RESEARCH COLLABORATION AND LICENSE AGREEMENT by and between ASTRAZENECA AB and PALATIN TECHNOLOGIES, INC

(1)

ASTRAZENECA AB, a company incorporated in Sweden under no. 556011-7482 with offices at S-151 85 Södertälje, Sweden ("AstraZeneca"); and

(2)

PALATIN TECHNOLOGIES, INC., a Delaware corporation with its principal place of business at 4-C Cedar Brook Drive, Cranbury, New Jersey 08512 ("Palatin").

(A)

WHEREAS, Palatin is engaged in research regarding modulation of the activity of the MC4 receptor, including regulation of appetite for treatment of obesity, diabetes and related metabolic syndrome; and

(B)

WHEREAS, AstraZeneca and its Affiliates (as defined below) have specialised experience in, among other things, the research, development, manufacturing and commercialisation of pharmaceutical compounds worldwide; and

(C)

WHEREAS, the Parties wish to engage in a research collaboration utilising the Parties’ respective knowledge, skills and proprietary technology to develop the Agreement Compounds (as defined below) *** (as specified below and in the Research Plan) and up to selection of Candidate Drug (as defined below) for ***; and

(D)

WHEREAS, the Parties wish AstraZeneca to be responsible, as a general matter, for all other aspects of the development and commercialisation of the Agreement Compounds and Licensed Products (as defined below); and

(E)

WHEREAS, the Parties wish to collaborate as set forth above and Palatin desires to grant a licence to AstraZeneca, and AstraZeneca desires to take a licence, to develop and commercialise the above-mentioned Agreement Compounds and Licensed Products in accordance with the terms and conditions set forth below.

Unless otherwise specifically provided in this Agreement, the following terms have the following meanings:

1.1.

" AAALAC " means the Association for the Assessment and Accreditation of Laboratory Animal Care.

1.2.

" Additional Indication " means an indication other than such ***.

1.3.

" Affiliate " means, with respect to a Person, any Person that Controls, is Controlled by or is under common Control with such first Person. For purposes of this definition only, " Control " means (a) to possess, directly or indirectly, the power to direct the management or policies of a Person, whether through ownership of voting securities or by contract relating to voting rights or corporate governance, or (b) to own, directly or indirectly, more than fifty percent (50%) of the outstanding voting securities or other ownership interest of such Person.

1.4.

" Agreement " has the meaning set forth in the preamble of this agreement.

1.5.

" Agreement Compounds " means the Compound and the Collaboration Compound.

1.6.

" Annual Net Sales " means the Net Sales made during a given Calendar Year.

1.7.

" Applicable Law " means the applicable laws, rules and regulations, including any rules, regulations, guidelines or other requirements of the Health Authorities, that may be in effect from time to time in the Territory.

1.8.

" AstraZeneca Background Technologies " means any (a) Information, discovery, invention, products, cultures, biological materials and other materials and compositions (including Collaboration Materials provided by AstraZeneca to Palatin hereunder), owned or Controlled independent of this Agreement by AstraZeneca or its Affiliates at the Effective Date or during the Collaboration Term and introduced at its sole discretion to Palatin under the Research Collaboration by AstraZeneca or its Affiliates and (b) IP Protection Rights pertaining to any of the foregoing.

1.9.

" AstraZeneca Improvements " means all Results that constitute Improvements to the AstraZeneca Background Technologies.

1.10.

" AstraZeneca Information " has the meaning set forth in Section 13.1.2.

1.11.

" AstraZeneca Patents " means Patents with respect to AstraZeneca Improvements.

1.12.

" AstraZeneca Principal Scientists " means the principal scientists designated by AstraZeneca to be responsible for all Research Collaboration activities undertaken by AstraZeneca and serving as the primary contacts for Palatin on all matters related to the Research Collaboration. The AstraZeneca Principal Scientists are listed in Schedule 1.12 hereto.

1.13.

" AstraZeneca Product Data " has the meaning set forth in Section 20.7.1.

1.14.

" Calendar Quarter " means each successive period of three (3) calendar months commencing on 1st January, 1st April, 1st July and 1st October.

1.15.

" Calendar Year " means each successive period of twelve (12) calendar months commencing on 1st January

1.16.

" Candidate Drug " or " CD " means an Agreement Compound selected by AstraZeneca in its sole discretion as a candidate for clinical development.

1.17.

" Change of Corporate Control " means the occurrence of any of the following:

(a)

  any merger, consolidation or sale or transfer of all or substantially all of the assets, or other similar transaction to which Palatin is a party unless, following such transaction or transactions, (i) the individuals and entities who were the beneficial owners of the outstanding voting securities of Palatin immediately prior to such transaction beneficially own, directly or indirectly, at least fifty percent (50%) of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors or similar governing persons of the corporation or other entity resulting from such transaction ("Successor") in substantially the same proportions as their ownership immediately prior to such transaction of such outstanding voting securities, and (ii) at least fifty percent (50%) of the members of the Board of Directors or similar governing body of the Successor were members of the Board of Directors of Palatin at the time of the execution of the initial agreement, or the action of the Board of Directors of Palatin, providing for such transaction.

(b)

  any transaction or series of related transactions in which any "person", as such term is used in Sections 13(d) and 14(d) of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), together with any of such person’s "affiliates" or "associates", as such terms are used in the Exchange Act, become the beneficial owner of fifty percent (50%) or more of the combined voting power of the outstanding securities of Palatin.

1.18.

" Collaboration Compound " means any compound, other than a Compound, and any of its metabolites, salts, crystalline forms, esters, free acid forms, free base forms, pro-drug forms, racemates and all optically active forms thereof that are selected by means of ***.

1.19.

" Collaboration Management Committee " or "CMC" means the joint committee established by the Parties pursuant to Article 4.1.1.

1.20.

" Collaboration Materials " means any compounds, cells, cell lines, DNA and RNA molecules, plasmids, proteins, crystals, coordinates, antibodies, antibody coding DNA sequences, antibody coding expression vectors and antibody expressing transfected cell lines and other materials and any replications of any of the foregoing, that one Party provides to the other Party to enable such Party to perform work under the Research Collaboration; provided, however, that "Collaboration Materials" shall exclude all Collaboration Results.

1.21.

" Collaboration Patent " means Patents with respect to Collaboration Results.

1.22.

" Collaboration Results " means Results that are discovered, conceived, reduced to practice or otherwise generated through work performed, jointly or by either Party, under the Research Collaboration, provided, however, that Collaboration Results shall exclude all AstraZeneca Improvements other than as provided in the last sentence of Section 1.18.

1.23.

" Collaboration Term " has the meaning specified in Section 20.2.

1.24.

" Collaboration Year " means the twelve-month period starting on the Effective Date and any immediately subsequent twelve-month period.

1.25.

" Combination Product " means a Product that contains an Agreement Compound together with one or more other active ingredient(s) that are sold either as a fixed dose or as separate doses in a single package.

1.26.

" Commercially Reasonable Efforts " means, with respect to the research, development, Manufacture or commercialisation of an Agreement Compound or Licensed Product, as the case may be, efforts and resources used by AstraZeneca for its own compounds or products with similar commercial and scientific potential at a similar stage in their lifecycle, taking into consideration their safety and efficacy, their cost to develop, the competitiveness of alternative products and the nature and extent of their market exclusivity (including Patent coverage and regulatory exclusivity), the likelihood of regulatory approval, their estimated overall profitability, including the amounts of marketing and promotional expenditures with respect to the Licensed Products and Competing Products and all other relevant factors. Commercially Reasonable Efforts shall be determined on a market-by-market basis for each Agreement Compound and each Licensed Product, as applicable; provided, however, that should what would otherwise constitute Commercially Reasonable Efforts with respect to an individual market conflict with, or otherwise not constitute, Commercially Reasonable Efforts with respect to a group of markets out of which such individual market is a part then Commercially Reasonable Efforts shall be determined for such group of markets as a whole.

1.27.

" Competing Product " has the meaning set forth in Section 11.5.1.

1.28.

" Compound " means compounds covered or claimed by the Licensed Patents.

1.29.

" Confidential Information " has the meaning set forth in Section 13.1.1.

1.30.

" Control " means, with respect to any item of Information, Patent or other IP Protection Right, possession of the right, whether directly or indirectly, and whether by ownership, license or otherwise, to assign, or grant a license, sublicense or other right to or under, such information, Patent or other IP Protection Right as provided for herein without violating the terms of any agreement or other arrangement with any Third Party.

1.31.

