The license to be granted by Aegis Therapeutics, LLC (“Aegis”) to Lightlake Therapeutics, Inc. (“Lightlake”) is a royalty-bearing license under all applicable patent and other proprietary rights of Aegis, including without limitation rights under the Technology and Aegis’s interest in the New Inventions and Joint Inventions (collectively, “Aegis IP Rights”) to develop, make, have made, use, sell, offer to sell, import and export (or otherwise commercialize and exploit) the Products in the Field in the Territory.

Subject to the Right of First Refusal and Option below, Aegis shall not license to any third party, and hereby grants an exclusive option to Lightlake to license, the Aegis IP Rights to develop, make, have made, use, sell, offer to sell, import and export (or otherwise commercialize and exploit) naloxone for treatment or prevention of opioid overdose (“Opioid Field”) in the Territory.

Notwithstanding the above license to manufacture the Excipient, Lightlake will covenant and agree to not exercise such right to make or have made Excipient for so long as Aegis remains in compliance with the terms of the Supply Agreement. If the Supply Agreement becomes terminated in accordance with its terms, or if Lightlake exercises its right to terminate Aegis’ exclusive right to supply Excipient, then Lightlake may exercise its license right to make or have made Excipient, which license right shall automatically extend to any contract manufacturer engaged by Lightlake, any of its Affiliates and/or any sublicensee to manufacture Excipient.

Treatment or prevention of any disease, disorder, state, condition or malady in humans except in the Opioid Field, provided that upon election of Lightlake in writing and payment of the Option Fee, the “Field” shall include the Opioid Field.

The Option Fee shall mean one hundred thousand dollars ($100,000) and agreement by Lightlake that by expansion of the Field to include Opioid Field, that Products for the Opioid Field in the Territory using the Aegis IP Rights shall be subject to the same monetary obligations as other Products in the Field (i.e. Option Field milestones, royalties under terms and conditions to be negotiated in good faith by the parties).

Lightlake shall pay to Aegis a nonrefundable and noncreditable license fee of $300,000 on the effective date of the license agreement.

Lightlake may elect to pay up to 50% of the License Fee by issuing to Aegis shares of Lightlake’s common stock subject to the following:

a.    There must be a public market for Lightlake's shares and Lightlake must be current with all statutory filings

b.   The shares shall be issued pursuant to Rule 144 of the Securities Act of 1933;

c.    The number of shares to be issued shall be calculated to 75% of the average closing price for the previous 20 trading days;

d.   After the statutory holding period has been satisfied, Lightlake’s legal counsel shall provide a legal opinion so that the shares can be sold in accordance with Rule 144 of the Securities Act of 1933.

Beginning on the first anniversary of the effective date of the license agreement and through the first Product approval by Lightlake, Lightlake shall be required to make minimum quarterly nonrefundable payments (“Quarterly Payments”) to Aegis in the amount of $25,000. These Quarterly Payments would be fully creditable and treated as a prepayment against future milestones or royalties and are required in order to maintain the license.

If, at the time when any milestone payment listed above is due, Lightlake has not paid all other milestone payments (if any) previously listed above, then at such time Lightlake shall pay all such unpaid milestone payments (other than product approval milestones).

Provided that the license agreement has not been terminated, during the first two (2) year period beginning on the Effective Date, Aegis grants Lightlake a right of first refusal and option to add any, or all, of the compounds included under Option Compound or the Opioid Field to the license agreement (the “Lightlake Option”). Except as permitted by this section, Aegis shall not sell, license, offer for sale, offer for license or agree to sell or license any Aegis Technology relating to the Option Compound to any third party during the first two (2) year period beginning on the Effective Date.

The following sets forth the procedure whereby Lightlake may exercise the Lightlake Option.

1.        In the event that Aegis is approached by a third party interested in licensing the Option Compound(s) or the Opioid Field, Aegis shall provide a written notice to Lightlake specifying the specific compound(s) or the Opioid Field (the “Aegis Notice”).

2.        Lightlake shall as soon as possible, but in no event longer than forty (40) days of receipt of the Aegis Notice, provide a written notice to Aegis whether Lightlake intends to exercise the Lightlake Option. In the event that Lightlake does not does exercise the Lightlake Option or fails to deliver to Aegis its intent to exercise such option within the forty (40) day period, then Aegis shall be free to grant such licenses to any other third party covering such Option Compound(s) or the Opioid Field for a period of up to twelve (12) months thereafter (the “Third Party Negotiation Period”).

3.        In the event Lightlake exercises the Lightlake Option, then as partial consideration for the grant to Lightlake of the rights under the license agreement for each Option Compound Lightlake shall pay to Aegis a nonrefundable and noncreditable license issuance fee of Two-Hundred and Fifty Thousand U.S. dollars (U.S. $250,000). Lightlake may elect to pay up to 50% of the Option Fee by issuing to Aegis shares of Lightlake’s common stock subject to the procedures for the License Fee payment in the form of Lightlake shares. In the event that Lightlake exercises the Lightlake Option specific to the Opioid Field then Lightlake shall pay to Aegis the Option Fee.

4.       In the event Lightlake does not exercise the Lightlake Option and the other interested third party either: (i) does not license within the Third Party Negotiation Period, under either feasibility or commercial licenses, the Option Compound; or (ii) the license pertaining to such Option Compound that has been exclusively licensed has been subsequently terminated, or prior to the end of the Third Party Negotiation Period negotiations with the interested third party licensee are terminated as determined in Aegis’ sole discretion, then Aegis shall within thirty (30) days of such termination provide written notice to Lightlake that the Option Compound remains available. Any subsequent inquiry by the same or any other third party interested in licensing such Option Compound shall again be subject to the requirements of this section.

