Exhibit 10.34

 

* Portions of this exhibit marked [*] are requested to be treated
confidentially.

Option and License Agreement

 

This Option and License Agreement (the “Agreement”) is entered into as of
January 29, 2016 (the “Effective Date”) by and between Cempra Pharmaceuticals,
Inc., a Delaware corporation having an address at 6320 Quadrangle Dr. #360,
Chapel Hill, NC 27517 (“Cempra”), and Macrolide Pharmaceuticals, Inc., a
Delaware corporation having an address at 480 Arsenal St., Suite 130, Watertown,
MA 02472 (“MP”).  MP and Cempra may be referred to herein individually as a
“Party” or collectively, as the “Parties.”

 

Recitals

 

Whereas, MP owns or controls certain intellectual property rights with respect
to Macrolides (as defined below) and/or the synthesis or manufacture thereof,
and owns or controls certain know-how, technology, documentation, data, and
other materials relating thereto; and

 

Whereas, Cempra wishes to obtain an exclusive option to exclusively license
certain of such intellectual property rights, and, during such option, a license
to evaluate such rights and the technology covered thereby.

 

Now, Therefore, in consideration of the foregoing and the covenants and promises
contained in this Agreement, the Parties agree as follows:

 

1.

Definitions.  The following capitalized terms shall have the subsequent meanings
when used in this Agreement.

1.1“Affiliate” means, with respect to either Party or any other business entity,
any person, corporation or other business entity which, directly or indirectly
through one or more intermediaries, actually controls, is actually controlled
by, or is under common control with such party.  As used in this Section 1.1,
“control” means to possess, directly or indirectly, the power to affirmatively
direct the management and policies of such person, corporation or other business
entity, whether through ownership of at least fifty percent (50%) of the voting
securities or by contract relating to voting rights or corporate governance.  

1.2“Annual Net Sales” shall mean the cumulative Net Sales in the Territory of
all Royalty Products in an applicable Calendar Year.

1.3“API” means active pharmaceutical ingredient.

1.4“Applicable Law” means all applicable laws, rules, regulations and guidelines
that may apply to the development, marketing, manufacturing or sale of Products,
the performance of either Party’s obligations, or the exercise of either Party’s
rights, under this Agreement, including but not limited to all laws, regulations
and guidelines governing the import, export, development, marketing,
distribution and sale of Products in the Territory and,

1

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

 

to the extent relevant, all GCP, GLP or GMP standards or guidelines promulgated
by any Regulatory Authorities or the ICH. 

1.5“Approved Subcontractor” means a Third Party contractor selected or
designated by a Party in good faith to perform one or more of the activities
described or contemplated by the Evaluation Program on behalf of such Party on a
fee-for-service or similar basis, pursuant to a contract that (a) assigns to
such Party ownership of intellectual property rights created in the course of
such subcontractor’s service in a manner reasonably sufficient to enable such
Party’s compliance with the intellectual property-related provisions of this
Agreement and (b) requires that Confidential Information of either Party be kept
confidential on terms substantially as protective as those of this Agreement.  

1.6“BLA” means a Biologics License Application under the United States’ Public
Health Services Act and Federal Food, Drug and Cosmetics Act, each as amended,
and the regulations promulgated thereunder, or a comparable filing seeking
Regulatory Approval in any country.

1.7“Business Day” means any day other than Saturday, Sunday, or a day that is a
federal legal holiday in the U.S.

1.8“Calendar Day” means each of those seven (7) days in the week.

1.9“Calendar Quarter” means each of those three (3) calendar month periods of
each Calendar Year ending March 31, June 30, September 30 and December 31,
provided, that (i) the initial Calendar Quarter shall begin on the Effective
Date and end June 30, 2016 and (ii) the Calendar Quarter in which this Agreement
expires or is terminated shall extend from the first Calendar Day of such
Calendar Quarter until the effective date of such expiration or termination.

1.10“Calendar Year” means (a) for the first Calendar Year, the period commencing
on the Effective Date and ending on December 31 of the same year, (b) for the
Calendar Year in which this Agreement expires or is terminated, the period
beginning on January 1 of such Calendar Year and ending on the effective date of
such expiration or termination, and (c) for all other years, each successive
twelve (12) consecutive month period beginning on January 1 and ending December
31.

1.11“Commercialize” or “Commercialization” means all activities that are
undertaken after Regulatory Approval of a Product in a particular jurisdiction
and that relate to the commercial marketing, sale, and/or distribution of such
Product, including but not limited to advertising and/or promotional activities.

1.12“Commercially Reasonable Efforts” means the carrying out of obligations or
tasks in a manner consistent with the efforts a Party devotes to research,
development, commercialization or marketing of a pharmaceutical product or
products of similar market potential, profit potential or strategic value
resulting from its own research efforts or for its own benefit, taking into
account technical, regulatory and intellectual property factors, target product
profiles, product labeling, past performance, costs, economic return, the
regulatory environment and competitive market conditions in the therapeutic or
market niche, all based on conditions

2

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

 

then prevailing, and subject to and in consideration of, in each case, the
resources available to such Party and within such Party’s organization for such
efforts, provided that such efforts shall, no less than consistent with
reasonable, customary practices within the U.S. pharmaceutical
industry.  “Commercially Reasonable” shall have a corresponding meaning. 

1.13“Compound” means solithromycin, which has the chemical structure set forth
on Schedule 1.13, and any enantiomer, diastereomer, racemate, salt, hydrate,
solvate, polymorph or co-crystal thereof.

1.14“Confidential Information” means all information and know-how and any
tangible embodiments thereof provided by or on behalf of one Party to the other
Party either in connection with the discussions and negotiations pertaining to
this Agreement or in the course of performing under this Agreement, which may
include data, knowledge, practices, processes, ideas, research plans,
formulation or manufacturing processes and techniques, scientific,
manufacturing, marketing and business plans, and financial and personnel matters
relating to the disclosing Party or to its present or future products, sales,
suppliers, customers, employees, investors or business; provided, that,
information of a Party will not be deemed Confidential Information of such Party
for purposes of this Agreement if such information:  (a) was already known to
the receiving Party, other than under an obligation of confidentiality or
non-use, at the time of disclosure to such receiving Party, as can be shown by
written records; (b) was part of the public domain, at the time of its
disclosure to such receiving Party; (c) became part of the public domain after
its disclosure to such receiving Party through no fault of the receiving Party;
(d) was disclosed to such receiving Party, other than under an obligation of
confidentiality or non-use, by a Third Party who had no obligation to the
disclosing Party not to disclose such information or know-how to others, as can
be shown by written records; or (e) was independently discovered or developed by
such receiving Party, as can be shown by its written records, without the use or
benefit of, or reliance on, Confidential Information belonging to the disclosing
Party.  Notwithstanding anything to the contrary, and regardless of which Party
first discloses any Improvement(s) to the other Party, (y) any Cempra
Improvements, any information related thereto (or to any intellectual property
rights related thereto), and Compound Data shall be the Confidential Information
of Cempra, and Cempra shall be deemed the disclosing Party, and MP the receiving
Party, with respect to such Confidential Information and (z) any MP Improvements
and any information related thereto (or to any intellectual property rights
related thereto) shall be the confidential information of MP, and MP shall be
deemed the disclosing party, and Cempra the receiving Party, with respect to
such Confidential Information.

1.15“Control” means, with respect to any intellectual property or right therein,
the possession by a Party or an Affiliate thereof of the ability to grant a
license or sublicense as provided for herein without violating the terms of any
arrangement or agreements between such Party (or any Affiliate thereof) and any
Third Party.

1.16“Cover” means that the use, manufacture, sale, offer for sale, development,
commercialization or importation of the subject matter in question by an
unlicensed entity would infringe a Valid Claim of a Patent.

3

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

 

1.17“Derivative” means any compound that can be synthetically prepared from or
converted into a Compound, and any enantiomer, diastereomer, racemate, isomer,
metabolite, salt, hydrate, solvate, polymorph, or co-crystal of the foregoing. 

1.18“Develop” or “Development” means, with respect to a Product, engaging in
preclinical, clinical, and other research or development activities, which may
include but is not limited to research, pre-clinical, clinical and regulatory
activities directed towards obtaining Regulatory Approval of a Product in a
particular jurisdiction.

1.19“DMF” means a drug master file, as provided for in 21 CFR § 314.420 or
similar submission to or file maintained with the FDA or other Governmental
Authority or Regulatory Authority that may be used to provide confidential
detailed information about facilities, processes, or articles used in the
manufacturing, processing, packaging, and storing of one or more human drugs.

1.20“Evaluation Program” means the research activities to be carried out by or
on behalf of MP and the evaluation activities to be carried out by or on behalf
of Cempra pursuant to this Agreement, as further described on Schedule 1.20.

1.21“FDA” means the United States Food and Drug Administration, or any successor
federal agency thereto.

1.22“Field” means any and all uses in humans or non-human animals.

1.23“GCP” means all applicable Good Clinical Practice standards for the design,
conduct, performance, monitoring, auditing, recording, analyses and reporting of
clinical trials, including, if and as applicable, (a) CFR Title 21, Parts 50
(Protection of Human Subjects), 56 (Institutional Review Boards), and 312
(Investigational New Drug Application), as may be amended from time to time, (b)
as set forth in European Commission Directive 2001/20/EC relating to the
implementation of good clinical practice in the conduct of clinical trials on
medicinal products for human use, and brought into law by European Commission
Directive 2005/28/EC laying down the principles and detailed guidelines for good
clinical practice for investigational medicinal products, (c) as set forth in
the ICH Harmonised Tripartite Guideline for Good Clinical Practice
(CPMP/ICH/135/95) and any other guidelines for good clinical practice for trials
on medicinal products in the Territory, and (d) the equivalent Applicable Laws
in any relevant country, each as may be amended and applicable from time to time
and in each case, that provide for, among other things, assurance that the
clinical data and reported results are credible and accurate and protect the
rights, integrity, and confidentiality of trial subjects.

1.24“GLP” means all applicable Good Laboratory Practice standards, including, if
and as applicable, (a) as set forth in the then-current good laboratory practice
standards promulgated or endorsed by the FDA as defined in Title 21, Part 58 of
the CFR, (b) as set forth in European Commission Directive 2004/10/EC relating
to the application of the principles of good laboratory practices, as may be
amended from time to time as well as any Rules Governing Medicinal Products in
the European Community Vol. III, ISBN 92.825 9619-2 (ex—OECD principles of GLP),
and (c) the Applicable Laws in any relevant country, each as may be amended and
applicable from time to time.

4

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

 

1.25“GMP” means all applicable Good Manufacturing Practices including, if and as
applicable, (a) the principles detailed in the U.S. Current Good Manufacturing
Practices, Title 21, Parts 210, 211, 601 and 610 of the CFR, (b) the applicable
part of quality assurance to ensure that products are consistently produced and
controlled in accordance with the quality standards appropriate for their
intended use, as defined in European Commission Directive 2003/94/EC laying down
the principals and guidelines of good manufacturing practice, (c) the principles
detailed in the ICH Q7A guidelines, (d) the Rules Governing Medicinal Products
in the European Community, Volume IV Good Manufacturing Practice for Medicinal
Products, and (e) the equivalent Applicable Laws in any relevant country, each
as may be amended and applicable from time to time. 

1.26“Governmental Authority” means any court, agency, department or other
instrumentality of any foreign, federal, state, county, city or other political
subdivision (including any supra-national agency such as in the European Union).

1.27“Harvard License” means the License Agreement between the President and
Fellows of Harvard College (“Harvard”) and MP, dated February 10. 2015, as
amended pursuant to that certain Amendment to License Agreement and Waiver
between Harvard, MP, and Cempra, dated as of January 29, 2016 (the “Harvard
Waiver”).

1.28“Harvard Patents” means the Patent Rights (as defined in the Harvard
License), which shall include, but not be limited to, (i) those Patents
identified as Harvard Patents on Schedule 1.40 and (ii) any Improvement Patent
Rights (as defined in the Harvard License) that may be included in the rights
granted under the Harvard License as contemplated by Section 2.4 thereof.

1.29“Harvard Product” means any Product Covered by any Valid Claim of any
Harvard Patent in the country in which such Product is manufactured, used, or
sold.

1.30“ICH” means the International Conference on Harmonisation of Technical
Requirements for Registration of Pharmaceuticals for Human Use.

1.31“Improvements Date” means the date that is six (6) months following the
earlier of (i) the termination or expiration of this Agreement, (ii) MP’s
satisfaction of the condition corresponding to the last of the milestones set
forth on Schedule 3.3-1 (i.e., delivery to Cempra of between 3-5 kilograms of MP
Materials satisfying the specifications described in Schedule 3.3-2B), or (iii)
Cempra’s termination of MP’s obligations under the Evaluation Program pursuant
to Section  2.1.b(vii).

1.32“IND” means an Investigational New Drug Application filed with the FDA or
the equivalent application or filing filed with any Regulatory Authority outside
of the United States (including any supra-national agency such as in the
European Union) necessary to commence human clinical trials in such
jurisdiction, and including all regulations at 21 CFR § 312 et. seq., and
equivalent foreign regulations.

1.33 “Infringed Patent” means an issued and unexpired patent with a priority
date prior to the Effective Date (a) that has not been abandoned, held invalid,
revoked, held or rendered unenforceable or lost through interference and (b) the
claims of which Cover methods

5

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

 

to Manufacture or synthesize the Compound or any Product and are infringed by
Cempra’s, any of its Affiliate’s, any Sublicensee’s, or any of Cempra’s, its
Affiliates’, or Sublicensees’ contract manufacturers’  making, using, selling,
offering for sale or importing the Compound or a Product in a particular
country. 

1.34“Know-How” means all technical, scientific and other know-how and
information, trade secrets, knowledge, technology, inventions, means, methods,
processes, practices, formulas, instructions, skills, techniques, procedures,
experiences, ideas, technical assistance, designs, drawings, assembly
procedures, computer programs, apparatuses, specifications, data, results and
other material, and other drug discovery and development technology,
pre-clinical and clinical trial results, manufacturing procedures, test
procedures and purification and isolation techniques, (whether or not
confidential, proprietary, patented or patentable) in written, electronic or any
other form now known or hereafter developed, and all improvements, whether to
the foregoing or otherwise, and other discoveries, developments inventions and
other intellectual property (whether or not confidential, proprietary, patented
or patentable), provided that Know-How shall not include Patents.

1.35“Macrolide” means any macrolide or ketolide, including but not limited to
any 14-, 15-, or 16-membered lactone-ring-based compound, which shall include
but not be limited to (i) any 14-, 15-, or 16-membered lactone containing a
1,2,3 triazole, including but not limited to solithromycin, (ii) any
aza-macrolide, including but not limited to azithromycin, and (iii) any
derivatives of any of the foregoing.

1.36“Manufacture” means, with respect to the Compound, a Derivative or a
Product, all activities related to the production, manufacture, processing,
filling, finishing, packaging, labeling, release, shipping, holding, conduct of
Manufacturing Process Development, stability testing, quality assurance and
quality control of such Compound, Derivative or Product.

1.37“Manufacturing Process Development” means the process development, process
qualification and validation and scale-up of the process to manufacture the
Compound, a Derivative or a Product and analytic development and product
characterization with respect thereto.

1.38“MP Know-How” means all Know-How Controlled by MP or its Affiliates as of
the Effective Date or coming under MP’s or its Affiliates’ Control prior to the
Improvements Date that is necessary for the research, Development, manufacture,
or Commercialization of the Compound or a Product, which shall include, but not
be limited to, any Know-How concerning any MP Improvements.

1.39“MP Materials” means (a) the tangible supply of Compound that will be
(x)  manufactured or synthesized by the application, to a material extent, of
any MP Technology and (y) provided by MP to Cempra pursuant to the Evaluation
Program (which shall include but not be limited to the amounts of Compound
described on Schedule 3.3-1) and (b) any additional tangible amount of Compound
that is manufactured or synthesized by the application, to a material extent, of
any MP Technology and to be delivered under this Agreement by MP that may be
added after the Effective Date by the mutual written agreement of the Parties.

6

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

 

1.40“MP Patents” means (a) those Patents set forth on Schedule 1.40 attached
hereto (the “Initial MP Patents”); (b) any other Patents that are Controlled by
MP or any Affiliate thereof as of the Effective Date, or come under MP’s or any
of its Affiliates’ Control following the Effective Date and, solely in the case
of Patents included under this clause (b) through the application of the
following clauses (ii), (iii), and (iv), prior to the Improvements Date, and
Cover (i) any of the subject matter described in or Covered by the Initial MP
Patents and pertaining to the manufacture or synthesis of the Compound or a
Product, (ii) the Compound, (iii) any Product, or (iv) the use, manufacture, or
synthesis of the Compound or a Product; (c) any divisionals, continuations,
continuations-in-part, conversion, extensions, term restorations, registrations,
re-instatements, amendments, reissuances, corrections, substitutions,
re-examinations, registrations, revalidations, supplementary protection
certificates, renewals, and foreign counterparts of any Patents described in
clause (a) or (b) above, and any other Patents Controlled by MP or any Affiliate
thereof claiming priority to any of the foregoing or any of the Patents
referenced in clause (a) or (b) above; (d) all patents issuing from any of the
Patents mentioned in clause (a), (b), or (c) above and any foreign counterparts
of any such Patents; and (e) any MP Improvement Patents included in “MP Patents”
pursuant to Section 8.2 of this Agreement. 

1.41“MP Technology” means the MP Know-How and the MP Patents.

1.42“NDA” means a new drug application (as defined in Title 21 of the United
States Code of Federal Regulations, as amended from time to time) submitted to
the FDA seeking regulatory approval to market and sell any Product for human
therapeutic use in the United States (including a new drug application submitted
under Section 505(b)(2) of the Act).

1.43“Net Sales” means gross amounts invoiced or otherwise received for Cempra’s,
its Affiliates’, Sublicensees’, and Product Partners’ sales of Royalty Products,
less the sum of the following, to the extent related to the sale of such Royalty
Products: (1) discounts in amounts reasonable or customary in the trade,
including but not limited to trade, cash, consumer, and quantity discounts, and
credits, price adjustments or allowances for damaged Royalty Products, returns,
defects, recalls or rejections of Royalty Products or retroactive price
reductions; (2) reasonable rebates, credits, and chargeback payments granted to
federal, state/provincial, local and other governments or managed health care
organizations, including their agencies, purchasers, and/or reimbursers, under
programs available under or required by Applicable Law, or reasonably entered
into to sustain and/or increase market share for Royalty Products; (3) sales,
value added, use, excise, and similar taxes; (4) amounts allowed or credited on
returns for defective, damaged, expired, or otherwise unuseable or unsaleable
Royalty Products; (5) freight, shipping, handling, and insurance charges; (6)
import or export duties, tariffs, or similar charges incurred with respect to
the import or export of Royalty Products into or out of any country; (7)
distribution commissions/fees (including fees related to services provided
pursuant to distribution service agreements with wholesalers) payable to any
Third Party providing distribution services with respect to Royalty Products;
and (8) amounts repaid or credited or provisions made for uncollectible
amounts.  Such amounts shall be determined from the books and records of Cempra,
its Affiliates, Sublicensees, and Product Partners maintained in accordance with
such reasonable accounting principles as may be consistently applied by Cempra,
its Affiliates, Sublicensees, and Product Partners.

