EXHIBIT 10.3

TRADEMARK LICENSE AGREEMENT

This TRADEMARK LICENSE AGREEMENT (this “Agreement”), dated as of February 15,
2007 (the “Effective Date”), is made by and between Inspire Pharmaceuticals,
Inc., a Delaware corporation having its principal office at 4222 Emperor Blvd.,
Suite 200, Durham, NC 27703 (“Inspire”), and InSite Vision Incorporated, a
Delaware corporation having its principal office at 965 Atlantic Ave., Alameda,
CA 94501 (“InSite”). Inspire and InSite are each sometimes referred to
individually as a “Party” and together as the “Parties.”

RECITALS

WHEREAS, InSite and Inspire are entering into a license agreement (the “License
Agreement”) contemporaneously with this Agreement, under which InSite is
granting to Inspire the exclusive rights in the Territory to certain patents,
know-how and regulatory filings for the commercialization of Subject Products;

WHEREAS, InSite owns and has the right to grant a license to the InSite
Trademarks and the Domain Names described on Schedule 1 attached hereto; and

WHEREAS, Inspire desires to obtain from InSite, and InSite desires to grant to
Inspire, rights and licenses to use the InSite Trademarks and the Domain Names
in connection with the marketing, commercialization and sale of Subject Products
in the Territory under the License Agreement.

NOW, THEREFORE, in consideration of the foregoing premises, the rights and
benefits that they will each receive in connection with the License Agreement,
and the mutual representations, covenants and agreements contained herein,
Inspire and InSite, intending to be legally bound, hereby agree as follows:

ARTICLE 1

DEFINITIONS

1.1 Incorporated Definitions. Capitalized terms that are used in this Agreement
but are not otherwise defined in this Agreement will have the respective meaning
ascribed to such terms in the License Agreement.

1.2 Additional Definitions. When used in this Agreement, whether in the singular
or plural, each of the following capitalized terms shall have the meanings set
forth in this Section 1.2.

(a) “AzaSite Trademark” means the trademark AzaSite™.

(b) “Domain Names” means the internet domain names set forth in Schedule 1, such
domain names being owned and registered by InSite.

(c) “Independent Sublicensee” has the meaning set forth in Section 4.4.

(d) “InSite Trademarks” means the trademarks set forth in Schedule 1, such marks
being owned and registered by InSite. From and after the effective date of the
assignment of the AzaSite Trademark by InSite to Inspire pursuant to
Section 2.3(b) of

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

the License Agreement, the term “InSite Trademarks” shall not include the
AzaSite Trademark for any purpose under this Agreement.

(e) “Term” has the meaning set forth in Section 4.1.

ARTICLE 2

LICENSES AND EXCLUSIVITY

2.1 Licenses.

(a) Subject to the terms and conditions of this Agreement, InSite hereby grants
to Inspire a royalty-free, exclusive (even as to InSite and its Affiliates)
right and license, with the right to grant sublicenses, to use the AzaSite
Trademark and the Domain Names in connection with the marketing,
commercialization and sale of Subject Products in the Field in the Territory
under the License Agreement. In connection with such license, InSite agrees
immediately to cease any and all use of the Domain Names and to execute and
deliver such further and other documents and to perform such actions as may be
necessary to enable Inspire to access and use the Domain Names under such
license.

(b) Subject to the terms and conditions of this Agreement, InSite hereby grants
to Inspire a royalty-free, non-exclusive right and license, with the right to
grant sublicenses, to use the InSite Trademarks (other than the AzaSite
Trademark) in connection with the marketing, commercialization and sale of
Subject Products in the Field in the Territory under the License Agreement.
Notwithstanding the non-exclusive nature of the foregoing grant, InSite hereby
expressly covenants that it shall not, and shall cause its Affiliates and
licensees not to, directly or indirectly: (x) use the InSite Trademarks in
connection with the marketing, commercialization or sale of Subject Products in
the Field in the Territory; or (y) grant to any Third Party any right or license
under the InSite Trademarks to conduct any of the activities set forth in the
foregoing clause (x).

2.2 Sublicenses. Inspire may sublicense the rights granted under Section 2.1
only to sublicensees who will use the InSite Trademarks and the Domain Names in
connection with the marketing, commercialization and sale of Subject Products in
the Field in the Territory under the License Agreement. All sublicenses granted
hereunder must be in writing and must contain provisions that are not
inconsistent with the terms and conditions of this Agreement. All sublicenses
shall include quality control standards at least as protective as those
referenced under Section 3.1.

