Document:

QuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 10.4    
    

	 	 	***Text Omitted and Filed Separately

CONFIDENTIAL TREATMENT REQUESTED

Under 17 C.F.R. §§ 200.80(b)(4) and 230.406

 
 

COLLABORATIVE RESEARCH AND DEVELOPMENT AND LICENSE AGREEMENT

        THIS COLLABORATIVE RESEARCH AND DEVELOPMENT AND LICENSE AGREEMENT
(the "Agreement") is entered into as of March 31, 2006 (the "Effective Date") by
and between OPTIMER PHARMACEUTICALS INC., a Delaware corporation with its offices located at 10110 Sorrento Valley Road, Suite C, San
Diego, California 92121 ("Optimer"), and CEMPRA PHARMACEUTICALS, INC., a Delaware corporation
with its offices located at 170 Southport Drive, Suite 500, Morrisville, NC 27560. Optimer and Cempra may be referred to herein individually as a
"Party" or collectively, as the "Parties." 

 
 

RECITALS

        WHEREAS, Optimer is a biopharmaceutical company engaged in the discovery and development of pharmaceutical
products using its proprietary carbohydrate synthesis technology; 

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

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

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

        WHEREAS, Optimer is willing to synthesize Macrolide Antibiotics using its proprietary carbohydrate synthesis technology, assist Cempra in
the development thereof, and is prepared to grant Cempra a license under such technology to allow Cempra to develop and commercialize pharmaceutical products arising from this relationship; 

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

1.    DEFINITIONS    

        1.1   "Affiliate" means a person, corporation, partnership, or other entity that controls, is controlled by or is under common
control with a Party. For the purposes of this Section 1.1, the word "control" (including, with correlative meaning, the terms "controlled by" or "under the common control with") means the
actual power, either directly or indirectly through one or more intermediaries, to direct the management and policies of such entity, whether by the ownership of at least fifty percent (50%) of the
voting stock of such entity, or by contract or otherwise. 

        1.2   "ASEAN Countries" means all member nations of the Association of Southeast Asian Nations as of the Effective Date. 

        1.3   "Cempra Know-How" means any Know-How which is developed or acquired and Controlled by Cempra or
its Affiliates during the term of this Agreement that is necessary and useful for the research, development, manufacture, importation, use, or sale of Cempra Products. 

        1.4   "Cempra Patents" means any Patents, other than Optimer Patents, which are Controlled by Cempra or its Affiliates during
the term of this Agreement and that claim the manufacture, importation, use or sale of Macrolide Antibiotics or Cempra Products. 

 

        1.5   "Cempra Product" means a pharmaceutical product (including but not limited to Combination Products or those comprised of
one or more Test Products, Macrolide Antibiotics, or any analogs or derivatives of either of the foregoing) for which the use, sale, or manufacture thereof would, but for the licenses granted Cempra
hereunder, infringe the Optimer Patents in the country in which such product is sold by Cempra, an Affiliate thereof, or a Third Party sublicensee of either of the foregoing. 

        1.6   "Collaboration" means all activities performed by or on behalf of Optimer or Cempra in the course of the Research Program
with respect to the Development and Commercialization of Test Products and Cempra Products. 

        1.7   "Combination Product" means a pharmaceutical product (i) containing (x) in the case of Cempra, an active
pharmaceutical ingredient for which, if included in a pharmaceutical product as the sole active pharmaceutical ingredient the use, sale, or manufacture thereof would, but for the licenses granted
Cempra hereunder, infringe the Optimer Patents in the country in which such product is sold by Cempra, an Affiliate thereof, or a Third Party sublicensee of either of the foregoing, or (y) in
the case of Optimer, an active pharmaceutical ingredient which (I) contains a Macrolide Antibiotic, Test Product, or derivative or analog of either of the foregoing, (II) is a Cempra
Product, or (III) whose manufacture, sale, or use is covered in any ASEAN Country by a Valid Claim of any Cempra Patent, Joint Invention Patent, or foreign counterpart of any Optimer Patent;
and (ii) one or more other pharmaceutically active ingredients for which rights are not included in the license granted to (x) Cempra under this Agreement, with respect to Cempra
Products, or (y) Optimer, with respect to Optimer Products. 

        1.8   "Commence" or "Commencement", when used to describe a Phase 1
Trial, Phase 2 Trial, Phase 3 Trial, or Phase 4 Trial, means the first dosing of the first patient for such trial. 

        1.9   "Commercialization" means all activities that are undertaken after Regulatory Approval of an NDA for a particular Product
and that relate to the commercial marketing and sale of such Product including advertising, marketing, promotion, distribution, and Phase 4 Trials. 

        1.10 "Confidential Information" means all Information, and other information and materials, received by either Party from the
other Party pursuant to this Agreement that: (i) is designated as confidential at the time of disclosure or promptly thereafter; (ii) under the circumstances surrounding disclosure
should be treated as confidential by the receiving Party, or (iii) by reason of its nature would be treated as confidential by a reasonable receiving party, which would include, without
limitation, trade secrets.. 

        1.11 "Control" means, with respect to any intellectual property right, that a Party owns or has a license to such item or
right, and has the ability to grant a license or sublicense in or to such right as set forth herein without violating the terms of 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 and clinical drug
development activities, which may include but is not limited to research, pre-clinical, clinical and regulatory activities directed towards obtaining Regulatory Approval of a Product,
including but not limited to the performance by Optimer of its obligations and Cempra of its responsibilities under 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 the efforts a Party
devotes to research, development or marketing of a pharmaceutical product or products of similar market potential, profit potential or strategic value resulting from its own research efforts, taking
into account technical and regulatory factors, target product profiles, product labeling, past performance, costs, economic return, the regulatory environment and competitive market conditions in the
therapeutic area, all based on conditions then prevailing, and subject to and in 

2

 

consideration
of, in each case, the resources available to such Party and within such Party's organization for such efforts. Diligent Efforts requires that a Party, at a minimum, assign responsibility
for such obligations to specific employees, sets and seeks to achieve specific and meaningful objectives for carrying out such obligations, and consistently makes and implements decisions designed and
allocates resources reasonably sufficient to advance progress with respect to such objectives. 

        1.15 "Fair Market Value" means the fair market value of Cempra capital stock on the date the relevant milestone is achieved
under Section 6.2(a) or (b), as applicable, which shall be determined as follows: 

        (a)   if the Cempra capital stock to be issued under Section 6.2(a) or (b) is traded on a public securities
exchange or through the Nasdaq National Market, the fair market value thereof shall be deemed to be
the average of the closing prices of such security on such exchange over the 30-day period ending three (3) business days prior to the date such security was received; 

        (b)   if the Cempra capital stock to be issued under Section 6.2(a) or (b) is actively traded
over-the-counter, the fair market value thereof shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the 30-day period
ending three (3) business days prior to the date such security was received; or 

        (c)   If there is no active public market for 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's Board of Directors based on a reasonable consideration of all relevant factors. 

        1.16 "FDA" means the United States Food and Drug Administration, or any successor federal agency thereto. 

        1.17 "Field" means all human and animal diagnostic and therapeutic uses. 

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

        1.19 "FTE" means the equivalent of 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, a single individual who works more than
1800 hours in a single year shall be treated 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 States Code
of Federal Regulations, at the time of testing, and all FDA and ICH guidelines, including the ICH Consolidated Guidelines on Good Clinical Practices. 

        1.21 "Good Laboratory Practices" or "GLP" means current Good Laboratory Practices as specified in the United States
Code of Federal Regulations at 21 CFR § 58 at the time of testing and all applicable ICH guidelines. 

        1.22 "Good Manufacturing Practices" or "GMP" means current Good Manufacturing Practices and standards as provided for
(and as amended from time to time) in European Community Directive 91/356/EEC (Principles and Guidelines of Good Manufacturing Practice for Medicinal Products) and in the Current Good
Manufacturing Practice Regulations of the United States Code of Federal Regulations Title 21 (21 CFR §§ 210-211) in relation to the production
of pharmaceutical intermediates and active pharmaceutical ingredients, as interpreted by ICH Harmonized Tripartite Guideline, Good Manufacturing Practice Guide for Active Pharmaceutical Ingredients,
and subject to any arrangements, additions or clarifications agreed from time to time between the Parties. 

3

 

        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 or Phase 4
Trial the subject of which includes a Test Product or Product. 

        1.25 "IND" means an Investigational New Drug Application filed with the FDA or the equivalent application or filing
filed with any equivalent agency or government authority outside of the United States (including any supra-national agency such as in the European Union) necessary to Commence human clinical
trials in such jurisdiction, and including all regulations at 21 CFR § 312 et. esq., and equivalent foreign regulations. 

        1.26 "Information" means information, results and data of any type whatsoever, including without limitation, 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, stability data, studies and procedures, and patent and other legal information or descriptions. 

        1.27 "Invention" means any discovery, invention, improvement, concept or idea, whether or not patentable, conceived or
reduced to in the course of the activities conducted pursuant to this Agreement, together with all intellectual property rights relating 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, expert opinions 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 synthesis of 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 Agreement or the Letter Agreement, (ii) [***] (including but not limited to
[***]), and (iii) any derivatives or analogs of any of the foregoing. For avoidance of doubt, the parties expressly agree that Macrolide Antibiotics shall not mean any
18-membered-lactone-ring-based compound (e.g., Optimer's OPT-80). 

        1.31 "NDA" means a New Drug Application filed with the FDA or the equivalent application or filing filed with any
equivalent Governmental Authority outside of the United States necessary for approval of a drug in such jurisdiction. 

        1.32 "Net Sales" means 

        (a)   with respect to a Product (subject to subsections (b) and (c) below), the amount received by a Party or its
Affiliate or a Third Party sublicensee for sales of such Product to Third Parties, excluding reasonable sales returns, allowances and rebates actually paid, granted or accrued, including, without
limitation, trade, quantity and cash discounts and any other reasonable adjustments actually allowed, including, but not limited to, those granted on account of price adjustments (including
retroactive price adjustments), billing errors, rejected goods, damaged or defective goods, recalls, returns, rebates, chargeback rebates, reimbursements or similar payments granted or given to
wholesalers or other distributors, buying groups, health care insurance carriers or other institutions, pharmacy benefit management companies, health maintenance organizations or other health care
organizations, or any governmental or regulatory authority or agency (including their purchasers and/or reimbursers), adjustments arising from consumer discount programs, customs or excise duties,
tariffs, sales tax, 

4

 

consumption
tax, value added tax, and other taxes (except income taxes) or duties relating to sales, and similar payments respect to the United States government, any state government, any
local government, or any foreign government, or to any governmental or regulatory authority in respect of sales, and freight, handling, and insurance; and 

        (b)   in
the case of Combination Products, 

          (i)  if
a Party and/or its Affiliate and/or any Third Party sublicensee of either of the foregoing separately sells in such country during such year when it sells such
Combination Product both (1) one or more Products containing solely one particular active pharmaceutical ingredient and (2) products containing other pharmaceutically active
ingredient(s) that are also contained in such Combination Product, the Net Sales attributable to such Combination Product during such year shall be calculated by multiplying actual Net Sales of such
Combination Product by the fraction A/(A+B) where: A is such Party's (or its Affiliate's or Third Party sublicensee's, as applicable) average Net Sales price per daily dose during such year for each
Product(s) in such Combination Product in such country and B is the sum of the average of such Party's (or its Affiliate's or Third Party sublicensee's, as applicable) net sales price per daily dose
during such year in such country, for each product(s) containing the other pharmaceutically active ingredient(s) in such Combination Product (other than the Product); 

         (ii)  if
a Party and/or its Affiliate and/or any Third Party sublicensee of either of the foregoing separately sells, in such country during such year when it sells such
Combination Product, one or more Products containing solely one particular active pharmaceutical ingredient entity but do not separately sell, in such country, other products containing the other
active ingredient(s) that are also contained in such Combination Product, the Net Sales attributable to such Combination Product during such year shall be calculated by multiplying the Net Sales of
such Combination Product by the fraction A/C where: A is the applicable Party's (or its Affiliate's or Third Party sublicensee's, as applicable) average Net Sales price per daily dose during such year
for each Product in such Combination Product in such country, and C is such Party's (or its Affiliate's or Third Party sublicensee's, as applicable) average Net Sales price per daily dose during such
year for the Combination Product in such country; and 

        (iii)  if
a Party and/or its Affiliates and/or their Third Party sublicensees do not separately in such country during such year sell products containing each active
pharmaceutical ingredient in the Combination Product, then the Net Sales attributable to such Combination Product may, following mutual agreement of the Parties concerning the applicable fair market
values, be determined by multiplying the Net Sales of such Combination Product by the fraction D/(D+E) where D is the fair market value of the portion of the Combination Product that contains the
Product with a single active pharmaceutical ingredient and E is the fair market value of the portion of the Combination Product containing the other pharmaceutically active ingredient(s) and the
delivery device included in such Combination Product, as such fair market values are reasonably determined by mutual agreement of the Parties in good faith. In the event that the Parties are unable to
mutually agree upon appropriate fair market values for D and E as set forth herein, such matter may be referred to arbitration as set forth in Section 12.3 below. 

        (c)   In
the case of discounts on "bundles" of separate products or services which include Products, a Party may with notice to the other Party discount the bona fide list
price of a Product by the average percentage discount of all products of such Party (the "Selling Party") and/or its Affiliates or Third Party
sublicensees in a particular "bundle", calculated as follows: 

	 	 	Average percentage	 	 	 	 
	 	 	discount on a	 	=	 	1 - (X/Y) × 100
	 	 	particular "bundle"	 	 	 	 

5

 

where
X equals the total discounted price of a particular "bundle" of products, and Y equals the sum of the undiscounted bona fide list prices of each unit of every product in such "bundle". The
Selling Party shall provide the other Party documentation reasonably supporting such average discount with respect to each "bundle." If a Product in a "bundle" is not sold separately, and no bona fide
list price exists for such Product, the parties shall negotiate in good faith a reasonable imputed list price for such Product and Net Sales with respect thereto shall be based on such imputed list
price; provided, however, that in the event that the Parties are unable to mutually agree upon appropriate imputed list price as set forth herein, then such matter may be referred to arbitration as
set forth in Section 12.3 below. 

        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 be useful 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
Effective Date, or which is developed or acquired by and Controlled by Optimer or its Affiliates during the term of this Agreement, including but not limited to any Know-How related to
Optimer Improvements, that is necessary or useful for the research, development, manufacture, importation, use or sale of the Macrolide Antibiotics, Test Products or Cempra Products. 

        1.35 "Optimer Patents" means any Patents Controlled by Optimer or its Affiliates as of the Effective Date or which are
developed and Controlled, or licensed to and Controlled, by Optimer or its Affiliates during the term of this Agreement, that are necessary or useful for the research, development, manufacture,
importation, use or sale of Macrolide Antibiotics, Test Products, or Cempra Products, including without limitation, 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) developed and/or commercialized
by Optimer in any ASEAN Country that (i) contains a Macrolide Antibiotic, Test Product, or derivative or analog of either of the foregoing, (ii) is a Cempra Product, or
(iii) whose manufacture, sale, or use is covered in any ASEAN Country by a Valid Claim of any Cempra Patent, Joint Invention Patent, or foreign counterpart of any Optimer Patent. For avoidance
of doubt, the parties expressly agree that, for purposes of this Agreement (including, but not limited to, Optimer's royalty payment obligation set forth in Article 6), Optimer Products shall
not include any product which incorporates an 18-membered-lactone-ring-based compound as an active pharmaceutical ingredient (e.g., Optimer's
OPT-80) unless such product incorporates an additional active pharmaceutical ingredient which itself (or the mechanism of action of which) independently renders such product 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 (including inventor's certificate)
that has not been held invalid or unenforceable by a court of competent jurisdiction from which no appeal can be taken or has been taken within the required time period, including without limitation
any substitution, extension, registration, confirmation, reissue, re-examination, renewal or any like filing thereof; or (b) any pending United States or foreign patent
application, including without limitation any continuation, division or continuation-in-part thereof and any provisional application. 

        1.39 "Phase 1 Trial" means a clinical trial that generally provides for the first introduction into humans of a
Product with the primary purpose of determining safety, metabolism and pharmacokinetic properties and clinical pharmacology of the Product, and generally consistent with 21 CFR
§ 312.21(a). 

6

 

        1.40 "Phase 2 Trial" means a clinical trial of a Product on patients, including possibly pharmacokinetic studies, the
principal purpose of which is to make a preliminary determination that such Product is safe for its intended use and to obtain sufficient information about such Product's efficacy to permit the design
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 a Product, which trial
is designed to: (a) establish that a Product is safe and efficacious for its intended use; (b) define warnings, precautions and adverse reactions that are associated with the Product in
the dosage range to be prescribed; (c) support Regulatory Approval of such Product; and (d) generally consistent with 21 CFR § 312.21(c). 

        1.42 "Phase 4 Trial" means clinical trial of a Product Commenced in a particular country after Regulatory Approval for
such Product in such country in order to support commercialization of the Product. 

        1.43 "Product" means an Optimer Product or Cempra Product, as appropriate. 

        1.44 "Regulatory Approval" means any and all approvals (including supplements, amendments, pre- and
post-approvals, pricing and reimbursement approvals), licenses, registrations or authorizations of any national, supra-national (e.g., the European Commission or the Council of the
European Union), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity, that are necessary for the manufacture, distribution, use or, in the
Commercializing Party's reasonable judgment, sale of a Product in a regulatory jurisdiction. 