7

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

 

Royalty Products are considered “sold” when billed out or invoiced or, in the
event such Royalty Products are not billed out or invoiced, when the
consideration for sale of the Royalty Products is received.  Notwithstanding the
foregoing, Net Sales shall not include, and shall be deemed zero with respect
to, (i) Royalty Products used by Cempra, its Affiliates, Sublicensees, or
Product Partners for their internal use, (ii) the distribution of reasonable
quantities of promotional samples of Royalty Products, (iii) Royalty Products
provided for clinical trials or research, development, or evaluation purposes,
(iv) Royalty Products provided by or on behalf of Cempra, an Affiliate thereof,
a Sublicensee, or a Product Partner to Cempra, an Affiliate thereof, a
Sublicensee, or a Product Partner for purposes of resale, provided such resale
is subject to or triggers payments due MP under Section 3.6 of this Agreement,
(v) Royalty Products provided in a compassionate use program, and (vi) Royalty
Products, not themselves constituting finished Products, provided by or on
behalf of Cempra, an Affiliate thereof, a Sublicensee, or a Product Partner to
Cempra, an Affiliate thereof, a Sublicensee, or a Product Partner for purposes
of manufacturing Royalty Products, provided (x) the sale of such finished
Royalty Products is subject to or triggers payments due MP under Section 3.6 of
this Agreement or (y) such finished Royalty Products are (I) used by Cempra, its
Affiliates, Sublicensees, or Product Partners for internal purposes, (II)
distributed in reasonable quantities as promotional samples or in a
compassionate use program, (III) provided for clinical trials or research,
development, or evaluation purposes, or (IV) provided by or on behalf of Cempra,
an Affiliate thereof, a Sublicensee, or a Product Partner to Cempra, an
Affiliate thereof, a Sublicensee, or a Product Partner for purposes of resale,
provided such resale is subject to or triggers payments due MP under Section 3.6
of this Agreement.

Notwithstanding anything to the contrary, in the event that any Royalty Product
includes, in addition to any Royalty Compound, one or more APIs that are not a
Royalty Compound (such Royalty Product, a “Combination Product”), Net Sales of
such Combination Product in a particular country, for the purposes of
determining royalty payments due to MP hereunder, shall be determined by
multiplying the Net Sales of the Combination Product in such country by the
fraction A/(A+B), where A is the weighted average sale price(s) of the Royalty
Product(s) including Royalty Compound(s) included in such Combination Product
(and not any of the other APIs included in the Combination Product) (the “Basic
Product”) when sold separately in finished form in such country (if there is
more than one Basic Product sold in such country, A shall equal the sum of all
such Basic Products’ weighted average sale prices in such country), and B is the
weighted average sale price(s) of product(s) including the other API(s) (and not
the Royalty Compound(s) incorporated in such Combination Product) (such
products, “Other Products” ) sold separately in finished form in such country
(if there is more than one Other Product sold in such country, B shall equal the
sum of all such Other Products’ weighted average sale prices in such country).

In the event that, with respect to any Combination Product sold in a particular
country, the weighted average sale price of the Basic Product in such country
can be determined but the weighted average sale price(s) of the Other Product(s)
in such country cannot be determined, Net Sales for purposes of determining
royalty payments for such Combination Product in such country shall be
calculated by multiplying the Net Sales of the Combination Product in such
country by the fraction A/C where A is the weighted average sale price(s) of the
Basic Product(s) when sold separately in finished form in such country (if there
is more than one Basic Product sold in such country, A shall equal the sum of
all such Basic Products’ weighted

8

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

 

average sale prices in such country) and C is the weighted average sale price of
the Combination Product in such country.

In the event that, with respect to any Combination Product sold in a particular
country,  the weighted average sale price(s) of the Other Product(s) in such
country can be determined but the weighted average sale price of the Basic
Product cannot be determined, Net Sales for purposes of determining royalty
payments shall be calculated by multiplying the Net Sales of the Combination
Product by the formula one (1) minus (B/C) (which may also be written as
1-(B/C)), where B is the weighted average sale price(s) of the Other Product(s)
when sold separately in finished form in such country and C is the weighted
average sale price of the Combination Product in such country (if there is more
than one Other Product sold in such country, B shall equal the sum of all such
Other Products’ weighted average sale prices in such country).

 

In the event that, with respect to any Combination Product sold in a particular
country, the weighted average sale price(s) in such country of neither the Basic
Product nor the Other Product(s) in the Combination Product can be determined,
the Net Sales of the Combination Product shall, for the purposes of determining
royalty payments with respect to such Combination Product, be commercially
reasonable and determined by good faith negotiation between Cempra and MP
consistent with the ratios and related principles referenced above and based on
the relative value of the Royalty Compound(s) incorporated in such Combination
Product (and/or MP Technology used to synthesize or manufacture such Royalty
Compound(s)) and the other API(s) to such Combination Product.

 

The weighted average sale price for a Basic Product, Other Product, or
Combination Product in a particular country shall be calculated once for each
Calendar Year and such price shall be used during all applicable royalty
reporting periods for such Calendar Year.  When determining the weighted average
sale price of a Basic Product, Other Product, or Combination Product in a
particular country, the weighted average sale price shall be calculated by
dividing the sales dollars by the units of Basic Product, Combination Product,
or Other Product sold in such country during the twelve (12) months (or the
number of months sold in a partial Calendar Year) of that Calendar Year for the
respective Basic Product, Other Product, or Combination Product.  For each
Calendar Year, a reasonably forecasted weighted average sale price will be used
for the Basic Product, Other Product, or Combination Product, which forecasted
weighted average sale price will be, for each Calendar Year other than the
initial Calendar Year (or portion thereof) during which the Combination Product
is sold, no less than the weighted average sale price for the Basic Product,
Other Product, or Combination Product in a particular country calculated for the
preceding Calendar Year. Any over or under payment due to a difference between
forecasted and actual weighted average sale prices will be paid or credited in
the payment due with respect to the first Calendar Quarter of the following
Calendar Year.  For the avoidance of doubt, excipients shall not be considered
APIs for the purpose of this definition of Net Sales.

 

Notwithstanding anything to the contrary, in the case of discounts on “bundles”
of separate products or services which include Royalty Products (such “bundles”
including but not limited to (i) contingent arrangements involving drugs that
share the same NDC (whether the same or different package sizes), drugs with
different NDCs, or drugs and other products or

9

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

 

services, (ii) circumstances in which a discount is conditioned on the
achievement of some other performance requirement for the Royalty Product or
other product or service (e.g. achievement of market share or placement on a
formulary tier), or (iii) otherwise where the resulting price concessions or
discounts are greater than those which would have been available had the bundled
products or services been purchased separately or outside the bundled
arrangement), Cempra may calculate Net Sales and royalties due hereunder by
applying a discount to the price of a Royalty Product equal to the average
percentage discount of all products or services of Cempra, its Affiliate(s), or
Sublicensee(s) in a particular “bundle”, calculated as follows:

 

Average percentage

discount on a             =        [1 - (X/Y)] x 100

particular “bundle”

 

where X equals the total discounted price of a particular “bundle” of products
or services, and Y equals the sum of the undiscounted bona fide list prices of
each unit of every product or service in such “bundle”.  Cempra shall provide MP
documentation reasonably supporting such average discount with respect to each
“bundle.”  If a Royalty Product in a “bundle” is not sold separately, and no
bona fide list price exists for such Royalty Product, Cempra and MP shall, for
purposes of calculating Net Sales and royalties due hereunder, negotiate in good
faith a reasonable imputed list price for such Royalty Product and Net Sales
with respect thereto shall be based on such imputed list price.

 

1.44“Option” has the meaning set forth in Section 2.2.

1.45“Option Period” means the period commencing on the Effective Date and ending
at 5:00 pm Eastern Time on the date that is the later to occur of (A) the
earlier of (i) the date that Cempra, its Affiliate(s) or Sublicensee(s) first
obtains Regulatory Approval from the FDA with respect to any product
incorporating the Compound as an API or (ii) the third (3rd) anniversary of the
Effective Date or (B) the date that is six (6) months following the earlier of
(I) MP’s satisfaction of the condition corresponding to the last of the
milestones set forth on Schedule 3.3-1 (i.e., delivery to Cempra of between [*]
kilograms of MP Materials satisfying the specifications described in Schedule
3.3-2B) or (II) Cempra’s termination of MP’s obligations under the Evaluation
Program pursuant to Section  2.1.b(vii).

1.46“Patent(s)” means any granted patents and pending patent applications,
together with all additions, divisionals, continuations, continuations-in-part,
substitutions, reissues, re-examinations, extensions, registrations, patent term
extensions, revalidations, supplementary protection certificates, and renewals
of any of the foregoing, and all foreign applications and patents corresponding
to or claiming priority from any of the foregoing.

1.47“Pricing Approval” means any pricing and reimbursement approvals which must
be obtained before placing a Product on the market for sale in a particular
jurisdiction.

 

 

 

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

10

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

 

1.48“Product” means a product that incorporates or comprises a Compound as an
API (alone or in combination with any other API(s)) and (i) utilizes,
incorporates, or is Developed, Manufactured, or Commercialized using any MP
Technology or (ii) is Covered by one or more Valid Claims of any MP Patents in
any country in which such product or any part thereof is made, used, or sold. 

1.49“Product Partner” means a Third Party, other than a Sublicensee, that (i) is
granted a license by Cempra or an Affiliate thereof under Patents or Know-How
owned, licensed, or controlled by Cempra or an Affiliate thereof, other than MP
Technology, to sell a Royalty Product and (ii) supplied by Cempra or an
Affiliate thereof with Royalty Product or Royalty Compound for use as an API in
the Manufacture of finished Royalty Products.

1.50“Regulatory Approval” means any and all approvals (including supplements,
amendments, and pre- and post-approvals), licenses, registrations, clearances,
or authorizations of any national, supra-national (e.g., the European Commission
or the Council of the European Union), regional, state or local regulatory
agency, department, bureau, commission, council or other governmental entity,
that are necessary for the manufacture, distribution, use or, in Cempra’s
reasonable judgment, sale of a Product for human therapeutic use in a particular
jurisdiction, provided that Regulatory Approval shall not include any Pricing
Approval.

1.51“Regulatory Authority” means any Governmental Authority with responsibility
for granting any licenses or approvals necessary for the marketing and sale of
human pharmaceutical or biological products in a particular jurisdiction,
including the FDA with respect to the United States, and where applicable any
ethics committee or any equivalent review board.

1.52“Regulatory Filing” means, with respect to the United States, an NDA, BLA,
or IND, any foreign counterparts or equivalents of any of the foregoing, any
DMFs, and any other filings or submissions required by or provided to Regulatory
Authorities relating to the Manufacture, Development or Commercialization of any
Product, including any supporting documentation, data, correspondence, meeting
minutes, amendments, supplements, registrations, licenses, regulatory drug
lists, advertising and promotion documents, adverse event files, complaint
files, and manufacturing, shipping, or storage records with respect to any of
the foregoing.

1.53“Royalty Compound” means a Compound that is actually synthesized or
Manufactured using a method or process that is Covered by a Valid Claim of an MP
Patent in the country in which the Product incorporating such Compound as an API
is actually sold.  For purposes of clarity, Compound, as incorporated as an API
into a particular Product, that is not actually synthesized or Manufactured
using any methods or processes Covered by a Valid Claim of a MP Patent in the
country in which such Product is actually sold shall not be considered a Royalty
Compound for purposes of this Agreement, even if such Compound could have been
so Manufactured or synthesized.

1.54“Royalty Product” means a particular Product that incorporates, as an API
(alone or in combination with any other API(s)), a Compound constituting a
Royalty Compound in the country in which such Product is actually sold and, with
respect to Products sold by Product Partners, which Royalty Compound
incorporated into such particular Product is supplied to

11

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

 

such Product Partner by Cempra or an Affiliate thereof for use as an API in the
Manufacture of such Product. 

1.55“Sublicensee” means a Third Party granted a sublicense to any of the rights
granted to Cempra and its Affiliates under this Agreement.

1.56“Territory” means the world, other than the member nations of the
Association of Southeast Asian Nations as of March 31, 2006 (such member
nations, “ASEAN Countries”), subject to any further reduction in the Territory
(or later expansion thereof) as set forth in Section 2.2.

1.57“Third Party” means any entity other than (a) MP, (b) Cempra, or (c) any
Affiliate of either Party.

1.58“United States” shall mean the United States of America and its territories
and protectorates.

1.59“Valid Claim” means a claim of any pending patent application or any issued,
unexpired United States or granted foreign patent that has not been dedicated to
the public, disclaimed, abandoned or held invalid or unenforceable by a court or
other body of competent jurisdiction from which no further appeal can be taken,
and that has not been explicitly disclaimed, or admitted in writing to be
invalid or unenforceable or of a scope not Covering a particular Product or
Compound through reissue, disclaimer or otherwise, provided that,
notwithstanding the foregoing, if a particular claim has been pending longer
than seven (7) years from the date of issuance of the first substantive patent
office action considering patentability of such claim by the relevant patent
office in the country or territory in which such claim is pending, such pending
claim shall, upon the conclusion of such seven (7) year period, cease to be a
Valid Claim in a particular country for purposes of this Agreement unless and
until such claim is the claim of an issued patent in such country.

2.

Evaluation; Option; License.

2.1Evaluation Program.

a.Purpose of Evaluation Program.  The purpose of the Evaluation Program shall be
(i) research and Development by MP of methods to Manufacture or synthesize the
Compound using methods or processes Covered by the Existing MP Patents and (ii)
the evaluation by Cempra of (A) the Manufacture and synthesis of the MP
Materials (and the MP Materials themselves) and (B) the MP Technology, to permit
Cempra to evaluate its interest in exercising the Option.  Except as set forth
in Section 3, each Party shall be solely responsible for all of its own costs
and expenses associated with this Agreement.

b.Conduct of Evaluation Program.

(i)MP Responsibilities.  MP shall use Commercially Reasonable Efforts during the
Option Period to perform its obligations under the Evaluation Program, which
shall include but not be limited to supplying Cempra, in accordance with the
delivery schedule set forth on Schedule 1.20 attached hereto, with the MP
Materials in the quantities set forth on

12

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

 

Schedules 1.20 and 3.3-1 attached hereto to a facility designated in writing by
Cempra, subject to the restrictions set forth herein, including, without
limitation, Section 2.1.b.(iv). MP shall not use any Third Parties (other than
Approved Subcontractors) in the course of performing its obligations under the
Evaluation Program, unless such Third Party is approved in advance in writing by
Cempra. 

(ii)Cempra Responsibilities.  Cempra shall use Commercially Reasonable Efforts
during the Option Period to evaluate the Manufacture and synthesis of the MP
Materials (and the MP Materials themselves) and the MP Technology, for purposes
of eventually determining whether or not to exercise the Option, and commit such
resources as are reasonably necessary to perform such evaluation.

(iii)Compliance.  Both Parties shall perform their obligations under this
Agreement, and Cempra shall use the MP Materials, in compliance with all
Applicable Laws.  

(iv)Restrictions on Use of MP Materials.  Cempra hereby agrees that,
notwithstanding anything to the contrary in this Agreement, Cempra shall not use
MP Materials for any purpose other than in the conduct of the Evaluation
Program.  Cempra shall transfer MP Materials only to its Affiliates or those
employees, consultants, or Approved Subcontractors of Cempra or its Affiliates
who are conducting Cempra’s portion of the Evaluation Program and who are bound
by obligations of confidentiality and non-use comparable in scope to those set
forth in this Agreement, and Cempra shall not transfer, distribute or release
any MP Materials to any Third Party (other than Approved Subcontractors) without
the prior written consent of MP.

(v)Cooperation; Scientific Contact. The Parties shall reasonably cooperate in
the conduct of the Evaluation Program and, subject to the terms of this
Agreement and any confidentiality obligations to third parties, shall provide
such information and materials as are reasonably necessary for the performance
of the Evaluation Program.  The respective scientific contacts (each, a
“Scientific Contact”) of the Parties for purposes of this Agreement are as
follows:

 

 

MP:

[*]

 

 

Macrolide Pharmaceuticals, Inc.

 

 

480 Arsenal St., Suite 130

 

 

Watertown, MA 02472

 

 

Email: [*]

 

 

Phone: [*]

 

 

 

 

Cempra:

[*]

 

 

Vice President, CMC

 

 

Cempra Pharmaceuticals, Inc.

 

 

6320 Quadrangle Dr. #360

 

 

Chapel Hill, NC 27517

 

 

Email:  [*]

 

 

Phone: [*]

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

13

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

 

(vi)Reporting.  Each Party shall (i) keep the other Party reasonably informed of
the progress of the Evaluation Program by oral reports to the respective
Scientific Contact not less than once each thirty (30) day period during the
Option Period (which can occur by telephone) and (ii) provide written summary
reports to the respective Scientific Contact of the results of the Evaluation
Program as are reasonably requested, no more frequently than once per Calendar
Quarter.  In addition to the foregoing, the Parties’ Scientific Contacts shall
attend in-person meetings, at a location to be mutually agreed on by the
Parties, at least once per Calendar Quarter.  Each Party shall bear its own
expenses of complying with the provisions of this Section 2.1.b.(vi). 

(vii)Termination of MP Responsibilities Under Evaluation Program.  Cempra shall
be entitled to terminate MP’s performance of MP’s remaining, unfulfilled
research, development, synthesis, and manufacturing obligations under the
Evaluation Program (and corresponding obligations under Section 2.1.b(i)) upon
written notice to MP given at any time following the second (2nd) anniversary of
the Effective Date or, if earlier, Cempra’s exercise of its Option in whole or
in part.  Upon such notice, MP shall, without limitation of any of its
obligations under this Agreement except those set forth in Section 2.1(b)(i),
cease (and cause its Affiliates to cease) all of its and its Affiliates’
research, development, synthesis, and manufacturing activities with respect to
the Evaluation Program or the Compound.

2.2Option.  MP hereby grants to Cempra the exclusive option to be granted (and
to have Cempra’s Affiliates be granted) the exclusive license set forth in
Section 2.3.b. below (the “Option”).  Cempra may exercise such Option, at its
sole discretion, at any time during the Option Period by providing written
notice of such exercise to MP; provided that Cempra shall automatically be
deemed to have exercised the Option for any and all purposes of this Agreement
if, and as of the date that, Cempra, its Affiliate(s) or Sublicensee(s) makes a
Regulatory Filing with any Regulatory Authority that covers a Royalty Product
manufactured using or incorporating Royalty Compound and includes, as part of
such Regulatory Filing’s chemistry, manufacturing, and controls section(s), a
description of the relevant manufacturing process(es) Covered by the MP
Patents.  If, and only if, Cempra indicates in such exercise notice, or by
providing written notice to MP within sixty (60) days of any deemed exercise of
its Option pursuant to the preceding sentence’s proviso, that it wishes to
exercise such Option only with respect to a reduced portion of the Territory
and/or a reduced portion of the rights to MP Technology described in Section
2.3.b below, the Territory and/or scope of rights to MP Technology to be
licensed to Cempra and its Affiliates under Section 2.3.b. upon exercise of the
Option shall be so reduced as described in such notice, unless Cempra, within
sixty (60) months of providing such notice of such reduced rights, provides MP
with a subsequent notice indicating that Cempra wishes to increase the scope of
such rights and/or portion of the Territory applicable to the rights granted
under Section 2.3.b. and describing the extent to which Cempra wishes to do so
(such a notice, a “Restoration Notice”), in which case, effective upon receipt
of such Restoration Notice, the portion of the Territory and/or scope of such
rights licensed to Cempra under Section 2.3.b. shall be increased to the extent
requested in such subsequent notice, provided that a Restoration Notice shall
not in any case be construed to expand Cempra’s and its Affiliates’ rights under
Section 2.3.b. beyond the potential maximum scope originally contemplated
thereby.  The Parties further agree that Cempra shall be entitled to provide
more than one Restoration Notice, and thereby increase the scope of rights
granted under Section 2.3.b. to the extent described in any such

14

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

 

Restoration Notice(s) at any time prior to the expiration of the
above-referenced sixty (60) month period following the initial Option exercise
notice. 

