EXHIBIT 10.44

 

[NOTE: CERTAIN PORTIONS OF THIS DOCUMENT HAVE BEEN MARKED TO INDICATE THAT
CONFIDENTIAL INFORMATION HAS BEEN OMITTED. CONFIDENTIALITY HAS BEEN REQUESTED
FOR THIS CONFIDENTIAL INFORMATION. THE CONFIDENTIAL PORTIONS HAVE BEEN PROVIDED
SEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION]

 

EXCLUSIVE LICENSE AGREEMENT

 

This Exclusive License Agreement (hereinafter called the “Agreement”) is made
effective the 2nd day of November, 2004, by and between Wisconsin Alumni
Research Foundation (hereinafter called “WARF”), a nonstock, nonprofit Wisconsin
corporation, and Inspire Pharmaceuticals, Inc. (hereinafter called “Licensee”),
a corporation organized and existing under the laws of Delaware.

 

WHEREAS, WARF and Yeda Research and Development Co. Ltd. (hereinafter called
“Yeda”) own certain inventions described in the “Licensed Patents” defined below
and have entered into an agreement under which Yeda has granted to WARF the
exclusive right to grant, negotiate, execute, administer and enforce licenses
under the Licensed Patents for the benefit of WARF and Yeda (collectively
referred to hereinafter as the “Licensors”); and

 

WHEREAS, WARF is willing to grant a license to Licensee under any one or all of
the Licensed Patents and Licensee desires a license under all of them;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth below, the parties covenant and agree as follows:

 

Section 1. Definitions.

 

For the purpose of this Agreement, the Appendix A definitions shall apply.

 

Section 2. Grant.

 

A. License.

 

WARF hereby grants to Licensee on behalf of the Licensors, and Licensee hereby
accepts, subject to the terms and conditions hereof, an exclusive license under
the Licensed Patents, with the right to grant sublicenses in accordance with
Section 2B below, to develop, make, have made, use, market, distribute, import,
offer for sale and sell Products in the Licensed Field and Licensed Territory.

 

B. Sublicenses.

 

(i) Licensee may grant written sublicenses to third parties with respect to the
rights licensed hereunder. Any agreement granting a sublicense shall state that
the sublicense is subject to the termination of this Agreement, but that such
Sublicensee shall have the right simultaneously with such termination to obtain
a license directly from WARF, and WARF shall simultaneously grant such a
license, under the terms and conditions set forth in this Agreement. During the
term of this Agreement, Licensee shall have the same responsibility for the
activities of any Sublicensee as if the activities were directly those of
Licensee. Licensee shall provide WARF with the name, contact information and
address of each Sublicensee, as well as information regarding the number of
full-time employees of any such Sublicensee to allow WARF to determine whether
it can maintain its small entity filing status for patent prosecution and
maintenance purposes.

 

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(ii) With respect to sublicenses granted by Licensee under this Section 2B,
Licensee shall pay to WARF what Licensee would have been required to pay to WARF
had Licensee sold the amount of Products sold by such Sublicensee. In addition,
if Licensee receives fees or milestone payments in consideration for the grant
of rights under any sublicense, and such amounts are not royalty payments based
directly upon the amount or value of Products sold by the Sublicensee, then
Licensee shall pay to WARF a percentage of such fee or milestone payments as
follows:

 

(a) [CONFIDENTIAL] of such fee or milestone payments received under each
sublicense agreement entered into within [CONFIDENTIAL] of the date hereof;

 

(b) [CONFIDENTIAL] of such fee or milestone payments received under each
sublicense agreement entered into prior to the date that is [CONFIDENTIAL] from
the date hereof but subsequent to the date that is [CONFIDENTIAL] from the date
hereof; and

 

(c) [CONFIDENTIAL] of such fee or milestone payments received under each
sublicense agreement entered into subsequent to the date that is [CONFIDENTIAL]
from the date hereof.

 

The parties agree that payments received by Licensee as payment to or
reimbursement for actual costs and expenses, including direct, indirect and
overhead allocations, calculated in accordance with Licensee’s accounting
practices applied on a consistent basis in accordance with generally accepted
accounting principles, incurred in conducting research or other activities on
behalf of a Sublicensee as part of a research or collaboration or other
agreement, or payments received by Licensee as consideration for services or
goods provided to a Sublicensee, shall not be considered as payments subject to
the percentage distribution set forth above. If goods provided by Licensee to
its Sublicensees are Products as defined under this Agreement, then any payments
received by Licensee for such goods shall be subject to Section 4C. Licensee
shall not receive from its Sublicensees anything of value in lieu of cash
payments in consideration for any sublicense granted under this Agreement,
without the express prior written consent of WARF, such consent not to be
unreasonably withheld, conditioned or delayed.

 

C. Reservation of Rights.

 

Licensors hereby reserve the right to practice and use the inventions of the
Licensed Patents solely for Non-Commercial Research Purposes, and to grant
non-profit research institutions and governmental agencies non-exclusive
licenses under the Licensed Patents for Non-Commercial Research Purposes,
provided that such use shall specifically prohibit any human use or clinical
administration.

 

D. License to WARF.

 

Licensee hereby grants WARF a nonexclusive, royalty-free, irrevocable, paid-up
license, with the right to grant sublicenses solely to non-profit research
institutions and governmental agencies, to practice and use “Improvements” for
Non-Commercial Research Purposes, provided that such use shall specifically
prohibit any human use or clinical administration. “Improvements” shall mean any
patented modification by Licensee during the term of this Agreement of an
invention described in the Licensed Patents that (1) would be infringed by the
practice of an invention claimed in the Licensed Patents; or (2) if not for the
license granted under this Agreement, would infringe one or more Valid Claims of
the Licensed Patents. Licensee shall provide WARF with a written, enabling
disclosure of each such invention, unambiguously identifying it as an invention
governed by this paragraph, within six (6) months of the issuance of a patent
thereon.

 

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Section 3. Development.