" Defending Party " has the meaning set forth in Section 17.4.

1.32.

" Development Project " means any activities under this Agreement by or on behalf of AstraZeneca or its Affiliates outside of the Research Collaboration with the aim of developing one or more Licensed Products.

1.33.

" Development Report " has the meaning set forth in Section 6.3.

1.34.

" Development Results " means any and all Results not constituting Collaboration Results or AstraZeneca Improvements.

1.35.

" Disclosing Party " has the meaning set forth in Section 13.1.1.

1.36.

" Distributor " has the meaning set forth in Section 7.8.

1.37.

" Effective Date " means the date as set forth in the preamble to this Agreement.

1.38.

" Europe " means the European Economic Area as it may be constituted from time to time.

1.39.

" Exploit " means to make, have made, import, use, sell, or offer for sale, including to research, develop, register, modify, enhance, improve, Manufacture, have Manufactured, hold/keep (whether for disposal or otherwise), formulate, optimise, have used, export, transport, distribute, promote, market or have sold or otherwise dispose or offer to dispose of, a product or process.

1.40.

" Exploitation " means the act of Exploiting a product or process.

1.41.

" FDA " means the United States Food and Drug Administration and any successor agency thereto.

1.42.

" First Commercial Sale " means the first sale for monetary value for use or consumption by the general public of a Licensed Product in any country in the Territory after Health Registration Approval for the sale of such Licensed Product has been obtained in such country. For the avoidance of doubt, sales prior to receipt of all Health Registration Approvals necessary to commence regular commercial sales, such as so-called "treatment IND sales," "named patient sales" and "compassionate use sales," shall not be construed as a First Commercial Sale.

1.43.

" Force Majeure " has the meaning set forth in Section 21.1.

1.44.

" Force Majeure Party " means a Party prevented or delayed in its performance under this Agreement by an event of Force Majeure.

1.45.

" FTE " means the equivalent of one (1) researcher being at least a graduate or a similarly qualified employee of Palatin having the requisite skills to fulfill Palatin’s obligations under this Agreement and devoting the equivalent hours of a full time employee. For purposes of this Agreement, "full time" shall *** per Calendar Year as determined in accordance with Palatin’s regular project hour reporting system. An FTE shall be an employee of Palatin or a permitted subcontractor pursuant to Section 3.3.

1.46.

" FTE Rate " means the price of one (1) FTE per single Calendar Year. The FTE Rate shall be ***. The FTE Rate reflects the fully burdened costs for an FTE. AstraZeneca shall not be responsible for any Palatin ***, incurred in pursuit of the Research Collaboration and the consultation services rendered by Palatin under this Agreement, above and beyond the FTE Rate, or for ***.

1.47.

" Grant-Back Patents " has the meaning set forth in Section 20.7.2.

1.48.

" Health Authority " means any applicable supra-national, federal, national, regional, state, provincial or local regulatory agency, department, bureau, commission, council or other government entity regulating or otherwise exercising authority with respect to the Exploitation of Agreement Compounds or Licensed Products in the Territory

1.49.

" Health Registration Approval " means, with respect to a country in the Territory, any and all approvals, licenses, registrations or authorisations of any Health Authority necessary to commercially distribute, sell or market a Licensed Product in such country, including, where applicable, (a) pricing and reimbursement approval in such country, (b) pre- and post-approval marketing authorisations (including any prerequisite Manufacturing approval or authorisation related thereto), (c) labelling approval and (d) technical, medical and scientific licenses.

1.50.

" Improvements " means any improvements, adaptations, modifications or upgrading, and any IP Protection Rights related thereto.

1.51.

" ICC " has the meaning set forth in Section 24.2.

1.52.

" Information Forum " or " IF " has the meaning set forth in Section 4.3.2.

1.53.

***.

1.54.

" IND " means an investigational new drug application filed with the FDA for authorisation to commence human clinical trials in the U.S., and its equivalent in other countries or regulatory jurisdictions in the Territory.

1.55.

" Indemnification Claim Notice " has the meaning set forth in Section 19.3.

1.56.

" Indemnified Party " means a Party, its Affiliates or its or their respective directors, officers, employees and agents designated under Section 19.1 or 19.2, as applicable, seeking to recover a Loss under such applicable Section.

1.57.

" Indemnifying Party " means a Party from whom recovery of a Loss is sought under Section 19.1 or 19.2.

1.58.

" Indemnitee " has the meaning set forth in Section 19.3.

1.59.

" Indirect Taxes " means value added taxes, sales taxes, consumption taxes and other similar taxes.

1.60.

" Information " means all technical, scientific and other know-how and information, trade secrets, knowledge, technology, means, methods, processes, practices, formulae, instructions, skills, techniques, procedures, experiences, ideas, technical assistance, designs, drawings, assembly procedures, computer programs, apparatuses, specifications, data, results and other material, including: the process and results of high-throughput screening, gene expression, genomics, proteomics and other drug discovery and development technology; biological, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, pre-clinical, clinical, safety, manufacturing and quality control data and information, including study designs and protocols; assays and biological methodology; Manufacturing and quality control procedures and data, including test procedures; and synthesis, purification and isolation techniques, (whether or not confidential, proprietary, patented or patentable) in written, electronic or any other form now known or hereafter developed, but excluding the Regulatory Documentation.

1.61.

" Infringement Suit " has the meaning set forth in Section 17.4.

1.62.

" IP " has the meaning set forth in Section 20.10.

1.63.

" IP Protection Rights " means any and all legal means of establishing rights in and to ideas, inventions, discoveries, know-how, data, databases, documentation, reports, materials, writings, designs, computer software, processes, principles, methods, techniques and other information, including Patents, trade marks, service marks, trade names, registered designs, design rights, copyrights (including rights in computer software and database rights) and any rights or property similar to any of the foregoing in any part of the world, whether registered or not, together with the right to apply for the registration of any such rights.

1.64.

" Joint Executive Committee " or " JEC " means the joint committee established by the Parties pursuant to Section 4.2.1.

1.65.

" Key Personnel " has the meaning set forth in Section 3.2.

1.66.

" Knowledge " means a Party’s and its Affiliates’ understanding in good faith of the relevant facts and information resulting from the reasonable conduct of its business affairs, but without the requirement of performing an investigation with respect to any such facts and information.

1.67.

" License " has the meaning set forth in Section 7.5.

1.68.

"*** Patents " means (a) all patents and patent applications set forth in Schedule 1.68 and (b) any Patents with respect to such patents and patent applications.

1.69.

" Licensed Field " means the palliative, prophylactic or therapeutic treatment of mammalian, including human, obesity, diabetes and related metabolic syndrome by use of (a) a Compound, other than such Compound mentioned under (b), which binds to the melanocortin-4 receptor or the melanocortin-3 receptor; or (b) a Compound which binds to the melanocortin-4 receptor and is effective for palliative, prophylactic or therapeutic treatment of any mammalian, including human, disease, syndrome or condition as a result of such binding to the melanocortin-4 receptor, but specifically excluding from either of the foregoing ***.

1.70.

" Licensed Improvement " means any Improvement with respect to an Agreement Compound or Licensed Product or relating to the Exploitation thereof Controlled by Palatin or its Affiliates, not constituting a Development Result, whether or not patentable, that is conceived, reduced to practice, developed or discovered or otherwise made outside the Research Collaboration during the term of this Agreement by or on behalf of Palatin or its Affiliates or by the Parties or their respective Affiliates jointly, or their respective employees and agents (whether alone or jointly with others), or otherwise Controlled by Palatin or its Affiliates at any time prior to and at the Effective Date or during any period in which AstraZeneca owes royalties to Palatin pursuant to Section 11.7, and which AstraZeneca has not rejected pursuant to Section 7.4.1.

1.71.

" Licensed Know-How " means the Information set out and described in Schedule 1.71 and ***, but excluding any Information to the extent covered or claimed by the Licensed Patents.

1.72.

***.

1.73.

" Licensed Patents " means the *** Patents and *** and any Patents claiming or covering any Licensed Improvement.

1.74.

" Licensed Products " means the Products and the Combination Products.

1.75.

" Losses " means any and all direct or indirect liability, damage, loss or expense, including interest, penalties and reasonable lawyers’ fees and disbursements. In calculating Losses, the duty to mitigate on the part of the Party suffering the Loss shall be taken into account.

1.76.

" Major Markets " means (a) ***, (b) ***, or (c) ***.

1.77.

" Manufacture " and " Manufacturing " means, with respect to a product or compound, the synthesis, manufacturing, processing, formulating, packaging, labelling, holding and quality control testing of such product or compound.