During the Option Term, and, if the Option is not exercised by Cempra with
respect to the entirety of rights potentially available under Section 2.3.b.,
prior to the expiration of the above-referenced sixty (60) month period
following the initial exercise of the Option, MP will not (and will ensure that
its Affiliates do not), on its (or their) own or with any Third Party, conduct
any research or development directly and specifically related to the Compound,
Products, or the synthesis or manufacture of either of the foregoing, except to
the extent such activities are undertaken solely by MP (y) in the performance of
its obligations under this Agreement or (z) in using a Compound as a comparator
in its in vitro or in silico (i.e., non-clinical and non-animal) research, or
incidentally in non-commercial, internal, in vitro or in silico (i.e.,
non-clinical and non-animal) research, focused in each case under this clause
(y) on any compound other than the Compound, provided that nothing in this
paragraph shall be construed to create or include a grant of any rights by
Cempra or any Affiliate thereof to MP or any Affiliate thereof under any
Patents, Know-How, or other intellectual property rights.

 

2.3Licenses; Retained Rights.

a.Subject to the other terms and conditions of this Agreement, MP hereby grants
to Cempra and its Affiliates an exclusive license (transferable in accordance
with Section 12.2), without the right to grant sublicenses, during the Option
Period under the MP Technology to conduct the Evaluation Program or otherwise
evaluate, test, or analyze the MP Materials, provided that, notwithstanding the
foregoing prohibition on sublicensing, Cempra and its Affiliates shall be
entitled to engage Approved Subcontractors to perform Cempra’s portion of the
Evaluation Program or otherwise evaluate, test, or analyze the MP
Materials.  Cempra shall not acquire any additional right, title or interest in
or to the MP Materials as a result of MP’s supply, or Cempra’s use, of the MP
Materials in the Evaluation Program.

b.Upon Cempra’s exercise or deemed exercise of the Option pursuant to Section
2.2, MP hereby grants to Cempra and its Affiliates an exclusive license
(transferable in accordance with Section 12.2), with the right to sublicense as
set forth in Section 2.4, under the MP Technology to:

(i)engage in clinical and regulatory activities directed towards obtaining
Regulatory Approval, make, have made, Manufacture, use, sell, offer for sale,
import, export and otherwise Commercialize the Compound and Products in the
Field in the Territory, subject to any reductions in such rights which may be
indicated by Cempra in its exercise notice (or later restored, in whole or in
part) as contemplated by Section 2.2; and

(ii)Manufacture, make, have made, use, sell, offer for sale, import, and export
Derivatives solely and exclusively for the purposes of (A) making, having made,
or Manufacturing the Compound or a Product under the foregoing clause (i) or (B)
activities that are necessary to seek or obtain Regulatory Approval of or for
the Compound or a Product, provided that (x) the rights to sell or offer for
sale Derivative referenced above in this clause (ii) shall only be exercised
with respect to sales of Derivatives (or offers for the sale thereof) to Third
Parties to whom Cempra, an Affiliate thereof, or a Sublicensee has granted
rights under

15

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

 

Know-How or Patents owned, licensed, or controlled by Cempra or an Affiliate
thereof to make, use, and sell Compound or Product and (y) the right to sell
Derivative referenced above in this clause (ii) shall further only be exercised
pursuant to a written agreement containing provisions explicitly limiting the
use of such Derivative solely to the manufacture of Compound or Product or
activities that are necessary to seek or obtain Regulatory Approval of or for
the Compound or Product. 

For purposes of clarity, the license under this Section 2.3.b. shall not include
any right to research, Develop, Manufacture, make, have made, sell, offer for
sale, use, import, export or otherwise Commercialize any Macrolide other than
(y) the Compound and (z) subject to the provisions of Section 2.3.b(ii),
Derivatives.

c.Cempra acknowledges and agrees that, notwithstanding the rights granted in
Sections 2.3.a. and 2.3.b. above with respect to the Harvard Patents or the
exclusivity thereof:

(i)the United States Government has certain rights arising out of its
sponsorship of the research that led to the conception or reduction to practice
of technology Covered by the Harvard Patents and, therefore, the United States
federal government retains rights in the Patent Rights pursuant to 35 U.S.C. §§
200-212 and 37 C.F.R. § 401 et seq., and any right granted in this Agreement
greater than that permitted under 35 U.S.C. §§ 200-212 or 37 C.F.R. § 401 et
seq. will be deemed modified as may be required to conform to the provisions of
those statutes and regulations; and

(ii)Harvard retains the right, for itself and for other not-for-profit research
organizations, to practice the Harvard Patents within the scope of the license
granted above, solely for non-commercial research, educational and scholarly
purposes; provided, that, nothing herein or in the Harvard License shall be
construed as permitting Harvard or any such not-for-profit research organization
to grant any rights to any third party, including any for-profit sponsor, to
practice or exploit any of the Harvard Patents for any commercial purpose that
would be inconsistent with the terms of the exclusive license granted hereunder
or under the Harvard License, including any right to develop, Manufacture,
market or sell Harvard Products for use in the Field.

d.Other than as expressly set forth in this Section 2.3, Cempra shall not
acquire any right, title, interest or license in or to the MP Materials or MP
Technology.

2.4Sublicensing.

 

a.Cempra and its Affiliates shall, upon prior written notice to MP describing
the territory and/or scope of rights within which Cempra and/or its Affiliates
wish to be entitled to grant one or more sublicenses of rights granted under
this Agreement (such a notice, a “Sublicense Notice”), have the right to
sublicense any rights granted under Section 2.3.b. to one or more Third Parties
within the scope described in such Sublicense Notice, through multiple tiers of
sublicenses.  The Parties further agree that Cempra shall be entitled to provide
more than one Sublicense Notice, and thereby increase the scope of rights that
may be sublicensed hereunder, at any time.  Cempra shall, as promptly as
practicable after execution thereof, provide MP a written copy of each such
sublicense executed with respect to the rights

16

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

 

granted under this Agreement (and each amendment thereto, if any), which may be
redacted to the extent reasonably necessary to protect the confidentiality of
the applicable Sublicensee’s confidential or proprietary information, promptly
following its execution.  Each such sublicense shall (i) be consistent with this
Agreement and (ii) contain terms and conditions reasonably sufficient to enable
Cempra to comply with the terms of this Agreement.   

b.Notwithstanding anything to the contrary, however, and without limiting
Cempra’s, its Affiliates’, and Sublicensees’ rights to engage Third Party
contract manufacturers to Manufacture the Compound, Derivatives, or Products on
behalf of Cempra, its Affiliates, and Sublicensees as permitted in the exercise
of the rights granted above, neither Cempra nor any Affiliate thereof shall,
during the five (5) years following Cempra’s exercise of the Option, be entitled
to sublicense to any Third Party the rights granted under this Agreement to make
or have made Compound or Derivative in the People’s Republic of China (excluding
Hong Kong) (“China”), other than for supply to Cempra, any Affiliate(s) thereof,
or any Sublicensee pursuant to a manufacturing, supply, or similar agreement,
unless (i) MP consents in writing to the grant of such sublicense, such consent
not to be unreasonably withheld, or (ii) the agreement under which such
sublicense is granted (x) includes rights to sell finished Product in China and
(y) contains reasonable contractual provisions prohibiting any Compound made in
China pursuant to such sublicense from being sold or commercialized outside of
China or used in the manufacture of any product other than Product to be used or
sold in China pursuant to such agreement.

c.Cempra shall ensure, and shall ensure that its Affiliates ensure, that any
Third Party contract manufacturers engaged to manufacture the Compound,
Derivatives or Products on behalf of Cempra or its Affiliates through the
practice of MP Technology are subject to commercially reasonable contractual
obligations that prohibit the use of MP’s Confidential Information for any other
purpose, and Cempra shall, and shall ensure that its Affiliates shall, either
(i) use Commercially Reasonable Efforts to enforce such obligations or (ii) make
MP a third party beneficiary entitled to enforce such obligations.  Cempra
shall, and shall ensure that its Affiliates shall, with respect to any
sublicense agreement executed without MP’s consent as permitted pursuant to
Section 2.4(b), either (1) use Commercially Reasonable Efforts to enforce the
contractual provisions referenced in clause (y) of the last sentence of Section
2.4(b) or (2) make MP a third party beneficiary entitled to enforce such
obligations.

17

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

 

2.5Section 365(n).  All licenses granted under this Agreement are deemed to be,
for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of right to
“intellectual property” as defined in Section 101 of such Code. The Parties
agree that Cempra and its Affiliates may fully exercise all of its and their
rights and elections under the U.S. Bankruptcy Code and any foreign equivalent
thereto in any country having jurisdiction over a Party, any Affiliate thereof,
or any of its or their assets.  The Parties further agree that, in the event
Cempra or any Affiliate(s) thereof elect to retain its rights as a licensee
under such Code, Cempra and/or such Affiliate(s), as applicable, shall be
entitled to complete access to any technology or intellectual property licensed
to them hereunder and all embodiments of such technology and intellectual
property.  Such embodiments of the technology and intellectual property shall be
delivered to Cempra and its Affiliates not later than: 

a.the commencement of bankruptcy proceedings against MP, upon written request,
unless MP elects to perform its obligations under this Agreement, or

b.if not delivered above under this Section 2.5, upon the rejection of this
Agreement by or on behalf of MP, upon Cempra’s written request.

 

2.6Restrictive Covenants.  

(a)Until the earlier of (i) the expiration of this Agreement in all countries of
the world or (ii) the termination of this Agreement in its entirety, MP and its
Affiliates shall not, and MP shall cause its Affiliates not to, (A) manufacture,
have manufactured, use, sell, market, distribute, or import the Compound or
enter into any agreement with any Third Party regarding the manufacture, sale,
marketing, distribution, or import of the Compound; (B) grant any Third Party
any rights under any MP Technology to manufacture, sell, market, distribute, or
import the Compound; or (C) enable any Third Party, directly or indirectly, to
manufacture the Compound; or (D) grant any Third Party any rights under any MP
Technology, or enable any Third Party directly or indirectly, in each case to
manufacture, sell, market, distribute or import any Derivative if MP or any of
its Affiliates possess actual knowledge that such Derivative is being or will be
used by or on behalf of such Third Party to manufacture, sell, or otherwise
commercialize the Compound; provided that, notwithstanding the foregoing, the
obligations of MP and its Affiliates under this Section 2.6 shall not apply (x)
to the extent reasonably necessary to enable MP to satisfy its obligations under
this Agreement or (y) to the incidental use thereof in non-commercial internal
in vitro or in silico (i.e., non-clinical and non-animal) research, or use of
the same as a comparator in its in vitro or in silico (i.e., non-clinical and
non-animal) research, focused in each case under this clause (y) on any compound
other than the Compound (and provided that nothing in this paragraph shall be
construed to create or include a grant of any rights by Cempra or any Affiliate
thereof to MP or any Affiliate thereof under any Patents, Know-How, or other
intellectual property rights).

(b)MP shall, and MP shall ensure that its Affiliates, use Commercially
Reasonable Efforts to (I) include in any agreement (other than the Harvard
License) between MP or any Affiliate thereof and any Third Party concerning the
(i) manufacture, use, sale, or import of any Derivative, (ii) grant of any
intellectual property rights with respect to any Derivative (or the use or
manufacture thereof), or (iii) enablement of the manufacture of any Derivative,
a provision prohibiting any such Derivative procured from MP or any Affiliate

18

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

 

thereof, manufactured in the exercise of any rights granted by MP or any
Affiliate thereof, or whose manufacture is otherwise enabled by MP or any
Affiliate thereof to, in any case, from being used in the manufacture of the
Compound and (II) ensure that Cempra is a third party beneficiary entitled to
enforce such provision. 

3.

Financial Terms

 

3.1Initial License Fee.  In consideration of the rights granted under Sections
2.2, 2.3, and 8.1, Cempra will pay MP a non-refundable, non-creditable fee (the
“Initial License Fee”) in the aggregate amount of Three Hundred and Seventy Five
Thousand Dollars ($375,000), payable by wire transfer of immediately available
funds, within five (5) Business Days of the Effective Date.

3.2Facilities Fee.  In consideration of the facilities, equipment, supplies and
related goods and services that MP will need to purchase, acquire or provide to
conduct the Evaluation Program, Cempra will pay MP a non-refundable,
non-creditable fee (the “Facilities Fee”) in the aggregate amount of Three
Hundred and Seventy Five Thousand Dollars ($375,000), payable by wire transfer
of immediately available funds, within five (5) Business Days of the Effective
Date.

3.3Research Funding.  In consideration of the conduct by MP of the Evaluation
Program, Cempra will pay MP the expected reasonable, documented, direct
compensation-related costs of employees and advisors necessary to conduct MP’s
portion of the Evaluation Program, mutually agreed by the parties to be an
aggregate amount equal to One Million Four Hundred Ninety-Nine Thousand Nine
Hundred Ninety-Nine Dollars and Ninety-Four Cents ($1,499,999.94), which shall
be paid by Cempra monthly in eighteen (18) equal consecutive non-refundable,
non-creditable monthly installments of $83,333.33 (each, a “Research Funding
Payment”), payable by wire transfer of immediately available funds on or prior
to each of the eighteen (18) consecutive monthly anniversaries of the Effective
Date (the “Research Funding Dates”).

3.4Initial Milestone Payments. In consideration of the rights granted under
Sections 2.2, 2.3, and 8.1, Cempra shall pay MP the respective non-refundable,
non-creditable amounts set forth on Schedule 3.3-1 upon the satisfaction of the
respective corresponding conditions described therein (the “Initial Milestone
Payments”), in each case payable by wire transfer of immediately available funds
within thirty (30) Calendar Days following satisfaction of the relevant
conditions for the relevant payment and written notice thereof from MP.

3.5Second License Fee.  If Cempra exercises or is deemed to have exercised its
Option under Section 2.2, Cempra shall pay MP a non-refundable, non-creditable
license fee in the aggregate amount of One Million Dollars ($1,000,000) (the
“Second License Fee” ), payable as follows:

a.Five Hundred Thousand Dollars ($500,000) of the Second License Fee shall be
paid by Cempra within fifteen (15) Business Days of its exercise or deemed
exercise of the Option; and

19

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

 

b.Five Hundred Thousand Dollars ($500,000) of the Second License Fee shall be
paid by Cempra in the form of “deemed royalty” payments equal to [*] percent
([*]%) of Net Sales of Products (whether or not a Compound, as incorporated as
an API into such Product, is actually synthesized or Manufactured using any
methods or processes Covered by a Valid Claim of an MP Patent in the country in
which such Product is actually sold) sold by Cempra, its Affiliates,
Sublicensees, and Product Partners following the exercise or deemed exercise of
the Option (i.e., the total payment obligation under this Section 3.5.b. shall
not exceed $500,000); provided that for all purposes of this Section 3.5.b.
(including the calculation of such deemed royalty payments), the provisions of
this Agreement pertaining to payments due on the basis of Net Sales of Royalty
Products shall apply, mutatis mutandis, to the Net Sales of all Products sold by
Cempra, its Affiliates, Sublicensees, and Product Partners, further provided
that, notwithstanding anything to the contrary, with respect to sales of
Products by Sublicensees and Product Partners, the “deemed royalty” shall only
be due under this Section 3.5.b. to the extent such Sublicensees and Product
Partners pay a royalty to Cempra or an Affiliate thereof with respect to such
sales. 

3.6Royalty Payments.  Except as otherwise set forth in this Agreement, Cempra
will make royalty payments based on a percentage of the applicable Annual Net
Sales, on a Royalty Product-by-Royalty Product and country-by-country basis,
from the date of the First Commercial Sale of each Royalty Product in each
country until the expiration of the Royalty Term applicable to such Royalty
Product in such country.  Such royalty payments shall be calculated based on
Annual Net Sales of all Royalty Products by applying the tiered royalty rate
shown below:

Annual Net Sales

Royalty

Annual Net Sales up to and including $[*]

[*]%

Annual Net Sales over $[*]

[*]%

 

For example, if, during a Calendar Year, Annual Net Sales of Royalty Products
were equal to $[*], then the royalties payable would be calculated by adding (a)
the royalties with respect to the first $[*] at the first-level percentage of
[*] percent ([*]%) ($[*] x [*] = $[*]) and (b) the royalties with respect to the
next $[*] at the second-level percentage of [*] percent ([*]%) ($[*] x [*] =
$[*]), for a total royalty of $[*].

3.7Additional Royalty Payments Following First Commercial Sale.  Cempra shall
pay to MP a non-refundable, non-creditable additional royalty equal to [*]
percent ([*]%) of the first (1st) $[*] in combined, aggregate Net Sales of all
Royalty Products sold by Cempra, its Affiliates, Sublicensees, and Product
Partners (i.e., the total payment obligation under this Section 3.7 shall not
exceed $1,000,000).

 

 

 

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

20

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

 

3.8Third Party Royalties.  If (a) any technology Covered by any MP Patents, to
the extent licensed to Cempra under this Agreement, is Covered by any Valid
Claim in an Infringed Patent owned, licensed, or controlled by a Third Party in
any country(ies) of the Territory, and Cempra, an Affiliate thereof, any
Sublicensee, or any Product Partner, after arms’-length negotiations, is
required to license such Infringed Patent, then Cempra shall be entitled to
deduct [*] percent ([*]%) of the consideration paid to any such Third Party for
any such rights (such consideration, “Third Party Royalties”) from any payments
due MP under Section 3.6, provided that such amounts payable shall not be
reduced, with respect to any Calendar Quarter, below [*] percent ([*]%) of the
amounts otherwise due MP with respect to such Calendar Quarter without such
offset. 

3.9Compulsory Licenses.  Should a compulsory license be granted, or be the
subject of a possible grant, to a Third Party under the Applicable Laws of any
country in the Territory under any MP Patent(s), the Party receiving notice
thereof or otherwise becoming aware thereof shall promptly notify the other
Party thereof, including any material information concerning such compulsory
license, and the total amount payable under Section 3.6 (as adjusted by Section
3.8) with respect to sales of Royalty Products in such country will be adjusted
to match any lower amount such Third Party may be allowed to pay with respect to
the sales of such Royalty Products in such country, with such lower amount
subject to further adjustments pursuant to Section 3.8.