 

Licensee agrees to and warrants that it has, or will obtain, the expertise
reasonably necessary to independently evaluate the inventions of the Licensed
Patents and to undertake the development of Products for sale in the commercial
market, and that it so intends to develop Products for the commercial market.
Further, the parties agree that Licensee has, as of the date hereof, provided
WARF with a development plan encompassing at least the information set forth in
Appendix E describing the steps Licensee reasonably anticipates, consistent with
industry practice, as necessary to allow the inventions of the Licensed Patents
to be utilized to provide Products for sale in the commercial market. The
parties acknowledge that such plan may be subject to change, as determined by
Licensee in its sole and reasonable discretion. In addition, within one (1)
month following the end of each annual period ending on December 31 until the
Date of First Commercial Sale of Products, Licensee will provide WARF with a
written Development Report summarizing Licensee’s product development activities
since the last Development Report and any necessary adjustments to the
development plan. If Licensee fails to provide a written Development Report to
WARF within forty-five (45) days of receipt of written request from WARF as a
result of Licensee’s failure to provide the Development Report to WARF within
the required time period set forth above (i.e., by January 31 for the prior
calendar year), such failure shall be deemed a material breach of a material
covenant under this Agreement. All development activities and strategies and all
aspects of product design and decisions to market and the like are entirely at
the discretion of Licensee, and Licensee shall rely entirely on its own
expertise and/or the expertise of Licensee’s contractors and collaborators with
respect thereto. WARF’s review of Licensee’s development plan is solely to
verify the existence of Licensee’s commitment to the development activity
described in Appendix E hereto and to assure compliance with Licensee’s
obligations to utilize the inventions of the Licensed Patents to commercialize
Products for the marketplace. WARF reserves the right to audit Licensee’s
records relating to development of Products as required hereunder. Such record
keeping and audit procedures shall be subject to the procedures and restrictions
set forth in Section 6 for auditing the financial records of Licensee.

 

Section 4. Consideration.

 

A. License Fee.

 

Licensee agrees to pay to WARF a license fee of $150,000 within thirty (30) days
of execution of this Agreement.

 

B. Milestone Fees.

 

Licensee agrees to pay to WARF the amounts detailed below within thirty (30)
days of the achievement of the corresponding milestones.

 

Milestone

--------------------------------------------------------------------------------

 

Milestone Fee

--------------------------------------------------------------------------------

[CONFIDENTIAL]

  $[CONFIDENTIAL]

[CONFIDENTIAL]

  $[CONFIDENTIAL]

[CONFIDENTIAL]

  $[CONFIDENTIAL]

[CONFIDENTIAL]

  $[CONFIDENTIAL]

 

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Each milestone payment above shall only be made once under this Agreement upon
the initial accomplishment of the relevant milestone in connection with the
first Product for which such milestone event occurs. Thus, a maximum of
$1,800,000 in potential milestones is payable during the term of this Agreement.

 

C. Royalty; Combination Products; Third Party Royalties.

 

(i) In addition to the Section 4A license fee and Section 4B milestone fees,
Licensee agrees to pay to WARF a royalty calculated as [CONFIDENTIAL] of the
Selling Price of Products sold by or on behalf of Licensee in jurisdictions in
the Licensed Territory where the use or sale of such Products would, but for the
licenses granted hereunder, infringe a Valid Claim of the Licensed Patents in
that jurisdiction. The royalty shall be deemed earned as of the earlier of the
date the Product is actually sold or otherwise transferred for consideration, or
the date an invoice is sent by Licensee. No multiple royalty shall be payable
because the manufacture, use, sale or distribution of a Product is covered by
more than one Valid Claim. In addition, with respect to transfers of Products
by, between or among Licensee and Licensee’s affiliates or Sublicensees, no
royalty shall be due and payable where the affiliate or Sublicensee will resell
the Products and such resale will be subject to the earned royalty calculation.

 

(ii) Notwithstanding the foregoing or anything to the contrary in this
Agreement, in the event that Products are sold by Licensee as part of a
combination or bundled product, the Selling Price of such combination/bundled
product, for the purposes of determining royalty payments due under this
Agreement, shall be determined by multiplying the Selling Price (as defined on
Appendix A) of the combination/bundled product by the fraction A/(A+B), where A
is the average sale price of the Product when sold separately in finished form
and B is the average sale price of the other product(s) or system sold
separately in finished form, so that A+B is the average sale price of the
product(s). In the event that such average sale price cannot be determined for
both the Product and such other product(s) or system(s) in combination, the
Selling Price for the purposes of determining royalty payments with respect to
such combination or bundled product shall be commercially reasonable and
determined by good faith negotiation between WARF and Licensee.

 

(iii) Notwithstanding the foregoing, in addition to and without limitation of
any reduction in royalties pursuant to Section 4C(ii) above, if Licensee makes
payments to one or more independent third parties during any calendar year to
obtain or maintain a license or similar right under intellectual property owned
by such independent third party as determined in good faith by Licensee, after
consultation with WARF, to be reasonably necessary to avoid infringement thereof
by the manufacture, use, or sale of Products, or to reasonably avoid
infringement-related litigation with respect to such patent(s), then Licensee
may deduct [CONFIDENTIAL] of such third party payments from royalties payable to
WARF with respect to that calendar year, provided that such deduction does not
exceed [CONFIDENTIAL] of the royalties payable to WARF under this Agreement
during any such calendar year.

 

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D. Minimum Royalty.

 

Licensee further agrees to pay to WARF a minimum royalty of $10,000 per calendar
year, or pro rated portion thereof for each partial calendar year, during which
this Agreement is in effect starting in calendar year 2008, against which any
earned royalty paid for the same calendar year will be credited. The minimum
royalty for a given year shall be due at the time payments are due for the
calendar quarter ending on December 31. It is understood that the minimum
royalties will apply on a calendar year basis, and that sales of Products
requiring the payment of earned royalties made during a prior or subsequent
calendar year shall have no effect on the annual minimum royalty due WARF for
any given calendar year.