2.3 Use of Affiliates and Third Party Contractors. The licenses granted under
Section 2.1 include the right of Inspire to engage its Affiliates and Third
Party contractors in exercising such rights and in carrying out its activities
and obligations under this Agreement, provided that (i) all such agreements with
Third Party contractors must be in writing and must contain provisions that are
not inconsistent with the terms and conditions of this Agreement and
(ii) Inspire remains responsible for the compliance with this Agreement by such
Affiliates or Third Party contractors.

2.4 No Implied Grants. Except as expressly licensed hereunder, neither Party
grants any rights to the other Party under this Agreement, by implication or
estoppel, under any of its intellectual property rights.

 

2

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

2.5 Registration of License. Notwithstanding anything to the contrary in
Section 5.1, Inspire, at its expense, may register the licenses granted under
this Agreement in any country of the Territory. Upon request by Inspire, InSite
agrees promptly to execute any “short form” licenses consistent with the terms
and conditions of this Agreement submitted to it by Inspire reasonably necessary
to effect the foregoing registration in such country.

2.6 Notice. In connection with the use of the InSite Trademarks, Licensee will
mark the first prominent use of the InSite Trademark with the appropriate
trademark symbol (“TM” or “®”, as set forth in Schedule 1 or as otherwise
reasonably instructed by InSite in writing) and will include the following
legend in connection with such use: “[InSite Trademark] is the trademark of
InSite Vision Incorporated and is being used by permission.”

ARTICLE 3

QUALITY CONTROL AND RELATED MATTERS

3.1 Quality Control and Standards. Inspire shall adhere to such reasonable
quality control standards that InSite may from time to time promulgate and
communicate to Inspire in writing with respect to the InSite Trademarks, and
shall comply materially with all federal, state and local laws and regulations
governing the use of the InSite Trademarks in connection with the provision of
Inspire Licensed Products. In order to confirm that Inspire’s use of the InSite
Trademarks complies with this Section 3.1, InSite shall have the right upon
written notice to require that Inspire submit to InSite a reasonable number of
representative samples of any Inspire Licensed Products or related materials
bearing the InSite Trademarks.

3.2 Protection of the InSite Trademarks. Inspire hereby acknowledges InSite’s
rights in the InSite Trademarks and shall not at any time do or authorize to be
done any action that would prejudice the validity or registration of the InSite
Trademarks or the good will associated therewith, including filing for, using or
authorizing the use of any trademark (i) likely to cause consumer confusion with
respect to the InSite Trademarks or (ii) containing “SITE” as a part. It is
understood that neither Inspire nor any of its Affiliates shall acquire or claim
any independent right, title or interest in or to the InSite Trademarks by
virtue of Inspire’s use of the InSite Trademarks as provided in this Agreement,
it being the intention of the Parties that all use of the InSite Trademarks by
Inspire, and all goodwill associated therewith, shall at all times inure to the
exclusive benefit of InSite.

ARTICLE 4

TERM AND TERMINATION

4.1 Term. Except as set forth in Section 5.13, unless earlier terminated by
mutual agreement of the Parties in writing or pursuant to the provisions of this
Article 4, this Agreement will become effective as of the Effective Date and
continue in full force and effect until the expiration or termination of the
License Agreement in its entirety (the “Term”).

4.2 Bankruptcy or Insolvency. Either Party may, subject to the provisions set
forth herein, terminate this Agreement by giving the other Party written
termination notice if, at any time, the other Party shall: (a) file in any court
pursuant to any statute a petition for bankruptcy or insolvency, or for
reorganization in bankruptcy, or for an arrangement or for the appointment of

 

3

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

a receiver, trustee or administrator of such Party or of its assets; (b) be
served with an involuntary petition against it, filed in any insolvency
proceeding, and such petition shall not be dismissed within sixty (60) days
after the filing thereof; (c) propose or be a party to any dissolution; or
(d) make an assignment for the benefit of its creditors.