        1.45 "Regulatory Authority" means any Governmental Authority with responsibility for granting any licenses or approvals
necessary for the marketing and sale of pharmaceutical products including, without limitation, the FDA and any drug regulatory authority of countries of the European Union, and Japan, and where
applicable any ethics committee or any equivalent review board. 

        1.46 "Regulatory Filing" means the NDA, biologic license application ("BLA"), IND, or any foreign counterparts thereof and
any other filings required by regulatory authorities relating to the study, manufacture or commercialization of any Product. 

        1.47 "Research Program" means the activities conducted by Optimer and Cempra pursuant to the obligations and responsibilities
set forth in a Work Plan and Budget established by the Parties pursuant to this Agreement. 

        1.48 "Research Term" means the period commencing on the Effective Date and continuing until the earlier of
(i) completion by Optimer of the tasks assigned to Optimer in the Work Plan and Budget or (ii) the second anniversary of the Effective Date, subject to any extensions thereof agreed to
by the Parties in writing. 

        1.49 "Royalty Term" means, on a country-by-country and Product-by-Product
basis: 

        (a)   For Cempra Products, the period commencing on the First Commercial Sale thereof in a particular country and continuing
until the later of (a) the last to expire Valid Claim of an Optimer Patent covering the manufacture, use or sale of such Cempra Product in such country or (b) ten (10) years
following the First Commercial Sale of such Cempra Product in such country; and 

        (b)   For Optimer Products, the period commencing on the First Commercial Sale thereof in a particular country and continuing
until the later of (a) the last to expire Valid Claim of a Cempra Patent covering the manufacture, use or sale of such Optimer Product in such country or (b) ten (10) years
following the First Commercial Sale of such Optimer Product in such country. 

        1.50 "Sublicensing Revenue" means net revenue received from Third Party sublicensees, other than royalties or other payments
calculated on the basis of sales of Cempra Products, directly and solely as consideration for Cempra's or its Affiliates' sublicensing to Third Parties (other than Cempra Affiliates) of the rights to
Optimer Patents licensed to Cempra and its Affiliates under this Agreement, including but not limited to upfront and milestone payments, but excluding (i) [***] 

        1.51 "Term" has the meaning assigned to it in Section 9.1. 

        1.52 "Territory" means worldwide, excluding ASEAN Countries. 

7

   
        1.53 "Test Product" means a Macrolide Antibiotic or derivative or analog thereof that has been designated 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) an Affiliate of either
of them. 

        1.55 "Valid Claim" means a claim of any pending patent application or any issued, unexpired United States or granted
foreign patent within any Patent that has not been dedicated to the public, disclaimed, abandoned or held invalid or unenforceable by a court or other body of competent jurisdiction from which no
further appeal can be taken, and that has not been explicitly disclaimed, or admitted by the Party Controlling such Patent in writing to be invalid or unenforceable or of a scope not covering Products
through reissue, disclaimer or 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, the Parties shall establish a "Joint Steering Committee" as described in this Section 1A. The Joint Steering Committee shall exist during the Research Term. The Joint Steering Committee
shall, subject to applicable provisions of this Agreement concerning 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) monitor and oversee the Parties' progress thereunder, advise the Parties with respect thereto, and develop, review,
and approve any changes or amendments to the Work Plan and Budget, such changes and amendments to be effective upon approval thereof by the Joint Steering Committee and agreement by (i) Optimer
with respect to obligations of Optimer (such agreement not to be unreasonably withheld) or (ii) Cempra with respect to responsibilities of Cempra, provided that, notwithstanding the foregoing,
the Joint Steering Committee shall have no authority to amend the body of this Agreement. Each party shall indicate in writing within five (5) business days of approval by the Joint Steering
Committee whether or not it agrees to its proposed obligations or responsibilities, and, if not agreeing to its proposed obligations or responsibilities, provide its reasonable objections thereto. In
the absence of such written notice within such five (5) business day period, a party shall 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 to pursue alternative solutions therefor. Notwithstanding anything to the
contrary in this Agreement,
the Joint Steering Committee shall have no rights or responsibilities, and Cempra shall have no obligations with respect to the Joint Steering Committee, following the Research Term. 

        1A.2    Membership.    The Joint Steering Committee will be comprised
of an equal number of representatives from each Party. The exact number of such representatives shall be as agreed upon by the Parties, but no event shall such number be less than two (2) nor
more than five (5) for each Party. Each Party shall provide the other with a list of its initial members of the Joint Steering Committee promptly after the Effective Date. Each Party may
replace any or all of its representatives on the Joint Steering Committee at any time upon written notice to the other Party. Any member of the Joint Steering Committee may designate a substitute to
attend and perform the functions of that member at any meeting of the Joint Steering Committee. Each Party may, in its reasonable discretion, invite non-member representatives of such
Party to attend meetings of the Joint Steering Committee. 

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

8

 

alternate
between the offices of the Parties or 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 or
consulted from time to time by means of telecommunications, video conferences, electronic mail or correspondence, as deemed necessary or appropriate, provided that the Parties hold at least one
face-to-face meeting each year. Each Party shall bear all costs and expenses relating to its members' attendance at meetings of the Joint Steering Committee. 

        1A.4    Decision-Making.    The Joint Steering Committee shall use
good faith efforts to operate and make decisions by consensus, provided that in the event the Joint Steering Committee is unable to reach consensus regarding any matter before the Joint Steering
Committee within a reasonable period of time not to exceed ten (10) business days, Cempra shall have the tie-breaking vote to resolve such deadlock and determine the Joint Steering
Committee's final decision regarding such matter, including but not limited to approval of any Work Plan and Budget, or any changes thereto, consistent with the parameters described below, provided
that no Work Plan or Budget shall be effective without the written agreement of (i) Optimer with respect to any obligations of Optimer thereunder (such agreement not to be unreasonably
withheld) and (ii) Cempra with respect to any responsibilities of Cempra thereunder (such agreement not to be unreasonably withheld). Each party shall indicate in writing within five
(5) business days of approval by the Joint Steering Committee whether or not it agrees to its proposed obligations or responsibilities, and, if not agreeing to its proposed obligations or
responsibilities, provide its reasonable objections thereto. In the absence of such written notice within such five (5) business day period, a party shall 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 to
pursue alternative solutions therefor. 

2.    MANAGEMENT OF THE RESEARCH PROGRAM    

        2.1    General.    The general purpose of the Collaboration described
in Sections 2 and 3 of this Agreement is to synthesize, develop and commercialize Macrolide Antibiotics for sale as Cempra Products. If and as determined by the Joint Steering Committee,
Optimer shall synthesize Macrolide Antibiotics and conduct preliminary research and biological testing on such Macrolide Antibiotics according to a Work Plan and Budget that has been developed and
approved by the Joint Steering Committee and agreed upon by Optimer and Cempra (such agreement not to be unreasonably withheld). Each party shall indicate in writing within five (5) business
days of approval by the Joint Steering Committee whether or not it agrees to the Work Plan or Budget approved by the Joint Steering Committee and, if not agreeing thereto, provide its reasonable
objections thereto. In the absence of such written notice within such five (5) business day period, a party shall be deemed to have agreed to such Work Plan and Budget. Cempra shall, as
determined by the Joint Steering Committee, conduct (or have conducted by Third Parties) preclinical and animal testing on such Macrolide Antibiotics synthesized by Optimer. Based on the
results of such research, the Joint Steering Committee may designate certain Macrolide Antibiotics as Test Products for preclinical testing and further development by Cempra. Cempra shall be solely
responsible, at its expense, for animal testing, preclinical and clinical development of such Test Products, including as may be provided for in a Work Plan and Budget approved by the Joint Steering
Committee and agreed upon (i) by Optimer with respect to Optimer's obligations thereunder (such agreement not to be unreasonably withheld) and (ii) Cempra with respect to Cempra
responsibilities thereunder. Each party shall indicate in writing within five (5) business days of approval by the Joint Steering Committee whether or not it agrees to its proposed obligations
or responsibilities, and, if not agreeing to such obligations or responsibilities, provide its reasonable objections thereto. In the absence of such written notice within such five (5) business
day period, a party shall 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 to pursue alternative solutions therefor. For so long as Cempra retains its license hereunder, and except as provided for performance by 

9

 

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 terms and
conditions of this Agreement, including without limitation the payments owed to Optimer for such Cempra Products as set forth in Article 6. 

        2.2    Information Exchange.    During the Research Term, Optimer and
Cempra shall keep the Joint Steering Committee fully and regularly informed of their activities (and the activities of their Affiliates and/or sublicensees) in connection with their conduct of
the Research Program and the Development and Commercialization of Test Products and Cempra Products, and shall diligently respond to any other reasonable requests by the Joint Steering Committee or
the other Party for information. Each Party will provide the Joint Steering Committee (during the Research Term) and the other Party (during the entire term of this Agreement) with formal written
progress reports of its activities under this Agreement, no less than twice per year. 

        2.3    Independence.    Subject to the terms of this Agreement and any
applicable Work Order and Budget, the activities and resources of each Party shall be managed by such Party, acting independently and in its individual capacity. The relationship between Optimer and
Cempra is that of independent contractors and neither Party shall have the power to bind or obligate the other Party in any manner, other than as is expressly set forth in this Agreement. 

3.    CONDUCT OF THE RESEARCH PROGRAM    

        3.1    Work Plan and Budget.    The Research Program shall be carried
out by Optimer and Cempra according to a written work plan setting forth the obligations of Optimer and responsibilities of Cempra (the "Work
Plan") and budget providing for Cempra's funding of Optimer's obligations thereunder (the "Budget"). The Work Plan shall
set forth in reasonable detail the obligations of Optimer and responsibilities of Cempra with respect to the Research Program, including the identity and number of Macrolide Antibiotics that Optimer
shall endeavor to synthesize and formulate for animal testing, and shall include the desired quantities of such Macrolide Antibiotics, timeframe for delivery, technical specifications
(the "Specifications"), and the Budget shall set forth the budget for such synthesis and formulation work by Optimer. The Joint Steering
Committee shall develop an initial Work Plan and Budget and shall submit such plan to Optimer and Cempra for review and approval, such approval not to be unreasonably withheld, within thirty
(30) days following the execution of this Agreement. In the absence of a party's written approval of or reasonable objection to the Work Plan and Budget within five (5) business days of
its submission to the parties by the Joint Steering Committee, a party shall be deemed to have agreed to such Work Plan and Budget. The Work Plan and Budget may be amended from time to time by the
Joint Steering Committee during the Research Term, based upon the data obtained in the Research Program or from Cempra's independent activities, provided such amendments do not violate or contradict
any provision of this Agreement. In the event of an inconsistency or disagreement between the Work Plan and Budget and this Agreement, the terms of this Agreement shall prevail. 

        3.2    Work Performed to Date.    The Parties acknowledge that initial
research and Macrolide Antibiotics synthesis activities have been conducted by the Parties pursuant to the Letter Agreement (the "Initial
Research"). All Initial Research, including any Macrolide Antibiotics, Information, inventions, know-how, data, information, or other intellectual property rights
created pursuant to the Initial Research, is deemed included within the scope of this Agreement. No amounts shall be due Optimer by Cempra for the conduct of the Initial Research. 

        3.3    Synthesis of Macrolide Antibiotics and Biological
Testing.    The Joint Steering Committee shall, during the Research Term, determine the Macrolide Antibiotics designated for synthesis and Development under this
Agreement, and Optimer shall provide its advice and comment with respect thereto. The Joint Steering Committee shall determine which Macrolide Antibiotics will be the subject of synthesis and
Development as part of Optimer's performance under the Research Program, and 

10

 

Optimer
shall provide its advice and comment with respect thereto, provided that Optimer shall have no obligation to perform such synthesis and Development without its consent (such consent not to be
unreasonably withheld). Optimer shall indicate in writing within five (5) business days 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
such obligations and Cempra shall be free to seek alternative solutions therefor. The Joint Steering Committee shall, during the Research Term, designate the initial 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 Diligent Efforts to
synthesize Macrolide Antibiotics that have been designated by the Joint Steering Committee for synthesis, to conduct biological testing on such Macrolide Antibiotics, and to provide such Macrolide
Antibiotics in reasonable quantities to Cempra as determined by the Joint Steering Committee. If and as included in the Work Plan and Budget, Optimer shall use Diligent Efforts to synthesize and
conduct biological testing with respect to each Macrolide Antibiotic according to applicable Specifications for such Macrolide Antibiotics, and to produce and provide to Cempra a sufficient quantity
of each Macrolide Antibiotic to allow Cempra to conduct further Development of such Macrolide Antibiotics. Optimer shall use Diligent Efforts to provide additional quantities of each Macrolide
Antibiotics to Cempra at Cempra's reasonable request on an as needed basis. The reasonable, documented direct expense of manufacturing additional quantities of Macrolide Antibiotics will be paid for
by Cempra as set forth in the Work Plan and Budget. 

        3.4    Preclinical Testing and Human Clinical Testing.    Cempra may
perform, in its sole discretion and at its own expense, after, during the Research Term, providing reasonable opportunity for advice and comment by the Joint Steering Committee, preclinical testing on
Macrolide Antibiotics that have been synthesized by Optimer or any other Cempra Products of Cempra's choosing. Based on the results of any such preclinical testing, the Joint Steering Committee may,
subject to the advice and comment of Cempra and Optimer, determine whether additional Macrolide Antibiotics should be synthesized or developed by Optimer for preclinical testing, or whether any
existing Macrolide Antibiotics should be reformulated by Optimer (or a Third Party) for further testing. The Joint Steering Committee may, subject to Optimer's and Cempra's approval (such
approval not to be unreasonably withheld), amend or revise the applicable Work Plan and Budget accordingly to allow for such additional synthesis or reformulation activities. Each party shall indicate
in writing within five (5) business days of approval by the Joint Steering Committee whether or not it approves of such amendment or revision, as applicable, and, if not approving thereof,
provide its reasonable objections thereto. In the absence of such a written response from a particular party within such five (5) business day period, a party shall be deemed to have rejected
such amendment or revision to the extent it proposes 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 to pursue independent solutions with respect to the subject matter of the rejected amendment or revision. Cempra shall, after,
during the Research Term, providing reasonable opportunity for advice and comment by the Joint Steering Committee, have the right to designate one or more of such Macrolide Antibiotics as Test
Products for human clinical testing. In the event that Cempra enrolls a patient for human clinical testing of any Macrolide Antibiotics prior to formal designation of such Macrolide Antibiotics as a
Test Product, such Macrolide Antibiotics shall be deemed to have been designated as a Test Product upon enrollment of the first such patient. If a Test Product does not achieve desirable results
during Phase 1 Trials, then, if and as requested by the Joint Steering Committee, subject to Optimer's consent (such consent not to be unreasonably withheld), Optimer shall use Diligent Efforts
to reformulate such Test Product according to specifications established by the Joint Steering Committee. Any such reformulation activities shall be reflected in a revised Work Plan and Budget to be
developed and approved by the Joint Steering Committee, negotiated in good faith, and agreed 

11

 

upon
by the Parties (such agreement not to be unreasonably withheld), and the reasonable, documented, direct costs incurred by Optimer for such reformulation and related additional testing of a Test
Product by Optimer shall be borne by Cempra pursuant to such Budget. Each party shall indicate in writing within five (5) business days of approval by the Joint Steering Committee whether or
not it agrees to such revised Work Plan and Budget, and, if not agreeing to its proposed additional obligations or responsibilities contained therein, provide its reasonable objections thereto. In the
absence of providing such written notice within such five (5) business day period, a party shall 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 to seek alternative solutions therefor. In the event that Cempra
enrolls a patient in a Phase 2 Trial or in a Phase 3 Trial, or obtains Regulatory Approval, for any Macrolide Antibiotics or Test Product prior to formal designation of such
Macrolide Antibiotics or Test Product as a Cempra Product, such Macrolide Antibiotics or Test Product shall be deemed to have been designated as a Cempra Product upon the first such event to 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 and Budget established by the Joint Steering Committee and agreed upon by Optimer, Optimer shall use Diligent
Efforts in accordance with such Work Plan and Budget to produce, or have produced, a sufficient quantity of each Test Product to enable Cempra to conduct preclinical testing of such Test Products, and
to cooperate with Cempra in preparing formulations, conducting feasibility studies, and facilitating such testing. Optimer shall not have any obligation or responsibility for providing clinical
supplies of Test Products or Cempra Products. 