 

E. Patent Fees and Costs.

 

(i) Licensee also agrees to reimburse the Licensors for all reasonable,
documented costs associated with the filing, prosecution and maintenance of the
Licensed Patents. Licensee shall pay to WARF $67,353.32 within thirty (30) days
of execution of this Agreement to reimburse the Licensors for the
previously-incurred expenses incurred with respect to the Licensed Patents.
Licensee shall pay to WARF all reasonable, documented future expenses associated
with the filing, prosecution and maintenance of the Licensed Patents within
thirty (30) days of receiving an invoice from WARF with respect thereto.

 

(ii) WARF shall keep Licensee advised as to the maintenance of all Licensed
Patents by promptly forwarding to Licensee copies of all official correspondence
received or provided to the corresponding patent office relating thereto
(including, but not limited to, patent applications, Office Actions, responses,
etc.). Licensee shall have the right to advise WARF as to such maintenance; and
further, Licensee shall have the right to make reasonable requests to WARF as to
the conduct of such maintenance; provided, however, that Licensee understands
and agrees that WARF has the sole and final authority to make final decisions.

 

(iii) WARF will maintain the Licensed Patents until WARF makes a good faith
determination, in consultation with Licensee, that continued maintenance is
unnecessary. If WARF makes such a good faith determination to abandon a Licensed
Patent, WARF shall provide Licensee written notice of WARF’s intent to abandon
such patent at least ninety (90) days in advance of any applicable statutory
deadline. In such event, Licensee shall have the right to continue maintenance
of said patent, at its own expense, on behalf of WARF, Yeda and Licensee, to the
extent allowed under applicable law, by providing written notice thereof to WARF
within such ninety (90) day period.

 

F. Accounting; Payments; Taxes.

 

(i) Amounts owing to WARF under Sections 2B and 4C shall be paid on a quarterly
basis, with such amounts due and received by WARF on or before the sixtieth
(60th) day following the end of the calendar quarter ending on March 31, June
30, September 30 or December 31 in which such amounts were earned. The balance
of any amounts which remain unpaid more than thirty (30) days after they are due
to WARF shall accrue interest until paid at the rate of the lesser of one
percent (1%) per month or the maximum amount allowed under applicable law.
However, in no event shall this interest provision be construed as a grant of
permission for any payment delays.

 

(ii) Except as otherwise directed, all amounts owing to Licensors under this
Agreement shall be paid in U.S. dollars to WARF at the address provided in
Section 16(a). For converting any royalty payments on Selling Prices made in a
currency other than U.S. dollars, Selling Prices shall first be determined in
the currency of the country in which they are earned and shall be converted each
calendar quarter into an account in U.S. dollars at the average of the bid and
ask prices reported in the Wall Street Journal as of the close of the last
business day of such calendar quarter in which such royalty is due. If the last
day of such calendar quarter is not a business day, then the closest preceding
business day shall be used for such calculation. All such converted Selling
Prices

 

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for each country shall be consolidated for each calendar quarter and the
applicable royalty payable determined therefrom. WARF is exempt from paying
income taxes under U.S. law. Therefore, all payments due under this Agreement
shall be made without deduction for income taxes, assessments, or other charges
of any kind which may be imposed on WARF by any government outside of the United
States or any political subdivision of such government with respect to any
amounts payable to WARF pursuant to this Agreement, where WARF has registered as
a tax exempt entity and any such jurisdiction has approved such claim;
otherwise, Licensee shall be entitled to deduct from any payments due to WARF
all applicable taxes.

 

(iii) A full accounting showing how any amounts owing to WARF under Sections 2B
and 4C have been calculated shall be submitted to WARF on the date of each such
payment. Such accounting shall be on a per-country and product line, model or
trade name basis and shall be summarized on a form similar to that shown in
Appendix C of this Agreement. In the event no payment is owed to WARF, a
statement setting forth that fact shall be supplied.

 

Section 5. Certain Warranties.

 

A. WARF represents and warrants that, except as otherwise provided under Section
14 of this Agreement with respect to U.S. Government interests:

 

(i) WARF and Yeda are the sole owners of the Licensed Patents or otherwise have
the sole and exclusive right to grant the licenses granted to Licensee in this
Agreement, and to the best of the WARF’s knowledge, free and clear of any liens,
claims, and encumbrances of any non-governmental third party;

 

(ii) WARF and Yeda have entered into a definitive agreement granting to WARF the
exclusive right to grant, negotiate, execute, administer and enforce exclusive
licenses under the Licensed Patents with Licensee and such definitive agreement
does not conflict with any provision or right or obligation granted or received
hereunder;

 

(iii) subject to Section 2C above and to any research rights previously granted
by Licensors to the inventors of the Licensed Patents or research rights
reserved by the inventors of the Licensed Patents, WARF and Yeda have not
granted to any third party any rights to or under the Licensed Patents that
currently conflict or in the future will conflict with, contradict, or overlap
with those granted hereunder; and

 

(iv) WARF and Yeda have not received any notification that the Licensed Patents
are invalid or that the exercise of any rights granted hereunder will infringe
on any patent or other proprietary right of any third party.

 

Nothing in this Agreement shall be construed as:

 

(i) a warranty or representation by the Licensors as to the validity or scope of
any of the Licensed Patents;

 

(ii) a warranty or representation that anything made, used, sold or otherwise
disposed of under the license granted in this Agreement will or will not
infringe patents of third parties; or

 

(iii) an obligation to furnish any intellectual property not provided in the
Licensed Patents or any services other than those specified in this Agreement.

 

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B. THE LICENSORS MAKE NO REPRESENTATIONS, EXTEND NO WARRANTIES OF ANY KIND,
EITHER EXPRESS OR IMPLIED, AND ASSUME NO RESPONSIBILITIES WHATSOEVER WITH
RESPECT TO THE USE, SALE, OR OTHER DISPOSITION BY LICENSEE, ITS SUBLICENSEE(S),
OR THEIR VENDEES OR OTHER TRANSFEREES, OF PRODUCTS INCORPORATING OR MADE BY USE
OF INVENTIONS LICENSED UNDER THIS AGREEMENT.