1.78.

" Net Sales " means the gross invoiced amount on sales of the Licensed Products by AstraZeneca and its Affiliates to Third Parties (including Distributors) after deduction of:

(a)

normal and customary trade, quantity or prompt settlement discounts (including chargebacks and allowances) actually allowed;

(b)

  amounts *** or *** by reason of *** determined by AstraZeneca or its Affiliates in good faith and not inconsistent with standard industry practice;

(c)

  *** similar payments made with respect to *** such as, by way of illustration and not in limitation of the Parties’ rights hereunder, ***;

(d)

  ***;

(e)

  ***;

(f)

any other deductions that are consistent with generally-accepted accounting principles, or in the case of non-United States sales, other applicable accounting standards ; and

(g)

as an allowance for *** percent (***) of the amount arrived at after application of the provisions of items (a) to (f) above.

Net Sales shall be calculated using AstraZeneca’s internal systems, which systems are externally audited, used to report such sales as adjusted for any of items (a) to (g) above not taken into account in such systems. Deductions pursuant to subsection (d) above shall be taken in the Calendar Quarter in which such sales are no longer recorded as a receivable.

1.79.

" Non-Defending Party " has the meaning set forth in Section 17.4.

1.80.

" Palatin Principal Scientists " has the meaning set forth in Section 3.2.

1.81.

" Parties " means AstraZeneca and Palatin and "Party" means either of AstraZeneca or Palatin.

1.82.

" Patents " means (a) all national, regional and international patents and patent applications, including provisional patent applications, (b) all patent applications filed either from such patents, patent applications or provisional applications or from an application claiming priority from either of these, including divisionals, continuations, continuations-in-part, provisionals, converted provisionals, and continued prosecution applications, (c) any and all patents that have issued or in the future issue from the foregoing patent applications ((a) and (b)), including utility models, petty patents and design patents and certificates of invention, (d) any and all extensions or restorations by existing or future extension or restoration mechanisms, including revalidations, reissues, re-examinations and extensions (including any supplementary protection certificates and the like) of the foregoing patents or patent applications ((a), (b) and (c)), and (e) any similar rights, including so-called pipeline protection, or any importation, revalidation, confirmation or introduction patent or registration patent or patent of additions to any such foregoing patent applications and patents.

1.83.

" Payments " has the meaning set forth in Section 12.1.

1.84.

" Person " means an individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust, joint stock company, trust, incorporated association, joint venture or similar entity or organization, including a government or political subdivision, department or agency of a government.

1.85.

" Phase I Clinical Trial " means a clinical study performed in healthy subjects or patients starting with first single dose to man to study the safety and tolerability and/or pharmacokinetic and/or pharmacodynamic properties of a Candidate Drug.

1.86.

" Phase II Clinical Trial " means a clinical study performed in patients in order to define the optimal dose range for a Phase III Clinical Trial.

1.87.

" Phase III Clinical Trial " means a large scale, multicenter, human clinical trial (excluding dose ranging studies) to be conducted in a number of patients estimated to be sufficient to primarily establish efficacy of a Licensed Product in the claim of e.g. obesity or diabetes or any other claimed major medical indication and at a standard suitable to obtain a Health Registration Approval in a Major Market.

1.88.

" Product " means any product in a form suitable for applications for human, veterinary or agricultural use that contains an Agreement Compound as the sole active ingredient.

1.89.

" Receiving Party " has the meaning set forth in Section 13.1.1.

1.90.

" Regulatory Documentation " means all applications, registrations, licenses, authorisations and approvals (including all Health Registration Approvals), all correspondence submitted to or received from Health Authorities (including minutes and official contact reports relating to any communications with any Health Authority) and all supporting documents and all clinical studies and tests, relating to any Agreement Compounds or Licensed Products, and all data contained in any of the foregoing, including all IND applications, Health Registration Approvals, regulatory drug lists, advertising and promotion documents, adverse event files and complaint files.

1.91.

" Research Collaboration " means the research collaboration described in the Research Plans. For the avoidance of doubt, any research or development concerning the Agreement Compounds or the Licensed Products beyond the Research Collaboration will be part of the Development Project.

1.92.

" Research Plan " means the Discovery Research Plan, attached hereto as Schedule 1.92 , outlining the Research Collaboration and each Party’s undertakings and obligations, including ***, in relation thereto as they may be amended from time to time in accordance with Section 4.1.2.

1.93.

" Results " means ideas, inventions, discoveries, know-how, data, documentation, reports, materials, writings, designs, computer software, processes, principles, methods, techniques and other information, recorded in any form, that are discovered, conceived, reduced to practice or otherwise generated through work performed under or in connection with this Agreement by either Party or by the Parties jointly, and any IP Protection Rights pertaining to any of the foregoing.

1.94.

***.

1.95.

" Sublicensee " has the meaning set forth in Section 7.7.

1.96.

" Term " means the period beginning on the Effective Date and continuing until the earlier of the date upon which this Agreement expires by its terms or is terminated in accordance with Article 20.

1.97.

***.

1.98.

" Third Party " means any Person not including the Parties, the Parties’ respective Affiliates or the Sublicensees.

1.99.

" Third Party Claim " has the meaning set forth in Section 19.1.

1.100.

" Trademark " means any word, name, symbol, colour, designation or device or any combination thereof for use in the course of trade, including any trademark, trade dress, brand mark, trade name, brand name, logo or business symbol used by AstraZeneca in connection with the Licensed Products.

1.101.

" Triggering Event " has the meaning set forth in Section 17.1.

1.102.

" United States " or " U.S. " means the United States of America, including its territories, possessions and Puerto Rico.

1.103.

" Valid Claim " shall mean, with respect to a Licensed Product in a particular country, any claim of a Licensed Patent or Collaboration Patent that claims the Agreement Compound included in such Licensed Product as a composition of matter and either:

(a)

with respect to a granted and unexpired Licensed Patent or Collaboration Patent in such country, that (i) has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, which decision is unappealable or unappealed within the time allowed for appeal, and (ii) has not been abandoned, disclaimed, denied or admitted to be invalid or unenforceable through reissue or disclaimer or otherwise; or

(b)

with respect to a pending Licensed Patent or Collaboration Patent application that was filed and is being prosecuted in good faith and has not been abandoned or finally disallowed without the possibility of appeal or re-filing of the application, provided that such claim has not been pending for more than *** years.

2.

Construction

Except where the context requires otherwise, whenever used the singular includes the plural, the plural includes the singular, the use of any gender is applicable to all genders and the word "or" has the inclusive meaning represented by the phrase "and/or." Whenever this Agreement refers to a number of days, unless otherwise specified, such number refers to calendar days. The headings of this Agreement are for convenience of reference only and do not define, describe, extend or limit the scope or intent of this Agreement or the scope or intent of any provision contained in this Agreement. The term "including" or "includes" as used in this Agreement means including, without limiting the generality of any description preceding such term. The wording of this Agreement shall be deemed to be the wording mutually chosen by the Parties and no rule of strict construction shall be applied against any Party.

3.

The Research Collaboration

3.1.

Conduct of Research Collaboration . During the Collaboration Term and under the direction and supervision of the CMC, each Party shall (a) perform or cause to be performed its obligations under the Research Plan in good scientific manner and in compliance in all relevant material aspects with all Applicable Law, including, as required by the Research Plan, good laboratory practices, good manufacturing practice and good clinical practices, (b) allocate sufficient time, effort, equipment and skilled personnel to complete such activities successfully and promptly and (c) insofar as the activities involve the use of animals by Palatin, Palatin shall conduct activities in accordance with the AAALAC standards and AstraZeneca International Policy on Animal Care and Use, attached hereto as Schedule 3.1, to the extent stricter than the AAALAC standards. Following the Effective Date, the Parties shall promptly commence the Research Collaboration.

3.2.