        3.6    Research and Supply Costs.    Cempra shall reimburse Optimer
for Optimer's reasonable, documented internal costs associated with Optimer's work under the Work Plan and Budget, which shall equal the pro-rated cost of full-time equivalent
employees to the extent used by Optimer in performing its portion of the Research Program. Such cost shall (1) be commercially reasonable based on the applicable employees' role in performing
Optimer's portion of the Research Program, job title and responsibilities with Optimer, training, education, and expertise, which shall, in each case, be reasonably appropriate for the tasks performed
thereby, and (2) not exceed US$[***] on an annual basis in any event. Cempra shall reimburse Optimer for the purchasing of key intermediates from Third Parties at
Optimer's cost, which cost shall be commercially reasonable and included in the Budget. Cempra shall also reimburse Optimer for commercially reasonable and documented external
out-of-pocket expenses consistent with the Work Plan and Budget that Optimer incurs for performing such work, including without limitation commercially reasonable and
documented payments to any Third Party manufacturer for production of Macrolide Antibiotics, Test Products and/or Cempra Products. At the end of each calendar quarter, Optimer shall submit to Cempra
an invoice that sets forth in reasonable detail the internal costs and external expenses Optimer has incurred in performing its obligations under the Work Plan and Budget. Cempra shall remit payment
to Optimer within thirty (30) days following Cempra's receipt of such invoice. Any disputes arising between the Parties related to the amounts invoiced under this Section 3.6 shall be
resolved in accordance with Article 12. Notwithstanding anything to the contrary, (i) Cempra shall not be obligated to pay Optimer any amounts with respect to Optimer's performance of
its obligations under the Research Program except as specifically described in any Budgets established by the Joint Steering Committee, (ii) Optimer shall not incur any Third Party costs in
performing under the Research Program, and Cempra shall not be responsible for the reimbursement of any such Third Party costs, except as approved in advance by the Joint Steering Committee, and
(iii) Cempra shall not be obligated to reimburse any costs of Optimer incurred in performing its obligations under the Research Program to the extent such costs are covered by any grant funding
provided to Optimer (including but not limited to any SBIR or other government grants). 

12

 

        3.7    Conduct of Research.    The Parties shall use Diligent Efforts
to conduct their tasks and responsibilities under the Work Plan and Budget throughout the Research Program. In addition, the Parties shall conduct their tasks and responsibilities under the Research
Program in compliance in all material respects with the requirements of applicable laws, rules and regulations and all applicable GLP to attempt to achieve their objectives consistent with industry
standards. Optimer shall use commercially reasonable efforts to (i) perform in accordance with, maintain, and obtain any awarded, active, or future grants (including but not limited to any SBIR
or other government grants) concerning research or development related to the research and development of Macrolide Antibiotics, Test Products, and/or Cempra Products (collectively, such grants,
"Subject Grants"), (ii) ensure payment and receipt of all funds to be provided to Optimer under Subject Grants to the extent covering any of Optimer's costs of performing of Optimer's portion
of the Research Program, and (iii) ensure that (a) all Optimer
Improvements, Optimer Know-How, and results generated, in each case, under the Subject Grants, and all intellectual property rights appurtenant to the foregoing (including but not limited
to Optimer Patents) shall be owned by Optimer and included in the licenses granted to Cempra hereunder, subject to any nonexclusive rights the United States government may have in any of the
foregoing, by operation of law pursuant to the terms of such Subject Grants. 

        3.8    Acceptance.    If,
as set forth in the Work Plan, Cempra has responsibility for performing quality control and/or quality assurance testing on Macrolide Antibiotics and/or Test Products supplied by Optimer, Cempra shall
have thirty (30) business days following its receipt of a shipment to confirm that such shipment meets the applicable Specifications. If, as set forth in the Work Plan, Optimer has
responsibility for performing quality control and/or quality assurance testing on Macrolide Antibiotics and/or Test Products supplied by Optimer, Cempra shall be deemed to have accepted any delivery
of Macrolide Antibiotics and/or Test Products supplied by Optimer unless Cempra gives Optimer written notice of its rejection within fifteen (15) business days of delivery, unless any defect in
the Macrolide Antibiotics and/or Test Products could not have been identified by reasonable visual examination, in which event Cempra shall not be deemed to have accepted such Macrolide Antibiotics
and/or Test Products until fifteen (15) business days after the date when such defect could first have been reasonably identified by Cempra. If Cempra reasonably rejects in whole or in part any
nonconforming shipment at any time following its receipt thereof, Cempra shall provide Optimer written notice of such rejection within the applicable time period described above. If nonconforming
Macrolide Antibiotics or Test Products are delivered to Cempra by Optimer in the course of the Research Program, Optimer shall, if and as elected by Cempra in its sole discretion (i) use
commercially reasonable efforts to replace in a timely manner the nonconforming Macrolide Antibiotics or Test Products at no additional cost to Cempra or (ii) refund to Cempra any amounts paid
to Optimer with respect to the manufacture or supply of such Macrolide Antibiotics or Test Products. 

4.    DEVELOPMENT AND COMMERCIALIZATION    

        4.1    Development Plan;
Reports.    The Development of Cempra Products shall be governed by a development plan developed by Cempra, in consultation with the Joint Steering Committee, subject
to amendment at any time by Cempra, that describes the proposed overall program of Development (the "Development Plan"). 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 Development Plan. During the Research Term, Optimer
and the Joint Steering Committee shall have the right to comment and make suggestions with respect to the Development Plan; provided, however, that Cempra shall have the sole right and responsibility
for determining the Development Plan for Cempra Products. Each Party shall conduct its Development of Products in compliance in all material aspects with the requirements under all applicable laws,
rules and regulations, including without limitation applicable GLP, GCP and GMP. Each Party shall keep the other Party and, during the Research Term, the Joint Steering Committee regularly informed on
a semiannual basis via summary updates with respect to its material Development and Commercialization 

13

 

activities
and those of its Affiliates and Third Party sublicensees. Such reports shall be the Confidential Information of a Party and subject to applicable provisions set forth in Article 8. 

        4.2    Regulatory Matters.    Cempra shall have control of and be
responsible for all regulatory applications, filings and communications with regulatory authorities regarding Cempra Products, including obtaining Regulatory Approval of Cempra Products, in any
jurisdiction in the Territory. Cempra shall keep Optimer regularly informed of its efforts and progress with respect to regulatory matters and approvals on a semiannual basis. Cempra shall own all the
Regulatory Filings it makes and Regulatory Approvals it obtains. Optimer shall have the right of access to such regulatory documents and material for its use in obtaining Regulatory Approval in ASEAN
Countries (subject to any payment obligations under Sections 6.6 and 6.7). Optimer shall cooperate with Cempra in all such regulatory efforts as reasonably requested by Cempra and
provide all reasonable assistance to Cempra. If and as requested by Cempra, Optimer shall be responsible, at the expense of Cempra, which expense shall be reasonable, documented, and agreed upon in
advance by the parties, for preparing and providing to Cempra in a timely manner all documents and submissions that relate directly to the manufacturing of Cempra Product, as reasonably required for
Regulatory Filings and Regulatory Approval of the Cempra Product in the Territory, including the CMC of any IND or NDA in electronic format, for filing by Cempra. 

        4.3    Manufacture and Supply.    With respect to the Territory, and
except as may otherwise be specified in the Work Plan and Budget, Section 3.5, or any separate clinical supply agreement entered into by the Parties, Cempra shall, as between the Parties, be
responsible for the manufacture of clinical materials for each Cempra Product, and for the commercial supply of each Cempra Product, and for all costs associated therewith. Cempra shall use Diligent
Efforts to make necessary Regulatory Filings to obtain, or cause a Third Party manufacturer to obtain, Regulatory Approval in the Territory for the manufacture of Cempra Products. 

        4.4    Development and Commercialization Costs.    Cempra shall be
responsible for all costs associated with its Development and Commercialization of the Cempra Products, including the manufacture, marketing and commercialization of such Cempra Products in the Field
and in the Territory, provided that,
notwithstanding the foregoing, Cempra's only obligations to Optimer with respect to any such costs shall solely be as provided for in Section 3 and 4.2, or as otherwise agreed to by the
parties in writing. 

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

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

        4.7    Diligent Efforts; Decision Not to Develop.    

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

14

 

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

5.    LICENSES AND RELATED RIGHTS    

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

        5.2    Cempra Sublicensing.    Cempra and its Affiliates shall have
the right to sublicense their rights under Section 5.1 to one or more Third Parties. Cempra shall promptly provide Optimer a written copy of each such sublicense (and each
amendment thereto, if any), and in no event more than ten (10) days following its execution, provided that Cempra may redact any portions of such sublicenses (or amendments) disclosing
sublicensees' proprietary information, technology, or research and development plans as reasonably necessary to comply with any confidentiality provisions of such sublicense. Each sublicense shall be
consistent with the terms and conditions of this Agreement. For purposes of this Agreement, a Third Party to whom Cempra or its Affiliate grants exclusive rights to market one or more Cempra Products
in a given territory shall be deemed a "sublicensee" of Cempra hereunder for such territory. 

        5.3    [***] Intellectual Property.    If
Optimer licenses any rights to any Macrolide Antibiotics from [***] or any affiliate thereof during the term of this Agreement, it shall provide prompt written notice thereof
to Cempra, identifying such licensed intellectual property, and, if and as elected by Cempra in writing its sole discretion, (i) Patents to which Optimer obtains rights under such a license
shall be deemed included in Optimer Patents for purposes of this Agreement and (ii) Know-How to which Optimer obtains rights 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 its Affiliates an exclusive license, with the right to sublicense as set forth in Section 5.5, in the Field under Cempra Patents and Cempra Know-How to make, have made,
use, sell, offer for sale and import Optimer Products in ASEAN Countries, which license shall include a right of reference to all Regulatory Filings, Regulatory Approvals, and supporting data and
documentation of Cempra with respect to Cempra Products. 

        5.5    Optimer Sublicensing.    Optimer and its Affiliates shall have
the right to sublicense their rights under Section 5.4 to one or more Third Parties. Optimer shall promptly provide Cempra a written copy of each such sublicense (and each
amendment thereto, if any), and in no event more than ten (10) days following its execution, provided that Optimer may redact any portions of such sublicenses (or amendments) disclosing
sublicensees' proprietary information, technology, or research and development plans as reasonably necessary to comply with any confidentiality provisions of such sublicense. Each sublicense shall be
consistent with the terms and conditions of this Agreement. For purposes of this Agreement, a Third Party to whom Optimer or its Affiliate grants exclusive rights to 

15

 

market
one or more Optimer Products in a given territory shall be deemed a "sublicensee" of Optimer hereunder for such territory 

        5.6    Bankruptcy.    All rights and licenses granted under or
pursuant to any section of this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to "intellectual
property" as defined under Section 101(35A) of the U.S. Bankruptcy Code. The Parties shall retain and may fully exercise all of their respective rights and elections under the
U.S. Bankruptcy Code. The Parties agree that a Party that is a licensee of such rights under this Agreement shall retain and may fully exercise all of its rights and elections under the
U.S. Bankruptcy Code, and that upon commencement of a bankruptcy proceeding by or against the licensing Party (such Party, the "Involved Party")
under the U.S. Bankruptcy Code, the other Party (such Party, the "Noninvolved Party") shall be entitled to a complete duplicate of or complete
access to (as such Noninvolved Party deems appropriate), any such intellectual property and all embodiments of such intellectual property, provided the Noninvolved Party continues to fulfill
its payment or royalty obligations as specified herein in full. Such intellectual property and all embodiments thereof shall be promptly delivered to the Noninvolved Party (a) upon any such
commencement of a bankruptcy proceeding upon written request therefore by the Noninvolved Party, unless the Involved Party elects to continue to perform all of its obligations under this Agreement or
(b) if not delivered under (a) above, upon the rejection of this Agreement by or on behalf of the Involved Party upon written request therefor by the Noninvolved Party. The foregoing is
without prejudice to any rights the Noninvolved Party may have arising under the U.S. Bankruptcy Code or other applicable law. 

        5.7    Disclosure of Information.    Upon execution of this Agreement
and thereafter during the term hereof, each party shall disclose to the other party, in confidence under the terms of Article 8 hereof, (a) all relevant Information as shall become
available to it relating to the Macrolide Antibiotics, Test Products and Cempra Products, and (b) all relevant Information as shall become available to it relating to the safety and efficacy of
each Macrolide Antibiotic, Test Product, and Cempra Product to the extent necessary or useful to develop or manufacture a Cempra Product. Optimer will use 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 to register for sale or obtain approval for sale of each Cempra Product. 

        5.8    No Implied Licenses.    Other than those rights and licenses
expressly granted herein, no other rights or licenses are granted or shall be deemed 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 as
determined on a fully-diluted basis as of the Effective Date), within thirty (30) after the Effective Date of this Agreement. The Cempra common stock issued to Optimer pursuant to this
Section 6.1 shall not be subject to dilution until after Cempra closes on an Equity Investment (as defined below). Upon closing of an Equity Investment, Cempra shall issue Optimer
additional shares of Cempra common stock sufficient to ensure that the total number of shares of Cempra common stock held by Optimer immediately following such Equity 

16

 

Investment
equals the percentage of Cempra's total number of outstanding shares (as calculated on a fully-diluted basis immediately following the Equity 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 shares issued to Optimer will be subject to dilution on a pari passu basis with the
Cempra common stock held by other holders of Cempra common stock and Optimer shall not be entitled to any further shares of stock under this Section 6.1. For purposes of this Agreement,
an "Equity Investment" shall mean Cempra's issuance and sale of equity securities to venture capital, institutional, corporate, or private investors resulting in aggregate gross proceeds to Cempra of
at least [***] [***]. The issuances of stock to Optimer under this Section 6.1 shall be done pursuant to separate Subscription Agreements, a form
of which is attached hereto as Schedule 6.1(1), and the Cempra common stock held by Optimer shall be subject to a shareholders agreement, which
shall initially be in the form of set forth at Schedule 6.1(2). Optimer agrees to enter into reasonable or customary agreements required by any
future equity investors regarding subjecting Optimer's shares of Cempra common stock to rights of first refusal and co-sale, such rights to terminate on an initial public offering of
Cempra stock pursuant to a registration statement filed pursuant to the Securities Act of 1933, as amended. 

        6.2    Milestone Payments to Optimer.    

        (a)   Cempra shall pay to Optimer a milestone payment (the "[***]
Milestone Payment") in the amount of $[***] upon Cempra's, its Affiliate's, or their sublicensee's [***]
(the "[***] Milestone"), and the [***] Milestone Payment shall be payable in cash or
Cempra capital stock, as further described below. Cempra shall 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 such notice from Cempra, whether it elects the [***] Milestone Payment to be paid in cash or shares of Cempra
capital stock having a Fair Market Value, as calculated as of the date the [***] Milestone is achieved, equal to the [***] Milestone Payment; in the
absence of such election within such ten (10) business day period, Cempra shall be entitled to make such 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) no later than twenty (20) days after the earlier of (i) the date on which Optimer provides its
written election, as described above, or (ii) the expiration of the ten (10) business day period referenced above. Only one [***] Milestone Payment shall be
payable by Cempra under this Agreement, regardless of the number of Cempra Products or indications therefor developed by Cempra, its Affiliates, or their sublicensees under this Agreement. 

        (b)   Cempra shall pay to Optimer a milestone payment (each, a "[***] Milestone
Payment") in the amount of $[***] upon Cempra's, its Affiliate's, or their sublicensee's completion of the first [***] Trial of
each Cempra Product resulting in data reasonably sufficient to support the conduct of a [***] Trial with respect to such Cempra Product
(the "[***] Milestone"), and the initial [***] Milestone Payment shall be payable in cash
or Cempra capital stock, as further described below. Cempra shall 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 it elects the initial [***] Milestone Payment to be paid
in cash or shares of Cempra capital stock having a Fair Market Value, as calculated as of the date the initial [***] Milestone is achieved, equal to the

17

 

[***]
Milestone Payment; in the absence of such election within such ten (10) business day period, Cempra shall be entitled to make such election in 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 later than twenty (20) days after the
earlier of (i) the date on which Optimer provides its written election, as described above, or (ii) the expiration of the ten (10) business day period referenced above; all other
[***] Milestone Payments shall be paid in immediately available funds, pursuant to Section 6.9 below, no later than thirty (30) days following the achievement of
such [***] Milestone. Only one [***] Milestone Payment shall be payable by Cempra under this Agreement with respect to each Cempra Product, regardless
of the number of indications therefor developed by Cempra, its Affiliates, or their sublicensees under this Agreement. 

        (c)   In addition to the Phase 2 Milestone Payments, in the event that (i) Cempra or an Affiliate thereof
sublicenses rights for Development and Commercialization of a Cempra Product to a Third Party sublicensee and (ii) Cempra, an Affiliate, or such sublicensee completes a Phase 3 Trial of
such Cempra Product resulting in data 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 shall pay to Optimer (a) the following amounts with respect to each of the first two (2) Cempra
Products to achieve the Sublicensee Milestone: (1) $[***] within thirty (30) days after each such Cempra Product achieves the Sublicensee Milestone
(the "Initial Sublicensee Milestone Payments") and (2) [***] percent ([***]%) of all
Sublicensing Revenue, if any, received in excess of $[***] with respect to each such Cempra Product from the Third Party sublicensee(s) for such Cempra Product (to be
paid to Optimer within thirty (30) days of Cempra's receipt of each applicable payment of Sublicensing Revenue from such sublicensee(s)) ("Trailing Sublicensee Milestone
Payments") and, with respect to each of the subsequent two Cempra Products to achieve the Sublicensee Milestone, (b) $[***] within thirty
(30) days after the date upon which such subsequent Cempra Product achieves the Sublicensee Milestone ("Subsequent Sublicensee Milestone
Payments"; collectively, with all of the foregoing payments described in this subsection (c), the "Sublicensee Milestone
Payments"). Cempra shall notify Optimer within thirty (30) days of each of the first four occurrences of the Sublicensee Milestone. 