 

C. Licensee represents and warrants that Products produced under the license
granted herein for sale in the United States shall be manufactured substantially
in the United States as required by 35 U.S.C § 204 and applicable regulations of
Chapter 37 of the Code of Federal Regulations.

 

Section 6. Recordkeeping.

 

A. Licensee shall keep books and records sufficient to verify the accuracy and
completeness of Licensee’s accounting referred to above, including, without
limitation, inventory, purchase and invoice records relating to all Products and
their manufacture. In addition, Licensee shall maintain documentation evidencing
that Licensee is in fact pursuing the development of Products as required
herein. Such documentation may include, but is not limited to, invoices for
studies advancing development of Products, laboratory notebooks, internal job
cost records, and filings made to the Internal Revenue Department to obtain tax
credit, if applicable, for research and development activities. Such books and
records shall be preserved for a period of not less than four (4) years after
they are created during the term of this Agreement. Licensee shall use
commercially reasonable efforts to include similar recordkeeping provisions in
any sublicense granted under this Agreement.

 

B. Licensee shall take all steps necessary so that WARF may, within thirty (30)
days of its request and at WARF’s cost and expense (except as provided under
Section 6D below), but not more than once in any consecutive four (4) calendar
quarters, review all the relevant books and records relating to Licensee’s
activities under this Agreement to allow WARF to verify the accuracy of
Licensee’s royalty reports and Development Reports. Such review may be performed
by any qualified WARF employee as to the Development Reports, or any registered
certified public accountant (“CPA”) from a nationally-recognized accounting firm
designated by WARF, upon reasonable notice as set forth above and during
Licensee’s regular business hours. Licensee shall use commercially reasonable
efforts to include similar auditing provisions in any sublicense granted
pursuant to this Agreement. WARF agrees that any such WARF employee and
registered CPA shall be subject to an obligation to maintain any information
reviewed in confidence.

 

C. If a royalty payment deficiency is reasonably determined by such registered
CPA, after normal adjustments, detailed information supporting such deficiency
shall be provided to Licensee. If Licensee agrees with the determination,
Licensee shall pay the royalty deficiency outstanding within thirty (30) days of
receiving written notice thereof, plus interest on outstanding amounts as
described in Section 4F(i); provided, however, if Licensee contests the validity
of any such deficiency, the parties shall, within ninety (90) days of notice of
disagreement, submit the results of the review and information deemed relevant
by Licensee, to an independent third party to resolve the dispute. Such third
party shall be a nationally recognized accounting firm and the costs associated
with the review performed by any such firm shall be divided and paid equally by
the parties.

 

D. If a royalty payment deficiency for a calendar year exceeds five percent (5%)
of the royalties due for that year, then Licensee shall be responsible for
paying WARF’s reasonable, documented out-of-pocket expenses incurred with
respect to such review. Upon the expiration of four (4) years following the end
of any calendar year, the calculation of royalties in respect of such calendar
year shall be binding and conclusive upon WARF; provided, however, such
limitation shall not apply to any instance of fraud, gross negligence or
intentional misrepresentation with respect to the Licensee’s calculation of
royalties hereunder.

 

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Section 7. Term and Termination.

 

A. The term of this Agreement and the licenses granted hereunder shall begin on
the effective date of this Agreement and continue until: (i) this Agreement is
terminated as provided herein, or (ii) on a country-by-country basis, until the
date that no Licensed Patent with respect to a given country remains an
enforceable patent.

 

B. Licensee may terminate this Agreement at any time by giving at least ninety
(90) days written and unambiguous notice of such termination to WARF. Such a
notice shall be accompanied by a statement of the reasons for termination.

 

C. If Licensee at any time defaults in the timely payment of any monies due to
the Licensors or commits any material breach of any other material covenant
herein contained, and Licensee fails to remedy any such breach or default within
ninety (90) days after written notice thereof by WARF, or, if such breach is not
remediable within such ninety (90) day period, Licensee fails to undertake
reasonable steps to remedy such breach within such ninety (90) day period, or if
Licensee commits any act of bankruptcy, is unable to pay its debts as they
become due, files a petition under any bankruptcy or insolvency act, or has any
such petition filed against it which is not dismissed within sixty (60) days,
WARF may, at its option, within ninety (90) days of the discovery of the event
giving rise to the right to terminate this Agreement, elect to terminate this
Agreement by giving notice of such termination to Licensee; provided, however,
that time is of the essence with respect to WARF’s option to terminate within
the referenced ninety (90) day period. WARF shall exercise its option to
terminate this Agreement within the ninety (90) day period or such option shall
terminate.

 

D. Upon the termination of this Agreement, and subject to Section 7D below,
Licensee shall remain obligated to provide an accounting for and to pay
royalties earned up to the date of termination, and any minimum royalties shall
be prorated as of the date of termination by the number of days elapsed in the
applicable calendar year.

 

E. Upon termination of this Agreement by WARF or Licensee, Licensee shall
provide WARF with a written inventory of all Products in the process of being
manufactured, in use, in stock, or otherwise under Licensee’s control, for which
the Licensed Patents have not expired. Licensee shall have the privilege of
disposing of such inventory of Products within a period of one hundred and
eighty (180) days of such termination, and any such dispositions shall bear
royalties if royalties would otherwise have been payable on such Products under
this Agreement. Licensee will also have the right to complete performance of all
contracts requiring practice of the technology claimed in the Licensed Patents
or the use of Products within and beyond said one hundred eighty (180) day
period, provided that the remaining term of any such contract does not exceed
beyond one (1) year from the effective date of the termination of this Agreement
and any such contract shall bear royalties as set forth in this Agreement. All
Products for which the Licensed Patents have not expired which are not disposed
of as provided above shall be delivered to WARF or destroyed, in WARF’s sole
discretion, at Licensee’s sole expense.

 

F. Waiver by either party of a single breach or default, or a succession of
breaches or defaults, shall not deprive such party of any right to terminate
this Agreement in the event of any subsequent breach or default.

 

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G. Upon expiration of this Agreement due to the expiration of all Licensed
Patents with respect to a particular jurisdiction, Licensee shall have the
unrestricted royalty-free right to develop, make, have made, use, market,
distribute, import, offer for sale and sell Products in such jurisdiction.