Facilities and Key Personnel . Palatin shall provide facilities, equipment and manpower that are reasonably necessary to carry out the work undertaken by Palatin under the Research Collaboration at Palatin’s facilities at the address set forth in the preamble to this Agreement or at such other facilities as set out in the Research Plan. The principal scientists designated by Palatin (the " Palatin Principal Scientists ") shall be responsible for all Research Collaboration activities undertaken by Palatin and shall supervise the work of all personnel engaged by Palatin in the Research Collaboration. The Palatin Principal Scientists shall serve as the primary contact for AstraZeneca on all matters

related to the Discovery Research Plan and the Development Research Plan, respectively. The Palatin Principal Scientists and other scientific and technical personnel of Palatin considered by AstraZeneca to be of key importance for the conduct of the Research Collaboration (the " Key Personnel "), and the minimum amount of time that they each will devote to the Research Collaboration, are listed on Schedule 3.2 hereto. Palatin shall not substitute persons for the Key Personnel or materially reduce the time commitment of any Key Personnel to the Research Collaboration without the prior written approval of AstraZeneca. In the event that any Key Personnel are no longer employed by Palatin or are otherwise incapable of performing their obligations under this Agreement (e.g., become disabled), the Parties shall meet and discuss in good faith how best to proceed. Notwithstanding the foregoing, Palatin shall continue to be responsible for performing the activities undertaken by it under the Research Collaboration and any consent or agreement by AstraZeneca pursuant to this Section 3.2 shall not be deemed to be a waiver of any right or remedy AstraZeneca may have in relation to any failure by Palatin to conduct such activities.

3.3.

Subcontracting . Palatin shall be solely responsible for successfully completing its activities set forth in the Research Plan. Palatin shall conduct and carry out all activities provided for under the Research Collaboration through its employees at the site identified under Section 3.2 unless and only to the extent AstraZeneca consents in writing to Palatin engaging a subcontractor to carry out a portion of such activities. Any such permitted subcontract shall be subject to the applicable terms and conditions of this Agreement, including Articles 7 and 13, and, upon AstraZeneca’s request, Palatin shall require each such subcontractor to enter into an undertaking, pursuant to which the terms and conditions of this Agreement shall apply directly between such subcontractor and AstraZeneca, prior to disclosing to such subcontractor any of AstraZeneca’s Confidential Information; provided, however, that Palatin shall remain ultimately responsible for the performance of its obligations under this Agreement. Any fees or costs due any such subcontractor shall be at the sole expense of Palatin, unless otherwise agreed upon in writing.

3.4.

Collaboration Materials and Information Transfer

3.4.1.

Palatin shall, and shall cause its Affiliates, without additional compensation and at Palatin’s sole expense, to provide to AstraZeneca copies of any Licensed Know-How which could be reasonably considered material to the Research Collaboration, not previously provided to AstraZeneca, promptly after the Effective Date. Upon AstraZeneca’s request to Palatin, Palatin shall promptly provide to AstraZeneca any copies of additional Licensed Know-How and originals of Licensed Know-How in those cases where AstraZeneca has a need for the same in connection with the filing and prosecution of patents.

3.4.2.

Upon the identification of hits through screening of ***, Palatin shall promptly take all steps reasonably necessary to ensure that information with regard to such compound is not made available or accessible to any Third Party, including by ***.

3.4.3.

During the Research Collaboration each Party shall, and shall cause its Affiliates, in accordance with the criteria and mechanisms established by the CMC, disclose and make available to the other Party, in whatever form such Party may reasonably request, all Collaboration Results promptly upon the earlier of the conception or reduction to practice, discovery, development or making of such Collaboration Results.

3.4.4.

Each Party shall, and shall cause its Affiliates to, in accordance with the criteria and mechanisms established by the CMC, disclose and make available to the other Party, in whatever form such Party may reasonably request, all Collaboration Material promptly upon the Effective Date or upon the earlier of the conception or reduction to practice, discovery, development or making of such Collaboration Material; provided, however, that notwithstanding the foregoing, AstraZeneca shall only be required to provide or disclose to Palatin such Collaboration Materials and other information as it determines, in its sole discretion, is reasonably necessary for Palatin to perform its activities under the Research Collaboration and AstraZeneca retains the right, in its reasonable discretion, to withdraw any such Collaboration Material information from the Research Collaboration upon written notice to Palatin.

3.5.

Cooperation . Each Party shall cooperate with any and all reasonable requests for assistance from the other Party with respect to the activities under the Research Collaboration, including by making its employees, consultants and other scientific staff available upon reasonable notice during normal business hours at their respective places of employment to consult with such other Party on issues arising in connection with the Research Collaboration.

3.6.

Regulatory Records . Palatin and AstraZeneca each shall maintain, or cause to be maintained, records of its respective activities under the Research Collaboration in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes, which shall be complete and accurate and shall fully and properly reflect all work done and results achieved in the performance of its respective activities under the Research Collaboration, and which shall be retained by such Party for at least *** years after the termination of the Research Collaboration, or for such longer period as may be required by Applicable Law; provided always that before destroying any such record upon expiration of such period Palatin shall offer AstraZeneca in writing to transfer such record to AstraZeneca and shall, should AstraZeneca declare in writing that it wishes to have such record transferred, transfer it to AstraZeneca, at AstraZeneca’s cost, without unreasonable delay. Each Party shall have the right, during normal business hours and upon reasonable notice, to inspect and copy any such records.

3.7.

Additional Undertakings of Palatin .

3.7.1.

During the Collaboration Term and for a period of *** year thereafter, Palatin covenants that it and its Affiliates shall not (a) conduct any research or activity for or on behalf of any Third Party that is aimed at or has as its goal or intent discovering, identifying, Exploiting or otherwise commercialising products for the treatment of ***, or (b) grant any license or other rights to any Person to utilise any intellectual property Controlled by Palatin or its Affiliates for the purpose of discovering, identifying, Exploiting or otherwise commercialising products for the treatment of ***.

Palatin does hereby grant, and shall cause its Affiliates and its and their employees and researchers to grant, to AstraZeneca and its Affiliates the first opportunity to obtain a worldwide, exclusive license under the results that are discovered, conceived, reduced to practice or otherwise generated through and under Palatin’s research work for the treatment of *** to develop, make, use, sell, offer for sale and import any inventions claimed or otherwise included therein and to otherwise use such results for all purposes. For the avoidance of doubt, what is stated in the preceding sentence shall be entirely without prejudice to the rights that AstraZeneca has licensed under Section 7.5 and otherwise under this Agreement, and to Palatin’s undertakings in Sections 3.7.2 and 7.5 and otherwise under this Agreement. Palatin shall and shall cause its Affiliates and its and their researchers, as applicable, to negotiate with AstraZeneca in good faith to determine the terms of any such exclusive license agreement. If, after good faith negotiations, the Parties fail to execute such exclusive license agreement within *** year after the Collaboration Term, Palatin will be free to license such results to any Person on terms no less advantageous to Palatin than those last offered to AstraZeneca.

3.7.2.

For the avoidance of doubt, during the Term of this Agreement Palatin covenants that it and its Affiliates shall not (a) subject to the retained right pursuant to Section 7.5 for Palatin to carry out its obligations under the Research Collaboration, conduct any research or activity that is aimed at or has as its goal or intent discovering, identifying, Exploiting or otherwise commercialising Licensed Products for use in the Licensed Field or (b) grant any license or other rights to any Person, other than AstraZeneca and its Affiliates hereunder, to utilise any intellectual property Controlled by Palatin or its Affiliates for the purpose of discovering, identifying, Exploiting or otherwise commercialising Licensed Products for use in the Licensed Field.

3.7.3.

The Parties acknowledge that all restrictions contained in this Section 3.7 are reasonable, valid and necessary for the adequate protection of the Licensed Product business and that AstraZeneca would not have entered in this Agreement without the protection afforded it by this Section 3.7.

3.8.

Selection of Candidate Drug . For the avoidance of doubt, the Parties acknowledge and agree that AstraZeneca shall have the right in its sole discretion at any time during or after the Collaboration Term, irrespective of whether any compound has already been selected for further optimisation or as a CD and whether or not any such compound or CD has failed in research, clinical development or on the market, to select any Agreement Compound for optimisation or clinical development. AstraZeneca shall without delay notify the CMC of any such selections or, if such selections are made after the Collaboration Term, AstraZeneca shall similarly notify Palatin.

4.

Management of the Research Collaboration

4.1.

  Collaboration Management Committees .

4.1.1.