        Notwithstanding
anything to the contrary, (i) the Initial Sublicensee Milestone Payment shall only be payable by Cempra [***] under this Agreement,
(ii) an Initial Sublicensee Milestone Payment shall not be due or payable under this Agreement with respect to a particular Cempra Product if the Initial Cempra Milestone Payment
(as defined in Section 6.2(d) below) becomes due for such Cempra Product prior to the date upon which the applicable Initial Sublicensee Milestone Payment becomes due for such Cempra
Product, (iii) the aggregate, combined, total number of Subsequent Sublicensee Milestone Payments and 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 or payable under this
Agreement with respect to a particular Cempra Product if the Subsequent Cempra Milestone Payment (as defined in Section 6.2(d) below) becomes due with respect to such Cempra Product
prior to the date upon which the Subsequent Sublicensee Milestone Payment becomes due with respect thereto. Except with respect to Trailing Sublicensee Milestone Payments, and notwithstanding anything
to the contrary in this Agreement, the total possible combined aggregate amount due Optimer under this Section 6.2(c) and Section 6.2(d) below shall not exceed, and Cempra shall not be
obligated to pay Optimer any amounts in excess of, $[***]. 

18

   
        (d)   In addition to the [***] Milestone Payments, if, prior to the occurrence of a Sublicensee
Milestone with respect to 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 Cempra Milestone (the "Initial
Cempra Milestone Payments") and (ii) $[***] with respect to each of the 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, in each case, thirty (30) days of the first anniversary of such Cempra Product's achievement of the Cempra Milestone. 

        Notwithstanding
anything to the contrary, each Cempra Milestone Payment (i) shall only be payable by Cempra once under this Agreement with respect to a particular Cempra Product,
regardless of the number of indications therefor, (ii) an Initial Cempra Milestone Payment shall not be due or payable under this Agreement with respect to a particular Cempra Product if an
Initial Sublicensee Milestone Payment (as defined in Section 6.2(c) above) becomes due with respect to such Cempra Product prior to the date upon which the Initial Cempra Milestone
Payment becomes due with respect to such Cempra Product, (iii) the aggregate, combined, total number of Subsequent Sublicensee Milestone Payments and 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 payable under this Agreement with respect to a particular Cempra Product if the Subsequent Sublicensee Milestone Payment (as defined in Section 6.2(c) above) becomes due with
respect to such Cempra Product prior to the date upon which the Subsequent Cempra Milestone Payment becomes due with respect thereto. 

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

        6.3    Royalty Payments to Optimer.    For the duration of the
applicable Royalty Term for each Cempra Product, Cempra shall pay to Optimer the following royalty payments, 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, its Affiliates, and their Third Party sublicensees: 

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

         (ii)  [***]
percent ([***]%) of Net Sales for the portion, if any, of aggregate worldwide Net Sales of Cempra Products sold by
Cempra, its Affiliates, and their Third Party sublicensees exceeding $[***] in a particular calendar year. 

        As
an example of the royalty calculation contemplated above, if aggregate worldwide Net Sales of Cempra Products by Cempra, its Affiliates, and their Third Party sublicensees in a
particular calendar year total $[***], Cempra shall owe Optimer $[***] under this Section 6.3
([***]% × $[***] = $[***]; [***]% of
$[***] = $[***]; $[***] + $[***] = $[***]). 

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

        (a)   a
Cempra Product is deemed by a final, unappealable decision of a court of competent jurisdiction to infringe a claim of a patent(s) owned or controlled by a Third Party
in any given country of the Territory, and Cempra, an Affiliate thereof, or any sublicensee thereof licenses such patent(s) in settlement of such claims ("Cempra Infringement
License"), 

19

 

        (b)   Cempra,
an Affiliate thereof, or any sublicensee of either of the foregoing determines that it is commercially, reasonably necessary or advisable to pay royalties to a
Third Party to obtain a license to practice any Third Party's rights in order to manufacture, use, Commercialize or Develop a Cempra Product in any given country of the Territory
("Cempra Necessary License"), or 

        (c)   it
would be useful to obtain a license to practice any Third Party's rights that could improve, enhance, or modify a Cempra Product in any given country of the Territory
("Cempra Improvement License"), as determined reasonably and in good faith by Cempra, an Affiliate thereof, or any sublicense of either of
the foregoing, 

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

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

        6.6    Milestone Payments to Cempra.    For each of the first
[***] Optimer Products to achieve the Optimer Milestone (as defined below), Optimer shall, within two (2) years of the earlier of (i) the
[***] of an Optimer Product in any ASEAN Country by Optimer, an Affiliate thereof, or any sublicensee of either of the foregoing or (ii) [***] of
an Optimer Product in any ASEAN Country, pay Cempra $[***] with respect to such Optimer Product (the first to occur of the foregoing with respect to an Optimer Product,
the "Optimer Milestone"). Such payment shall be due with respect solely to each of the first [***] (2) Optimer Products
to achieve the Optimer Milestone. Optimer shall notify Cempra in writing within thirty days of each occurrence of the Optimer Milestone. 

        6.7    Royalties to Cempra.    For the duration of the applicable
Royalty Term for each Optimer Product, Optimer shall pay to Cempra the following royalty payments based on Net Sales of Optimer Products in ASEAN Countries by Optimer, its Affiliates, and their Third
Party sublicensees: 

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

        As
an example of the royalty calculation contemplated above, if aggregate Net Sales of Optimer Products in a particular calendar year total $[***], Optimer shall
owe Cempra $[***] under this Section 6.7 ([***]% × $[***] =
$[***]; [***]% of $[***] = $[***];
$[***] + $[***] = $[***]). 

20

 

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

        (a)   a
Optimer Product is deemed by a final, unappealable decision of a court of competent jurisdiction to infringe a claim of a patent(s) owned or controlled by a Third
Party in any given country of the Territory, and Optimer, an Affiliate thereof, or any sublicensee thereof licenses such patent(s) in settlement of such claims ("Optimer
Infringement License"), 

        (b)   Optimer,
an Affiliate thereof, or any sublicensee of either of the foregoing determines that it is commercially, reasonably necessary or advisable to pay royalties to a
Third Party to obtain a license to practice any Third Party's rights in order to manufacture, use, Commercialize or 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 any Third Party's rights that could improve, enhance, or modify a Optimer Product in any given country of the
Territory ("Optimer Improvement License"), as determined reasonably and in good faith by Optimer, an Affiliate thereof, or any sublicense of either of
the foregoing, 

        then
Optimer may deduct any fees, milestones or royalties paid for Optimer Infringement Licenses, Optimer Necessary Licenses and Optimer Improvement Licenses due to such Third Parties
(or such amounts paid by Optimer, its Affiliate, or any sublicensee of either of the foregoing in settlement of such infringement action) (collectively, all of the foregoing,
"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 Cempra under this Agreement with respect to Net Sales for Optimer Products sold by Optimer and its Affiliates any particular calendar quarter shall not be reduced by more than
[***] percent
([***]%) as a result of any such deduction, and any amounts not deducted in a calendar quarter shall be carried forward for deduction 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 be the subject of a possible grant, to a Third Party under the applicable laws of any country in the Territory under the Cempra Patents and/or Cempra Know-How, or to any
Optimer Product, the Party receiving notice thereof or otherwise becoming aware thereof shall promptly notify the other Party thereof, including any material information concerning such compulsory
license, and the applicable royalty rate payable hereunder for sales of Optimer Products in such country will be adjusted to match any lower royalty rate granted to such Third Party for such country
with respect to the sales of such Optimer Products, subject to any adjustments pursuant to Section 6.8 above. 

        6.10    Payments and Payment Reports.    Except as otherwise provided
herein, all royalties and payments due under this Section 6 shall be paid within ninety (90) days of the end of the relevant calendar quarter for which the applicable Net Sales occur
and/or revenues are received, subject, with respect to Net Sales, as applicable, by Third Party sublicensees, to any longer reporting periods which may be reasonably agreed to by Cempra, Optimer, or
their Affiliates with respect to such sublicensees. Each royalty payment shall be accompanied by a statement stating (as applicable) the number, description, and aggregate Net Sales, by
country, of each Product sold during the relevant calendar quarter by Cempra or Optimer, as applicable, and their respective Affiliates and Third Party sublicensees and detailing the calculation of
royalties due for such calendar quarter, as well as, with respect to Cempra's reporting obligations, an accounting of Sublicense Revenues received in the applicable calendar quarter. 

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

21

 

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

        6.12    Taxes.    It is understood and agreed between the Parties that
any payments made under Section 6.1, 6.2, or 6.6 of this Agreement are inclusive of any value added or similar tax imposed upon such payments. In addition, in the event any of the payments made
by either Party (the "Paying Party") pursuant to Article 6 become subject to withholding 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") shall be reduced by the amount of taxes deducted and
withheld, and the Paying Party shall pay the amounts of such taxes to the proper Governmental Authority in a timely manner and promptly transmit to the Paid Party an official tax certificate or other
evidence of such tax obligations together with proof of payment from the relevant Governmental Authority of all amounts deducted and withheld sufficient to enable the Paid Party to
claim such payment of taxes. Any such withholding taxes required under applicable law to be paid or withheld shall be an expense of, and borne solely by, the Paid Party. The Paying Party will provide
the Paid Party with reasonable assistance to enable the Paid Party to recover such taxes as permitted by law. 

        6.13    Blocked Currency.    In each country where the local currency
is blocked and cannot be removed from the country under such country's applicable law, royalties accrued in that country shall be paid to a Party in the country in local currency by deposit in a local
bank designated by such Party, unless the Parties otherwise agree. 

        6.14    Sublicenses.    For avoidance of doubt, the Parties agree that
in the event that a Party grants licenses or sublicenses to Third Parties to sell Products, the licensing (or sublicensing) Party shall use commercially reasonable efforts to include in such
licenses or sublicenses an obligation for the licensee or sublicense to account for and report its sales of Products on a basis reasonably sufficient to enable payment of royalties hereunder with
respect to such sales as if such sales of the licensee or sublicensee were Net Sales of the applicable Party. 

        6.15    Foreign Exchange.    Conversion of a Party's Net Sales
recorded in local currencies to U.S. dollars will be performed by such Party in a manner consistent with such Party's normal practices used to prepare its audited financial statements for
external reporting purposes, provided that such practices use a widely accepted source of published exchange rates. Each Party shall notify the other of the conversion method(s) used by it for
such purposes. 

        6.16    Interest.    If either Party fails to make any payment when
due to the other Party under this Agreement, then interest shall accrue on a daily basis at a rate equal to the thirty (30) day U.S. dollar LIBOR rate effective for the date that payment
was due, as published by The Wall Street Journal. The obligation to pay interest on such late payments set forth herein shall not be construed to limit
or restrict a Party's right to terminate this Agreement in accordance with the terms and conditions of Section 9.3. 

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

22

 

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

7.    Intellectual Property    

        7.1    General Principles.    

        (a)   The
Optimer Technology existing as of the Effective Date shall, subject to the rights granted under this Agreement, remain the sole property of Optimer and may be
licensed by Optimer for any purpose that is not inconsistent nor in conflict with this Agreement. 

        (b)   All
right, title, and interest in any and all Know-How or Inventions generated, conceived or reduced to practice by employees, agents or independent
contractors of Optimer or its Affiliates, solely or jointly with employees, agents or independent contractors of Cempra or any Affiliate thereof, in connection with the performance of Optimer's
obligations under this Agreement, or that relate to Cempra Products in any manner, except any such Know-How or Inventions that are generated using grant monies provided by the
United States government to Optimer and which are, therefore, subject to the limitations and requirements of such grants with respect 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 5 and Optimer's ownership of the Optimer Technology and sole or joint ownership (as applicable) of Optimer
Improvements. Optimer shall notify Cempra promptly in writing and in reasonable detail of any Optimer Inventions. Optimer hereby assigns all right, title, and interest to Optimer Inventions and all
intellectual property rights appurtenant thereto to Cempra, and agrees to take all actions and execute all documents, and to cause its Affiliates, employees, agents, and independent contractors to
execute all documents and take all actions, requested by Cempra to
effect the purposes of the foregoing. Optimer hereby appoints Cempra as it attorney to effect on its behalf any assignment of the Optimer Inventions which Optimer has failed to make to Cempra within
7 days in accordance with the terms of this Section with the right but not the obligation to do any and all acts and things reasonably necessary to effect unconditionally such assignment
including the right for Cempra to execute all deeds, documents or instruments and swear any oaths or declarations in the name of and on behalf of Optimer necessary for such purpose. Cempra's
appointment as attorney under this Section is given to secure Cempra's interest in the Optimer Inventions and intellectual property rights appurtenant thereto and to secure the performance of
Optimer's obligations to assign the Optimer Inventions and intellectual property rights appurtenant thereto in the event of termination and such appointment shall be perpetual 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 of
its assets. 

        (c)   Subject
to Section 7.1(d) below, Optimer and Cempra shall each own any inventions conceived solely by its own employees or agents, other than those inventions
that are Optimer Inventions ("Other Sole Inventions"), including but not limited to (i) Know-How, conceived or reduced to practice
during the term of this Agreement or (ii) such inventions generated using grant monies provided by the United States government to Optimer and which are, therefore, subject to the
limitations and requirements of such grants with respect to such intellectual property. Subject to Section 7.1(d) below, Cempra and Optimer shall each own an undivided one-half
interest in any inventions conceived jointly by employees or agents of both Cempra and Optimer, other than those inventions that are Optimer Inventions ("Other Joint
Inventions"), 

23

 

including
but not limited to (i) Know-How conceived or reduced to practice during the term of this Agreement and (ii) such inventions generated using grant monies provided by
the United States government to Optimer and which are, therefore, subject to the limitations and requirements of such grants with respect to such intellectual property. Subject to
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. The determinations of inventorship, and each
Party's rights and interests with respect to Other Joint Inventions and jointly created Know-How relating to such Other Joint Inventions, shall be the same as provided with respect to
patents under United States law, and in particular, subject in all cases to the provisions of this Agreement, either Party may exploit or grant licenses under such Other Joint Inventions and
jointly created Know-How without a duty of accounting to the other Party. 

        (d)   Notwithstanding
anything to the contrary, the exclusive license granted in Section 5.1 above shall include rights to Optimer Improvements, Optimer's rights in
Other Joint Inventions and Other Sole Inventions, Optimer's rights in all Patents claiming any of the foregoing, and Optimer's rights in all Know-How related to all of the foregoing,
subject to any nonexclusive rights the United States government may have in any of the foregoing, by operation of law pursuant to the terms of any applicable grants. 

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

        7.2    Patent Prosecution and Maintenance of Optimer
Patents.    Optimer shall be responsible for, and be obligated to the extent it is commercially reasonable to diligently pursue, or to 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 applicable fees and costs), and extension of Patents within the Optimer Patents (including but not limited to those claiming
Optimer's Other Sole Inventions). Optimer will regularly advise Cempra of the status of all pending Optimer Patent applications, including any related hearings or other proceedings, and, at Cempra
request, will provide Cempra with copies of all documentation concerning such applications, including all correspondence to and from any Governmental Authority. Optimer shall consult with and obtain
written consent from Cempra prior to abandoning any Optimer Patent, which consent shall not be unreasonably withheld, delayed, or conditioned. Optimer will solicit Cempra's advice and review of such
applications and important prosecution matters related thereto in reasonably sufficient time prior to filing thereof, and will take into account Cempra's reasonable comments related thereto. The costs
of prosecution and maintenance of Optimer Patents shall be borne by Optimer. 

        7.3    Patent Prosecution and Maintenance of Cempra Patents.    Cempra
shall be responsible for, and be obligated to the extent it is commercially reasonable to diligently pursue, or to 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 applicable fees and costs), and extension of Patents within the Cempra Patents (including but not limited to those claiming Cempra's Other Sole Inventions). Cempra will regularly advise Optimer
of the status of all pending Cempra Patent applications, including any related hearings or other proceedings, and, at Optimer's request, will provide Optimer with copies of all documentation
concerning such applications, including all correspondence to and from any Governmental Authority. Cempra shall consult with and obtain written consent from Optimer prior to abandoning any Cempra
Patent, which consent shall not be unreasonably withheld, delayed, or conditioned. Cempra will solicit Optimer's advice and review of such applications and important prosecution matters related
thereto in reasonably sufficient time prior to 

24

 

filing
thereof, and will take into account Optimer's reasonable comments related thereto. The costs of prosecution and maintenance of Cempra Patents shall be borne by Cempra. 

        7.4    Patent Prosecution and Maintenance of Patents Claiming Other Joint
Inventions.    Subject to 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 such responsibilities upon written notice to Optimer, and Optimer may agree to do so, in its sole discretion. If Optimer does not
agree to undertake such responsibilities within ten (10) days of such request with respect to any such Patents, Cempra shall not have any further obligations to prosecute or maintain such
Patents. Within nine (9) months after the filing date of a
Patent application in respect of an Other Joint Invention, the Party filing such application will request that the other Party identify those non-priority, non-PCT ("foreign")
countries in which the other Party desires that the filing Party file corresponding Patent applications. Within thirty (30) days after receipt of such request, the other Party will provide to
the filing Party a written list of such foreign countries in which the other Party wishes to effect corresponding foreign patent application filings. The Parties will then attempt to agree on the
particular countries in which such applications will be filed, provided that in the event agreement is not reached, the issue shall be resolved pursuant to Section 12.3
("Designated Foreign Filings"). Thereafter, the filing Party will effect all such Designated Foreign Filings in a timely manner. It is presumed unless
otherwise agreed in writing by the Parties, that a corresponding PCT application will be filed designating all PCT member countries. Should the Party filing the priority application not agree to file
or cause to be filed a Designated Foreign Filing, the other Party will have the right to effect such Designated Foreign Filing. 

