of the Shares. Such stock certificates shall be endorsed with the following legends:

(a) THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.

(b) Any legend required by any applicable state securities laws.

7. Standstill Provisions . Commencing as of the date of this Agreement and until the earlier of (a) the fifth anniversary of the date of this Agreement; (b) the termination of the License Agreement or (c) Forendo selling all the Shares acquired by it under this Agreement (including stock dividends thereon) other than to an Affiliate of Forendo, Forendo (including all Affiliates) shall not acquire beneficial ownership of any shares of Common Stock of the Company, any securities convertible into or exchangeable for Common Stock, or any other right to acquire Common Stock, except by way of stock dividends or other distributions or offerings made available to holders of Common Stock generally, from the Company or any other person or entity, without the prior written consent of the Company, which consent may be withheld in its sole discretion; provided , however , that in no event shall the issuance of Shares pursuant to this Agreement constitute a violation of this Section 7.

8. Tax Consequences . Each of the Purchasers has reviewed with Purchaser’s own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions

contemplated by this Agreement. Each of the Purchasers is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. Each of the Purchasers understands that such Purchaser (and not the Company) shall be responsible for such Purchaser’s own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement.

9. Indemnification . Each of the Purchasers agrees to indemnify, defend, and hold the Company free and harmless from all claims, demands, losses, costs, expenses, obligations, liabilities, damages, recoveries and deficiencies, including interest, penalties, attorneys’ fees, and costs, that the Company may incur as a result of any dispute arising out of or resulting from the issuance of the B&L Shares or the allocation of the Shares to each party.

10. General Provisions .

(a) This Agreement shall be governed by the laws of the State of New York. This Agreement and the documents referred to herein represent the entire agreement between the parties with respect to the purchase of Common Stock by the Purchasers and may only be modified or amended in writing signed by each of the parties.

(b) This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(c) The titles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

(d) Any notice, demand or request required or permitted to be given by either the Company or the Purchasers pursuant to the terms of this Agreement shall be in writing and shall be deemed given when delivered personally, by facsimile at the number set forth at the end of this Agreement or deposited in the U.S. mail, First Class with postage prepaid, and addressed to the parties at the addresses of the parties set forth at the end of this Agreement or such other address or fax number as a party may request by notifying the other in writing.

(e) The rights and benefits of the Company under this Agreement shall be transferable to any one or more persons or entities, and all covenants and agreements hereunder shall inure to the benefit of, and be enforceable by the Company’s successors and assigns. The rights and obligations of each of the Purchasers under this Agreement may only be assigned with the prior written consent of the Company and any purported transfer otherwise shall be null and void.

(f) Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively but only if so expressly stated), only with the written consent of the Company and the Purchasers.

(g) Any party’s failure to enforce any provision or provisions of this Agreement shall not in any way be construed as a waiver of any such provision or provisions, nor prevent that party thereafter from enforcing each and every other provision of this Agreement. The rights granted to each of the parties herein are cumulative and shall not constitute a waiver of any party’s right to assert all other legal remedies available to it under the circumstances.

(h) If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provisions were so excluded and shall be enforceable in accordance with its terms.

(i) The Purchasers and the Company agree upon request to execute any further documents or instruments necessary or desirable to carry out the purposes or intent of this Agreement.

[Remainder of page intentionally left blank]

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


COMPANY:		PURCHASERS:

APRICUS BIOSCIENCES, INC. a Nevada corporation		FORENDO PHARMA LTD.

By: /s/ Steve Martin Name: Steve Martin Title: Senior Vice President, Chief Financial Officer and Secretary		By: /s/ Risto Lammintausta Name: Risto Lammintausta Title: Chief Executive Officer

Address: Facsimile:	11975 El Camino Real, Suite 300 San Diego, CA 92130 (858) 436-8155	Address:	Itäinen Pitkäkatu 4 B FI-20520 Turku Finland
		Facsimile:	+358 42 310 8010

		BIRCH & LAKE PARTNERS LLC

		By: /s/ Jyrki Mattila Name: Jyrki Mattila Title: Chairman

		Address:	9 Spring Mill Lane Haverford, Pennsylvania 19041

		Facsimile:	(484) 395-2461

Exhibit 10.3

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT (as the same may from time to time be amended, modified, supplemented or restated, this “ Agreement ”) dated as of October 17, 2014 (the “ Effective Date ”) among OXFORD FINANCE LLC, a Delaware limited liability company with an office located at 133 North Fairfax Street, Alexandria, Virginia 22314 (“ Oxford ”), as collateral agent (in such capacity, “ Collateral Agent ”), the Lenders listed on Schedule 1.1 hereof or otherwise a party hereto from time to time including Oxford in its capacity as a Lender and SILICON VALLEY BANK, a California corporation with an office located at 3003 Tasman Drive, Santa Clara, CA 95054 (“ Bank ” or “ SVB ”) (each a “ Lender ” and collectively, the “ Lenders ”), and APRICUS BIOSCIENCES, INC., a Nevada corporation, NEXMED (U.S.A.), INC., a Delaware corporation, NEXMED HOLDINGS, INC., a Delaware corporation and APRICUS PHARMACEUTICALS USA, INC., a Delaware corporation, each with offices located at 11975 El Camino Real, Suite 300, San Diego, CA 92130 (individually and collectively, jointly and severally, “ Borrower ”), provides the terms on which the Lenders shall lend to Borrower and Borrower shall repay the Lenders. The parties agree as follows:

1.	ACCOUNTING AND OTHER TERMS

1.1 Accounting terms not defined in this Agreement shall be construed in accordance with GAAP. Calculations and determinations must be made in accordance with GAAP. Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in Section 13. All other terms contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the extent such terms are defined therein. All references to “ Dollars ” or “ $ ” are United States Dollars, unless otherwise noted.

2.	LOANS AND TERMS OF PAYMENT

2.1 Promise to Pay. Borrower hereby unconditionally promises to pay each Lender, the outstanding principal amount of all Term Loans advanced to Borrower by such Lender and accrued and unpaid interest thereon and any other amounts due hereunder as and when due in accordance with this Agreement.

2.2 Term Loans.

(a) Availability .

(i) Subject to the terms and conditions of this Agreement, the Lenders agree, severally and not jointly, to make term loans to Borrower on the Effective Date in a single advance in an aggregate amount equal to Five Million Dollars ($5,000,000.00) according to each Lender’s Term A Loan Commitment as set forth on Schedule 1.1 hereto (such term loans are hereinafter referred to singly as a “ Term A Loan ”, and collectively as the “ Term A Loans ”). After repayment, no Term A Loan may be re-borrowed.

(ii) Subject to the terms and conditions of this Agreement, the Lenders agree, severally and not jointly, during the Second Draw Period, to make term loans to Borrower in a single advance in an aggregate amount up to Five Million Dollars ($5,000,000.00) according to each Lender’s Term B Loan Commitment as set forth on Schedule 1.1 hereto (such term loans are hereinafter referred to singly as a “ Term B Loan ”, and collectively as the “ Term B Loans ”; each Term A Loan or Term B Loan is hereinafter referred to singly as a “ Term Loan ” and the Term A Loans and the Term B Loans are hereinafter referred to collectively as the “ Term Loans ”). After repayment, no Term B Loan may be re-borrowed.

(b) Repayment . Borrower shall make monthly payments of interest only commencing on the first (1 ^st ) Payment Date following the Funding Date of each Term Loan, and continuing on the Payment Date of each successive month thereafter through and including the Payment Date immediately preceding the Amortization Date. Borrower agrees to pay, on the Funding Date of each Term Loan, any initial partial monthly interest payment otherwise due for the period between the Funding Date of such Term Loan and the first Payment Date thereof. Commencing on the Amortization Date, and continuing on the Payment Date of each month thereafter, Borrower shall make consecutive equal monthly payments of principal and interest, in arrears, to each Lender, as calculated by Collateral Agent (which calculations shall be deemed correct absent manifest error) based upon: (1) the amount of

such Lender’s Term Loan, (2) the effective rate of interest, as determined in Section 2.3(a), and (3) a repayment schedule equal to (x) if the Amortization Date is November 1, 2015, thirty six (36) months and (y) if the Amortization Date is May 1, 2016, thirty (30) months. All unpaid principal and accrued and unpaid interest with respect to each Term Loan is due and payable in full on the Maturity Date. Each Term Loan may only be prepaid in accordance with Sections 2.2(c) and 2.2(d).

(c) Mandatory Prepayments . If the Term Loans are accelerated following the occurrence of an Event of Default, Borrower shall immediately pay to Lenders, payable to each Lender in accordance with its respective Pro Rata Share, an amount equal to the sum of: (i) all outstanding principal of the Term Loans plus accrued and unpaid interest thereon through the prepayment date, (ii) the Final Payment, (iii) the Prepayment Fee, plus (iv) all other Obligations that are due and payable, including Lenders’ Expenses and interest at the Default Rate with respect to any past due amounts. Notwithstanding (but without duplication with) the foregoing, on the Maturity Date, if the Final Payment had not previously been paid in full in connection with the prepayment of the Term Loans in full, Borrower shall pay to Collateral Agent, for payment to each Lender in accordance with its respective Pro Rata Share, the Final Payment in respect of the Term Loan(s).

(d) Permitted Prepayment of Term Loans . Borrower shall have the option to prepay all, but not less than all, of the Term Loans advanced by the Lenders under this Agreement, provided Borrower (i) provides written notice to Collateral Agent of its election to prepay the Term Loans at least ten (10) Business Days prior to such prepayment, and (ii) pays to the Lenders on the date of such prepayment, payable to each Lender in accordance with its respective Pro Rata Share, an amount equal to the sum of (A) all outstanding principal of the Term Loans plus accrued and unpaid interest thereon through the prepayment date, (B) the Final Payment, (C) the Prepayment Fee, plus (D) all other Obligations that are due and payable, including Lenders’ Expenses and interest at the Default Rate with respect to any past due amounts.

2.3 Payment of Interest on the Credit Extensions.

(a) Interest Rate . Subject to Section 2.3(b), the principal amount outstanding under the Term Loans shall accrue interest at a fixed per annum rate (which rate shall be fixed for the duration of the applicable Term Loan) equal to the Basic Rate, determined by Collateral Agent on the Funding Date of the applicable Term Loan, which interest shall be payable monthly in arrears in accordance with Sections 2.2(b) and 2.3(e). Interest shall accrue on each Term Loan commencing on, and including, the Funding Date of such Term Loan, and shall accrue on the principal amount outstanding under such Term Loan through and including the day on which such Term Loan is paid in full.

(b) Default Rate . Immediately upon the occurrence and during the continuance of an Event of Default, Obligations shall accrue interest at a fixed per annum rate equal to the rate that is otherwise applicable thereto plus five percentage points (5.00%) (the “ Default Rate ”). Payment or acceptance of the increased interest rate provided in this Section 2.3(b) is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Collateral Agent.

(c) 360-Day Year . Interest shall be computed on the basis of a three hundred sixty (360) day year consisting of twelve (12) months of thirty (30) days.

(d) Debit of Accounts . Collateral Agent and each Lender may debit (or ACH) any deposit accounts, maintained by Borrower or any of its Subsidiaries, including the Designated Deposit Account, for principal and interest payments or any other amounts Borrower owes the Lenders under the Loan Documents when due. Any such debits (or ACH activity) shall not constitute a set-off.

(e) Payments . Except as otherwise expressly provided herein, all payments by Borrower under the Loan Documents shall be made to the respective Lender to which such payments are owed, at such Lender’s office in immediately available funds on the date specified herein. Unless otherwise provided, interest is payable monthly on the Payment Date of each month. Payments of principal and/or interest received after 12:00 noon Eastern Time are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day, the payment is due the next Business Day and additional fees or interest, as applicable, shall continue to accrue until paid. All payments to be made by Borrower hereunder or under any other

Loan Document, including payments of principal and interest, and all fees, expenses, indemnities and reimbursements, shall be made without set-off, recoupment or counterclaim, in lawful money of the United States and in immediately available funds.

2.4 Secured Promissory Notes. The Term Loans shall be evidenced by a Secured Promissory Note or Notes in the form attached as Exhibit D hereto (each a “ Secured Promissory Note ”), and shall be repayable as set forth in this Agreement. Borrower irrevocably authorizes each Lender to make or cause to be made, on or about the Funding Date of any Term Loan or at the time of receipt of any payment of principal on such Lender’s Secured Promissory Note, an appropriate notation on such Lender’s Secured Promissory Note Record reflecting the making of such Term Loan or (as the case may be) the receipt of such payment. The outstanding amount of each Term Loan set forth on such Lender’s Secured Promissory Note Record shall be prima facie evidence of the principal amount thereof owing and unpaid to such Lender, but the failure to record, or any error in so recording, any such amount on such Lender’s Secured Promissory Note Record shall not limit or otherwise affect the obligations of Borrower under any Secured Promissory Note or any other Loan Document to make payments of principal of or interest on any Secured Promissory Note when due. Upon receipt of an affidavit of an officer of a Lender as to the loss, theft, destruction, or mutilation of its Secured Promissory Note , Borrower shall issue, in lieu thereof, a replacement Secured Promissory Note in the same principal amount thereof and of like tenor.

2.5 Fees. Borrower shall pay to Collateral Agent:

(a) Facility Fee . A fully earned, non-refundable facility fee of One Hundred Thousand Dollars ($100,000.00) to be shared between the Lenders pursuant to their respective Commitment Percentages payable on the Effective Date, of which Collateral Agent acknowledges receipt of Fifty Thousand Dollars ($50,000.00) prior to the Effective Date.

(b) Final Payment . The Final Payment, when due hereunder, to be shared between the Lenders in accordance with their respective Pro Rata Shares;

(c) Prepayment Fee . The Prepayment Fee, when due hereunder, to be shared between the Lenders in accordance with their respective Pro Rata Shares; and

(d) Lenders’ Expenses . All Lenders’ Expenses (including reasonable attorneys’ fees and expenses for documentation and negotiation of this Agreement) incurred through and after the Effective Date, when due.

2.6 Withholding. Payments received by the Lenders from Borrower hereunder will be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any governmental authority (including any interest, additions to tax or penalties applicable thereto). Specifically, however, if at any time any Governmental Authority, applicable law, regulation or international agreement requires Borrower to make any withholding or deduction from any such payment or other sum payable hereunder to the Lenders, Borrower hereby covenants and agrees that the amount due from Borrower with respect to such payment or other sum payable hereunder will be increased to the extent necessary to ensure that, after the making of such required withholding or deduction, each Lender receives a net sum equal to the sum which it would have received had no withholding or deduction been required and Borrower shall pay the full amount withheld or deducted to the relevant Governmental Authority. Borrower will, upon request, furnish the Lenders with proof reasonably satisfactory to the Lenders indicating that Borrower has made such withholding payment; provided, however, that Borrower need not make any withholding payment if the amount or validity of such withholding payment is contested in good faith by appropriate and timely proceedings and as to which payment in full is bonded or reserved against by Borrower. The agreements and obligations of Borrower contained in this Section 2.6 shall survive the termination of this Agreement.

3.	CONDITIONS OF LOANS

3.1 Conditions Precedent to Initial Credit Extension. Each Lender’s obligation to make a Term A Loan is subject to the condition precedent that Collateral Agent and each Lender shall consent to or shall have

received, in form and substance satisfactory to Collateral Agent and each Lender, such documents, and completion of such other matters, as Collateral Agent and each Lender may reasonably deem necessary or appropriate, including, without limitation:

(a) original Loan Documents, each duly executed by Borrower and each Subsidiary, as applicable;

(b) duly executed original Control Agreements with respect to any Collateral Accounts maintained by Borrower or any of its Subsidiaries and required to be subject to Control Agreements hereunder;

(c) duly executed original Secured Promissory Notes in favor of each Lender according to its Term A Loan Commitment Percentage;

(d) the certificate(s) for the Shares, together with Assignment(s) Separate from Certificate, duly executed in blank;

(e) the Operating Documents and good standing certificates of Borrower and its Subsidiaries certified by the Secretary of State (or equivalent agency) of Borrower’s and such Subsidiaries’ jurisdiction of organization or formation and each jurisdiction in which Borrower and each Subsidiary is qualified to conduct business, each as of a date no earlier than thirty (30) days prior to the Effective Date;

(f) a completed Perfection Certificate for Borrower and each of its Subsidiaries;

(g) the Annual Projections;

(h) duly executed original officer’s certificate for Borrower and each Subsidiary that is a party to the Loan Documents, in a form acceptable to Collateral Agent and the Lenders;

(i) certified copies, dated as of date no earlier than thirty (30) days prior to the Effective Date, of financing statement searches, as Collateral Agent shall request, accompanied by written evidence (including any UCC termination statements) that the Liens indicated in any such financing statements either constitute Permitted Liens or have been or, in connection with the initial Credit Extension, will be terminated or released;

(j) a landlord’s consent executed in favor of Collateral Agent in respect of all of Borrower’s and each Subsidiaries’ leased locations;

(k) a bailee waiver executed in favor of Collateral Agent in respect of each third party bailee where Borrower or any Subsidiary maintains Collateral having a book value in excess of Two Hundred Fifty Thousand Dollars ($250,000.00);

(l) a duly executed legal opinion of counsel to Borrower dated as of the Effective Date;

(m) that certain Forendo License Agreement;

(n) evidence satisfactory to Collateral Agent and the Lenders that the insurance policies required by Section 6.5 hereof are in full force and effect, together with appropriate evidence showing loss payable and/or additional insured clauses or endorsements in favor of Collateral Agent, for the ratable benefit of the Lenders;

(o) a payoff letter from each of Solomon Strategic Holdings, Inc., Tail Wind Advisory & Management, Ltd. and The Tail Wind Fund Ltd. in respect of the Existing Indebtedness;

(p) evidence that (i) the Liens securing the Existing Indebtedness will be terminated and (ii) the documents and/or filings evidencing the perfection of such Liens, including without limitation any financing statements and/or control agreements, have or will, concurrently with the initial Credit Extension, be terminated; and

(q) payment of the fees and Lenders’ Expenses then due as specified in Section 2.5 hereof.

3.2 Conditions Precedent to all Credit Extensions. The obligation of each Lender to make each Credit Extension, including the initial Credit Extension, is subject to the following conditions precedent:

(a) receipt by (i) the Lenders of an executed Disbursement Letter in the form of Exhibit B-1 attached hereto; and (ii) SVB of an executed Loan Payment/Advance Request Form in the form of Exhibit B-2 attached hereto;

(b) the representations and warranties in Section 5 hereof shall be true, accurate and complete in all material respects on the date of the Disbursement Letter (and the Loan Payment/Advance Request Form) and on the Funding Date of each Credit Extension; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, and no Event of Default shall have occurred and be continuing or result from the Credit Extension. Each Credit Extension is Borrower’s representation and warranty on that date that the representations and warranties in Section 5 hereof are true, accurate and complete in all material respects; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date;

(c) in such Lender’s sole discretion, there has not been any Material Adverse Change or any material adverse deviation by Borrower from the Annual Projections of Borrower presented to and accepted by Collateral Agent and each Lender;

(d) to the extent not delivered at the Effective Date, duly executed original Secured Promissory Notes and Warrants, in number, form and content acceptable to each Lender, and in favor of each Lender according to its Commitment Percentage, with respect to each Credit Extension made by such Lender after the Effective Date; and

(e) payment of the fees and Lenders’ Expenses then due as specified in Section 2.5 hereof.

3.3 Covenant to Deliver. Borrower agrees to deliver to Collateral Agent and the Lenders each item required to be delivered to Collateral Agent under this Agreement as a condition precedent to any Credit Extension. Borrower expressly agrees that a Credit Extension made prior to the receipt by Collateral Agent or any Lender of any such item shall not constitute a waiver by Collateral Agent or any Lender of Borrower’s obligation to deliver such item, and any such Credit Extension in the absence of a required item shall be made in each Lender’s sole discretion.