3.10Challenge of Harvard Patents.

a.In the event that Cempra, its Affiliate, or a Sublicensee (a “Challenging
Party”) commences, during any period of time during which such entity enjoys
rights to any Harvard Patents granted hereunder, an action in which it
challenges the validity, enforceability, or scope of any Harvard Patents (a
“Harvard Patent Challenge”), Cempra shall reimburse Harvard for all reasonable,
documented expenses incurred by Harvard (including reasonable attorneys’ fees)
in connection with such Harvard Patent Challenge.  If the outcome of such
Harvard Patent Challenge is a determination in favor of the Challenging Party,
such Challenging Party will not have any right to recoup any royalties paid
before or during the pendency of such Harvard Patent Challenge.

b.In the event that a Challenging Party commences a Harvard Patent Challenge
with respect to any Harvard Patent to which Cempra enjoys rights under this
Agreement, Cempra shall pay, directly to Harvard, a royalty of [*] percent
([*]%) of Net Sales on Licensed Products (as defined in the Harvard License)
sold by Cempra, its Affiliates, and Sublicensees during the pendency of such
Harvard Patent Challenge.  If the outcome of such Harvard Patent Challenge is a
determination against the Challenging Party and its assertions in such Harvard
Patent Challenge (e.g., that the Harvard Patents subject to such Harvard Patent
Challenge are not invalid or unenforceable), Cempra shall continue to pay such
royalty, on a country-by-country and Licensed Product-by-Licensed Product basis,
until the earlier of (i) the date on which Cempra no longer enjoys rights to the
Harvard Patents subject to such Harvard Patent Challenge under this Agreement or
(ii) such time as the applicable Product is no longer covered by a Valid Claim
of the Harvard Patents in the country in which such Product is sold.

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

21

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

 

c.The Parties agree that neither Section 3.10.a nor Section 3.10.b shall apply
to (i) Cempra or its Affiliates with respect to a Harvard Patent Challenge
regarding a Harvard Patent to which Cempra does not enjoy rights under this
Agreement or (ii) any Sublicensee with respect to a Harvard Patent Challenge
regarding a Harvard Patent to which such Sublicensee does not enjoy rights under
any sublicense granted under this Agreement. 

d.The Parties agree that neither (I) arguments and comments made by or on behalf
of Cempra, its Affiliates, or any Sublicensee with respect to the prosecution,
maintenance, or defense of Cempra’s, its Affiliates’, or any Sublicensee’s owned
or licensed patents or patent applications (other than Harvard Patents) in
response to examiners’ citations of or references to the Harvard Patents in
office actions and other communications from governmental patent offices,
agencies, or authorities, but only to the extent reasonably necessary to attempt
to overcome the examiner’s rejection of the relevant claims, nor (II) in the
event an opposing party (that is not Cempra, an Affiliate thereof, any
Sublicensee, or any Third Party acting on behalf, or with the knowing
assistance, of any of the foregoing) uses in any legal proceeding a Harvard
Patent to make a bona fide challenge to the validity, enforceability, scope, or
patentability of any patents or patent applications of Cempra, any Affiliate
thereof, or any Sublicensee (other than Harvard Patents), any arguments and
comments made by Cempra, its Affiliate, or any Sublicensee, as appropriate, but
only to the extent reasonably necessary to defend such owned or licensed patents
or patent applications in such legal proceedings, shall, in either case,
constitute a Harvard Patent Challenge for purposes of this Section
3.10.  Harvard is not a party to this Agreement; however, Harvard shall be a
third party beneficiary of the terms of this Section 3.10, and Harvard may
enforce such terms directly against Cempra.

3.11Royalty Term.  Subject to any earlier termination of this Agreement, amounts
due under Section 3.6 (as they may be further adjusted under this Agreement)
shall only be payable on a country-by-country and Royalty Product-by-Royalty
Product basis for sales occurring, as applicable, with respect to a particular
Royalty Product in a particular country prior to the first (1st) date on which
there are no Valid Claims of any MP Patent Covering such Royalty Product (or any
Royalty Compound incorporated therein as an API) in such country (the period
from the Effective Date until such date for a particular Royalty Product in a
particular country, the “Royalty Term” for such Royalty Product in such
country).

3.12Payments and Payment Reports.  Except as otherwise provided in this Section
3, all royalties due under Section 3.5.b., 3.6, and 3.7 shall be paid within
ninety (90) Calendar Days of the end of the Calendar Quarter during which the
applicable Net Sales occur.  Each royalty payment shall be accompanied by a
statement stating (as applicable) the number, description, and aggregate Net
Sales, by country, of each Royalty Product and cumulative Annual Net Sales of
all Royalty Products sold during the relevant Calendar Quarter and Calendar Year
by Cempra, its Affiliates, Sublicensees, and Product Partners, with a list of
Harvard case numbers for all Harvard Patents that have Valid Claims Covering the
Royalty Products (to the extent such case numbers are ascertainable from
Schedule 1.40 or similar information provided by MP prior to the end of the
Calendar Quarter for which such report is being provided), and detailing the
calculation of royalties and amounts due for such Calendar Quarter.

22

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

 

3.13Payment Method.  Except as set forth in Section 3.17 below, all payments due
under this Agreement to MP shall be made by bank wire transfer in immediately
available funds to an account designated by MP in writing.  All payments
hereunder shall be made in the legal currency of the United States. 

3.14Taxes.  In the event any tax or similar amount is paid or required to be
withheld by Cempra or any Affiliate thereof for the benefit of MP on account of
any royalties or other payments payable to MP under this Agreement, the
corresponding amounts payable to MP shall be reduced by the amount of taxes or
similar amounts deducted and withheld, and Cempra or its Affiliates shall pay
the amounts of such taxes or similar amounts to the proper Governmental
Authority in a timely manner and promptly transmit to MP an official tax
certificate or other evidence of such tax or other obligations together with
proof of payment from the relevant Governmental Authority of all amounts
deducted and withheld sufficient to enable MP to claim such payment of taxes or
similar amounts. Any such withholding taxes or similar amounts required under
applicable law to be paid or withheld shall be an expense of, and borne solely
by, MP.  Cempra will provide MP with, at MP’s expense, reasonable assistance to
enable MP to recover such taxes or amounts otherwise withheld as permitted by
law.

3.15Sublicenses.  For avoidance of doubt, the Parties agree that in the event
that Cempra grants licenses or sublicenses to Third Parties any right under MP
Technology to sell Royalty Products, Cempra shall include in such licenses or
sublicenses an obligation for such Sublicensee to account for and report its
sales of Royalty Products on a basis reasonably sufficient to enable Cempra to
pay MP the royalties due under this Agreement and satisfy Cempra’s reporting
obligations hereunder.  

3.16Foreign Exchange.  All payments due under this Agreement will be paid in
United States dollars.  Conversion of amounts received or sales made in foreign
currency to United States dollars will, for reporting or payment purposes
hereunder, be made at the conversion rate existing in the United States, as
reported in the Wall Street Journal on the last Business Day of the applicable
Calendar Quarter.  If The Wall Street Journal ceases to be published, then the
rate of exchange to be used shall be that reported in such other business
publication of national circulation in the United States on which the Parties
reasonably agree.  

3.17Blocked Currency.  In each country where the local currency is blocked and
cannot be removed from the country, payments under this Agreement arising from
activities in that country for which Cempra or an Affiliate thereof does not
receive payment in United States’ currency, freely useable outside of such
country, shall, notwithstanding anything to the contrary, be paid to MP in the
country in local currency by deposit in a local bank designated by Cempra,
unless the Parties otherwise mutually agree in writing.

3.18Interest.  If Cempra fails to make any payment when due to MP under this
Agreement, then interest shall accrue on the balance due on a daily basis at a
rate equal to LIBOR (as published in The Wall Street Journal, New York edition),
or at the maximum rate permitted by applicable law, whichever is lower, until
Cempra meets the full financial obligation due under this Agreement.

23

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

 

3.19Records; Audits.  Cempra shall maintain, and shall cause its Affiliates,
Sublicensees, and Product Partners to maintain, complete and accurate records of
Royalty Products that are made, used, sold, leased or transferred under this
Agreement, which records shall contain sufficient information to permit MP to
confirm the accuracy of any reports or notifications delivered to it under
Section 3.12 of this Agreement.  Cempra shall retain, and cause its Affiliates,
Sublicensees to retain, such records relating to a given Calendar Quarter for at
least five (5) years after the conclusion of that Calendar Quarter, during which
time MP and Harvard will, subject to the terms of this Section 3.19, have the
right, at their expense, to cause an independent, certified public accountant
(or, in the event of a non-financial audit, other appropriate independent,
neutral auditor) to inspect such records during normal business hours for the
purposes of verifying the accuracy of any reports and payments delivered under
this Agreement and Cempra’s compliance with the terms hereof.  Such accountant
or other auditor, as applicable, shall be bound by obligations of
confidentiality and non-use with respect to information disclosed by Cempra and
shall not disclose to MP or Harvard any information other than information
relating to the accuracy of reports and payments delivered under this
Agreement.  MP shall promptly provide Cempra a copy of the results of any audit
or inspection under this Section 3.19, and the Parties shall reconcile any
underpayment or overpayment within thirty (30) days after the accountant
delivers the results of the audit, provided that any overpayment by Cempra of
royalties or any other amount paid to MP revealed by an inspection or audit
shall, in Cempra’s sole discretion, (i) be fully-creditable against future
payments under this Agreement or (ii) refunded to Cempra within thirty (30)
Calendar Days of its request.  If any audit performed under this Section 3.19
reveals an underpayment in excess of five percent (5%) in any Calendar Year,
Cempra shall reimburse MP for all reasonable, documented amounts incurred in
connection with such audit.  MP and Harvard may collectively exercise their
rights under this Section 3.19 only once every Calendar Year per audited entity
and only with reasonable prior notice to Cempra.   

4.

Technology Transfer; Diligence; Compliance

4.1Technology Transfer.  Upon Cempra’s exercise or deemed exercise of the Option
and, additionally, as reasonably requested at any time prior to the date ninety
(90) days following such exercise or deemed exercise, MP shall transfer to
Cempra, at no additional cost, all MP Know-How (including copies of any tangible
embodiments thereof), that is necessary to the practice of the license granted
under Section 2.3.b.  MP shall use Commercially Reasonable Efforts to effect the
purposes of the foregoing as promptly as practicable, which shall include but
not be limited to taking reasonable actions necessary to enable Cempra, any
Affiliate thereof, or any designated contractor of Cempra or any Affiliate
thereof to undertake the manufacture and/or synthesis of the Compound and/or
Products using the technology, methods, or processes described, embodied, or
claimed in the MP Technology.  Such actions shall include providing Cempra with
(i) the data, files and results of any chemistry, manufacturing, or
control-related activities relating to the Compound or a Product (and, if
necessary to manufacture the Compound, a Derivative), and (ii) all other
information known to or possessed by MP or any of its Affiliates that is
necessary or reasonably useful to the Manufacturing and/or synthesis of the
Compound and/or Products (and, if necessary to manufacture the Compound or such
Products, any Derivative).  The Parties agree that the costs and expenses of MP
in performing its obligations under this Section 4.1 shall be borne by MP and
that MP shall not be

24

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

 

required to provide more than [*] person-hours of assistance in using
Commercially Reasonable Efforts in fulfilling its obligations under this Section
4.1. at its expense 

4.2Additional Assistance.  In the event Cempra desires any additional assistance
from MP with respect to the understanding, utilization, or application of the MP
Technology necessary or reasonably useful to the Manufacturing and/or synthesis
of the Compound and/or Products (and, if necessary to manufacture the Compound
or such Products, any Derivative) , beyond the assistance to be provided in
Section 4.1, Cempra shall provide written notice thereof to MP, and the parties
shall enter into good faith discussions concerning the financial and other terms
upon which such assistance may be provided by MP, provided that MP shall not
have any obligation to provide such assistance unless and until the Parties have
executed a mutually agreeable definitive written agreement governing the
provision of such assistance on Commercially Reasonable terms.  MP shall permit
any of its or its Affiliates’ employees, officers, or directors to enter into
one or more consulting or service agreement(s) with Cempra concerning the
Compound and/or Products (and, if necessary to manufacture the Compound or such
Products, any Derivative) (or the Commercialization or Manufacture thereof) to
the extent to the extent so requested by Cempra, consistent with Cempra’s rights
under this Agreement, and acceptable to such employee, officer, or director.

 

4.3Diligence; Reporting.

 

a.If Cempra exercises its Option, Cempra shall thereafter use Commercially
Reasonable Efforts to pursue the Development and Commercialization of
Products.  The Parties agree that the efforts of Cempra’s Affiliates,
Sublicensees, and contractors or consultants of Cempra, its Affiliates, or
Sublicensees shall constitute the efforts of Cempra for purposes of satisfying
Cempra’s obligations under this Section 4.3.a.

 

b.Within sixty (60) days after the end of each Calendar Year, Cempra shall
furnish MP with a written report summarizing Cempra’s, its Affiliates’ and
Sublicensees’ efforts during the prior Calendar Year to Develop and
Commercialize Royalty Products, including: (a) research and development
activities; (b) Commercialization efforts; and (c) marketing efforts. Each
report must contain a reasonably sufficient level of detail for MP to assess
whether Cempra is in compliance with its obligations under Section 4.3.a. and a
discussion of intended efforts for the then current Calendar Year.  All reports
delivered pursuant to this Section 4.3.b. shall be deemed Confidential
Information of Cempra pursuant to this Agreement.  All reports delivered
pursuant to this Section 4.3.b. shall be deemed Confidential Information of
Cempra pursuant to this Agreement.

 

 

 

 

 

 

 

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

25

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

 

4.4Compliance.  Cempra shall comply, and shall use Commercially Reasonable
Efforts to ensure that its Affiliates and any Sublicensees comply, with all
Applicable Laws in the exercise of the rights granted under this
Agreement.  Without limiting the foregoing, Cempra represents and warrants, on
behalf of itself and its Affiliates, that it shall, and it will contractually
obligate Sublicensees to comply with all United States laws and regulations
controlling the export of certain commodities and technical data, including
without limitation all Export Administration Regulations of the United States
Department of Commerce.  Cempra hereby gives written assurance that it will
comply with, and will cause its Affiliates to comply with (and will
contractually obligate its Sublicensees to comply with), all United States
export control laws and regulations, that it bears sole responsibility for any
violation of such laws and regulations by itself or its Affiliates or
Sublicensees, and that it will indemnify, defend, and hold each of MP (in
accordance with Section 11.2) and Harvard (in accordance with Section 11.4)
harmless for the consequences of any such violation. 

 

4.5Preference for US Industry.  During the period of exclusivity of the licenses
granted hereunder with respect to Harvard Patents in the United States (but no
longer than the expiration of the last Valid Claim thereof), Cempra shall
comply, and shall use Commercially Reasonable Efforts to ensure that its
Affiliates and Sublicensees comply, with 37 CFR 401.14(i) or any successor rule
or regulation.

 

5.Patent Prosecution and Maintenance.

 

5.1Prosecution and Maintenance by MP.  Prior to exercise of the Option by
Cempra, MP shall have sole responsibility for, and use Commercially Reasonable
Efforts to pursue, the filing, prosecution, and maintenance of the MP
Patents.  From and after exercise of the Option, except as provided in Sections
5.2 and 5.3, MP shall have primary responsibility for, and use Commercially
Reasonable Efforts to pursue, the filing, prosecution, and maintenance of the MP
Patents and, subject to Sections 5.2 and 5.3 below, MP will be responsible for
all reasonable costs and expenses it incurs with respect such filing,
prosecution, and maintenance.  MP will, to the extent reasonably practicable,
provide Cempra a reasonable opportunity to review and comment on any material
patent filings or correspondence with patent authorities pertaining to the MP
Patents and the Manufacture of the Compound, provided that all decisions with
respect to the filing, prosecution, and maintenance of MP Patents under this
Section 5.1 shall be made by MP in its reasonable discretion.  Schedule 1.40
shall be updated periodically by MP to reflect the further prosecution and
maintenance of such Patents and the addition of any such MP Patents coming under
the Control of MP or any Affiliate thereof after the Effective Date, and any
such update shall indicate whether or not any MP Patents subject to such update
are Harvard Patents (and include the Harvard case number therefor).  MP shall
not abandon (or permit any Affiliate thereof or, in the case of Harvard Patents,
Harvard to abandon) prosecution, maintenance, or financial support of any such
MP Patent without first notifying Cempra in a reasonably timely manner of MP’s
intention and/or reason therefor, and providing Cempra with a reasonable
opportunity to assume responsibility for prosecution, maintenance, and/or
financial support of such MP Patent or, in the case of any Harvard Patents that
MP may wish to abandon or permit Harvard to abandon, using Commercially
Reasonable Efforts to cause Harvard to continue the filing, prosecution, and
maintenance of such Harvard Patents or provide Cempra an opportunity to discuss
such issue with Harvard.

26

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

 

5.2Prosecution and Maintenance by Cempra of Compound-Specific Patents. Upon
Cempra’s exercise of its Option, and subject to Section 5.3 below, Cempra shall
assume and have primary responsibility for, and use Commercially Reasonable
Efforts to pursue, the filing, prosecution, and maintenance of all MP Patents
licensed to Cempra and its Affiliates under Section 2.3.b. that (i) are owned by
MP or an Affiliate thereof, (ii) solely contain claims Covering the Compound
(and not any other compounds), and (iii) are not Harvard Patents (such MP
Patents, “Compound Patents”), using patent counsel of Cempra’s choosing and,
subject to Section 5.3 below, Cempra will be responsible for all costs and
expenses it incurs with respect its filing, prosecution, and maintenance of
Compound Patents.  Cempra will, to the extent reasonably practicable, provide MP
a reasonable opportunity to review and comment on any material patent filings or
correspondence with patent authorities pertaining to Compound Patents, provided
that all decisions with respect to the filing, prosecution, and maintenance of
Compound Patents under this Section 5.2 shall be made by Cempra in its
reasonable discretion.  Schedule 1.40 shall be updated periodically by Cempra to
reflect its further prosecution of Compound Patents, and MP shall provide notice
to Cempra of, and update Schedule 1.40 to reflect the addition thereto of, the
Compound Patents coming under the Control of MP or an Affiliate thereof after
the Effective Date.  Cempra shall not abandon prosecution or maintenance of a
Compound Patent without first notifying MP in a reasonably timely manner of
Cempra’s intention and reason therefor, and providing MP with reasonable
opportunity to assume responsibility for prosecution and maintenance of such
Compound Patent, at MP’s cost and expense, as set forth in Section 5.3. 

5.3Abandonment by a Party; Prosecution and Maintenance by the other Party.  If a
Party responsible for filing, prosecution, and maintenance of any MP Patents,
other than Harvard Patents (to which this Section 5.3 shall not apply), pursuant
to Section 5.1 or 5.2 (such Party, the “Patent Party”) provides the other Party
(the “Non-Patent Party”) with written notification that the Patent Party will no
longer support or pursue the filing, prosecution, or maintenance of a specified
MP Patent in a particular country, then (A) the Patent Party’s responsibility
for such filing, prosecution, or maintenance of such MP Patent in such country,
and the fees and costs related thereto, will terminate on the earlier of (x) the
date sixty (60) Calendar Days after the Non-Patent Party’s receipt of such
written notice from the Patent Party or (y) the Non-Patent Party’s assumption of
the filing, prosecution and maintenance of such MP Patent in such country and
(B) the Non-Patent Party shall have the right, upon written notice to the Patent
Party given during such sixty (60) Calendar Day period, to assume control of,
and responsibility for, the filing, prosecution, or maintenance of such MP
Patent in such country, at the Non-Patent Party’s expense.  In the event of such
an assumption by a Non-Patent Party with respect to such MP Patent in such
country, the Non-Patent Party will thereafter advise the Patent Party in writing
of the status of such MP Patent (including any related hearings or other
proceedings) on a reasonably regular basis and, at the Patent Party’s request,
will provide the Patent Party with copies of all documentation concerning such
MP Patent in such country, including all correspondence to and from any patent
authority with respect thereto.  The Non-Patent Party assuming filing,
prosecution, or maintenance of a particular MP Patent under this Section 5.3
shall consult with the Patent Party prior to abandoning any such MP Patent or
any claim contained therein, and will solicit the Patent Party’s advice and
review of such MP Patent (or any correspondence related thereto) and important
prosecution or maintenance matters related thereto in reasonably sufficient time
prior to any filing, submission, or communication thereof or with respect
thereto, and will take into account the Patent Party’s reasonable

27

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

 

comments related to any of the foregoing. For purposes of clarification, but not
limitation, any MP Patent subject to this Section 5.3 shall in any event remain
an MP Patent, and remain included in the rights granted to Cempra, its
Affiliates, and Sublicensees, under this Agreement, until such time as such MP
Patent no longer has any Valid Claims. 