        Regardless
of which Party is responsible for preparation, prosecution and maintenance of a Joint Invention Patent, the Parties shall share equally all reasonable, documented costs and
expenses incurred in connection with procuring Joint Invention Patents (including entering national phase in all agreed countries), including application preparation, filing fees, prosecution,
maintenance and all costs associated with reexamination, oppositions and interference proceedings. The filing Party shall invoice the other Party for such costs and expenses, and the other Party will
pay such invoices within thirty (30) days after receipt. 

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

        7.6    Disclosure.    Each party shall make available to the other
party in confidence all information in its possession necessary or expedient for the filing of Patents arising out of such party's performance under this Agreement in all countries of
the world. 

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

        (a)    Optimer Patents.    With respect to any alleged infringement of
any Optimer Patents with respect to the rights granted to Cempra under this Agreement, Cempra shall have the first and primary right, but not the obligation, to, in its sole discretion, to initiate,
prosecute, and control any action or legal proceedings, and/or enter into a settlement, including any declaratory judgment action, on its behalf or in Optimer's name, if necessary, with respect to
such alleged infringement. 

25

 

If,
within [***] months of the notice above, Cempra (i) shall have been unsuccessful in persuading the alleged infringer to desist, (ii) shall not have
brought and shall not be diligently prosecuting an infringement action, or (iii) has not entered into settlement discussions with respect to such infringement, or if Cempra notifies Optimer
that it has decided not to undertake any of the foregoing against any such alleged infringer, then Optimer shall then have the right to bring suit to enforce such Optimer Patents at its own expense.
In any such litigation brought by Cempra, Cempra shall have the right to use and sue in Optimer's name, and Optimer shall cooperate reasonably, as requested by Cempra and at Cempra's expense (which
expense shall be reasonable). 

        (b)    Cempra Patents.    With respect to any alleged infringement of
any Cempra Patents with respect to the rights granted to Optimer under this Agreement, Optimer shall have the first and primary right, but not the obligation, to, in its sole discretion, to initiate,
prosecute, and control any action or legal proceedings, and/or enter into a settlement, including any declaratory judgment action, on its behalf or in Cempra's name, if necessary, with respect to such
alleged infringement. If, within [***] months of the notice above, Optimer (i) shall have been unsuccessful in persuading the alleged infringer to desist,
(ii) shall not have brought and shall not be diligently prosecuting an infringement action, or (iii) has not entered into settlement discussions with respect to such infringement, or if
Optimer notifies Cempra that it has decided not to undertake any of the foregoing against any such alleged infringer, then Cempra shall then have the right to bring suit to enforce such Cempra Patents
at its own expense. In any such litigation brought by Optimer, Optimer shall have the right to use and sue in Cempra's name, and Cempra shall cooperate reasonably, as requested by Optimer and at
Optimer's expense (which expense shall be reasonable). 

        (c)    Procedure.    The Party pursuing or controlling any action
against an alleged infringer pursuant to the foregoing (the "Controlling Party") shall be free to enter into a settlement, consent judgment, or
other voluntary disposition of any such action, provided, however, that (i) the Controlling Party shall consult with the other Party (the "Secondary
Party") prior to entering into any settlement thereof and (ii) any settlement, consent judgment or other voluntary disposition of such actions which
(1) materially limits the scope, validity, or enforceability of any Optimer Patents (if Optimer is the Secondary Party) or Patents Controlled by Cempra (if Cempra is the Secondary
Party), (2) subjects the Secondary Party to any non-indemnified liability or obligation, or (3) admits fault or wrongdoing on the part of Secondary Party must be approved in
writing by Secondary Party, such approval not to be unreasonably withheld. Secondary Party shall provide the Controlling Party notice of its approval or denial of such approval within ten
(10) business days of any request for such approval by the Controlling Party, provided that (i) in the event Secondary Party wishes to deny such approval, such notice shall include a
written description of Secondary Party's reasonable objections to the proposed settlement, consent judgment, or other voluntary disposition and (ii) Secondary Party shall be deemed to have
approved such proposed settlement, consent judgment, or other voluntary disposition in the event it fails to provide such notice within such ten (10) business day period. Any recovery or
damages received by the Controlling Party with respect to the infringement of a Party's rights under this
Agreement shall be used first to reimburse the Parties for unreimbursed reasonable, documented expenses incurred in connection with such action, and the remainder shall be split
[***] ([***]%) to Controlling Party and [***] percent ([***]%) to Secondary Party. Notwithstanding the
foregoing, the Secondary Party, at its expense, shall have the right to be represented by counsel of its choice in any such proceeding. 

        7.8    Infringement of Third Party Rights.    

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

26

 

challenges
the validity of any claims of any Optimer Patents or Cempra Patents, each Party will give prompt written notice to the other Party of such 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, its Affiliates, or its sublicensees in the Territory, using counsel of its own choice. Cempra shall be free to enter into a settlement, consent judgment, or other voluntary
disposition of such action, provided that any settlement, consent judgment or other voluntary disposition of such actions which (i) materially limits the scope, validity, or enforceability of
patents included in the Optimer Patents, (ii) subjects Optimer to any nonindemnified liability, or (ii) admits fault or wrongdoing on the part of Optimer must be approved in writing by
Cempra, such approval not being unreasonably withheld. Optimer shall provide Cempra notice of such approval or denial of such approval within ten (10) business days of any request for such
approval by Cempra, provided that (i) in the event Optimer wishes to deny such approval, such notice shall include a written description of Optimer's reasonable objections to the proposed
settlement, consent judgment, or other voluntary disposition and (ii) Optimer shall be deemed to have approved of such proposed settlement, consent judgment, or other voluntary disposition in
the event it fails to provide such notice within such ten (10) business day period. Optimer agrees to cooperate with Cempra in any reasonable manner deemed by Cempra to be necessary in
defending any such action. Cempra shall reimburse Optimer for any out of pocket expenses incurred in providing such assistance. Any recovery or damages received by Cempra in any action or settlement
under this Section 7.7(b) with respect to the rights licensed to Cempra under this Agreement shall be used first to reimburse the Parties for unreimbursed reasonable, documented expenses
incurred in connection with such action, and the remainder shall be split [***] percent ([***]%) to Cempra and [***] percent
([***]%) to Optimer. Notwithstanding the foregoing, either Party, at its expense, shall have the right to be represented by counsel of its choice in any such proceeding
controlled by the other 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, its Affiliates, or its sublicensees in any ASEAN Countries, using counsel of its own choice. Optimer shall be free to enter into a settlement, consent judgment, or other
voluntary disposition of such action with respect to any ASEAN Countries, provided that any settlement, consent judgment or other voluntary disposition of such actions which (i) materially
limits the scope, validity, or enforceability of any Patents owned or Controlled by Cempra, (ii) subjects Cempra to any nonindemnified liability, or (ii) admits fault or wrongdoing on
the part of Cempra must be approved in writing by Cempra, such approval not being unreasonably withheld. Cempra shall provide Optimer notice of such approval or denial of such approval within ten
(10) business days of any request for such approval by Optimer, provided that (i) in the event Cempra wishes to deny such approval, such notice shall include a written description of
Cempra's reasonable objections to the proposed settlement, consent judgment, or other voluntary disposition and (ii) Cempra shall be deemed to have approved of such proposed settlement, consent
judgment, or other voluntary disposition in the event it fails to provide such notice within such ten (10) business day period. Cempra agrees to cooperate with Optimer in any reasonable manner
deemed by Optimer to be necessary in defending any such action. Optimer shall reimburse Cempra for any out of pocket expenses incurred in providing such assistance. Any recovery or damages received by
Optimer in any action or settlement under this Section 7.7(c) with respect to the rights licensed to Optimer under this Agreement shall be used first to reimburse the Parties for unreimbursed
reasonable, documented expenses incurred in connection with such action, and the remainder shall be split [***] percent ([***]%) to Optimer and
[***] percent ([***]%) to Cempra. Notwithstanding the foregoing, either Party, at its expense, shall have the right to be represented by counsel of its
choice in any such proceeding controlled by the other Party. 

27

 

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

        7.10    Trademarks.    Cempra may, in its sole discretion, select
trademarks for Cempra Products and shall own all such trademarks world-wide. To the extent Cempra pursues trademarks for Cempra Products, as between the parties, Cempra shall have the sole
responsibility for the filing, prosecution and maintenance of registrations of product trademarks for Cempra Products, at its sole expense. Optimer shall not have any rights to any trademarks of
Cempra under this Agreement; provided that, if it is commercially reasonable to do so, Cempra shall, at Optimer's request, license such trademarks under a separate agreement to Optimer for use in the
ASEAN Countries. Optimer may, in its sole discretion, select trademarks for Optimer Products and shall own all such trademarks world-wide. To the extent Optimer pursues trademarks for
Optimer Products, as between the parties, Optimer shall have the sole responsibility for the filing, prosecution and maintenance of registrations of product trademarks for Optimer Products, at its
sole expense. Cempra shall not have any rights to any trademarks of Optimer under this Agreement; provided that, if it commercially reasonable to do so, Optimer shall, at Cempra's request, license
such trademarks under a separate agreement to Cempra for use in the Territory. 

8.    CONFIDENTIALITY    

        8.1    Treatment of Confidential Information.    The Parties agree
that during the Term, and for a period of five (5) years after the end of the Term, a Party receiving Confidential Information of the other Party will (a) maintain in confidence such
Confidential Information to the same extent such Party maintains its own proprietary industrial information of similar kind and value (but at a minimum each Party shall use commercially
reasonable efforts), (b) not disclose such Confidential Information to any Third Party without prior consent of the other Party, and (c) not use such Confidential Information for any
purpose except those permitted by this Agreement. 

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

        (a)   is publicly disclosed by the disclosing Party, either before or after it becomes known to the receiving Party; 

        (b)   was known to the receiving Party, without obligation to keep it confidential, prior to when it was received from the
disclosing Party, as demonstrated by receiving Party's written records; 

        (c)   is subsequently disclosed to the receiving Party without obligation of confidentiality or limitation on use by a Third
Party lawfully in possession thereof without obligation to keep it confidential; 

        (d)   has been published by a Third Party; or 

        (e)   has been independently developed by the receiving Party without the aid, application or use of Confidential Information. 

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

        (a)   filing or prosecuting Patents pursuant to Article 7; 

        (b)   Regulatory Filings; 

28

  

        (c)   prosecuting or defending litigation relating to Macrolide Antibiotics, Test Products or Products; 

        (d)   complying with applicable laws and governmental regulations; and 

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

        8.4    Terms of the Agreement.    The Parties acknowledge that the
terms of this Agreement shall be treated as Confidential Information of both Parties. Such terms may be disclosed by a Party to individuals or entities covered by 8.3(e) above, each of whom prior to
disclosure must be bound by similar obligations of confidentiality and non-use at least equivalent in scope to those set forth in this Article 8. Disclosure of the terms of this
Agreement (but not other Confidential Information received from the other Party) may also be made, under obligations of confidentiality and non use at least equivalent in scope to those set
forth in this Article 8, to actual or potential bankers, lenders, investors, acquirors, acquisition targets, and strategic partners of either Party. 

        8.5    Publicity.    The public announcement of the execution of this
Agreement is set forth on Schedule 8.5 hereto. Each Party shall be entitled, in its sole discretion, to make public announcements regarding its
Development and Commercialization of Products, subject to the other Party's opportunity to review and comment with respect thereto provided below. In addition, either Party may make a public
statement, including in analyst meetings, concerning the Agreement or the progress of the Test Products or Products where such statement is required by law, applicable stock exchange regulation or
legal proceedings. In connection with any filing described in the foregoing sentence, such Party shall use commercially reasonable efforts to obtain confidential treatment of economic and trade secret
information. In any event, the Parties agree to take all reasonable action to avoid disclosure of Confidential Information except as permitted hereunder, and shall cooperate with each other with
respect to all such disclosures. The Party that is required to or has otherwise decided to make a public statement pursuant permitted under this Section 8.5 will give the other Party reasonable
advance notice of the text of any proposed statement so that the other Party will have the opportunity to comment upon the statement. Either Party may disclose any matter that has previously been
publicly disclosed in accordance with this Section 8.5. Except as described above, neither Party will make any public announcement regarding the terms of or events related to the Agreement
without the prior consent of the other 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 preclinical or clinical studies, with respect to any Macrolide
Antibiotic, Test Product or Cempra Product without Cempra's prior consent (which may be withheld in Cempra's sole and final discretion), except as permitted under Section 8.3(d) or this
Section 8.6. Optimer agrees to provide Cempra a copy of any such proposed publication or presentation at least 60 days prior to its submission for publication, and Cempra shall have
60 days in which to review the proposed publication or presentation for the purposes described below. Cempra may request in writing, and the Optimer shall agree to, (i) the deletion of
any of Cempra's Confidential Information, (ii) any reasonable changes requested by Cempra, consistent with scientific practice, or (iii) a delay of such proposed submission for an
additional period, not to exceed ninety (90) days, in order to protect the potential patentability of any technology described therein. Cempra, at its election, shall be entitled to receive in
any such publication an acknowledgment of its support of and involvement in the Research Program and its rights to Optimer Technology. 

29

 

9.    TERM AND TERMINATION    

        9.1    Term.    This Agreement shall become effective on the Effective
Date and shall continue on a Product-by-Product (Cempra Product or Optimer Product, as applicable) and country-by-country basis until the earlier of
(1) the expiration of the Royalty Term with respect to the applicable Product (Cempra Product or Optimer Product, as applicable) in the applicable country; or (2) the effective date of
termination pursuant to Section 9.2 or 9.3 (the "Term"). Upon expiration of this Agreement pursuant to clause (1) above with
respect to a particular Product in a particular country, the Parties and their Affiliates shall have the perpetual, unrestricted, fully-paid, royalty-free
world-wide right, with rights of sublicense, to make, use, sell, offer for sale, and import such Product in such country. 

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

        9.3    Mutual Termination Rights.    Either Party will have the right
to terminate this Agreement upon the following: 

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

        (b)   the other Party is generally unable to meet its debts when due, or makes a general assignment for the 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 its assets, or any case or proceeding shall have been commenced or
other action taken by or against such Party in bankruptcy or seeking the reorganization, liquidation, dissolution or winding-up of such Party or any other relief under any bankruptcy,
insolvency, reorganization or other similar act or law, and any such event shall have continued for sixty (60) days undismissed, unstayed, unbonded and undischarged. In such circumstances, the
other Party may, upon notice to such Party, terminate this Agreement, such termination to be effective upon such Party's receipt of such notice. 

        9.4    Effects of Termination.    

        (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, all
licenses granted under this Agreement shall terminate, Cempra and its Affiliates shall cease Development and Commercialization of all Macrolide Antibiotics, Test Products and Cempra Products, and
Optimer and its Affiliates shall cease development and/or commercialization of Optimer Products, provided that, notwithstanding the foregoing, each Party and its Affiliates shall have the privilege,
subject to the payment of royalties as required under Section 6, of (i) completing the manufacture of any Products in the process of manufacture as of the effective date of such
termination (the "Termination Date"), (ii) selling such Products and all finished Products in their possession or under their control as
of the Termination Date for a period of one year following the Termination Date upon commercially reasonable conditions, and (iii) completing performance of all contracts entered into with
third parties prior to the Termination Date (1) for the marketing, sale, or manufacture of Products or (2) requiring the use of Products or technology claimed in the Optimer Patents or
Cempra Patents, 

30

 

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

        (b)   If a Party terminates this Agreement in accordance with Section 9.2, then, at the other Party's express election
upon notice of termination, all licenses granted by the terminating Party to the non-terminating Party shall survive, in which event, the non-terminating Party's obligations
set forth in Article 4 and in Article 6 (including without limitation the obligation to pay to the terminating Party any milestone and/or royalty payments set forth in
Article 6 and provide the reports set forth therein), the non-terminating Party's rights under Section 7, and al other provisions of this Agreement applicable to the
foregoing, other than Sections 1A, 2, and 3 (which shall terminate), shall survive. It is understood and agreed that following such a termination, the terminating Party shall retain the right
to terminate the other Party's remaining licenses and rights in accordance with Section 9.3, and the non-terminating Party shall retain the right to subsequently terminate its
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 in accordance with Section 9.3, then at Cempra's express election upon notice
of termination, all licenses and rights granted by Optimer to Cempra shall survive, in which event Cempra's obligations set forth in Article 4 and in Article 6 (including without
limitation the obligation to pay to Optimer the royalty and milestone payments set forth in Article 6 and provide the reports set forth therein), Cempra's rights under Section 7,
and all other provisions of this Agreement applicable to the foregoing, other than Sections 1A, 2, and 3 (which shall terminate), shall survive. It is understood and agreed that following such
a termination, Optimer shall retain the right to terminate the remaining licenses and rights of Cempra in accordance with Section 9.3, and Cempra shall retain the right to subsequently
terminate its 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. 

