**Exhibit 10.2**

 

**COLLABORATIVE RESEARCH AND DEVELOPMENT ANDLICENSE AGREEMENT**

 

**THISCOLLABORATIVE RESEARCH AND DEVELOPMENT AND LICENSE AGREEMENT**(the “*Agreement*”) is enteredinto as of March 31, 2006 (the “*EffectiveDate*”) by and between **OPTIMERPHARMACEUTICALS INC.**, a Delaware corporation with its officeslocated at 10110 Sorrento Valley Road, Suite C, San Diego, California92121 (“*Optimer*”), and **CEMPRA PHARMACEUTICALS, INC.**, aDelaware corporation with its offices located at 170 Southport Drive, Suite 500,Morrisville, NC 27560. Optimer and Cempra may be referred to hereinindividually as a “*Party*” orcollectively, as the “*Parties*.”

 

**RECITALS**

 

**WHEREAS,**Optimer is a biopharmaceutical company engaged in the discovery and developmentof pharmaceutical products using its proprietary carbohydrate synthesistechnology;

 

**WHEREAS,**Cempra is a biopharmaceutical company engaged in the discovery and developmentof novel pharmaceutical products;

 

**WHEREAS,**Cempra and Optimer desire to enter into a relationship to identify, develop andcommercialize pharmaceutical products comprising novel Macrolide Antibiotics totreat infectious diseases.

 

**WHEREAS,**Cempra and Optimer entered into a letter agreement dated November 10, 2005wherein Optimer and Cempra agreed to execute a detailed agreement regarding thesynthesis by Optimer of Macrolide Antibiotics for Cempra; and

 

**WHEREAS,**Optimer is willing to synthesize Macrolide Antibiotics using its proprietarycarbohydrate synthesis technology, assist Cempra in the development thereof, andis prepared to grant Cempra a license under such technology to allow Cempra todevelop and commercialize pharmaceutical products arising from thisrelationship;

 

**NOW,THEREFORE,** in consideration of the foregoing and thecovenants and promises contained in this Agreement, the Parties agreeas follows: 

 

**1.****                                     DEFINITIONS**

 

**1.1          “Affiliate”**means a person, corporation, partnership, or other entity that controls, iscontrolled by or is under common control with a Party. For the purposes of thisSection 1.1, the word “control” (including, with correlative meaning, theterms “controlled by” or “under the common control with”) means the actualpower, either directly or indirectly through one or more intermediaries, todirect the management and policies of such entity, whether by the ownership ofat least fifty percent (50%) of the voting stock of such entity, or by contractor otherwise.

 

**1.2          “ASEAN Countries”**means all member nations of the Association of Southeast Asian Nations as ofthe Effective Date.

 

**1.3          “Cempra Know-How”**means any Know-How which is developed or acquired and Controlled by Cempra orits Affiliates during the term of this Agreement that is necessary and usefulfor the research, development, manufacture, importation, use, or sale of CempraProducts.

 

**1.4          “Cempra Patents”**means any Patents, other than Optimer Patents, which are Controlled by Cempraor its Affiliates during the term of this Agreement and that claim themanufacture, importation, use or sale of Macrolide Antibiotics or CempraProducts.

 

**1.5          “Cempra Product”**means a pharmaceutical product (including but not limited to CombinationProducts or those comprised of one or more Test Products, MacrolideAntibiotics, or any analogs or derivatives of either of the foregoing) forwhich the use, sale, or manufacture thereof would, but for the licenses grantedCempra hereunder, infringe the Optimer Patents in the country in which suchproduct is sold by Cempra, an Affiliate thereof, or a Third Party sublicenseeof either of the foregoing.

 

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**1.6          “Collaboration”**means all activities performed by or on behalf of Optimer or Cempra in thecourse of the Research Program with respect to the Development andCommercialization of Test Products and Cempra Products.

 

**1.7          “Combination Product”**means a pharmaceutical product (i) containing (x) in the case ofCempra, an active pharmaceutical ingredient for which, if included in apharmaceutical product as the sole active pharmaceutical ingredient the use,sale, or manufacture thereof would, but for the licenses granted Cemprahereunder, infringe the Optimer Patents in the country in which such product issold by Cempra, an Affiliate thereof, or a Third Party sublicensee of either ofthe foregoing, or (y) in the case of Optimer, an active pharmaceuticalingredient which (I) contains a Macrolide Antibiotic, Test Product, orderivative or analog of either of the foregoing, (II) is a Cempra Product,or (III) whose manufacture, sale, or use is covered in any ASEAN Countryby a Valid Claim of any Cempra Patent, Joint Invention Patent, or foreigncounterpart of any Optimer Patent; and (ii) one or more otherpharmaceutically active ingredients for which rights are not included in thelicense granted to (x) Cempra under this Agreement, with respect to CempraProducts, or (y) Optimer, with respect to Optimer Products.

 

**1.8          “Commence”** or**“Commencement”,** when used todescribe a Phase 1 Trial, Phase 2 Trial, Phase 3 Trial, orPhase 4 Trial, means the first dosing of the first patient forsuch trial.

 

**1.9          “Commercialization”**means all activities that are undertaken after Regulatory Approval of an NDAfor a particular Product and that relate to the commercial marketing and saleof such Product including advertising, marketing, promotion, distribution, andPhase 4 Trials.

 

**1.10        “Confidential Information”**means all Information, and other information and materials, received by eitherParty from the other Party pursuant to this Agreement that: (i) isdesignated as confidential at the time of disclosure or promptly thereafter; (ii) underthe circumstances surrounding disclosure should be treated as confidential bythe receiving Party, or (iii) by reason of its nature would be treated asconfidential by a reasonable receiving party, which would include, withoutlimitation, trade secrets..

 

**1.11        “Control**”means, with respect to any intellectual property right, that a Party owns orhas a license to such item or right, and has the ability to grant a license orsublicense in or to such right as set forth herein without violating the termsof any agreement or other arrangement with any Third Party.

 

**1.12        “Develop” or “Development”**means, with respect to a Test Product or Product, engaging in preclinical andclinical drug development activities, which may include but is not limited toresearch, pre-clinical, clinical and regulatory activities directed towardsobtaining Regulatory Approval of a Product, including but not limited to theperformance by Optimer of its obligations and Cempra of its responsibilitiesunder the Research Program.

 

**1.13        “Development Plan”**has the meaning set forth in Section 4.1.

 

**1.14        “Diligent Efforts**”means the carrying out of obligations or tasks in a manner consistent with theefforts a Party devotes to research, development or marketing of apharmaceutical product or products of similar market potential, profitpotential or strategic value resulting from its own research efforts, takinginto account technical and regulatory factors, target product profiles, productlabeling, past performance, costs, economic return, the regulatory environmentand competitive market conditions in the therapeutic area, all based onconditions then prevailing, and subject to and in consideration of, in eachcase, the resources available to such Party and within such Party’sorganization for such efforts. Diligent Efforts requires that a Party, at aminimum, assign responsibility for such obligations to specific employees, setsand seeks to achieve specific and meaningful objectives for carrying out suchobligations, and consistently makes and implements decisions designed andallocates resources reasonably sufficient to advance progress with respect tosuch objectives.

 

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**1.15****                        “Fair Market Value”** meansthe fair market value of Cempra capital stock on the date the relevantmilestone is achieved under Section 6.2(a) or (b), asapplicable, which shall be determined as follows:

 

**(a)**           if the Cempra capital stock to beissued under Section 6.2(a) or (b) is traded on a publicsecurities exchange or through the Nasdaq National Market, the fair marketvalue thereof shall be deemed to be the average of the closing prices of suchsecurity on such exchange over the 30-day period ending three (3) businessdays prior to the date such security was received;

 

**(b)**           if the Cempra capital stock to beissued under Section 6.2(a) or (b) is actively tradedover-the-counter, the fair market value thereof shall be deemed to be theaverage of the closing bid or sale prices (whichever is applicable) over the30-day period ending three (3) business days prior to the date suchsecurity was received; or

 

**(c)**           If there is no active public marketfor any Cempra capital stock issued under Section 6.2(a) or (b),the fair market value thereof shall be as determined in good faith by Cempra’sBoard of Directors based on a reasonable consideration of all relevant factors.

 

**1.16****                        “FDA**” means theUnited States Food and Drug Administration, or any successor federalagency thereto.

 

**1.17****                        “Field**” means all human andanimal diagnostic and therapeutic uses.

 

**1.18****                        “First Commercial Sale”**means the first sale of commercial quantities of any Product sold to a ThirdParty by a Party, its Affiliate, or a sublicensee of either of the foregoing inany country after, if and as reasonably necessary or applicable, receipt ofRegulatory Approval for such Product in such country. Sales for test marketing,sampling and promotional uses or clinical trial or research purposes orcompassionate uses will not be considered to constitute a FirstCommercial Sale

 

**1.19****                        “FTE”** means the equivalentof one person working full time for one 12-month period in a research,development, commercialization, regulatory or other relevant capacity,approximating 1800 hours per year. In the interests of clarity, though, asingle individual who works more than 1800 hours in a single year shall betreated as one FTE regardless of the number of hours worked.

 

**1.20****                        “Good Clinical Practices” or “GCP”**means current Good Clinical Practices as specified in the United StatesCode of Federal Regulations, at the time of testing, and all FDA and ICHguidelines, including the ICH Consolidated Guidelines on Good ClinicalPractices.

 

**1.21****                        “Good Laboratory Practices” or “GLP”**means current Good Laboratory Practices as specified in the United StatesCode of Federal Regulations at 21 CFR § 58 at the time of testing andall applicable ICH guidelines.

 

**1.22****                        “Good Manufacturing Practices”or “GMP”** means current Good Manufacturing Practices and standards asprovided for (and as amended from time to time) in European CommunityDirective 91/356/EEC (Principles and Guidelines of Good Manufacturing Practicefor Medicinal Products) and in the Current Good Manufacturing PracticeRegulations of the United States Code of Federal Regulations Title 21(21 CFR §§ 210-211) in relation to the production of pharmaceuticalintermediates and active pharmaceutical ingredients, as interpreted by ICHHarmonized Tripartite Guideline, Good Manufacturing Practice Guide for ActivePharmaceutical Ingredients, and subject to any arrangements, additions orclarifications agreed from time to time between the Parties.

 

**1.23****                        “Governmental Authority”**means any court, agency, department or other instrumentality of any foreign,federal, state, county, city or other political subdivision.

 

**1.24****                        “Human Clinical Trial”**means any Phase 1 Trial, Phase 2 Trial, Phase 3 Trial orPhase 4 Trial the subject of which includes a Test Productor Product.

 

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**1.25        “IND”** means anInvestigational New Drug Application filed with the FDA or the equivalentapplication or filing filed with any equivalent agency or government authorityoutside of the United States (including any supra-national agencysuch as in the European Union) necessary to Commence human clinical trials insuch jurisdiction, and including all regulations at 21 CFR § 312 et.esq., and equivalent foreign regulations.

 

**1.26        “Information**”means information, results and data of any type whatsoever, including withoutlimitation, databases, inventions, practices, methods, techniques,specifications, formulations, formulae, knowledge, know-how, skill, experience,test data including pharmacological, biological, chemical, biochemical,toxicological and clinical test data, analytical and quality control data, stabilitydata, studies and procedures, and patent and other legal information ordescriptions.

 

**1.27        “Invention”**means any discovery, invention, improvement, concept or idea, whether or notpatentable, conceived or reduced to in the course of the activities conductedpursuant to this Agreement, together with all intellectual property rightsrelating thereto. Inventions may include, but not be limited to, processes,compounds, compositions, or methods.

 

**1.28        “Know-How”**means any non-public, proprietary Information and other data, instructions,processes, methods, formulae, techniques, compositions, materials, expertopinions and information, including without limitation, biological, chemical,pharmacological, toxicological, pharmaceutical, physical and analytical,clinical, safety, manufacturing and quality control data and information.Know-How does not include any rights under Patents.

 

**1.29        “Letter Agreement”**means the letter agreement between Optimer and Cempra dated November 11, 2005.

 

**1.30        “Macrolide Antibiotics”**means any macrolide or ketolide, including but not limited to any (i) [***]compound that incorporates, is based on, or is described in, or the synthesisof which is in whole or part based on or described in, the Optimer Technology,including but not limited to those synthesized by Optimer under this Agreementor the Letter Agreement, (ii) [***] (including but not limited to [***]),and (iii) any derivatives or analogs of any of the foregoing. Foravoidance of doubt, the parties expressly agree that Macrolide Antibioticsshall not mean any 18-membered- lactone-ring-based compound(e.g., Optimer’s OPT-80).

 

**1.31        “NDA”** means aNew Drug Application filed with the FDA or the equivalent application orfiling filed with any equivalent Governmental Authority outside of theUnited States necessary for approval of a drug in such jurisdiction.

 

**1.32        “Net Sales”**means

 

**(a)**           with respect to a Product (subject tosubsections (b) and (c) below), the amount received by aParty or its Affiliate or a Third Party sublicensee for sales of such Productto Third Parties, excluding reasonable sales returns, allowances and rebatesactually paid, granted or accrued, including, without limitation, trade,quantity and cash discounts and any other reasonable adjustments actuallyallowed, including, but not limited to, those granted on account of priceadjustments (including retroactive price adjustments), billing errors, rejectedgoods, damaged or defective goods, recalls, returns, rebates, chargebackrebates, reimbursements or similar payments granted or given to wholesalers orother distributors, buying groups, health care insurance carriers or otherinstitutions, pharmacy benefit management companies, health maintenanceorganizations or other health care organizations, or any governmental orregulatory authority or agency (including their purchasers and/or reimbursers),adjustments arising from consumer discount programs, customs or excise duties,tariffs, sales tax, consumption tax, value added tax, and other taxes (exceptincome taxes) or duties relating to sales, and similar payments respect to theUnited States government, any state government, any local government, orany foreign government, or to any governmental or regulatory authority inrespect of sales, and freight, handling, and insurance; and

 

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(b)           in the case of Combination Products,

 

[***]

 

**1.33        “Optimer Improvements”**means any Other Sole Inventions of Optimer and, to the extent owned by Optimer,Other Joint Inventions that, in either case, constitute improvements,enhancements, or modifications of any Macrolide Antibiotics, Cempra Products,or other technology claimed in the Optimer Patents listed on *Schedule 1.30*, or which would beuseful or necessary in the manufacture, use, or sale of Cempra Products.

 

**1.34        “Optimer Know-How”**means all Know-How Controlled by Optimer or its Affiliates as of the EffectiveDate, or which is developed or acquired by and Controlled by Optimer or itsAffiliates during the term of this Agreement, including but not limited to anyKnow-How related to Optimer Improvements, that is necessary or useful for theresearch, development, manufacture, importation, use or sale of the MacrolideAntibiotics, Test Products or Cempra Products.

 

**1.35        “Optimer Patents”**means any Patents Controlled by Optimer or its Affiliates as of the EffectiveDate or which are developed and Controlled, or licensed to and Controlled, byOptimer or its Affiliates during the term of this Agreement, that are necessaryor useful for the research, development, manufacture, importation, use or saleof Macrolide Antibiotics, Test Products, or Cempra Products, including withoutlimitation, the Patents listed on *Schedule 1.35*and any Patents (or, with respect to Patents jointly owned by the Parties,Optimer’s rights to any such Patents) claiming any Optimer Improvements.

 

**1.36        “Optimer Product”**means any product (including but not limited to Combination Products) developedand/or commercialized by Optimer in any ASEAN Country that (i) contains aMacrolide Antibiotic, Test Product, or derivative or analog of either of theforegoing, (ii) is a Cempra Product, or (iii) whose manufacture,sale, or use is covered in any ASEAN Country by a Valid Claim of any CempraPatent, Joint Invention Patent, or foreign counterpart of any Optimer Patent.For avoidance of doubt, the parties expressly agree that, for purposes of thisAgreement (including, but not limited to, Optimer’s royalty payment obligationset forth in Article 6), Optimer Products shall not include any productwhich incorporates an 18-membered-lactone-ring-based compound as anactive pharmaceutical ingredient (e.g., Optimer’s OPT-80) unless suchproduct incorporates an additional active pharmaceutical ingredient whichitself (or the mechanism of action of which) independently renders suchproduct an Optimer Product pursuant to the foregoing definition.

 

**1.37        “Optimer Technology”**means Optimer Patents and Optimer Know-How.

 

**1.38        “Patent”** means:(a) an issued unexpired United States or foreign patent (includinginventor’s certificate) that has not been held invalid or unenforceable by acourt of competent jurisdiction from which no appeal can be taken or has beentaken within the required time period, including without limitation any substitution,extension, registration, confirmation, reissue, re-examination, renewal or anylike filing thereof; or (b) any pending United States or foreignpatent application, including without limitation any continuation, division orcontinuation-in-part thereof and any provisional application.

 

**1.39        “Phase 1 Trial”**means a clinical trial that generally provides for the first introduction intohumans of a Product with the primary purpose of determining safety, metabolismand pharmacokinetic properties and clinical pharmacology of the Product, andgenerally consistent with 21 CFR § 312.21(a).