3.4 Procedures for Borrowing. Subject to the prior satisfaction of all other applicable conditions to the making of a Term Loan set forth in this Agreement, to obtain a Term Loan, Borrower shall notify the Lenders (which notice shall be irrevocable) by electronic mail, facsimile, or telephone by 12:00 noon Eastern time three (3) Business Days prior to the date the Term Loan is to be made. Together with any such electronic, facsimile or telephonic notification, Borrower shall deliver to the Lenders by electronic mail or facsimile a completed Disbursement Letter (and the Loan Payment/Advance Request Form, with respect to SVB) executed by a Responsible Officer or his or her designee. The Lenders may rely on any telephone notice given by a person whom a Lender reasonably believes is a Responsible Officer or designee. On the Funding Date, each Lender shall credit and/or transfer (as applicable) to the Designated Deposit Account, an amount equal to its Term Loan Commitment.

4.	CREATION OF SECURITY INTEREST

4.1 Grant of Security Interest. Borrower hereby grants Collateral Agent, for the ratable benefit of the Lenders, to secure the payment and performance in full of all of the Obligations, a continuing security interest in, and pledges to Collateral Agent, for the ratable benefit of the Lenders, the Collateral, wherever located, whether now

owned or hereafter acquired or arising, and all proceeds and products thereof. Borrower represents, warrants, and covenants that the security interest granted herein is and shall at all times continue to be a first priority perfected security interest in the Collateral, subject only to Permitted Liens that are permitted by the terms of this Agreement to have priority to Collateral Agent’s Lien. If Borrower shall acquire a commercial tort claim (as defined in the Code) greater than Twenty-Five Thousand Dollars ($25,000.00), Borrower, shall promptly notify Collateral Agent in a writing signed by Borrower, as the case may be, of the general details thereof (and further details as may be required by Collateral Agent) and grant to Collateral Agent, for the ratable benefit of the Lenders, in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to Collateral Agent.

Borrower acknowledges that it previously has entered, and/or may in the future enter, into Bank Services Agreements with Bank. Regardless of the terms of any Bank Services Agreement, Borrower agrees that any amounts Borrower owes Bank thereunder shall be deemed to be Obligations hereunder and that it is the intent of Borrower and Bank to have all such Obligations secured by the first priority perfected security interest in the Collateral granted herein (subject only to Permitted Liens that may have superior priority to Bank’s Lien in this Agreement).

If this Agreement is terminated, Collateral Agent’s Lien in the Collateral shall continue until the Obligations (other than inchoate indemnity obligations) are repaid in full in cash. Upon payment in full in cash of the Obligations (other than inchoate indemnity obligations) and at such time as the Lenders’ obligation to make Credit Extensions has terminated, Collateral Agent shall, at the sole cost and expense of Borrower, release its Liens in the Collateral and all rights therein shall revert to Borrower. In the event (x) all Obligations (other than inchoate indemnity obligations), except for Bank Services, are satisfied in full, and (y) this Agreement is terminated, Bank shall terminate the security interest granted herein upon Borrower providing cash collateral acceptable to Bank in its good faith business judgment for Bank Services, if any. In the event such Bank Services consist of outstanding Letters of Credit, Borrower shall provide to Bank cash collateral in an amount equal to (x) if such Letters of Credit are denominated in Dollars, then one hundred five percent (105%); and (y) if such Letters of Credit are denominated in a Foreign Currency, then one hundred ten percent (110%), of the Dollar Equivalent of the face amount of all such Letters of Credit plus all interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its good faith business judgment), to secure all of the Obligations relating to such Letters of Credit.

4.2 Authorization to File Financing Statements. Borrower hereby authorizes Collateral Agent to file financing statements or take any other action required to perfect Collateral Agent’s security interests in the Collateral, without notice to Borrower, with all appropriate jurisdictions to perfect or protect Collateral Agent’s interest or rights under the Loan Documents.

4.3 Pledge of Collateral. Borrower hereby pledges, assigns and grants to Collateral Agent, for the ratable benefit of the Lenders, a security interest in all the Shares, together with all proceeds and substitutions thereof, all cash, stock and other moneys and property paid thereon, all rights to subscribe for securities declared or granted in connection therewith, and all other cash and noncash proceeds of the foregoing, as security for the performance of the Obligations. On the Effective Date, or, to the extent not certificated as of the Effective Date, within ten (10) days of the certification of any Shares, the certificate or certificates for the Shares will be delivered to Collateral Agent, accompanied by an instrument of assignment duly executed in blank by Borrower. To the extent required by the terms and conditions governing the Shares, Borrower shall cause the books of each entity whose Shares are part of the Collateral and any transfer agent to reflect the pledge of the Shares. Upon the occurrence and during the continuance of an Event of Default hereunder, Collateral Agent may effect the transfer of any securities included in the Collateral (including but not limited to the Shares) into the name of Collateral Agent and cause new (as applicable) certificates representing such securities to be issued in the name of Collateral Agent or its transferee. Borrower will execute and deliver such documents, and take or cause to be taken such actions, as Collateral Agent may reasonably request to perfect or continue the perfection of Collateral Agent’s security interest in the Shares. Unless an Event of Default shall have occurred and be continuing, Borrower shall be entitled to exercise any voting rights with respect to the Shares and to give consents, waivers and ratifications in respect thereof, provided that no vote shall be cast or consent, waiver or ratification given or action taken which would be inconsistent with any of the terms of this Agreement or which would constitute or create any violation of any of such terms. All such rights to vote and give consents, waivers and ratifications shall terminate upon the occurrence and continuance of an Event of Default.

5.	REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants to Collateral Agent and the Lenders as follows:

5.1 Due Organization, Authorization: Power and Authority. Borrower and each of its Subsidiaries is duly existing and in good standing as a Registered Organization in its jurisdictions of organization or formation and Borrower and each of its Subsidiaries is qualified and licensed to do business and is in good standing in any jurisdiction in which the conduct of its businesses or its ownership of property requires that it be qualified except where the failure to do so could not reasonably be expected to have a Material Adverse Change. In connection with this Agreement, Borrower and each of its Subsidiaries has delivered to Collateral Agent a completed perfection certificate signed by an officer of Borrower or such Subsidiary (each a “ Perfection Certificate ” and collectively, the “ Perfection Certificates ”). Borrower represents and warrants that (a) Borrower and each of its Subsidiaries’ exact legal name is that which is indicated on its respective Perfection Certificate and on the signature page of each Loan Document to which it is a party; (b) Borrower and each of its Subsidiaries is an organization of the type and is organized in the jurisdiction set forth on its respective Perfection Certificate; (c) each Perfection Certificate accurately sets forth each of Borrower’s and its Subsidiaries’ organizational identification number or accurately states that Borrower or such Subsidiary has none; (d) each Perfection Certificate accurately sets forth Borrower’s and each of its Subsidiaries’ place of business, or, if more than one, its chief executive office as well as Borrower’s and each of its Subsidiaries’ mailing address (if different than its chief executive office); (e) Borrower and each of its Subsidiaries (and each of its respective predecessors) have not, in the past five (5) years, changed its jurisdiction of organization, organizational structure or type, or any organizational number assigned by its jurisdiction; and (f) all other information set forth on the Perfection Certificates pertaining to Borrower and each of its Subsidiaries, is accurate and complete (it being understood and agreed that Borrower and each of its Subsidiaries may from time to time update certain information in the Perfection Certificates (including the information set forth in clause (d) above) after the Effective Date to the extent permitted by one or more specific provisions in this Agreement); such updated Perfection Certificates subject to the review and approval of Collateral Agent. If Borrower or any of its Subsidiaries is not now a Registered Organization but later becomes one, Borrower shall notify Collateral Agent of such occurrence and provide Collateral Agent with such Person’s organizational identification number within five (5) Business Days of receiving such organizational identification number.

The execution, delivery and performance by Borrower and each of its Subsidiaries of the Loan Documents to which it is a party have been duly authorized, and do not (i) conflict with any of Borrower’s or such Subsidiaries’ organizational documents, including its respective Operating Documents, (ii) contravene, conflict with, constitute a default under or violate any material Requirement of Law applicable thereto, (iii) contravene, conflict or violate any applicable order, writ, judgment, injunction, decree, determination or award of any Governmental Authority by which Borrower or such Subsidiary, or any of their property or assets may be bound or affected, (iv) require any action by, filing, registration, or qualification with, or Governmental Approval from, any Governmental Authority (except such Governmental Approvals which have already been obtained and are in full force and effect) or are being obtained pursuant to Section 6.1(b), or (v) constitute an event of default under any material agreement by which Borrower or any of such Subsidiaries, or their respective properties, is bound. Neither Borrower nor any of its Subsidiaries is in default under any agreement to which it is a party or by which it or any of its assets is bound in which such default could reasonably be expected to have a Material Adverse Change.

5.2 Collateral.

(a) Borrower and each of its Subsidiaries have good title to, have rights in, and the power to transfer each item of the Collateral upon which it purports to grant a Lien under the Loan Documents, free and clear of any and all Liens except Permitted Liens, and neither Borrower nor any of its Subsidiaries have any Deposit Accounts, Securities Accounts, Commodity Accounts or other investment accounts other than the Collateral Accounts or the other investment accounts, if any, described in the Perfection Certificates delivered to Collateral Agent in connection herewith with respect of which Borrower or such Subsidiary has given Collateral Agent notice and taken such actions as are necessary to give Collateral Agent a perfected security interest therein. The Accounts are bona fide, existing obligations of the Account Debtors.

(b) On the Effective Date, and except as disclosed on the Perfection Certificate (i) the Collateral is not in the possession of any third party bailee (such as a warehouse), and (ii) no such third party bailee possesses components of the Collateral in excess of One Hundred Thousand Dollars ($100,000.00). None of the components of the Collateral shall be maintained at locations other than as disclosed in the Perfection Certificates on the Effective Date or as permitted pursuant to Section 6.11.

(d) Borrower and each of its Subsidiaries is the sole owner of the Intellectual Property each respectively purports to own, free and clear of all Liens other than Permitted Liens. Except as noted on the Perfection Certificates, neither Borrower nor any of its Subsidiaries is a party to, nor is bound by, any material license or other material agreement with respect to which Borrower or such Subsidiary is the licensee that (i) prohibits or otherwise restricts Borrower or its Subsidiaries from granting a security interest in Borrower’s or such Subsidiaries’ interest in such material license or material agreement or any other property, or (ii) for which a default under or termination of could interfere with Collateral Agent’s or any Lender’s right to sell any Collateral. Borrower shall provide written notice to Collateral Agent and each Lender within ten (10) days of Borrower or any of its Subsidiaries entering into or becoming bound by any license or agreement with respect to which Borrower or any Subsidiary is the licensee (other than over-the-counter software that is commercially available to the public).

5.3 Litigation. Except as disclosed (i) on the Perfection Certificates, or (ii) in accordance with Section 6.9 hereof, there are no actions, suits, investigations, or proceedings pending or, to the knowledge of the Responsible Officers, threatened in writing by or against Borrower or any of its Subsidiaries involving more than Two Hundred Fifty Thousand Dollars ($250,000.00).

5.4 No Material Deterioration in Financial Condition; Financial Statements. All consolidated financial statements for Borrower and its Subsidiaries, delivered to Collateral Agent fairly present, in conformity with GAAP, in all material respects the consolidated financial condition of Borrower and its Subsidiaries, and the consolidated results of operations of Borrower and its Subsidiaries. There has not been any material deterioration in the consolidated financial condition of Borrower and its Subsidiaries since the date of the most recent financial statements submitted to any Lender.

5.5 Solvency. Borrower and each of its Subsidiaries is Solvent.

5.6 Regulatory Compliance. Neither Borrower nor any of its Subsidiaries is an “investment company” or a company “controlled” by an “investment company” under the Investment Company Act of 1940, as amended. Neither Borrower nor any of its Subsidiaries is engaged as one of its important activities in extending credit for margin stock (under Regulations X, T and U of the Federal Reserve Board of Governors). Borrower and each of its Subsidiaries has complied in all material respects with the Federal Fair Labor Standards Act. Neither Borrower nor any of its Subsidiaries is a “holding company” or an “affiliate” of a “holding company” or a “subsidiary company” of a “holding company” as each term is defined and used in the Public Utility Holding Company Act of 2005. Neither Borrower nor any of its Subsidiaries has violated any laws, ordinances or rules, the violation of which could reasonably be expected to have a Material Adverse Change. Neither Borrower’s nor any of its Subsidiaries’ properties or assets has been used by Borrower or such Subsidiary or, to Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than in material compliance with applicable laws. Borrower and each of its Subsidiaries has obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all Governmental Authorities that are necessary to continue their respective businesses as currently conducted.

None of Borrower, any of its Subsidiaries, or any of Borrower’s or its Subsidiaries’ Affiliates or any of their respective agents acting or benefiting in any capacity in connection with the transactions contemplated by this Agreement is (i) in violation of any Anti-Terrorism Law, (ii) engaging in or conspiring to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law, or (iii) is a Blocked Person. None of Borrower, any of its Subsidiaries, or to the knowledge of Borrower and any of their Affiliates or agents, acting or benefiting in any capacity in connection with the transactions contemplated by this Agreement, (x) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (y) deals in, or otherwise engages in any transaction relating to, any property or interest in property blocked pursuant to Executive Order No. 13224, any similar executive order or other Anti-Terrorism Law.

5.7 Investments. Neither Borrower nor any of its Subsidiaries owns any stock, shares, partnership interests or other equity securities except for Permitted Investments.

5.8 Tax Returns and Payments; Pension Contributions. Borrower and each of its Subsidiaries has timely filed all required tax returns and reports, and Borrower and each of its Subsidiaries, has timely paid all foreign, federal, state, and local taxes, assessments, deposits and contributions owed by Borrower and such Subsidiaries, in all jurisdictions in which Borrower or any such Subsidiary is subject to taxes, including the United States, unless such taxes are being contested in accordance with the following sentence. Borrower and each of its Subsidiaries, may defer payment of any contested taxes, provided that Borrower or such Subsidiary, (a) in good faith contests its obligation to pay the taxes by appropriate proceedings promptly and diligently instituted and conducted, (b) notifies Collateral Agent in writing of the commencement of, and any material development in, the proceedings, and (c) posts bonds or takes any other steps required to prevent the Governmental Authority levying such contested taxes from obtaining a Lien upon any of the Collateral that is other than a “ Permitted Lien .” Neither Borrower nor any of its Subsidiaries is aware of any claims or adjustments proposed for any of Borrower’s or such Subsidiaries’, prior tax years which could result in additional taxes becoming due and payable by Borrower or its Subsidiaries. Borrower and each of its Subsidiaries have paid all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms, and neither Borrower nor any of its Subsidiaries have, withdrawn from participation in, and have not permitted partial or complete termination of, or permitted the occurrence of any other event with respect to, any such plan which could reasonably be expected to result in any liability of Borrower or its Subsidiaries, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other Governmental Authority; in each case which could reasonably be expected to have a Material Adverse Change. Notwithstanding anything to the contrary contained in this Agreement, Borrower shall not be in breach of this Section 5.8 unless the aggregate amount of taxes covered by tax returns and reports that have not been filed or the aggregate amount of taxes that have not been timely paid in either case exceeds Fifty Thousand Dollars ($50,000.00).

5.9 Use of Proceeds. Other than as provided in the next sentence, Borrower shall use the proceeds of the Credit Extensions solely as working capital and to fund its general business requirements in accordance with the provisions of this Agreement, and not for personal, family, household or agricultural purposes. A portion of the proceeds of the Term A Loans shall be used by Borrower to repay the Existing Indebtedness in full and to make certain payments under the Forendo License Agreement on the Effective Date.

5.10 Shares. Borrower has full power and authority to create a first lien on the Shares and no disability or contractual obligation exists that would prohibit Borrower from pledging the Shares pursuant to this Agreement. To Borrower’s knowledge, there are no subscriptions, warrants, rights of first refusal or other restrictions on transfer relative to, or options exercisable with respect to the Shares. The Shares have been and will be duly authorized and validly issued, and are fully paid and non-assessable. To Borrower’s knowledge, the Shares are not the subject of any present or threatened suit, action, arbitration, administrative or other proceeding, and Borrower knows of no reasonable grounds for the institution of any such proceedings.

5.11 Full Disclosure. No written representation, warranty or other statement of Borrower or any of its Subsidiaries in any certificate or written statement given to Collateral Agent or any Lender, as of the date such representation, warranty, or other statement was made, taken together with all such written certificates and written statements given to Collateral Agent or any Lender, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading (it being recognized that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results).

5.12 Definition of “ Knowledge. ” For purposes of the Loan Documents, whenever a representation or warranty is made to Borrower’s knowledge or awareness, to the “best of” Borrower’s knowledge, or with a similar qualification, knowledge or awareness means the actual knowledge, after reasonable investigation, of the Responsible Officers.

6.	AFFIRMATIVE COVENANTS

Borrower shall, and shall cause each of its Subsidiaries to, do all of the following:

6.1 Government Compliance.

(a) Maintain its and all its Subsidiaries’ legal existence and good standing in their respective jurisdictions of organization and maintain qualification in each jurisdiction in which the failure to so qualify could reasonably be expected to have a Material Adverse Change. Comply with all laws, ordinances and regulations to which Borrower or any of its Subsidiaries is subject, the noncompliance with which could reasonably be expected to have a Material Adverse Change.

(b) Obtain and keep in full force and effect, all of the material Governmental Approvals necessary for the performance by Borrower and its Subsidiaries of their respective businesses and obligations under the Loan Documents and the grant of a security interest to Collateral Agent for the ratable benefit of the Lenders, in all of the Collateral. Borrower shall promptly provide copies to Collateral Agent of any material Governmental Approvals obtained by Borrower or any of its Subsidiaries.

6.2 Financial Statements, Reports, Certificates.

(a) Deliver to each Lender:

(i) as soon as available, but no later than thirty (30) days after the last day of each month, a company prepared consolidated balance sheet and income statement covering the consolidated operations of Borrower and its Subsidiaries for such month certified by a Responsible Officer and in a form reasonably acceptable to Collateral Agent;

(ii) as soon as available, but no later than forty five (45) days after the last day of each quarter (other than the last quarter of each fiscal year), a company prepared consolidating balance sheet, income statement and cash flow statement covering the operations of Borrower and its Subsidiaries for such quarter certified by a Responsible Officer and in a form reasonably acceptable to Collateral Agent;

(iii) as soon as available, but no later than one hundred eighty (180) days after the last day of Borrower’s fiscal year or within five (5) days of filing with the SEC, audited consolidated financial statements prepared under GAAP, consistently applied, together with an unqualified opinion (other than with respect to a going concern) on the financial statements from an independent certified public accounting firm acceptable to Collateral Agent in its reasonable discretion;

(iv) within the earlier of (X) seven (7) days after approval thereof by Borrower’s Board of Directors and (Y) sixty (60) days after the last day of each of Borrower’s fiscal years, Borrower’s annual financial projections for the entire current fiscal year as approved by Borrower’s Board of Directors, which such annual financial projections shall be set forth in a month-by-month format (such annual financial projections as originally delivered to Collateral Agent and the Lenders are referred to herein as the “ Annual Projections ”; provided that, any revisions of the Annual Projections approved by Borrower’s Board of Directors shall be delivered to Collateral Agent and the Lenders no later than seven (7) days after such approval);

(v) within five (5) days of delivery, copies of all non-ministerial statements, reports and notices made available to Borrower’s security holders or holders of Subordinated Debt (excluding any materials provided to such security holders or holders of Subordinated Debt solely in their capacity as members of Borrower’s Board of Directors;

(vi) within five (5) days of filing, all reports on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission,

(vii) prompt notice of any amendments of or other changes to the capitalization table of Borrower and to the Operating Documents of Borrower or any of its Subsidiaries, together with any copies reflecting such amendments or changes with respect thereto that would require Borrower to file a report with the Securities and Exchange Commission under the Securities Exchange Act of 1934 if Borrower is subject to the reporting requirements thereof at such time;

(viii) prompt notice of any event that could reasonably be expected to materially and adversely affect the value of the Intellectual Property;

(ix) as soon as available, but no later than thirty (30) days after the last day of each month, copies of the month-end account statements for each Collateral Account maintained by Borrower or its Subsidiaries, which statements may be provided to Collateral Agent and each Lender by Borrower or directly from the applicable institution(s), and

(x) other information as reasonably requested by Collateral Agent or any Lender.