  Responsibilities of the CMC . The Parties shall establish a Collaboration Management Committee consisting of Palatin and AstraZeneca representatives to oversee the initiation, planning and performance of the activities under the Research Collaboration. In particular, the responsibilities of the CMC shall include: (a) establishing reporting criteria and mechanisms for making Collaboration Results and other materials available to the other Party; (b) establishing prioritisation criteria for specific components under the Research Collaboration, including setting proposed dates for experimental initiation and completion of each stage of the Research Collaboration; (c) determining within *** of the completion of each stage of the Research Collaboration whether the completion thereof has been successful and deciding whether or not to continue the Research Collaboration into the next stage (i.e., making "stop/go decisions"); (d) monitoring workflow, including experimental sample transfer, sample analysis and data quality control, data analysis and summarisation, software installation (access), training and maintenance; (e) monitoring of sample throughput, and overall Research Collaboration progress; (f) to the extent permitted by the Research Plan, assigning tasks and responsibilities taking into account each Party’s respective specific capabilities and expertise in order to avoid duplication and enhance efficiency and synergies; (g) monitoring timely execution of the Research Collaboration, including compliance with timelines; (h) deciding whether or not to provide Third Parties with any material and (i) reviewing and approving any amendments to the Research Plan, which to the extent they place additional financial responsibilities on Palatin shall require the express written consent of Palatin.

4.1.2.

  Research Plan . The Parties acknowledge and agree that (a) the Research Plan attached hereto as of the Effective Date set forth the goals and objectives of the Research Collaboration and the broad terms of the Parties’ respective undertakings to achieve those goals and objectives and (b) the funding of FTEs provided for under Section 9.1 and contracted items and costs identified in the Research Plan represent AstraZeneca’s total financial obligation for all services to be rendered and expenses to be incurred by or on behalf of Palatin as necessary to achieve the goals and objectives of the Research Collaboration. The Parties further acknowledge and agree that the Research Plan will be amended by the CMC from time to time during the Collaboration Term for each stage of the Research Collaboration to identify and define the specific undertakings of the Parties required to implement the Research Collaboration.

4.1.3.

  Formation of CMC . The CMC shall consist of *** with the requisite experience and seniority to enable them to make decisions on behalf of the Parties with respect to the Research Collaboration, with equal numbers appointed by the respective Party, which shall include the Palatin Principal Scientists and the AstraZeneca Principal Scientists. AstraZeneca shall appoint the chairman of the CMC and Palatin shall appoint the secretary of the CMC; provided, however that none of the AstraZeneca Principal Scientists or the Palatin Principal Scientists shall act as chairman or secretary of the CMC. Each Party shall have the right to replace its CMC representatives upon written notice to the other Party, provided that any such substitute representative shall have substantially the equivalent experience and seniority as the representative that such person replaces.

4.1.4.

  Disputes . The CMC shall endeavour to reach consensus on all matters brought before it with each Party having a single vote, irrespective of the number of representatives actually in attendance at a meeting; provided, however, that in the event the CMC is unable to resolve an outstanding matter before it, such matter shall be resolved by the JEC.

4.1.5.

  Meetings . The CMC shall meet at least quarterly and more frequently when required. Regular quarterly meetings shall be scheduled on a recurring schedule to be established by the CMC, or at such other mutually agreeable times no less than three (3) months in advance, except for the initial meeting of the CMC, which shall be at a mutually agreeable time and place. Any such regular meeting falling on a holiday when commercial banks are closed in any of Great Britain, Sweden or the United States shall be postponed until the next succeeding day when commercial banks are open for business in all three jurisdictions. The meetings shall be held by means of teleconference or videoconference or, when held in person, at AstraZeneca AB’s facilities in Mölndal, Sweden, or at other locations *** mutually agreed upon by the Parties. Subject to Section 4.1.6, a quorum of the CMC shall exist whenever there is present at a meeting each of the Palatin Principal Scientists and the AstraZeneca Principal Scientists. In addition, the CMC may act without a formal meeting by a written memorandum signed by the chairman and the secretary of the CMC. Whenever any action by the CMC is required hereunder during a time period in which the CMC is not scheduled to meet, either of the chairman and the secretary shall have the right to call a special meeting or the chairman and the secretary may jointly cause the CMC to take the action without a meeting in the applicable time period. Any such special meetings shall be held at places and on dates selected by the chairman and the secretary.

4.1.6.

  Quorum . Notwithstanding what is stated in Section 4.1.5, the chairman of the CMC may call for a meeting to be held on a business day when commercial banks are open for business in Great Britain, Sweden and the United States by notifying Palatin no later than *** in advance of a meeting of the CMC of the exact date, time and location for the meeting. Provided that (i) such notice has been timely issued and that the meeting is held on the date, time and place so indicated, or (ii) Palatin confirms that it has been properly notified about the meeting, quorum shall be considered constituted at that meeting unless all members of one Party fail to attend the meeting because of illness, where no substitution could be reasonably arranged, breakdown in general communications, travel difficulties beyond the reasonable control of such Party, or by other similar reasons. For the purpose of agreeing that Palatin has been properly notified of the meeting in the case under (ii), attendance to a meeting without express objection thereto shall be sufficient.

4.1.7.

  Expenses . Palatin and AstraZeneca each shall bear all expenses of its respective CMC members related to such members’ participation on the CMC and attendance at CMC meetings.

4.1.8.

  Minutes . The CMC shall keep accurate minutes of its deliberations, which minutes shall record all proposed decisions and all actions recommended or taken, Research Collaboration progress reports provided to the CMC pursuant to Section 5.1 and Collaboration Results generated of interest. In particular CDs nominated by AstraZeneca during the Collaboration Term shall be recorded in the minutes of the CMC. Drafts of minutes shall be delivered to the chairman and the secretary of the CMC within *** after the respective meeting. The Parties, on an alternating basis, shall prepare and circulate the draft minutes. Draft minutes shall be edited by the chairman and the secretary of the CMC and shall be issued in final form only with the approval and agreement of the chairman and the secretary of the CMC, such issuance not subject to final determination by the JEC in the event of a dispute.

4.2.

  Joint Executive Committee .

4.2.1.

  Formation of the JEC . The Parties shall establish one Joint Executive Committee (the "JEC") to resolve any outstanding matter before the CMC that the CMC is unable to resolve. The JEC shall consist of four (4) members with equal numbers appointed by each Party with the requisite experience and seniority to enable them to resolve any matter brought before them and make any necessary decisions on behalf of the Parties with respect to any such matter. Furthermore, the JEC shall include a Co Chair to be designated by each Party. None of the Parties representatives in the CMC shall be members of the JEC. Each Party shall have the right to replace its respective JEC representatives upon written notice to the other Party, provided that any such substitute representative shall have substantially the equivalent experience and seniority as the representative that such person replaces.

4.2.2.

  Meetings . The JEC shall meet within *** from when a matter in dispute is first brought to the attention of the JEC by the CMC and when otherwise required for the purpose of the Research Collaboration. The JEC shall meet at least once every Calendar Year, on a date agreed by the Parties. The meetings shall be held by means of teleconference or videoconference or, when held in person, at AstraZeneca AB’s facilities in Mölndal, Sweden, or at other locations *** mutually agreed upon by the Parties. Subject to what is stated in Section 4.2.3, a quorum of the JEC shall exist whenever there is present at a meeting each of the Co-Chairs or their respective designees. The JEC shall endeavour to reach consensus on all matters brought before it with each Party having a single vote, irrespective of the number of representatives actually in attendance at a meeting.

4.2.3.

  Quorum . Notwithstanding what is stated in Section 4.2.2, the Co-Chair of AstraZeneca may call for a meeting by notifying Palatin no later than thirty (30) days in advance of a meeting of the JEC of the exact date, time and location for the meeting. Provided that (i) such notice has been timely issued and that the meeting is held on the date, time and place so indicated, or (ii) that Palatin confirms that it has been properly notified about the meeting, quorum shall be considered constituted at that meeting unless all members of one Party fail to attend the meeting because of illness, where no substitution could be reasonably arranged, breakdown in general communications, travel difficulties beyond the reasonable control of such Party, or by other similar reasons. No meeting shall be called for a day on which the commercial banks are closed in any of Great Britain, Sweden or the United States. For the purpose of agreeing that Palatin has been properly notified of the meeting in the case under (ii), attendance to a meeting without express objection thereto shall be sufficient.

4.2.4.

  Decision-making . Any final decision mutually agreed to by the JEC shall be in writing and shall be conclusive and binding on the Parties. If such resolution regarding the Research Collaboration is unattainable by the JEC *** from the date the matter in dispute is first brought to the attention of the JEC, the dispute shall be resolved ***; provided, however, that, subject to Section 4.1.2, if the matter in dispute would result in additional expense being incurred ***.

4.2.5.

  Expenses . Palatin and AstraZeneca each shall bear all expenses of its JEC members related to such members’ participation on the JEC and attendance at JEC meetings.

4.2.6.