        (d)   If Optimer terminates this Agreement in accordance with Section 9.3, then at Optimer's express election upon
notice of termination, all licenses and rights granted by Cempra to Optimer shall survive, in which event Optimer's obligations set forth in Article 4 and in Article 6 (including
without limitation obligation to pay to Cempra the royalty and milestone payments set forth in Article 6 and provide the reports set forth therein), Optimer's rights under
Article 7, and all other provisions of this Agreement applicable to the foregoing, other than Sections 1A, 2, and 3 (which shall terminate), shall survive. It is understood and agreed
that following such a termination, Cempra shall retain the right to terminate the remaining licenses and rights of Optimer in accordance with Section 9.3, and Optimer shall retain the right to
subsequently terminate its remaining licenses and rights under this Agreement pursuant to Section 9.2, in which event the applicable provisions of Section 9.4(b) shall apply. 

        (e)   Termination of this Agreement shall not terminate the obligations of a Party to make any payments then owing through the
date of termination or the obligations of confidentiality imposed on either Party. 

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

31

 

        9.5    Survival.    The following provisions shall survive any
expiration 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 surviving provisions or necessary to give
them effect. 

10.    REPRESENTATIONS AND WARRANTIES    

        10.1    General Representations and Warranties.    Each Party
represents and warrants to the other that, as of the date hereof: 

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

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

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

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

        (e)   all necessary consents, approvals and authorizations of all governmental authorities and other Persons required to be
obtained by such Party to enter into, or perform its obligations under, this Agreement have been obtained (provided, however, that the foregoing shall not be construed as a representation or warranty
concerning governmental authorizations and non-infringement of intellectual property rights of Third Parties disclaimed in Section 10.3 below). 

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

        (g)   all products, materials and Information created by the Parties under this Agreement is current and accurate, is such
Party's original work (except for identified third-party materials), and, to such Party's knowledge, will not infringe upon, violate or misappropriate any intellectual property right of any third
party; and 

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

        10.2    Optimer Representations and Warranties.    Optimer represents,
warrants, and covenants that: 

        (a)   Optimer has not, and during the term of the Agreement will not, grant any right to any Third Party relating to Optimer
Technology which conflicts with the rights granted to Cempra hereunder; 

        (b)   During the Term, Optimer will not, without the prior written consent of Cempra, encumber the Optimer Patents or Optimer
Know-How, respectively, with liens, mortgages, security interests or another similar interest that would give the holder the right to convert the interest into ownership, unless the
encumbrance is expressly subject to the licenses herein; 

32

 

        (c)   Optimer has (or will have at the time performance is due) maintained and will maintain and keep in full force and
effect all agreements necessary to perform its obligations hereunder; 

        (d)   Optimer does not have any present knowledge from which it would reasonably conclude that the Optimer Patents are invalid
or that their exercise would infringe patent rights of any Third Party; 

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

        (f)    To the best of Optimer's knowledge, each item included in the Optimer Patents that is registered, filed or issued under
the authority of an appropriate governmental authority is and at all times has been in compliance with all legal requirements applicable thereto, and all filings, payments, and other
actions required to be made or taken to maintain such item of Optimer Patents in full force and effect have been made by the applicable deadline. Furthermore, (1) no patent application or
patent included in the Optimer Patents has been abandoned or allowed to lapse and (2) no provisional patent application included therein has expired without the filing of a nonprovisional
patent application that claims the benefit of such provisional patent application. 

        (g)   Optimer has, to the knowledge of Optimer's executive management, furnished to Cempra all tangible manifestations of the
Optimer Technology which Optimer owns or possesses as of the Effective Date; 

        (h)   Optimer has taken commercially reasonable measures, using its good faith business judgment, to protect the
confidentiality of the Optimer Know How; 

        (i)    None of the Optimer Patents is the subject of any pending interference, opposition, cancellation or other protest
proceeding; 

        (j)    Optimer has no knowledge of any claim pending, threatened, or previously made alleging infringement or misappropriation
of any patent, trade secret, or other intellectual property right of any Third Party relative to the Optimer Patents, the technology claimed therein, Optimer Know How, Test Products, Macrolide
Antibiotics, or Cempra Products; and 

        (k)   Optimer is not aware of any third party activities which would constitute misappropriation or infringement of 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 has been obtained by Optimer pursuant to any license or other agreement with any third party; 

        (m)  Optimer does not presently own or Control any rights to any trademarks, service marks, trade dress, or similar
intellectual property rights with respect to Cempra Products or Macrolide Antibiotics. 

        10.3    Cempra Representations and Warranties.    Optimer represents,
warrants, and covenants that: 

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

        (b)   During the Term, Cempra will not, without the prior written consent of Optimer, encumber the Cempra Patents or Cempra
Know-How, respectively, with liens, mortgages, security 

33

 

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

        (c)   Cempra has (or will have at the time performance is due) maintained and will maintain and keep in full force and
effect all agreements necessary to perform its obligations hereunder. 

        10.4    Disclaimer Concerning Technology.    EACH PARTY EXPRESSLY
DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, EXCEPT FOR THOSE SET FORTH IN THIS AGREEMENT, INCLUDING WITHOUT LIMITATION THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, (A) BOTH PARTIES ACKNOWLEDGE AND AGREE THAT THE ACTIVITIES TO BE CONDUCTED UNDER THE RESEARCH PROGRAM ARE
INHERENTLY UNCERTAIN AND, PROVIDED THAT EACH PARTY ENGAGES IN DILIGENT EFFORTS TO PERFORM ITS OBLIGATIONS HEREUNDER, THAT THERE ARE OTHERWISE NO ASSURANCES THAT THE PARTIES WILL SUCCESSFULLY
SYNTHESIZE MACROLIDE ANTIBIOTICS MEETING THE SPECIFICATIONS SET FORTH BY CEMPRA AND OPTIMER JOINTLY OR IDENTIFY A TEST PRODUCT, OR SUCCESSFULLY CONDUCT OTHER ACTIVITIES CONTEMPLATED TO BE PERFORMED IN
THE RESEARCH PROGRAM, OR THAT ANY MACROLIDE ANTIBIOTICS OR TEST PRODUCT WILL BE SUCCESSFULLY DEVELOPED AND COMMERCIALIZED BY CEMPRA AS A LICENSED PRODUCT, OR THAT REQUIRED GOVERNMENTAL APPROVALS IN
CONNECTION WITH THE MANUFACTURE, CLINICAL DEVELOPMENT AND/OR COMMERCIALIZATION OF MACROLIDE ANTIBIOTICS, TEST PRODUCTS AND/OR LICENSED PRODUCTS CAN OR WILL BE OBTAINED; AND (B) EACH PARTY
EXPRESSLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, TO THE CONTRARY. 

11.    INDEMNITIES    

        11.1    Mutual Indemnification.    Subject to Section 11.2,
each Party hereby agrees to indemnify, defend and hold the other Party, its Affiliates, its licensees, and its and their officers, directors, employees, consultants, contractors, sublicensees and
agents (collectively, "Representatives") harmless from and against 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 of any 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) material breach by the indemnifying Party of this Agreement, (b) breach of any applicable law, rule, or regulation by
such indemnifying Party in connection with the performance of its obligations hereunder or the exercise of licenses or rights conveyed hereunder, (c) gross negligence or willful misconduct by
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, Test Products, or Products, except, in each case, to the extent such Damages are subject to indemnification by the other Party under this Section 11.1. 

        11.2    Notification.    In the event that any Third Party asserts a
claim with respect to any matter for which a Party (the "Indemnified Party") is entitled to indemnification hereunder
(a "Third Party Claim"), then the Indemnified Party shall promptly notify the Party obligated to indemnify the Indemnified Party
(the "Indemnifying Party") thereof; provided, however, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party
shall relieve the Indemnifying Party from any obligation hereunder unless (and then only to the extent that) the Indemnifying Party is prejudiced thereby. Indemnifying Party may assume the
complete control of the defense, compromise or settlement of any Third Party Claim (provided that any settlement of any Third Party Claim that (i) subjects Indemnified Party to any
non-indemnified liability or (ii) admits fault or wrongdoing on the 

34

 

part
of Indemnified Party will require the prior written consent of such Indemnified Party, provided such consent will not be unreasonably withheld), including, at its own expense, employment of legal
counsel, and at any time thereafter Indemnifying Party will be entitled to exercise, on behalf of Indemnified Party, any rights which may mitigate the extent or amount of such Third Party Claim;  provided, however, that if Indemnifying Party has exercised its right to assume control of such Third
Party Claim, Indemnified Party (i) may, in its sole discretion and at its own expense, employ legal counsel to represent it (in addition to the legal counsel employed by Indemnifying
Party) in any such matter, and in such event legal counsel selected by Indemnified Party will be required to reasonably confer and cooperate with such counsel of Indemnifying Party in such defense,
compromise or settlement for the purpose of informing and sharing information with Indemnifying Party; (ii) will, at Indemnifying Party's own expense, make available to Indemnifying Party those
employees, officers, contractors, and directors of Indemnified Party whose assistance, testimony or presence is necessary or appropriate to assist Indemnifying Party in evaluating and in defending any
such Third Party Claim; provided, however, that any such access will be conducted in such a manner as
not to interfere unreasonably with the operations of the businesses of Indemnified Party; and (iii) will otherwise fully cooperate with Indemnifying Party and its legal counsel in the
investigation and defense of such Third Party Claim. 

        11.3    Exclusion of Damages.    IN NO EVENT SHALL EITHER PARTY OR ITS
AFFILIATES BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES, WHETHER BASED UPON A CLAIM OR ACTION OF CONTRACT, WARRANTY, NEGLIGENCE,
STRICT LIABILITY OR OTHER TORT, OR OTHERWISE, ARISING OUT OF THIS AGREEMENT, UNLESS SUCH DAMAGES ARE DUE TO THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE LIABLE PARTY. NOTWITHSTANDING ANYTHING TO
THE CONTRARY, THE FOREGOING SHALL NOT BE CONSTRUED TO LIMIT THE INDEMNITY OBLIGATIONS SET FORTH IN SECTION 11.1 ABOVE OR EITHER PARTY'S LIABILITY FOR PATENT INFRINGEMENT OR BREACH OF
SECTIONS 8 (CONFIDENTIALITY), 7 (INTELLECTUAL PROPERTY), 5.1 (WITH RESPECT TO
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 to certain
matters may from time to time arise during the Term that relate to either Party's rights and/or obligations hereunder. It is the objective of the Parties to facilitate the resolution of disputes
arising under this Agreement in an expedient manner by mutual cooperation and without resort to litigation or arbitration. To accomplish this objective, the Parties agree that, in the event of any
disputes, controversies or differences that may arise between the Parties, out of or in relation to or in connection with this Agreement, or for the breach thereof, upon the request of either Party,
the Parties agree to meet and discuss in good faith a possible resolution thereof. If the matter is not resolved within thirty (30) days following the request for discussions, either Party may
refer the matter to arbitration            in accordance with Section 12.3 below. Notwithstanding the foregoing, each Party shall be entitled to seek appropriate injunctive relief in
any
court of competent jurisdiction (i) to preserve such Party's rights pending resolution of arbitration proceedings under this Agreement, (ii) to avoid irreparable damages, or
(iii) with respect to any matters concerning intellectual property rights or confidentiality. 

        12.2    Governing Law.    Resolution of all disputes arising out of or
related to this Agreement or the performance, enforcement, breach or termination of this Agreement and any remedies relating thereto, shall be governed by and construed under the substantive laws of
the State of California, without regard to conflicts of law rules that would provide for application of the law of a jurisdiction outside California. 

35

 

        12.3    Arbitration.    Except as otherwise expressly provided herein,
the Parties agree that any dispute not resolved internally by the Parties, within thirty (30) days after meeting pursuant to Section 12.1, shall be finally resolved, upon notice to the
other Party by either Party, by binding arbitration in accordance with the provisions of this Section 12.3. The arbitration shall be conducted by the Judicial Arbitration and Mediation
services, Inc. ("JAMS") under its rules of arbitration then in effect, 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. In the event a Party fails to select its such arbitrator within fifteen (15) business days of its receipt of the notice provided above, the other Party shall be entitled to select
such arbitrator. The arbitrators shall use their best efforts to rule on each disputed issue within sixty (60) calendar days after completion of hearings on the matter(s) in dispute, and the
arbitration decision(s) shall be rendered in writing to the 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 court in any jurisdiction. Unless otherwise mutually agreed upon by the Parties, the arbitration proceedings shall be conducted in New York, New York. One or more of the Parties to
any arbitration proceeding commenced under this Agreement shall be entitled, as a part
of the arbitration award, to the costs and expenses (including reasonable attorneys fees and interest on any award) of investigating, preparing and pursuing an arbitration claim to the extent that the
arbitrators award such costs and expenses, provided that, notwithstanding the foregoing, the Parties shall bear the costs and expenses incurred in connection with an arbitration under this section in
inverse proportion to the award granted to each of them by the arbitrators. 

13.    MISCELLANEOUS    

        13.1    Entire Agreement; Amendment.    This Agreement, 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
Parties hereto and supersedes and terminates all prior agreements and understandings between 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 herein and therein. No subsequent alteration, amendment, change or addition to
this Agreement shall be binding upon the Parties unless reduced to writing and signed by an authorized officer of each Party. 

        13.2    Force Majeure.    Both Parties shall be excused from the
performance of their obligations under this Agreement to the extent that such performance is prevented by force majeure and the nonperforming Party promptly provides notice of the prevention to the
other Party. Such excuse shall be continued so long as the condition constituting force majeure continues and the nonperforming Party takes reasonable efforts to remove the condition. For purposes of
this Agreement, force majeure shall include conditions beyond the control of the Parties, including without limitation, an act of God, voluntary or involuntary compliance with any regulation, law or
order of any government, war, civil commotion, labor strike or lock-out, epidemic, failure or default of public utilities or common carriers, destruction of production facilities or
materials by fire, earthquake, storm or like catastrophe; provided, however, the payment of invoices due
and owing hereunder shall not be delayed by the payer because of a force majeure affecting the payer, unless such force majeure specifically precludes the payment process. 

        13.3    Notices.    Any notices, approvals, or consents required or
permitted to be given under this Agreement shall be in writing, shall specifically refer to this Agreement and shall be deemed to have been sufficiently given for all purposes if mailed by first class
certified or registered mail, postage 

36

 

prepaid,
or by internationally recognized express delivery service or personally delivered. Unless otherwise specified in writing, the mailing addresses of the Parties 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 States Dollars.    References in this Agreement
to "Dollars" or "$" shall mean the legal tender of the United States of America. 

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

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

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

        13.8    Further Actions.    Each Party agrees to execute, acknowledge
and deliver such further instruments (including without limitation patent assignments), and to do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent
of this Agreement. 

        13.9    Severability.    If any one or more of the provisions of this
Agreement is held to be invalid or unenforceable by any court of competent jurisdiction from which no appeal can be or is taken, or in arbitration proceedings between the Parties as set forth in
Article 12 of this Agreement, the provision shall be considered severed from this Agreement and shall not serve to invalidate any remaining provisions hereof. The Parties shall make a good
faith effort to replace any invalid or unenforceable provision with a valid and enforceable one such that the objectives contemplated by the Parties when entering into this Agreement may
be realized. 

        13.10    Headings.    The headings for each article and section in
this Agreement have been inserted for convenience of reference only and are not intended to limit or expand on the meaning of the language contained in the particular article or section. 

        13.11    No
Waiver.    Any delay in enforcing a Party's rights under this Agreement or any waiver as to a particular default or other matter shall not constitute a waiver of such
Party's rights to the future 

37

 

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

 
 

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

38

 

IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate originals by their proper officers as of the date and year first
above written. 

	CEMPRA PHARMACEUTICALS INC.	 	OPTIMER PHARMACEUTICALS, INC.
	
BY:	
 	

	
 	

BY:	
 	

	

NAME:	
 	

	
 	

NAME:	
 	

	

TITLE:	
 	

	
 	

TITLE:	
 	

39

 
 

Schedule 1.35    
    
    Optimer Patents    
    

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	 	 
	 	 	
	 	
	 	
	 	 

 
 

Schedule 6.1(1)    
    
    Subscription Agreement    
    

        THE
SECURITIES SUBJECT TO THIS SUBSCRIPTION AGREEMENT ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR
THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. 

NAME OF PURCHASER:

OPTIMER PHARMACEUTICALS INC.  

 CEMPRA PHARMACEUTICALS, INC.  

SUBSCRIPTION AGREEMENT  

        The undersigned (the "Purchaser") hereby subscribes to and agrees to purchase            shares of Common Stock (the "Shares")
of Cempra
Pharmaceuticals, Inc., a Delaware corporation (the "Corporation"). The purchase price hereunder shall be considered paid in full upon the execution by Purchaser of that certain Collaborative
Research and Development and License Agreement dated March 31, 2006 (the "License Agreement") between the Corporation and Purchaser, with consideration taking the form of the Purchaser's
agreement to perform certain obligations and grant of various intellectual property rights to the Corporation pursuant to such License Agreement. 

        NOW,
THEREFORE, for and in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows: 

        Section 1.    Stock Subscription.    The Purchaser hereby subscribes for            shares of Corporation
Common Stock. The Shares are being issued as consideration under the License Agreement. 