Notwithstanding the foregoing, documents required to be delivered pursuant to the terms hereof (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which Borrower posts such documents, or provides a link thereto, on Borrower’s website on the internet at Borrower’s website address.

(b) Concurrently with the delivery of the financial statements specified in Section 6.2(a)(i) above but no later than thirty (30) days after the last day of each month, deliver to each Lender, a duly completed Compliance Certificate signed by a Responsible Officer.

(c) Keep proper books of record and account in accordance with GAAP in all material respects, in which full, true and correct entries shall be made of all dealings and transactions in relation to its business and activities. Borrower shall, and shall cause each of its Subsidiaries to, allow, at the sole cost of Borrower, Collateral Agent or any Lender, during regular business hours upon reasonable prior notice (provided that no notice shall be required when an Event of Default has occurred and is continuing), to visit and inspect any of its properties, to examine and make abstracts or copies from any of its books and records, and to conduct a collateral audit and analysis of its operations and the Collateral. Such audits shall be conducted no more often than once every year unless (and more frequently if) an Event of Default has occurred and is continuing.

6.3 Inventory; Returns. Keep all Inventory in good and marketable condition, free from material defects except for Inventory for which adequate reserves have been made. Returns and allowances between Borrower, or any of its Subsidiaries, and their respective Account Debtors shall follow Borrower’s, or such Subsidiary’s, customary practices as they exist at the Effective Date. Borrower must promptly notify Collateral Agent and the Lenders of all returns, recoveries, disputes and claims that involve more than Two Hundred Fifty Thousand Dollars ($250,000.00) individually or in the aggregate in any calendar year.

6.4 Taxes; Pensions. Timely file and require each of its Subsidiaries to timely file, all required tax returns and reports and timely pay, and require each of its Subsidiaries to timely file, all foreign, federal, state, and local taxes, assessments, deposits and contributions owed by Borrower or its Subsidiaries, except for deferred payment of any taxes contested pursuant to the terms of Section 5.8 hereof or as otherwise permitted pursuant to Section 5.8 hereof, and shall deliver to Lenders, on demand, appropriate certificates attesting to such payments, and pay all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with the terms of such plans if the failure to do so could reasonably be expected to have a Material Adverse Change. Notwithstanding anything to the contrary contained in this Agreement, Borrower shall not be in breach of this Section 6.4 unless the aggregate amount of taxes covered by tax returns and reports that have not been timely filed or the aggregate amount of taxes that have not been timely paid in either case exceeds Fifty Thousand Dollars ($50,000.00).

6.5 Insurance. Keep Borrower’s and its Subsidiaries’ business and the Collateral insured for risks and in amounts standard for companies in Borrower’s and its Subsidiaries’ industry and location and as Collateral Agent may reasonably request. Insurance policies shall be in a form, with companies, and in amounts that are reasonably satisfactory to Collateral Agent and Lenders. All property policies shall have a lender’s loss payable endorsement showing Collateral Agent as lender loss payee and waive subrogation against Collateral Agent, and all liability policies shall show, or have endorsements showing, Collateral Agent, as additional insured. The Collateral Agent shall be named as lender loss payee and/or additional insured with respect to any such insurance providing coverage in respect of any Collateral, and each provider of any such insurance shall agree, by endorsement upon the policy or policies issued by it or by independent instruments furnished to the Collateral Agent, that it will give the Collateral Agent thirty (30) days prior written notice before any such policy or policies shall be materially altered or canceled. At Collateral Agent’s request, Borrower shall deliver certified copies of policies and evidence of all premium payments. Proceeds payable under any policy shall, at Collateral Agent’s option, be payable to Collateral Agent, for the ratable benefit of the Lenders, on account of the Obligations. Notwithstanding the foregoing, (a) so long as no Event of Default has occurred and is continuing, Borrower shall have the option of applying the proceeds of any casualty policy up to Two Hundred Fifty Thousand Dollars ($250,000.00) with respect to any loss, but not exceeding Two Hundred Fifty Thousand Dollars ($250,000.00), in the aggregate for all losses under all casualty policies in any one year, toward the replacement or repair of destroyed or damaged property; provided that any such replaced or repaired property (i) shall be of equal or like value as the replaced or repaired Collateral and (ii) shall be deemed Collateral in which Collateral Agent has been granted a first priority security interest, and (b) after the occurrence and during the continuance of an Event of Default, all proceeds payable under such casualty policy shall, at the option of Collateral Agent, be payable to Collateral Agent, for the ratable benefit of the Lenders, on account of the Obligations. If Borrower or any of its Subsidiaries fails to obtain insurance as required under this Section 6.5 or to pay any amount or furnish any required proof of payment to third persons, Collateral Agent and/or any Lender may make, at Borrower’s expense, all or part of such payment or obtain such insurance policies required in this Section 6.5, and take any action under the policies Collateral Agent or such Lender deems prudent.

6.6 Operating Accounts.

(a) Maintain Borrower’s and its Subsidiaries’ primary Collateral Accounts with Bank or its Affiliates in accounts which are subject to a Control Agreement in favor of Collateral Agent.

(b) Borrower shall provide Collateral Agent five (5) days’ prior written notice before Borrower or any of its Subsidiaries establishes any Collateral Account at or with any Person other than Bank or its Affiliates. In addition, for each Collateral Account that Borrower or any of its Subsidiaries, at any time maintains, Borrower or such Subsidiary shall cause the applicable bank or financial institution at or with which such Collateral Account is maintained to execute and deliver a Control Agreement or other appropriate instrument with respect to such Collateral Account to perfect Collateral Agent’s Lien in such Collateral Account in accordance with the terms hereunder prior to the establishment of such Collateral Account, which Control Agreement may not be terminated without prior written consent of Collateral Agent or upon the satisfaction in full in cash in each of the Obligations (other than inchoate indemnity obligations). The provisions of the previous sentence shall not apply to deposit accounts exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of Borrower’s, or any of its Subsidiaries’, employees and identified to Collateral Agent by Borrower as such in the Perfection Certificates.

(c) Neither Borrower nor any of its Subsidiaries shall maintain any Collateral Accounts except Collateral Accounts maintained in accordance with Sections 6.6(a) and (b).

(d) Notwithstanding anything to the contrary in this Section 6.6, none of the terms, conditions, restrictions, requirements or obligations set forth in Section 6.6(a), (b), or (c) above shall apply with respect to the Excluded Accounts.

6.7 Protection of Intellectual Property Rights. Borrower and each of its Subsidiaries shall: (a) use commercially reasonable efforts to protect, defend and maintain the validity and enforceability of its Intellectual Property that is material to Borrower’s business; (b) promptly advise Collateral Agent in writing of material infringement by a third party of its Intellectual Property; and (c) not allow any Intellectual Property material to Borrower’s business to be abandoned, forfeited or dedicated to the public without Collateral Agent’s prior written consent.

6.8 Litigation Cooperation. Commencing on the Effective Date and continuing through the termination of this Agreement, make available to Collateral Agent and the Lenders, without expense to Collateral Agent or the Lenders, Borrower and each of Borrower’s officers, employees and agents and Borrower’s Books, to the extent that Collateral Agent or any Lender may reasonably deem them necessary to prosecute or defend any third-party suit or proceeding instituted by or against Collateral Agent or any Lender with respect to any Collateral or relating to Borrower.

6.9 Notices of Litigation and Default. Borrower will give prompt written notice to Collateral Agent and the Lenders of any litigation or governmental proceedings pending or threatened (in writing) against Borrower or any of its Subsidiaries, which could reasonably be expected to result in damages or costs to Borrower or any of its Subsidiaries of Two Hundred Fifty Thousand Dollars ($250,000.00) or more or which could reasonably be expected to have a Material Adverse Change. Without limiting or contradicting any other more specific provision of this Agreement, promptly (and in any event within three (3) Business Days) upon Borrower becoming aware of the existence of any Event of Default or event which, with the giving of notice or passage of time, or both, would constitute an Event of Default, Borrower shall give written notice to Collateral Agent and the Lenders of such occurrence, which such notice shall include a reasonably detailed description of such Event of Default or event which, with the giving of notice or passage of time, or both, would constitute an Event of Default.

6.10 Intentionally Omitted.

6.11 Landlord Waivers; Bailee Waivers. In the event that Borrower or any of its Subsidiaries, after the Effective Date, intends to add any new offices or business locations, including warehouses, or otherwise store any portion of the Collateral with, or deliver any portion of the Collateral to, a bailee, in each case pursuant to Section 7.2, then Borrower or such Subsidiary will first receive the written consent of Collateral Agent and, in the event that the Collateral at any new location is valued in excess of Two Hundred Fifty Thousand Dollars ($250,000.00) in the aggregate, such bailee or landlord, as applicable, must execute and deliver a bailee waiver or landlord waiver, as applicable, in form and substance reasonably satisfactory to Collateral Agent prior to the addition of any new offices or business locations, or any such storage with or delivery to any such bailee, as the case may be.

6.12 Creation/Acquisition of Subsidiaries. In the event Borrower, or any of its Subsidiaries creates or acquires any Subsidiary, Borrower shall provide prior written notice to Collateral Agent and each Lender of the creation or acquisition of such new Subsidiary and take all such action as may be reasonably required by Collateral Agent or any Lender to cause each such Subsidiary to become a co-Borrower hereunder or to guarantee the Obligations of Borrower under the Loan Documents and, in each case, grant a continuing pledge and security interest in and to the assets of such Subsidiary (substantially as described on Exhibit A hereto); and Borrower (or its Subsidiary, as applicable) shall grant and pledge to Collateral Agent, for the ratable benefit of the Lenders, a perfected security interest in the Shares of each such newly created Subsidiary; provided, however, that solely in the circumstance in which Borrower or any Subsidiary creates or acquires a Foreign Subsidiary in an acquisition permitted by Section 7.7 hereof or otherwise approved by the Required Lenders, (i) such Foreign Subsidiary shall not be required to guarantee the Obligations of Borrower under the Loan Documents and grant a continuing pledge and security interest in and to the assets of such Foreign Subsidiary, and (ii) Borrower shall not be required to grant and pledge to Collateral Agent, for the ratable benefit of Lenders, a perfected security interest in more than sixty-five percent (65%) of the stock, units or other evidence of ownership of such Foreign Subsidiary, if Borrower demonstrates to the reasonable satisfaction of Collateral Agent that such Foreign Subsidiary providing such guarantee or pledge and security interest or Borrower providing a perfected security interest in more than sixty-five percent (65%) of the stock, units or other evidence of ownership would create a present and existing adverse tax consequence to Borrower under the U.S. Internal Revenue Code.

6.13 Further Assurances.

(a) Execute any further instruments and take further action as Collateral Agent or any Lender reasonably requests to perfect or continue Collateral Agent’s Lien in the Collateral or to effect the purposes of this Agreement.

(b) Deliver to Collateral Agent and Lenders, within five (5) days after the same are sent or received, copies of all material correspondence, reports, documents and other filings with any Governmental Authority that could reasonably be expected to have a material adverse effect on any of the Governmental Approvals material to Borrower’s business or otherwise could reasonably be expected to have a Material Adverse Change.

7.	NEGATIVE COVENANTS

Borrower shall not, and shall not permit any of its Subsidiaries to, do any of the following without the prior written consent of the Required Lenders:

7.1 Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose of (collectively, “ Transfer ”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, except for Transfers (a) of Inventory in the ordinary course of business; (b) of worn out or obsolete Equipment; (c) in connection with Permitted Liens, Permitted Investments and Permitted Licenses; or (d) cash and Cash Equivalents in the ordinary course of business (provided that “ordinary course of business” shall not exclude any actions that are approved by Borrower’s Board of Directors) and in connection with transactions not prohibited hereunder.

7.2 Changes in Business, Management, Ownership, or Business Locations. (a) Engage in or permit any of its Subsidiaries to engage in any business other than the businesses engaged in by Borrower as of the Effective Date or reasonably related thereto; (b) liquidate or dissolve; or (c) (i) any Key Person shall cease to be actively engaged in the management of Borrower unless written notice thereof is provided to Collateral Agent within five (5) Business Days of such change, or (ii) enter into any transaction or series of related transactions in which the stockholders of Borrower who were not stockholders immediately prior to the first such transaction own more than forty nine percent (49%) of the voting stock of Borrower immediately after giving effect to such transaction or related series of such transactions (other than by the sale of Borrower’s equity securities in a public offering, a private placement of public equity or to venture capital investors so long as Borrower identifies to Collateral Agent the venture capital investors prior to the closing of the transaction). Borrower shall not, without at least thirty (30) days’ prior written notice to Collateral Agent: (A) add any new offices or business locations, including warehouses (unless such new offices or business locations contain less than Two Hundred Fifty Thousand Dollars ($250,000.00) in assets or property of Borrower or any of its Subsidiaries); (B) change its jurisdiction of organization, (C) change its organizational structure or type, (D) change its legal name, or (E) change any organizational number (if any) assigned by its jurisdiction of organization.

7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock, shares or property of another Person. A Subsidiary may merge or consolidate into another Subsidiary (provided such surviving Subsidiary is a “co-Borrower” hereunder or has provided a secured Guaranty of Borrower’s Obligations hereunder) or with (or into) Borrower provided Borrower is the surviving legal entity, and as long as no Event of Default is occurring prior thereto or arises as a result therefrom.

7.4 Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness.

7.5 Encumbrance. Create, incur, allow, or suffer any Lien on any of its property, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, or permit any Collateral not to be subject to the first priority security interest granted herein (except for Permitted Liens that are permitted by the terms of this Agreement to have priority over Collateral Agent’s Lien), or enter into any agreement, document, instrument or other arrangement (except with or in favor of Collateral Agent, for the ratable benefit of the Lenders) with any Person which directly or indirectly prohibits or has the effect of prohibiting Borrower, or any of its Subsidiaries, from assigning, mortgaging, pledging, granting a security interest in or upon, or encumbering any of Borrower’s or such Subsidiary’s Intellectual Property, except as is otherwise permitted in Section 7.1 hereof and the definition of “ Permitted Liens ” herein.

7.6 Maintenance of Collateral Accounts. Maintain any Collateral Account except pursuant to the terms of Section 6.6 hereof.

7.7 Distributions; Investments. (a) Pay any dividends (other than dividends payable solely in capital stock) or make any distribution or payment in respect of or redeem, retire or purchase any capital stock (other than repurchases pursuant to the terms of employee stock purchase plans, employee restricted stock agreements, stockholder rights plans, director or consultant stock option plans, or similar plans, provided such repurchases do not exceed One Hundred Thousand Dollars ($100,000.00) in the aggregate per fiscal year) or (b) directly or indirectly make any Investment other than Permitted Investments, or permit any of its Subsidiaries to do so.

7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower or any of its Subsidiaries, except for (a) transactions that are in the ordinary course of Borrower’s or such Subsidiary’s business, upon fair and reasonable terms that are no less favorable to Borrower or such Subsidiary than would be obtained in an arm’s length transaction with a non-affiliated Person, (b) Subordinated Debt or equity investments by Borrower’s investors in Borrower or its Subsidiaries and (c) compensation arrangements for Borrower’s employees and consultants that are consistent with Borrower’s past practices.

7.9 Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt, except under the terms of the subordination, intercreditor, or other similar agreement to which such Subordinated Debt is subject, or (b) amend any provision in any document relating to the Subordinated Debt which would increase the amount thereof or adversely affect the subordination thereof to Obligations owed to the Lenders.

7.10 Compliance. Become an “investment company” or a company controlled by an “investment company”, under the Investment Company Act of 1940, as amended, or undertake as one of its important activities extending credit to purchase or carry margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System), or use the proceeds of any Credit Extension for that purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could reasonably be expected to have a Material Adverse Change, or permit any of its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in, permit partial or complete termination of, or permit the occurrence of any other event with respect to, any present pension, profit sharing and deferred compensation plan which could reasonably be expected to result in any liability of Borrower or any of its Subsidiaries, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other Governmental Authority.

7.11 Compliance with Anti-Terrorism Laws. Collateral Agent hereby notifies Borrower and each of its Subsidiaries that pursuant to the requirements of Anti-Terrorism Laws, and Collateral Agent’s policies and practices, Collateral Agent is required to obtain, verify and record certain information and documentation that identifies Borrower and each of its Subsidiaries and their principals, which information includes the name and address of Borrower and each of its Subsidiaries and their principals and such other information that will allow Collateral Agent to identify such party in accordance with Anti-Terrorism Laws. Neither Borrower nor any of its Subsidiaries shall, nor shall Borrower or any of its Subsidiaries permit any Affiliate to, directly or indirectly, knowingly enter into any documents, instruments, agreements or contracts with any Person listed on the OFAC Lists. Borrower and each of its Subsidiaries shall immediately notify Collateral Agent if Borrower or such Subsidiary has knowledge that Borrower, or any Subsidiary or Affiliate of Borrower, is listed on the OFAC Lists or (a) is convicted on, (b) pleads nolo contendere to, (c) is indicted on, or (d) is arraigned and held over on charges involving money laundering or predicate crimes to money laundering. Neither Borrower nor any of its Subsidiaries shall, nor shall Borrower or any of its Subsidiaries, permit any Affiliate to, directly or indirectly, (i) conduct any business or engage in any transaction or dealing with any Blocked Person, including, without limitation, the making or receiving of any contribution of funds, goods or services to or for the benefit of any Blocked Person, (ii) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224 or any similar executive order or other Anti-Terrorism Law, or (iii) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in Executive Order No. 13224 or other Anti-Terrorism Law.