5.4Patent Term Extensions.  Cempra shall promptly notify MP of the issuance of
each Regulatory Approval and, to the extent reasonably and legally possible and
reasonably useful or materially valuable in the Commercialization of Products
Covered by a Valid Claim of any MP Patent to which Cempra and its Affiliates
have rights hereunder, use Commercially Reasonable Efforts to apply (or cause
its Affiliates or Sublicensee(s) to apply) for a patent term extension,
adjustment or restoration, supplementary protection certificate, or other form
of market exclusivity conferred by Applicable Laws with respect to any MP
Patents (collectively, “Patent Term Extensions”) in the relevant country(ies) of
the Territory.  MP shall, if and as requested by Cempra, (i) use Commercially
Reasonable Efforts to obtain, and assist Cempra, its Affiliates, and
Sublicensees in obtaining, all available Patent Term Extensions and (ii) take
all actions necessary to obtain all Patent Term Extensions.  The Parties shall
reasonably cooperate with each other in obtaining Patent Term Extensions
wherever and whenever applicable.

5.5Small Entity Designation.  If Cempra, any of its Affiliates, any Sublicensee,
or any holder of an option to become a Sublicensee, at any point prior to the
first date on which there are no Valid Claims of any Harvard Patents in the
United States that are licensed to Cempra under this Agreement, ceases to
qualify as an entity entitled to pay lesser patent-related fees as provided by
the United States Patent and Trademark Office (i.e., a “small entity”), Cempra
shall so notify MP as soon as reasonably possible, in order to enable MP and
Harvard to comply with USPTO regulations regarding payment of fees with respect
to the Harvard Patents.

5.6Patent Marking.  Cempra shall mark, shall cause its Affiliates to mark, and
shall use Commercially Reasonable Efforts to cause its Sublicensees to, mark all
Products Covered by a Valid Claim of any MP Patent(s) sold or otherwise disposed
of in such a manner as to conform with the patent laws and practice of the
country to which such products are shipped or in which such products are sold
for purposes of ensuring maximum enforceability of MP Patents in such country.

6.

Infringement and defense.

6.1Notice.  If either Party becomes aware of any actual, potential, or alleged
infringement of any of the rights to MP Patents granted under this Agreement,
such Party shall give to the other Party prompt and reasonably detailed written
notice of such actual, potential, or alleged infringement.

6.2Infringement of MP Patents.

a.Prior to Option Exercise.  Notwithstanding anything to the contrary, this
Section 6.2.a. shall only apply with respect to rights to MP Patents that have
not been granted under Section 2.3.b.; upon the grant of any rights to MP
Patents under Section 2.3.b., Section 6.2.b. shall apply with respect to such
rights under the MP Patents in lieu of this Section

28

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

 

6.2.a., except with respect to any patent infringement litigation initiated in
accordance with this Section 6.2.a. prior to the grant of such rights to Cempra
under Section 2.3.b.  MP shall have the sole right, but not the obligation, to,
initiate, prosecute, and control any action or legal proceedings, and/or enter
into a settlement, including any declaratory judgment action, with respect to
any actual, potential, or alleged infringement of any MP Patents, provided that
MP shall not (and shall ensure that its Affiliates do not) initiate or undertake
any of the foregoing actions or activities, or otherwise communicate with any
Third Party concerning any actual, potential, or alleged infringement of, or
need for a license to, any MP Patents within the scope of Cempra’s actual or
potential rights under this Agreement without providing Cempra thirty (30) days
advance written notice thereof and an opportunity to discuss in detail the
circumstances concerning such actual, potential, or alleged infringement of, or
need for a license to, any MP Patents within the scope of such actual or
potential rights and, if Cempra exercises its Option during such thirty (30) day
period, or otherwise prior to the initiation or undertaking of any such
activities, Section 6.2.b. shall apply with respect to the rights under the MP
Patents that are the subject of the exercise of the Option. 

b.Following Option Exercise.  

(i)Compound Patents.  Notwithstanding anything to the contrary, this Section
6.2.b(i) shall apply with respect to rights to Compound Patents within the MP
Patents for which Cempra has exercised the Option.  With respect to any actual,
potential, or alleged infringement of the rights to Compound Patents within the
MP Patents granted under Section 2.3.b., Cempra shall have the first and primary
right (which may be further granted to Affiliates of Cempra, but not to
Sublicensees), but not the obligation, to, initiate, prosecute, and control any
action or legal proceedings, and/or enter into a settlement, including any
declaratory judgment action, with respect to such actual, potential, or alleged
infringement, provided that, notwithstanding the foregoing, (i) Cempra shall
keep MP reasonably informed of the progress of any such action and shall give MP
a reasonable opportunity in advance to consult with Cempra and offer its views
about major decisions affecting the litigation, (ii) Cempra shall give careful
consideration to those views, but shall have the right to control the action in
its discretion, and (ii) if Cempra (or its Affiliate controlling such litigation
as permitted hereby) fails to defend in good faith the validity and/or
enforceability of any Harvard Patent(s) or MP Patents in the action or, or if
the license granted hereunder to any MP Patent(s) in the suit terminates, MP may
elect to take control of the action pursuant to the second paragraph of this
Section 6.2.b. with respect to such Harvard Patent(s) or MP Patent(s).  In any
such litigation brought by Cempra (and/or any Affiliate thereof), Cempra (and/or
any Affiliate thereof) shall have the right to use and sue in MP’s or any MP’s
Affiliate’s name, and join MP or any Affiliate thereof as a party to such
litigation, and MP shall cooperate (and cause its Affiliates to cooperate)
reasonably, as requested by Cempra and at Cempra’s expense (which expense shall
be reasonable and documented). If, within one hundred eighty (180) Calendar Days
of the notice in Section 6.1, Cempra and/or its Affiliates (i) shall have been
unsuccessful in persuading the actual, potential, or alleged infringer to
desist, (ii) shall not have brought and shall not be diligently prosecuting an
infringement action with respect to such actual, potential, or alleged
infringement, and (iii) have not entered into settlement discussions with
respect to such actual, potential, or alleged infringement, or if Cempra
notifies MP that it has decided not to undertake any of the foregoing against
any such alleged, potential, or actual infringer, then MP shall have the right
to bring suit to enforce such rights under the MP Patents against such actual,
alleged,

29

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

 

or potential infringer at its own expense.  In any such litigation brought by
MP, Cempra shall cooperate reasonably, as requested by MP and at MP’s expense
(which expense shall be reasonable). 

(ii)MP Patents Other than Compound Patents.  Notwithstanding anything to the
contrary, this Section 6.2.b(ii) shall apply with respect to rights to MP
Patents, other than Compound Patents, for which Cempra has exercised the Option
(“MP-Controlled Patents”).  If Cempra becomes aware of any possible, alleged, or
actual infringement of any MP-Controlled Patents with respect to (1) the
Compound or any Product or (2) any use or manufacture of the Compound or any
Product in, in the case of (1) or (2), the Field in the Territory (“Cempra
Infringement”), Cempra will notify MP of such Cempra Infringement.  MP shall, as
between the Parties, have the right to take action in the prosecution,
prevention, or termination of any Cempra Infringement, provided that,
notwithstanding anything to the contrary, (i) MP shall not have any right to
grant any licenses under any of the rights to MP-Controlled Patents granted to
Cempra under this Agreement as part of any settlement, voluntary disposition, or
other resolution of any Cempra Infringement, (ii) any recovery or damages
received by Harvard, MP, or any Affiliate of MP with respect to any Cempra
Infringement, or in settlement or voluntary disposition of any matter with
respect thereto, shall be used (A) first, to reimburse Cempra, its Affiliates,
and Sublicensees for unreimbursed reasonable, documented expenses incurred in
connection with any cooperation thereof rendered to Harvard, MP, or any
Affiliate thereof, at their request, with respect to such action, settlement, or
voluntary disposition, then (B) second to reimburse Harvard, MP, and its
Affiliates with respect to their unreimbursed reasonable, documented expenses
incurred in connection with such action, settlement, or voluntary disposition,
and (C) third, Cempra shall be paid seventy-five percent (75%) of any remaining
portion of any such recovery or damages, with the remaining twenty-five percent
(25%) of such remainder to be retained by MP (or, with respect to any Cempra
Infringement concerning any Harvard Patents, split between Harvard and MP
pursuant to the applicable percentage set forth in the Harvard License), and
(iii) Cempra, its Affiliates, and Sublicensees shall, at their expense, have the
right to be represented by counsel of their choice in any proceeding governed by
this Section 6.2.b(ii).  If Cempra desires to take action in the prosecution,
prevention, or termination of any Cempra Infringement, and neither MP nor, with
respect to any Harvard Patents, Harvard are so enforcing the MP-Controlled
Patents, Cempra may petition MP (and, with respect to any Harvard Patents,
Harvard) in writing to pursue such enforcement action.  If MP (and, with respect
to any Harvard Patents, Harvard) consents in writing to such action, in its sole
discretion, Cempra may commence such action with respect to such Cempra
Infringement, and compromise, settle, or enter into voluntary dispositions of
such litigation, provided that (i) any settlement, consent judgment or other
voluntary disposition of such actions which limits the scope, validity, or
enforceability of, or otherwise may adversely affect, any MP-Controlled Patents
shall not be entered into, consented to, approved, or agreed upon by Cempra, an
Affiliate thereof, or any Sublicensee without MP’s (and, with respect to any
Harvard Patents, Harvard’s) prior written approval, (ii) nothing in this Section
6.2.b(ii) shall be construed as prohibiting or limiting Cempra’s, its
Affiliates’, or Sublicensees’ rights under this Agreement to grant sublicenses
or any other rights under any MP Patents to any party, whether with respect to
any Cempra Infringement or otherwise, and (iii) if (x) MP (and, with respect to
any Harvard Patents, Harvard) does not take any material action in the
prosecution, prevention, or termination of any Cempra Infringement, (y) Cempra
petitions MP (and, with respect to any Harvard Patents, Harvard) to pursue an
enforcement action with respect thereto,

30

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

 

and (z) MP (and, with respect to any Harvard Patents, Harvard) does not consent
in writing to such action, Cempra’s royalty and payment obligations under
Section 3 with respect to any Products covered (or whose manufacture, use, or
sale is covered) by the MP-Controlled Patents subject to such Cempra
Infringement shall terminate, upon the ninetieth (90th) day following such
written petition by Cempra, with respect to all countries in which Cempra’s, its
Affiliates’, or any Sublicensee’s commercialization of the Compound or Products
is adversely affected by such Cempra Infringement (whether or not such Cempra
Infringement actually exists in such country).  Notwithstanding anything to the
contrary, the Parties agree that, solely for purposes of clause (iii) of the
preceding sentence, a Cempra Infringement shall, without limitation of the
definition therefor established above, also include an infringement of the
MP-Controlled Patents with respect to the manufacture, use, sale, import, or
export of any Derivative solely for purposes of making or having made the
Compound or a Product, and Cempra shall be entitled to the economic benefit set
forth in such clause (iii) in the event any such Cempra Infringement satisfies
the applicable conditions set forth therein. 

6.3Infringement of Third Party Rights.  In the event that a claim of
infringement of a Third Party’s Patent(s) is made or brought against either
Party or any Affiliate thereof with respect to the Manufacture, use, sale, or
importation of the Compound or a Product that is the subject of any of the
rights granted under this Agreement, the Party receiving such claim (or whose
Affiliate receives such claim) shall promptly inform the other Party in writing,
and, to the extent such claim relates to any rights granted hereunder or the
practice thereof, the Parties shall consult with each other in order to develop
a strategy for addressing the alleged infringement.  Each Party shall reasonably
cooperate with the other in any investigations undertaken to determine any such
potential infringement.  As between the Parties, Cempra (and/or its Affiliates
and/or Sublicensees) shall have the first and primary right, but not the
obligation, at its own expense to defend, control the defense of, and/or settle
any such claim against Cempra, its Affiliates, Sublicensees, or Product Partners
using counsel of its own choice.

6.4Third Party Challenge.

a.Without limitation of any Party’s (or, in the case of Cempra, its Affiliates’
or Sublicensees’) rights under Section 6.2 or 6.3, and subject to Section
6.4.b., in the event that a declaratory judgment action is brought against MP,
any Affiliate thereof, Cempra, any Affiliate thereof, or any Sublicensee by a
Third Party alleging invalidity, unpatentability, unenforceability, or
non-infringement of a Compound Patent to which Cempra and its Affiliates have
rights under Section 2.3.b. hereof, Cempra shall, at its option, have the first
right (which it may grant to any Affiliate or Sublicensee), within ninety (90)
days after commencement of such action, to take over the sole defense of the
action at its own expense.  If Cempra, an Affiliate thereof, or a Sublicensee
exercises such right, Cempra (and/or such Affiliate thereof or Sublicensee)
shall have the right to use and defend in MP’s or MP’s Affiliate’s name and join
MP or any Affiliate thereof as a party to such litigation, and MP shall
cooperate (and cause its Affiliates to cooperate) reasonably, as requested by
Cempra and at Cempra’s expense (which expense shall be reasonable and
documented).  If neither Cempra, an Affiliate thereof, nor any Sublicensee
exercises this right within such time period, MP shall have the right to assume
such defense, subject to Section 6.5.

31

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

 

b.Notwithstanding anything to the contrary, if a declaratory judgment action is
brought naming Cempra, any Affiliate thereof, or any Sublicensee as a defendant
and alleging invalidity or unenforceability of any claims within the Harvard
Patents, Cempra shall promptly notify Harvard in writing and Harvard may elect,
upon written notice to Cempra within thirty (30) days after Harvard receives
notice of the commencement of such action, to take over the sole defense of the
invalidity and/or unenforceability aspect of the action at its own expense. 

6.5Litigation Control.  Except as otherwise set forth in, and subject to,
Section 6.2.b(ii), the Party pursuing or controlling any action or defense under
Section 6.2, 6.3, or 6.4 (the “Controlling Party”) shall be free to enter into a
settlement, consent judgment, or other voluntary disposition of any such action
or defense, provided, however, that (i) the Controlling Party shall, to the
extent reasonably practicable, consult with the other Party (the “Secondary
Party”) prior to entering into any settlement or voluntary disposition thereof,
(ii) any settlement, consent judgment or other voluntary disposition of such
actions which (1) subjects the Secondary Party to any non-indemnified liability
or obligation or (2) admits fault or wrongdoing on the part of Secondary Party
must, in each case, be approved in advance and in writing by the Secondary
Party, (iii) any settlement, consent judgment or other voluntary disposition of
such actions which materially limits the scope, validity, or enforceability of,
or otherwise may materially adversely affect, any MP Patents shall not be
entered into, consented to, approved, or agreed upon without the Secondary
Party’s prior written approval, such approval not to be unreasonably withheld,
and (iv) any settlement, consent judgment or other voluntary disposition of such
actions that would reasonably be expected to materially adversely affect any
Patents owned, controlled or licensed by Cempra, any Affiliate thereof, any
Sublicensee, or any Product Partner, or the ability of Cempra, any Affiliate
thereof, any Sublicensee, or any Product Partner to Manufacture, Develop or
Commercialize the Compound or any Products shall not be entered into, consented
to, approved, or agreed upon by MP or any Affiliate thereof without Cempra’s
prior written consent, provided that the foregoing shall not be construed to
prevent Harvard from entering into any settlement, consent judgment, or other
voluntary disposition of any matter concerning any infringement of the Harvard
Patents.  Except as otherwise set forth in, and subject to, Section 6.2.b(ii),
any recovery or damages received by the Controlling Party with respect to the
infringement of the rights to MP Patents granted under this Agreement, or in
settlement of any matter subject to Section 6.2, 6.3, or 6.4, shall be used
first to reimburse the Parties for unreimbursed reasonable, documented expenses
incurred in connection with such action or settlement, and the remainder shall
be split [*] percent ([*]%) to the Controlling Party and [*] percent ([*]%) to
the Secondary Party.  Notwithstanding the foregoing, the Secondary Party, at its
expense, shall have the right to be represented by counsel of its choice in any
proceeding governed by this Section 6.5.

6.6Reimbursement.  Each Party shall invoice the other Party for any reasonable,
documented costs incurred that are to be borne by the other Party pursuant to
this Section 6.  Each Party shall pay the other Party such amounts within thirty
(30) Calendar Days of its receipt of any such invoice, except to the extent such
amounts are the subject of a good faith dispute, in which the amounts subject to
such dispute shall be due within thirty (30) Calendar Days of the resolution of
such dispute.

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

32

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

 

6.7Litigation Credit.  To the extent there is no recovery of damages, or amounts
received in settlement, by Cempra or its Affiliates with respect to any matter
contemplated by Section 6.2, 6.3, or 6.4 above, or all such amounts received
with respect to a particular matter are insufficient to fully reimburse Cempra
or its Affiliates for any amounts incurred with respect to such matter
(including but not limited to attorneys’ fees, out-of-pocket costs, and all
amounts paid as judgments, damages, or in settlement) (such amounts,
“Infringement Costs”), Cempra shall be entitled to credit all Infringement Costs
against royalties or other fees thereafter payable to MP under this Agreement.
If the total Infringement Costs incurred in any particular Calendar Quarter
exceed more than [*] percent ([*]%) of amounts payable to MP under this
Agreement with respect to such Calendar Quarter, then the amount of such
Infringement Costs in excess of [*] percent ([*]%) of the amounts payable to MP
under this Agreement with respect to such Calendar Quarter shall be carried over
and remain creditable against payments due MP in future Calendar Quarters,
subject to such [*] percent ([*]%) limitation (and continued rollover) in each
case. 

6.8Trademarks.  Cempra, its Affiliates, Sublicensees, and/or Product Partners
may, in their sole discretion, select trademarks for Products (“Product Marks”)
and shall own all such trademarks.  To the extent Cempra, its Affiliates,
Sublicensees, and/or Product Partners pursue trademarks for Products, as between
the parties, Cempra, its Affiliates, Sublicensees, and/or Product Partners shall
have the sole responsibility for the filing, prosecution and maintenance of
registrations of trademarks for Products, as determined in their sole
discretion, at their sole expense.

7.

Confidentiality

7.1Confidentiality Obligations.  The Parties agree that, for the term of this
Agreement and for seven (7) years thereafter, each Party will keep completely
confidential and will not publish, submit for publication or otherwise disclose,
and will not use for any purpose except for the purposes contemplated by this
Agreement, any Confidential Information of the other Party.