4.3 Termination of License Agreement. If either Party terminates the License
Agreement in its entirety pursuant to Section 10.2 or 10.3 thereof, then either
such terminating Party or the other Party may terminate this Agreement in its
entirety concurrently with such termination by providing written notice thereof
to the other Party. If either Party terminates the License Agreement with
respect to a particular country pursuant to Section 10.2 or 10.3 thereof, then
either such terminating Party or the other Party may terminate this Agreement,
solely with respect to such country, concurrently with such termination by
providing written notice thereof to the other Party.

4.4 Continuing Rights of Sublicensees. Upon any termination of any license
rights granted to Inspire under this Agreement, each sublicense previously
granted by Inspire or any of its Affiliates under such license rights to any
Person that is not an Affiliate of Inspire (each, an “Independent Sublicensee”)
shall remain in effect and shall become a direct license or sublicense, as the
case may be, of such rights by InSite to such Independent Sublicensee, subject
to (i) the Independent Sublicensee agreeing in writing to assume Inspire’s
terms, conditions and obligations to InSite under this Agreement as they pertain
to the sublicensed rights, and (ii) Inspire remaining liable for any liability
to the Independent Sublicensee incurred by Inspire prior to such termination.

4.5 Effect of Expiration or Termination.

(a) Expiration or termination of this Agreement in its entirety pursuant to this
Article 4 shall not (i) relieve a Party hereto of any obligation accruing to
such Party prior to such termination, or (ii) result in the waiver of any right
or remedy by a Party hereto accruing to such Party prior to such termination.
Upon termination of this Agreement in its entirety, all licenses granted to
Inspire by InSite under this Agreement will terminate, and all rights therein
will revert to InSite. Inspire promptly shall cease, and cause its Affiliates
and sublicensees (subject to Section 4.4) promptly to cease, any use of any
InSite Trademarks and Domain Names in the Territory.

(b) Termination of this Agreement with respect to a particular country pursuant
to this Article 4 shall not (i) relieve a Party hereto of any obligation
accruing to such Party prior to such termination, (ii) result in the waiver of
any right or remedy by a Party hereto accruing to such Party prior to such
termination, or (iii) result in the termination or modification of any rights or
obligations of a Party under the Agreement not involved in such termination.
Upon termination of this Agreement with respect to a particular country, the
licenses granted to Inspire by InSite under this Agreement solely with respect
to such country will terminate, and all such rights will revert to InSite.
Inspire promptly shall cease, and cause its Affiliates and sublicensees (subject
to Section 4.4) promptly to cease, any use of any InSite Trademarks in such
country.

(c) Notwithstanding anything to the contrary in this Agreement, the licenses
granted to Inspire by InSite under this Agreement shall continue during any
period in which

 

4

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

Inspire continues to have the right to sell Inspire Licensed Products under
Sections 10.6(c) or 10.7(c) of the License Agreement solely in connection with
Inspire’s exercise of its rights as set forth in the License Agreement during
such period.

ARTICLE 5

MISCELLANEOUS

5.1 Confidentiality. All secret, confidential or proprietary information or
data, whether provided in written, oral, graphic, video, computer or other form,
provided by a Party to the other Party in connection with the activities
contemplated by this Agreement is and will be deemed under the License Agreement
to be Confidential Information of the Party providing such information or data,
subject to the limitations set forth in Section 1.15 thereof, and will be held
in accordance with and subject to the terms of Article 8 thereof. The terms of
this Agreement shall also be deemed Confidential Information of each Party under
the License Agreement, except to the extent disclosed pursuant to Section 8.4
thereof.

5.2 Assignment. This Agreement may not be assigned or otherwise transferred (in
whole or in part, whether voluntarily, by operation of law or otherwise) by
either Party without the prior written consent of the other Party (which consent
shall not be unreasonably withheld); provided, however, that such consent shall
not be required for assignment or transfer of this Agreement in connection with
an assignment or transfer of the License Agreement as permitted under
Section 12.2 thereof. Notwithstanding the foregoing, any such assignment or
transfer to an Affiliate shall not relieve the assigning Party of its
responsibilities for performance of its obligations under this Agreement. The
rights and obligations of the Parties under this Agreement shall be binding upon
and inure to the benefit of the successors and permitted assigns of the Parties.
Any attempted assignment not in accordance with this Agreement shall be void.

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

5.4 Notices. All notices under this Agreement by one Party to the other Party
shall be given in accordance with Section 12.4 of the License Agreement.