 

Section 8. Assignability.

 

This Agreement may not be transferred or assigned by Licensee without the prior
written consent of WARF. Notwithstanding the foregoing, Licensee may assign this
Agreement or otherwise transfer its rights hereunder without such consent to the
following parties: (a) a successor to Licensee’s business by sale, exchange,
transfer, merger or consolidation, or a successor to that portion of Licensee’s
business that pertains to the subject matter of the Licensed Patents, or (b) any
entity or entities controlled by, controlling or under common control with
Licensee, where control means ownership of more than fifty percent (50%) of the
entity’s outstanding equity or the ability to control the entity through voting
shares or otherwise; provided that such assignee or transferee agrees to be
bound by the terms and conditions of this Agreement. Subject to the foregoing,
this Agreement shall be binding on and inure to the benefit of each of WARF,
Yeda, and Licensee, and each of their respective successors and assigns.

 

Section 9. Contest of Validity.

 

In the event Licensee or any Sublicensee contests the validity or enforceability
of any Licensed Patent, Licensee shall continue to pay royalties with respect to
that patent as if such contest were not underway until the patent is adjudicated
invalid or unenforceable by a court of last resort.

 

Section 10. Patent Enforcement and Infringement Defense.

 

A. Each party shall inform the other parties promptly in writing of any alleged
infringement of the Licensed Patents by a third party, of which it becomes
aware, and any available evidence thereof. WARF maintains the sole right to
prosecute, at its own expense, all infringements of the Licensed Patents, and to
settle any such suit or action, provided that such settlement does not: (i)
subject Licensee to any non-indemnified liability, (ii) admit fault or
wrongdoing on the part of Licensee, or (iii) permit continuing use of or grant
of any on-going rights that conflict with the license granted to Licensee under
this Agreement. Upon WARF’s request, Licensee shall take action, join in an
action and otherwise provide WARF with such assistance and information as may be
useful to WARF in connection with such action (if the cause of action arose
during the term of this Agreement and WARF reimburses Licensee for Licensee’s
reasonable out-of-pocket expenses).

 

B. If: (i) within six (6) months after having been notified by Licensee of an
alleged infringement of the Licensed Patents in the Licensed Field and Licensed
Territory, WARF has not been successful in persuading the alleged infringer to
desist, or has not brought and is not diligently prosecuting an infringement
action with respect to such alleged infringement; or (ii) if WARF notifies
Licensee at any time prior thereto of its intention not to bring suit or to seek
a settlement with respect to such infringement or to take reasonable action
against any alleged infringer, then, and only in those events and subject to the
prior written consent of WARF, such consent not to be unreasonably withheld,
conditioned or delayed, Licensee shall have the right, but not the obligation,
to prosecute at its own expense any infringement of the Licensed Patents in the
Licensed Field and Licensed Territory. Licensee may, for such purposes, use the
name of the Licensors as party plaintiffs; provided that Licensee shall permit
Licensors the opportunity to cooperate and jointly participate in such action
and Licensee agrees to take into account the reasonable concerns and requests of
the Licensors in such action. During said litigation, Licensee shall act in good
faith to preserve the right, title and interest of the Licensors in and to the
Licensed Patents, shall keep the Licensors advised as to the status of the
litigation and shall not enter into a settlement of such litigation without
first allowing WARF the option of either approving the settlement or of
continuing the litigation at WARF’s expense (upon payment to Licensee of its
out-of-

 

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pocket costs and expenses of the litigation). Licensee shall bear all costs and
expenses of any suit brought under this Section 10B, and Licensee shall keep any
recovery or damages for past infringement derived therefrom; provided, however,
that if Licensor becomes involved in such litigation, the parties agree to
equitably allocate any recovery or damages awarded based upon the applicable
economics of this Agreement and the relative contribution of the parties to such
litigation. Nothing herein shall permit or allow Licensee to commence any action
for infringement of the Licensed Patent for any activity allowed under a
settlement arrangement entered into by the Licensors in good faith with a third
party infringer. WARF reserves the right to select and retain counsel of its own
to preserve and defend the rights and interest of the Licensors in the Licensed
Patents.

 

Section 11. Patent Marking.

 

Licensee and its Sublicensees shall mark all Products or Product packaging with
the appropriate patent number reference if and as may be necessary to comply
with the requirements of U.S. law, 35 U.S.C. § 287.

 

Section 12. Product Liability; Conduct of Business.

 

A. Licensee shall, at all times during the term of this Agreement and
thereafter, indemnify, defend and hold Licensors and the inventors of the
Licensed Patents (the “Indemnified Parties”; each, an “Indemnified Party”)
harmless against all third party claims and expenses, including legal expenses
and reasonable attorneys fees, arising out of the death of or injury to any
person or persons or out of any damage to property and against any other claim,
proceeding, demand, expense and liability of any kind whatsoever resulting from
the production, manufacture, sale, use, lease, consumption or advertisement of
Products manufactured, used, or sold by Licensee or any Sublicensee, provided
that Licensee shall not be obligated to indemnify any Indemnified Party to the
extent any such claim results from the negligence, intentional misconduct,
breach of this Agreement, or the failure to comply with any applicable laws,
rules, and regulations by an Indemnified Party or any third party under an
Indemnified Party’s reasonable control. Each Indemnified Party shall, at all
times, have the right to select and retain counsel of its own to defend its
interests.

 

B. The Indemnified Parties agree to give Licensee prompt written notice of any
matter with respect to which any Indemnified Party intends to claim
indemnification hereunder. The Indemnified Parties shall permit Licensee, at its
discretion, to settle any such action, claim or liability and agree to the
complete control of such defense or settlement by Licensee; provided, however,
that such settlement does not adversely affect the Indemnified Parties, or any
property rights of the Indemnified Parties, or impose any obligation on the
Indemnified Parties in addition to those set forth in this Agreement. Each
Indemnified Party shall cooperate fully with Licensee in the investigation and
defense of any matter for which indemnification is claimed hereunder.