8.	EVENTS OF DEFAULT

Any one of the following shall constitute an event of default (an “ Event of Default ”) under this Agreement:

8.1 Payment Default. Borrower fails to (a) make any payment of principal or interest on any Credit Extension on its due date, or (b) pay any other Obligations within three (3) Business Days after such Obligations are due and payable (which three (3) Business Day grace period shall not apply to payments due on the Maturity Date or the date of acceleration pursuant to Section 9.1 (a) hereof). During the cure period, the failure to cure the payment default is not an Event of Default (but no Credit Extension will be made during the cure period);

8.2 Covenant Default.

(a) Borrower or any of its Subsidiaries fails or neglects to perform any obligation in Sections 6.2 (Financial Statements, Reports, Certificates), 6.4 (Taxes), 6.5 (Insurance), 6.6 (Operating Accounts), 6.7 (Protection of Intellectual Property Rights), 6.9 (Notice of Litigation and Default), 6.11 (Landlord Waivers; Bailee Waivers), 6.12 (Creation/Acquisition of Subsidiaries) or 6.13 (Further Assurances) or Borrower violates any covenant in Section 7; or

(b) Borrower, or any of its Subsidiaries, fails or neglects to perform, keep, or observe any other term, provision, condition, covenant or agreement contained in this Agreement or any Loan Documents, and as to any default (other than those specified in this Section 8) under such other term, provision, condition, covenant or agreement that can be cured, has failed to cure the default within ten (10) days after the occurrence thereof; provided, however, that if the default cannot by its nature be cured within the ten (10) day period or cannot after diligent attempts by Borrower be cured within such ten (10) day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional period (which shall not in any case exceed thirty (30) days) to attempt to cure such default, and within such reasonable time period the failure to cure the default shall not be deemed an Event of Default (but no Credit Extensions shall be made during such cure period). Grace periods provided under this Section shall not apply, among other things, to financial covenants or any other covenants set forth in subsection (a) above;

8.3 Material Adverse Change. A Material Adverse Change occurs;

8.4 Attachment; Levy; Restraint on Business.

(a) (i) The service of process seeking to attach, by trustee or similar process, any funds of Borrower or any of its Subsidiaries or of any entity under control of Borrower or its Subsidiaries on deposit with any Lender or any Lender’s Affiliate or any bank or other institution at which Borrower or any of its Subsidiaries maintains a Collateral Account, or (ii) a notice of lien, levy, or assessment is filed against Borrower or any of its Subsidiaries or their respective assets by any government agency, and the same under subclauses (i) and (ii) hereof are not, within ten (10) days after the occurrence thereof, discharged or stayed (whether through the posting of a bond or otherwise); provided, however, no Credit Extensions shall be made during any ten (10) day cure period; and

(b) (i) any material portion of Borrower’s or any of its Subsidiaries’ assets is attached, seized, levied on, or comes into possession of a trustee or receiver, or (ii) any court order enjoins, restrains, or prevents Borrower or any of its Subsidiaries from conducting any part of its business;

8.5 Insolvency. (a) Borrower or any of its Subsidiaries is or becomes Insolvent; (b) Borrower or any of its Subsidiaries begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower or any of its Subsidiaries and not dismissed or stayed within forty-five (45) days (but no Credit Extensions shall be made while Borrower or any Subsidiary is Insolvent and/or until any Insolvency Proceeding is dismissed);

8.6 Other Agreements. There is a default in any agreement to which Borrower or any of its Subsidiaries is a party with a third party or parties resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of Two Hundred Fifty Thousand Dollars ($250,000.00) or that could reasonably be expected to have a Material Adverse Change;

8.7 Judgments. One or more judgments, orders, or decrees for the payment of money in an amount, individually or in the aggregate, of at least Two Hundred Fifty Thousand Dollars ($250,000.00) (not covered by independent third-party insurance as to which liability has been accepted by such insurance carrier) shall be rendered against Borrower or any of its Subsidiaries and shall remain unsatisfied, unvacated, or unstayed for a period of ten (10) days after the entry thereof (provided that no Credit Extensions will be made prior to the satisfaction, vacation, or stay of such judgment, order or decree);

8.8 Misrepresentations. Borrower or any of its Subsidiaries or any Person acting for Borrower or any of its Subsidiaries makes any representation, warranty, or other statement now or later in this Agreement, any Loan Document or in any writing delivered to Collateral Agent and/or Lenders or to induce Collateral Agent and/or the Lenders to enter this Agreement or any Loan Document, and such representation, warranty, or other statement is incorrect in any material respect when made;

8.9 Subordinated Debt. A default or breach occurs under any agreement between Borrower or any of its Subsidiaries and any creditor of Borrower or any of its Subsidiaries that signed a subordination, intercreditor, or other similar agreement with Collateral Agent or the Lenders, or any creditor that has signed such an agreement with Collateral Agent or the Lenders breaches any terms of such agreement;

8.10 Guaranty. (a) Any Guaranty terminates or ceases for any reason to be in full force and effect; (b) any Guarantor does not perform any obligation or covenant under any Guaranty; (c) any circumstance described in Sections 8.3, 8.4, 8.5, 8.7, or 8.8 occurs with respect to any Guarantor, or (d) the liquidation, winding up, or termination of existence of any Guarantor;

8.11 Governmental Approvals. Any Governmental Approval shall have been revoked, rescinded, suspended, modified in an adverse manner, or not renewed in the ordinary course for a full term and such revocation, rescission, suspension, modification or non-renewal has resulted in or could reasonably be expected to result in a Material Adverse Change; or

8.12 Lien Priority. Any Lien created hereunder or by any other Loan Document shall at any time fail to constitute a valid and perfected Lien on any of the Collateral purported to be secured thereby, subject to no prior or equal Lien, other than Permitted Liens which are permitted to have priority in accordance with the terms of this Agreement, provided that such circumstance is not due to Collateral Agent’s failure to file an appropriate continuation financing statement, amendment financing statement or initial financing statement.

9.	RIGHTS AND REMEDIES

9.1 Rights and Remedies.

(a) Upon the occurrence and during the continuance of an Event of Default, Collateral Agent may, and at the written direction of Required Lenders shall, without notice or demand, do any or all of the following: (i) deliver notice of the Event of Default to Borrower, (ii) by notice to Borrower declare all Obligations immediately due and payable (but if an Event of Default described in Section 8.5 occurs all Obligations shall be immediately due and payable without any action by Collateral Agent or the Lenders) or (iii) by notice to Borrower suspend or terminate the obligations, if any, of the Lenders to advance money or extend credit for Borrower’s benefit under this Agreement or under any other agreement between Borrower and Collateral Agent and/or the Lenders (but if an Event of Default described in Section 8.5 occurs all obligations, if any, of the Lenders to advance money or extend credit for Borrower’s benefit under this Agreement or under any other agreement between Borrower and Collateral Agent and/or the Lenders shall be immediately terminated without any action by Collateral Agent or the Lenders).

(b) Without limiting the rights of Collateral Agent and the Lenders set forth in Section 9.1(a) above, upon the occurrence and during the continuance of an Event of Default, Collateral Agent shall have the right, without notice or demand, to do any or all of the following:

(i) foreclose upon and/or sell or otherwise liquidate, the Collateral;

(ii) apply to the Obligations any (a) balances and deposits of Borrower that Collateral Agent or any Lender holds or controls, or (b) any amount held or controlled by Collateral Agent or any Lender owing to or for the credit or the account of Borrower; and/or

(iii) commence and prosecute an Insolvency Proceeding or consent to Borrower commencing any Insolvency Proceeding.

(c) Without limiting the rights of Collateral Agent and the Lenders set forth in Sections 9.1(a) and (b) above, upon the occurrence and during the continuance of an Event of Default, Collateral Agent shall have the right, without notice or demand, to do any or all of the following:

(i) settle or adjust disputes and claims directly with Account Debtors for amounts on terms and in any order that Collateral Agent considers advisable, notify any Person owing Borrower money of Collateral Agent’s security interest in such funds, and verify the amount of such account;

(ii) make any payments and do any acts it considers necessary or reasonable to protect the Collateral and/or its security interest in the Collateral. Borrower shall assemble the Collateral if Collateral Agent requests and make it available in a location as Collateral Agent reasonably designates. Collateral Agent may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest and pay all expenses incurred. Borrower grants Collateral Agent a license to enter and occupy any of its premises, without charge, to exercise any of Collateral Agent’s rights or remedies;

(iii) ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, and/or advertise for sale, the Collateral. Collateral Agent is hereby granted a non-exclusive, royalty-free license or other right to use, without charge, Borrower’s and each of its Subsidiaries’ labels, patents, copyrights, mask works, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Collateral Agent’s exercise of its rights under this Section 9.1, Borrower’s and each of its Subsidiaries’ rights under all licenses and all franchise agreements inure to Collateral Agent, for the benefit of the Lenders;

(iv) place a “hold” on any account maintained with Collateral Agent or the Lenders and/or deliver a notice of exclusive control, any entitlement order, or other directions or instructions pursuant to any Control Agreement or similar agreements providing control of any Collateral;

(v) demand and receive possession of Borrower’s Books;

(vi) appoint a receiver to seize, manage and realize any of the Collateral, and such receiver shall have any right and authority as any competent court will grant or authorize in accordance with any applicable law, including any power or authority to manage the business of Borrower or any of its Subsidiaries;

(vii) subject to clauses 9.1(a) and (b), exercise all rights and remedies available to Collateral Agent and each Lender under the Loan Documents or at law or equity, including all remedies provided under the Code (including disposal of the Collateral pursuant to the terms thereof);

(viii) for any Letters of Credit, demand that Borrower (i) deposit cash with Bank in an amount equal to (x) if such Letters of Credit are denominated in Dollars, then one hundred five percent (105%); and (y) if such Letters of Credit are denominated in a Foreign Currency, then one hundred ten percent (110%), of the

Dollar Equivalent of the aggregate face amount of all Letters of Credit remaining undrawn (plus all interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its good faith business judgment)), to secure all of the Obligations relating to such Letters of Credit, as collateral security for the repayment of any future drawings under such Letters of Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii) pay in advance all letter of credit fees scheduled to be paid or payable over the remaining term of any Letters of Credit; and

(ix) terminate any FX Contracts.

Notwithstanding any provision of this Section 9.1 to the contrary, upon the occurrence of any Event of Default, Collateral Agent shall have the right to exercise any and all remedies referenced in this Section 9.1 without the written consent of Required Lenders following the occurrence of an Exigent Circumstance. As used in the immediately preceding sentence, “ Exigent Circumstance ” means any event or circumstance that, in the reasonable judgment of Collateral Agent, imminently threatens the ability of Collateral Agent to realize upon all or any material portion of the Collateral, such as, without limitation, fraudulent removal, concealment, or abscondment thereof, destruction or material waste thereof, or failure of Borrower or any of its Subsidiaries after reasonable demand to maintain or reinstate adequate casualty insurance coverage, or which, in the judgment of Collateral Agent, could reasonably be expected to result in a material diminution in value of the Collateral.

9.2 Power of Attorney. Borrower hereby irrevocably appoints Collateral Agent as its lawful attorney-in-fact, exercisable upon the occurrence and during the continuance of an Event of Default, to: (a) endorse Borrower’s or any of its Subsidiaries’ name on any checks or other forms of payment or security; (b) sign Borrower’s or any of its Subsidiaries’ name on any invoice or bill of lading for any Account or drafts against Account Debtors; (c) settle and adjust disputes and claims about the Accounts directly with Account Debtors, for amounts and on terms Collateral Agent determines reasonable; (d) make, settle, and adjust all claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge, encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; and (f) transfer the Collateral into the name of Collateral Agent or a third party as the Code or any applicable law permits. Borrower hereby appoints Collateral Agent as its lawful attorney-in-fact to sign Borrower’s or any of its Subsidiaries’ name on any documents necessary to perfect or continue the perfection of Collateral Agent’s security interest in the Collateral regardless of whether an Event of Default has occurred until all Obligations (other than inchoate indemnity obligations) have been satisfied in full and Collateral Agent and the Lenders are under no further obligation to make Credit Extensions hereunder. Collateral Agent’s foregoing appointment as Borrower’s or any of its Subsidiaries’ attorney in fact, and all of Collateral Agent’s rights and powers, coupled with an interest, are irrevocable until all Obligations (other than inchoate indemnity obligations) have been fully repaid and performed and Collateral Agent’s and the Lenders’ obligation to provide Credit Extensions terminates.

9.3 Protective Payments. If Borrower or any of its Subsidiaries fail to obtain the insurance called for by Section 6.5 or fails to pay any premium thereon or fails to pay any other amount which Borrower or any of its Subsidiaries is obligated to pay under this Agreement or any other Loan Document, Collateral Agent may obtain such insurance or make such payment, and all amounts so paid by Collateral Agent are Lenders’ Expenses and immediately due and payable, bearing interest at the Default Rate, and secured by the Collateral. Collateral Agent will make reasonable efforts to provide Borrower with notice of Collateral Agent obtaining such insurance or making such payment at the time it is obtained or paid or within a reasonable time thereafter. No such payments by Collateral Agent are deemed an agreement to make similar payments in the future or Collateral Agent’s waiver of any Event of Default.

9.4 Application of Payments and Proceeds. Notwithstanding anything to the contrary contained in this Agreement, upon the occurrence and during the continuance of an Event of Default, (a) Borrower irrevocably waives the right to direct the application of any and all payments at any time or times thereafter received by Collateral Agent from or on behalf of Borrower or any of its Subsidiaries of all or any part of the Obligations, and, as between Borrower on the one hand and Collateral Agent and Lenders on the other, Collateral Agent shall have the continuing and exclusive right to apply and to reapply any and all payments received against the Obligations in such manner as Collateral Agent may deem advisable notwithstanding any previous application by Collateral Agent, and (b) the proceeds of any sale of, or other realization upon all or any part of the Collateral shall be applied: first, to the

Lenders’ Expenses; second, to accrued and unpaid interest on the Obligations (including any interest which, but for the provisions of the United States Bankruptcy Code, would have accrued on such amounts); third, to the principal amount of the Obligations outstanding; and fourth, to any other indebtedness or obligations of Borrower owing to Collateral Agent or any Lender under the Loan Documents. Any balance remaining shall be delivered to Borrower or to whoever may be lawfully entitled to receive such balance or as a court of competent jurisdiction may direct. In carrying out the foregoing, (x) amounts received shall be applied in the numerical order provided until exhausted prior to the application to the next succeeding category, and (y) each of the Persons entitled to receive a payment in any particular category shall receive an amount equal to its pro rata share of amounts available to be applied pursuant thereto for such category. Any reference in this Agreement to an allocation between or sharing by the Lenders of any right, interest or obligation “ratably,” “proportionally” or in similar terms shall refer to Pro Rata Share unless expressly provided otherwise. Collateral Agent, or if applicable, each Lender, shall promptly remit to the other Lenders such sums as may be necessary to ensure the ratable repayment of each Lender’s portion of any Term Loan and the ratable distribution of interest, fees and reimbursements paid or made by Borrower. Notwithstanding the foregoing, a Lender receiving a scheduled payment shall not be responsible for determining whether the other Lenders also received their scheduled payment on such date; provided, however, if it is later determined that a Lender received more than its ratable share of scheduled payments made on any date or dates, then such Lender shall remit to Collateral Agent or other Lenders such sums as may be necessary to ensure the ratable payment of such scheduled payments, as instructed by Collateral Agent. If any payment or distribution of any kind or character, whether in cash, properties or securities, shall be received by a Lender in excess of its ratable share, then the portion of such payment or distribution in excess of such Lender’s ratable share shall be received by such Lender in trust for and shall be promptly paid over to the other Lender for application to the payments of amounts due on the other Lenders’ claims. To the extent any payment for the account of Borrower is required to be returned as a voidable transfer or otherwise, the Lenders shall contribute to one another as is necessary to ensure that such return of payment is on a pro rata basis. If any Lender shall obtain possession of any Collateral, it shall hold such Collateral for itself and as agent and bailee for Collateral Agent and other Lenders for purposes of perfecting Collateral Agent’s security interest therein.

9.5 Liability for Collateral. So long as Collateral Agent and the Lenders comply with reasonable banking practices regarding the safekeeping of the Collateral in the possession or under the control of Collateral Agent and the Lenders, Collateral Agent and the Lenders shall not be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss, damage or destruction of the Collateral.

9.6 No Waiver; Remedies Cumulative. Failure by Collateral Agent or any Lender, at any time or times, to require strict performance by Borrower of any provision of this Agreement or any other Loan Document shall not waive, affect, or diminish any right of Collateral Agent or any Lender thereafter to demand strict performance and compliance herewith or therewith. No waiver hereunder shall be effective unless signed by Collateral Agent and the Required Lenders and then is only effective for the specific instance and purpose for which it is given. The rights and remedies of Collateral Agent and the Lenders under this Agreement and the other Loan Documents are cumulative. Collateral Agent and the Lenders have all rights and remedies provided under the Code, any applicable law, by law, or in equity. The exercise by Collateral Agent or any Lender of one right or remedy is not an election, and Collateral Agent’s or any Lender’s waiver of any Event of Default is not a continuing waiver. Collateral Agent’s or any Lender’s delay in exercising any remedy is not a waiver, election, or acquiescence.

9.7 Demand Waiver. Borrower waives, to the fullest extent permitted by law, demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Collateral Agent or any Lender on which Borrower or any Subsidiary is liable.

10.

NOTICES

All notices, consents, requests, approvals, demands, or other communication (collectively, “ Communication ”) by any party to this Agreement or any other Loan Document must be in writing and shall be deemed to have been validly served, given, or delivered: (a) upon the earlier of actual receipt and three (3) Business Days after deposit in the U.S. mail, first class, registered or certified mail return receipt requested, with proper

postage prepaid; (b) upon transmission, when sent by facsimile transmission or electronic mail; (c) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address, facsimile number, or email address indicated below. Any of Collateral Agent, Lender or Borrower may change its mailing or email address or facsimile number by giving the other party written notice thereof in accordance with the terms of this Section 10.


If to Borrower:		APRICUS BIOSCIENCES, INC. 11975 El Camino Real, Suite 300 San Diego, CA 92130 Attn: Steve Martin Fax: (858) 436-8155

with a copy (which shall not constitute notice) to:		LATHAM & WATKINS LLP 12670 High Bluff Drive San Diego, CA 92130 Attn: Cheston Larson Fax: (858) 523-5450 Email: cheston.larson@lw.com

		and

		LATHAM & WATKINS LLP 505 Montgomery Street Suite 2000 San Francisco, CA 94111-6538 Attn: Haim Zaltzman Fax: (415) 395-8095 Email: haim.zaltzman@lw.com

If to Collateral Agent:		OXFORD FINANCE LLC 133 North Fairfax Street Alexandria, Virginia 22314 Attention: Legal Department Fax: (703) 519-5225 Email: LegalDepartment@oxfordfinance.com

with a copy to		SILICON VALLEY BANK 4370 La Jolla Village Drive, Suite 1050 San Diego, CA 92122 Attn: Michael White Email: mwhite@svb.com

with a copy (which shall not constitute notice) to:		Cooley LLP 4401 Eastgate Mall San Diego, CA 92121-1909 Attn: George Samuel Fax: (858) 550 6420 Email: gsamuel@cooley.com

11.

CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER, AND JUDICIAL REFERENCE

California law governs the Loan Documents without regard to principles of conflicts of law. Borrower, Collateral Agent and each Lender each submit to the exclusive jurisdiction of the State and Federal courts in Santa Clara County, California; provided, however, that nothing in this Agreement shall be deemed to operate to preclude

Collateral Agent or any Lender from bringing suit or taking other legal action in any other jurisdiction to realize on the Collateral or any other security for the Obligations, or to enforce a judgment or other court order in favor of Collateral Agent or any Lender. Borrower expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and Borrower hereby waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by such court. Borrower hereby waives personal service of the summons, complaints, and other process issued in such action or suit and agrees that service of such summons, complaints, and other process may be made by registered or certified mail addressed to Borrower at the address set forth in, or subsequently provided by Borrower in accordance with, Section 10 of this Agreement and that service so made shall be deemed completed upon the earlier to occur of Borrower’s actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage prepaid.

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER, COLLATERAL AGENT AND EACH LENDER EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial by jury is not enforceable, the parties hereto agree that any and all disputes or controversies of any nature between them arising at any time shall be decided by a reference to a private judge, mutually selected by the parties (or, if they cannot agree, by the Presiding Judge of the Santa Clara County, California Superior Court) appointed in accordance with California Code of Civil Procedure Section 638 (or pursuant to comparable provisions of federal law if the dispute falls within the exclusive jurisdiction of the federal courts), sitting without a jury, in Santa Clara County, California; and the parties hereby submit to the jurisdiction of such court. The reference proceedings shall be conducted pursuant to and in accordance with the provisions of California Code of Civil Procedure §§ 638 through 645.1, inclusive. The private judge shall have the power, among others, to grant provisional relief, including without limitation, entering temporary restraining orders, issuing preliminary and permanent injunctions and appointing receivers. All such proceedings shall be closed to the public and confidential and all records relating thereto shall be permanently sealed. If during the course of any dispute, a party desires to seek provisional relief, but a judge has not been appointed at that point pursuant to the judicial reference procedures, then such party may apply to the Santa Clara County, California Superior Court for such relief. The proceeding before the private judge shall be conducted in the same manner as it would be before a court under the rules of evidence applicable to judicial proceedings. The parties shall be entitled to discovery which shall be conducted in the same manner as it would be before a court under the rules of discovery applicable to judicial proceedings. The private judge shall oversee discovery and may enforce all discovery rules and orders applicable to judicial proceedings in the same manner as a trial court judge. The parties agree that the selected or appointed private judge shall have the power to decide all issues in the action or proceeding, whether of fact or of law, and shall report a statement of decision thereon pursuant to California Code of Civil Procedure § 644(a). Nothing in this paragraph shall limit the right of any party at any time to exercise self-help remedies, foreclose against collateral, or obtain provisional remedies. The private judge shall also determine all issues relating to the applicability, interpretation, and enforceability of this paragraph.

12.