 

**1.40        “Phase 2 Trial”**means a clinical trial of a Product on patients, including possiblypharmacokinetic studies, the principal purpose of which is to make apreliminary determination that such Product is safe for its intended use and toobtain sufficient information about such Product’s efficacy to permit thedesign of further clinical trials, and generally consistent with 21 CFR§ 312.21(b).

 

**1.41        “Phase 3 Trial”**means a clinical trial that provides for a pivotal human clinical trial of aProduct, which trial is designed to: (a) establish that a Product is safeand efficacious for its intended use; (b) define warnings, precautions andadverse reactions that are associated with the Product in the 

 

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dosage range to be prescribed; (c) supportRegulatory Approval of such Product; and (d) generally consistent with21 CFR § 312.21(c).

 

**1.42****                        “Phase 4 Trial”** meansclinical trial of a Product Commenced in a particular country after RegulatoryApproval for such Product in such country in order to support commercializationof the Product.

 

**1.43****                        “Product”** means an OptimerProduct or Cempra Product, as appropriate.

 

**1.44****                        “Regulatory Approval”** meansany and all approvals (including supplements, amendments, pre- andpost-approvals, pricing and reimbursement approvals), licenses, registrationsor authorizations of any national, supra-national (e.g., the EuropeanCommission or the Council of the European Union), regional, state or localregulatory agency, department, bureau, commission, council or othergovernmental entity, that are necessary for the manufacture, distribution, useor, in the Commercializing Party’s reasonable judgment, sale of a Product in aregulatory jurisdiction.

 

**1.45****                        “Regulatory Authority”**means any Governmental Authority with responsibility for granting any licensesor approvals necessary for the marketing and sale of pharmaceutical productsincluding, without limitation, the FDA and any drug regulatory authority ofcountries of the European Union, and Japan, and where applicable any ethicscommittee or any equivalent review board.

 

**1.46****                        “Regulatory Filing”** meansthe NDA, biologic license application (“BLA”), IND, or any foreign counterpartsthereof and any other filings required by regulatory authorities relating tothe study, manufacture or commercialization of any Product.

 

**1.47****                        “Research Program”** meansthe activities conducted by Optimer and Cempra pursuant to the obligations andresponsibilities set forth in a Work Plan and Budget established by the Partiespursuant to this Agreement.

 

**1.48****                        “Research Term”** means theperiod commencing on the Effective Date and continuing until the earlier of (i) completionby Optimer of the tasks assigned to Optimer in the Work Plan and Budget or (ii) thesecond anniversary of the Effective Date, subject to any extensions thereofagreed to by the Parties in writing.

 

**1.49****                        “Royalty Term”** means, on acountry-by-country and Product-by-Product basis:

 

**(a)**           For Cempra Products, the periodcommencing on the First Commercial Sale thereof in a particular country andcontinuing until the later of (a) the last to expire Valid Claim of anOptimer Patent covering the manufacture, use or sale of such Cempra Product insuch country or (b) ten (10) years following the First CommercialSale of such Cempra Product in such country; and

 

**(b)**           For Optimer Products, the periodcommencing on the First Commercial Sale thereof in a particular country andcontinuing until the later of (a) the last to expire Valid Claim of aCempra Patent covering the manufacture, use or sale of such Optimer Product insuch country or (b) ten (10) years following the First CommercialSale of such Optimer Product in such country.

 

**1.50****                        “Sublicensing Revenue”**means net revenue received from Third Party sublicensees, other than royaltiesor other payments calculated on the basis of sales of Cempra Products, directlyand solely as consideration for Cempra’s or its Affiliates’ sublicensing toThird Parties (other than Cempra Affiliates) of the rights to Optimer Patentslicensed to Cempra and its Affiliates under this Agreement, including but notlimited to upfront and milestone payments, but excluding (i) [***]

 

**1.51****                        “Term”** has the meaning assignedto it in Section 9.1.

 

**1.52****                        “Territory”** meansworldwide, excluding ASEAN Countries.

 

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**1.53        “Test Product”**means a Macrolide Antibiotic or derivative or analog thereof that has beendesignated by Cempra to be the subject of Development pursuant to Section 3.4.

 

**1.54        “Third Party”**means any entity other than (a) Optimer, (b) Cempra or (c) anAffiliate of either of them.

 

**1.55        “Valid Claim”**means a claim of any pending patent application or any issued, unexpiredUnited States or granted foreign patent within any Patent that has notbeen dedicated to the public, disclaimed, abandoned or held invalid orunenforceable by a court or other body of competent jurisdiction from which nofurther appeal can be taken, and that has not been explicitly disclaimed, oradmitted by the Party Controlling such Patent in writing to be invalid orunenforceable or of a scope not covering Products through reissue, disclaimeror otherwise.

 

**1.56        “Work Plan and Budget”**has the meaning set forth in Section 3.1. 

 

**1A.****                             JOINT STEERING COMMITTEE**

** **

**1A.1***      ***Joint Steering Committee.**  Promptly after the Effective Date, theParties shall establish a “Joint Steering Committee” as described in this Section 1A.The Joint Steering Committee shall exist during the Research Term. The JointSteering Committee shall, subject to applicable provisions of this Agreementconcerning the Research Program, Work Plan, and Budget, (i) develop,review, approve, and establish all aspects of the Work Plan and Budget and,once the initial Work Plan and Budget have been established, (ii) monitorand oversee the Parties’ progress thereunder, advise the Parties with respectthereto, and develop, review, and approve any changes or amendments to the WorkPlan and Budget, such changes and amendments to be effective upon approvalthereof by the Joint Steering Committee and agreement by (i) Optimer withrespect to obligations of Optimer (such agreement not to be unreasonablywithheld) or (ii) Cempra with respect to responsibilities of Cempra,provided that, notwithstanding the foregoing, the Joint Steering Committeeshall have no authority to amend the body of this Agreement. Each party shallindicate in writing within five (5) business days of approval by the JointSteering Committee whether or not it agrees to its proposed obligations orresponsibilities, and, if not agreeing to its proposed obligations orresponsibilities, provide its reasonable objections thereto. In the absence ofsuch written notice within such five (5) business day period, a partyshall be deemed to have rejected its proposed obligations or responsibilities,and, in the event Optimer rejects its proposed obligations or responsibilities(whether by written notice or the absence thereof), Cempra shall be free topursue alternative solutions therefor. Notwithstanding anything to the contraryin this Agreement, the Joint Steering Committee shall have no rights orresponsibilities, and Cempra shall have no obligations with respect to theJoint Steering Committee, following the Research Term.

 

**1A.2***      ***Membership.** The Joint Steering Committee will be comprised of an equal number ofrepresentatives from each Party. The exact number of such representatives shallbe as agreed upon by the Parties, but no event shall such number be less thantwo (2) nor more than five (5) for each Party. Each Party shallprovide the other with a list of its initial members of the Joint SteeringCommittee promptly after the Effective Date. Each Party may replace any or allof its representatives on the Joint Steering Committee at any time upon writtennotice to the other Party. Any member of the Joint Steering Committee maydesignate a substitute to attend and perform the functions of that member atany meeting of the Joint Steering Committee. Each Party may, in its reasonablediscretion, invite non-member representatives of such Party to attend meetingsof the Joint Steering Committee.

 

**1A.3***      ***Meetings.** During the Research Term, the Joint Steering Committee shall meet atleast twice per calendar year, or more frequently as the Parties deemappropriate, on such dates, and at such places and times, as provided herein oras the Parties shall agree, provided, however, that (i) the first meetingshall be held within 30 days of the Effective Date and (ii) the JointSteering Committee and the Parties shall use best efforts to draft, review, andapprove the initial Work Plan and Budget as soon as reasonably practicablefollowing the Effective Date. Meetings of the Joint Steering Committee shall 

 

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alternate between the offices of the Partiesor their respective Affiliates, or such other place as the Parties may agree.The members of the Joint Steering Committee also may convene or be polled orconsulted from time to time by means of telecommunications, video conferences,electronic mail or correspondence, as deemed necessary or appropriate, providedthat the Parties hold at least one face-to-face meeting each year. Each Partyshall bear all costs and expenses relating to its members’ attendance atmeetings of the Joint Steering Committee.

 

**1A.4***      ***Decision-Making.**  The Joint Steering Committee shall use goodfaith efforts to operate and make decisions by consensus, provided that in theevent the Joint Steering Committee is unable to reach consensus regarding anymatter before the Joint Steering Committee within a reasonable period of timenot to exceed ten (10) business days, Cempra shall have the tie-breakingvote to resolve such deadlock and determine the Joint Steering Committee’sfinal decision regarding such matter, including but not limited to approval ofany Work Plan and Budget, or any changes thereto, consistent with theparameters described below, provided that no Work Plan or Budget shall be effectivewithout the written agreement of (i) Optimer with respect to anyobligations of Optimer thereunder (such agreement not to be unreasonablywithheld) and (ii) Cempra with respect to any responsibilities of Cemprathereunder (such agreement not to be unreasonably withheld). Each party shallindicate in writing within five (5) business days of approval by the JointSteering Committee whether or not it agrees to its proposed obligations orresponsibilities, and, if not agreeing to its proposed obligations orresponsibilities, provide its reasonable objections thereto. In the absence ofsuch written notice within such five (5) business day period, a partyshall be deemed to have rejected its proposed obligations or responsibilities,and, in the event Optimer rejects its proposed obligations or responsibilities(whether by written notice or the absence thereof), Cempra shall be free topursue alternative solutions therefor. 

 

**2.****                                      MANAGEMENT OF THERESEARCH PROGRAM**

 

**2.1***         ***General.** The general purpose of the Collaboration described in Sections 2and 3 of this Agreement is to synthesize, develop and commercializeMacrolide Antibiotics for sale as Cempra Products. If and as determined by theJoint Steering Committee, Optimer shall synthesize Macrolide Antibiotics andconduct preliminary research and biological testing on such MacrolideAntibiotics according to a Work Plan and Budget that has been developed andapproved by the Joint Steering Committee and agreed upon by Optimer and Cempra(such agreement not to be unreasonably withheld). Each party shall indicate inwriting within five (5) business days of approval by the Joint SteeringCommittee whether or not it agrees to the Work Plan or Budget approved by theJoint Steering Committee and, if not agreeing thereto, provide its reasonableobjections thereto. In the absence of such written notice within such five (5) businessday period, a party shall be deemed to have agreed to such Work Plan andBudget. Cempra shall, as determined by the Joint Steering Committee, conduct(or have conducted by Third Parties) preclinical and animal testing onsuch Macrolide Antibiotics synthesized by Optimer. Based on the results of suchresearch, the Joint Steering Committee may designate certain MacrolideAntibiotics as Test Products for preclinical testing and further development byCempra. Cempra shall be solely responsible, at its expense, for animal testing,preclinical and clinical development of such Test Products, including as may beprovided for in a Work Plan and Budget approved by the Joint Steering Committeeand agreed upon (i) by Optimer with respect to Optimer’s obligationsthereunder (such agreement not to be unreasonably withheld) and (ii) Cemprawith respect to Cempra responsibilities thereunder. Each party shall indicatein writing within five (5) business days of approval by the Joint SteeringCommittee whether or not it agrees to its proposed obligations orresponsibilities, and, if not agreeing to such obligations or responsibilities,provide its reasonable objections thereto. In the absence of such writtennotice within such five (5) business day period, a party shall be deemedto have rejected its proposed obligations or responsibilities, and in the eventOptimer rejects its proposed obligations or responsibilities (whether bywritten notice or the absence thereof), Cempra shall be free to pursuealternative solutions therefor. For so long as Cempra retains its licensehereunder, and except as provided for performance by 

 

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Optimer under any Work Plan and Budget,Cempra shall be responsible for the research, Development, manufacturing,marketing and Commercialization of Cempra Products, subject only to the termsand conditions of this Agreement, including without limitation the paymentsowed to Optimer for such Cempra Products as set forth in Article 6.

 

**2.2          Information Exchange.**  During the Research Term, Optimer and Cemprashall keep the Joint Steering Committee fully and regularly informed of theiractivities (and the activities of their Affiliates and/or sublicensees) inconnection with their conduct of the Research Program and the Development andCommercialization of Test Products and Cempra Products, and shall diligentlyrespond to any other reasonable requests by the Joint Steering Committee or theother Party for information. Each Party will provide the Joint SteeringCommittee (during the Research Term) and the other Party (during the entireterm of this Agreement) with formal written progress reports of its activitiesunder this Agreement, no less than twice per year.

 

**2.3          Independence.**  Subject to the terms of this Agreement andany applicable Work Order and Budget, the activities and resources of eachParty shall be managed by such Party, acting independently and in itsindividual capacity. The relationship between Optimer and Cempra is that ofindependent contractors and neither Party shall have the power to bind orobligate the other Party in any manner, other than as is expressly set forth inthis Agreement. 

 

**3.****                                      CONDUCT OF THERESEARCH PROGRAM**

 

**3.1          Work Plan and Budget.**  The Research Program shall be carried out byOptimer and Cempra according to a written work plan setting forth theobligations of Optimer and responsibilities of Cempra (the “*Work Plan*”) and budget providing forCempra’s funding of Optimer’s obligations thereunder (the “*Budget*”). The Work Plan shall set forth inreasonable detail the obligations of Optimer and responsibilities of Cemprawith respect to the Research Program, including the identity and number ofMacrolide Antibiotics that Optimer shall endeavor to synthesize and formulatefor animal testing, and shall include the desired quantities of such MacrolideAntibiotics, timeframe for delivery, technical specifications (the “*Specifications*”), and the Budget shall setforth the budget for such synthesis and formulation work by Optimer. The JointSteering Committee shall develop an initial Work Plan and Budget and shallsubmit such plan to Optimer and Cempra for review and approval, such approvalnot to be unreasonably withheld, within thirty (30) days following theexecution of this Agreement. In the absence of a party’s written approval of orreasonable objection to the Work Plan and Budget within five (5) businessdays of its submission to the parties by the Joint Steering Committee, a partyshall be deemed to have agreed to such Work Plan and Budget. The Work Plan andBudget may be amended from time to time by the Joint Steering Committee duringthe Research Term, based upon the data obtained in the Research Program or fromCempra’s independent activities, provided such amendments do not violate orcontradict any provision of this Agreement. In the event of an inconsistency ordisagreement between the Work Plan and Budget and this Agreement, the terms ofthis Agreement shall prevail.

 

**3.2***        ***Work Performed to Date.**  The Parties acknowledge that initial researchand Macrolide Antibiotics synthesis activities have been conducted by theParties pursuant to the Letter Agreement (the “*Initial Research*”). All Initial Research, including anyMacrolide Antibiotics, Information, inventions, know-how, data, information, orother intellectual property rights created pursuant to the Initial Research, isdeemed included within the scope of this Agreement. No amounts shall be dueOptimer by Cempra for the conduct of the Initial Research.

 

**3.3***         ***Synthesis of Macrolide Antibiotics and BiologicalTesting.**  The Joint SteeringCommittee shall, during the Research Term, determine the Macrolide Antibioticsdesignated for synthesis and Development under this Agreement, and Optimershall provide its advice and comment with respect thereto. The Joint SteeringCommittee shall determine which Macrolide Antibiotics will be the subject ofsynthesis and Development as part of Optimer’s performance under the ResearchProgram, and 

 

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Optimer shall provide its advice and commentwith respect thereto, provided that Optimer shall have no obligation to performsuch synthesis and Development without its consent (such consent not to beunreasonably withheld). Optimer shall indicate in writing within five (5) businessdays of approval by the Joint Steering Committee whether or not it consents,and, if not consenting, provide its reasonable objections to such obligations.In the absence of such written consent or reasonable objection within such five(5) business day period, Optimer shall be deemed to have rejected suchobligations and Cempra shall be free to seek alternative solutions therefor.The Joint Steering Committee shall, during the Research Term, designate theinitial number of Macrolide Antibiotics for synthesis under this Agreement,provided Optimer shall provide its advice and comment with respect thereto.Optimer shall, if and as included in the Work Plan and Budget, use DiligentEfforts to synthesize Macrolide Antibiotics that have been designated by theJoint Steering Committee for synthesis, to conduct biological testing on suchMacrolide Antibiotics, and to provide such Macrolide Antibiotics in reasonablequantities to Cempra as determined by the Joint Steering Committee. If and asincluded in the Work Plan and Budget, Optimer shall use Diligent Efforts tosynthesize and conduct biological testing with respect to each MacrolideAntibiotic according to applicable Specifications for such MacrolideAntibiotics, and to produce and provide to Cempra a sufficient quantity of eachMacrolide Antibiotic to allow Cempra to conduct further Development of suchMacrolide Antibiotics. Optimer shall use Diligent Efforts to provide additionalquantities of each Macrolide Antibiotics to Cempra at Cempra’s reasonablerequest on an as needed basis. The reasonable, documented direct expense ofmanufacturing additional quantities of Macrolide Antibiotics will be paid forby Cempra as set forth in the Work Plan and Budget.