  Minutes . The JEC shall keep accurate minutes of its deliberations, which minutes shall record all proposed decisions and all actions recommended or taken. Drafts of minutes shall be delivered to the Co Chairs of the JEC within *** after the respective meeting. The Parties, on an alternating basis, shall prepare and circulate the draft minutes. Draft minutes shall be edited by the Co-Chairs and shall be issued in final form only with the approval and agreement of the Co-Chairs.

4.3.

  Upon Expiration or Termination of the Collaboration Term . Upon expiration or termination of the Collaboration Term the following shall apply:

4.3.1.

  Dissolution of the CMC and the JEC . The CMC and the JEC shall be dissolved and Palatin shall provide AstraZeneca with consultation services, including reviewing and contributing to proposed publications concerning the Agreement Compounds or Licensed Products, as AstraZeneca may reasonably request for the Development Project, including by making Palatin’s employees, consultants and other scientific staff available upon reasonable notice during normal business hours to consult with AstraZeneca on issues arising during the Development Project, or in connection with Exploitation of Agreement Compounds, Licensed Products or Results. AstraZeneca shall reimburse Palatin for out-of-pocket costs incurred in connection with such consultation services and should the time devoted by Palatin to such services exceed *** in any Calendar Year, AstraZeneca shall compensate Palatin for any additional agreed upon ***. Prior to performing services in excess of the *** allotment, Palatin shall notify AstraZeneca in writing that the said allotment has been utilised. For purposes of this Section 4.3.1, the daily FTE rate shall be determined by dividing the FTE Rate by ***.

4.3.2.

  The Parties shall establish an Information Forum (the " IF "), consisting of *** with equal numbers appointed by each Party for the purpose of AstraZeneca gaining from the experience and expertise of Palatin and for keeping Palatin updated on AstraZeneca’s activities in the Development Project. The IF shall meet annually on dates mutually agreed by the Parties at a location suitable to both parties or by teleconference, videoconference or by other jointly suitable means. Palatin and AstraZeneca each shall bear all expenses of its IF members related to such members’ participation on the IF and attendance at IF meetings.

4.3.3.

  Palatin shall cease any and all use of the Licensed Know How useful in the Licensed Field, the Collaboration Results, the AstraZeneca Background Technologies, the AstraZeneca Improvements and any other AstraZeneca Confidential Information.

4.3.4.

  Palatin shall deliver or return, as applicable, all data, files, records and other materials in its possession or control containing or comprising all AstraZeneca Background Technologies, AstraZeneca Improvements and AstraZeneca’s Confidential Information (except one copy of AstraZeneca’s Confidential Information which may be retained by Palatin solely for archival purposes).

4.3.5.

  Palatin’s obligation under Sections 4.3.1 through 4.3.4 shall, in addition to, and without limiting, what is stated therein, apply to each separate Agreement Compound, when the Research Collaboration has been completed for such Agreement Compound, in which situation such obligations shall refer to such individual Agreement Compound or Licensed Improvement thereon.

4.4.

  Transfer upon Termination of the Collaboration Term .

Upon expiration or termination of the Collaboration Term the following shall apply:

4.4.1.

Palatin shall, and shall cause its Affiliates to, without additional compensation, disclose and make available to AstraZeneca, to the extent not done so already, in whatever form AstraZeneca may reasonably request, Regulatory Documentation, copies of Licensed Know-How, Collaboration Results and any other Information claimed or covered by any Collaboration Patent or Licensed Patent or otherwise relating, directly or indirectly, to any Agreement Compound, Licensed Product or Licensed Improvement, and thereafter and throughout the term of the Agreement immediately upon the earlier of the development, making, conception or reduction to practice of each such Regulatory Documentation, Licensed Know-How or other Information.

4.4.2.

Palatin’s obligation under Section 4.4.1 and under Section 4.4.4 shall, in addition to, and without limiting what is stated therein, apply to each separate Agreement Compound in which situation such obligations shall refer to such Regulatory Documentation, Licensed Know-How, Collaboration Results and Information relating directly or indirectly to that particular Agreement Compound or Licensed Improvement thereon.

4.4.3.

Palatin warrants that it will perform a reasonably diligent search for Licensed Know-How and Regulatory Documentation relevant to the safety, efficacy and Exploitation of Agreement Compounds and Licensed Products in existence as of the termination or expiration of the Collaboration Term and that all such located Licensed Know-How and Regulatory Documentation will be disclosed to AstraZeneca upon termination or expiration of the Collaboration Term.

4.4.4.

Palatin, ***, will provide AstraZeneca with all reasonable assistance required in order to transfer the Licensed Know-How to AstraZeneca in a timely manner following termination or expiration of the Collaboration Term. Without prejudice to the generality of the foregoing, if visits of Palatin’s representatives to AstraZeneca’s facilities are reasonably requested by AstraZeneca for purposes of transferring the Licensed Know-How to AstraZeneca or for purposes of AstraZeneca acquiring expertise on the practical application of the Licensed Know-How or assisting on issues arising during such Exploitation, Palatin will send appropriate representatives to AstraZeneca’s facilities, provided that AstraZeneca shall ***.

5.

Reports

5.1.

Research Collaboration Progress Reports . No later than *** prior to each quarterly meeting of the CMC, each Party shall provide the CMC with a detailed written progress report containing specifications and other information on all Collaboration Results generated and not previously reported to the CMC. The CMC may provide further instructions on the timing and content of these reports.

5.2.

Copyrights . Copyrights to reports provided for hereunder are part of the Results. Neither Party shall, without the prior written approval of the other Party, attribute to the other Party any abstract or interpretation of any such report for sales or promotion purposes.

6.

Development Project

6.1.

Diligence Obligations .

6.1.1.

AstraZeneca undertakes to use Commercially Reasonable Efforts at its own cost and expense to develop a Licensed Product and to conduct all development necessary to obtain Health Registration Approvals for a Licensed Product for use in humans in each country listed in the definition of the Major Markets and throughout the Territory.

6.1.2.

AstraZeneca undertakes to use Commercially Reasonable Efforts to commercialise a Licensed Product for use in humans in each of the Major Markets and throughout the Territory; provided, however, that such obligations are expressly conditioned upon Palatin and its Affiliates performing their respective obligations hereunder, including the completion of the activities under the Research Collaboration and the information disclosure requirements pursuant to Section 3.4, and such obligations of AstraZeneca shall be delayed or suspended to the extent any such condition causes a delay; and provided further, for the avoidance of doubt, that AstraZeneca shall not be obligated to obtain Health Registration Approval for, or commercialise, more than one Licensed Product in any Major Market and throughout the Territory. In the event that AstraZeneca decides to discontinue the development or commercialisation of a Licensed Product in favour of another Licensed Product, its obligations under this Section 6.1.2. shall cease with respect to such initial Licensed Product in favour of such other Licensed Product. AstraZeneca shall perform its obligation under this Section 6.1.2 in good scientific manner and in compliance in all material respects with all Applicable Law.

6.1.3.

Should the use by AstraZeneca of its Commercially Reasonable Efforts have as a consequence that AstraZeneca would be obligated to carry out some or all of the activities provided for in Section 6.1.1 or 6.1.2 in a country *** then AstraZeneca shall, notwithstanding what is stated in Sections 6.1.1 and 6.1.2 and following consultation with Palatin, be allowed to ***.

6.1.4.

Upon satisfaction of its obligations under Sections 6.1.1 and 6.1.2, AstraZeneca shall be deemed to have satisfied all diligence obligations owed to Palatin hereunder, with respect to the Exploitation of the Agreement Compounds, Licensed Products or Collaboration Results, and shall have no other obligation, express or implied, to Exploit the Agreement Compounds, Licensed Products or Collaboration Results.

6.2.

Breach of Diligence Obligations .

6.2.1.

Notification and Meeting . If AstraZeneca is in material breach of its obligations under Section 6.1, then Palatin shall so notify AstraZeneca and the Parties shall meet within *** after such notice to discuss in good faith AstraZeneca’s development and commercialisation plans with respect to the Agreement Compound and Licensed Product.

6.2.2.

Right of Termination . If, after such good faith discussions mentioned in Section 6.2.1, (a) AstraZeneca is in breach of its obligations under Section 6.1, and (b) AstraZeneca does not take reasonable steps designed to rectify such breach within *** of meeting with Palatin pursuant to Section 6.2.1 (or, if such failure cannot be rectified within such *** period, if AstraZeneca does not commence actions to rectify such breach within such period and thereafter diligently pursues such actions), Palatin may exercise its right of termination provided under Section 20.5.

6.3.