GENERAL PROVISIONS

12.1 Successors and Assigns. This Agreement binds and is for the benefit of the successors and permitted assigns of each party. Borrower may not transfer, pledge or assign this Agreement or any rights or obligations under it without Collateral Agent’s and each Lender’s prior written consent (which may be granted or withheld in Collateral Agent’s and each Lender’s discretion, subject to Section 12.6). The Lenders have the right, without the consent of or notice to Borrower, to sell, transfer, assign, pledge, negotiate, or grant participation in (any such sale, transfer, assignment, negotiation , or grant of a participation, a “Lender Transfer”) all or any part of, or any interest in, the Lenders’ obligations, rights, and benefits under this Agreement and the other Loan Documents; provided , however , that any such Lender Transfer (other than a transfer, pledge, sale or assignment to an Eligible Assignee) of its obligations, rights, and benefits under this Agreement and the other Loan Documents shall require

the prior written consent of the Required Lenders (such approved assignee, an “ Approved Lender ”) . Borrower and Collateral Agent shall be entitled to continue to deal solely and directly with such Lender in connection with the interests so assigned until Collateral Agent shall have received and accepted an effective assignment agreement in form satisfactory to Collateral Agent executed, delivered and fully completed by the applicable parties thereto, and shall have received such other information regarding such Eligible Assignee or Approved Lender as Collateral Agent reasonably shall require. Notwithstanding anything to the contrary contained herein, so long as no Event of Default has occurred and is continuing, no Lender Transfer (other than a Lender Transfer (i) in respect of the Warrants or (ii) in connection with (x) assignments by a Lender due to a forced divestiture at the request of any regulatory agency; or (y) upon the occurrence of a default, event of default or similar occurrence with respect to a Lender’s own financing or securitization transactions) shall be permitted, without Borrower’s consent, to any Person which is an Affiliate or Subsidiary of Borrower, a direct competitor of Borrower or a vulture hedge fund, each as determined by Collateral Agent.

12.2 Indemnification. Borrower agrees to indemnify, defend and hold Collateral Agent and the Lenders and their respective directors, officers, employees, agents, attorneys, or any other Person affiliated with or representing Collateral Agent or the Lenders (each, an “ Indemnified Person ”) harmless against: (a) all obligations, demands, claims, and liabilities (collectively, “ Claims ”) asserted by any other party in connection with; related to; following; or arising from, out of or under, the transactions contemplated by the Loan Documents; and (b) all losses or Lenders’ Expenses incurred, or paid by Indemnified Person in connection with; related to; following; or arising from, out of or under, the transactions contemplated by the Loan Documents between Collateral Agent, and/or the Lenders and Borrower (including reasonable attorneys’ fees and expenses), except for Claims and/or losses directly caused by such Indemnified Person’s gross negligence or willful misconduct. Borrower hereby further indemnifies, defends and holds each Indemnified Person harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel for such Indemnified Person) in connection with any investigative, response, remedial, administrative or judicial matter or proceeding, whether or not such Indemnified Person shall be designated a party thereto and including any such proceeding initiated by or on behalf of Borrower, and the reasonable expenses of investigation by engineers, environmental consultants and similar technical personnel and any commission, fee or compensation claimed by any broker (other than any broker retained by Collateral Agent or Lenders) asserting any right to payment for the transactions contemplated hereby which may be imposed on, incurred by or asserted against such Indemnified Person as a result of or in connection with the transactions contemplated hereby and the use or intended use of the proceeds of the loan proceeds except for liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements directly caused by such Indemnified Person’s gross negligence or willful misconduct.

12.3 Time of Essence. Time is of the essence for the performance of all Obligations in this Agreement.

12.4 Severability of Provisions. Each provision of this Agreement is severable from every other provision in determining the enforceability of any provision.

12.5 Correction of Loan Documents. Collateral Agent and the Lenders may correct patent errors and fill in any blanks in this Agreement and the other Loan Documents consistent with the agreement of the parties .

12.6 Amendments in Writing; Integration. (a) No amendment, modification, termination or waiver of any provision of this Agreement or any other Loan Document, no approval or consent thereunder, or any consent to any departure by Borrower or any of its Subsidiaries therefrom, shall in any event be effective unless the same shall be in writing and signed by Borrower, Collateral Agent and the Required Lenders provided that:

(i) no such amendment, waiver or other modification that would have the effect of increasing or reducing a Lender’s Term Loan Commitment or Commitment Percentage shall be effective as to such Lender without such Lender’s written consent;

(ii) no such amendment, waiver or modification that would affect the rights and duties of Collateral Agent shall be effective without Collateral Agent’s written consent or signature;

(iii) no such amendment, waiver or other modification shall, unless signed by all the Lenders directly affected thereby, (A) reduce the principal of, rate of interest on or any fees with respect to any Term Loan or forgive any principal, interest (other than default interest) or fees (other than late charges) with respect to any Term Loan (B) postpone the date fixed for, or waive, any payment of principal of any Term Loan or of interest on any Term Loan (other than default interest) or any fees provided for hereunder (other than late charges or for any termination of any commitment); (C) change the definition of the term “ Required Lenders ” or the percentage of Lenders which shall be required for the Lenders to take any action hereunder; (D) release all or substantially all of any material portion of the Collateral, authorize Borrower to sell or otherwise dispose of all or substantially all or any material portion of the Collateral or release any Guarantor of all or any portion of the Obligations or its guaranty obligations with respect thereto, except, in each case with respect to this clause (D), as otherwise may be expressly permitted under this Agreement or the other Loan Documents (including in connection with any disposition permitted hereunder); (E) amend, waive or otherwise modify this Section 12.6 or the definitions of the terms used in this Section 12.6 insofar as the definitions affect the substance of this Section 12.6; (F) consent to the assignment, delegation or other transfer by Borrower of any of its rights and obligations under any Loan Document or release Borrower of its payment obligations under any Loan Document, except, in each case with respect to this clause (F), pursuant to a merger or consolidation permitted pursuant to this Agreement; (G) amend any of the provisions of Section 9.4 or amend any of the definitions of Pro Rata Share, Term Loan Commitment, Commitment Percentage or that provide for the Lenders to receive their Pro Rata Shares of any fees, payments, setoffs or proceeds of Collateral hereunder; (H) subordinate the Liens granted in favor of Collateral Agent securing the Obligations; or (I) amend any of the provisions of Section 12.10. It is hereby understood and agreed that all Lenders shall be deemed directly affected by an amendment, waiver or other modification of the type described in the preceding clauses (C), (D), (E), (F), (G) and (H) of the preceding sentence;

(iv) the provisions of the foregoing clauses (i), (ii) and (iii) are subject to the provisions of any interlender or agency agreement among the Lenders and Collateral Agent pursuant to which any Lender may agree to give its consent in connection with any amendment, waiver or modification of the Loan Documents only in the event of the unanimous agreement of all Lenders.

(b) Other than as expressly provided for in Section 12.6(a)(i)-(iii), Collateral Agent may, if requested by the Required Lenders, from time to time designate covenants in this Agreement less restrictive by notification to a representative of Borrower.

(c) This Agreement and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Agreement and the Loan Documents merge into this Agreement and the Loan Documents.

12.7 Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, is an original, and all taken together, constitute one Agreement.

12.8 Survival. All covenants, representations and warranties made in this Agreement continue in full force and effect until this Agreement has terminated pursuant to its terms and all Obligations (other than inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement) have been satisfied. Without limiting the foregoing, except as otherwise provided in Section 4.1, the grant of security interest by Borrower in Section 4.1 shall survive until the termination of all Bank Services Agreements. The obligation of Borrower in Section 12.2 to indemnify each Lender and Collateral Agent, as well as the confidentiality provisions in Section 12.9 below, shall survive until the statute of limitations with respect to such claim or cause of action shall have run.

12.9 Confidentiality. In handling any confidential information of Borrower, the Lenders and Collateral Agent shall exercise the same degree of care that it exercises for their own proprietary information, but disclosure of information may be made: (a) subject to the terms and conditions of this Agreement, to the Lenders’ and Collateral Agent’s Subsidiaries or Affiliates, or in connection with a Lender’s own financing or securitization transactions and upon the occurrence of a default, event of default or similar occurrence with respect to such financing or securitization transaction; (b) to prospective transferees (other than those identified in (a) above) or

purchasers of any interest in the Credit Extensions (provided, however, the Lenders and Collateral Agent shall, except upon the occurrence and during the continuation of an Event of Default, obtain such prospective transferee’s or purchaser’s agreement to the terms of this provision or to similar confidentiality terms); (c) as required by law, regulation, subpoena, or other order; (d) to Lenders’ or Collateral Agent’s regulators or as otherwise required in connection with an examination or audit; (e) as Collateral Agent reasonably considers appropriate in exercising remedies under the Loan Documents; and (f) to third party service providers of the Lenders and/or Collateral Agent so long as such service providers have executed a confidentiality agreement with the Lenders and Collateral Agent with terms no less restrictive than those contained herein. Confidential information does not include information that either: (i) is in the public domain or in the Lenders’ and/or Collateral Agent’s possession when disclosed to the Lenders and/or Collateral Agent, or becomes part of the public domain after disclosure to the Lenders and/or Collateral Agent; or (ii) is disclosed to the Lenders and/or Collateral Agent by a third party, if the Lenders and/or Collateral Agent does not know that the third party is prohibited from disclosing the information. Collateral Agent and the Lenders may use confidential information for any purpose, including, without limitation, for the development of client databases, reporting purposes, and market analysis, so long as Collateral Agent and Lenders do not disclose Borrower’s identity or the identity of any person associated with Borrower unless otherwise expressly permitted by this Agreement or consented to by Borrower. The provisions of the immediately preceding sentence shall survive the termination of this Agreement. The agreements provided under this Section 12.9 supersede all prior agreements, understanding, representations, warranties, and negotiations between the parties about the subject matter of this Section 12.9.

12.10 Right of Set Off. Borrower hereby grants to Collateral Agent and to each Lender, a lien, security interest and right of set off as security for all Obligations to Collateral Agent and each Lender hereunder, whether now existing or hereafter arising upon and against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of Collateral Agent or the Lenders or any entity under the control of Collateral Agent or the Lenders (including a Collateral Agent affiliate) or in transit to any of them. At any time after the occurrence and during the continuance of an Event of Default, without demand or notice, Collateral Agent or the Lenders may set off the same or any part thereof and apply the same to any liability or obligation of Borrower even though unmatured and regardless of the adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE COLLATERAL AGENT TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

12.11 Silicon Valley Bank as Agent. Collateral Agent hereby appoints Silicon Valley Bank (“ SVB ”) as its agent (and SVB hereby accepts such appointment) for the purpose of perfecting Collateral Agent’s Liens in assets which, in accordance with Article 8 or Article 9, as applicable, of the Code can be perfected by possession or control, including without limitation, all deposit accounts maintained at SVB.

12.12 Cooperation of Borrower. If necessary, Borrower agrees to (i) execute any documents (including new Secured Promissory Notes) reasonably required to effectuate and acknowledge each assignment of a Term Loan Commitment or Loan to an assignee in accordance with Section 12.1, (ii) make Borrower’s management available to meet with Collateral Agent and prospective participants and assignees of Term Loan Commitments or Credit Extensions (which meetings shall be conducted no more often than twice every twelve months unless an Event of Default has occurred and is continuing), and (iii) assist Collateral Agent or the Lenders in the preparation of information relating to the financial affairs of Borrower as any prospective participant or assignee of a Term Loan Commitment or Term Loan reasonably may request. Subject to the provisions of Section 12.9, Borrower authorizes each Lender to disclose to any prospective participant or assignee of a Term Loan Commitment, any and all information in such Lender’s possession concerning Borrower and its financial affairs which has been delivered to such Lender by or on behalf of Borrower pursuant to this Agreement, or which has been delivered to such Lender by or on behalf of Borrower in connection with such Lender’s credit evaluation of Borrower prior to entering into this Agreement.

12.13 Borrower Liability. Either Borrower may, acting singly, request Credit Extensions hereunder. Each Borrower hereby appoints the other as agent for the other for all purposes hereunder, including with respect to requesting Credit Extensions hereunder. Each Borrower hereunder shall be jointly and severally obligated to repay all Credit Extensions made hereunder, regardless of which Borrower actually receives said Credit Extension, as if

each Borrower hereunder directly received all Credit Extensions. Each Borrower waives (a) any suretyship defenses available to it under the Code or any other applicable law, including, without limitation, the benefit of California Civil Code Section 2815 permitting revocation as to future transactions and the benefit of California Civil Code Sections 1432, 2809, 2810, 2819, 2839, 2845, 2847, 2848, 2849, 2850, and 2899 and 3433, and (b) any right to require Collateral Agent or any Lender to: (i) proceed against any Borrower or any other person; (ii) proceed against or exhaust any security; or (iii) pursue any other remedy. Collateral Agent and or any Lender may exercise or not exercise any right or remedy it has against any Borrower or any security it holds (including the right to foreclose by judicial or non-judicial sale) without affecting any Borrower’s liability. Notwithstanding any other provision of this Agreement or other related document, each Borrower irrevocably waives all rights that it may have at law or in equity (including, without limitation, any law subrogating Borrower to the rights of Collateral Agent and the Lenders under this Agreement) to seek contribution, indemnification or any other form of reimbursement from any other Borrower, or any other Person now or hereafter primarily or secondarily liable for any of the Obligations, for any payment made by Borrower with respect to the Obligations in connection with this Agreement or otherwise and all rights that it might have to benefit from, or to participate in, any security for the Obligations as a result of any payment made by Borrower with respect to the Obligations in connection with this Agreement or otherwise. Any agreement providing for indemnification, reimbursement or any other arrangement prohibited under this Section shall be null and void. If any payment is made to a Borrower in contravention of this Section, such Borrower shall hold such payment in trust for Collateral Agent and the Lenders and such payment shall be promptly delivered to Collateral Agent for application to the Obligations, whether matured or unmatured.

13.

DEFINITIONS

13.1 Definitions. As used in this Agreement, the following terms have the following meanings:

“ Account ” is any “account” as defined in the Code with such additions to such term as may hereafter be made, and includes, without limitation, all accounts receivable and other sums owing to Borrower.

“ Account Debtor ” is any “account debtor” as defined in the Code with such additions to such term as may hereafter be made.

“ Affiliate ” of any Person is a Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Person’s senior executive officers, directors, partners and, for any Person that is a limited liability company, that Person’s managers and members.

“ Agreement ” is defined in the preamble hereof.

“ Amortization Date ” is (x) if the Equity Event has not occurred, November 1, 2015 and (y) if the Equity Event has occurred, May 1, 2016.

“ Annual Projections ” is defined in Section 6.2(a).

“ Anti-Terrorism Laws ” are any laws relating to terrorism or money laundering, including Executive Order No. 13224 (effective September 24, 2001), the USA PATRIOT Act, the laws comprising or implementing the Bank Secrecy Act, and the laws administered by OFAC.

“ Approved Fund ” is any (i) investment company, fund, trust, securitization vehicle or conduit that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business or (ii) any Person (other than a natural person) which temporarily warehouses loans for any Lender or any entity described in the preceding clause (i) and that, with respect to each of the preceding clauses (i) and (ii), is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) a Person (other than a natural person) or an Affiliate of a Person (other than a natural person) that administers or manages a Lender.

“ Approved Lender ” is defined in Section 12.1.

“ Bank Services ” are any products, credit services, and/or financial accommodations previously, now, or hereafter provided to Borrower or any of its Subsidiaries by Bank or any Bank Affiliate, including, without limitation, any letters of credit, cash management services (including, without limitation, merchant services, direct deposit of payroll, business credit cards, and check cashing services), interest rate swap arrangements, and foreign exchange services as any such products or services may be identified in Bank’s various agreements related thereto (each, a “ Bank Services Agreement ”).

“ Bank ” is defined in the preamble hereof.

“ Basic Rate ” is, with respect to a Term Loan, the per annum rate of interest (based on a year of three hundred sixty (360) days) equal to the greater of (i) seven and ninety five hundredths of one percent (7.95%) and (ii) the sum of (a) the three (3) month U.S. LIBOR rate reported in the Wall Street Journal three (3) Business Days prior to the Funding Date of such Term Loan (which shall not, in any case, be less than twenty three hundredths of one percent (0.23%), plus (b) seven and seventy two hundredths of one percent (7.72%).

“ Blocked Person ” is any Person: (a) listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (b) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (c) a Person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law, (d) a Person that commits, threatens or conspires to commit or supports “terrorism” as defined in Executive Order No. 13224, or (e) a Person that is named a “specially designated national” or “blocked person” on the most current list published by OFAC or other similar list.

“ Borrower ” is defined in the preamble hereof.

“ Borrower’s Books ” are Borrower’s or any of its Subsidiaries’ books and records including ledgers, federal, and state tax returns, records regarding Borrower’s or its Subsidiaries’ assets or liabilities, the Collateral, business operations or financial condition, and all computer programs or storage or any equipment containing such information.

“ Business Day ” is any day that is not a Saturday, Sunday or a day on which Collateral Agent is closed.

“ Cash Equivalents ” are (a) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency or any State thereof having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing no more than one (1) year after its creation and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc., and (c) certificates of deposit maturing no more than one (1) year after issue provided that the account in which any such certificate of deposit is maintained is subject to a Control Agreement in favor of Collateral Agent. For the avoidance of doubt, the direct purchase by Borrower or any of its Subsidiaries of any Auction Rate Securities, or purchasing participations in, or entering into any type of swap or other derivative transaction, or otherwise holding or engaging in any ownership interest in any type of Auction Rate Security by Borrower or any of its Subsidiaries shall be conclusively determined by the Lenders as an ineligible Cash Equivalent, and any such transaction shall expressly violate each other provision of this Agreement governing Permitted Investments. Notwithstanding the foregoing, Cash Equivalents does not include and Borrower, and each of its Subsidiaries, are prohibited from purchasing, purchasing participations in, entering into any type of swap or other equivalent derivative transaction, or otherwise holding or engaging in any ownership interest in any type of debt instrument, including, without limitation, any corporate or municipal bonds with a long-term nominal maturity for which the interest rate is reset through a dutch auction and more commonly referred to as an auction rate security (each, an “ Auction Rate Security ”).

“ Claims ” are defined in Section 12.2.

“ Code ” is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the State of California; provided, that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory

provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to, Collateral Agent’s Lien on any Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the State of California, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions.

“ Collateral ” is any and all properties, rights and assets of Borrower described on Exhibit A .

“ Collateral Account ” is any Deposit Account, Securities Account, or Commodity Account, or any other bank account maintained by Borrower or any Subsidiary at any time.

“ Collateral Agent ” is, Oxford, not in its individual capacity, but solely in its capacity as agent on behalf of and for the benefit of the Lenders.

“ Commitment Percentage ” is set forth in Schedule 1.1 , as amended from time to time.

“ Commodity Account ” is any “commodity account” as defined in the Code with such additions to such term as may hereafter be made.

“ Communication ” is defined in Section 10.

“ Compliance Certificate ” is that certain certificate in the form attached hereto as Exhibit C .

“ Contingent Obligation ” is, for any Person, any direct or indirect liability, contingent or not, of that Person for (a) any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable; (b) any obligations for undrawn letters of credit for the account of that Person; and (c) all obligations from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent Obligation” does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under any guarantee or other support arrangement.

“ Control Agreement ” is any control agreement entered into among the depository institution at which Borrower or any of its Subsidiaries maintains a Deposit Account or the securities intermediary or commodity intermediary at which Borrower or any of its Subsidiaries maintains a Securities Account or a Commodity Account, Borrower and such Subsidiary, and Collateral Agent pursuant to which Collateral Agent obtains control (within the meaning of the Code) for the benefit of the Lenders over such Deposit Account, Securities Account, or Commodity Account.

“ Copyrights ” are any and all copyright rights, copyright applications, copyright registrations and like protections in each work or authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret.

“ Credit Extension ” is any Term Loan or any other extension of credit by Collateral Agent or Lenders for Borrower’s benefit.

“ Default Rate ” is defined in Section 2.3(b).