7.2Authorized Disclosure.  Each Party may disclose Confidential Information of
the other Party to the extent that such disclosure is:

(a)made in response to a valid order of a court of competent jurisdiction;
provided, however, that in each case such disclosing Party will, to the extent
reasonably practicable, (i) first have given written notice to the other Party
and given such other Party a reasonable opportunity to take appropriate action
and (ii) cooperate with such other Party as necessary to obtain an appropriate
protective order or other protective remedy or treatment; provided, further,
that in each case, the Confidential Information disclosed in response to such
court or governmental order will be limited to that information which is legally
required to be disclosed in response to such court or governmental order, as
determined in good faith by counsel to the Party that is obligated to disclose
Confidential Information pursuant to such order;

 

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

33

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

 

(b)otherwise required to be disclosed by Applicable Law or the requirements of
any stock exchange to which a Party is subject; provided, however, that the
Party that is so required will provide such other Party with written notice of
such disclosure reasonably in advance thereof to the extent reasonably
practicable and reasonable measures will be taken to assure confidential
treatment of such information, including such measures as may be reasonably
requested by the disclosing Party with respect to such Confidential
Information; 

(c)made by such Party, in connection with the performance of, or exercise of
rights under, this Agreement, to such Party’s Affiliates, licensors, licensees
or sublicensees, directors, officers, employees, consultants, representatives or
agents, or to other Third Parties, in each case on a need-to-know basis and
solely to use such information for business purposes relevant to and permitted
by this Agreement, and provided that (i) each individual and entity to whom such
Confidential Information is disclosed is bound in writing to non-use and
non-disclosure obligations no less than substantially as restrictive as those
set forth in this Agreement and (ii) the Party making such disclosure shall be
liable for such Third Parties’ compliance with such obligations;

(d)made by such Party to existing or potential acquirers, acquisition targets,
collaborators, investment bankers, accountants, attorneys, investors, merger
candidates, partners, venture capital firms or other financial institutions or
investors for use of such information for business purposes relevant to this
Agreement or for due diligence in connection with the financing, licensing or
acquisition of such Party (or such Party’s acquisition of, or merger with, a
Third Party), and provided that (i) each individual and entity to whom such
Confidential Information is disclosed is bound in writing to non-use and
non-disclosure obligations (or in the case of attorneys or accountants, an
equivalent professional duty of confidentiality) at least as restrictive as
those set forth in this Agreement and (ii) the Party making such disclosure
shall be liable for such Third Parties’ compliance with such obligations; or

(e)authorized in writing by the disclosing Party.

7.3Publicity.  Press releases or other similar public communication by either
Party not required by Applicable Law or the requirements of any stock exchange
to which a Party is subject and disclosing the existence or terms of this
Agreement will require the advance written approval of the other Party, which
approval will not be unreasonably withheld, conditioned or delayed.  The
foregoing notwithstanding, communications required by Applicable Law or the
requirements of any stock exchange to which a Party is subject, and disclosures
of information for which consent has previously been obtained, will not require
advance approval, but will be provided to the other Party as soon as practicable
after the release or communication thereof, provided that, with respect to any
such communications required by Applicable Law or the requirements of any stock
exchange to which a Party is subject, the Party required to make such disclosure
shall, to the extent reasonably practicable and to the extent such disclosure
does not include information for which consent has previously been obtained,
provide the other Party a reasonable opportunity to review and comment on such
communications.

34

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

 

8.Intellectual Property 

8.1Compound Data.  Cempra shall be entitled to sole ownership of all data,
results, information, analyses and reports directly related to the Compound or a
Product (or the use or manufacture thereof) generated by or on behalf of either
Party, any Affiliate thereof, or any director, officer, employee, contractor,
agent, or representative of any of the foregoing, solely or jointly with the
other Party, any Affiliate thereof, or any director, officer, employee,
contractor, agent, or representative of any of the foregoing resulting from the
conduct of the Evaluation Program, MP’s or its Affiliates’ access to or
knowledge, use, or manufacture of the Compound or a Product, or Cempra’s
Confidential Information, or Cempra’s exercise of rights under this Agreement
(such data, results, information, analyses and reports, “Compound Data”).  MP
shall promptly report all Compound Data to Cempra in writing.  MP will assign
and hereby assigns, and will cause its Affiliates to assign, all right, title,
and interest in Compound Data, and intellectual property rights therein, to
Cempra, free and clear of all liens, claims, and encumbrances.  MP shall take
all actions, and shall cause its Affiliates and any officers, employees,
contractors, agents or representatives of MP or any Affiliate thereof, to take
all actions, including but not limited to the execution of documents, reasonably
requested by Cempra to effect the purposes of the foregoing.  Notwithstanding
the foregoing, MP shall have the right to use any Compound Data generated by or
on behalf of MP, or by Cempra or any Affiliate thereof as part of the Evaluation
Program, on an anonymized basis:  (i) to prosecute and file applications for MP
Patents or MP Improvement Patents that are prosecuted or filed in accordance
with the provisions of this Agreement; (ii) to disclose to potential investors
in MP for bona fide fundraising purposes; (iii) for MP’s internal research
purposes; and (iv) to file applications for regulatory approval for human
pharmaceutical products containing or comprised of a Macrolide other than (q)
the Compound or (r) other compound covered, in the case of this clause (r), by
any claims of any Patents owned, licensed, or controlled by Cempra or any
Affiliate thereof, provided that, with respect to clause (i), (ii), (iii), or
(iv), (X) the foregoing rights shall not limit MP’s or its Affiliates’
obligations under the last paragraph of Section 2.2 or Section 2.6, (Y) MP shall
maintain the confidentiality of Compound Data pursuant to its obligations under
Section 7, and (Z) MP shall, in exercising the foregoing rights, not identify
the Compound except to the extent reasonably necessary to exercise such
rights.  Following exercise of the Option, Cempra shall, reasonably in advance
of any public disclosure of any Compound Data, provide a copy of such Compound
Data to MP (provided, that MP shall maintain such Compound Data in strict
confidence, and shall not use such Compound Data for any purpose or disclose the
same to any Third Party, unless and until Cempra publicly discloses such
Compound Data).

8.2MP Improvements. MP shall be entitled to sole ownership of all inventions,
discoveries, or improvements that are (i) (a) conceived, invented, or otherwise
discovered by MP, any Affiliate thereof, or any director, officer, employee,
contractor, agent, or representative of any of the foregoing following the
Effective Date and prior to the Improvements Date, solely or jointly with
Cempra, any Affiliate thereof, any of its or their officers, employees,
contractors, agents or other representatives, or any Third Party(ies), as a
result of the Parties’ interactions or performance under this Agreement or MP’s
or its Affiliates’ access to or knowledge or use or manufacture of the Compound,
any Product, or Cempra’s Confidential Information or (b) conceived, invented, or
otherwise discovered by Cempra, any Affiliate thereof, or any employee, agent,
or representative of any of the foregoing, solely or

35

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

 

jointly with MP, any Affiliate thereof, or any employee, agent, or
representative of any of the foregoing, following the Effective Date and prior
to the Improvements Date as a direct result of Cempra’s or its Affiliates’
exercise of rights under this Agreement to manufacture the Compound through the
practice of MP Technology or Cempra’s or its Affiliates’ access to, or use or
knowledge of, MP Technology or MP’s Confidential Information, (ii) directly
related to the synthesis or manufacture of one or more Macrolides, and (iii) (X)
an improvement to or enhancement or modification of any MP Technology existing
as of the Effective Date or (Y) Covered by a Valid Claim of any Initial MP
Patent at the time of such conception, invention, or discovery (all such
inventions, discoveries, or improvements, and all intellectual property rights
with respect thereto, collectively, “MP Improvements”).  Cempra shall promptly
disclose to MP in writing and in reasonable detail any MP Improvement of which
it has knowledge as soon as reasonably possible upon the conception, invention,
or other generation of such MP Improvement.  MP shall promptly disclose to
Cempra any MP Improvement of which it or any Affiliate thereof has knowledge and
which pertains to the research, Development, Manufacture, or Commercialization
of the Compound or any Product as soon as reasonably possible upon the
conception, invention, or discovery of such MP Improvement and, if Cempra
provides written notice to MP within thirty (30) days following such disclosure
indicating that Cempra wishes to include in the licenses granted to Cempra and
its Affiliates under this Agreement the Patents Covering such MP Improvement
(“MP Improvement Patents”) and/or Know-How Controlled by MP or its Affiliates
with respect to such MP Improvement, then such MP Improvement Patent and/or such
Know-How, respectively, shall automatically be included in the MP Patents and/or
MP Know-How, respectively, for purposes of this Agreement.  Cempra will assign
and hereby assigns, and will cause its Affiliates to assign, all right, title,
and interest in any MP Improvements to MP, free and clear of all liens, claims,
and encumbrances (except for such rights thereto granted under this
Agreement).  Cempra shall take all actions, and shall cause its Affiliates and
any officers, employees, contractors, agents or representatives of Cempra or any
Affiliate thereof, to take all actions, including but not limited to the
execution of patent assignments or other documents, reasonably requested by MP
to effect the purposes of the foregoing.  Notwithstanding anything to the
contrary however, (i) MP’s obligations, and Cempra’s rights, to the inclusion of
MP Improvements in MP Know-How under this Section 8.2 and Section 1.38 shall be
subject to Harvard’s ownership under the Harvard License of an undivided half
interest in any MP Improvement conceived and/or reduced to practice by Dr.
Andrew G. Myers (“Myers”) (for so long as he is employed by Harvard) in his
performance of consulting or other advisory services for MP related to
Macrolides for the treatment of disease, (ii) Cempra shall have the right, upon
written notice to MP, to terminate the rights granted by license under this
Agreement to any MP Improvement Patent(s), and (iii) MP agrees not to disclose
any of Cempra’s Confidential Information to Myers or, except to the extent
required to enable MP to comply with its obligations to Harvard under the
Harvard License, Harvard without Cempra’s prior written consent. 

8.3Cempra Improvements. Cempra shall be entitled to sole ownership of all
inventions, discoveries, or improvements, other than MP Improvements, that (i)
are conceived, invented, or discovered by MP, any Affiliate thereof, or any
director, officer, employee, contractor, agent, or representative of any of the
foregoing following the Effective Date and prior to the Improvements Date,
solely or jointly with Cempra, any Affiliate thereof, any of its or their
officers, employees, contractors, agents or other representatives, or any Third
Party(ies), (ii) result from the Parties’ interactions, performance, or exercise
of rights under this Agreement

36

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

 

or MP’s, its Affiliates’, or MP’s or its Affiliates’ officers’, employees’,
contractors’, agents’ or representatives’ knowledge or use or manufacture of, or
access to, Cempra’s Confidential Information, the Compound or any Product, and
(iii) relate directly and solely to the Compound, a Product, or use of either of
the foregoing, and not to the synthesis or manufacture of the Compound or
Product (such inventions, discoveries, or improvements, and all intellectual
property rights with respect thereto, collectively, the “Cempra
Improvements”).  MP will promptly notify Cempra in writing and in reasonable
detail of any Cempra Improvements.  MP will assign and hereby assigns, and will
cause its Affiliates and any officers, employees, contractors, agents or
representatives of MP or any Affiliate thereof to assign, all right, title, and
interest in any Cempra Improvements to Cempra, free and clear of all liens,
claims, and encumbrances.  MP shall take all actions, and shall cause its
Affiliates and any officers, employees, contractors, agents, or representatives
of MP or any Affiliate thereof to take all actions, including but not limited to
the execution of patent assignments or other documents, reasonably requested by
Cempra to effect the purposes of the foregoing.  Notwithstanding anything to the
contrary however, (x) MP’s obligations and Cempra’s rights under this Section
8.3 shall be subject to Harvard’s ownership under the Harvard License of an
undivided half interest in any Cempra Improvement conceived and/or reduced to
practice by Myers (for so long as he is employed by Harvard) in his performance
of consulting or other advisory services for MP related to Macrolides for the
treatment of disease, (y) Cempra shall have the right, upon written notice to
MP, to terminate the rights granted by license under this Agreement to any
Harvard Patent(s) Covering any Cempra Improvement(s), and (z) MP agrees not to
disclose any of Cempra’s Confidential Information to Myers or, except to the
extent required to enable MP to comply with its obligations to Harvard under the
Harvard License, Harvard without Cempra’s prior written consent. 

8.4Harvard Improvements.  MP shall notify Cempra in writing and in reasonable
detail of each Improvement Invention (as defined in the Harvard License) which
directly pertains to the Compound or any Product (or any Derivative, to the
extent necessary to the manufacture or synthesis of the Compound or a Product),
or the use or manufacture of any of the foregoing, as soon as MP receives notice
thereof or otherwise becomes aware of such Improvement Invention, with such
notice to be provided as soon as reasonably possible following such notice or
knowledge thereof, and in any event within fifteen (15) business days
thereof.  If Cempra provides written notice to MP, within the thirty (30) day
period set forth in the Harvard License, indicating that Cempra wishes MP to
exercise its option under Section 2.4 of the Harvard License to amend the
Harvard License to include Patents Covering such Improvement Invention in the
Harvard Patents, MP shall (i) immediately provide notice to Harvard exercising
such right and, during the ninety (90) days thereafter and (ii) negotiate in
good faith with Harvard and Cempra regarding the upfront fee and development
plan necessary to include such Patents in the Harvard Patents, as contemplated
by Section 2.4 of the Harvard License, on terms reasonably acceptable to
Cempra.  

9.

Term and Termination

9.1Term.  This Agreement shall become effective on the Effective Date and shall
continue on a country-by-country and Product-by-Product (and
Compound-by-Compound) basis, until the date on which there are no Valid Claims
in the MP Patents Covering a particular Product (or Compound) in a particular
country, subject to any earlier termination of this

37

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

 

Agreement (the period from the Effective Date until such expiration or
termination, the “Term”), provided that, except to the extent Cempra has
exercised the Option prior to the end of the Option Period and, therefore,
Cempra and its Affiliates have been granted rights under Section 2.3.b., this
Agreement shall automatically expire with respect to the Option and the rights
granted under Section 2.3.a. as of the end of the Option Period.  If Cempra has
exercised the Option prior to the end of the Option Period, then, (i) upon
expiration (but not termination) of this Agreement as set forth above with
respect to a particular Product (and/or Compound) and country or (ii) with
respect to any country in which there never were any Valid Claims of any MP
Patents covering a particular Product (and Compound), Cempra and its Affiliates
shall have a perpetual, irrevocable, fully-paid, royalty-free, exclusive right
(transferable in accordance with Section 12.2), with rights of sublicense, under
MP Technology to make, have made, use, sell, offer for sale, and import such
Product (and Compound) in the Field in such country. 

9.2Termination for Payment Default or Material Breach.  

a.If Cempra defaults in the making of any payment as and when due hereunder
(including without limitation the payment the Initial License Fee, any Research
Funding Payment, any Initial Milestone Payment, Second License Fee or Royalty
Payment) MP shall have the right to terminate this Agreement by written notice
to Cempra if such non-payment is not cured within thirty (30) Business Days of
written notice given by MP to Cempra specifying such non-payment.

b.If either Party materially breaches any other provision of this Agreement at
any time, the non-breaching Party shall have the right to terminate this
Agreement by written notice to the breaching Party, if (a) such material breach
is not cured within sixty (60) Calendar Days of written notice given by the
non-breaching Party to the breaching Party specifying such material breach and
(b) the non-breaching Party provides notice confirming such termination within
sixty (60) Calendar Days following the expiration of such sixty (60) Calendar
Day cure period without later cure of such material breach, provided that,
notwithstanding anything to the contrary, if such material breach is cured or
remedied or shown, in a manner satisfactory to MP in its reasonable discretion,
to be non-existent or not material within the aforesaid sixty (60) Calendar Day
period or, if later, prior to notice of termination from the non-breaching
Party, the non-breaching party’s notice(s) hereunder shall be automatically
withdrawn and of no effect.

38

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

 

9.3Termination for Convenience by Cempra.  This Agreement may be terminated by
Cempra in its entirety or in part with respect to any particular country(ies) in
the Territory, in Cempra’s sole discretion, upon sixty (60) Calendar Days’
written notice to MP; provided that (i) termination of this Agreement in whole
or in part under this Section 9.3 following Cempra’s exercise of its Option
shall not become effective unless and until (i) Cempra shall have irrevocably
paid to MP the amount (if any) by which $[*] exceeds the total combined sum of
the payments made under Section 3.5.b. prior to such termination (and upon such
payment, Cempra shall have no further payment obligations to MP under Section
3.5.b), with any amount paid under this clause (i) being fully creditable
against amounts due, payable, or owing under Section 3.5, and, if and only if
Cempra, an Affiliate thereof, a Sublicensee, or a Product Partner has obtained
Regulatory Approval with respect to a Royalty Product and Net Sales have
occurred with respect to such Royalty Product prior to termination of this
Agreement under this Section 9.3, (ii) Cempra shall have irrevocably paid to MP
the amount (if any) by which $[*] exceeds the total combined sum of the payments
made under Section 3.7 prior to such termination (and upon such payment, Cempra
shall have no further payment obligations to MP under Section
3.7).  Notwithstanding anything to the contrary, (a) Cempra shall not be
required to make any payment under clause (ii) above as a condition to
termination if either (x) Regulatory Approval with respect to a Royalty Product
has not been obtained or (y) no Net Sales of Royalty Products have occurred
prior to the effective date of  termination and (b) the total aggregate amount
payable to MP under Sections 3.5.b., 3.7, and this Section 9.3 shall not in any
event exceed $[*]. 

9.4Termination for Bankruptcy.  MP may terminate this Agreement upon written
notice to Cempra if (i) Cempra becomes insolvent, is adjudged bankrupt, applies
for judicial or extra‑judicial settlement with its creditors, makes an
assignment for the benefit of its creditors, voluntarily files for bankruptcy or
has a receiver or trustee (or the like) in bankruptcy appointed by reason of its
insolvency, (ii) an involuntary bankruptcy action is filed against Cempra and
not dismissed within ninety (90) days, or (iii) Cempra becomes the subject of
liquidation or dissolution proceedings or otherwise discontinues business.

9.5Effects of Termination.

a.Upon any termination in whole or in part of this Agreement occurring following
Cempra’s exercise of its Option, other than the expiration of this Agreement or
a termination of this Agreement by Cempra pursuant to Section 9.3, Cempra, its
Affiliates, Sublicensees, and Product Partners shall have the privilege, subject
to the payment of royalties as required under Section 3.6 (as they may be
adjusted under this Agreement), of (i) completing the Manufacture of Compound or
Products that are in the process of Manufacture as of the effective date of such
termination (the “Termination Date”), (ii) selling such Compound or Products and
all other such Compound or Products in Cempra’s, its Affiliates’, or
Sublicensees’, or Product Partners’ possession or control as of such termination
for a period of one year following such termination upon commercially reasonable
conditions, and (iii) completing performance of all contracts entered into with
third parties prior to such termination (1) for the marketing, sale, or
Manufacture of Compound or Products or (2) requiring the practice of the rights
to MP Technology, or the use of Compound or Products, for a period of one year
following such termination.