 

**3.4***         ***Preclinical Testing and Human Clinical Testing.**  Cempra may perform, in its sole discretionand at its own expense, after, during the Research Term, providing reasonableopportunity for advice and comment by the Joint Steering Committee, preclinicaltesting on Macrolide Antibiotics that have been synthesized by Optimer or anyother Cempra Products of Cempra’s choosing. Based on the results of any suchpreclinical testing, the Joint Steering Committee may, subject to the adviceand comment of Cempra and Optimer, determine whether additional MacrolideAntibiotics should be synthesized or developed by Optimer for preclinicaltesting, or whether any existing Macrolide Antibiotics should be reformulatedby Optimer (or a Third Party) for further testing. The Joint SteeringCommittee may, subject to Optimer’s and Cempra’s approval (such approval not tobe unreasonably withheld), amend or revise the applicable Work Plan and Budgetaccordingly to allow for such additional synthesis or reformulation activities.Each party shall indicate in writing within five (5) business days ofapproval by the Joint Steering Committee whether or not it approves of suchamendment or revision, as applicable, and, if not approving thereof, provideits reasonable objections thereto. In the absence of such a written responsefrom a particular party within such five (5) business day period, a partyshall be deemed to have rejected such amendment or revision to the extent itproposes additional obligations or responsibilities for the objecting party,and, in the event Optimer rejects its proposed obligations or responsibilities(whether by written notice or the absence thereof), Cempra shall be free topursue independent solutions with respect to the subject matter of the rejectedamendment or revision. Cempra shall, after, during the Research Term, providingreasonable opportunity for advice and comment by the Joint Steering Committee,have the right to designate one or more of such Macrolide Antibiotics as TestProducts for human clinical testing. In the event that Cempra enrolls a patientfor human clinical testing of any Macrolide Antibiotics prior to formaldesignation of such Macrolide Antibiotics as a Test Product, such MacrolideAntibiotics shall be deemed to have been designated as a Test Product uponenrollment of the first such patient. If a Test Product does not achievedesirable results during Phase 1 Trials, then, if and as requested by theJoint Steering Committee, subject to Optimer’s consent (such consent not to beunreasonably withheld), Optimer shall use Diligent Efforts to reformulate suchTest Product according to specifications established by the Joint SteeringCommittee. Any such reformulation activities shall be reflected in a revisedWork Plan and Budget to be developed and approved by the Joint SteeringCommittee, negotiated in good faith, and agreed

 

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upon by the Parties (such agreement not to be unreasonably withheld),and the reasonable, documented, direct costs incurred by Optimer for suchreformulation and related additional testing of a Test Product by Optimer shallbe borne by Cempra pursuant to such Budget. Each party shall indicate inwriting within five (5) business days of approval by the Joint SteeringCommittee whether or not it agrees to such revised Work Plan and Budget, and,if not agreeing to its proposed additional obligations or responsibilitiescontained therein, provide its reasonable objections thereto. In the absence ofproviding such written notice within such five (5) business day period, aparty shall be deemed to have rejected its proposed obligations orresponsibilities, and, in the event Optimer rejects its proposed obligations orresponsibilities (whether by written notice or the absence thereof), Cemprashall be free to seek alternative solutions therefor. In the event that Cempraenrolls a patient in a Phase 2 Trial or in a Phase 3 Trial,or obtains Regulatory Approval, for any Macrolide Antibiotics or TestProduct prior to formal designation of such Macrolide Antibiotics or TestProduct as a Cempra Product, such Macrolide Antibiotics or Test Product shallbe deemed to have been designated as a Cempra Product upon the first such eventto occur with respect to such Macrolide Antibiotics or Test Product.

 

**3.5***         ***Pre-Clinical and Clinical Supply.**  As may be provided in any Work Plan andBudget established by the Joint Steering Committee and agreed upon by Optimer,Optimer shall use Diligent Efforts in accordance with such Work Plan and Budgetto produce, or have produced, a sufficient quantity of each Test Product toenable Cempra to conduct preclinical testing of such Test Products, and tocooperate with Cempra in preparing formulations, conducting feasibilitystudies, and facilitating such testing. Optimer shall not have any obligationor responsibility for providing clinical supplies of Test Products or CempraProducts.

 

**3.6***         ***Research and Supply Costs.**  Cempra shall reimburse Optimer for Optimer’sreasonable, documented internal costs associated with Optimer’s work under theWork Plan and Budget, which shall equal the pro-rated cost of full-timeequivalent employees to the extent used by Optimer in performing its portion ofthe Research Program. Such cost shall (1) be commercially reasonable basedon the applicable employees’ role in performing Optimer’s portion of theResearch Program, job title and responsibilities with Optimer, training,education, and expertise, which shall, in each case, be reasonably appropriatefor the tasks performed thereby, and (2) not exceed US$[***] on an annualbasis in any event. Cempra shall reimburse Optimer for the purchasing of keyintermediates from Third Parties at Optimer’s cost, which cost shall becommercially reasonable and included in the Budget. Cempra shall also reimburseOptimer for commercially reasonable and documented external out-of-pocketexpenses consistent with the Work Plan and Budget that Optimer incurs forperforming such work, including without limitation commercially reasonable anddocumented payments to any Third Party manufacturer for production of MacrolideAntibiotics, Test Products and/or Cempra Products. At the end of each calendarquarter, Optimer shall submit to Cempra an invoice that sets forth inreasonable detail the internal costs and external expenses Optimer has incurredin performing its obligations under the Work Plan and Budget. Cempra shallremit payment to Optimer within thirty (30) days following Cempra’sreceipt of such invoice. Any disputes arising between the Parties related tothe amounts invoiced under this Section 3.6 shall be resolved inaccordance with Article 12. Notwithstanding anything to the contrary, (i) Cemprashall not be obligated to pay Optimer any amounts with respect to Optimer’sperformance of its obligations under the Research Program except asspecifically described in any Budgets established by the Joint SteeringCommittee, (ii) Optimer shall not incur any Third Party costs inperforming under the Research Program, and Cempra shall not be responsible forthe reimbursement of any such Third Party costs, except as approved in advanceby the Joint Steering Committee, and (iii) Cempra shall not be obligatedto reimburse any costs of Optimer incurred in performing its obligations underthe Research Program to the extent such costs are covered by any grant fundingprovided to Optimer (including but not limited to any SBIR or other governmentgrants).

 

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**3.7***         ***Conduct of Research.**  The Parties shall use Diligent Efforts toconduct their tasks and responsibilities under the Work Plan and Budgetthroughout the Research Program. In addition, the Parties shall conduct theirtasks and responsibilities under the Research Program in compliance in allmaterial respects with the requirements of applicable laws, rules andregulations and all applicable GLP to attempt to achieve their objectivesconsistent with industry standards. Optimer shall use commercially reasonableefforts to (i) perform in accordance with, maintain, and obtain anyawarded, active, or future grants (including but not limited to any SBIR orother government grants) concerning research or development related to theresearch and development of Macrolide Antibiotics, Test Products, and/or CempraProducts (collectively, such grants, “Subject Grants”), (ii) ensurepayment and receipt of all funds to be provided to Optimer under Subject Grantsto the extent covering any of Optimer’s costs of performing of Optimer’sportion of the Research Program, and (iii) ensure that (a) allOptimer Improvements, Optimer Know-How, and results generated, in each case,under the Subject Grants, and all intellectual property rights appurtenant tothe foregoing (including but not limited to Optimer Patents) shall be owned byOptimer and included in the licenses granted to Cempra hereunder, subject toany nonexclusive rights the United States government may have in any ofthe foregoing, by operation of law pursuant to the terms of suchSubject Grants.

 

**3.8***         ***Acceptance.** If, as set forth in the Work Plan, Cempra has responsibility forperforming quality control and/or quality assurance testing on MacrolideAntibiotics and/or Test Products supplied by Optimer, Cempra shall have thirty(30) business days following its receipt of a shipment to confirm thatsuch shipment meets the applicable Specifications. If, as set forth in the WorkPlan, Optimer has responsibility for performing quality control and/or qualityassurance testing on Macrolide Antibiotics and/or Test Products supplied byOptimer, Cempra shall be deemed to have accepted any delivery of MacrolideAntibiotics and/or Test Products supplied by Optimer unless Cempra givesOptimer written notice of its rejection within fifteen (15) business daysof delivery, unless any defect in the Macrolide Antibiotics and/or TestProducts could not have been identified by reasonable visual examination, inwhich event Cempra shall not be deemed to have accepted such MacrolideAntibiotics and/or Test Products until fifteen (15) business days afterthe date when such defect could first have been reasonably identified byCempra. If Cempra reasonably rejects in whole or in part any nonconformingshipment at any time following its receipt thereof, Cempra shall provideOptimer written notice of such rejection within the applicable time perioddescribed above. If nonconforming Macrolide Antibiotics or Test Products aredelivered to Cempra by Optimer in the course of the Research Program, Optimershall, if and as elected by Cempra in its sole discretion (i) usecommercially reasonable efforts to replace in a timely manner the nonconformingMacrolide Antibiotics or Test Products at no additional cost to Cempra or(ii) refund to Cempra any amounts paid to Optimer with respect to themanufacture or supply of such Macrolide Antibiotics or Test Products. 

 

**4.***            ***DEVELOPMENT ANDCOMMERCIALIZATION**

** **

**4.1***         ***Development Plan; Reports.**  The Development of Cempra Products shall begoverned by a development plan developed by Cempra, in consultation with theJoint Steering Committee, subject to amendment at any time by Cempra, thatdescribes the proposed overall program of Development (the “DevelopmentPlan”). Cempra shall engage, at its sole expense, a Scientific Advisory Board,which shall, during the Research Term, include one representative of Optimer,initially to be Yoshi Ichikawa, Ph.D., to review and comment on the DevelopmentPlan. During the Research Term, Optimer and the Joint Steering Committee shallhave the right to comment and make suggestions with respect to the DevelopmentPlan; provided, however, that Cempra shall have the sole right andresponsibility for determining the Development Plan for Cempra Products. EachParty shall conduct its Development of Products in compliance in all materialaspects with the requirements under all applicable laws, rules and regulations,including without limitation applicable GLP, GCP and GMP. Each Party shall keepthe other Party and, during the Research Term, the Joint Steering Committeeregularly informed on a semiannual basis via summary updates with respect toits material Development and Commercialization 

 

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activities andthose of its Affiliates and Third Party sublicensees. Such reports shall be theConfidential Information of a Party and subject to applicable provisions setforth in Article 8.

 

**4.2***         ***Regulatory Matters.**  Cempra shall have control of and be responsiblefor all regulatory applications, filings and communications with regulatoryauthorities regarding Cempra Products, including obtaining Regulatory Approvalof Cempra Products, in any jurisdiction in the Territory. Cempra shall keepOptimer regularly informed of its efforts and progress with respect toregulatory matters and approvals on a semiannual basis. Cempra shall own allthe Regulatory Filings it makes and Regulatory Approvals it obtains. Optimershall have the right of access to such regulatory documents and material forits use in obtaining Regulatory Approval in ASEAN Countries (subject to anypayment obligations under Sections 6.6 and 6.7). Optimer shallcooperate with Cempra in all such regulatory efforts as reasonably requested byCempra and provide all reasonable assistance to Cempra. If and as requested byCempra, Optimer shall be responsible, at the expense of Cempra, which expenseshall be reasonable, documented, and agreed upon in advance by the parties, forpreparing and providing to Cempra in a timely manner all documents andsubmissions that relate directly to the manufacturing of Cempra Product, asreasonably required for Regulatory Filings and Regulatory Approval of theCempra Product in the Territory, including the CMC of any IND or NDA inelectronic format, for filing by Cempra.

 

**4.3***         ***Manufacture and Supply.**  With respect to the Territory, and except asmay otherwise be specified in the Work Plan and Budget, Section 3.5, orany separate clinical supply agreement entered into by the Parties, Cemprashall, as between the Parties, be responsible for the manufacture of clinicalmaterials for each Cempra Product, and for the commercial supply of each CempraProduct, and for all costs associated therewith. Cempra shall use DiligentEfforts to make necessary Regulatory Filings to obtain, or cause a Third Partymanufacturer to obtain, Regulatory Approval in the Territory for themanufacture of Cempra Products.

 

**4.4***         ***Development and Commercialization Costs.**  Cempra shall be responsible for all costsassociated with its Development and Commercialization of the Cempra Products,including the manufacture, marketing and commercialization of such CempraProducts in the Field and in the Territory, provided that, notwithstanding theforegoing, Cempra’s only obligations to Optimer with respect to any such costsshall solely be as provided for in Section 3 and 4.2, or as otherwiseagreed to by the parties in writing.

 

**4.5***         ***Third Party Commercialization.**  Subject to the terms and conditions set forthin Section 5.2, Cempra may utilize, at its discretion, Third Partycontractors, distributors, marketing organizations, agents or sublicensees toresearch, develop, manufacture, supply, promote, market, distribute, and/orsell Cempra Products in one or more countries or jurisdictions inthe Territory.

 

**4.6***         ***Pricing.** Cempra shall be solely responsible for pricing and other terms of salefor Cempra Products.

 

**4.7***         ***Diligent Efforts; Decision Not to Develop.**

 

(a)           Cempra shall, itself and/or through its Affiliates andThird Party sublicensees, use Diligent Efforts to Develop and CommercializeCempra Products in the Territory. In the event that Cempra makes adetermination not to Develop and Commercialize at least one Cempra Producthereunder, Cempra shall promptly notify Optimer in writing of suchdetermination in writing. If Cempra (itself or through its Affiliates or ThirdParty sublicensees) does not use Diligent Efforts as set forth in thisSection 4.7(a), or if Cempra makes a determination not to further Develop andCommercialize at least one Cempra Product hereunder, then Optimer may terminatethis Agreement in accordance with Section 9.3(a) below; provided, however,that if Cempra has notified Optimer in writing of a determination not toDevelop and Commercialize at least one Cempra Product, then the cure period setforth in Section 9.3(a) shall not apply.

 

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(b)           Optimer shall, itself and/or through its Affiliates andThird Party sublicensees, use Diligent Efforts to develop and commercializeProducts in ASEAN Countries. In the event that Optimer makes a determinationnot to Develop and Commercialize at least one Product hereunder in ASEANCountries, Optimer shall promptly notify Cempra in writing of suchdetermination in writing. If Optimer (itself or through its Affiliates or ThirdParty sublicensees) does not use Diligent Efforts as set forth in thisSection 4.7(b), or if Optimer makes a determination not to further Developand Commercialize at least one Product in ASEAN Countries hereunder, thenCempra may terminate this Agreement in accordance with Section 9.3(a)below; provided, however, that if Optimer has notified Cempra in writing of adetermination not to Develop and Commercialize at least one Product in ASEANCountries, then the cure period set forth in Section 9.3(a) shallnot apply. 

 

**5.             LICENSES AND RELATED RIGHTS**

** **

**5.1***         ***License to Cempra.**  Optimer hereby grants to Cempra and itsAffiliates an exclusive license, with the right to sublicense as set forth inSection 5.2, under the Optimer Technology and the Optimer Improvements tomake, have made, use, sell, offer for sale and import Macrolide Antibiotics,Test Products, and Cempra Products in the Field in the Territory. It isunderstood and agreed that Optimer retains the right under the OptimerTechnology to conduct activities allocated to Optimer in the Research Program.

 

**5.2***         ***Cempra Sublicensing.**  Cempra and its Affiliates shall have theright to sublicense their rights under Section 5.1 to one or moreThird Parties. Cempra shall promptly provide Optimer a written copy of eachsuch sublicense (and each amendment thereto, if any), and in no event morethan ten (10) days following its execution, provided that Cempra mayredact any portions of such sublicenses (or amendments) disclosingsublicensees’ proprietary information, technology, or research and developmentplans as reasonably necessary to comply with any confidentiality provisions ofsuch sublicense. Each sublicense shall be consistent with the terms and conditionsof this Agreement. For purposes of this Agreement, a Third Party to whom Cempraor its Affiliate grants exclusive rights to market one or more Cempra Productsin a given territory shall be deemed a “sublicensee” of Cempra hereunder forsuch territory.

 

**5.3***         ***[***] Intellectual Property.**  If Optimer licenses any rights to anyMacrolide Antibiotics from [***] or any affiliate thereof during the term ofthis Agreement, it shall provide prompt written notice thereof to Cempra,identifying such licensed intellectual property, and, if and as elected byCempra in writing its sole discretion, (i) Patents to which Optimerobtains rights under such a license shall be deemed included in Optimer Patentsfor purposes of this Agreement and (ii) Know-How to which Optimer obtainsrights under such a license shall be deemed include in Optimer Know-How.

 

**5.4***         ***Optimer Rights in ASEAN Countries.**  Cempra hereby grants to Optimer and itsAffiliates an exclusive license, with the right to sublicense as set forth inSection 5.5, in the Field under Cempra Patents and Cempra Know-How tomake, have made, use, sell, offer for sale and import Optimer Products in ASEANCountries, which license shall include a right of reference to all RegulatoryFilings, Regulatory Approvals, and supporting data and documentation of Cemprawith respect to Cempra Products.