“ Deposit Account ” is any “deposit account” as defined in the Code with such additions to such term as may hereafter be made.

“ Designated Deposit Account ” is Borrower’s deposit account, account number XXXXXX6152, maintained with Bank.

“ Disbursement Letter ” is that certain form attached hereto as Exhibit B-1 .

“ Dollar Equivalent ” is, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in a Foreign Currency, the equivalent amount therefor in Dollars as determined by Bank at such time on the basis of the then-prevailing rate of exchange in San Francisco, California, for sales of the Foreign Currency for transfer to the country issuing such Foreign Currency.

“ Dollars ,” “ dollars ” and “$” each mean lawful money of the United States.

“ Effective Date ” is defined in the preamble of this Agreement.

“ Eligible Assignee ” is (i) a Lender, (ii) an Affiliate of a Lender, (iii) an Approved Fund and (iv) any commercial bank, savings and loan association or savings bank or any other entity which is an “accredited investor” (as defined in Regulation D under the Securities Act of 1933, as amended) and which extends credit or buys loans as one of its businesses, including insurance companies, mutual funds, lease financing companies and commercial finance companies, in each case, which either (A) has a rating of BBB or higher from Standard & Poor’s Rating Group and a rating of Baa2 or higher from Moody’s Investors Service, Inc. at the date that it becomes a Lender or (B) has total assets in excess of Five Billion Dollars ($5,000,000,000.00), and in each case of clauses (i) through (iv), which, through its applicable lending office, is capable of lending to Borrower without the imposition of any withholding or similar taxes; provided that notwithstanding the foregoing, “Eligible Assignee” shall not include, unless an Event of Default has occurred and is continuing, (i) Borrower or any of Borrower’s Affiliates or Subsidiaries or (ii) a direct competitor of Borrower or a vulture hedge fund, each as determined by Collateral Agent. Notwithstanding the foregoing, (x) in connection with assignments by a Lender due to a forced divestiture at the request of any regulatory agency, the restrictions set forth herein shall not apply and Eligible Assignee shall mean any Person or party and (y) in connection with a Lender’s own financing or securitization transactions, the restrictions set forth herein shall not apply and Eligible Assignee shall mean any Person or party providing such financing or formed to undertake such securitization transaction and any transferee of such Person or party upon the occurrence of a default, event of default or similar occurrence with respect to such financing or securitization transaction; provided that no such sale, transfer, pledge or assignment under this clause (y) shall release such Lender from any of its obligations hereunder or substitute any such Person or party for such Lender as a party hereto until Collateral Agent shall have received and accepted an effective assignment agreement from such Person or party in form satisfactory to Collateral Agent executed, delivered and fully completed by the applicable parties thereto, and shall have received such other information regarding such Eligible Assignee as Collateral Agent reasonably shall require.

“ Equipment ” is all “equipment” as defined in the Code with such additions to such term as may hereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing.

“ Equity Event ” is the receipt by Borrower on or after August 11, 2014 but by no later than September 30, 2015, of unrestricted net cash proceeds of not less than Forty Million Dollars ($40,000,000.00) from the issuance and sale by Borrower of its unsecured subordinated convertible debt and/or equity securities in form and substance reasonably satisfactory, and on terms and conditions reasonably satisfactory, to Collateral Agent and Lenders.

“ ERISA ” is the Employee Retirement Income Security Act of 1974, as amended, and its regulations.

“ Excluded Accounts ” are the following Collateral Accounts:

(a) that certain account which serves as cash collateral for letters of credit maintained at Wells Fargo Bank pursuant to clause (g) of the definition of “Permitted Indebtedness”, provided that the aggregate amount in such account does not at any time exceed the lesser of (i) the aggregate face value of any such letters of credit and (ii) One Hundred Thousand Dollars ($100,000.00); and

(b) that certain environmental escrow account described in clause (h) of the definition of “Permitted Indebtedness”, provided that the aggregate amount in such account does not at any time exceed One Hundred Eighty Two Thousand Dollars ($182,000.00).

“ Existing Indebtedness ” is the indebtedness of Borrower to (i) Solomon Strategic Holdings, Inc. in the aggregate principal outstanding amount as of the Effective Date of approximately One Hundred Seventy Five Thousand Dollars ($175,000.00) pursuant to that certain Amended and Restated Convertible Note, dated as of December 7, 2012, entered into by and between Solomon Strategic Holdings, Inc. and Borrower, (ii) Tail Wind Advisory & Management, Ltd. in the aggregate principal outstanding amount as of the Effective Date of approximately One Hundred Seventy Five Thousand Dollars ($175,000.00) pursuant to that certain Amended and Restated Convertible Note, dated as of December 7, 2012, entered into by and between Tail Wind Advisory & Management, Ltd. and Borrower, and (iii) The Tail Wind Fund Ltd. in the aggregate principal outstanding amount as of the Effective Date of approximately Eight Hundred Seventy Five Thousand Dollars ($875,000.00) pursuant to that certain Amended and Restated Convertible Note, dated as of December 7, 2012, entered into by and between The Tail Wind Fund Ltd. and Borrower.

“ Event of Default ” is defined in Section 8.

“ Final Payment ” is a payment (in addition to and not a substitution for the regular monthly payments of principal plus accrued interest) due on the earliest to occur of (a) the Maturity Date, or (b) the acceleration of any Term Loan, or (c) the prepayment of a Term Loan funded pursuant to Section 2.2(c) or (d), equal to the original principal amount of such Term Loan multiplied by the Final Payment Percentage, payable to Lenders in accordance with their respective Pro Rata Shares.

“ Final Payment Percentage ” is six percent (6.00%).

“ Foreign Currency ” means lawful money of a country other than the United States.

“ Foreign Subsidiary ” is a Subsidiary that is not an entity organized under the laws of the United States or any territory thereof.

“ Forendo License Agreement ” means that certain License Agreement by and between Forendo Pharma Ltd., a company organized under the laws of Finland, NexMed (U.S.A.), Inc., a Delaware corporation, and Apricus Biosciences, Inc., a Nevada corporation, dated as of October 17, 2014.

“ Funding Date ” is any date on which a Credit Extension is made to or on account of Borrower which shall be a Business Day.

“ FX Contract ” is any foreign exchange contract by and between Borrower and Bank under which Borrower commits to purchase from or sell to Bank a specific amount of Foreign Currency on a specified date.

“ GAAP ” is generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other Person as may be approved by a significant segment of the accounting profession in the United States, which are applicable to the circumstances as of the date of determination.

“ General Intangibles ” are all “general intangibles” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation, all copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work, whether published or unpublished, any patents, trademarks, service marks and, to the extent permitted under applicable law, any applications therefor, whether registered or not, any trade secret rights, including any rights to unpatented inventions, payment intangibles, royalties, contract rights, goodwill, franchise agreements, purchase orders, customer lists, route lists, telephone numbers, domain names, claims, income and other tax refunds, security and other deposits, options to purchase or sell real or personal property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without limitation key man, property damage, and business interruption insurance), payments of insurance and rights to payment of any kind.

“ Governmental Approval ” is any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, registration, filing or notice, of, issued by, from or to, or other act by or in respect of, any Governmental Authority.

“ Governmental Authority ” is any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization.

“ Guarantor ” is any Person providing a Guaranty in favor of Collateral Agent.

“ Guaranty ” is any guarantee of all or any part of the Obligations, as the same may from time to time be amended, restated, modified or otherwise supplemented.

“ Indebtedness ” is (a) indebtedness for borrowed money or the deferred price of property or services, such as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations, and (d) Contingent Obligations.

“ Indemnified Person ” is defined in Section 12.2.

“ Insolvency Proceeding ” is any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.

“ Insolvent ” means not Solvent.

“ Intellectual Property ” means all of Borrower’s or any Subsidiary’s right, title and interest in and to the following:

(a) its Copyrights, Trademarks and Patents;

(b) any and all trade secrets and trade secret rights, including, without limitation, any rights to unpatented inventions, know-how, operating manuals;

(d) any and all design rights which may be available to Borrower;

(e) any and all claims for damages by way of past, present and future infringement of any of the foregoing, with the right, but not the obligation, to sue for and collect such damages for said use or infringement of the Intellectual Property rights identified above; and

(f) all amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents.

“ Inventory ” is all “inventory” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products, including without limitation such inventory as is temporarily out of any Person’s custody or possession or in transit and including any returned goods and any documents of title representing any of the above.

“ Investment ” is any beneficial ownership interest in any Person (including stock, partnership interest or other securities), and any loan, advance, or capital contribution to any Person.

“ Key Person ” is each of Borrower’s (i) Chief Executive Officer, who is Richard Pascoe as of the Effective Date and (ii) Chief Financial Officer, who is Steve Martin as of the Effective Date.

“ Lender ” is any one of the Lenders.

“ Lenders ” are the Persons identified on Schedule 1.1 hereto and each assignee that becomes a party to this Agreement pursuant to Section 12.1.

“ Lenders’ Expenses ” are all reasonable audit fees and expenses, costs, and expenses (including reasonable attorneys’ fees and expenses, as well as appraisal fees, fees incurred on account of lien searches, inspection fees, and filing fees) for preparing, amending, negotiating, administering, defending and enforcing the Loan Documents (including, without limitation, those incurred in connection with appeals or Insolvency Proceedings) or otherwise incurred by Collateral Agent and/or the Lenders in connection with the Loan Documents.

“ Letter of Credit” is a standby or commercial letter of credit issued by Bank upon request of Borrower based upon an application, guarantee, indemnity, or similar agreement.

“ Lien ” is a claim, mortgage, deed of trust, levy, charge, pledge, security interest, or other encumbrance of any kind, whether voluntarily incurred or arising by operation of law or otherwise against any property.

“ Loan Documents ” are, collectively, this Agreement, the Warrants, the Perfection Certificates, each Compliance Certificate, each Disbursement Letter, each Loan Payment/Advance Request Form and any Bank Services Agreement, the Post Closing Letter, any subordination agreements, any note, or notes or guaranties executed by Borrower or any other Person, and any other present or future agreement entered into by Borrower, any Guarantor or any other Person for the benefit of the Lenders and Collateral Agent in connection with this Agreement; all as amended, restated, or otherwise modified.

“ Loan Payment/Advance Request Form ” is that certain form attached hereto as Exhibit B-2 .

“ Material Adverse Change ” is (a) a material impairment in the perfection or priority of Collateral Agent’s Lien in the Collateral or in the value of such Collateral; (b) a material adverse change in the business, operations or condition (financial or otherwise) of Borrower or any Subsidiary; or (c) a material impairment of the prospect of repayment of any portion of the Obligations.

“ Maturity Date ” is October 1, 2018.

“ NexMed International ” means NexMed International Limited, a wholly owned subsidiary of Apricus Biosciences, Inc. formed under the laws of the British Virgin Islands.

“ Obligations ” are all of Borrower’s obligations to pay when due any debts, principal, interest, Lenders’ Expenses, the Prepayment Fee, the Final Payment, and other amounts Borrower owes the Lenders now or later, in connection with, related to, following, or arising from, out of or under, this Agreement or, the other Loan Documents (other than the Warrants or any equity instrument), or otherwise, including, without limitation, all obligations relating to letters of credit (including reimbursement obligations for drawn and undrawn letters of credit), cash management services, and foreign exchange contracts, if any, and including interest accruing after Insolvency Proceedings begin (whether or not allowed) and debts, liabilities, or obligations of Borrower assigned to the Lenders and/or Collateral Agent, and the performance of Borrower’s duties under the Loan Documents (other than the Warrants or any equity instrument).

“ OFAC ” is the U.S. Department of Treasury Office of Foreign Assets Control.

“ OFAC Lists ” are, collectively, the Specially Designated Nationals and Blocked Persons List maintained by OFAC pursuant to Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other restricted Persons maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable Executive Orders.

“ Operating Documents ” are, for any Person, such Person’s formation documents, as certified by the Secretary of State (or equivalent agency) of such Person’s jurisdiction of organization on a date that is no earlier than thirty (30) days prior to the Effective Date, and, (a) if such Person is a corporation, its bylaws in current form, (b) if such Person is a limited liability company, its limited liability company agreement (or similar agreement), and (c) if such Person is a partnership, its partnership agreement (or similar agreement), each of the foregoing with all current amendments or modifications thereto.

“ Patents ” means all patents, patent applications and like protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same.

“ Payment Date ” is the first (1 ^st ) calendar day of each calendar month, commencing on December 1, 2014.

“ Perfection Certificate ” and “ Perfection Certificates ” is defined in Section 5.1.

“ Permitted Indebtedness ” is:

(a) Borrower’s Indebtedness to the Lenders and Collateral Agent under this Agreement and the other Loan Documents;

(b) Indebtedness existing on the Effective Date and disclosed on the Perfection Certificate(s);

(d) unsecured Indebtedness to trade creditors incurred in the ordinary course of business;

(e) Indebtedness consisting of capitalized lease obligations and purchase money Indebtedness, in each case incurred by Borrower or any of its Subsidiaries to finance the acquisition, repair, improvement or construction of fixed or capital assets of such person, provided that (i) the aggregate outstanding principal amount of all such Indebtedness does not exceed Two Hundred Fifty Thousand Dollars ($250,000.00) at any time and (ii) the principal amount of such Indebtedness does not exceed the lower of the cost or fair market value of the property so acquired or built or of such repairs or improvements financed with such Indebtedness (each measured at the time of such acquisition, repair, improvement or construction is made);

(f) Indebtedness incurred as a result of endorsing negotiable instruments received in the ordinary course of Borrower’s business;

(g) Indebtedness to Wells Fargo Bank to secure letters of credit outstanding as of the Effective Date in an aggregate amount not to exceed One Hundred Thousand Dollars ($100,000.00);

(h) Indebtedness to ESROG LLC pursuant to that certain Environmental Escrow Agreement dated as of March 11, 2013 in an amount equal to One Hundred Eighty Two Thousand Dollars ($182,000.00);

(i) other unsecured Indebtedness incurred by Borrower in the ordinary course of business not otherwise permitted by Section 7.4 not exceeding Two Hundred Fifty Thousand Dollars ($250,000.00) in the aggregate outstanding at any time; and

(j) intercompany Indebtedness that consists of Permitted Investments;

(k) extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (e) above, provided that the principal amount thereof is not increased or the terms thereof are not modified to impose materially more burdensome terms upon Borrower, or its Subsidiary, as the case may be.

“ Permitted Investments ” are:

(a) Investments disclosed on the Perfection Certificate(s) and existing on the Effective Date;

(b) (i) Investments consisting of cash and Cash Equivalents, and (ii) any other Investments permitted by Borrower’s investment policy, as amended from time to time, provided that such investment policy (and any such amendment thereto) has been approved in writing by Collateral Agent;

(c) Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of Borrower;

(d) Investments consisting of Deposit Accounts in which Collateral Agent has a perfected security interest;

(e) Investments in connection with Transfers permitted by Section 7.1;

(f) Investments consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase plans or agreements approved by Borrower’s Board of Directors; not to exceed One Hundred Thousand Dollars ($100,000.00) in the aggregate for (i) and (ii) in any fiscal year;

(g) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of business;

(h) Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates, in the ordinary course of business; provided that this paragraph (h) shall not apply to Investments of Borrower in any Subsidiary;

(i) non-cash Investments in joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting of the non-exclusive licensing of technology, the development of technology or the providing of technical support; and

(j) Investments in Subsidiaries which are co-borrowers under this Agreement.

“ Permitted Licenses ” are (A) licenses of over-the-counter software that is commercially available to the public, and (B) non-exclusive and exclusive licenses for the use of the Intellectual Property of Borrower or any of its Subsidiaries entered into in the ordinary course of business, provided , that, with respect to each such license described in clause (B), (i) no Event of Default has occurred or is continuing at the time of such license; (ii) the license constitutes an arms-length transaction, the terms of which, on their face, do not provide for a sale or assignment of any Intellectual Property and do not restrict the ability of Borrower or any of its Subsidiaries, as applicable, to pledge, grant a security interest in or lien on, or assign or otherwise Transfer any Intellectual Property; (iii) in the case of any exclusive license, (x) Borrower delivers ten (10) days’ prior written notice and a brief summary of the terms of the proposed license to Collateral Agent and the Lenders and delivers to Collateral Agent and the Lenders copies of the final executed licensing documents in connection with the exclusive license promptly upon consummation thereof, and (y) any such license could not result in a legal transfer of title of the licensed property but may be exclusive in respects other than territory and may be exclusive as to territory only as to discrete geographical areas outside of the United States; and (iv) all upfront payments, royalties, milestone payments or other proceeds arising from the licensing agreement that are payable to Borrower or any of its Subsidiaries are paid to a Deposit Account that is governed by a Control Agreement.

“ Permitted Liens ” are:

(a) Liens existing on the Effective Date and disclosed on the Perfection Certificates or arising under this Agreement and the other Loan Documents;

(b) Liens for taxes, fees, assessments or other government charges or levies, either (i) not due and payable or (ii) being contested in good faith and for which Borrower maintains adequate reserves on its Books, provided that no notice of any such Lien has been filed or recorded under the Internal Revenue Code of 1986, as amended, and the Treasury Regulations adopted thereunder;

(c) Liens on insurance proceeds in favor of insurance companies granted solely to secure financed insurance premiums in the aggregate amount not to exceed One Hundred Thousand Dollars ($100,000.00);

(d) Liens securing Indebtedness permitted under clause (e) of the definition of “ Permitted Indebtedness ,” provided that (i) such liens exist prior to the acquisition of, or attach substantially simultaneous with, or within twenty (20) days after the, acquisition, lease, repair, improvement or construction of, such property financed or leased by such Indebtedness and (ii) such liens do not extend to any property of Borrower other than the property (and proceeds thereof) acquired, leased or built, or the improvements or repairs, financed by such Indebtedness;

(e) Liens of carriers, warehousemen, suppliers, or other Persons that are possessory in nature arising in the ordinary course of business so long as such Liens attach only to Inventory, securing liabilities in the aggregate amount not to exceed Twenty Five Thousand Dollars ($25,000.00), and which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto;

(f) Liens to secure payment of workers’ compensation, employment insurance, old-age pensions, social security and other like obligations incurred in the ordinary course of business (other than Liens imposed by ERISA);

(g) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (d), but any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness may not increase;

(h) leases or subleases of real property granted in the ordinary course of Borrower’s business (or, if referring to another Person, in the ordinary course of such Person’s business), and leases, subleases, non-exclusive licenses or sublicenses of personal property (other than Intellectual Property) granted in the ordinary course of Borrower’s business (or, if referring to another Person, in the ordinary course of such Person’s business), if the leases, subleases, licenses and sublicenses do not prohibit granting Collateral Agent or any Lender a security interest therein;

(i) banker’s liens, rights of setoff and Liens in favor of financial institutions incurred in the ordinary course of business arising in connection with Borrower’s deposit accounts or securities accounts held at such institutions solely to secure payment of fees and similar costs and expenses and provided such accounts are maintained in compliance with Section 6.6(b) hereof;

(j) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Section 8.4 or 8.7;

(k) Liens consisting of Permitted Licenses; and

(l) Liens securing Indebtedness permitted under clause (g) and (h) of the definition of “ Permitted Indebtedness ”.

“ Person ” is any individual, sole proprietorship, partnership, limited liability company, joint venture, company, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency.

“ Post Closing Letter ” is that certain Post Closing Letter dated as of the Effective Date by and between Collateral Agent and Borrower.

“ Prepayment Fee ” is, with respect to any Term Loan subject to prepayment prior to the Maturity Date, whether by mandatory or voluntary prepayment, acceleration or otherwise, an additional fee payable to the Lenders in amount equal to:

(i) for a prepayment made on or after the Funding Date of such Term Loan through and including the first anniversary of the Funding Date of such Term Loan, three percent (3.00%) of the principal amount of such Term Loan prepaid;

(ii) for a prepayment made after the date which is after the first anniversary of the Funding Date of such Term Loan through and including the second anniversary of the Funding Date of such Term Loan, two percent (2.00%) of the principal amount of the Term Loans prepaid; and

(iii) for a prepayment made after the date which is after the second anniversary of the Funding Date of such Term Loan and prior to the Maturity Date of such Term Loan, one percent (1.00%) of the principal amount of the Term Loans prepaid.