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

39

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

 

b.Notwithstanding any provision herein to the contrary, in the event (A) Cempra
or an Affiliate thereof has entered into any sublicense agreement granting any
Third Party rights to Manufacture, Develop and/or Commercialize Products as
permitted by this Agreement, (B) this Agreement is terminated by MP with respect
to any such sublicensed rights, and (C) such sublicense is in effect as of such
termination, such sublicense granted hereunder and such Sublicensee’s rights
under such sublicense will, to the extent concerning rights that are subject to
such termination and provided in such sublicense, survive such termination, with
MP as the Sublicensee’s direct licensor, provided that: 

 

(i)such Sublicensee’s payment obligations with respect to its exercise of its
surviving rights to the rights to MP Technology that are the subject of such
termination (but not with respect to its exercise or enjoyment of any other
rights or assets) shall not exceed the corresponding payment obligations set
forth in this Agreement with respect to the Compound, any Product(s), fields of
use, and/or territory(ies) that are the subject of such surviving rights;

(ii)such Sublicensee’s collective, aggregate payment obligations with respect to
the MP Technology and any other rights granted or transferred by Cempra or MP to
such Sublicensee with respect thereto shall not exceed the amounts payable under
its agreement with Cempra (or any Affiliate thereof) with respect to all of the
foregoing as such agreement was in effect immediately prior to the applicable
termination of this Agreement; and

(iii)such Sublicensee delivers to MP within ninety (90) Calendar Days after
termination of this Agreement a license agreement, executed by such Sublicensee
and proposed thereby for execution by MP, that (a) is consistent with the terms
and conditions set forth in this Agreement with respect to the rights to MP
Technology subject to such termination under this Agreement, as reasonably
modified to be no greater in scope than the scope of the sublicense granted to
Sublicensee thereunder with respect to territory, duration/term of sublicense
grant, Products, fields of use, etc. (e.g. if the Sublicensee’s sublicense to
rights subject to termination under this Agreement, as in effect immediately
prior to such termination, included rights and obligations only with respect to
a particular Product, country, field of use, and/or indication, such license
agreement shall only include rights and obligations with respect to such a
particular Product, country, field of use, and/or indication) (such a license
agreement, a “New License Agreement”), provided that (a) such New License
Agreement shall not be required to impose any obligations on such Sublicensee in
excess of those obligations of Cempra under this Agreement corresponding to such
Sublicensee’s rights to MP Technology, and MP shall not be entitled to impose
any additional obligations on such Sublicensee as a condition to MP’s execution
of a New License Agreement therewith; (b) MP shall have no liability to such
Sublicensee for any actual or alleged breach of the sublicense agreement under
which such Sublicensee was granted rights to MP Technology by the entity
(Cempra, an Affiliate thereof, or Sublicensee) that granted such Sublicensee
such sublicense; and (c) MP shall not have any obligations to such Sublicensee
in excess of those obligations corresponding to, and consistent with, those of
MP set forth in this Agreement with respect to the applicable rights of such
Sublicensee to MP Technology; and

(iv)MP shall promptly execute any New License Agreement, provided that all of
the conditions thereto for the benefit of MP in subclauses (i)‑(iii) above have

40

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

 

been materially satisfied, and MP shall not require, as a condition to its
exercise of any New License Agreement, that any Sublicensee assume any
obligations or liabilities in connection with the rights to MP Technology that
are greater than the corresponding obligations and liabilities of Cempra under
this Agreement. 

The provisions of this Section 9.5.b. must be included, referenced, or otherwise
reasonably accounted for in a sublicense agreement with a Sublicensee concerning
MP Technology in order for the applicable Sublicensee’s rights to survive any
termination of this Agreement as set forth above.

9.6Survival of Rights Upon Harvard License Termination.  MP shall provide notice
to Cempra immediately upon (i) any termination of the Harvard License, (ii) any
receipt of notice from Harvard regarding any actual or threatened termination of
the Harvard License or breach of the Harvard License, (iii) MP becoming aware of
any other circumstance that may enable Harvard to terminate the Harvard License,
and (iv) any notice from Harvard claiming any breach of the Harvard License on
the basis of any action, omission, or breach of this Agreement or any sublicense
granted hereunder by Cempra, any Affiliate thereof, or any Sublicensee.  In the
event of any termination of the Harvard License, other than a termination
thereof pursuant to the Cempra Breach Proviso (as defined in the Harvard
License), if Cempra is not in material breach of this Agreement, (i) the rights
granted to Cempra and its Affiliates under the Harvard Patents pursuant to this
Agreement (including Cempra’s option under Section 2.2) shall automatically
survive and continue thereafter as, and pursuant to the terms therefor, set
forth in the Harvard Waiver and (ii) Sections 3.5, 3.6, 3.7, 3.10,  and 3.12 of
this Agreement, all payment and reporting obligations thereunder, and any
payment obligations under this Agreement with respect to any Harvard Patents,
any products Covered by any Valid Claims thereof, or any infringements thereof
shall terminate, and the remaining rights and licenses granted to MP Technology
other than Harvard Patents under this Agreement shall become royalty-free and
fully-paid, upon termination of the Harvard License (except to the extent any
such payments to MP accrued thereunder prior to such termination); for clarity,
the foregoing clause (ii) is not intended to reduce Cempra’s payment obligations
to Harvard under any Post-Termination License (as defined in the Harvard
License), but to ensure that Cempra’s payment obligations thereunder replace,
and are not additive to, the payment obligations to MP referenced above upon
termination of the Harvard License.

9.7Remedies.  Any rights or remedies set forth in this Section 9 are not
exclusive, and shall not limit any other legal or equitable remedies that are
available to the Parties with respect to any breach or other matter under this
Agreement.

9.8Survival. Termination or expiration of this Agreement for any reason will be
without prejudice to any rights that will have accrued to the benefit of any
Party prior to such termination or expiration, and any termination or expiration
of this Agreement shall not relieve either Party of any obligation which has
accrued prior to the effective date of such termination or expiration, which
obligations shall remain in full force and effect.  The following provisions
shall survive any expiration or termination of this Agreement: Sections 1, 2.5,
3.14, 3.16, 3.17, 3.18, 6.2.b (with respect to infringement occurring prior to
termination or expiration), 6.3, 6.5, 6.6, 6.7, 6.8, 7, 8.1, 8.2, 8.3, 9.1, 9.5,
9.6, 9.7, 9.8, 10.4, 10.5, 11.1, 11.2, 11.3, 11.4, 11.5, 11.6

41

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

 

(to the extent set forth therein), and 12, together with any Sections referenced
in such surviving provisions or necessary to give them effect. 

10.

Representations, Warranties, and Covenants

10.1Representations and Warranties of MP.  MP represents and warrants to Cempra
as of the Effective Date as follows:

a.MP is a corporation, duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation, with full corporate power
and authority to operate its properties and to carry on its business as
presently conducted.  

b.MP has full power and authority to execute, deliver and perform this
Agreement.  There are no liens or other encumbrances on the MP Technology or any
portion thereof which would interfere with the rights granted to Cempra
hereunder.  This Agreement constitutes the legally binding and valid obligation
of MP, enforceable in accordance with its terms, except as such enforcement may
be limited by applicable bankruptcy, moratorium and other laws affecting
creditors’ rights generally.  

c.The execution, delivery and performance by MP of this Agreement and the
consummation of the transactions contemplated hereby will not result in any
violation of, conflict with, result in a breach of or constitute a default under
any contract or agreement to which MP or any Affiliate thereof is a party.

d.There is no action, suit, proceeding or investigation pending or, to MP’s and
its Affiliates’ knowledge, currently threatened in writing against or affecting
MP that questions the validity of this Agreement or the right of MP to enter
into this Agreement or consummate the transactions contemplated hereby.

e.No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority, or any Third Party, on the part of MP or any
Affiliate thereof is required in connection with the execution, delivery and
performance of this Agreement.

f.MP has disclosed in writing to Cempra all Patents Controlled by MP or its
Affiliates as of the Effective Date which, to MP’s and its Affiliates’
knowledge, Cover the Compound or any Product (or any Derivative, to the extent
necessary to the manufacture or synthesis of the Compound or any Product), or
which are necessary or appropriate to Develop, Manufacture and Commercialize
Products, and all such Patents are set forth on Schedule 1.40 attached hereto.

g.To the best of MP’s and its Affiliates’ knowledge, there are no inventors of
any Initial MP Patents other than those listed as inventors on the Initial MP
Patents as they exist as of the Effective Date and, to MP’s and its Affiliates’
knowledge, there are no pending or threatened disputes over inventorship with
respect to any Initial MP Patents.

h.Except with respect to the Harvard Patents, no research or Development of any
MP Technology, or research or other activities, leading to the inventions
Covered by the

42

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

 

MP Patents was supported in whole or part by funding or grants by any
governmental agency or philanthropic or charitable organization. 

i.Except with respect to the Harvard Patents, which have been exclusively
licensed to MP pursuant to the Harvard License, the MP Technology existing as of
the Effective Date is wholly owned by MP, free and clear of all mortgages,
pledges, charges, liens, equities, security interests, or other encumbrances or
similar agreements (including with respect to any “proceeds”) (including any
liens or claims on or to rights to sue for past, present and future
infringements thereof, any licenses, claims, damages and proceeds of suit
arising therefore, or any payments or rights to payments arising out of the
sale, lease, license assignment, or other disposition thereof).

j.Except with respect to the Harvard Patents, which have been exclusively
licensed to MP pursuant to the Harvard License, (i) no Third Party or Affiliate
of MP has, to MP’s or any Affiliates’ knowledge, any rights or ownership
interest in any MP Technology, except for certain limited rights expressly
reserved in the Harvard License for the benefit of Harvard and the United States
Government, and (ii) neither MP nor any Affiliate thereof has obtained rights to
any of the MP Technology by license or any similar contract or agreement with
any Third Party.  Neither MP nor any Affiliate thereof has granted any Third
Party any rights with respect to the MP Technology.

k.Neither MP nor any Affiliate thereof is aware of any Third Party intellectual
property rights (including any Patent(s)) that were (prior to the Effective
Date) or would be (following the Effective Date) infringed, misappropriated, or
otherwise violated by the practice of the technology or inventions described,
claimed, or embodied by any MP Technology.

l.No written communication has been received by MP or any Affiliate thereof, and
no investigation, regulatory enforcement action (including seizure, injunction,
civil penalty or criminal action) or any related Governmental Authority or
Regulatory Authority review is or, to the knowledge of the MP or any Affiliate
thereof, was at any time pending or is threatened by any Governmental Authority
or Regulatory Authority with respect to (i) any alleged or actual violation by
MP, any Affiliate thereof, or any contractor of either of the foregoing, of any
permit, Applicable Law or other requirement of any Governmental Authority or
Regulatory Authority relating to the operations conducted by or on behalf of MP
or any Affiliate thereof with respect to any MP Technology or (ii) any alleged
or actual failure to have or maintain in effect all permits required in
connection with the operations conducted by or on behalf of MP or any Affiliate
thereof with respect to any MP Technology.

m.To the knowledge of MP and its Affiliates, MP and its Affiliates have taken
all reasonable actions necessary or appropriate to preserve the confidentiality
of all trade secrets, proprietary and other confidential information material to
the MP Technology.

n.Neither MP nor any Affiliate thereof is aware of any Third Party activities
that would constitute misappropriation or infringement of any MP Technology.

43

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

 

o.Neither MP nor any Affiliate thereof owns, controls or has licensed any right,
title, and interest to any Regulatory Filings or Regulatory Approvals concerning
the Compound or a Product.  No Compound or Product Manufactured by or on behalf
of MP or any Affiliate thereof has been administered to any human or animal
subjects, and no animal or clinical study of the Compound or a Product has been
sponsored or performed by or on behalf of MP or any Affiliate thereof. 

p.All information provided to Cempra, its Affiliates, and their employees,
officers, directors, agents, and other representatives by or on behalf of MP or
any Affiliate thereof with respect to the MP Technology has, to the best of MP’s
and its Affiliates’ knowledge, been accurate.

q.There is no pending or, to the knowledge of MP, threatened claim,
interference, opposition or demand of any Third Party challenging the ownership,
validity or scope of any MP Technology in existence as of the Effective Date,
and MP is not aware of any facts from which it could reasonably conclude that
any of the MP Patents is invalid or that the exercise thereof would infringe any
Patent(s) of Third Parties.

r.To MP’s and its Affiliates’ knowledge, each item included in the MP Patents
that is registered, filed or issued under the authority of an appropriate
governmental authority is and at all times has been in compliance with all legal
requirements applicable thereto, and all filings, payments, and other actions
required to be made or taken to maintain such item of the MP Patents in full
force and effect have been made by the applicable deadline, including complying
with the required duty of candor and good faith in dealing with the U.S. Patent
and Trademark Office, including the duty to disclose as defined in 37 C.F.R. §
1.56 with respect to all U.S. Patents, and any equivalent disclosure requirement
in any other country.  Furthermore, (1) no patent application or patent included
in the MP Patents has been abandoned or allowed to lapse and (2) no provisional
patent application included therein has expired without the filing of a
nonprovisional patent application that claims the benefit of such provisional
patent application.

s.MP and its Affiliates have at all times complied with, and are currently in
compliance, in all material respects, with all terms and conditions of the
Harvard License.  All milestones established under the Harvard License that were
required to be achieved by a date prior to the Effective Date have been achieved
by the date required therefor.

t.This Agreement, to the extent that it constitutes a sublicense under the
Harvard License of MP’s rights to the Harvard Patents, constitutes a valid such
sublicense granted in accordance with the terms of the Harvard License.

u.MP has, prior to the Effective Date, provided Cempra with a complete, full,
and accurate copy of the Harvard License (including but not limited to all
amendments thereto and any side letters, waivers, consents, or other
arrangements between MP or any Affiliate thereof and Harvard or any Affiliate
thereof with respect to the subject matter thereof).

10.2Covenants of MP.  MP will not, and will ensure that none of its Affiliates,
grant any rights to any Third Party that would conflict with Cempra’s rights
under this Agreement.  

44

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

 

MP will not grant, and will ensure that none of its Affiliates’ grant, any lien
or make any assignment of amounts hereunder that would reasonably be expected to
adversely affect in any respect any rights or obligations of either Party (or
any Affiliate thereof) under this Agreement.  MP shall at all times comply with
the Harvard License and any other agreement by which MP previously acquired or
later acquires Control of any MP Technology. 

10.3Representations and Warranties of Cempra.  Cempra represents and warrants to
MP as follows as of the Effective Date:

a.Cempra is a corporation, duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, with full
corporate power and authority to operate its properties and to carry on its
business as presently conducted.  

b.Cempra has full power and authority to execute, deliver and perform this
Agreement.  This Agreement constitutes the legally binding and valid obligations
of Cempra, enforceable in accordance with their terms, except as such
enforcement may be limited by applicable bankruptcy, moratorium and other laws
affecting creditors’ rights generally.

c.The execution, delivery and performance by Cempra of this Agreement and the
consummation of the transactions contemplated thereby will not result in any
violation of, conflict with, result in a breach of or constitute a default under
any contract or agreement material to Cempra, its business or its assets.

d.No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority on the part of Cempra is required in connection
with the execution, delivery and performance of this Agreement.

e.There is no action, suit, proceeding or investigation pending or, to Cempra’s
knowledge, currently threatened in writing against or affecting Cempra that
questions the validity of this Agreement or the right of Cempra to enter into
this Agreement or consummate the transactions contemplated hereby.

f.There is no action, suit, proceeding or investigation pending or, to Cempra’s
knowledge, currently threatened against or affecting Cempra or that questions
the validity of this Agreement, or the right of Cempra to enter into this
Agreement or consummate the transactions contemplated hereby and, to Cempra’s
knowledge, there is no reasonable basis for the foregoing.

10.4Cempra Covenant.  To the extent this Agreement constitutes a sublicense
under the Harvard License, Cempra shall not be entitled to enter into any
agreement under which Cempra grants to or otherwise creates in any Third Party a
security interest in this Agreement or any of the rights granted to Cempra
herein, provided that, notwithstanding the foregoing, Cempra, its Affiliates,
and Sublicensees shall be entitled to grant or create a security interest in
this Agreement and/or any sublicenses granted under either of the foregoing in
connection with a blanket lien (subject to customary and reasonable exclusions)
granted to institutional lenders to secure debt instruments held by such
lenders.

45

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

 

10.5Disclaimer. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS AGREEMENT,
INCLUDING SECTIONS 12.1 AND 12.3, AS APPLICABLE, THE PARTIES MAKE NO
REPRESENTATIONS AND GRANT NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR
BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND THE PARTIES EACH SPECIFICALLY
DISCLAIM ANY OTHER WARRANTIES, WHETHER WRITTEN OR ORAL, OR EXPRESS OR IMPLIED,
INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
USE OR PURPOSE, OR AS TO THE SUCCESS OR LIKELIHOOD OF SUCCESS OF THE RESEARCH,
DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF THE COMPOUND OR ANY PRODUCT
UNDER THIS AGREEMENT. 

11.

Indemnities; Limits on Liability

11.1Indemnification by MP.  Subject to Section 11.3, MP hereby agrees to defend,
indemnify and hold harmless Cempra and its Affiliates, and each of their
directors, officers and employees (“Cempra Indemnitees”), from and against all
suits, claims, proceedings or causes of action brought by Third Parties
(“Claims”), and all associated damages, liabilities, expenses and/or loss,
including reasonable legal expenses and reasonable attorneys’ fees (“Losses”),
to the extent arising out of MP’s, its Affiliates’, or MP’s or its Affiliates’
officers’, directors’, employees’, contractors’, agents’, or other
representatives’ (i) negligence or willful misconduct with respect to this
Agreement or the subject matter hereof, (ii) breach of this Agreement, or (iii)
failure to comply with any Applicable Law with respect to this Agreement or the
subject matter hereof, or (iv) practice or use of any MP Technology, except to
the extent such Losses result from the negligence or willful misconduct, breach
of this Agreement, or failure to comply with Applicable Laws on the part of, in
each case, any Cempra Indemnitee.

11.2Indemnification by Cempra.  Subject to Section 11.3, Cempra hereby agrees to
indemnify, defend and hold harmless MP and its Affiliates, and each of their
officers, directors and employees (collectively, “MP Indemnitees”) from and
against any Claims and all associated Losses to the extent arising out of
Cempra’s, its Affiliates’, or Cempra’s or its Affiliates’ officers’, directors’,
employees’, agents’, or other representatives’ (i) negligence or willful
misconduct with respect to this Agreement or the subject matter hereof, (ii)
breach of this Agreement, or (iii) failure to comply with Applicable Laws with
respect to this Agreement or the subject matter hereof, except to the extent
such Losses result from the negligence or willful misconduct, breach of this
Agreement, or failure to comply with Applicable Laws on the part of, in each
case, any MP Indemnitee.