 

**5.5***         ***Optimer Sublicensing.**  Optimer and its Affiliates shall have theright to sublicense their rights under Section 5.4 to one or moreThird Parties. Optimer shall promptly provide Cempra a written copy of eachsuch sublicense (and each amendment thereto, if any), and in no event morethan ten (10) days following its execution, provided that Optimer mayredact any portions of such sublicenses (or amendments) disclosing sublicensees’proprietary information, technology, or research and development plans asreasonably necessary to comply with any confidentiality provisions of suchsublicense. Each sublicense shall be consistent with the terms and conditionsof this Agreement. For purposes of this Agreement, a Third Party to whomOptimer or its Affiliate grants exclusive rights to

 

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market one ormore Optimer Products in a given territory shall be deemed a “sublicensee” ofOptimer hereunder for such territory

 

**5.6***         ***Bankruptcy.** All rights and licenses granted under or pursuant to any section of thisAgreement are, and shall otherwise be deemed to be, for purposes ofSection 365(n) of the U.S. Bankruptcy Code, licenses of rights to “intellectualproperty” as defined under Section 101(35A) of the U.S. BankruptcyCode. The Parties shall retain and may fully exercise all of their respectiverights and elections under the U.S. Bankruptcy Code. The Parties agreethat a Party that is a licensee of such rights under this Agreement shallretain and may fully exercise all of its rights and elections under theU.S. Bankruptcy Code, and that upon commencement of a bankruptcyproceeding by or against the licensing Party (such Party, the “*Involved Party*”) under theU.S. Bankruptcy Code, the other Party (such Party, the “*Noninvolved Party*”) shall be entitled to acomplete duplicate of or complete access to (as such Noninvolved Partydeems appropriate), any such intellectual property and all embodiments of suchintellectual property, provided the Noninvolved Party continues to fulfill itspayment or royalty obligations as specified herein in full. Such intellectualproperty and all embodiments thereof shall be promptly delivered to theNoninvolved Party (a) upon any such commencement of a bankruptcyproceeding upon written request therefore by the Noninvolved Party, unless theInvolved Party elects to continue to perform all of its obligations under thisAgreement or (b) if not delivered under (a) above, upon the rejectionof this Agreement by or on behalf of the Involved Party upon written requesttherefor by the Noninvolved Party. The foregoing is without prejudice to anyrights the Noninvolved Party may have arising under the U.S. BankruptcyCode or other applicable law.

 

**5.7***         ***Disclosure of Information.**  Upon execution of this Agreement andthereafter during the term hereof, each party shall disclose to the otherparty, in confidence under the terms of Article 8 hereof, (a) allrelevant Information as shall become available to it relating to the MacrolideAntibiotics, Test Products and Cempra Products, and (b) all relevantInformation as shall become available to it relating to the safety and efficacyof each Macrolide Antibiotic, Test Product, and Cempra Product to the extentnecessary or useful to develop or manufacture a Cempra Product. Optimer willuse reasonable efforts to disclose to Cempra or, if and as requested by Cempra,to the FDA all relevant Information in its possession required for Cempra toregister for sale or obtain approval for sale of each Cempra Product.

** **

**5.8***         ***No Implied Licenses.**  Other than those rights and licensesexpressly granted herein, no other rights or licenses are granted or shall bedeemed granted under this Agreement by either Party. 

 

**6.             FINANCIAL TERMS**

** **

**6.1***         ***Upfront Payment.**  Cempra shall issue Optimer [***] [***] [***]shares of Cempra common stock ([***]% of total number of outstanding shares asdetermined on a fully-diluted basis as of the Effective Date), withinthirty (30) after the Effective Date of this Agreement. The Cempra commonstock issued to Optimer pursuant to this Section 6.1 shall not be subjectto dilution until after Cempra closes on an Equity Investment (as definedbelow). Upon closing of an Equity Investment, Cempra shall issue Optimeradditional shares of Cempra common stock sufficient to ensure that the totalnumber of shares of Cempra common stock held by Optimer immediately followingsuch Equity 

 

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Investmentequals the percentage of Cempra’s total number of outstanding shares(as calculated on a fully-diluted basis immediately following theEquity Investment) noted below:

 
| **Gross Proceeds to Cempra in Equity Financing** | ** ** | **Percentage of Cempra Common Stock to be Held by Optimer** |
|--------------------------------------------------|------------|-------------------------------------------------------------|
| $[***] to $[***]                                 |       | [***]%                                                      |
|                                             |       |                                                        |
| $[***] to $[***]                                 |       | [***]%                                                      |
|                                             |       |                                                        |
| $[***] to $[***]                                 |       | [***]%                                                      |
|                                             |       |                                                        |
| $[***] to $[***]                                 |       | [***]%                                                      |
|                                             |       |                                                        |
| $[***] or more                                   |       | [***]%                                                      |

 

Following the first such issuance of additional shares, all sharesissued to Optimer will be subject to dilution on a *pari passu* basis with the Cempra common stock held byother holders of Cempra common stock and Optimer shall not be entitled to anyfurther shares of stock under this Section 6.1. For purposes of thisAgreement, an “Equity Investment” shall mean Cempra’s issuance and sale ofequity securities to venture capital, institutional, corporate, or privateinvestors resulting in aggregate gross proceeds to Cempra of at least [***] [***].The issuances of stock to Optimer under this Section 6.1 shall be donepursuant to separate Subscription Agreements, a form of which is attachedhereto as *Schedule 6.1(1)*,and the Cempra common stock held by Optimer shall be subject to a shareholdersagreement, which shall initially be in the form of set forth at *Schedule 6.1(2)*. Optimer agrees toenter into reasonable or customary agreements required by any future equityinvestors regarding subjecting Optimer’s shares of Cempra common stock torights of first refusal and co-sale, such rights to terminate on an initialpublic offering of Cempra stock pursuant to a registration statement filedpursuant to the Securities Act of 1933, as amended.

 

**6.2***         ***Milestone Payments to Optimer.**

** **

**(a)**           Cempra shall pay to Optimer amilestone payment (the “*[***] MilestonePayment*”) in the amount of $[***] upon Cempra’s, its Affiliate’s, ortheir sublicensee’s [***] (the “*[***]Milestone*”), and the [***] Milestone Payment shall be payablein cash or Cempra capital stock, as further described below. Cempra shallnotify Optimer within thirty (30) days of its determination that a [***]Milestone has occurred. Optimer shall indicate in writing, within ten(10) business days of such notice from Cempra, whether it elects the [***]Milestone Payment to be paid in cash or shares of Cempra capital stock having aFair Market Value, as calculated as of the date the [***] Milestone isachieved, equal to the [***] Milestone Payment; in the absence of such electionwithin such ten (10) business day period, Cempra shall be entitled to makesuch election in its sole discretion. The [***] Milestone Payment shall be paid(or, if to be paid in Cempra capital stock, such stock shall be issued) nolater than twenty (20) days after the earlier of (i) the date onwhich Optimer provides its written election, as described above, or(ii) the expiration of the ten (10) business day period referencedabove. Only one [***] Milestone Payment shall be payable by Cempra under thisAgreement, regardless of the number of Cempra Products or indications therefordeveloped by Cempra, its Affiliates, or their sublicensees underthis Agreement.

** **

**(b)**           Cempra shall pay to Optimer amilestone payment (each, a “*[***] MilestonePayment*”) in the amount of $[***] upon Cempra’s, its Affiliate’s, ortheir sublicensee’s completion of the first [***] Trial of each Cempra Productresulting in data reasonably sufficient to support the conduct of a [***] Trialwith respect to such Cempra Product (the “*[***]Milestone*”), and the initial [***] Milestone Payment shall bepayable in cash or Cempra capital stock, as further described below. Cemprashall notify Optimer within thirty (30) days of its determination that a [***]Milestone has occurred. Optimer shall indicate in writing, within ten(10) business days of the initial such notice from Cempra, whether itelects the initial [***] Milestone Payment to be paid in cash or shares ofCempra capital stock having a Fair Market Value, as calculated as of the datethe initial [***] Milestone is achieved, equal to the

 

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[***]Milestone Payment; in the absence of such election within such ten(10) business day period, Cempra shall be entitled to make such electionin its sole discretion. The initial [***] Milestone Payment shall be paid (or,if to be paid in Cempra capital stock, such stock shall be issued) no laterthan twenty (20) days after the earlier of (i) the date on whichOptimer provides its written election, as described above, or (ii) theexpiration of the ten (10) business day period referenced above; all other[***] Milestone Payments shall be paid in immediately available funds, pursuantto Section 6.9 below, no later than thirty (30) days following theachievement of such [***] Milestone. Only one [***] Milestone Payment shall bepayable by Cempra under this Agreement with respect to each Cempra Product,regardless of the number of indications therefor developed by Cempra, itsAffiliates, or their sublicensees under this Agreement.

** **

**(c)**           In addition to the Phase 2Milestone Payments, in the event that (i) Cempra or an Affiliate thereofsublicenses rights for Development and Commercialization of a Cempra Product toa Third Party sublicensee and (ii) Cempra, an Affiliate, or suchsublicensee completes a Phase 3 Trial of such Cempra Product resulting indata sufficient to support Regulatory Approval of such Cempra Product(the date upon which both of the foregoing have been achieved, the “*Sublicensee Milestone*”), then Cempra shallpay to Optimer (a) the following amounts with respect to each of the firsttwo (2) Cempra Products to achieve the Sublicensee Milestone: (1) $[***]within thirty (30) days after each such Cempra Product achieves theSublicensee Milestone (the “*InitialSublicensee Milestone Payments*”) and (2) [***] percent ([***]%)of all Sublicensing Revenue, if any, received in excess of $[***] with respectto each such Cempra Product from the Third Party sublicensee(s) for such CempraProduct (to be paid to Optimer within thirty (30) days of Cempra’sreceipt of each applicable payment of Sublicensing Revenue from suchsublicensee(s)) (“*Trailing SublicenseeMilestone Payments*”) and, with respect to each of the subsequent twoCempra Products to achieve the Sublicensee Milestone, (b) $[***] withinthirty (30) days after the date upon which such subsequent Cempra Productachieves the Sublicensee Milestone (“*SubsequentSublicensee Milestone Payments*”; collectively, with all of theforegoing payments described in this subsection (c), the “*Sublicensee Milestone Payments*”). Cemprashall notify Optimer within thirty (30) days of each of the first fouroccurrences of the Sublicensee Milestone.

 

Notwithstanding anything to the contrary,(i) the Initial Sublicensee Milestone Payment shall only be payable byCempra [***] under this Agreement, (ii) an Initial Sublicensee MilestonePayment shall not be due or payable under this Agreement with respect to aparticular Cempra Product if the Initial Cempra Milestone Payment(as defined in Section 6.2(d) below) becomes due for such CempraProduct prior to the date upon which the applicable Initial SublicenseeMilestone Payment becomes due for such Cempra Product, (iii) theaggregate, combined, total number of Subsequent Sublicensee Milestone Paymentsand Subsequent Cempra Milestone Payments due under this Agreement shall be [***](regardless of the number of Cempra Products or indications therefor), and(iv) a Subsequent Sublicensee Milestone Payment shall not be due orpayable under this Agreement with respect to a particular Cempra Product if theSubsequent Cempra Milestone Payment (as defined in Section 6.2(d)below) becomes due with respect to such Cempra Product prior to the date uponwhich the Subsequent Sublicensee Milestone Payment becomes due with respectthereto. Except with respect to Trailing Sublicensee Milestone Payments, andnotwithstanding anything to the contrary in this Agreement, the total possiblecombined aggregate amount due Optimer under this Section 6.2(c) andSection 6.2(d) below shall not exceed, and Cempra shall not be obligatedto pay Optimer any amounts in excess of, $[***].

 

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**(d)**           In addition to the [***] MilestonePayments, if, prior to the occurrence of a Sublicensee Milestone with respectto a Cempra Product, an [***] is obtained (the “*Cempra Milestone*”), Cempra shall pay Optimer (i) $[***]with respect to each of the first [***] Cempra Products to achieve the CempraMilestone (the “*Initial CempraMilestone Payments*”) and (ii) $[***] with respect to each ofthe subsequent two Cempra Products to achieve the Cempra Milestone (the “*Subsequent Cempra Milestone Payments*”;collectively, with the Initial Cempra Milestone Payment, the “*Cempra Milestone Payments*”) within, ineach case, thirty (30) days of the first anniversary of such CempraProduct’s achievement of the Cempra Milestone.

 

Notwithstanding anything to the contrary,each Cempra Milestone Payment (i) shall only be payable by Cempra onceunder this Agreement with respect to a particular Cempra Product, regardless ofthe number of indications therefor, (ii) an Initial Cempra MilestonePayment shall not be due or payable under this Agreement with respect to aparticular Cempra Product if an Initial Sublicensee Milestone Payment(as defined in Section 6.2(c) above) becomes due with respect to suchCempra Product prior to the date upon which the Initial Cempra MilestonePayment becomes due with respect to such Cempra Product, (iii) theaggregate, combined, total number of Subsequent Sublicensee Milestone Paymentsand Subsequent Cempra Milestone Payments due under this Agreement shall be [***](regardless of the number of Cempra Products or indications therefor), and(iv) a Subsequent Cempra Milestone Payment shall not be due or payableunder this Agreement with respect to a particular Cempra Product if theSubsequent Sublicensee Milestone Payment (as defined inSection 6.2(c) above) becomes due with respect to such Cempra Productprior to the date upon which the Subsequent Cempra Milestone Payment becomesdue with respect thereto.

** **

**(e)**           As a condition to the issuance(s) ofCempra capital stock to Optimer pursuant to Sections 6.2(a)and/or 6.2(b), as applicable, Optimer shall enter into reasonable orcustomary agreements (including but not limited to subscription or purchaseagreements) substantially consistent with those entered into by other holdersof such shares of stock, including but not limited to investors, as applicable,and which may concern the issuance of such stock, voting provisions, and/orrights of first refusal and co-sale with respect to such shares.

 

**6.3***         ***Royalty Payments to Optimer.**  For the duration of the applicable RoyaltyTerm for each Cempra Product, Cempra shall pay to Optimer the following royaltypayments, subject to adjustment as described in Sections 6.4 and 6.5,based on Net Sales of Cempra Products sold in the Territory by Cempra, itsAffiliates, and their Third Party sublicensees:

 

(i)            [***] percent ([***]%) of Net Sales for the first $[***]of aggregate worldwide Net Sales of Cempra Products sold by Cempra, itsAffiliates, and their Third Party sublicensees in a particular calendaryear; and

 

(ii)           [***] percent ([***]%) of Net Sales for the portion, ifany, of aggregate worldwide Net Sales of Cempra Products sold by Cempra, itsAffiliates, and their Third Party sublicensees exceeding $[***] in a particularcalendar year.

 

As an example of the royalty calculationcontemplated above, if aggregate worldwide Net Sales of Cempra Products byCempra, its Affiliates, and their Third Party sublicensees in a particularcalendar year total $[***], Cempra shall owe Optimer $[***] under thisSection 6.3 ([***]% × $[***] = $[***]; [***]% of $[***] =$[***]; $[***] + $[***] = $[***]).

 

**6.4***         ***Third Party Royalties on Cempra Products.**  In the event that:

 

(a)           a Cempra Product is deemed by a final, unappealabledecision of a court of competent jurisdiction to infringe a claim of apatent(s) owned or controlled by a Third Party in any given country of theTerritory, and Cempra, an Affiliate thereof, or any sublicensee thereoflicenses such patent(s) in settlement of such claims (“*Cempra Infringement License*”),

 

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(b)           Cempra, an Affiliate thereof, or any sublicensee of eitherof the foregoing determines that it is commercially, reasonably necessary oradvisable to pay royalties to a Third Party to obtain a license to practice anyThird Party’s rights in order to manufacture, use, Commercialize or Develop aCempra Product in any given country of the Territory (“*Cempra Necessary License*”), or

 

(c)           it would be useful to obtain a license to practice anyThird Party’s rights that could improve, enhance, or modify a Cempra Product inany given country of the Territory (“*CempraImprovement License*”), as determined reasonably and in good faith byCempra, an Affiliate thereof, or any sublicense of either ofthe foregoing,

 

then Cempra may deduct any fees, milestonesor royalties paid for Cempra Infringement Licenses, Cempra Necessary Licensesand Cempra Improvement Licenses due to such Third Parties (or such amountspaid by Cempra, its Affiliate, or any sublicensee of either of the foregoing insettlement of such infringement action) (collectively, all of the foregoing, “*Third Party Royalties*”) from the royaltiesotherwise due to Optimer with respect to Net Sales; provided, however, that,notwithstanding the foregoing, the total amount due to Optimer under thisAgreement with respect to Net Sales for Cempra Products sold by Cempra and itsAffiliates any particular calendar quarter shall not be reduced by more than [***]percent ([***]%) as a result of any such deduction, and any amounts notdeducted in a calendar quarter shall be carried forward for deduction in thesubsequent calendar quarter(s), subject to such [***] percent ([***]%)limitation in each case.

 

**6.5***         ***Cempra Compulsory Licenses.**  Should a compulsory license be granted, or bethe subject of a possible grant, to a Third Party under the applicable laws ofany country in the Territory under the Optimer Patents and/or Optimer Know-How,or to any Cempra Product, the Party receiving notice thereof or otherwisebecoming aware thereof shall promptly notify the other Party thereof, includingany material information concerning such compulsory license, and the applicableroyalty rate payable hereunder for sales of Cempra Products in such countrywill be adjusted to match any lower royalty rate granted to such Third Partyfor such country with respect to the sales of such Cempra Products, subject toany adjustments pursuant to Section 6.4 above.