“ Pro Rata Share ” is, as of any date of determination, with respect to each Lender, a percentage (expressed as a decimal, rounded to the ninth decimal place) determined by dividing the outstanding principal amount of Term Loans held by such Lender by the aggregate outstanding principal amount of all Term Loans.

“ Registered Organization ” is any “registered organization” as defined in the Code with such additions to such term as may hereafter be made.

“ Required Lenders ” means (i) for so long as all of the Persons that are Lenders on the Effective Date (each an “ Original Lender ”) have not assigned or transferred any of their interests in their Term Loan, Lenders holding one hundred percent (100%) of the aggregate outstanding principal balance of the Term Loan, or (ii) at any time from and after any Original Lender has assigned or transferred any interest in its Term Loan, Lenders holding at least sixty six percent (66%) of the aggregate outstanding principal balance of the Term Loan and, in respect of this clause (ii), (A) each Original Lender that has not assigned or transferred any portion of its Term Loan, (B) each assignee or transferee of an Original Lender’s interest in the Term Loan, but only to the extent that such assignee or transferee is an Affiliate or Approved Fund of such Original Lender, and (C) any Person providing financing to any Person described in clauses (A) and (B) above; provided, however, that this clause (C) shall only apply upon the occurrence of a default, event of default or similar occurrence with respect to such financing.

“ Requirement of Law ” is as to any Person, the organizational or governing documents of such Person, and any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

“ Responsible Officer ” is any of the President, Chief Executive Officer, or Chief Financial Officer of Borrower acting alone.

“ Second Draw Period ” is the period commencing on the date of Borrower providing evidence to Collateral Agent and Lenders, in form and substance satisfactory to Collateral Agent and Lenders, of Borrower’s initiation of Phase 2b of its Falcon (Fispemifene) Program pursuant to the Forendo License Agreement (the “ Draw Event ”), and ending on the earlier of (i) April 30, 2015 and (ii) the occurrence of an Event of Default; provided, however, that the Second Draw Period shall not commence if on the date of the Draw Event, an Event of Default has occurred and is continuing.

“ Secured Promissory Note ” is defined in Section 2.4.

“ Secured Promissory Note Record ” is a record maintained by each Lender with respect to the outstanding Obligations owed by Borrower to Lender and credits made thereto.

“ Securities Account ” is any “securities account” as defined in the Code with such additions to such term as may hereafter be made.

“ Shares ” is one hundred percent (100%) of the issued and outstanding capital stock, membership units or other securities owned or held of record by Borrower or Borrower’s Subsidiary, in any Subsidiary, except NexMed International.

“ Solvent ” is, with respect to any Person: the fair salable value of such Person’s consolidated assets (including goodwill minus disposition costs) exceeds the fair value of such Person’s liabilities; such Person is not left with unreasonably small capital after the transactions in this Agreement; and such Person is able to pay its debts (including trade debts) as they mature.

“ Subordinated Debt ” is indebtedness incurred by Borrower or any of its Subsidiaries subordinated to all Indebtedness of Borrower and/or its Subsidiaries to the Lenders (pursuant to a subordination, intercreditor, or other similar agreement in form and substance satisfactory to Collateral Agent and the Lenders entered into between Collateral Agent, Borrower, and/or any of its Subsidiaries, and the other creditor), on terms acceptable to Collateral Agent and the Lenders.

“ Subsidiary ” is, with respect to any Person, any Person of which more than fifty percent (50%) of the voting stock or other equity interests (in the case of Persons other than corporations) is owned or controlled, directly or indirectly, by such Person or through one or more intermediaries.

“ Term Loan ” is defined in Section 2.2(a) hereof.

“ Term A Loan ” is defined in Section 2.2(a)(i) hereof.

“ Term B Loan ” is defined in Section 2.2(a)(ii) hereof.

“ Term Loan Commitment ” is, for any Lender, the obligation of such Lender to make a Term Loan, up to the principal amount shown on Schedule 1.1 . “ Term Loan Commitments ” means the aggregate amount of such commitments of all Lenders.

“ Trademarks ” means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks.

“ Transfer ” is defined in Section 7.1.

“ Warrants ” are those certain Warrants to Purchase Stock dated as of the Effective Date, or any date thereafter, issued by Borrower in favor of each Lender or such Lender’s Affiliates.

[ Balance of Page Intentionally Left Blank ]

IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be executed as of the Effective Date.


BORROWER:		COLLATERAL AGENT AND LENDER:

APRICUS BIOSCIENCES, INC.		OXFORD FINANCE LLC

By /s/ Richard W. Pascoe		By /s/ Mark Davis
Name: Richard W. Pascoe		Name: Mark Davis
Title: Chief Executive Officer		Title: Vice President - Finance, Secretary & Treasurer

NEXMED (U.S.A.), INC.		LENDER:
NEXMED (U.S.A.), INC.		SILICON VALLEY BANK

By /s/ Richard W. Pascoe		By /s/ D Michael Lehito
Name: Richard W. Pascoe		Name: D Michael Lehito
Title: Chief Executive Officer		Title: Managing Director

NEXMED HOLDINGS, INC.

By /s/ Richard W. Pascoe
Name: Richard W. Pascoe
Title: Chief Executive Officer

APRICUS PHARMACEUTICALS USA, INC.

By /s/ Richard W. Pascoe
Name: Richard W. Pascoe
Title: Chief Executive Officer

[ Signature Page to Loan and Security Agreement ]

SCHEDULE 1.1

Lenders and Commitments

Term A Loans


Lender	Term Loan Commitment		Commitment Percentage
OXFORD FINANCE LLC	$	2,500,000.00		50.00	%
SILICON VALLEY BANK	$	2,500,000.00		50.00	%
TOTAL	$	5,000,000.00		100.00	%

Term B Loans


Lender	Term Loan Commitment		Commitment Percentage
OXFORD FINANCE LLC	$	2,500,000.00		50.00	%
SILICON VALLEY BANK	$	2,500,000.00		50.00	%
TOTAL	$	5,000,000.00		100.00	%

Aggregate (all Term Loans)


Lender	Term Loan Commitment		Commitment Percentage
OXFORD FINANCE LLC	$	5,000,000.00		50.00	%
SILICON VALLEY BANK	$	5,000,000.00		50.00	%
TOTAL	$	10,000,000.00		100.00	%

EXHIBIT A

Description of Collateral

The Collateral consists of all of Borrower’s right, title and interest in and to the following personal property:

All goods, Accounts (including health-care receivables), Equipment, Inventory, contract rights or rights to payment of money, leases, license agreements, franchise agreements, General Intangibles (except as noted below), commercial tort claims, documents, instruments (including any promissory notes), chattel paper (whether tangible or electronic), cash, deposit accounts and other Collateral Accounts, all certificates of deposit, fixtures, letters of credit rights (whether or not the letter of credit is evidenced by a writing), securities, and all other investment property, supporting obligations, and financial assets, whether now owned or hereafter acquired, wherever located; and

All of Borrower’s Books relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing.

Notwithstanding the foregoing, the Collateral does not include (i) any Intellectual Property; provided, however, the Collateral shall include all Accounts and all proceeds of Intellectual Property; provided that if a judicial authority (including a U.S. Bankruptcy Court) would hold that a security interest in the underlying Intellectual Property is necessary to have a security interest in such Accounts and such property that are proceeds of Intellectual Property, then the Collateral shall automatically, and effective as of the Effective Date, include the Intellectual Property to the extent necessary to permit perfection of Collateral Agent’s security interest in such Accounts and such other property of Borrower that are proceeds of the Intellectual Property; (ii) more than 65% of the total combined voting power of all classes of stock entitled to vote the shares of capital stock (the “Shares”) of any Foreign Subsidiary, if Borrower demonstrates to Collateral Agent’s reasonable satisfaction that a pledge of more than sixty five percent (65%) of the Shares of such Subsidiary creates a present and existing adverse tax consequence to Borrower under the U.S. Internal Revenue Code; or (iii) any license or contract, in each case if the granting of a Lien in such license or contract is prohibited by or would constitute a default under the agreement governing such license or contract (but (A) only to the extent such prohibition is enforceable under applicable law and (B) other than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-408 or 9-409 (or any other Section) of Division 9 of the Code); provided that upon the termination, lapsing or expiration of any such prohibition, such license or contract, as applicable, shall automatically be subject to the security interest granted in favor of Collateral Agent hereunder and become part of the “Collateral.”

Pursuant to the terms of a certain negative pledge arrangement with Collateral Agent and the Lenders, Borrower has agreed not to encumber any of its Intellectual Property.

EXHIBIT B-1

Form of Disbursement Letter

[see attached]

DISBURSEMENT LETTER

, 20

The undersigned, being the duly elected and acting of APRICUS BIOSCIENCES, INC., a Nevada corporation with offices located at 11975 El Camino Real, Suite 300, San Diego, CA 92130 (“ Apricus ”), does hereby certify in [his/her] capacity as an officer of Borrower, and not under any individual capacity, on behalf of Apricus and NEXMED (U.S.A.), INC., a Delaware corporation, NEXMED HOLDINGS, INC., a Delaware corporation and APRICUS PHARMACEUTICALS USA, INC., a Delaware corporation, each with offices located at 11975 El Camino Real, Suite 300, San Diego, CA 92130 (together with Apricus, individually and collectively, jointly and severally, “ Borrower ”), to OXFORD FINANCE LLC (“ Oxford ” and “ Lender ”), as collateral agent (the “ Collateral Agent ”) in connection with that certain Loan and Security Agreement dated as of October 17, 2014, by and among Borrower, Collateral Agent and the Lenders from time to time party thereto (the “ Loan Agreement ”; with other capitalized terms used below having the meanings ascribed thereto in the Loan Agreement) that:

1. The representations and warranties made by Borrower in Section 5 of the Loan Agreement and in the other Loan Documents are true and correct in all material respects as of the date hereof.

2. No event or condition has occurred that would constitute an Event of Default under the Loan Agreement or any other Loan Document.

3. Borrower is in compliance with the covenants and requirements contained in Sections 4, 6 and 7 of the Loan Agreement.

4. All conditions referred to in Section 3 of the Loan Agreement to the making of the Loan to be made on or about the date hereof have been satisfied or waived by Collateral Agent.

5. No Material Adverse Change has occurred.

6. The undersigned is a Responsible Officer.

[ Balance of Page Intentionally Left Blank ]

7. The proceeds of the Term [A][B] Loan shall be disbursed as follows:


Disbursement from Oxford:
Loan Amount	$
Plus:
—Deposit Received	$

Less:
—Facility Fee	($	)
—Existing Debt Payoff to be remitted to Solomon Strategic Holdings, Inc. per the Payoff Letter dated [DATE]	($	)
—Existing Debt Payoff to be remitted to Tail Wind Advisory & Management, Ltd. per the Payoff Letter dated [DATE]	($	)
—Existing Debt Payoff to be remitted to Tail Wind Fund Ltd. per the Payoff Letter dated [DATE]	($	)
[—Interim Interest	($	)]
—Lender’s Legal Fees	($	)*

Net Proceeds due from Oxford:	$

Disbursement from SVB:
Loan Amount	$
Plus:
—Deposit Received	$

Less:
—Facility Fee	($	)
[—Interim Interest	($	)]

Net Proceeds due from SVB:	$

TOTAL TERM [A][B] LOAN NET PROCEEDS FROM LENDERS	$

8. The Term [A][B] Loan shall amortize in accordance with the Amortization Table attached hereto.

9. The aggregate net proceeds of the Term Loans shall be transferred to the Designated Deposit Account as follows:


Account Name:		APRICUS BIOSCIENCES, INC.

Bank Name:		Silicon Valley Bank

Bank Address:		3003 Tasman Drive Santa Clara, California 95054

Account Number:		[ ]

ABA Number:		121140399

[ Balance of Page Intentionally Left Blank ]

*	Legal fees and costs are through the Effective Date. Post-closing legal fees and costs, payable after the Effective Date, to be invoiced and paid post-closing.

Dated as of the date first set forth above.


BORROWER:		COLLATERAL AGENT AND LENDER:

APRICUS BIOSCIENCES, INC.		OXFORD FINANCE LLC

By		By
Name:		Name:
Title:		Title:

NEXMED (U.S.A.), INC.		LENDER:
NEXMED (U.S.A.), INC.		SILICON VALLEY BANK

By
Name:		By
Title:		Name:
		Title:

NEXMED HOLDINGS, INC.

By
Name:
Title:

APRICUS PHARMACEUTICALS USA, INC.

By
Name:
Title:

[ Signature Page to Disbursement Letter ]

AMORTIZATION TABLE

(Term [A][B] Loan)

[see attached]

EXHIBIT B-2

Loan Payment/Advance Request Form

D EADLINE FOR SAME DAY PROCESSING IS N OON P ACIFIC T IME *


Fax To:		Date:


L OAN P AYMENT :
				APRICUS BIOSCIENCES, INC.

From Account #				To Account #
(Deposit Account #)				(Loan Account #)

Principal $				and/or Interest $

Authorized Signature:				Phone Number:
Print Name/Title:


L OAN A DVANCE :
Complete Outgoing Wire Request section below if all or a portion of the funds from this loan advance are for an outgoing wire.

From Account #				To Account #
(Loan Account #)				(Deposit Account #)

Amount of Advance $

All Borrower’s representations and warranties in the Loan and Security Agreement are true, correct and complete in all material respects on the date of the request for an advance; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date:

Authorized Signature:				Phone Number:
Print Name/Title:


O UTGOING W IRE R EQUEST :
Complete only if all or a portion of funds from the loan advance above is to be wired.
Deadline for same day processing is noon, Pacific Time

Beneficiary Name:				Amount of Wire: $
Beneficiary Bank:				Account Number:
City and State:

Beneficiary Bank Transit (ABA) #:				Beneficiary Bank Code (Swift, Sort, Chip, etc.):
				(For International Wire Only)

Intermediary Bank:				Transit (ABA) #:
For Further Credit to:

Special Instruction:

By signing below, I (we) acknowledge and agree that my (our) funds transfer request shall be processed in accordance with and subject to the terms and conditions set forth in the agreements(s) covering funds transfer service(s), which agreements(s) were previously received and executed by me (us).

Authorized Signature:				2 ^nd Signature (if required):
Print Name/Title:				Print Name/Title:
Telephone #:				Telephone #:

EXHIBIT C

Compliance Certificate


TO:		OXFORD FINANCE LLC, as Collateral Agent and Lender SILICON VALLEY BANK, as Lender

FROM:		APRICUS BIOSCIENCES, INC., NEXMED (U.S.A.), INC., NEXMED HOLDINGS, INC., APRICUS PHARMACEUTICALS USA, INC.

The undersigned authorized officer (“ Officer ”) of APRICUS BIOSCIENCES, INC. (“ Apricus ”), hereby certifies on behalf of APRICUS and NEXMED (U.S.A.), INC., NEXMED HOLDINGS, INC., and APRICUS PHARMACEUTICALS USA, INC. (together with Apricus, individually and collectively, jointly and severally, “ Borrower ”) hereby certifies in [his/her] capacity as an officer of Borrower, and not under any individual capacity, that in accordance with the terms and conditions of the Loan and Security Agreement by and among Borrower, Collateral Agent, and the Lenders from time to time party thereto (the “ Loan Agreement ;” capitalized terms used but not otherwise defined herein shall have the meanings given them in the Loan Agreement),

(a) Borrower is in complete compliance for the period ending with all required covenants except as noted below;

(b) There are no Events of Default, except as noted below;

(c) Except as noted below, all representations and warranties of Borrower stated in the Loan Documents are true and correct in all material respects on this date and for the period described in (a), above; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date.

(d) Borrower, and each of Borrower’s Subsidiaries, has timely filed all required tax returns and reports, Borrower, and each of Borrower’s Subsidiaries, has timely paid all foreign, federal, state, and local taxes, assessments, deposits and contributions owed by Borrower, or Subsidiary, except as otherwise permitted pursuant to the terms of Section 5.8 of the Loan Agreement;

(e) No Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Collateral Agent and the Lenders.

Attached are the required documents, if any, supporting our certification(s). The Officer, on behalf of Borrower, further certifies that the attached financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and are consistently applied from one period to the next except as explained in an accompanying letter or footnotes and except, in the case of unaudited financial statements, for the absence of footnotes and subject to year-end audit adjustments as to the interim financial statements.

Please indicate compliance status since the last Compliance Certificate by circling Yes, No, or N/A under “Complies” column.

Reporting Covenant

Requirement

Actual

Complies

Consolidated financial statements

Monthly within 30 days

Yes

N/A

Consolidating financial statements

Quarterly within 45 days

Yes

N/A

Annual (CPA Audited) statements

Within 180 days after FYE

Yes

N/A

Annual Financial Projections/Budget (prepared on a monthly basis)

Annually (within the earlier of 7 days of board approval or 60 days of FYE), and when revised

Yes

N/A

A/R & A/P agings

If applicable

Yes

N/A

8-K, 10-K and 10-Q Filings

If applicable, within 5 days of filing

Yes

N/A

Compliance Certificate

Monthly within 30 days

Yes

N/A

IP Report

When required

Yes

N/A

Total amount of Borrower’s cash and cash equivalents at the last day of the measurement period

Yes

N/A

10)

Total amount of Borrower’s Subsidiaries’ cash and cash equivalents at the last day of the measurement period

Yes

N/A

Deposit and Securities Accounts

(Please list all accounts; attach separate sheet if additional space needed)


Institution Name	Account Number	New Account?	Account Control Agreement in place?
1)		Yes No	Yes	No
2)		Yes No	Yes	No
3)		Yes No	Yes	No
4)		Yes No	Yes	No

Financial Covenants


Covenant		Requirement		Actual		Compliance

n/a

Other Matters


1)	Have there been any changes in management since the last Compliance Certificate?	Yes	No

2)	Have there been any transfers/sales/disposals/retirement of Collateral or IP prohibited by the Loan Agreement?	Yes	No

3)	Have there been any new or pending claims or causes of action against Borrower that involve more than Two Hundred Fifty Thousand Dollars ($250,000.00)?	Yes	No

4)	Have there been any amendments of or other changes to the capitalization table of Borrower and to the Operating Documents of Borrower or any of its Subsidiaries as required to be reported under the Loan Agreement and not reported? If yes, provide copies of any such amendments or changes with this Compliance Certificate.	Yes	No

Exceptions

Please explain any exceptions with respect to the certification above: (If no exceptions exist, state “No exceptions.” Attach separate sheet if additional space needed.)

APRICUS BIOSCIENCES, INC.

Name:

Title:

Date:


LENDER USE ONLY

Received by:		Date:

Verified by:		Date:

Compliance Status: Yes	No

EXHIBIT D

Form of Secured Promissory Note

[see attached]

SECURED PROMISSORY NOTE

(Term [A][B] Loan)


$		Dated: [DATE]

FOR VALUE RECEIVED, the undersigned, APRICUS BIOSCIENCES, INC., a Nevada corporation, NEXMED (U.S.A.), INC., a Delaware corporation, NEXMED HOLDINGS, INC., a Delaware corporation and APRICUS PHARMACEUTICALS USA, INC., a Delaware corporation, each with offices located at 11975 El Camino Real, Suite 300, San Diego, CA 92130 (individually and collectively, jointly and severally, “ Borrower ”) HEREBY PROMISES TO PAY to the order of [OXFORD FINANCE LLC][SILICON VALLEY BANK] (“ Lender ”) the principal amount of [ ] MILLION DOLLARS ($ ) or such lesser amount as shall equal the outstanding principal balance of the Term [A][B] Loan made to Borrower by Lender, plus interest on the aggregate unpaid principal amount of such Term [A][B] Loan, at the rates and in accordance with the terms of the Loan and Security Agreement dated [DATE] by and among Borrower, Lender, Oxford Finance LLC, as Collateral Agent, and the other Lenders from time to time party thereto (as amended, restated, supplemented or otherwise modified from time to time, the “ Loan Agreement ”). If not sooner paid, the entire principal amount and all accrued and unpaid interest hereunder shall be due and payable on the Maturity Date as set forth in the Loan Agreement. Any capitalized term not otherwise defined herein shall have the meaning attributed to such term in the Loan Agreement.