 

C. Licensee warrants that it now maintains and will continue to maintain such
liability insurance coverage as it reasonably deems appropriate to the risk
involved in developing or marketing the products subject to this Agreement, and
that such insurance coverage is sufficient to cover the Licensors and inventors
of the Licensed Patents. WARF shall provide Licensee with the names of such
inventors of the Licensed Patents. Within ninety (90) days after the execution
of this Agreement and thereafter annually between January 1 and January 31 of
each year, Licensee will present evidence to WARF that the coverage is being
maintained. In addition, Licensee shall use commercially reasonable efforts to
provide WARF with at least thirty (30) days prior written notice of any material
reduction in or cancellation of the insurance coverage.

 

Page 10 of 19

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Section 13. Use of Names.

 

Neither Licensee nor its Sublicensees shall use WARF’s name, Yeda’s name, the
name of any inventor of the technology governed by this Agreement, or the name
of the University of Wisconsin or the Weizmann Institute of Science in sales
promotion, advertising, or any other form of publicity without the prior written
approval of the entity or person whose name is being used, provided that,
notwithstanding anything to the contrary in this Agreement, Licensee shall have
the right to identify Licensors as the licensors hereunder and the inventors of
the technology licensed hereunder as the inventors thereof and to describe the
technology licensed hereunder. WARF acknowledges Licensee’s intent to issue a
press release regarding this Agreement and the technology licensed hereunder
after execution of the Agreement. Licensee shall have the right to disclose,
under conditions of confidentiality, the terms of this Agreement to prospective
investors, sublicensees, investment bankers, attorneys, auditors, and regulatory
authorities in connection with its financing, auditing, regulatory, development,
licensing, partnership, and stockholder relations activities. In addition,
Licensee shall have the right to disclose the terms of this Agreement as
Licensee may deem to be required in any prospectus, offering memorandum, or
other document or filing prepared in connection with its compliance obligations
under applicable securities law or other applicable law or regulation.

 

Section 14. United States Government Interests.

 

It is understood that if the United States Government (through any of its
agencies or otherwise) has funded research, during the course of or under which
any of the inventions of the Licensed Patents were conceived or made, the United
States Government is entitled, as a right, under the provisions of 35 U.S.C. §§
200-212 and applicable regulations of Chapter 37 of the Code of Federal
Regulations, to a nonexclusive, nontransferable, irrevocable, paid-up license to
practice or have practiced the invention of such Licensed Patents for
governmental purposes. Any license granted under this Agreement to Licensee or
any of its sublicensee shall be subject to such right.

 

Section 15. Miscellaneous.

 

This Agreement shall be governed by and construed in all respects in accordance
with the laws of the State of Wisconsin. If any provisions of this Agreement are
or shall come into conflict with the laws or regulations of any jurisdiction or
any governmental entity having jurisdiction over the parties or this Agreement,
those provisions shall be deemed automatically deleted, if such deletion is
allowed by relevant law, and the remaining terms and conditions of this
Agreement shall remain in full force and effect. If such a deletion is not so
allowed or if such a deletion leaves terms thereby made clearly illogical or
inappropriate in effect, the parties agree to substitute new terms as similar in
effect to the present terms of this Agreement as may be allowed under the
applicable laws and regulations. The parties hereto are independent contractors
and not joint venturers or partners.

 

Section 16. Notices.

 

Any notice required to be given pursuant to the provisions of this Agreement
shall be in writing and shall be deemed to have been given at the earlier of the
time when actually received as a consequence of any effective method of
delivery, including but not limited to hand delivery, transmission by
telecopier, or delivery by a professional courier service or the time when sent
by certified or registered mail addressed to the party for whom intended at the
address below or at such changed address as the party shall have specified by
written notice, provided that any notice of change of address shall be effective
only upon actual receipt.

 

(a)

  

Wisconsin Alumni Research Foundation

    

Attn: Managing Director

    

614 Walnut Street

    

Madison, Wisconsin 53726

 

Page 11 of 19

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(b)

  

Yeda Research and Development Co. Ltd.

    

Attn: President

    

P.O. Box 95

    

Rehovot, 76100, Israel

(c)

  

Inspire Pharmaceuticals, Inc.

    

Attn: General Counsel

    

4222 Emperor Boulevard, Suite 200

    

Durham, NC 27703

 

Section 17. Integration.

 

This Agreement constitutes the full understanding between the parties with
reference to the subject matter hereof, and no statements or agreements by or
between the parties, whether orally or in writing, except as provided for
elsewhere in this Section 17, made prior to or at the signing hereof, shall vary
or modify the written terms of this Agreement. Neither party shall claim any
amendment, modification, or release from any provisions of this Agreement by
mutual agreement, acknowledgment, or otherwise, unless such mutual agreement is
in writing, signed by the other party, and specifically states that it is an
amendment to this Agreement.

 

Section 18. Confidentiality.

 

Except to the extent expressly authorized by this Agreement or otherwise agreed
in writing, the parties hereto agree that, for the term of this Agreement and
for five (5) years thereafter, the receiving party shall keep confidential and
shall not disclose or use for any purpose other than as permitted under this
Agreement any confidential information furnished to it by the other party
pursuant to this Agreement. “Confidential Information” shall include Licensee’s
development plan, development reports, and royalty reports, any information
reviewed by or on behalf of WARF under Section 6 hereof, the Licensed Patents,
and all information concerning them and any other information marked
confidential or accompanied by correspondence indicating such information is
exchanged in confidence between the parties. Except as may be authorized in
advance in writing by WARF, Licensee shall grant access to the Confidential
Information of WARF and Yeda only to its Sublicensees and those employees,
consultants, and contractors of Licensee and its Sublicensees involved in
research, development or other activities relating to Products or the Licensed
Patents who are under conditions of confidentiality, and to prospective
investors, sublicensees, investment bankers, auditors, attorneys, and regulatory
authorities in connection with its financing, regulatory, product development,
and business development activities. Licensee shall use commercially reasonable
efforts to require its Sublicensees and all such employees, consultants,
contractors, prospective investors, sublicensees, investment bankers, auditors,
attorneys, and regulatory authorities (if possible), to be bound by terms of
confidentiality no less restrictive than those set forth in this Section 18.
Licensee shall use such Confidential Information only in the course of
exercising the rights granted under this Agreement or in the fulfillment of the
obligations entered into hereunder. The confidentiality and use obligations set
forth above apply to all or any part of the Confidential Information disclosed
hereunder except to the extent that:

 

(i) WARF, Yeda, Licensee or its Sublicensees can show by written record that it
possessed the information prior to its receipt from the other party;

 

(ii) the information was already available to the public or became so through no
fault of WARF, Yeda, Licensee or Sublicensees; or

 

Page 12 of 19

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(iii) the information is subsequently disclosed without obligation of
confidentiality to WARF, Yeda, Licensee or Sublicensees by a third party that
has the right to disclose it free of any obligations of confidentiality or

 

(iv) the recipient can demonstrate by written record was developed by or for the
recipient independently of the disclosure of information by the other party.

 

Section 19. Authority.

 

The persons signing on behalf of Licensors and Licensee hereby warrant and
represent that they have authority to execute this Agreement on behalf of the
party for whom they have signed.

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the
dates indicated below.

 

WISCONSIN ALUMNI RESEARCH FOUNDATION

By:

 

/s/ Carl E. Gulbrandsen

--------------------------------------------------------------------------------

 

Date: November 2, 2004

   

Carl E. Gulbrandsen, Managing Director

   

 

INSPIRE PHARMACEUTICALS, INC.

By:

 

/s/ Chrsity L. Shaffer

--------------------------------------------------------------------------------

 

Date: November 1, 2004

   

Christy L. Shaffer, Chief Executive Officer

   

 

--------------------------------------------------------------------------------

    Reviewed by WARF’s Attorney:    

 

 

/s/ David M. Kettner, Esq.

--------------------------------------------------------------------------------

 

Date: October 29, 2004

David M. Kettner, Esq.

   

 

(WARF’s attorney shall not be deemed a signatory to this Agreement.)

 

WARF Ref: Kaufman – P95212US

 

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APPENDIX A

 

A. “Date of First Commercial Sale” shall mean the date when cumulative sales to
the retail market of Products exceeds $50,000.

 

B. “Development Report” shall mean a written account of Licensee’s progress
under the development plan having at least the information specified on Appendix
D to this Agreement, which shall be sent to the address specified on Appendix D.

 

C. “Licensed Field” shall be limited to ocular human therapeutics.

 

D. “Licensed Patents” shall refer to and mean those patents listed on Appendix B
attached hereto in the Licensed Territory, and any subsequent patents owned by
WARF or YEDA in a country in the Licensed Territory, including any reissues,
reexaminations, renewals, extensions, divisions, continuations or requests for
continued examinations, but only to the extent they claim inventions claimed in
a patent listed on Appendix B.

 

E. “Licensed Territory” shall be limited to the United States, its territories
and possessions and those countries or regions for which patents are included on
Appendix B.

 

F. “Non-Commercial Research Purposes” shall mean the use of the inventions of
the Licensed Patents and/or Improvements solely for academic research purposes
or other not-for-profit or scholarly purposes not involving the use of the
inventions of the Licensed Patents or Improvements to perform services for a fee
or for the production or manufacture of products for sale to third parties, and
the parties agree that the permitted right to practice and use reserved under
rights related to Non-Commercial Research Purposes shall not include the ability
of any person or entity to perform sponsored research wherein the sponsor
receives a right, whether actual or contingent, direct or indirect, license,
option or otherwise, to the results of the sponsored research or to any
proprietary property or intellectual property or property rights derived
directly from such sponsored research.

 

G. “Products” shall refer to and mean any and all products the use or sale of
which would, but for the licenses granted under this Agreement, otherwise
constitute infringement of any Valid Claim of the Licensed Patents.

 

H. “Selling Price” shall mean, in the case of Products that are sold or
licensed, the invoice price to the end user of Products less any (i) shipping,
postage, freight, and insurance costs, (ii) allowances, rebates, credits and
refunds for returned or defective Products, (iii) allowances, rebates, credits,
discounts and refunds for normal trade and quantity concessions, (iv) sales
taxes, and other taxes or duties related to product sales (excluding income
taxes), (v) chargeback payments and rebates (or the equivalent thereof) granted
to managed health care organizations, wholesalers, or to federal,
state/provincial, local and other governments, including their agencies,
purchasers, and/or reimbursers, or to trade customers, and (vi) any import or
export duties, tariffs, or similar charges incurred with respect to the import
or export of Products and/or currency (to make royalty payments) into or out of
any country in the Licensed Territory. Notwithstanding the foregoing, the
Selling Price shall not include, and shall be deemed zero with respect to: (1)
the distribution of reasonable quantities of promotional samples of Products
distributed for the sole purpose of promoting that Product, or (2) Products
provided for clinical trials or research purposes. The Selling Price for a
Product that is transferred to a third party for promotional purposes without
charge in excess of what is reasonable according to industry standards, or for
promoting another product, shall be the average invoice price to the end user of
that type of Product during the applicable calendar quarter.

 

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I. “Sublicensee” shall mean any party who is granted a license by Licensee under
the rights granted to Licensee under this Agreement.

 

J. “Valid Claim” shall mean any claim in an issued and unexpired patent included
within the Licensed Patents which claim has not been revoked or held
unenforceable, unpatentable or invalid by a decision of a court or other
governmental agency of competent jurisdiction, or that remains unappealable or
unappealed within the time allowed for appeal, or that has not been disclaimed,
denied or admitted to be invalid or unenforceable through reissue,
re-examination, disclaimer or otherwise.