 

**6.6***         ***Milestone Payments to Cempra.**  For each of the first [***] Optimer Productsto achieve the Optimer Milestone (as defined below), Optimer shall, withintwo (2) years of the earlier of (i) the [***] of an Optimer Productin any ASEAN Country by Optimer, an Affiliate thereof, or any sublicensee ofeither of the foregoing or (ii) [***] of an Optimer Product in any ASEANCountry, pay Cempra $[***] with respect to such Optimer Product (the firstto occur of the foregoing with respect to an Optimer Product, the “*Optimer Milestone*”). Such payment shall bedue with respect solely to each of the first [***] (2) Optimer Products toachieve the Optimer Milestone. Optimer shall notify Cempra in writing withinthirty days of each occurrence of the Optimer Milestone.

** **

**6.7***         ***Royalties to Cempra.**  For the duration of the applicable RoyaltyTerm for each Optimer Product, Optimer shall pay to Cempra the followingroyalty payments based on Net Sales of Optimer Products in ASEAN Countries byOptimer, its Affiliates, and their Third Party sublicensees:

 

(iii)          [***] percent ([***]%) of Net Sales for the first $[***] ofaggregate worldwide Net Sales of Optimer Products by Optimer, its Affiliates,and their Third Party sublicensees in a particular calendar year; and

 

(iv)          [***] percent ([***]%) of Net Sales for the portion, ifany, of aggregate worldwide Net Sales of Optimer Products by Optimer, itsAffiliates, and their Third Party sublicensees exceeding $[***] million ina particular calendar year.

 

As an example of the royalty calculationcontemplated above, if aggregate Net Sales of Optimer Products in a particularcalendar year total $[***], Optimer shall owe Cempra $[***] under thisSection 6.7 ([***]% × $[***] = $[***]; [***]% of $[***] =$[***]; $[***] + $[***] = $[***]).

 

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**6.8***         ***Third Party Royalties on Optimer Products.**  In the event that:

 

(a)           a Optimer Product is deemed by a final, unappealabledecision of a court of competent jurisdiction to infringe a claim of apatent(s) owned or controlled by a Third Party in any given country of theTerritory, and Optimer, an Affiliate thereof, or any sublicensee thereoflicenses such patent(s) in settlement of such claims (“*Optimer Infringement License*”),

 

(b)           Optimer, an Affiliate thereof, or any sublicensee ofeither of the foregoing determines that it is commercially, reasonablynecessary or advisable to pay royalties to a Third Party to obtain a license topractice any Third Party’s rights in order to manufacture, use, Commercializeor Develop an Optimer Product in any given country of the Territory (“*Optimer Necessary License*”), or

 

(c)           it would be useful to obtain a license to practice anyThird Party’s rights that could improve, enhance, or modify a Optimer Productin any given country of the Territory (“*OptimerImprovement License*”), as determined reasonably and in good faith byOptimer, an Affiliate thereof, or any sublicense of either ofthe foregoing,

 

then Optimer may deduct any fees, milestonesor royalties paid for Optimer Infringement Licenses, Optimer Necessary Licensesand Optimer Improvement Licenses due to such Third Parties (or suchamounts paid by Optimer, its Affiliate, or any sublicensee of either of theforegoing in settlement of such infringement action) (collectively, all of theforegoing, “*Third Party Royalties*”)from the royalties otherwise due to Cempra with respect to Net Sales; provided,however, that, notwithstanding the foregoing, the total amount due to Cempraunder this Agreement with respect to Net Sales for Optimer Products sold byOptimer and its Affiliates any particular calendar quarter shall not be reducedby more than [***] percent ([***]%) as a result of any such deduction, and anyamounts not deducted in a calendar quarter shall be carried forward fordeduction in the subsequent calendar quarter(s), subject to such [***] percent([***]%) limitation in each case.

 

**6.9***         ***Optimer Compulsory Licenses.**  Should a compulsory license be granted, or bethe subject of a possible grant, to a Third Party under the applicable laws ofany country in the Territory under the Cempra Patents and/or Cempra Know-How,or to any Optimer Product, the Party receiving notice thereof or otherwisebecoming aware thereof shall promptly notify the other Party thereof, includingany material information concerning such compulsory license, and the applicableroyalty rate payable hereunder for sales of Optimer Products in such countrywill be adjusted to match any lower royalty rate granted to such Third Partyfor such country with respect to the sales of such Optimer Products, subject toany adjustments pursuant to Section 6.8 above.

 

**6.10***       ***Payments and Payment Reports.**  Except as otherwise provided herein, allroyalties and payments due under this Section 6 shall be paid withinninety (90) days of the end of the relevant calendar quarter for which theapplicable Net Sales occur and/or revenues are received, subject, with respectto Net Sales, as applicable, by Third Party sublicensees, to any longerreporting periods which may be reasonably agreed to by Cempra, Optimer, ortheir Affiliates with respect to such sublicensees. Each royalty payment shallbe accompanied by a statement stating (as applicable) the number,description, and aggregate Net Sales, by country, of each Product sold duringthe relevant calendar quarter by Cempra or Optimer, as applicable, and theirrespective Affiliates and Third Party sublicensees and detailing thecalculation of royalties due for such calendar quarter, as well as, withrespect to Cempra’s reporting obligations, an accounting of Sublicense Revenuesreceived in the applicable calendar quarter.

 

**6.11***       ***Payment Method.**  Except with respect to any milestone paymentsdue under Sections 6.2 (a) and (b) that are paid in Cempra stockin accordance therewith, all payments due under this Agreement shall be made bybank wire transfer in immediately available funds to an account

 

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designated by the Party owed such payments. All payments hereundershall be made in the legal currency of the United States of America.

 

**6.12****           Taxes.**  It is understood and agreed between theParties that any payments made under Section 6.1, 6.2, or 6.6 of thisAgreement are inclusive of any value added or similar tax imposed upon suchpayments. In addition, in the event any of the payments made by either Party(the “Paying Party”) pursuant to Article 6 become subject towithholding taxes under the laws of any jurisdiction, such amounts payable or,in the case of stock to be issued to Optimer pursuant to Sections 6.2(a) or (b),as applicable, shares issuable to the other Party (the “Paid Party”) shallbe reduced by the amount of taxes deducted and withheld, and the Paying Partyshall pay the amounts of such taxes to the proper Governmental Authority in atimely manner and promptly transmit to the Paid Party an official taxcertificate or other evidence of such tax obligations together with proof ofpayment from the relevant Governmental Authority of all amounts deducted andwithheld sufficient to enable the Paid Party to claim such payment of taxes.Any such withholding taxes required under applicable law to be paid or withheldshall be an expense of, and borne solely by, the Paid Party. The Paying Partywill provide the Paid Party with reasonable assistance to enable the Paid Partyto recover such taxes as permitted by law.

 

**6.13****           Blocked Currency.**   Ineach country where the local currency is blocked and cannot be removed from thecountry under such country’s applicable law, royalties accrued in that countryshall be paid to a Party in the country in local currency by deposit in a localbank designated by such Party, unless the Parties otherwise agree.

 

**6.14****           Sublicenses.**   Foravoidance of doubt, the Parties agree that in the event that a Party grantslicenses or sublicenses to Third Parties to sell Products, the licensing(or sublicensing) Party shall use commercially reasonable efforts toinclude in such licenses or sublicenses an obligation for the licensee orsublicense to account for and report its sales of Products on a basisreasonably sufficient to enable payment of royalties hereunder with respect tosuch sales as if such sales of the licensee or sublicensee were Net Sales ofthe applicable Party.

 

**6.15****           Foreign Exchange.**  Conversion of a Party’s Net Sales recorded inlocal currencies to U.S. dollars will be performed by such Party in amanner consistent with such Party’s normal practices used to prepare itsaudited financial statements for external reporting purposes, provided thatsuch practices use a widely accepted source of published exchange rates. EachParty shall notify the other of the conversion method(s) used by it forsuch purposes.

 

**6.16****           Interest.**   Ifeither Party fails to make any payment when due to the other Party under thisAgreement, then interest shall accrue on a daily basis at a rate equal to thethirty (30) day U.S. dollar LIBOR rate effective for the date thatpayment was due, as published by *The WallStreet Journal*. The obligation to pay interest on such late paymentsset forth herein shall not be construed to limit or restrict a Party’s right toterminate this Agreement in accordance with the terms and conditions of Section 9.3.

 

**6.17****           Records; Audits.**   EachParty shall keep or cause to be kept such records as are required to determine,in a manner consistent with generally accepted accounting principles in theUnited States, the sums or credits due under this Agreement, including, butnot limited to Net Sales. At the request (and expense) of either Party,the other Party and its Affiliates and sublicensees shall permit an independentcertified public accountant appointed by such Party and reasonably acceptableto the other Party, at reasonable times not more than once a year and uponreasonable notice, to examine only those records as may be necessary todetermine, with respect to any calendar year ending not more than three (3) yearsprior to such Party’s request, the correctness or completeness of any royaltyreport or payment made under this Agreement. The Party requesting the auditshall bear the full cost of the performance of any such audit, unless suchaudit discloses a variance adverse to the Party requesting the audit of more thanfive percent (5%) from the amount of the original invoice, report, royalty or 

 

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payment calculation, in which case the Party being audited shall bearthe reasonable, documented cost of the performance of such audit. Each Partyshall promptly pay to the other Party the amount of any underpayment ofroyalties revealed by an examination and review. Any overpayment by a Party ofroyalties or any other amount paid to the other Party revealed by an examinationand review shall, in the overpaying Party’s sole discretion, (i) be fully-creditableagainst future payments under this Agreement or (ii) refunded to theoverpaying Party within sixty (60) business days of its request. 

 

**7.****         Intellectual Property**

 

**7.1****              General Principles.**

 

(a)           The Optimer Technologyexisting as of the Effective Date shall, subject to the rights granted underthis Agreement, remain the sole property of Optimer and may be licensed byOptimer for any purpose that is not inconsistent nor in conflict withthis Agreement.

 

(b)           All right, title, andinterest in any and all Know-How or Inventions generated, conceived or reducedto practice by employees, agents or independent contractors of Optimer or itsAffiliates, solely or jointly with employees, agents or independent contractorsof Cempra or any Affiliate thereof, in connection with the performance ofOptimer’s obligations under this Agreement, or that relate to Cempra Productsin any manner, except any such Know-How or Inventions that are generated usinggrant monies provided by the United States government to Optimer and whichare, therefore, subject to the limitations and requirements of such grants withrespect to such intellectual property (collectively, all of the foregoing, “*Optimer Inventions*”), and all right,title, and interest in all intellectual property rights appurtenant thereto,shall vest in Cempra, subject to the terms of the license grant set forth in Article 5and Optimer’s ownership of the Optimer Technology and sole or jointownership (as applicable) of Optimer Improvements. Optimer shall notifyCempra promptly in writing and in reasonable detail of any Optimer Inventions.Optimer hereby assigns all right, title, and interest to Optimer Inventions andall intellectual property rights appurtenant thereto to Cempra, and agrees totake all actions and execute all documents, and to cause its Affiliates,employees, agents, and independent contractors to execute all documents andtake all actions, requested by Cempra to effect the purposes of the foregoing.Optimer hereby appoints Cempra as it attorney to effect on its behalf anyassignment of the Optimer Inventions which Optimer has failed to make to Cemprawithin 7 days in accordance with the terms of this Section with theright but not the obligation to do any and all acts and things reasonablynecessary to effect unconditionally such assignment including the right forCempra to execute all deeds, documents or instruments and swear any oaths ordeclarations in the name of and on behalf of Optimer necessary for suchpurpose. Cempra’s appointment as attorney under this Section is given tosecure Cempra’s interest in the Optimer Inventions and intellectual propertyrights appurtenant thereto and to secure the performance of Optimer’sobligations to assign the Optimer Inventions and intellectual property rightsappurtenant thereto in the event of termination and such appointment shall beperpetual and irrevocable, notwithstanding Optimer entering into liquidation,being wound-up or dissolved or having a receiver, manager, administrator,administrative receiver or similar person appointed over any ofits assets.

 

(c)           Subject to Section 7.1(d) below,Optimer and Cempra shall each own any inventions conceived solely by its ownemployees or agents, other than those inventions that are Optimer Inventions (“*Other Sole Inventions*”), including but notlimited to (i) Know-How, conceived or reduced to practice during the termof this Agreement or (ii) such inventions generated using grant monies providedby the United States government to Optimer and which are, therefore,subject to the limitations and requirements of such grants with respect to suchintellectual property. Subject to Section 7.1(d) below, Cempra andOptimer shall each own an undivided one-half interest in any inventionsconceived jointly by employees or agents of both Cempra and Optimer, other thanthose inventions that are Optimer Inventions (“*OtherJoint Inventions*”), 

 

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including but not limited to (i) Know-Howconceived or reduced to practice during the term of this Agreement and (ii) suchinventions generated using grant monies provided by the United Statesgovernment to Optimer and which are, therefore, subject to the limitations andrequirements of such grants with respect to such intellectual property. Subjectto Sections 7.1(d), 7.2, and 7.3 below, each Party may use, protect,license and enforce its own Other Sole Inventions in its discretion. Thedeterminations of inventorship, and each Party’s rights and interests withrespect to Other Joint Inventions and jointly created Know-How relating to suchOther Joint Inventions, shall be the same as provided with respect to patentsunder United States law, and in particular, subject in all cases to theprovisions of this Agreement, either Party may exploit or grant licenses undersuch Other Joint Inventions and jointly created Know-How without a duty ofaccounting to the other Party.

 

(d)           Notwithstandinganything to the contrary, the exclusive license granted in Section 5.1above shall include rights to Optimer Improvements, Optimer’s rights in OtherJoint Inventions and Other Sole Inventions, Optimer’s rights in all Patentsclaiming any of the foregoing, and Optimer’s rights in all Know-How related toall of the foregoing, subject to any nonexclusive rights the United Statesgovernment may have in any of the foregoing, by operation of law pursuant tothe terms of any applicable grants.

 

(e)           Notwithstandinganything to the contrary, the exclusive license granted in Section 5.4above shall include rights to Cempra’s rights in Other Joint Inventions andOther Sole Inventions, Cempra’s rights in all Patents claiming any of theforegoing, and Cempra’s rights in all Know-How related to all ofthe foregoing.

 

**7.2****              Patent Prosecutionand Maintenance of Optimer Patents.**   Optimer shall be responsible for, and beobligated to the extent it is commercially reasonable to diligently pursue, orto cause Optimer’s licensors to diligently pursue, the preparation, filing,prosecution (including but not limited to, by conducting interferences,oppositions and reexaminations or other similar proceedings), maintenance(by timely paying all maintenance fees, renewal fees and other applicablefees and costs), and extension of Patents within the Optimer Patents (includingbut not limited to those claiming Optimer’s Other Sole Inventions). Optimerwill regularly advise Cempra of the status of all pending Optimer Patentapplications, including any related hearings or other proceedings, and, atCempra request, will provide Cempra with copies of all documentation concerningsuch applications, including all correspondence to and from any GovernmentalAuthority. Optimer shall consult with and obtain written consent from Cempraprior to abandoning any Optimer Patent, which consent shall not be unreasonablywithheld, delayed, or conditioned. Optimer will solicit Cempra’s advice andreview of such applications and important prosecution matters related theretoin reasonably sufficient time prior to filing thereof, and will take intoaccount Cempra’s reasonable comments related thereto. The costs of prosecutionand maintenance of Optimer Patents shall be borne by Optimer.

 

**7.3****              Patent Prosecutionand Maintenance of Cempra Patents.**   Cempra shall be responsible for, and beobligated to the extent it is commercially reasonable to diligently pursue, orto cause Cempra’s licensors to diligently pursue, the preparation, filing,prosecution (including but not limited to, by conducting interferences,oppositions and reexaminations or other similar proceedings), maintenance(by timely paying all maintenance fees, renewal fees and other applicablefees and costs), and extension of Patents within the Cempra Patents (includingbut not limited to those claiming Cempra’s Other Sole Inventions). Cempra willregularly advise Optimer of the status of all pending Cempra Patentapplications, including any related hearings or other proceedings, and, atOptimer’s request, will provide Optimer with copies of all documentationconcerning such applications, including all correspondence to and from anyGovernmental Authority. Cempra shall consult with and obtain written consentfrom Optimer prior to abandoning any Cempra Patent, which consent shall not beunreasonably withheld, delayed, or conditioned. Cempra will solicit Optimer’sadvice and review of such applications and important prosecution mattersrelated thereto in reasonably sufficient time prior to 

 

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filing thereof, and will take into account Optimer’s reasonablecomments related thereto. The costs of prosecution and maintenance of CempraPatents shall be borne by Cempra.