Principal, interest and all other amounts due with respect to the Term [A][B] Loan, are payable in lawful money of the United States of America to Lender as set forth in the Loan Agreement and this Secured Promissory Note (this “ Note ”). The principal amount of this Note and the interest rate applicable thereto, and all payments made with respect thereto, shall be recorded by Lender and, prior to any transfer hereof, endorsed on the grid attached hereto which is part of this Note.

The Loan Agreement, among other things, (a) provides for the making of a secured Term [A][B] Loan by Lender to Borrower, and (b) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events.

This Note may not be prepaid except as set forth in Section 2.2(c) and Section 2.2(d) of the Loan Agreement.

This Note and the obligation of Borrower to repay the unpaid principal amount of the Term [A][B] Loan, interest on the Term [A][B] Loan and all other amounts due Lender under the Loan Agreement is secured under the Loan Agreement.

Presentment for payment, demand, notice of protest and all other demands and notices of any kind in connection with the execution, delivery, performance and enforcement of this Note are hereby waived.

Borrower shall pay all reasonable fees and expenses, including, without limitation, reasonable attorneys’ fees and costs, incurred by Lender in the enforcement or attempt to enforce any of Borrower’s obligations hereunder not performed when due.

This Note shall be governed by, and construed and interpreted in accordance with, the internal laws of the State of California.

The ownership of an interest in this Note shall be registered on a record of ownership maintained by Lender or its agent. Notwithstanding anything else in this Note to the contrary, the right to the principal of, and stated interest on, this Note may be transferred only if the transfer is registered on such record of ownership and the transferee is identified as the owner of an interest in the obligation. Borrower shall be entitled to treat the registered holder of this Note (as recorded on such record of ownership) as the owner in fact thereof for all purposes and shall not be bound to recognize any equitable or other claim to or interest in this Note on the part of any other person or entity.

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IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed by one of its officers thereunto duly authorized on the date hereof.

BORROWER:

APRICUS BIOSCIENCES, INC.

By:

Name:

Title:

NEXMED (U.S.A.), INC.

By:

Name:

Title:

NEXMED HOLDINGS, INC.

By:

Name:

Title:

APRICUS PHARMACEUTICALS USA, INC.

By:

Name:

Title:

LOAN INTEREST RATE AND PAYMENTS OF PRINCIPAL


Date		Principal Amount		Interest Rate		Scheduled Payment Amount		Notation By

CORPORATE BORROWING CERTIFICATE

B ORROWER : L ENDERS :

APRICUS BIOSCIENCES, INC.

OXFORD FINANCE LLC, as Collateral Agent and Lender

SILICON VALLEY BANK, as Lender

D ATE : October , 2014

I hereby certify in my capacity as an officer of Borrower, and not in any individual capacity, as follows, as of the date set forth above:

1. I am the Secretary, Assistant Secretary or other officer of Borrower. My title is as set forth below.

2. Borrower’s exact legal name is set forth above. Borrower is a corporation existing under the laws of the State of Nevada.

3. Attached hereto as Exhibit A and Exhibit B , respectively, are true, correct and complete copies of (i) Borrower’s Articles of Incorporation (including amendments), as filed with the Secretary of State of the state in which Borrower is incorporated as set forth in paragraph 2 above; and (ii) Borrower’s Bylaws. Neither such Articles of Incorporation nor such Bylaws have been amended, annulled, rescinded, revoked or supplemented, and such Articles of Incorporation and such Bylaws remain in full force and effect as of the date hereof.

4. The following resolutions were duly and validly adopted by Borrower’s Board of Directors at a duly held meeting of such directors (or pursuant to a unanimous written consent or other authorized corporate action). Such resolutions are in full force and effect as of the date hereof and have not been in any way modified, repealed, rescinded, amended or revoked, and the Lenders may rely on them until each Lender receives written notice of revocation from Borrower.

[ Balance of Page Intentionally Left Blank ]

R ESOLVED , that any one of the following officers or employees of Borrower, whose names, titles and signatures are below, may act on behalf of Borrower:


Name	Title	Signature	Authorized to Add or Remove Signatories

			¨

			¨

			¨

			¨

R ESOLVED F URTHER , that any one of the persons designated above with a checked box beside his or her name may, from time to time, add or remove any individuals to and from the above list of persons authorized to act on behalf of Borrower.

R ESOLVED F URTHER , that such individuals may, on behalf of Borrower:

Borrow Money . Borrow money from the Lenders.

Execute Loan Documents . Execute any loan documents any Lender requires.

Grant Security . Grant Collateral Agent a security interest in any of Borrower’s assets.

Negotiate Items . Negotiate or discount all drafts, trade acceptances, promissory notes, or other indebtedness in which Borrower has an interest and receive cash or otherwise use the proceeds.

Issue Warrants . Issue warrants for Borrower’s capital stock.

Further Acts . Designate other individuals to request advances, pay fees and costs and execute other documents or agreements (including documents or agreement that waive Borrower’s right to a jury trial) they believe to be necessary to effectuate such resolutions.

R ESOLVED F URTHER , that all acts authorized by the above resolutions and any prior acts relating thereto are ratified.

[ Balance of Page Intentionally Left Blank ]

5. The persons listed above are Borrower’s officers or employees with their titles and signatures shown next to their names.

By:

Name:

Title:

*** If the Secretary, Assistant Secretary or other certifying officer executing above is designated by the resolutions set forth in paragraph 4 as one of the authorized signing officers, this Certificate must also be signed by a second authorized officer or director of Borrower.

I, the of Borrower, hereby certify in my capacity as an officer of Borrower, and not

[print title]

in any individual capacity, as to paragraphs 1 through 5 above, as of the date set forth above.

By:

Name:

Title:

[ Signature Page to Corporate Borrowing Certificate ]

EXHIBIT A

Articles of Incorporation (including amendments)

EXHIBIT B

Bylaws

CORPORATE BORROWING CERTIFICATE


B ORROWER :	NEXMED (U.S.A.), INC.	D ATE : October , 2014
L ENDERS :	OXFORD FINANCE LLC, as Collateral Agent and Lender
	SILICON VALLEY BANK, as Lender

I hereby certify in my capacity as an officer of Borrower, and not in any individual capacity, as follows, as of the date set forth above:

1. I am the Secretary, Assistant Secretary or other officer of Borrower. My title is as set forth below.

2. Borrower’s exact legal name is set forth above. Borrower is a corporation existing under the laws of the State of Delaware.

3. Attached hereto as Exhibit A and Exhibit B , respectively, are true, correct and complete copies of (i) Borrower’s Certificate of Incorporation (including amendments), as filed with the Secretary of State of the state in which Borrower is incorporated as set forth in paragraph 2 above; and (ii) Borrower’s Bylaws. Neither such Certificate of Incorporation nor such Bylaws have been amended, annulled, rescinded, revoked or supplemented, and such Certificate of Incorporation and such Bylaws remain in full force and effect as of the date hereof.

[ Balance of Page Intentionally Left Blank ]

R ESOLVED , that any one of the following officers or employees of Borrower, whose names, titles and signatures are below, may act on behalf of Borrower:


Name	Title	Signature	Authorized to Add or Remove Signatories

			¨

			¨

			¨

			¨

R ESOLVED F URTHER , that such individuals may, on behalf of Borrower:

Borrow Money . Borrow money from the Lenders.

Execute Loan Documents . Execute any loan documents any Lender requires.

Grant Security . Grant Collateral Agent a security interest in any of Borrower’s assets.

Negotiate Items . Negotiate or discount all drafts, trade acceptances, promissory notes, or other indebtedness in which Borrower has an interest and receive cash or otherwise use the proceeds.

R ESOLVED F URTHER , that all acts authorized by the above resolutions and any prior acts relating thereto are ratified.

[ Balance of Page Intentionally Left Blank ]

5. The persons listed above are Borrower’s officers or employees with their titles and signatures shown next to their names.

By:

Name:

Title:

I, the of Borrower, hereby certify in my capacity as an officer of Borrower, and not

[print title]

in any individual capacity, as to paragraphs 1 through 5 above, as of the date set forth above.

By:

Name:

Title:

[ Signature Page to Corporate Borrowing Certificate ]

EXHIBIT A

Certificate of Incorporation (including amendments)

EXHIBIT B

Bylaws

CORPORATE BORROWING CERTIFICATE


B ORROWER :	NEXMED HOLDINGS, INC.	D ATE : October , 2014
L ENDERS :	OXFORD FINANCE LLC, as Collateral Agent and Lender
	SILICON VALLEY BANK, as Lender

I hereby certify in my capacity as an officer of Borrower, and not in any individual capacity, as follows, as of the date set forth above:

1. I am the Secretary, Assistant Secretary or other officer of Borrower. My title is as set forth below.

2. Borrower’s exact legal name is set forth above. Borrower is a corporation existing under the laws of the State of Delaware.

[ Balance of Page Intentionally Left Blank ]

R ESOLVED , that any one of the following officers or employees of Borrower, whose names, titles and signatures are below, may act on behalf of Borrower:


Name	Title	Signature	Authorized to Add or Remove Signatories

			¨

			¨

			¨

			¨

R ESOLVED F URTHER , that such individuals may, on behalf of Borrower:

Borrow Money . Borrow money from the Lenders.

Execute Loan Documents . Execute any loan documents any Lender requires.

Grant Security . Grant Collateral Agent a security interest in any of Borrower’s assets.

Negotiate Items . Negotiate or discount all drafts, trade acceptances, promissory notes, or other indebtedness in which Borrower has an interest and receive cash or otherwise use the proceeds.

R ESOLVED F URTHER , that all acts authorized by the above resolutions and any prior acts relating thereto are ratified.

[Balance of Page Intentionally Left Blank]

5. The persons listed above are Borrower’s officers or employees with their titles and signatures shown next to their names.

By:

Name:

Title:

I, the of Borrower, hereby certify in my capacity as an officer of Borrower, and not

[print title]

in any individual capacity, as to paragraphs 1 through 5 above, as of the date set forth above.

By:

Name:

Title:

[ Signature Page to Corporate Borrowing Certificate ]

EXHIBIT A

Certificate of Incorporation (including amendments)

EXHIBIT B

Bylaws

CORPORATE BORROWING CERTIFICATE


B ORROWER :	APRICUS PHARMACEUTICALS USA, INC.	D ATE : October , 2014
L ENDERS :	OXFORD FINANCE LLC, as Collateral Agent and Lender
	SILICON VALLEY BANK, as Lender

I hereby certify in my capacity as an officer of Borrower, and not in any individual capacity, as follows, as of the date set forth above:

1. I am the Secretary, Assistant Secretary or other officer of Borrower. My title is as set forth below.

2. Borrower’s exact legal name is set forth above. Borrower is a corporation existing under the laws of the State of Delaware.

[ Balance of Page Intentionally Left Blank ]

R ESOLVED , that any one of the following officers or employees of Borrower, whose names, titles and signatures are below, may act on behalf of Borrower:


Name	Title	Signature	Authorized to Add or Remove Signatories

			¨

			¨

			¨

			¨

R ESOLVED F URTHER , that such individuals may, on behalf of Borrower:

Borrow Money . Borrow money from the Lenders.

Execute Loan Documents . Execute any loan documents any Lender requires.

Grant Security . Grant Collateral Agent a security interest in any of Borrower’s assets.

Negotiate Items . Negotiate or discount all drafts, trade acceptances, promissory notes, or other indebtedness in which Borrower has an interest and receive cash or otherwise use the proceeds.

R ESOLVED F URTHER , that all acts authorized by the above resolutions and any prior acts relating thereto are ratified.

[ Balance of Page Intentionally Left Blank ]

5. The persons listed above are Borrower’s officers or employees with their titles and signatures shown next to their names.

By:

Name:

Title:

I, the of Borrower, hereby certify in my capacity as an officer of Borrower, and not

[print title]

in any individual capacity, as to paragraphs 1 through 5 above, as of the date set forth above.

By:

Name:

Title:

[ Signature Page to Corporate Borrowing Certificate ]

EXHIBIT A

Certificate of Incorporation (including amendments)

EXHIBIT B

Bylaws


DEBTOR:		[APRICUS BIOSCIENCES, INC.][NEXMED (U.S.A.), INC.][NEXMED HOLDINGS, INC.][APRICUS PHARMACEUTICALS USA, INC.]
SECURED PARTY:		OXFORD FINANCE LLC,
		as Collateral Agent

EXHIBIT A TO UCC FINANCING STATEMENT

Description of Collateral

The Collateral consists of all of Debtor’s right, title and interest in and to the following personal property:

All of Debtor’s Books relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing.

Notwithstanding the foregoing, the Collateral does not include (i) any Intellectual Property; provided, however, the Collateral shall include all Accounts and all proceeds of Intellectual Property; provided that if a judicial authority (including a U.S. Bankruptcy Court) would hold that a security interest in the underlying Intellectual Property is necessary to have a security interest in such Accounts and such property that are proceeds of Intellectual Property, then the Collateral shall automatically, and effective as of the Effective Date, include the Intellectual Property to the extent necessary to permit perfection of Secured Party’s security interest in such Accounts and such other property of Debtor that are proceeds of the Intellectual Property; (ii) more than 65% of the total combined voting power of all classes of stock entitled to vote the shares of capital stock (the “Shares”) of any Foreign Subsidiary, if Debtor demonstrates to Secured Party’s reasonable satisfaction that a pledge of more than sixty five percent (65%) of the Shares of such Subsidiary creates a present and existing adverse tax consequence to Debtor under the U.S. Internal Revenue Code; or (iii) any license or contract, in each case if the granting of a Lien in such license or contract is prohibited by or would constitute a default under the agreement governing such license or contract (but (A) only to the extent such prohibition is enforceable under applicable law and (B) other than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-408 or 9-409 (or any other Section) of Division 9 of the Code); provided that upon the termination, lapsing or expiration of any such prohibition, such license or contract, as applicable, shall automatically be subject to the security interest granted in favor of Secured Party hereunder and become part of the “Collateral.”

Pursuant to the terms of a certain negative pledge arrangement with Secured Party and the Lenders, Debtor has agreed not to encumber any of its Intellectual Property.

Capitalized terms used but not defined herein have the meanings ascribed in the Uniform Commercial Code in effect in the State of California as in effect from time to time (the “Code”) or, if not defined in the Code, then in the Loan and Security Agreement by and between Debtor, Secured Party and the other Lenders party thereto (as modified, amended and/or restated from time to time).

Exhibit 99.1

LOGO

Apricus Expands Development Pipeline

With the In-Licensing of U.S. Rights for Fispemifene, a Phase2b Ready Asset,

from Forendo Pharma

Targeting Urological Conditions in Men

— Apricus Funds Upfront License Fee and 2015 Phase 2b Development Cost with

$10 Million Venture Debt Financing —

— Conference Call Today, Monday, Oct. 20, at 8:00 a.m. ET —

Risto Lammintausta, Chief Executive Officer, Forendo Pharma, stated, “Having previously developed and partnered two SERMS that are approved and marketed in the U.S., we are excited

to work with the Apricus team, which has a demonstrated track record of innovation within men’s health and a strategy committed to addressing the unmet needs of these patients. Fispemifene, a unique SERM targeted for use in men, will offer both patients and physicians a differentiated alternative for treating urological conditions in aging men. As a partner and now a major shareholder, we look forward to the progress of Apricus’ portfolio of biopharmaceutical programs, including the advancement of fispemifene in U.S. clinical trials.”

License Terms

Venture Debt Funding

Conference Call Details

Apricus will host a live conference call and webcast today at 8 a.m. Eastern Time to discuss the in-license agreement and related matters. To participate by telephone, please dial 877-407-9210 (Domestic) or 201-689-8049 (International). The conference ID number is 13593785. The live audio webcast and associated slide presentation can be accessed via the Investor section of the Company’s website at www.apricusbio.com. The archived webcast will remain available for three months following the live call.

About Fispemifene

circulating testosterone levels to within, but not beyond, the normal range. In line with fispemifene’s mechanism of action, the treatment has been shown in Phase 2a studies involving a total of 149 hypogonadal men to normalize testosterone levels while retaining (and, in some cases restoring) testicular function, a feature of importance for infertile younger men with hypogonadal symptoms. Additionally, in line with fispemifene’s anti-estrogenic action on the lower urinary tract (LUT), no negative effects on prostate volume, prostate specific antigen (PSA), or urodynamic obstructive symptoms were observed. Expanding on these observations seen in three-month clinical studies in hypogonadal men, preclinical studies involving fispemifene have shown the potential beneficial anti-estrogenic effects of fispemifene of reducing prostate volume and inflammation and improving urodynamics, opening up additional potential indications for this SERM in men with obstructive LUT conditions and chronic prostatitis.

About Apricus Biosciences, Inc .

Apricus Biosciences, Inc. (APRI) is a biopharmaceutical company advancing innovative medicines to meet the needs of patients. The Company’s lead product, Vitaros ^® , for the treatment of erectile dysfunction, is approved in Europe and Canada and commercialized in several countries in Europe. Apricus’ marketing partners for Vitaros ^® include Abbott Laboratories Limited, Takeda Pharmaceuticals International GmbH, Hexal AG (Sandoz), Recordati Ireland Ltd. (Recordati S.p.A.), Bracco S.p.A. and Laboratoires Majorelle. The Company’s second-generation Vitaros room temperature device is under development and is expected to enhance the product’s commercial value. The Company recently initiated a Phase 2a trial for RayVa ^™ , the Company’s product candidate for the treatment of Raynaud’s phenomenon. Femprox ^® , the Company’s product candidate for the treatment of female sexual interest/arousal disorder, has successfully completed an approximately 400-subject proof-of-concept study. The Company is currently seeking a strategic partner for Femprox. In October 2014, Apricus gained U.S. development and commercialization rights for fispemifene, a selective estrogen receptor modulator, in Phase 2 development.

For further information on Apricus, visit http://www.apricusbio.com .

About Forendo Pharma Oy

Forward-Looking Statements

clinical trial for fispemifene. Actual results could differ from those projected in any forward-looking statements due to a variety of reasons that are outside the control of the Company, including, but not limited to: its ability to further develop its product fispemifene for the treatment of secondary hypogonadism, chronic prostatitis in men and lower urinary tract symptoms in men, as well as the timing of such events; Apricus’ ability to obtain and maintain intellectual property protection for fispemifene; Apricus’ ability to carry out clinical studies for fispemifene; Apricus’ ability to draw the additional amounts under the venture debt facility when expected, or at all, including Apricus’ failure to meet the conditions required to draw under the loan and security agreement; Apricus’ ability to remain in compliance with the terms and restrictions under the loan and security agreement; Apricus’ ability to obtain the requisite governmental approval for fispemifene; Apricus’ ability to raise additional funding that it may need to continue to pursue its commercial and business development plans; fluctuations and volatility in Apricus’ stock price, including as a result of the issuance and possible resale of the shares granted as partial consideration for the fispemifene license; and market conditions. These forward-looking statements are made as of the date of this press release, and Apricus assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Readers are urged to read the risk factors set forth in the Company’s most recent annual report on Form 10-K, subsequent quarterly reports filed on Form 10-Q, and other filings made with the SEC. Copies of these reports are available from the SEC’s website at www.sec.gov or without charge from the Company.

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CONTACT: Steve Martin Apricus Biosciences Chief Financial Officer ir@apricusbio.com (858) 222-8041		Investors: Angeli Kolhatkar akolhatkar@burnsmc.com Media: Justin Jackson jjackson@burnsmc.com Burns McClellan (212) 213-0006

		Retail: Chris Eddy, David Collins apri@catalyst-ir.com Catalyst Global (212) 924-9800