 

Page 15 of 19

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APPENDIX B

 

LICENSED PATENTS

 

REFERENCE

NUMBER

--------------------------------------------------------------------------------

 

COUNTRY

--------------------------------------------------------------------------------

 

PATENT

NUMBER

--------------------------------------------------------------------------------

  

ISSUE

DATE

--------------------------------------------------------------------------------

  

APPLICATION

SERIAL NUMBER

--------------------------------------------------------------------------------

CYTOSKELETAL ACTIVE AGENTS FOR GLAUCOMA THERAPY (Paul L. Kaufman and Benjamin
Geiger)

P95212US

  UNITED STATES   5,798,380    8/25/1998    08/604,568

P95212WO

  PCT   —      —      US97/02709

P95212IL

  ISRAEL   125735    12/18/2003    125735 CYTOSKELETAL ACTIVE AGENTS FOR
GLAUCOMA THERAPY (Paul L. Kaufman and Benjamin Geiger)

P98048US

  UNITED STATES   6,110,912    8/29/2000    09/022,228 CYTOSKELETAL ACTIVE
AGENTS FOR GLAUCOMA THERAPY (Paul L. Kaufman and Benjamin Geiger)

P01051US

  UNITED STATES   6,586,425    7/1/2003    09/772,412

 

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APPENDIX C

 

WARF ROYALTY REPORT

 

Licensee:                                    
                                                 

            Agreement No:                        

Inventor:                                    
                                                 

            P#:        P            

 

Period Covered:

               From:         /        /                 Through:
        /        /            

 

Prepared By:                                                                   
        Date:                            
Approved By:                                                                    
     Date:                            

 

If license covers several major product lines, please prepare a separate report
for each line. Then combine all product lines into a summary report.

 

Report Type:    ¨     Single Product Line Report:
                                                                         

 

                ¨ Multiproduct Summary Report.    Page 1 of          Pages

 

                ¨ Product Line Detail. Line:                      Tradename:
                     Page:             

 

Report Currency:    ¨    U. S. Dollars            ¨     Other
                                                             

 

   

Gross

Sales

--------------------------------------------------------------------------------

 

* Less:

Allowances

--------------------------------------------------------------------------------

 

Net Sales

--------------------------------------------------------------------------------

 

Royalty

Rate

--------------------------------------------------------------------------------

 

Period Royalty Amount

--------------------------------------------------------------------------------

Country

--------------------------------------------------------------------------------

         

This Year

--------------------------------------------------------------------------------

 

Last Year

--------------------------------------------------------------------------------

U.S.A.

                       

Canada

                       

Europe:

                       

Japan

                       

Other:

                       

TOTAL:

                       

 

Total Royalty:                      Conversion Rate:                     
Royalty in U.S. Dollars:   $  

 

The following royalty forecast is non-binding and for WARF’s internal planning
purposes only:

 

Royalty Forecast Under This Agreement: Next Quarter:             Q2:            
Q3:             Q4:            

 

* On a separate page, please indicate the reasons for returns or other
adjustments if significant.

Also note any unusual occurrences that affected royalty amounts during this
period.

To assist WARF’s forecasting, please comment on any significant expected trends
in sales volume.

 

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APPENDIX D

 

(a) DEVELOPMENT REPORT

 

A. Date development plan initiated and time period covered by this report.

 

B. Development Report (4-8 paragraphs).

 

1. Activities completed since last report including the object and parameters of
the development, when initiated, when completed and the results.

 

2. Activities currently under investigation, i.e., ongoing activities including
object and parameters of such activities, when initiated, and projected date of
completion.

 

C. Future Development Activities (4-8 paragraphs).

 

1. Activities to be undertaken before next report including, but not limited to,
the type and object of any studies conducted and their projected starting and
completion dates.

 

2. Estimated total development time remaining before a product will be
commercialized.

 

D. Changes to initial development plan (2-4 paragraphs).

 

1. Reasons for change.

 

2. Variables that may cause additional changes.

 

E. Items to be provided if applicable:

 

1. Development work being performed by third parties other than Licensee to
include name of third party and type of work.

 

PLEASE SEND DEVELOPMENT REPORTS TO:

 

Wisconsin Alumni Research Foundation

Attn.: Contract Coordinator

614 Walnut Street

P.O. Box 7365

Madison, WI 53707-7365

 

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APPENDIX E

 

DEVELOPMENT PLAN

 

Licensee agrees that it will evaluate H-7, latrunculinat A and/or latrunculin B
along with internally synthesized compounds and compounds from external sources
to identify the optimal compound to develop and market as a human therapeutic
agent. The licensee will strive to make a determination of which compound(s) to
pursue into development no later than [CONFIDENTIAL], 2006. This evaluation will
include an assessment of the preclinical safety/efficacy of the various
compounds, preliminary formulation/stability evaluations, evaluation of the
complexity and cost of manufacturing of the bulk drug, and other standard
preclinical evaluations. In the event a compound is identified in this
timeframe, the Licensee will make every reasonable efforts to pursue the
following activities within the following timelines:

 

1. Formulation optimization and GLP toxicology testing will be initiated on or
about [CONFIDENTIAL].

 

2. Phase I clinical trials with the final formulation will be completed on or
about [CONFIDENTIAL].

 

3. Phase II clinical trials will be completed on or about [CONFIDENTIAL].

 

4. Phase III clinical trials will be completed on or about [CONFIDENTIAL].

 

5. Submission of an NDA with FDA will be completed on or about [CONFIDENTIAL].

 

6. NDA approval and product launch would be expected by [CONFIDENTIAL].

 

The milestones described, and dates estimated, above are based upon Licensee’s
good faith belief as to the time required to achieve each of the designated
milestones. To the extent any early milestone is not achieved, the subsequent
milestones will be delayed. No guaranty is made that the dates will be achieved.
Licensee shall not be in violation of any provision of this License as a result
of changing any anticipated milestone or failing to meet any anticipated
milestone. It is the understanding of the parties that drug development is
complex, and that forecasting events related to the success of drug development
may be affected, positively or adversely, by many factors that may or may not be
under the control of Licensee. Factors that may have significant impacts on the
timely achievement of any milestone include the responsiveness of the FDA, and
any development or marketing conditions that may be imposed upon the Licensee by
the FDA or any similar foreign regulatory body.

 

Page 19 of 19