 

**7.4****              Patent Prosecutionand Maintenance of Patents Claiming Other Joint Inventions.**   Subjectto Sections 7.7 and 7.8, for Patents claiming Other Joint Inventions(“*Joint Invention Patents*”),Cempra will have, without prejudice to ownership, the first right to prepare,file and prosecute such Patent applications and maintain any resulting Patents;provided, however, that Cempra may request that Optimer undertake suchresponsibilities upon written notice to Optimer, and Optimer may agree to doso, in its sole discretion. If Optimer does not agree to undertake suchresponsibilities within ten (10) days of such request with respect to anysuch Patents, Cempra shall not have any further obligations to prosecute ormaintain such Patents. Within nine (9) months after the filing date of aPatent application in respect of an Other Joint Invention, the Party filingsuch application will request that the other Party identify those non-priority,non-PCT (“foreign”) countries in which the other Party desires that the filingParty file corresponding Patent applications. Within thirty (30) daysafter receipt of such request, the other Party will provide to the filing Partya written list of such foreign countries in which the other Party wishes toeffect corresponding foreign patent application filings. The Parties will thenattempt to agree on the particular countries in which such applications will befiled, provided that in the event agreement is not reached, the issue shall beresolved pursuant to Section 12.3 (“*DesignatedForeign Filings*”). Thereafter, the filing Party will effect all suchDesignated Foreign Filings in a timely manner. It is presumed unless otherwiseagreed in writing by the Parties, that a corresponding PCT application will befiled designating all PCT member countries. Should the Party filing thepriority application not agree to file or cause to be filed a DesignatedForeign Filing, the other Party will have the right to effect such DesignatedForeign Filing.

 

Regardless of which Party is responsible forpreparation, prosecution and maintenance of a Joint Invention Patent, theParties shall share equally all reasonable, documented costs and expensesincurred in connection with procuring Joint Invention Patents (includingentering national phase in all agreed countries), including applicationpreparation, filing fees, prosecution, maintenance and all costs associatedwith reexamination, oppositions and interference proceedings. The filing Partyshall invoice the other Party for such costs and expenses, and the other Partywill pay such invoices within thirty (30) days after receipt.

 

**7.5****              Cooperation.**   TheParties agree to cooperate in the preparation and prosecution of all JointInvention Patent applications filed under Section 7.3, including obtainingand executing necessary powers of attorney and assignments by the named inventors,providing relevant technical reports to the filing Party concerning the OtherJoint Invention disclosed in such Joint Invention Patent applications,obtaining execution of such other documents which will be needed in the filingand prosecution of such Joint Invention Patent applications, and, as requested,updating each other regarding the status of such Joint Invention Patentapplications. The Parties will reasonably cooperate to obtain any exportlicenses that might be required for such activities.

 

**7.6****              Disclosure.**   Eachparty shall make available to the other party in confidence all information inits possession necessary or expedient for the filing of Patents arising out ofsuch party’s performance under this Agreement in all countries of the world.

 

**7.7****              Infringement.**   If inthe opinion of either Party any issued Patent contained in the Optimer Patentshas been infringed by a Third Party, such Party shall give to the other Partyprompt written notice of such alleged infringement.

 

**(a)****           Optimer Patents.**  With respect to any alleged infringement ofany Optimer Patents with respect to the rights granted to Cempra under thisAgreement, Cempra shall have the first and primary right, but not theobligation, to, in its sole discretion, to initiate, prosecute, and control anyaction or legal proceedings, and/or enter into a settlement, including anydeclaratory judgment action, on its behalf or in Optimer’s name, if necessary,with respect to such alleged infringement. 

 

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If, within [***] months of the noticeabove, Cempra (i) shall have been unsuccessful in persuading the allegedinfringer to desist, (ii) shall not have brought and shall not bediligently prosecuting an infringement action, or (iii) has not enteredinto settlement discussions with respect to such infringement, or if Cempranotifies Optimer that it has decided not to undertake any of the foregoingagainst any such alleged infringer, then Optimer shall then have the right tobring suit to enforce such Optimer Patents at its own expense. In any suchlitigation brought by Cempra, Cempra shall have the right to use and sue inOptimer’s name, and Optimer shall cooperate reasonably, as requested by Cempraand at Cempra’s expense (which expense shall be reasonable).

 

**(b)****           Cempra Patents.**   Withrespect to any alleged infringement of any Cempra Patents with respect to therights granted to Optimer under this Agreement, Optimer shall have the firstand primary right, but not the obligation, to, in its sole discretion, toinitiate, prosecute, and control any action or legal proceedings, and/or enterinto a settlement, including any declaratory judgment action, on its behalf orin Cempra’s name, if necessary, with respect to such alleged infringement. If, within[***] months of the notice above, Optimer (i) shall have beenunsuccessful in persuading the alleged infringer to desist, (ii) shall nothave brought and shall not be diligently prosecuting an infringement action, or(iii) has not entered into settlement discussions with respect to suchinfringement, or if Optimer notifies Cempra that it has decided not toundertake any of the foregoing against any such alleged infringer, then Cemprashall then have the right to bring suit to enforce such Cempra Patents at itsown expense. In any such litigation brought by Optimer, Optimer shall have theright to use and sue in Cempra’s name, and Cempra shall cooperate reasonably,as requested by Optimer and at Optimer’s expense (which expense shallbe reasonable).

 

**(c)****           Procedure.   **TheParty pursuing or controlling any action against an alleged infringer pursuantto the foregoing (the “*ControllingParty*”) shall be free to enter into a settlement, consent judgment,or other voluntary disposition of any such action, provided, however, that (i) theControlling Party shall consult with the other Party (the “*Secondary Party*”) prior to entering intoany settlement thereof and (ii) any settlement, consent judgment or othervoluntary disposition of such actions which (1) materially limits thescope, validity, or enforceability of any Optimer Patents (if Optimer isthe Secondary Party) or Patents Controlled by Cempra (if Cempra is theSecondary Party), (2) subjects the Secondary Party to any non-indemnifiedliability or obligation, or (3) admits fault or wrongdoing on the part ofSecondary Party must be approved in writing by Secondary Party, such approvalnot to be unreasonably withheld. Secondary Party shall provide the ControllingParty notice of its approval or denial of such approval within ten (10) businessdays of any request for such approval by the Controlling Party, provided that (i) inthe event Secondary Party wishes to deny such approval, such notice shallinclude a written description of Secondary Party’s reasonable objections to theproposed settlement, consent judgment, or other voluntary disposition and (ii) SecondaryParty shall be deemed to have approved such proposed settlement, consentjudgment, or other voluntary disposition in the event it fails to provide suchnotice within such ten (10) business day period. Any recovery or damagesreceived by the Controlling Party with respect to the infringement of a Party’srights under this Agreement shall be used first to reimburse the Parties forunreimbursed reasonable, documented expenses incurred in connection with suchaction, and the remainder shall be split [***] ([***]%) to Controlling Partyand [***] percent ([***]%) to Secondary Party. Notwithstanding the foregoing,the Secondary Party, at its expense, shall have the right to be represented bycounsel of its choice in any such proceeding.

 

**7.8****              Infringement ofThird Party Rights.**

 

(a)               If a claim is brought by a Third Partyalleging patent infringement by Cempra, Optimer, their Affiliates, or theirsublicensees with respect to the manufacture, use, sale, offer for sale orimportation of Macrolide Antibiotics, Test Products, Cempra Products, orOptimer Products or any third party 

 

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challenges the validity of any claims of any Optimer Patents or CempraPatents, each Party will give prompt written notice to the other Party ofsuch claim.

 

(b)           As between the parties to this Agreement,Cempra shall have the first and primary right at its own expense to defend,control the defense of, and/or settle any such claim against Cempra, itsAffiliates, or its sublicensees in the Territory, using counsel of its ownchoice. Cempra shall be free to enter into a settlement, consent judgment, orother voluntary disposition of such action, provided that any settlement,consent judgment or other voluntary disposition of such actions which (i) materiallylimits the scope, validity, or enforceability of patents included in theOptimer Patents, (ii) subjects Optimer to any nonindemnified liability, or(ii) admits fault or wrongdoing on the part of Optimer must be approved inwriting by Cempra, such approval not being unreasonably withheld. Optimer shallprovide Cempra notice of such approval or denial of such approval within ten (10) businessdays of any request for such approval by Cempra, provided that (i) in theevent Optimer wishes to deny such approval, such notice shall include a writtendescription of Optimer’s reasonable objections to the proposed settlement,consent judgment, or other voluntary disposition and (ii) Optimer shall bedeemed to have approved of such proposed settlement, consent judgment, or othervoluntary disposition in the event it fails to provide such notice within suchten (10) business day period. Optimer agrees to cooperate with Cempra inany reasonable manner deemed by Cempra to be necessary in defending any suchaction. Cempra shall reimburse Optimer for any out of pocket expenses incurredin providing such assistance. Any recovery or damages received by Cempra in anyaction or settlement under this Section 7.7(b) with respect to therights licensed to Cempra under this Agreement shall be used first to reimbursethe Parties for unreimbursed reasonable, documented expenses incurred inconnection with such action, and the remainder shall be split [***] percent([***]%) to Cempra and [***] percent ([***]%) to Optimer. Notwithstanding theforegoing, either Party, at its expense, shall have the right to be representedby counsel of its choice in any such proceeding controlled by theother Party.

 

(c)           As between the parties to this Agreement,Optimer shall have the first and primary right at its own expense to defend,control the defense of, and/or settle any such claim against Optimer, itsAffiliates, or its sublicensees in any ASEAN Countries, using counsel of itsown choice. Optimer shall be free to enter into a settlement, consent judgment,or other voluntary disposition of such action with respect to any ASEANCountries, provided that any settlement, consent judgment or other voluntarydisposition of such actions which (i) materially limits the scope,validity, or enforceability of any Patents owned or Controlled by Cempra, (ii) subjectsCempra to any nonindemnified liability, or (ii) admits fault or wrongdoingon the part of Cempra must be approved in writing by Cempra, such approval notbeing unreasonably withheld. Cempra shall provide Optimer notice of suchapproval or denial of such approval within ten (10) business days of anyrequest for such approval by Optimer, provided that (i) in the eventCempra wishes to deny such approval, such notice shall include a writtendescription of Cempra’s reasonable objections to the proposed settlement,consent judgment, or other voluntary disposition and (ii) Cempra shall bedeemed to have approved of such proposed settlement, consent judgment, or othervoluntary disposition in the event it fails to provide such notice within suchten (10) business day period. Cempra agrees to cooperate with Optimer inany reasonable manner deemed by Optimer to be necessary in defending any suchaction. Optimer shall reimburse Cempra for any out of pocket expenses incurredin providing such assistance. Any recovery or damages received by Optimer inany action or settlement under this Section 7.7(c) with respect tothe rights licensed to Optimer under this Agreement shall be used first toreimburse the Parties for unreimbursed reasonable, documented expenses incurredin connection with such action, and the remainder shall be split [***] percent([***]%) to Optimer and [***] percent ([***]%) to Cempra. Notwithstanding theforegoing, either Party, at its expense, shall have the right to be representedby counsel of its choice in any such proceeding controlled by theother Party.

 

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**7.9****              Reimbursement.**  Each Party shall invoice the other Party forany reasonable, documented costs incurred that are to be borne by the otherParty pursuant to this Article 7. Each Party shall pay the other Partysuch amounts within thirty (30) days of its receipt of anysuch invoice.

 

**7.10****           Trademarks.**  Cempra may, in its sole discretion, selecttrademarks for Cempra Products and shall own all such trademarks world-wide. Tothe extent Cempra pursues trademarks for Cempra Products, as between theparties, Cempra shall have the sole responsibility for the filing, prosecutionand maintenance of registrations of product trademarks for Cempra Products, atits sole expense. Optimer shall not have any rights to any trademarks of Cempraunder this Agreement; provided that, if it is commercially reasonable to do so,Cempra shall, at Optimer’s request, license such trademarks under a separateagreement to Optimer for use in the ASEAN Countries. Optimer may, in its solediscretion, select trademarks for Optimer Products and shall own all suchtrademarks world-wide. To the extent Optimer pursues trademarks for OptimerProducts, as between the parties, Optimer shall have the sole responsibilityfor the filing, prosecution and maintenance of registrations of producttrademarks for Optimer Products, at its sole expense. Cempra shall not have anyrights to any trademarks of Optimer under this Agreement; provided that, if itcommercially reasonable to do so, Optimer shall, at Cempra’s request, licensesuch trademarks under a separate agreement to Cempra for use inthe Territory. 

 

**8.****         CONFIDENTIALITY**

 

**8.1****              Treatment ofConfidential Information.**  TheParties agree that during the Term, and for a period of five (5) yearsafter the end of the Term, a Party receiving Confidential Information of theother Party will (a) maintain in confidence such Confidential Informationto the same extent such Party maintains its own proprietary industrialinformation of similar kind and value (but at a minimum each Party shalluse commercially reasonable efforts), (b) not disclose such ConfidentialInformation to any Third Party without prior consent of the other Party, and (c) notuse such Confidential Information for any purpose except those permitted bythis Agreement.

 

**8.2***             ***Exceptions.** A Party shall not have the obligations set forth in Section 8.1with respect to any portion of such Confidential Information that it can showby adequate documentation:

 

**(a)**           is publicly disclosedby the disclosing Party, either before or after it becomes known to thereceiving Party;

 

**(b)**           was known to thereceiving Party, without obligation to keep it confidential, prior to when itwas received from the disclosing Party, as demonstrated by receiving Party’swritten records;

 

**(c)**           is subsequentlydisclosed to the receiving Party without obligation of confidentiality orlimitation on use by a Third Party lawfully in possession thereof withoutobligation to keep it confidential;

 

**(d)**           has been published by aThird Party; or

 

**(e)**           has been independentlydeveloped by the receiving Party without the aid, application or use ofConfidential Information.

 

**8.3****              AuthorizedDisclosure.**  Notwithstanding Section 8.1,a Party may disclose Confidential Information belonging to the other Party tothe extent such disclosure is necessary in the following instances:

 

**(a)**           filing or prosecutingPatents pursuant to Article 7;

 

**(b)**           Regulatory Filings;

 

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**(c)**           prosecuting ordefending litigation relating to Macrolide Antibiotics, Test Productsor Products;

 

**(d)**           complying withapplicable laws and governmental regulations; and

 

**(e)**           disclosure, inconnection with the performance of this Agreement or exercise of the licensesor rights conveyed herein, to Affiliates, licensees, sublicensees, employees,consultants, or agents of either Party, each of whom prior to disclosure mustbe bound by substantially similar obligations of confidentiality and non-use atleast equivalent in scope to those set forth in this Article 8.

 

**8.4****              Terms of theAgreement.**  The Parties acknowledgethat the terms of this Agreement shall be treated as Confidential Informationof both Parties. Such terms may be disclosed by a Party to individuals orentities covered by 8.3(e) above, each of whom prior to disclosure must bebound by similar obligations of confidentiality and non-use at least equivalentin scope to those set forth in this Article 8. Disclosure of the terms ofthis Agreement (but not other Confidential Information received from theother Party) may also be made, under obligations of confidentiality and non useat least equivalent in scope to those set forth in this Article 8, toactual or potential bankers, lenders, investors, acquirors, acquisitiontargets, and strategic partners of either Party.

 

**8.5****              Publicity.**  The public announcement of the execution ofthis Agreement is set forth on *Schedule 8.5*hereto. Each Party shall be entitled, in its sole discretion, to make publicannouncements regarding its Development and Commercialization of Products,subject to the other Party’s opportunity to review and comment with respectthereto provided below. In addition, either Party may make a public statement,including in analyst meetings, concerning the Agreement or the progress of theTest Products or Products where such statement is required by law, applicablestock exchange regulation or legal proceedings. In connection with any filingdescribed in the foregoing sentence, such Party shall use commerciallyreasonable efforts to obtain confidential treatment of economic and tradesecret information. In any event, the Parties agree to take all reasonableaction to avoid disclosure of Confidential Information except as permittedhereunder, and shall cooperate with each other with respect to all suchdisclosures. The Party that is required to or has otherwise decided to make apublic statement pursuant permitted under this Section 8.5 will give theother Party reasonable advance notice of the text of any proposed statement sothat the other Party will have the opportunity to comment upon the statement.Either Party may disclose any matter that has previously been publiclydisclosed in accordance with this Section 8.5. Except as described above,neither Party will make any public announcement regarding the terms of orevents related to the Agreement without the prior consent of theother Party.

 

**8.6****              Publications.**  Neither Optimer nor its employees,contractors or investigators shall publish or present any information,including without limitation the results of the Research Program or preclinicalor clinical studies, with respect to any Macrolide Antibiotic, Test Product orCempra Product without Cempra’s prior consent (which may be withheld in Cempra’ssole and final discretion), except as permitted under Section 8.3(d) or thisSection 8.6. Optimer agrees to provide Cempra a copy of any such proposedpublication or presentation at least 60 days prior to its submission forpublication, and Cempra shall have 60 days in which to review the proposedpublication or presentation for the purposes described below. Cempra mayrequest in writing, and the Optimer shall agree to, (i) the deletion ofany of Cempra’s Confidential Information, (ii) any reasonable changesrequested by Cempra, consistent with scientific practice, or (iii) a delayof such proposed submission for an additional period, not to exceed ninety(90) days, in order to protect the potential patentability of anytechnology described therein. Cempra, at its election, shall be entitled toreceive in any such publication an acknowledgment of its support of andinvolvement in the Research Program and its rights to Optimer Technology.