5.       Without limiting the foregoing right of first refusal, Lightlake may in its sole discretion elect to affirmatively exercise the Lightlake Option with respect to any available Option Compound at any time by written notice to Aegis, in which case the same license issuance fees specified in subsection 3 shall apply.

The royalty percentage then applicable to Net Sales of any Product made in any country in the Territory shall be reduced by fifty percent (50%) if at the time of the sale of such Product in such country, the use, manufacture, offer for sale, sale and import of such Product in such county is not covered by a Valid Claim.

These royalties will be reduced by up to 50% in any payment period for the costs associated with the license of additional technology by Lightlake, its affiliates or sublicensees in order for Lightlake to use the Aegis Enhancement Agent for the development or commercialization of the Product but only for sales in the country where the third party patent rights are valid.

If the level of competition, patent protection or general commercial environment affects in any material respect the commercial viability of a Product at the then applicable royalty rate due to Aegis from Lightlake for any country(ies) within the Territory, upon written request from Lightlake, Aegis will negotiate in good faith with Lightlake to endeavor to reach mutual agreement on a reduction to such royalty rate for the applicable Product and applicable country(ies).

“Royalty Term” shall mean, with respect to a Product in a country, a period which is the longer of: (a) if the manufacture, use or sale of such Product in such country is covered by a Valid Claim, the term for which such Valid Claim remains in effect, and (b) fifteen (15) years from the date of the First Commercial Sale of such Product in such country.

“Valid Claim” shall mean, on a country-by-country basis, either (a) a claim of an issued and unexpired patent in any Aegis IP Rights or the Product (excluding any patent owned by Lightlake covering solely a Compound), which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, or which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise, or (b) a claim of a pending patent application in any Aegis IP Rights or the Product (excluding any pending patent application owned by Lightlake), which claim was filed in good faith and has not been abandoned or finally disallowed without the possibility of appeal or refiling of such application, and in any event has not been pending for more than seven (7) years.

“Net Sales” shall mean, with respect to any Product, the invoiced sales price of such Product by Lightlake, its sublicensees and their respective Affiliates billed to independent customers who are not Affiliates, less (a) credits, allowances, discounts and rebates to, and chargebacks from the account of, such independent customers for spoiled, damaged, outdated, rejected or returned Product; (b) actual freight and insurance costs incurred in transporting such Product to such customers; (c) cash, quantity and trade discounts and other price reductions; (d) sales, use, value-added and other direct taxes incurred; and (e) customs duties, surcharges and other governmental charges incurred in connection with the exportation or importation of such Product. Sales between or among Lightlake and its Affiliates or sublicensees shall be excluded from the computation of Net Sales except where such Affiliates or sublicensees are end users of the Product, but Net Sales shall include the subsequent final sales to third parties by such Affiliates or sublicensees.

It is the intent of the Parties that Aegis shall own all rights to the Aegis Intravail^® Technology and the Aegis Know-how. Aegis shall also own any improvements to the Aegis Intravail^® Technology or the Aegis Know-how that may be developed by Lightlake. Aegis shall be free to license its own technology, including any Lightlake improvements, to others on such terms and conditions as it sees fit. Aegis’ rights shall only be limited by the License granted under the license agreement and as described above regarding commercialization of a Product.

Ownership of Intellectual Property: Notwithstanding United States laws regarding inventorship, the Parties agree any patentable new inventions, innovations, developments or discoveries resulting from the activities under the license agreement (“New Inventions”) regardless of whether any such New Inventions are made solely by a party or jointly by both parties, and all patent and other intellectual property rights in any of the New Inventions, shall be owned as follows:

(a)    Lightlake shall remain the sole owner of all rights in the Compound, the Lightlake Know-how and all existing patents and patent applications relating to the use of such technology.

(b)   Aegis shall remain the sole owner of all rights in the Aegis Intravail^® Technology, the Aegis Know-how and all existing patents and patent applications relating to the use of such technology.

(c)    All New Inventions covering Products, including without limitation any invention relating to the use of the Aegis Intravail^® Technology or the Aegis Know-how that are invented in whole or in part by Lightlake (a “Joint Invention”), regardless of whether it may be commercially useful, shall be owned solely by Aegis. Nothing herein shall affect the right of Lightlake to invent and seek intellectual property protection for inventions that do not comprise Aegis Intravail^® Technology.

(d)   Nothing herein shall affect the ability of Aegis to develop and license intellectual property relating to Aegis Intravail^® Technology or any New Invention that is not a Joint Invention.

(e)    In the event a patent application on a New Invention includes at least one claim incorporating limitations that comprise Aegis Intravail^® Technology, the New Invention shall be considered a Joint Invention.

The definitive license agreement shall include mutually agreed upon due diligence obligations for the development and commercialization of the Product.

In the event Lightlake does not pursue Commercially Reasonable Efforts to Exploit a Product, then Aegis will have the right to terminate the license granted, whereupon Lightlake shall assign and transfer exclusively to Aegis (even as to Lightlake) all data and intellectual property that relates solely to such Product, at Aegis’ expense. Said termination will occur upon Aegis delivering to Lightlake a written notice of termination, unless Lightlake responds within sixty (60) days after receipt of said notice with evidence which demonstrates that Lightlake (or its Affiliate as sublicensee) is using Commercially Reasonable Efforts to Exploit a Product. Aegis’ rights to terminated under this Section shall not begin until two (2) years after the Effective Date.