        Section 2.    Representation and Warranties of the Purchaser.    The Purchaser hereby represents, warrants and
agrees as follows: 

        (a)   The
Purchaser is a resident of the State of California, is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware,
and has all the power and authority to enter into, and perform its obligations under this Subscription Agreement. 

        (b)   That
the transfer of securities contemplated hereby is made in reliance upon the Purchaser's representation to the Corporation, which by its acceptance hereof the
Purchaser hereby confirms, that the Shares to be received by it will be acquired for investment for its own account, not as a nominee or agent, and not with a view to the sale or distribution of any
part thereof, and that it has no present intention of selling, granting participation in, or otherwise distributing the same. By executing this Subscription Agreement, the Purchaser further represents
that it does not have any contract, undertaking, agreement, or arrangement with any person to sell, transfer or grant participations to such person, or to any third person, with respect to any of the
Shares. 

        (c)   The
Purchaser understands that the Shares have not been registered under the 1933 Act on the grounds that the sale provided for in this Agreement and the issuance of
securities hereunder is exempt from registration under the 1933 Act, and that the Corporation's reliance on such exemption is predicated in part on the Purchaser's representations set forth herein.
The Purchaser realizes that the basis for the exemption may not be present if, notwithstanding such representations, the Purchaser has in mind merely acquiring the Shares for a fixed or determined
period in the future, or for a market rise, or for sale if the market does not rise. The Purchaser does not have any such intention. 

        (d)   The
Purchaser represents that it is an "Accredited Investor" as such term is defined in Rule 501 or Regulation D promulgated under the Securities Act of
1933, as amended. 

 

        (e)   The
Purchaser represents that it is experienced in evaluating early-stage companies such as the Corporation, is able to fend for itself in the transactions contemplated
by this Agreement, has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment, and has the ability to bear the economic
risks of its investment. The Purchaser further represents that it has had access, during the course of the transactions and prior to its acquisition of Shares, to all such information as it deemed
necessary or appropriate (to the extent the Corporation possessed such information or could acquire it without unreasonable effort or expense), and that it has had, during the course of the
transactions and prior to its acquisition of Shares, the opportunity to ask questions of, and receive answers from, the Corporation concerning the terms and conditions of the offering and to obtain
additional information (to the extent the Corporation possessed such information or could acquire it without unreasonable effort or expense) necessary to verify the accuracy of any information
furnished to him or to which it had access. 

        (f)    The
Purchaser understands that the Shares may not be sold, transferred or otherwise disposed of without registration under the 1933 Act or an exemption therefrom, and
that in the absence of an effective registration statement covering the Shares or an available exemption from registration under the 1933 Act, the Shares must be held indefinitely. In particular, the
Purchaser is aware that the Shares may not be sold pursuant to Rule 144 promulgated under the 1933 Act unless all of the conditions of that Rule are met. Among the conditions for use of
Rule 144 is the availability of current information to the public about the Corporation. Such information is not now available and the Corporation has no present plans to make such information
available. The Purchaser represents that, in the absence of an effective registration statement covering the Shares it will sell, transfer, or otherwise dispose of the Shares only in a manner
consistent with its representations set forth herein. 

        (g)   The
Purchaser agrees that in no event will it make a transfer or disposition of any of the Shares (other than pursuant to an effective registration statement under the
1933 Act or, to the Corporation's reasonable satisfaction, pursuant to Rule 144), unless and until (i) the Purchaser shall have notified the Corporation of the proposed disposition and
shall have furnished the Corporation with a statement of the circumstances surrounding the disposition, and (ii) if requested by the Corporation, at the expense of the Purchaser or transferee,
it shall have furnished to the Corporation an opinion of counsel, reasonably satisfactory to the Corporation, to the effect that such transfer may be made without registration under the 1933 Act. 

        (h)   The
Purchaser understands that each certificate representing the Shares will be endorsed with a legend substantially as follows: 

"THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS, OR THE AVAILABILITY OF AN EXEMPTION FROM THE
REGISTRATION PROVISIONS OF THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS." 

        (i)    The
Purchaser understands that no public market now exists for any of the securities issued by the Corporation and that there is no assurance that a public market will
ever exist for the Shares. 

2

 

        Section 3.    Indemnity.    The Purchaser will indemnify the Corporation, its officers, directors,
shareholders, employees and agents against any losses or damages suffered by any of them as a result of the failure of the above representations and warranties to be true or the failure of the
Purchaser to comply with the agreements set forth herein. 

        Section 4.    Representations and Warranties of the Corporation.    The Corporation hereby represents and
warrants to the Purchaser as follows: 

        (a)   The
Corporation is a corporation duly organized and validly existing under the laws of the State of Delaware. The Corporation has the requisite corporate power to own
and operate its properties and assets, and to carry on its business as currently conducted. 

        (b)   The
Corporation has a requisite legal and corporate power to: (i) execute and deliver this Subscription Agreement; and (ii) to carry out and perform its
obligations under this Subscription Agreement. 

        (c)   [The
Corporation has no subsidiaries or affiliated companies and does not otherwise own or control, directly or indirectly, any other corporation,
association or business entity.]1 

	1
	This
subsection shall be subject to deletion or revision with respect to issuances made following the Effective Date of the License Agreement as necessary to reflect the
facts as they exist as of such date of such issuance. 

        (d)   [The
authorized capital stock of the Corporation consists of              shares of Common Stock, of
which              shares are issued and
outstanding prior to the sale of the stock contemplated hereunder. Other than as set forth above and except for the transactions contemplated by this Agreement and the License Agreement, there are no
other outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal or similar rights) or agreements, orally or in writing, for the purchase or
acquisition from the Corporation of any of the Corporation's securities.]2 

	2
	This
subsection shall be subject to revision with respect to issuances made following the Effective Date of the License Agreement as necessary to reflect the facts as they
exist as of such date of such issuances. 

        (e)   The
outstanding shares of the capital stock of the Corporation are duly and validly issued, fully paid and non-assessable. The Shares, issuable upon
execution of the License Agreement, shall, upon the terms of the License Agreement, be duly and validly issued, fully paid and non-assessable. 

        (f)    The
Corporation is not, and will not be by virtue of entering into, and performing its obligations under, this Agreement, in violation of any term of the Corporation's
Certificate of Incorporation, Bylaws or contractual undertakings or the provisions of any material agreement, mortgage, indenture, contract, lease agreement, instrument, judgment or decree to which
the Corporation is a party or by which it is bound. 

        (g)   There
are no actions, suits, proceedings or investigations pending or, to the knowledge of the Corporation, currently threatened against the Corporation or its
properties before any court or governmental body. 

        (h)   No
representation or warranty by the Corporation in this Agreement, or in connection with the execution or performance of this Agreement, contains or will contain any
untrue statement of a material fact or omits or will omit to state a material fact required to be stated herein or necessary to make any statement not misleading. 

        Section 5.    Lock-Up Agreement.    The Purchaser agrees, in connection with the first registration
with the United States Securities and Exchange Commission under the Securities Act of 1933, as 

3

 

amended,
of the public sale of the Corporation's Common Stock upon request of the Corporation or any underwriters managing such offering, not to sell, make any short sale of, loan, grant any option
for the purchase of or otherwise dispose of any such securities of the Corporation (other than those included in the registration) or the economic risk of the ownership thereof without the prior
written consent of the Corporation or such underwriters, as the case may be, for such period of time (not to exceed 180 days) from the effective date of such registration as the Corporation or
the underwriters, as the case may be, shall specify; provided each officer and director of the Corporation and all other holders of at least 5% of the Corporation's voting securities will agree to the
same restriction. Each such recipient agrees that the Corporation may instruct its transfer agent to place stop-transfer notations in its records to enforce this paragraph. 

        Section 5.    Miscellaneous    

        5.1    Amendment.    This Subscription Agreement may be amended only by written agreement among Purchaser and the
Corporation. 

        5.2    Survival of Representations, Warranties and Agreements.    All representations, warranties and agreements made
in this Subscription Agreement, or any other instrument or document delivered in connection herewith or therewith, shall survive the execution and delivery hereof or thereof. 

        5.3    Further Assurances.    All parties agree to execute any additional documents necessary to carry out the
purposes of this Subscription Agreement. 

        5.4    Notices.    All demands, notices, approvals, consents, requests, and other communications hereunder shall be in
writing and shall be deemed to have been given when the writing is delivered, if given or delivered by hand, overnight delivery service or by facsimile (with confirmed receipt), or three
(3) days after being mailed, if mailed, by first class, registered or certified mail, postage prepaid, to the applicable address established under Section 13.3 of the License Agreement. 

        5.5    Governing Law; Successors and Assigns.    This Subscription Agreement shall be governed by the laws of the
State of North Carolina. The rights and benefits of this Subscription Agreement shall inure to the benefit of, and be enforceable by, the successors and assigns of the parties. 

[Remainder of page intentionally left blank.] 

4

 

        IN
WITNESS WHEREOF, the parties have duly executed this Agreement as of this        day of                 200  .

	 	 	CORPORATION:
	

 	
 	
CEMPRA PHARMACEUTICALS, INC.
	

 	
 	

By:	
 	

	

 	
 	

Name:	
 	

	

 	
 	

Title:	
 	

	

 	
 	
PURCHASER:
	

 	
 	
OPTIMER PHARMACEUTICALS INC.
	

 	
 	

	

 	
 	

Name:	
 	

	

 	
 	

Title:	
 	

5

 
 

Schedule 6.1(2)
  Shareholders Agreement    
    

AGREEMENT TO JOIN AS A PARTY TO STOCKHOLDERS AGREEMENT

OF CEMPRA PHARMACEUTICALS, INC.  

        THIS AGREEMENT (the "Agreement") dated as of March 31, 2006 is between CEMPRA PHARMACEUTICALS, INC.,
a Delaware corporation (the "Company"), and 

        OPTIMER
PHARMACEUTICALS, INC. (the "New Stockholder"). 

WITNESSETH:  

        WHEREAS, the Company and certain holders of capital stock of the Company (the "Existing Stockholders") are parties
to Stockholders Agreement, dated as of January 11, 2006, a copy of which is attached hereto as Exhibit A (the
"Stockholders"); 

        WHEREAS,
pursuant to that certain Collaborative Research and Development and License Agreement and Subscription Agreement between the parties, each dated March 31, 2006, New
Stockholder has received [***] ([***]) shares of the Company's Common Stock, $.0001 par value (the "New Shares"); and 

        WHEREAS,
Section 5.12 of the Stockholders Agreement permits any party who acquires shares of the Company's capital stock to become party to the Stockholders Agreement in the form
of a joinder agreement whereby such party agrees to be bound and subject to the terms of the Stockholders Agreement with respect to such shares held by such Company stockholder; and 

        WHEREAS,
the New Stockholder must join as party to the Shareholders Agreement in connection with their receipt of the New Shares. 

        NOW,
THEREFORE, in consideration of the issuance of New Shares to New Stockholder and for the premises, the covenants of the parties set forth below and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows. 

        1.     The
undersigned New Stockholder hereby joins as party to and thereby agrees to be bound by the terms and conditions of the Stockholders Agreement, effective as of the
date hereof. 

        2.     The
Company hereby consents to New Stockholder joining as party to the Stockholders Agreement. 

        3.     For
all purposes under the Stockholders Agreement the New Stockholder shall be deemed a "Stockholder" and the New Shares shall be deemed to be "Shares." 

        4.     This
Agreement shall be governed by and interpreted in accordance with the laws of the State of North Carolina. 

        5.     This
Agreement may be executed in one or more counterparts. 

[The Next Page is the Signature Page]

 

        IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above. 

	 	 	OPTIMER PHARMACEUTICALS, INC.
	

 	
 	

By:	
 	

	

 	
 	

Name:	
 	

	

 	
 	

Title:	
 	

	

 	
 	
CEMPRA PHARMACEUTICALS, INC.
	

 	
 	

By:	
 	

	

 	
 	

Name:	
 	

	

 	
 	

Title:	
 	

2

EXHIBIT A

 Stockholders Agreement  

CEMPRA PHARMACEUTICALS, INC.  

 STOCKHOLDERS AGREEMENT  

        This Stockholders Agreement (the "Agreement") is made as of this 11th day of January, 2006, by and
among Cempra Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and the persons owning shares of the capital stock of the Company
listed on the Schedule of Stockholders attached hereto as Exhibit A (and any additional stockholder named in any amendment to  Exhibit A, referred
to herein individually as a "Stockholder" and collectively as the
"Stockholders"). 

ARTICLE 1 RECITALS  

        1.1   The
Stockholders are collectively the owners of all the issued and outstanding capital stock of the Company (the
"Shares"), as indicated on Exhibit A (which shall be amended from time to time to reflect
purchases or transfers of Shares). 

        1.2   The
Company and the Stockholders realize that, in the event of the death or termination of employment of one of the Stockholders, or the sale, transfer or encumbrance of
his/its stock in the Company during his/its lifetime, should the stock of the Company owned by such Stockholder pass into the ownership or control of a person or entity other than the remaining
Stockholders, it would tend to disrupt the harmonious and successful management and control of the Company. 

        1.3   It
is the earnest desire of the Company and the Stockholders to avoid the happening of any such unfortunate contingencies by assuring to the remaining Stockholders a
succession to the ownership and control of the Company through the acquisition of the stock of a Stockholder at the time of his death, termination of employment or prior to the sale or encumbrance of
such Stockholder's stock. 

        In
consideration of the mutual covenants contained herein, and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows: 

ARTICLE 2 TRANSFER OF SHARES  

        2.1    Prohibited Transfers.    No Stockholder shall sell, assign, transfer or dispose of all or any of his/its Shares
except in compliance with the terms of this Agreement. Notwithstanding anything to the contrary contained in this Agreement, any Stockholder may transfer without the necessity of prior approval all or
any of his/its Shares by way of gift to his spouse, to any of his lineal descendants or ancestors, or to any trust for the benefit of any one or more of such Stockholder, his spouse or his lineal
descendants or ancestors. The Company shall not be required to transfer on its books any capital stock transferred in violation hereof or to treat any transferee of capital stock transferred in
violation hereof as an owner or Stockholder. 

        2.2    Right of First Refusal on Dispositions.    

        (a)   If
at any time a Stockholder (a "Selling Stockholder") desires to sell or otherwise transfer all or any part of his
Shares pursuant to a bona fide offer from a third party (the "Proposed Transferee"), the Selling Stockholder shall submit a written offer (the
"Offer"), by delivering the Offer to the Company and the other Stockholders, to sell such Shares (the "Offered
Shares") to the Company on terms and conditions, including price, not less favorable than those on which the Selling Stockholder proposes to sell such Offered Shares to the
Proposed Transferee. The Offer shall disclose the identity of the Proposed Transferee, the number of Offered Shares proposed to be sold, the total number of Shares owned by the Selling Stockholder,
the terms and conditions, including price, of the proposed sale, and any other material facts relating to the proposed sale. 

        (b)   If
the Company does not purchase all of the Offered Shares within 30 days after receipt of notice of an Offer (the "Option
Period"), then the other Stockholders shall have a 30-day right, beginning on the day after the expiration of the Option Period, to purchase all such Offered
Shares, on the terms and conditions disclosed in the Offer (the "Second Option Period"), on a pro-rata basis based on the total Shares owned
by all Stockholders electing to purchase the Offered Shares. Upon the expiration of the Second Option Period or the express rejection of the Offer by both the Company and 

 

other
Stockholders, whichever occurs earlier, the Selling Stockholder may sell all of the Offered Shares to the Proposed Transferee at any time within 90 days after such time, subject to the
provisions of Section 2.3. Any such sale shall be to the Proposed Transferee, at not less than the price and upon other terms and conditions, if any, not more favorable to the Proposed
Transferee than those specified in the Offer. Any remaining Offered Shares not sold within such 90-day period shall again be subject to the requirements of a prior offer pursuant to this
Section 2.2. If Offered Shares are sold pursuant to this Section 2.2 to any purchaser who is not a party to this Agreement, the purchaser of such Offered Shares shall execute a
counterpart of this Agreement as a precondition of the purchase of such Offered Shares and any Offered Shares sold to such purchaser shall continue to be subject to the provisions of this Agreement,
including, without limitation, the provisions of Article II. 

        2.3    Right of Participation in Sales.    

        (a)   If
at any time a Stockholder desires to sell any Shares owned by him to a Proposed Transferee, and those Shares to be transferred have not been purchased by the Company
or other Stockholders under Section 2.2, each of the other Stockholders (other than those who have elected to purchase Shares pursuant to Section 2.2) shall have the right to sell to the
Proposed Transferee, as a condition to such sale by the Selling Stockholder, at the same price per share and on the same terms and conditions as involved in such sale by the Selling Stockholder, a  pro rata portion of the amount of Shares proposed to be sold to the Proposed Transferee. The "pro rata
portion" of Shares which a Stockholder shall be entitled to sell to the Proposed Transferee shall be that number of Shares as shall equal the number of Offered Shares proposed to be sold to the
Proposed Transferee multiplied by a fraction, the numerator of which is the aggregate of all shares of Common Stock (including shares issuable upon conversion or exercise of Preferred Stock, warrants,
options or other convertible securities held by such person) which are then held by the Participating Stockholder (as defined below), and the denominator of which is the aggregate of all shares of
Common Stock (including shares issuable upon conversion or exercise of Preferred Stock warrants, options or other convertible securities) which are then held by the Selling Stockholder and all
Stockholders wishing to participate in any sale under this Section 2.3. 