 

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**9.****         TERM AND TERMINATION**

 

**9.1****              Term.**  This Agreement shall become effective on theEffective Date and shall continue on a Product-by-Product (Cempra Product orOptimer Product, as applicable) and country-by-country basis until the earlierof (1) the expiration of the Royalty Term with respect to the applicableProduct (Cempra Product or Optimer Product, as applicable) in the applicablecountry; or (2) the effective date of termination pursuant to Section 9.2or 9.3 (the “*Term*”).Upon expiration of this Agreement pursuant to clause (1) above withrespect to a particular Product in a particular country, the Parties and theirAffiliates shall have the perpetual, unrestricted, fully-paid, royalty-freeworld-wide right, with rights of sublicense, to make, use, sell, offer forsale, and import such Product in such country.

 

**9.2****              Termination by Cempraor Optimer.**  Cempra may terminatethis Agreement at any time upon thirty (30) days prior written notice toOptimer. At any time following the end of the Research Term, Optimer mayterminate this Agreement upon thirty (30) days prior written notice to Cempra.In either case, the effects of such termination shall be as further describedin Section 9.4 below.

 

**9.3****              Mutual TerminationRights.**  Either Party will have theright to terminate this Agreement upon the following:

 

**(a)**           It believes that theother Party is in material breach of this Agreement, in which case thenon-breaching Party may deliver written notice of such material breach to theother Party, such notice to describe in detail the nature of such breach. Theallegedly breaching Party shall have [***] days from receipt of suchnotice to cure such breach. Any such termination shall become effective at theend of such [***] period unless the breaching Party has cured any such breachor default prior to the expiration of such [***] period (or, if such default iscapable of being cured but cannot be cured within such [***]-day period, thebreaching Party has commenced and diligently continued actions to cure suchdefault provided always that, in such instance, such cure must have occurredwithin [***] days after notice thereof was provided to the breaching Partyby the non-breaching Party to remedy such default); or

 

**(b)**           the other Party isgenerally unable to meet its debts when due, or makes a general assignment forthe benefit of its creditors, or there shall have been appointed a receiver,trustee or other custodian for such Party for or a substantial part of itsassets, or any case or proceeding shall have been commenced or other actiontaken by or against such Party in bankruptcy or seeking the reorganization,liquidation, dissolution or winding-up of such Party or any other relief underany bankruptcy, insolvency, reorganization or other similar act or law, and anysuch event shall have continued for sixty (60) days undismissed, unstayed,unbonded and undischarged. In such circumstances, the other Party may, uponnotice to such Party, terminate this Agreement, such termination to beeffective upon such Party’s receipt of such notice.

 

**9.4****              Effects ofTermination.**

 

**(a)**           Except as set forth in Sections 9.1,9.4(b), 9.4(c), and 9.4(d), upon any termination of this Agreement, alllicenses granted under this Agreement shall terminate, Cempra and itsAffiliates shall cease Development and Commercialization of all MacrolideAntibiotics, Test Products and Cempra Products, and Optimer and its Affiliatesshall cease development and/or commercialization of Optimer Products, providedthat, notwithstanding the foregoing, each Party and its Affiliates shall havethe privilege, subject to the payment of royalties as required under Section 6,of (i) completing the manufacture of any Products in the process ofmanufacture as of the effective date of such termination (the “*Termination Date*”), (ii) selling suchProducts and all finished Products in their possession or under their controlas of the Termination Date for a period of one year following the TerminationDate upon commercially reasonable conditions, and (iii) completingperformance of all contracts entered into with third parties prior to theTermination Date (1) for the marketing, sale, or manufacture of Productsor (2) requiring the use of Products or technology claimed in the OptimerPatents or Cempra Patents, 

 

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as applicable, for a period of one year following the Termination Date.Notwithstanding any provision herein to the contrary, no termination of thisAgreement by either Party shall be construed as a termination of any validsublicense granted by the other Party, its Affiliates, or its sublicensees withrespect to the rights granted under this Agreement. Upon termination of thisAgreement by a Party each sublicense of rights granted to a Third Party by theother Party shall, to the extent not imposing obligations on the other Party inexcess of those contained herein, be automatically assigned to such Party.

 

**(b)**           If a Party terminates this Agreement inaccordance with Section 9.2, then, at the other Party’s express electionupon notice of termination, all licenses granted by the terminating Party tothe non-terminating Party shall survive, in which event, the non-terminatingParty’s obligations set forth in Article 4 and in Article 6(including without limitation the obligation to pay to the terminating Partyany milestone and/or royalty payments set forth in Article 6and provide the reports set forth therein), the non-terminating Party’srights under Section 7, and al other provisions of this Agreementapplicable to the foregoing, other than Sections 1A, 2, and 3 (which shallterminate), shall survive. It is understood and agreed that following such atermination, the terminating Party shall retain the right to terminate theother Party’s remaining licenses and rights in accordance with Section 9.3,and the non-terminating Party shall retain the right to subsequently terminateits remaining licenses and rights under this Agreement pursuant to Section 9.2,in which event the applicable provisions of Section 9.4(a) shall apply.

 

**(c)**           If Cempra terminates this Agreement inaccordance with Section 9.3, then at Cempra’s express election upon noticeof termination, all licenses and rights granted by Optimer to Cempra shallsurvive, in which event Cempra’s obligations set forth in Article 4and in Article 6 (including without limitation the obligation to payto Optimer the royalty and milestone payments set forth in Article 6and provide the reports set forth therein), Cempra’s rights under Section 7,and all other provisions of this Agreement applicable to the foregoing, otherthan Sections 1A, 2, and 3 (which shall terminate), shall survive. It isunderstood and agreed that following such a termination, Optimer shall retainthe right to terminate the remaining licenses and rights of Cempra inaccordance with Section 9.3, and Cempra shall retain the right tosubsequently terminate its remaining licenses and rights under this Agreementpursuant to Section 9.2, in which event the applicable provisions of Section 9.4(a) shall apply.

 

**(d)**           If Optimer terminates this Agreement inaccordance with Section 9.3, then at Optimer’s express election uponnotice of termination, all licenses and rights granted by Cempra to Optimershall survive, in which event Optimer’s obligations set forth in Article 4and in Article 6 (including without limitation obligation to pay toCempra the royalty and milestone payments set forth in Article 6and provide the reports set forth therein), Optimer’s rights under Article 7,and all other provisions of this Agreement applicable to the foregoing, otherthan Sections 1A, 2, and 3 (which shall terminate), shall survive. It isunderstood and agreed that following such a termination, Cempra shall retainthe right to terminate the remaining licenses and rights of Optimer inaccordance with Section 9.3, and Optimer shall retain the right tosubsequently terminate its remaining licenses and rights under this Agreementpursuant to Section 9.2, in which event the applicable provisions of Section 9.4(b) shall apply.

 

**(e)**           Termination of this Agreement shall notterminate the obligations of a Party to make any payments then owing throughthe date of termination or the obligations of confidentiality imposed oneither Party.

 

**(f)**            The remedies set forth in this Article 9are not exclusive, and shall not limit any other legal or equitable remediesthat are available to the parties.

 

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**9.5***         ***Survival.**  The following provisions shall survive anyexpiration or termination of this Agreement: Sections 5.6, 6.15, 7, 8, 9,10, 11, 12 and 13, together with any sections referenced in such survivingprovisions or necessary to give them effect.

 

**10.****         ****REPRESENTATIONS ANDWARRANTIES**

 

**10.1***       ***GeneralRepresentations and Warranties.**  Each Party represents and warrants to theother that, as of the date hereof:

 

**(a)**           it is duly organized andvalidly existing under the laws of its state or country of incorporation, andhas full corporate power and authority to enter into this Agreement and tocarry out the provisions hereof;

 

**(b)**           it is duly authorized toexecute and deliver this Agreement and to perform its obligations hereunder,and the person or persons executing this Agreement on its behalf has been dulyauthorized to do so by all requisite corporate action;

 

**(c)**           this Agreement is legallybinding upon it and enforceable in accordance with its terms. The execution,delivery and performance of this Agreement by it does not conflict with anyagreement, instrument or understanding, oral or written, to which it is a partyor by which it may be bound, nor violate any material law or regulation of anyGovernmental Authority having jurisdiction over it;

 

**(d)**           it is aware of no action,suit or inquiry or investigation instituted by any governmental agency thatquestions or threatens the validity of this Agreement;

 

**(e)**           all necessary consents,approvals and authorizations of all governmental authorities and other Personsrequired to be obtained by such Party to enter into, or perform its obligationsunder, this Agreement have been obtained (provided, however, that the foregoingshall not be construed as a representation or warranty concerning governmentalauthorizations and non-infringement of intellectual property rights of ThirdParties disclaimed in Section 10.3 below).

 

**(f)**            it has not granted, and willnot grant during the Term of the Agreement, any right to any Third Party thatwould conflict with the rights granted to the other Party hereunder. It has(or will have at the time the performance is due) maintained and willmaintain and keep in full force and effect all agreements necessary to performits obligations hereunder;

 

**(g)**           all products, materials andInformation created by the Parties under this Agreement is current andaccurate, is such Party’s original work (except for identified third-partymaterials), and, to such Party’s knowledge, will not infringe upon, violate ormisappropriate any intellectual property right of any third party; and

 

**(h)**           to the extent any third-partymaterials are incorporated in the products, such Party has obtained from suchthird party rights (if any) reasonably sufficient to enable the such Partyto comply with this Agreement.

 

**10.2***       ***OptimerRepresentations and Warranties.**  Optimer represents, warrants, andcovenants that:

 

**(a)**           Optimer has not, and duringthe term of the Agreement will not, grant any right to any Third Party relatingto Optimer Technology which conflicts with the rights granted to Cemprahereunder;

 

**(b)**           During the Term, Optimerwill not, without the prior written consent of Cempra, encumber the OptimerPatents or Optimer Know-How, respectively, with liens, mortgages, securityinterests or another similar interest that would give the holder the right toconvert the interest into ownership, unless the encumbrance is expresslysubject to the licenses herein;

 

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**(c)**           Optimer has (or willhave at the time performance is due) maintained and will maintain and keep infull force and effect all agreements necessary to perform its obligationshereunder;

 

**(d)**           Optimer does not have anypresent knowledge from which it would reasonably conclude that the OptimerPatents are invalid or that their exercise would infringe patent rights of anyThird Party;

 

**(e)**           The Optimer Patents listedon *Schedule 1.30* are, as ofthe Effective Date, the only patents or patent applications owned, controlled,or licensed by Optimer claiming Macrolide Antibiotics, Test Products, CempraProducts, Optimer Technology, or the manufacture, use or application of any ofthe foregoing.

 

**(f)**            To the best of Optimer’sknowledge, each item included in the Optimer Patents that is registered, filedor issued under the authority of an appropriate governmental authority is andat all times has been in compliance with all legal requirements applicablethereto, and all filings, payments, and other actions required to be made ortaken to maintain such item of Optimer Patents in full force and effect havebeen made by the applicable deadline. Furthermore, (1) no patentapplication or patent included in the Optimer Patents has been abandoned orallowed to lapse and (2) no provisional patent application includedtherein has expired without the filing of a nonprovisional patent applicationthat claims the benefit of such provisional patent application.

 

**(g)**           Optimer has, to theknowledge of Optimer’s executive management, furnished to Cempra all tangiblemanifestations of the Optimer Technology which Optimer owns or possesses as ofthe Effective Date;

 

**(h)**           Optimer has takencommercially reasonable measures, using its good faith business judgment, toprotect the confidentiality of the Optimer Know How;

 

**(i)**            None of the Optimer Patentsis the subject of any pending interference, opposition, cancellation or otherprotest proceeding;

 

**(j)**            Optimer has no knowledge ofany claim pending, threatened, or previously made alleging infringement ormisappropriation of any patent, trade secret, or other intellectual propertyright of any Third Party relative to the Optimer Patents, the technologyclaimed therein, Optimer Know How, Test Products, Macrolide Antibiotics, orCempra Products; and

 

**(k)**           Optimer is not aware of anythird party activities which would constitute misappropriation or infringementof the Optimer Technology (including but not limited to Optimer Patents);

 

**(l)**            Optimer owns all right,title, and interest to all Optimer Technology, free and clear of any liens,claims, and encumbrances of any party, and none of the Optimer Technology hasbeen obtained by Optimer pursuant to any license or other agreement with anythird party;

 

**(m)**          Optimer does not presentlyown or Control any rights to any trademarks, service marks, trade dress, orsimilar intellectual property rights with respect to Cempra Products orMacrolide Antibiotics.

 

**10.3***       ***CempraRepresentations and Warranties.**  Optimer represents, warrants, andcovenants that:

 

**(a)**           Cempra has not, and duringthe term of the Agreement will not, grant any right to any Third Party relatingto Cempra Patent, Cempra Product, or Cempra Know-How which conflicts with therights granted to Optimer hereunder;

 

**(b)**           During the Term, Cempra willnot, without the prior written consent of Optimer, encumber the Cempra Patentsor Cempra Know-How, respectively, with liens, mortgages, security 

 

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interests or another similar interest that would give the holder theright to convert the interest into ownership, unless the encumbrance isexpressly subject to the licenses herein; and

 

**(c)**           Cempra has (or willhave at the time performance is due) maintained and will maintain and keep infull force and effect all agreements necessary to perform its obligationshereunder.

 

**10.4***       ***DisclaimerConcerning Technology.**  EACHPARTY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS ORIMPLIED, EXCEPT FOR THOSE SET FORTH IN THIS AGREEMENT, INCLUDING WITHOUTLIMITATION THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULARPURPOSE. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, (A) BOTHPARTIES ACKNOWLEDGE AND AGREE THAT THE ACTIVITIES TO BE CONDUCTED UNDER THERESEARCH PROGRAM ARE INHERENTLY UNCERTAIN AND, PROVIDED THAT EACH PARTY ENGAGESIN DILIGENT EFFORTS TO PERFORM ITS OBLIGATIONS HEREUNDER, THAT THERE AREOTHERWISE NO ASSURANCES THAT THE PARTIES WILL SUCCESSFULLY SYNTHESIZE MACROLIDEANTIBIOTICS MEETING THE SPECIFICATIONS SET FORTH BY CEMPRA AND OPTIMER JOINTLYOR IDENTIFY A TEST PRODUCT, OR SUCCESSFULLY CONDUCT OTHER ACTIVITIESCONTEMPLATED TO BE PERFORMED IN THE RESEARCH PROGRAM, OR THAT ANY MACROLIDEANTIBIOTICS OR TEST PRODUCT WILL BE SUCCESSFULLY DEVELOPED AND COMMERCIALIZEDBY CEMPRA AS A LICENSED PRODUCT, OR THAT REQUIRED GOVERNMENTAL APPROVALS IN CONNECTIONWITH THE MANUFACTURE, CLINICAL DEVELOPMENT AND/OR COMMERCIALIZATION OFMACROLIDE ANTIBIOTICS, TEST PRODUCTS AND/OR LICENSED PRODUCTS CAN OR WILL BEOBTAINED; AND (B) EACH PARTY EXPRESSLY DISCLAIMS ANY REPRESENTATIONS ORWARRANTIES, EXPRESS OR IMPLIED, TO THE CONTRARY. 

 

**11.****         ****INDEMNITIES**

 

**11.1***       ***MutualIndemnification.**  Subject to Section 11.2,each Party hereby agrees to indemnify, defend and hold the other Party, itsAffiliates, its licensees, and its and their officers, directors, employees,consultants, contractors, sublicensees and agents (collectively, “*Representatives*”) harmless from andagainst any and all damages or other amounts payable to a Third Party claimant,as well as any reasonable attorneys’ fees and costs of litigation arising out ofany such Claim (as defined in this Section 11.1), (collectively, “*Damages*”) resulting from claims, suits,proceedings or causes of action (“*Claims*”)brought by a Third Party against a Party or its Representatives based on: (a) materialbreach by the indemnifying Party of this Agreement, (b) breach of anyapplicable law, rule, or regulation by such indemnifying Party in connectionwith the performance of its obligations hereunder or the exercise of licensesor rights conveyed hereunder, (c) gross negligence or willful misconductby such indemnifying Party, its Affiliates, or their respective employees,contractors or agents, (d) the indemnifying Party’s Development,Commercialization, manufacture, use or sale of Macrolide Antibiotics, TestProducts, or Products, except, in each case, to the extent such Damages aresubject to indemnification by the other Party under this Section 11.1.