5.5 Amendment. No amendment, modification or supplement of any provision of this
Agreement shall be valid or effective unless made in writing and signed by a
duly authorized representative of each Party.

5.6 Waiver. No provision of this Agreement shall be waived by any act, omission
or knowledge of a Party or its agents or employees except by an instrument in
writing expressly waiving such provision and signed by a duly authorized officer
of the waiving Party.

5.7 Counterparts; Facsimile Signatures. This Agreement may be executed in
counterparts and such counterparts taken together shall constitute one and the
same agreement. This Agreement may be executed by facsimile signatures, which
signatures shall have the same force and effect as original signatures.

 

5

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

5.8 Descriptive Headings. The descriptive headings of this Agreement are for
convenience only, and shall be of no force or effect in construing or
interpreting any of the provisions of this Agreement.

5.9 Governing Law; Dispute Resolution. This Agreement shall be governed and
construed in accordance with the laws of the State of New York, without giving
effect to any choice of law provisions thereof. Prior to bringing any legal
action against the other Party, the Parties shall comply with the dispute
resolution procedures required under Section 12.9 of the License Agreement with
respect to such dispute.

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

5.11 Entire Agreement of the Parties. This Agreement hereby, together with the
License Agreement and the Schedules and Exhibits hereto and thereto, constitutes
and contains the complete, final and exclusive understanding and agreement of
the Parties and cancels and supersedes any and all prior negotiations,
correspondence, understandings and agreements whether oral or written, between
the Parties respecting the subject matter hereof.

5.12 Independent Parties. The relationship between the Parties created by this
Agreement is one of independent contractors and is not a joint venture,
partnership or any similar arrangement. Neither Party shall have the power or
authority to bind or obligate the other except as expressly set forth in this
Agreement.

5.13 Accrued Rights; Surviving Obligations. Unless explicitly provided otherwise
in this Agreement, termination, relinquishment or expiration of this Agreement
for any reason shall be without prejudice to any rights that shall have accrued
to the benefit to any Party prior to such termination, relinquishment or
expiration, including damages arising from any breach hereunder. Such
termination, relinquishment or expiration shall not relieve any Party from
obligations which are expressly indicated to survive termination or expiration
of the Agreement, including, without limitation, those obligations set forth in
Sections 4.4 and 4.5 and Article 1 (to the extent required to enforce other
surviving rights and/or obligations) and Article 5 hereof.

5.14 Injunctive Relief. Inspire acknowledges and agrees that InSite would be
irreparably damaged if any of the provisions of this Agreement are not performed
by Inspire in accordance with their specific terms, and that any breach of,
threatened breach of, or failure to perform or comply with, this Agreement by
Inspire could not be adequately compensated in all cases by monetary damages
alone. Accordingly, in addition to any other right or remedy to which InSite

 

6

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

may be entitled at law or in equity, InSite shall be entitled to temporary,
preliminary and permanent injunctive relief to prevent breaches or threatened
breaches of any of the provisions of this Agreement, without posting any bond or
other undertaking.

5.15 Expenses. Unless otherwise provided herein, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the Party that shall have incurred the same and the other Party shall
have no liability relating thereto.

5.16 No Third Party Beneficiaries. No person or entity other than the Parties
hereto and their respective Affiliates, successors and permitted assigns shall
be deemed an intended beneficiary hereunder or have any right to enforce any
obligation of this Agreement.

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

[Signature Page Immediately Follows]

 

7

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

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

 

INSITE VISION INCORPORATED By:  

/s/ S. Kumar Chandrasekaran

Name:   S. Kumar Chandrasekaran Title:   CEO INSPIRE PHARMACEUTICALS, INC. By:  

/s/ Christy L. Shaffer

Name:   Christy L. Shaffer Title:   President & CEO

SIGNATURE PAGE TO TRADEMARK LICENSE AGREEMENT

 

8

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

Schedule 1

InSite Trademarks

Trademarks

U.S.:

DuraSite

DuraSite® US Trademark Number: 1769077

AzaSite

AzaSite™ US Trademark Application Number: 78/426,374

Canada:

DuraSite

DuraSite® Canadian Registration Number 432299

AzaSite

AzaSite™ Canadian Trademark Application Number 1325128

Domain Name

www.AzaSite.com

 

9