Reporting . Following termination or expiration of the Research Collaboration AstraZeneca shall provide Palatin in reasonable connection with the meetings in the IF with a semi-annual report on the development of Licensed Products in the Territory (the " Development Report ") in order to keep Palatin informed of its progress. Such report shall cover, in relation to Agreement Compounds and Licensed Products, general information on AstraZeneca’s development activities in the previous ***, a summary of the activities planned in the next *** and a timetable of planned submissions for Health Registration Approvals. If and when a Health Registration Approval is obtained in any country of the Territory, AstraZeneca shall promptly inform Palatin thereof.

7.

Ownership and Grant of Rights

7.1.

Ownership of Collaboration Results and Development Results . AstraZeneca shall exclusively own all Collaboration Results and Development Results, for the avoidance of doubt including any Collaboration Compounds. Palatin shall promptly disclose to AstraZeneca in writing the development, making, conception or reduction to practice of any Collaboration Results and Development Results and shall, and does hereby, assign, and shall cause its Affiliates and its and their employees and agents, as applicable, to so assign, to AstraZeneca, without additional compensation, such right, title and interest in and to any such results. Assignment and transfer of all Collaboration Results and Development Results shall occur instantly and automatically upon the development, making, conception or reduction to practice of such results and technologies, as the case may be, and shall not require any further deeds or documents to be exchanged between the Parties.

7.2.

AstraZeneca Improvements . AstraZeneca shall exclusively own all AstraZeneca Improvements and AstraZeneca Patents. Palatin shall promptly disclose to AstraZeneca in writing the development, making, conception or reduction to practice of any Results that constitute AstraZeneca Improvements, and shall, and does hereby, assign, and shall cause its Affiliates and its and their employees and agents, as applicable, to so assign, to AstraZeneca, without additional compensation, such right, title and interest in and to any such Results. Assignment and transfer of all such Results shall occur instantly and automatically upon the development, making, conception or reduction to practice of such Results, as the case may be, and shall not require any further deeds or documents to be exchanged between the Parties.

7.3.

Ownership of Collaboration Patents .

7.3.1.

For the avoidance of doubt, AstraZeneca shall exclusively own all Collaboration Patents, provided that, in the sole discretion of AstraZeneca title to any Collaboration Patents developed, made, conceived, reduced to practice or otherwise generated through work performed under the Research Collaboration or in connection with this Agreement by Palatin or by the Parties jointly may be partially or wholly in Palatin, in which event Palatin shall, and does hereby, grant to AstraZeneca a perpetual, exclusive (including with regard to Palatin and its Affiliates), right and license in the Territory, with the right to grant sublicenses, under Palatin’s right, title and interest in and to the Collaboration Patents and Collaboration Compounds and Improvements thereto. Palatin shall, and does hereby, assign, and shall cause its Affiliates and its and their employees and agents, as applicable, to so assign to AstraZeneca (or its designee), without additional compensation, such right, title and interest in and to any such Collaboration Patents.

7.3.2.

***.

7.4.

Improvements outside the Research Collaboration .

7.4.1.

Palatin shall without delay disclose to AstraZeneca any Licensed Improvements Controlled by Palatin or its Affiliates during any period in which AstraZeneca owes royalties to Palatin pursuant to Section 11.1 and provide AstraZeneca with all relevant Information and materials with respect to such Licensed Improvements. AstraZeneca shall have the right, at any time, to reject any such Licensed Improvement on written notice to Palatin, in which event, this Agreement shall cease to apply to such Licensed Improvement.

7.4.2.

All Licensed Improvements shall automatically be included within the scope of this Agreement, subject to AstraZeneca’s right to reject any such Licensed Improvement pursuant to Section 7.4.1. Any Information with respect to such Licensed Improvements that is not covered or claimed by a Patent and *** shall be considered Licensed Know-How. Any Patents to the extent covering Licensed Improvements shall be considered Licensed Patents.

7.5.

License Grants by Palatin to AstraZeneca .

7.5.1.

Palatin hereby grants to AstraZeneca a perpetual, exclusive (including with regard to Palatin and its Affiliates), subject to a retained right thereto for the sole purpose of Palatin carrying out its obligations under the Research Collaboration, right and license in the Territory, with the right to grant sublicenses, under Palatin’s right, title and interest in and to the Compounds, the Licensed Products, the Licensed Patents, the Licensed Know-How and the Licensed Improvements to use and otherwise Exploit the Compounds, the Licensed Products, the Licensed Patents, the Licensed Know-How and the Licensed Improvements for use within the Licensed Field (the "License").

7.5.2.

Prior to initiation of any research or development program outside the Licensed Field by Palatin ***, will be utilized, Palatin will ***.

7.5.3.

Notwithstanding any other provision herein, Palatin may not, directly or through any Third Party, use or otherwise Exploit any Compound or Licensed Product used or useful in the Licensed Field, other than in carrying out its obligations under the Research Collaboration.

7.6.

License Grants to Palatin . AstraZeneca hereby grants to Palatin a non-exclusive right and license, without the right to grant sublicenses, under AstraZeneca’s rights, titles, and interests in and to the AstraZeneca Background Technologies, the AstraZeneca Improvements, the AstraZeneca Patents, the Collaboration Patents and the Collaboration Results that are disclosed or otherwise provided by AstraZeneca to, or discovered by, Palatin during the Collaboration Term (a) for the purpose of Palatin performing the Research Collaboration during the Collaboration Term solely to the extent required for such purpose, and (b) to use and otherwise Exploit such AstraZeneca Background Technologies and AstraZeneca Improvements as necessary or useful to exercise Palatin’s rights under the grant under (a).

7.7.

Sublicenses . AstraZeneca shall have the right to grant licenses or sublicenses, through multiple tiers of licensees, under the licenses granted, or under AstraZeneca’s rights pursuant to Section 7.3, to its Affiliates and to any other Persons in the Territory or in any country of the Territory. Where AstraZeneca grants such a license or sublicense to a Person other than to an Affiliate of AstraZeneca, and such Person is not a Distributor, such Person shall be a "Sublicensee" for purposes of this Agreement. AstraZeneca shall ensure that all Persons to which it grants licenses or sublicenses will comply with all terms and conditions of this Agreement and AstraZeneca shall remain liable for any breach of this Agreement by a Sublicensee. AstraZeneca shall provide notice of the granting of any license or sublicense hereunder promptly following the making of such grant. Such notice shall identify the Sublicensee, the territory of the license or sublicense and a copy of those provisions of the license or sublicense that relate to performance of this Agreement.

7.8.

Distributorships . AstraZeneca shall have the right, in its sole discretion, to appoint its Affiliates, and AstraZeneca and its Affiliates shall have the right, in their sole discretion, to appoint any other Persons, in the Territory or in any country of the Territory, to distribute, market and sell the Licensed Products (with or without packaging rights), in circumstances where the Person purchases its requirements of Licensed Products from AstraZeneca or its Affiliates but does not otherwise make any royalty or other payment to AstraZeneca with respect to its IP Protection Rights. Where AstraZeneca or its Affiliates appoints such a Person that is not an Affiliate of AstraZeneca, that Person shall be a "Distributor" for purposes of this Agreement. The term "packaging rights" in this Section 7.8 shall mean the right for the Distributor to package Licensed Products supplied in unpackaged bulk form into individual ready-for-sale packs.

7.9.

Co-Promotion Rights . For the avoidance of doubt, AstraZeneca and its Affiliates shall have the right, in their sole discretion, to co-promote the Licensed Products with any other Person, or to appoint one or more Third Parties to promote the Licensed Products without AstraZeneca carrying out any promotion in all or any part of the Territory.

7.10.

Covenant Not to Sue . Neither Palatin nor any of its Affiliates shall ever, anywhere in the world, institute or prosecute (or in any way aid any Third Party in instituting or prosecuting), at law or in equity, any claim, demand, action or cause of action for damages, costs, expenses or compensation, or for an enjoinment, injunction, or any other equitable remedy, against AstraZeneca, its Affiliates, Sublicensees, suppliers, Distributors, vendors or customers alleging the infringement by AstraZeneca in its Exploitation of the Compounds, the Licensed Patents, the Licensed Know-How, the Licensed Improvements, the Collaboration Compounds, the Collaboration Patents or the Licensed Products or of any Patent that claims an invention that is based on, derived from or otherwise relates to the Results and is Controlled by Palatin or its Affiliates, so long as such Exploitation is in accordance with this Agreement. In Palatin’s or its Affiliates’ agreements with any licensees, assignees or transferees of such Patent, Palatin or its Affiliate, as applicable, shall ***. Palatin and its Affiliates will take all reasonable action (including signing required documents) and offer full cooperation to allow AstraZeneca to ***, to the extent permitted by Applicable Law.