 

**11.2***       ***Notification.**  In the event that any Third Party asserts aclaim with respect to any matter for which a Party (the “*Indemnified Party*”) is entitled toindemnification hereunder (a “*ThirdParty Claim*”), then the Indemnified Party shall promptly notify theParty obligated to indemnify the Indemnified Party (the “*Indemnifying Party*”) thereof; provided,however, that no delay on the part of the Indemnified Party in notifying theIndemnifying Party shall relieve the Indemnifying Party from any obligationhereunder unless (and then only to the extent that) the Indemnifying Partyis prejudiced thereby. Indemnifying Party may assume the complete control ofthe defense, compromise or settlement of any Third Party Claim (provided thatany settlement of any Third Party Claim that (i) subjects IndemnifiedParty to any non-indemnified liability or (ii) admits fault or wrongdoingon the 

 

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partof Indemnified Party will require the prior written consent of such IndemnifiedParty, provided such consent will not be unreasonably withheld), including, atits own expense, employment of legal counsel, and at any time thereafterIndemnifying Party will be entitled to exercise, on behalf of IndemnifiedParty, any rights which may mitigate the extent or amount of such Third PartyClaim; *provided*, *however*, that if Indemnifying Party hasexercised its right to assume control of such Third Party Claim, IndemnifiedParty (i) may, in its sole discretion and at its own expense, employ legalcounsel to represent it (in addition to the legal counsel employed byIndemnifying Party) in any such matter, and in such event legal counselselected by Indemnified Party will be required to reasonably confer andcooperate with such counsel of Indemnifying Party in such defense, compromiseor settlement for the purpose of informing and sharing information withIndemnifying Party; (ii) will, at Indemnifying Party’s own expense, makeavailable to Indemnifying Party those employees, officers, contractors, anddirectors of Indemnified Party whose assistance, testimony or presence isnecessary or appropriate to assist Indemnifying Party in evaluating and indefending any such Third Party Claim; *provided*,*however*, that any such accesswill be conducted in such a manner as not to interfere unreasonably with theoperations of the businesses of Indemnified Party; and (iii) will otherwisefully cooperate with Indemnifying Party and its legal counsel in theinvestigation and defense of such Third Party Claim.

 

**11.3***       ***Exclusionof Damages.**  IN NO EVENTSHALL EITHER PARTY OR ITS AFFILIATES BE LIABLE TO THE OTHER PARTY FOR ANYINDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES,WHETHER BASED UPON A CLAIM OR ACTION OF CONTRACT, WARRANTY, NEGLIGENCE, STRICTLIABILITY OR OTHER TORT, OR OTHERWISE, ARISING OUT OF THIS AGREEMENT, UNLESSSUCH DAMAGES ARE DUE TO THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THELIABLE PARTY. NOTWITHSTANDING ANYTHING TO THE CONTRARY, THE FOREGOING SHALL NOTBE CONSTRUED TO LIMIT THE INDEMNITY OBLIGATIONS SET FORTH IN SECTION 11.1ABOVE OR EITHER PARTY’S LIABILITY FOR PATENT INFRINGEMENT OR BREACH OFSECTIONS 8 (CONFIDENTIALITY), 7 (INTELLECTUAL PROPERTY), 5.1 (WITH RESPECTTO CEMPRA’S BREACH THEREOF), OR 5.4 (WITH RESPECT TO OPTIMER’S BREACH THEREOF).

 

**12.****         ****DISPUTE RESOLUTION**

 

**12.1***       ***Disputes.**  The Parties recognize that disputes as tocertain matters may from time to time arise during the Term that relate toeither Party’s rights and/or obligations hereunder. It is the objective of theParties to facilitate the resolution of disputes arising under this Agreementin an expedient manner by mutual cooperation and without resort to litigationor arbitration. To accomplish this objective, the Parties agree that, in theevent of any disputes, controversies or differences that may arise between theParties, out of or in relation to or in connection with this Agreement, or forthe breach thereof, upon the request of either Party, the Parties agree to meetand discuss in good faith a possible resolution thereof. If the matter is notresolved within thirty (30) days following the request for discussions, eitherParty may refer the matter to arbitration in accordance with Section 12.3below. Notwithstanding the foregoing, each Party shall be entitled to seekappropriate injunctive relief in any court of competent jurisdiction (i) topreserve such Party’s rights pending resolution of arbitration proceedingsunder this Agreement, (ii) to avoid irreparable damages, or (iii) withrespect to any matters concerning intellectual property rights orconfidentiality.

 

**12.2***       ***GoverningLaw.**  Resolution of all disputes arisingout of or related to this Agreement or the performance, enforcement, breach ortermination of this Agreement and any remedies relating thereto, shall begoverned by and construed under the substantive laws of the State ofCalifornia, without regard to conflicts of law rules that would providefor application of the law of a jurisdiction outside California.

 

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**12.3***       ***Arbitration.**  Except as otherwise expressly providedherein, the Parties agree that any dispute not resolved internally by theParties, within thirty (30) days after meeting pursuant to Section 12.1,shall be finally resolved, upon notice to the other Party by either Party, bybinding arbitration in accordance with the provisions of this Section 12.3.The arbitration shall be conducted by the Judicial Arbitration and Mediationservices, Inc. (“JAMS”) under its rules of arbitration then ineffect, except as modified in this Agreement. Each Party shall select one (1) independent,neutral arbitrator experienced in the biotechnology/pharmaceutical industry,and the two (2) arbitrators so selected shall choose a third independent,neutral arbitrator experienced in the biotechnology/pharmaceutical industry. Inthe event a Party fails to select its such arbitrator within fifteen(15) business days of its receipt of the notice provided above, the otherParty shall be entitled to select such arbitrator. The arbitrators shall usetheir best efforts to rule on each disputed issue within sixty(60) calendar days after completion of hearings on the matter(s) indispute, and the arbitration decision(s) shall be rendered in writing tothe Parties and must specify the basis(es) on which the decision(s) was(were)made. Such decision(s) shall be binding and not be appealable to any courtin any jurisdiction. Unless otherwise mutually agreed upon by the Parties, thearbitration proceedings shall be conducted in New York, New York. Oneor more of the Parties to any arbitration proceeding commenced under thisAgreement shall be entitled, as a part of the arbitration award, to the costsand expenses (including reasonable attorneys fees and interest on any award) ofinvestigating, preparing and pursuing an arbitration claim to the extent thatthe arbitrators award such costs and expenses, provided that, notwithstandingthe foregoing, the Parties shall bear the costs and expenses incurred inconnection with an arbitration under this section in inverse proportion to theaward granted to each of them by the arbitrators. 

 

**13.****         ****MISCELLANEOUS**

 

**13.1***       ***EntireAgreement; Amendment.**  ThisAgreement, including the exhibits attached hereto, sets forth the complete,final and exclusive agreement and all the covenants, promises, agreements,warranties, representations, conditions and understandings between the Partieshereto and supersedes and terminates all prior agreements and understandingsbetween the Parties, including the Letter Agreement. There are no covenants,promises, agreements, warranties, representations, conditions or understandings,either oral or written, between the Parties other than as are set forth hereinand therein. No subsequent alteration, amendment, change or addition to thisAgreement shall be binding upon the Parties unless reduced to writing andsigned by an authorized officer of each Party.

 

**13.2***       ***ForceMajeure.**  Both Partiesshall be excused from the performance of their obligations under this Agreementto the extent that such performance is prevented by force majeure and thenonperforming Party promptly provides notice of the prevention to the otherParty. Such excuse shall be continued so long as the condition constitutingforce majeure continues and the nonperforming Party takes reasonable efforts toremove the condition. For purposes of this Agreement, force majeure shallinclude conditions beyond the control of the Parties, including withoutlimitation, an act of God, voluntary or involuntary compliance with anyregulation, law or order of any government, war, civil commotion, labor strikeor lock-out, epidemic, failure or default of public utilities or commoncarriers, destruction of production facilities or materials by fire,earthquake, storm or like catastrophe; *provided*,*however*, the payment of invoicesdue and owing hereunder shall not be delayed by the payer because of a forcemajeure affecting the payer, unless such force majeure specifically precludesthe payment process.

 

**13.3***       ***Notices.**  Any notices, approvals, or consents requiredor permitted to be given under this Agreement shall be in writing, shall specificallyrefer to this Agreement and shall be deemed to have been sufficiently given forall purposes if mailed by first class certified or registered mail, postage 

 

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prepaid,or by internationally recognized express delivery service or personallydelivered. Unless otherwise specified in writing, the mailing addresses of theParties shall be as described below:

 
|   |   | For  Optimer: | Optimer  Pharmaceuticals, Inc.   10110 Sorrento Valley Rd., Suite C   San Diego, CA 92121   FEIN: 33-0830300   Fax: (858) 909-0737   Attention: Michael N. Chang, President/CEO |
|--------|--------|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |          |                                                                                                                                                                                                |
|   |   | For  Cempra:  | Cempra  Pharmaceuticals Inc.   170 Southport Drive, Suite 500   Morrisville, NC 27560   Fax: (919) 467-1716   Attention: Dr. Prabha Fenandes, President/CEO                |

 

**13.4***       ***United StatesDollars.**  Referencesin this Agreement to “Dollars” or “$” shall mean the legal tender of theUnited States of America.

 

**13.5***       ***No StrictConstruction.**  ThisAgreement has been prepared jointly and shall not be strictly construed againsteither Party.

 

**13.6***       ***Assignment.**  Neither Party may assign or transfer thisAgreement or any rights or obligations hereunder without the prior consent ofthe other; *provided*, *however*, that a Party may make such anassignment without the other Party’s consent (a) to an Affiliate or inconjunction with a merger, acquisition, or sale of all or substantially all ofthe business or assets of such Party to which this Agreement pertains, or (b) ifsuch Party or its Affiliates is required to, or reasonably believes that itwill be required to, divest any Product or a competing product in order tocomply with law or the order of any Governmental Authority as a result of amerger or acquisition. This Agreement shall be binding upon and inure to thebenefit of the successors and permitted assigns of the Parties. Any assignmentor attempted assignment by either Party in violation of the terms of this Section 13.6shall be null and void and of no legal effect.

 

**13.7***       ***Counterparts.**  This Agreement may be executed in two or morecounterparts, each of which shall be deemed an original, but all of whichtogether shall constitute one and the same instrument.

 

**13.8***       ***FurtherActions.**  Each Partyagrees to execute, acknowledge and deliver such further instruments (including withoutlimitation patent assignments), and to do all such other acts, as may benecessary or appropriate in order to carry out the purposes and intent ofthis Agreement.

 

**13.9***       ***Severability.**  If any one or more of the provisions of thisAgreement is held to be invalid or unenforceable by any court of competentjurisdiction from which no appeal can be or is taken, or in arbitrationproceedings between the Parties as set forth in Article 12 of thisAgreement, the provision shall be considered severed from this Agreement andshall not serve to invalidate any remaining provisions hereof. The Partiesshall make a good faith effort to replace any invalid or unenforceableprovision with a valid and enforceable one such that the objectivescontemplated by the Parties when entering into this Agreement maybe realized.

 

**13.10***     ***Headings.**  The headings for each article and section inthis Agreement have been inserted for convenience of reference only and are notintended to limit or expand on the meaning of the language contained in theparticular article or section.

 

**13.11***     ***No Waiver.**  Any delay in enforcing a Party’s rights underthis Agreement or any waiver as to a particular default or other matter shallnot constitute a waiver of such Party’s rights to the future 

 

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enforcementof its rights under this Agreement, excepting only as to an express written andsigned waiver as to a particular matter for a particular period of time.

 

**REMAINDER OF PAGE INTENTIONALLY LEFT BLANK**

 

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**IN WITNESS WHEREOF**, the Parties have executedthis Agreement in duplicate originals by their proper officers as of the dateand year first above written.

 
| **CEMPRA PHARMACEUTICALS INC.** | **OPTIMER PHARMACEUTICALS, INC.** |
|--------------------------------------|----------------------------------------|
| ** **                           | ** **                             |
| BY:                                  |                                   |   | BY: |   |
|                                 |                                   |   |   |   |
| NAME:                                |                                   |   | NAME: |   |
|                                 |                                   |   |   |   |
| TITLE:                               |                                   |   | TITLE: |   |

 

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**Schedule 1.35**

 

**OptimerPatents**

 

**Macrolide Patent Estate**

 
| **“Macrolides and Process for  Their Preparation” 8024-006-PR** | ** ** | **(3/10/2003)**                            | ** ** | **Lapsed** | ** ** | **Provisional** | ** ** | **The application has converted to PCT  application, 8024-006-WO.**                                                                                                                                                                                                                             | ** ** |
|---------------------------------------------------------------------------|------------|--------------------------------------------|------------|------------|------------|-----------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
|                                                                      | ** ** | ** **                                 |       |       |       |            |       |                                                                                                                                                                                                                                                                                            |       |
| “Novel Antibacterial Agents”, 8024-006-WO                       | ** ** | **WO2004080381/****23-Sep-04  (3/5/2004)** |       | Published  |       | PCT             |       | The application claims  composition of matter comprising 14 membered macrolide triazole compounds  and/or 14 membered macrolide compounds with novel suger or sugar mimic  moieties at C5 position. The PCT application was published and has entered  national phase in US, Europe and Canada. |       |
| 8024-006-US                                                               |       | (9/9/2005)                                 |       | Pending    |       | US              |       | Notice of Acceptance and  Filing Receipt received on 1/12/06. Projected publication date 5/11/06.                                                                                                                                                                                               |       |
| 8024-006-CA                                                               |       | (12/19/2005)                               |       | Pending    |       | Canada          |       |                                                                                                                                                                                                                                                                                            |       |
| 8024-006-EP                                                               |       | (1/11/2006)                                |       | Pending    |       | Europe          |       |                                                                                                                                                                                                                                                                                            |       |

 

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**Schedule 6.1(1)**

 

**Subscription Agreement**

** **

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**Schedule 6.1(2)**

**Shareholders Agreement**

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**Schedule 8.5**

**Press Release**

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December 31, 2008

 

Optimer Pharmaceuticals, Inc.

10110 Sorrento Valley Road,Suite C

San Diego, California 92121

 

Attention:  John Prunty, Chief Financial Officer

 

Cempra Pharmaceuticals, Inc. (the “Company”) and OptimerPharmaceuticals, Inc. (“Optimer”) are parties to that certain CollaborativeResearch and Development and License Agreement dated March 31, 2006 (the“License Agreement”).  Pursuant toSections 6.2(a) and 6.2(b) of that License Agreement, Optimer may elect, uponwritten request to the Company, that it be paid certain milestone payments inshares of Cempra capital stock (“Cempra Capital Stock”) rather than in cash,such Cempra Capital Stock having a Fair Market Value calculated as of the datethe respective milestone is achieved equal to the value of the milestonepayments, as the case may be.  Allcapitalized terms not otherwise defined in this Letter Agreement shall have themeanings ascribed to them in the License Agreement.  

 

As you may be aware, the Company plans to engage in a reorganization wherebythe Company will merge with Cempra Merger Corp. (“MergeCo”), a Delawarecorporation and wholly-owned subsidiary of Cempra Holdings, LLC, a Delawarelimited liability company (the “Holding Company”).  Upon such merger, the separate corporateexistence of MergeCo will terminate, the Company will remain as the survivingentity and the stockholders of the Company will receive units of the HoldingCompany (“Holding Company Units”) in exchange for their shares of CempraCapital Stock (the “Reorganization”). The rights belonging to each respective class or series of HoldingCompany Units will be essentially the same as those of the corresponding classor series of Cempra Capital Stock. Subsequent to the Reorganization, the Company will distribute its sharesof CEM-102 Pharmaceuticals, Inc., the Company’s wholly-owned subsidiary thatholds assets unrelated to the technology licensed under the License Agreement,to the Holding Company (the “Spin-Off”).

 

As a result of the Reorganization and Spin-Off, it is currentlyintended that the equity holdings for the combined company will be held, andthe ultimate liquidity for that equity will be realized, at the Holding Companylevel.  Therefore, the parties find itnecessary to modify Sections 1.15, 6.2(a), 6.2(b) and 6.2(e) of the LicenseAgreement, which refer to Cempra Capital Stock in the context of milestonepayments described in Sections 6.2(a) and 6.2(b) of the License Agreement, to referto Holding Company equity.  This letteragreement reflects the parties’ mutual intent to modify those Sections so as touse the term “Holding Company Units” in lieu of “Cempra Capital Stock” in eachphase where used or referenced.  Except asspecifically modified herein, the License Agreement shall remain in full forceand effect as originally executed.

 

By their execution below, the parties agree that, upon the completionof the Reorganization, the references to “Cempra Capital Stock” in Sections 1.15,6.2(a), 6.2(b) and 6.2(e) of the License Agreement will be modified to become “HoldingCompany Units” (as defined in this Letter Agreement).  By its execution below, the Holding Companyagrees to issue Holding Company Units to Optimer when, if and as required underthe terms of the License Agreement, as modified by this Letter Agreement.

 

** **

**[THE NEXT PAGE IS THE SIGNATURE PAGE]**

 

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** **
| **CEMPRA  PHARMACEUTICALS, INC.** | **OPTIMER  PHARMACEUTICALS, INC.**                 |
|-----------------------------------|----------------------------------------------------|
| ** **                        | ** **                                         |
| ** **                        | ** **                                         |
| By:                               | /s/  Prabhavathi Fernandes                         |   | By: | /s/ John  Prunty |
|                              |   Prabhavathi  Fernandes, Ph.D.          |   |   John  Prunty |
|                              |   Chief  Executive Officer and President |   |   Chief  Financial Officer |
|                              |                                               |   |
|                              |                                               |   |
| **CEMPRA  HOLDINGS, LLC**         | ** **                                         | ** ** |
| ** **                        | ** **                                         | ** ** |
| ** **                        | ** **                                         | ** ** |
| By:                               | /s/  Prabhavathi Fernandes                         |   |   |
|                              |   Prabhavathi  Fernandes, Ph.D.          |   |   |
|                              |   Chief  Executive Officer and President |   |   |
|                                   |                                                    |  |  |  |

 

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