11.3Indemnification Procedures.  Each Party’s agreement to indemnify, defend,
and hold harmless under Section 11.1 or 11.2, as applicable, is conditioned upon
the indemnified party (a) providing written notice to the indemnifying Party of
any claim, demand or action arising out of the indemnified matter as soon as
reasonably possible, and in any event no later than within thirty (30) Calendar
Days after the indemnified Party has actual knowledge of such claim, demand or
action, (b) permitting the indemnifying Party to assume control over the
investigation of, preparation and defense against, and settlement or voluntary
disposition of any such claim, demand or action, (c) assisting the indemnifying
Party, at the indemnifying Party’s reasonable expense, in the investigation,
preparation, defense, and settlement or

46

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

 

voluntary disposition of any such claim, demand or action, and (d) not
compromising, settling, or entering into any voluntary disposition of any such
claim, demand or action without the indemnifying Party’s prior written consent,
which consent shall not be unreasonably withheld; provided, however, that, if
the party entitled to indemnification fails to promptly notify the indemnifying
Party pursuant to the foregoing clause (a), the indemnifying Party will only be
relieved of its indemnification obligation to the extent materially prejudiced
by such failure.  In no event may the indemnifying Party compromise, settle, or
enter into any voluntary disposition of any claim, demand or action in any
manner that admits material fault or wrongdoing on the part of the indemnified
party or incurs non-indemnified liability on the part of the indemnified party
without the prior written consent of the indemnified party, and in no event may
the indemnifying Party settle, compromise, or agree to any voluntary disposition
of any matter subject to indemnification hereunder in any manner which may
adversely affect any portion of the MP Technology, any Patents owned,
controlled, or licensed by Cempra, or Cempra’s, its Affiliates’, Sublicensees’,
or Product Partners’ ability to Manufacture or Commercialize Products, without
Cempra’s prior written consent. 

11.4Harvard Indemnity.  Cempra shall indemnify, defend and hold harmless Harvard
and its current and former directors, governing board members, trustees,
officers, faculty, medical and professional staff, employees, students, and
agents and their respective successors, heirs and assigns (collectively, the
“Harvard Indemnitees”) from and against any claim, liability, cost, expense,
damage, deficiency, loss or obligation of any kind or nature (including
reasonable attorneys’ fees and other costs and expenses of litigation), due to
any third party claim based upon, or arising out of the practice by or on behalf
of Cempra, any of its Affiliates, or Sublicensees of license rights granted
under this Agreement, including any cause of action relating to product
liability concerning any product, process, or service made, used, sold or
performed pursuant to any right or license granted by MP under this Agreement
(collectively, “Harvard Claims”).  The previous sentence will not apply to the
extent that any Harvard Claim is determined with finality by a court of
competent jurisdiction to result from the gross negligence or willful misconduct
of a Harvard Indemnitee or from any breach by Harvard of a representation made
under Section 8.1 of the Harvard License.  MP will notify Cempra of any Harvard
Claim hereunder as soon as reasonably practicable after it receives notice or
otherwise becomes aware of a Harvard Claim, provided that Harvard’s or MP’s
failure to notify of a Harvard Claim will relieve Cempra from liability for
indemnification only if and to the extent Cempra did not otherwise promptly
learn of such Harvard Claim and such failure results in additional costs,
expenses or liability of Cempra this Section 11.4.  MP and Harvard shall permit
Cempra to assume direction and control of the defense of the Harvard Claim
(including the right to settle the Harvard Claim, solely at Cempra’s expense);
provided, however, that Cempra shall not settle any Harvard Claim without the
prior written consent of Harvard where such settlement (a) would include any
admission of liability on the part of any Harvard Indemnitee, (b) would impose
any restriction on any Harvard Indemnitee’s conduct of any of its activities, or
(c) would not include an unconditional release of all Harvard Indemnitees from
all liability for claims that are the subject matter of the settled Harvard
Claim.  MP and Harvard shall (i) cooperate as reasonably requested (at the
expense of Cempra) in the investigation and defense of any Harvard Claim and
(ii) not settle a Harvard Claim (or, in the case of MP, permit Harvard to settle
a Harvard Claim) without the express written consent of Cempra.   Cempra agrees
that the Harvard Indemnitees are intended third-party beneficiaries of this
Agreement solely for purposes of enforcing Cempra’s obligations under this
Section 11.4.

47

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

 

11.5Limitation of Liability.  IN NO EVENT SHALL EITHER PARTY OR ITS AFFILIATES
BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES, WHETHER BASED UPON A CLAIM OR ACTION OF
CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHER TORT, OR OTHERWISE,
ARISING OUT OF THIS AGREEMENT, PROVIDED THAT, NOTWITHSTANDING ANYTHING TO THE
CONTRARY, THE FOREGOING SHALL NOT BE CONSTRUED TO LIMIT THE INDEMNITY
OBLIGATIONS SET FORTH IN SECTIONS 11.1, 11.2, OR 11.4 ABOVE OR EITHER PARTY’S
LIABILITY FOR PATENT INFRINGEMENT OR BREACH OF SECTION 7. 

11.6Insurance.

a.General.  Each Party shall carry and maintain insurance of the types and in
amounts that are reasonable and customary in the pharmaceutical industry for
companies of comparable size and activities.  Such insurance will insure against
all liability, including but not limited to, bodily injury or property damage
arising out of the Manufacture, sale, distribution, marketing, Development or
Commercialization of Products.  Such insurance shall include commercial general
liability insurance, including product liability insurance, which coverage shall
have limits of liability that are commercially reasonable for the pharmaceutical
industry.  Such coverage shall be maintained by each party for not less than
three (3) Calendar Years following expiration or termination of this Agreement
or if such coverage is of the “claims made” type, for five (5) Calendar Years
following expiration or termination of this Agreement.  Upon written request
from a Party, the other Party shall promptly provide written evidence (e.g.,
certificates) of such insurance that is reasonably satisfactory to the
requesting Party.  Notwithstanding the foregoing, commencing at the time any
Product is being commercially distributed or sold (other than for the purpose of
obtaining regulatory approvals) by Cempra, an Affiliate thereof, a Sublicensee
or a Product Partner or an agent of Cempra, Cempra shall, at its sole cost and
expense, procure and maintain commercial general liability insurance in amounts
not less than $[*] per incident and $[*] annual aggregate and naming MP as an
additional insured.  During clinical trials of any such Product, Cempra shall,
at its sole cost and expense, procure and maintain commercial general liability
insurance in commercially reasonable amounts, naming MP as an additional
insured.  Such commercial general liability insurance shall provide: (a) product
liability coverage and (b) broad form contractual liability coverage for
Cempra’s indemnification obligations under Section 11.2.

 

 

 

 

 

 

 

 

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

48

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

 

b.Harvard Obligation.  For so long as the Harvard License is in effect and the
rights to MP Patents granted hereunder include rights to any Harvard Patents
(and any longer period as set forth below): 

i.Beginning at the time any Harvard Product is being commercially distributed or
sold (other than for the purpose of obtaining regulatory approvals) by Cempra,
an Affiliate thereof, a Sublicensee, or an agent of Cempra, Cempra shall, at its
sole cost and expense, procure and maintain commercial general liability
insurance in amounts not less than $[*] per incident and $[*] annual aggregate
and naming the Harvard Indemnitees as additional insureds.  During clinical
trials of any such Harvard Product, Cempra shall, at its sole cost and expense,
procure and maintain commercial general liability insurance in commercially
reasonable amounts, naming the Harvard Indemnitees as additional insureds.  Such
commercial general liability insurance shall provide: (a) product liability
coverage and (b) broad form contractual liability coverage for Cempra’s
indemnification obligations under Section 11.4.

 

ii.If Cempra elects to self-insure all or part of the limits described above in
this Section 11.6.b. (including deductibles or retentions that are in excess of
$[*] annual aggregate) such self-insurance program must be acceptable to Harvard
and CRICO/RMF (Harvard’s insurer) in their sole discretion.  The minimum amounts
of insurance coverage required shall not be construed to create a limit of
Cempra’s liability with respect to its indemnification obligations under Section
11.4.

 

iii.Cempra shall provide Harvard with written evidence of such insurance upon
request of Harvard or MP within ten (10) days after such request.  Cempra shall
provide Harvard and MP with written notice at least fifteen (15) days prior to
the cancellation, non-renewal or material change in such insurance that would
result in non-compliance with clause i. or ii. of this Section 11.6.b. and shall
obtain replacement insurance providing comparable coverage within such fifteen
(15) day period.

iv.Cempra shall maintain such commercial general liability insurance beyond the
expiration or termination of this Agreement during: (a) the period that any
Harvard Product is being commercially distributed or sold by Cempra, an
Affiliate thereof, a Sublicensee, or an agent of Cempra and (b) a reasonable
period after the period referred to in (a) above which in no event shall be less
than ten (10) years.

 

 

 

 

 

 

 

 

 

 

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

49

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

 

12.

Miscellaneous  

12.1Force Majeure.  Neither Party shall be held liable or responsible to the
other Party, nor be deemed to have defaulted under or breached this Agreement,
for failure or delay in fulfilling or performing any term of this Agreement, to
the extent, and for so long as, such failure or delay is caused by or results
from causes beyond the reasonable control of the affected Party, which may
include, but shall not be limited to, fire, floods, embargoes, power shortage or
failure, acts of war (whether war be declared or not), insurrections, riots,
terrorism, civil commotions, strikes, lockouts or other labor disturbances, acts
of God or any acts, omissions or delays in acting by any Governmental Authority
or the other Party, provided that, notwithstanding the foregoing, the payment of
amounts due under this Agreement may not be delayed due to a force majeure
affecting the Party required to make such payment.

12.2Assignment.  Neither Party may assign this Agreement, or any of its rights
or obligations hereunder without the other Party’s prior written consent, which
consent shall not be unreasonably withheld, and Cempra may not assign this
Agreement without Harvard’s prior written consent, provided that,
notwithstanding the foregoing, (a) either Party shall be entitled, without the
other Party’s prior written consent (and, in the case of an assignment by
Cempra, without Harvard’s prior written consent), to assign or transfer this
Agreement: (i) in connection with the transfer or sale of all or substantially
all of its assets or business (or that portion thereof related to the subject
matter of this Agreement), (ii) in the event of such Party’s merger,
consolidation, reorganization, change of control or similar transaction, or
(iii) to an Affiliate of such Party and (b) any assignee of this Agreement
agrees in writing to be bound by the terms of this Agreement and to assume all
obligations of its assignor arising under this Agreement following such
assignment.  Any purported assignment by a Party of this Agreement or any of
such Party’s rights or obligations hereunder in violation of this Section 12.2
shall be void.  Any permitted assignee of either Party shall, as a condition to
such assignment, assume all obligations of its assignor arising under this
Agreement following such assignment.  Any purported assignment by a Party of
this Agreement or any of such Party’s rights or obligations hereunder in
violation of this Section 12.2 shall be void.

 

12.3Severability.  If one or more provisions of this Agreement is held to be
invalid, illegal or unenforceable, the Parties shall substitute, by mutual
consent, valid provisions for such invalid, illegal or unenforceable provisions
which valid provisions are, in their economic effect, sufficiently similar to
the invalid provisions that it can be reasonably assumed that the Parties would
have entered into this Agreement with such provisions.  In the event that such
provisions cannot be agreed upon, the invalidity, illegality or unenforceability
of one or more provisions of the Agreement shall not affect the validity of this
Agreement as a whole.

50

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

 

12.4Notices.  Any notice, consent or report required or permitted to be given or
made under this Agreement by one Party to the other Party shall be in English
and in writing, delivered personally or by U.S. first class mail or express
courier providing evidence of receipt, postage prepaid (where applicable), at
the following address for a Party (or such other address for a Party as may be
specified by like notice): 

 

To Cempra:

 

Cempra Pharmaceuticals, Inc.

6320 Quadrangle Dr. #360

Chapel Hill, NC 27517

Attn: Chief Executive Officer or President

 

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

 

Wyrick Robbins Yates & Ponton LLP

4101 Lake Boone Trail, Suite 300

Raleigh, NC 27607

Attn: Jason S. Wood

To MP:

 

Macrolide Pharmaceuticals, Inc.

480 Arsenal St., Suite 130

Watertown, MA 02472

Attn: President and Chief Executive Officer

 

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

 

Mintz Levin Cohn Ferris Glovsky and Popeo, P.C.

One Financial Center

Boston, MA 02111

Attention:  Lewis J. Geffen

 

All such notices, consents or reports shall be effective upon receipt.

 

12.5Applicable Law; Jurisdiction.  This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware,
excluding that body of law known as choice of law, and shall be binding upon the
Parties hereto in the United States and worldwide. All disputes with respect to
this Agreement shall be brought and heard either in the Delaware state courts
located in New Castle County, Delaware or the federal district court for the
State of Delaware located in Wilmington, Delaware.  The Parties each consent to
the in personam jurisdiction and venue of such courts.  The Parties agree that
service of process upon them in any such action may be made if delivered in
person, by courier service, by telegram, by telefacsimile or by first class
mail, and shall be deemed effectively given upon receipt.  The United Nations
Convention on Contracts for the International Sale of Goods is expressly
disclaimed by the Parties with respect to this Agreement and the transactions
contemplated hereby.

12.6Entire Agreement.  This Agreement (including any Schedules or Exhibits
attached hereto) contains the entire agreement by the Parties with respect to
the subject matter hereof and supersedes any prior express or implied
agreements, understandings and representations, either oral or written, which
may have related to the subject matter hereof in any way.  

12.7Interpretation.  The captions to the several Sections of this Agreement are
not a part of this Agreement, but are included for convenience of reference and
shall not affect its meaning or interpretation.  In this Agreement: (a) the word
“including” shall be deemed to be

51

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

 

followed by the phrase “without limitation”, “including but not limited to”, or
like expression; (b) the singular shall include the plural and vice versa; and
(c) masculine, feminine and neuter pronouns and expressions shall be
interchangeable.  

12.8Independent Contractors.  It is expressly agreed that Cempra and MP shall be
independent contractors and that the relationship between the two Parties shall
not constitute a partnership, joint venture or agency or other fiduciary
relationship.  Neither Cempra nor MP shall have the authority to make any
statements, representations or commitments of any kind, or to take any action,
which shall be binding on the other Party, without the prior written consent of
the other Party to do so.

12.9Waiver; Amendment.  Except as otherwise expressly provided in this
Agreement, any term of this Agreement may be waived only by a written instrument
executed by a duly authorized representative of the Party waiving
compliance.  The delay or failure of any Party at any time to require
performance of any provision of this Agreement shall in no manner affect such
Party’s rights at a later time to enforce the same.  This Agreement may be
amended, and any term of this Agreement may be modified, only by a written
instrument executed by a duly authorized representative of each Party.

12.10Binding Effect.  This Agreement shall be binding upon and inure to the
benefit of the Parties and their respective legal representatives, successors
and permitted assigns.

12.11Counterparts.  This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.  Facsimile and other
electronically scanned signatures shall have the same effect as their originals.

12.12United States Dollars.  References in this Agreement to “Dollars”,
“dollars”, or “$” shall mean the legal tender of the United States of America.

12.13No Strict Construction.  This Agreement has been prepared jointly and shall
not be strictly construed against either Party.

12.14Responsibility for Affiliates.  The Parties recognize that each Party may
perform some or all of its obligations, or exercise its rights, under this
Agreement through such Party’s Affiliates, provided, however, that each Party
shall remain responsible for the payment and performance by its Affiliates and
shall cause its Affiliates to comply with the provisions of this Agreement.  Any
breach of any provision of this Agreement by any Affiliate of a Party shall be
deemed a breach hereof by such Party, with such Party being liable hereunder
with respect to such breach as if such Party itself had breached this Agreement.

12.15Use of Name.  Except as explicitly permitted or contemplated by this
Agreement, Cempra shall not, and shall ensure that its Affiliates and
Sublicensees do not, use or register Harvard’s name (alone or as part of another
name) or any logos, seals, insignia or other words, names, symbols or devices
that identify Harvard or any Harvard school, unit, division or affiliate
(“Harvard Names”) for any purpose except with the prior written approval of, and
in accordance with restrictions required by, Harvard.  Without limiting the
foregoing, Cempra shall cease, and shall ensure that its Affiliates and
Sublicensees cease, all use of the Harvard

52

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

 

Names, on the termination or expiration of the earlier of the Harvard Agreement
or this Agreement, except as otherwise approved by Harvard.  The restrictions of
this Section 12.15 shall not apply to any information required by law,
regulation, or the rules of any securities exchange to be disclosed. 

[Signature page to follow.]

53

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

 

In Witness Whereof, the Parties have executed this Agreement by their proper
officers as of the date and year first above written.

 

MACROLIDE PHARMACEUTICALS, INC.

 

CEMPRA PHARMACEUTICALS, INC.

 

 

By:         /s/ Lawrence Miller

Name:   Lawrence Miller

Title:   President

 

 

By:         /s/ Prabhavathi Fernandes

Name:   Prabhavathi Fernandes, Ph.D.

Title:   President and Chief Executive

                Officer

 

 

54

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

Exhibit 10.34

 

SCHEDULE 1.13

 

SOLITHROMYCIN

 

[g201602251625154303209.jpg]

 

 

 

55

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

Exhibit 10.34

 

SCHEDULE 1.20

 

EVALUATION PROGRAM

 

[*]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

56

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

 

SCHEDULE 1.40

 

MP PATENTS

 

Harvard Patents

 

Docket # 4712

Country

 

Application No.

 

Filing Date

 

Status

Australia

 

2014248014

 

April 4, 2014

 

Pending

Brazil

 

BR112015025159-5

 

April 4, 2014

 

Pending

Canada

 

2908575

 

April 4, 2014

 

Pending

China

 

201480031522.6

 

April 4, 2014

 

Pending

Europe

 

14779590.0

 

April 4, 2014

 

Pending

Israel

 

241878

 

April 4, 2014

 

Pending

India

 

9189/DELNP/2015

 

April 4, 2014

 

Pending

Japan

 

 

 

April 4, 2014

 

Pending

Korea

 

10-2015-7031656

 

April 4, 2014

 

Pending

Mexico

 

MX/A/2015/014026

 

April 4, 2014

 

Pending

PCT

 

PCT/US2014/033025

 

April 4, 2014

 

National Phase

United States

 

61/808,441

 

April 4, 2013

 

Expired

Unites States

 

61/832,639

 

June 7, 2013

 

Expired

United States

 

61/946,604

 

Feb. 28, 2014

 

Expired

United States

 

14/781,719

 

Oct. 1, 2015

 

Pending

United States

 

62/061,571

 

Oct. 8, 2014

 

Expired

PCT

 

PCT/US2015/054700

 

Oct. 8, 2015

 

Pending

 

Docket # 5716

Country

 

Application No.

 

Filing Date

 

Status

United States

 

62/138,198

 

March 25, 2015

 

Pending

 

Docket # 5629

Country

 

Application No.

 

Filing Date

 

Status

United States

 

62/138,168

 

March 25, 2015

 

Pending

 

MP Patents Other Than Harvard Patents

 

None as of the Effective Date.

 

 

57

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

Execution Copy

 

SCHEDULE 3.3-1

 

EVALUATION LICENSE PAYMENTS

 

Initial Milestone Payment Trigger

Expected Delivery Date

Initial Milestone Payment

 

[*]

 

Approximately [*] after the Effective Date

$[*]

 

[*]

 

Approximately [*] after the Effective Date

$[*]

 

[*]

 

Approximately [*] after the Effective Date

$[*]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

 

58

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

Execution Copy

 

SCHEDULE 3.3-2A

 

EVALUATION LICENSE PAYMENT #1 - MP MATERIALS SPECIFICATIONS

 

[*]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

 

59

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

Execution Copy

 

SCHEDULE 3.3-2B

 

EVALUATION LICENSE PAYMENTS #2 AND #3 - MP MATERIALS SPECIFICATIONS

 

[*]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

 

60

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

Execution Copy

 

SCHEDULE 3.3-2C

 

RELATED SUBSTANCES

 

 

[*]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

61