7.11.

No Conflicts . Within the scope of the Research Collaboration, and to the extent Applicable Law permits Palatin to conduct research and development activities with respect to Agreement Compounds or Licensed Products notwithstanding the exclusive license grants to AstraZeneca under Section 7.5, Palatin agrees that neither it nor its Affiliates will publish or present any material or file any Patent applications with respect to such activities without the consent of AstraZeneca.

7.12.

Exclusivity Term . AstraZeneca’s exclusive position granted by Section 7.5 shall expire with respect to each separate Licensed Product, on a country-by-country basis, on the date when AstraZeneca’s obligation to pay royalties with respect to such Licensed Product pursuant to this Agreement expires. Upon expiration of the royalty term set forth in Section 11.7 with respect to a Licensed Product in a country, AstraZeneca’s license with respect to such Licensed Product in such country shall become non-exclusive, fully paid-up, perpetual and irrevocable and the Net Sales of such Licensed Product in such country shall be excluded from the royalty calculations in Section 11.1 (including the thresholds and ceilings) or 11.4, as applicable. AstraZeneca and its Affiliates and Sublicensees following such expiration shall be allowed to continue Exploiting such Licensed Product and using all Licensed Know How, Licensed Patents in the Licensed Field, Licensed Improvements and Collaboration Results in connection therewith on a non-exclusive basis in such country with no further consideration to Palatin.

7.13.

Collaboration Materials . The Parties agree that: (a) all Collaboration Materials provided by one Party to the other (including compounds) shall be used by the receiving Party (i) solely for the activities under the Research Collaboration as provided in the Research Plan, or (ii) in the case of AstraZeneca as the receiving Party, in the Exploitation of the Agreement Compounds and Licensed Products, and (iii) in either case, in material compliance with all Applicable Law; (b) subject to what is stated in Article 18, all such Collaboration Materials shall be provided without any warranties, express or implied; (c) the Party providing such Collaboration Materials shall obtain (or cause its Third Party collaborators to obtain or certify that they have obtained) all appropriate and required consents from the source of such Collaboration Materials; (d) Collaboration Materials provided by one Party to the other Party shall not be made available by such other Party to any Third Party except as expressly provided in the Research Plan or as necessary or useful for the Exploitation of the Agreement Compounds or Licensed Products by AstraZeneca, unless the prior written consent of the Party providing such Collaboration Materials is first obtained; and (e) subject to the license grants and assignments in the other provisions of this Article 7 and other provisions in this Agreement, as between the Parties, all right, title and interest in and to the Collaboration Materials shall be, and remain, vested in the Party that provided such Collaboration Materials.

7.14.

Regulatory Documentation . All INDs and regulatory filings shall be ***. Furthermore, in the event that in response to the submission of an IND, the Regulatory Authority poses questions to *** or otherwise requires additional data, *** shall cooperate to meet and confer as required to formulate an action plan in response to such request. *** may from time to time during the Term of this Agreement reasonably request *** to make, at ***, applications for an IND or other regulatory approvals whether in *** or in *** or any of its *** name and *** undertakes to comply with any such reasonable request. Without exception, *** will, as between *** and ***, be the owner of any Regulatory Documentation relating to any applications for an IND or regulatory approvals (including IND applications and approvals). *** shall upon the request by *** promptly transfer any IND and Regulatory Documentation to ***.

8.

Confirmatory Patent Licenses

Palatin shall if requested to do so by AstraZeneca promptly enter into confirmatory license agreements in the form or substantially in the form set out in Schedule 8 for purposes of recording the licenses granted under this Agreement with such patent offices in the Territory as AstraZeneca considers appropriate. Until the execution of any such confirmatory licenses, so far as may be legally possible, Palatin and AstraZeneca shall have the same rights and be under the same obligations to each other in all respects as if the said confirmatory licenses had been executed.

9.

Research Funding

9.1.

Funding . Each Party shall assume responsibility for *** for the Research Collaboration, except that AstraZeneca shall provide ***.

9.2.

Invoices . Within *** after the end of each Calendar Quarter, Palatin shall invoice AstraZeneca for amounts due to Palatin from AstraZeneca pursuant to Section 9.1 based on the ***, approved by AstraZeneca, for the ensuing Calendar Quarter. Each invoice shall be sent to AstraZeneca AB, AstraZeneca R&D Mölndal, Finance / Accounting, SE-431 83 Mölndal, Sweden with the attention of *** or such other individual that AstraZeneca may designate by providing Palatin written notice (provided, however, that the attention of *** or such other individual designated by AstraZeneca should not be included in the address section of the invoice) and shall be accompanied by a forecast *** to be provided by Palatin in the Research Collaboration during such ensuing Calendar Quarter and a report from *** costs spent in relation to the Research Collaboration during the immediately preceding Calendar Quarter, if any. No later than thirty (30) days after the end of each Collaboration Year Palatin shall send a report relating to the FTEs provided by Palatin and budgeted and approved Third Party costs paid by Palatin to the Research Collaboration during such Collaboration Year. Without prejudice to any other remedy available to AstraZeneca, any amount paid by AstraZeneca for which Palatin has not provided the corresponding number of FTEs or paid budgeted and approved Third Party Costs during such Collaboration Year may be deducted by AstraZeneca from subsequent payments to be made by AstraZeneca to Palatin for FTE funding hereunder and, if necessary to recover the amount, from milestone payments and royalty payments.

Each invoice shall be payable to Palatin within *** after receipt by ***, or such other individual designated by AstraZeneca, at AstraZeneca AB, AstraZeneca R&D Mölndal, Finance / Accounting, SE-431 83, Mölndal, Sweden, of a correct invoice with supporting documentation. Payment shall be made to such bank account as Palatin shall have notified AstraZeneca in writing.

9.3.

Records Retention; Audit .

9.3.1.

Palatin shall keep or cause to be kept accurate records or books of account in accordance with applicable generally accepted accounting principles that, in reasonable detail, fairly reflect the reimbursable FTEs. Such books and records shall include attendance records (specifically including name and hours for each attendee), records of the allocation of FTEs to the Research Collaboration, and the accomplishment of activities measured against the Research Plan, and shall be maintained by Palatin for *** following the end of the Calendar Year to which they pertain or such longer period of time required by Applicable Law.

9.3.2.

Upon the written request *** shall permit a certified public accountant or a person possessing similar professional status and associated with an independent accounting firm reasonably acceptable to the Parties to inspect during regular business hours and no more than once a year and going back *** after receipt of the respective invoice and report pursuant to Section 9.2, all or any part of *** necessary to verify such invoices and reports. The accounting firm shall enter into appropriate obligations with *** to treat all information it receives during its inspection in confidence. The accounting firm shall disclose to *** only whether such invoices and reports are correct and details concerning any discrepancies, but no other information shall be disclosed to ***. The charges of the accounting firm shall be paid by ***, except that if the FTEs allocated were less than *** of what was required from Palatin during the period under review or if otherwise the reimbursable Research Collaboration expenses have been overstated by more than ***, the charges shall be ***. Any failure by AstraZeneca to exercise its right under this Section 9.3.2 *** shall constitute a waiver by AstraZeneca of its right to later object to any invoice submitted by Palatin under this Agreement during such Calendar Year.

10.

Consideration

10.1.

Total Obligation . The milestone payments and royalty payments payable by AstraZeneca to Palatin pursuant to this Article 10 and Article 11, together with the funding to be provided by AstraZeneca to Palatin pursuant to Article 9, represent all of AstraZeneca’s financial obligations to Palatin hereunder and Palatin shall not be entitled to any additional compensation or remuneration from AstraZeneca under this Agreement. In consideration of the licenses and other rights granted by Palatin to AstraZeneca herein and subject to the terms and conditions of this Agreement, AstraZeneca shall make the following payments to Palatin:

10.1.1.

Initial Investment Fee . AstraZeneca shall pay to Palatin ten million U.S. Dollars ($10,000,000) within *** of the Effective Date.

10.1.2.

Development Milestones . Within *** days of achievement of each respective milestone as described in this Section 10.1.2 for the first Agreement Compound or Licensed Product, whichever is applicable, to meet such milestone, AstraZeneca shall, after receipt of an invoice, in each case, make the corresponding payment to Palatin.

10.1.2.1

*** Agreement Compounds or Licensed Product.

A)

     Development Milestones for *** Agreement Compounds

i)

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