        (b)   Each
Stockholder who wishes to make a sale to a Proposed Transferee which is subject to this Section 2.3 shall, after complying with the provisions of
Section 2.2, give to each other Stockholder notice of such proposed sale, and stating that all Offered Shares were not purchased pursuant to the Offer as discussed in Section 2.2. Such
notice shall be given at least 20 days prior to the date of the proposed sale to the Proposed Transferee. Each other Stockholder wishing to participate in such sale (a
"Participating Stockholder") shall notify the Selling Stockholder in writing of such intention within 15 days after such Participating
Stockholder's receipt of the notice described in the preceding sentence. 

        (c)   The
Selling Stockholder and each Participating Stockholder shall sell to the Proposed Transferee all, or at the option of the Proposed Transferee, any part of the Shares
proposed to be sold by them at not less than the price and upon other terms and conditions, if any, not more favorable to the Proposed Transferee than those in the notice provided by the Selling
Stockholder under Section 2.3(b) above; provided, however, that any purchase of less than all of such Shares by the Proposed Transferee shall be
made from the Selling Stockholder and each Participating Stockholder pro rata based upon the relative number of the Shares that the Selling Stockholder
and each Participating Stockholder is otherwise entitled to sell pursuant to Section 2.3(a). 

        (d)   If
any Shares are sold pursuant to this Section 2.3 to any purchaser who is not a party to this Agreement, the purchaser of such Shares shall execute a
counterpart of this Agreement as a precondition to the purchase of such Shares and such Shares shall continue to be subject to the provisions of this Agreement. 

        2.4    Transferee Restrictions.    Any transferee of capital stock under this Agreement must become a party to this
Agreement by executing any instruments or documents that may be deemed necessary or 

2

 

advisable
by counsel to the Company to make such transferee a party to this Agreement, or such transfer shall be deemed null and void. If and when all the capital stock of the Selling Stockholder
shall have been transferred in accordance with the terms and conditions of this Agreement, such person shall cease to be a Stockholder under this Agreement. 

ARTICLE 3 VOTING OF SHARES  

        3.1    Election of Directors.    In any and all elections of directors of the Company (whether at a meeting or by
written consent in lieu of a meeting), each Stockholder shall vote or cause to be voted all Shares (as defined in Section 4 below) owned by him or it, or over which he or it has voting control,
and to otherwise use his or its best efforts to elect: 

        (a)   Four
(4) designees of [***]; and 

        (b)   any
additional designee or designees approved by [***]. 

        3.2    Vacancies.    Any vacancy in the office of a director shall be filled by either (a) a unanimous vote of
the Board of Directors, or (b) in the manner specified in Section 3.1 hereof. 

        3.3    Definition of Shares.    The term "Shares" shall mean and
include any and all shares of Common Stock and/or shares of Preferred Stock of the Company by whatever name called, which carry voting rights (including voting rights which arise by reason of default)
and shall include any shares now owned or subsequently acquired by a Stockholder, however acquired, including without limitation by stock splits and stock dividends. 

        3.4    Size of Board.    The Stockholders shall vote or cause to be voted (whether by actual vote or by written
consent), all shares owned by him, her or it, or over which he, she or it has voting control, and to otherwise use his, her or its best efforts to ensure that the size of the Company's Board of
Directors shall be set at four members, unless otherwise agreed to by [***]. 

ARTICLE 4 TERMINATION AND REVOCATION  

        4.1    Termination.    This Stockholders' Agreement shall continue in effect as long as at least two of the
Stockholders are living or in existence and own shares of the Company's capital stock, and shall terminate upon (i) the death of one of the last remaining two Stockholders and the consummation
of the transfer to, and payment for, his shares by the last remaining Stockholder or the Company, as the case may be, (ii) the closing of the Company's sale of all or substantially all of its
assets or the acquisition of the Company by another entity by means of merger or other transaction, or (iii) the closing of the Company's initial public offering covering the offer and sale of
its Common Stock for the account of the Company. 

        4.2    Revocation.    The voting agreements contained herein are coupled with an interest and may not be revoked,
except in accordance with the amendment provisions of Section 5.8 hereof. 

ARTICLE 5 MISCELLANEOUS  

        5.1    Restrictive Legend.    All certificates representing Shares owned or hereafter acquired by the Stockholders or
any permitted transferee of any Stockholder bound by this Agreement shall have affixed thereto a legend substantially in the following form: 

THE
SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND PROVISIONS OF A STOCKHOLDERS AGREEMENT BY AND AMONG THE COMPANY AND ITS STOCKHOLDERS, AND ARE TRANSFERABLE ONLY IN
ACCORDANCE WITH THE TERMS AND CONDITIONS OF SUCH AGREEMENT. A COPY OF THE STOCKHOLDERS AGREEMENT IS AVAILABLE FOR INSPECTION AT THE OFFICES OF THE SECRETARY OF THE COMPANY. 

3

 

        5.2    Action as Director.    No party hereto who is or may become a director of the Company either agrees or implies
that he will exercise his actions as a director in any manner other than in accordance with his considered judgment at such time with respect to the best interests of the Company and all of its
stockholders. 

        5.3    Transferees; Binding Effect.    This Agreement shall be binding upon the Stockholders and their respective
heirs, executors, administrators, legal representatives, successors and assigns. 

        5.4    Severability.    The provisions of this Agreement are severable, so that the invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability of any other term or provision of this Agreement, which shall remain in full force and effect. 

        5.5    Specific Enforcement.    Each Stockholder expressly agrees that other Stockholders and the Company may be
irreparably damaged if this Agreement is not specifically enforced. Upon a breach or threatened breach of the terms, covenants and/or conditions of this Agreement by any Stockholder, the other
Stockholders and the Company shall, in addition to all other remedies, each be entitled to apply for a temporary or permanent injunction, and/or a decree for specific performance, in accordance with
the provisions hereof. 

        5.6    Governing Law.    This Agreement shall be governed by, and construed and enforced in accordance with, the laws
of the State of North Carolina. 

        5.7    Notices.    Any and all notices or elections permitted or required to be made under this Agreement shall be in
writing, signed by the party giving such notice or election and shall be delivered personally, or sent by registered or certified mail, return receipt requested, to the other parties at their
respective addresses shown below. 

        5.8    Complete Agreement; Amendments.    This Agreement constitutes the full and complete agreement of the parties
hereto with respect to the subject matter hereof. No amendment, modification or termination of any provision of this Agreement shall be valid unless in writing and signed by each of the parties
hereto. 

        5.9    Pronouns.    Whenever the content may require, any pronouns used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural, and vice-versa. 

        5.10    Counterparts.    This Agreement may be executed in any number of counterparts, each of which shall constitute
one Agreement binding on all the parties hereto. 

        5.11    Captions.    Captions of sections have been added only for convenience and shall not be deemed to be a part of
this Agreement. 

        5.12    Additional Stockholders.    Any parties who acquire shares of the Company's capital stock after the date
hereof who as a condition of such acquisition are required to become party to this Agreement, may do so by executing a form of joinder agreement whereby such party agrees to be bound and subject to
the terms of this Agreement with respect to the Shares held by such Company stockholder. Upon execution of such joinder agreement, Exhibit A
shall be amended to reflect the addition of such stockholders and its Shares. 

[THE NEXT PAGE IS THE SIGNATURE PAGE]  

4

 

        IN
WITNESS WHEREOF, the parties have executed this Stockholders Agreement as of the date first above written. 

	 	 	THE COMPANY:
	

 	
 	
CEMPRA PHARMACEUTICALS, INC.
	

 	
 	

By:	
 	

	

 	
 	

Name:	
 	

    

	

 	
 	

Title:	
 	

    

	

 	
 	
THE STOCKHOLDERS:

	

 	
 	

    	

(SEAL)
	

 	
 	

    	

(SEAL)
	

 	
 	

    	

(SEAL)

5

EXHIBIT A  

SCHEDULE OF STOCKHOLDERS  

	Founders
 
	 	Number of Shares

of Common Stock

	[***]	 	[***]
	

[***]	
 	

[***]
	

[***]	
 	

[***]
	

[***]	
 	

[***]
	 	 	

	

TOTAL:	
 	

[***]
	 	 	

  

 
 

Schedule 8.5    
    
    Press Release    
    

        
[LOGO] 

FOR IMMEDIATE RELEASE

Cempra Pharmaceuticals, Inc.
  Prabhavathi Fernandes, Ph.D.

+ 1 919 467 1716

 
 

CEMPRA PHARMACEUTICALS RECEIVES EXCLUSIVE RIGHTS FROM OPTIMER PHARMACEUTICALS FOR ITS MACROLIDE ANTIBACTERIAL PROGRAM    
    

        MORRISVILLE, NC April 4, 2006 Cempra Pharmaceuticals, Inc. announced that Optimer Pharmaceuticals has granted to Cempra exclusive worldwide rights
(except ASEAN countries) to patents and know-how related to its macrolide/ketolide antibacterial program. Cempra has licensed rights to discover, develop and commercialize drugs based on
the class of compounds called macrolides and ketolides. Optimer will receive an equity position in Cempra, as well as royalties and milestone payments from any drugs and drug candidates developed
and/or co-developed by Cempra. The license includes joint drug discovery and development activities at both companies. 

        Included
in the license agreement are several pre-clinical compounds in addition to ground-breaking chemistry technology for creating the next generation of macrolides and
ketolides. Pre-clinical candidates derived from this technology have been shown to possess potent activity against multi-drug resistant Streptococcus
pnuemoniae and Streptococcus pyogenes.
The most advanced lead, is orally active with potent efficacy in animal models after once-a-day administration. This lead will be initially developed for respiratory tract
infections in adults and children, including sinusitis, pharyngitis, and community acquired mild to moderate pneumonia. 

        "We
are extremely happy that Optimer has chosen to license their macrolide patents and know-how to Cempra Pharmaceuticals to develop and commercialize new macrolides that
could be useful in the armamentarium for treating drug resistant bacteria" said Prabhavathi Fernandes, Ph.D., Cempra's President and Chief Executive Officer. She added, "This license will be the
founding stone of Cempra and will allow us to build a company focused on developing a portfolio of antibacterial compounds." 

        Dr. Michael
Chang, President and CEO of Optimer said "Optimer is enthusiastic about this opportunity to move some of our earlier stage programs forward. Cempra has recruited
leaders in antibacterial drug discovery and development and by licensing these macrolides to Cempra, we are enhancing the potential to realize value from our macrolide program as we focus our
resources on other later stage products." 

        About Macrolide Antibiotics    Macrolides such Clarithromycin, Azithromycin and Telithromycin are favored by physicians and
pediatricians for use in upper and lower respiratory tract infections where the primary pathogens could be S. pneumoniae, S. aureus, S. pyogenes,  H. influenzae, M. catarrhalis, and Legionella pneumophila. Macrolides are also used to treat  Helicobater pylori gastritis. Many of these pathogens are now
resistant to currently available macrolides. 

About Optimer Pharmaceuticals  

        Optimer Pharmaceuticals, Inc. in San Diego, California (www.optimerpharma.com), a privately held biotechnology company and leader in carbohydrate
chemistry, has a strong portfolio of late-stage anti-infective products. Older generation antibiotics were mostly derived from natural products and 

1

 

these
antibiotics have key sugar components that contribute to their antibacterial properties. The sugar components of antibiotics have been generally beyond the reach of medicinal chemistry. Optimer
has applied its unique sugar chemistry technology to modify regions of macrolides and ketolides that could not be addressed previously, discovering new antibiotics that are effective against
drug-resistant bacteria. 

About Cempra Pharmaceuticals  

        Cempra Pharmaceuticals, Inc., located in Morrisville, North Carolina, is a newly founded biotechnology company focused on anti-infectives. The
company was founded in 2006 by Prabhavathi Fernandes, Ph.D. who was the leading microbiologist for Clarithromycin development at Abbott. Cempra is committed to the development of
best-in-class antibiotics to meet urgent and unmet needs to treat drug resistant bacteria. 

        This press release contains statements that constitute "forward-looking statements These statements contain information that is not historical fact and are
essentially predictions and are subject to risks and uncertainties, including risks associated with our ability to raise capital, the success of pre-clinical studies and clinical trials,
intellectual property risks, the difficulty of predicting FDA filings and approvals, and market acceptance.

#
# # 

2

QuickLinks

Exhibit 10.4

COLLABORATIVE RESEARCH AND DEVELOPMENT AND LICENSE AGREEMENT

RECITALS

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

Schedule 1.35 Optimer Patents

Schedule 6.1(1) Subscription Agreement

Schedule 6.1(2) Shareholders Agreement

Schedule 8.5 Press Release

CEMPRA PHARMACEUTICALS RECEIVES EXCLUSIVE RIGHTS FROM OPTIMER PHARMACEUTICALS FOR ITS MACROLIDE ANTIBACTERIAL PROGRAMQuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 10.5    
    

 
 

*** Text Omitted and Filed Separately
  CONFIDENTIAL TREATMENT REQUESTED
  Under 17 C.F.R. §§ 200.80(b)(4) and 230.406    
    

 
 

FIRST AMENDMENT TO LICENSE AGREEMENT
  
    Between
  Optimer Pharmaceuticals, Inc.
  and
  Sloan-Kettering Institute for Cancer Research    

        This
First Amendment confirms the mutual understanding between Optimer Pharmaceuticals, Inc., a corporation, having a place of business at 10110 Sorrento Valley Road,
Suite C, San Diego, California 92121 ("LICENSEE") and the Sloan-Kettering Institute for Cancer Research, a not-for-profit corporation organized under the laws of New York State,
having a place of business at 1275 York Avenue, New York, New York 10021 ("SKI"). 

WHEREAS,
LICENSEE and SKI have entered into a license agreement (SK#6637) related to carbohydrate cancer vaccines with an Effective Date of July 31, 2002 ("Agreement"), a copy of which
is attached hereto; and 

WHEREAS,
the parties wish to amend the Agreement as LICENSEE no longer desires to develop Licensed Products II, effective as of June 30, 2005 ("Amendment Effective Date"), 

NOW,
THEREFORE, the parties, intending to be legally bound, hereby amend the Agreement as follows: 

	1.
	Definitions.
All capitalized terms used and not otherwise defined herein shall have the respective meanings set forth in the Agreement.

	2.
	Article
2.1 of the Agreement is hereby replaced in its entirety to read: 

SKI
hereby grants to LICENSEE: 

	(i)
	an
exclusive, worldwide license, to SKI Patents A in Field I, to make, have made, use, sell, have sold, import and develop Licensed Products I, with the
right to grant and authorize sublicenses;

	(ii)
	a
nonexclusive, worldwide license to SKI Patents D in Field I, to make, have made, use, sell, have sold, import and develop Licensed Products I, with the
right to grant and authorize sublicenses; and

	(iii)
	a
non-exclusive, worldwide, royalty-free license, without the right to grant and authorize sublicenses, to SKI's entire interest in and to the Know-How pursuant to the
licenses granted in this Section 2.1.

	3.
	Articles
4.1(d), 4.1(e), 4.1(g), and 4.1(h) of the Agreement are hereby made void.

	4.
	LICENSEE's
responsibility to pay for all costs and expenses incurred for the preparation, filing, prosecution, issuance, and maintenance of SKI Patents B under
Article 6.1 of the Agreement shall be limited to such costs and expenses incurred up to and including the Amendment Effective Date. Such costs and expenses incurred subsequent to the Amendment
Effective Date shall be done by SKI.

	5.
	All
other terms and conditions of the Agreement not specifically modified by this First Amendment shall remain in full force and effect. 

	6.
	On
and after the Amendment Effective Date, each reference in the Agreement to this "Agreement", "hereunder", "herein", "hereof" or words of like import referring to the Agreement shall
mean and be a reference to the Agreement as amended by this First Amendment.

	7.
	This
First Amendment may be executed in two counterparts, each of which will be deemed an original, but both of which shall constitute but one and the same instrument. 

IN
WITNESS WHEREOF, the parties have caused this First Amendment to the Agreement to be executed by their duly authorized representatives. 

	OPTIMER PHARMACEUTICALS, INC.	 	SLOAN-KETTERING INSTITUTE FOR CANCER RESEARCH
	
 /s/  MICHAEL N. CHANG      
 Michael N. Chang, Ph.D.

CEO	
 	

/s/  G. BERNHARDT      
 James S. Quirk

Senior Vice President,

Research Resources Management
	
 Date:    11-16-05
	
 	

Date:    12/22/05

  

 
 

LICENSE AGREEMENT
  
    for SKI's technology
  
    "Carbohydrate Cancer Vaccines"
  (SK#6637)    

 
 

TABLE OF CONTENTS    
    

	PREAMBLE

ARTICLES:

	 	 
	 	 

	I	 	DEFINITIONS	 	2
	II	 	GRANT	 	3
	III	 	DUE DILIGENCE, REGULATORY MATTERS	 	4
	IV	 	PAYMENTS	 	5
	V	 	REPORTS AND RECORDS	 	7
	VI	 	PATENT PROSECUTION	 	8
	VII	 	INFRINGEMENT	 	8
	VIII	 	INDEMNIFICATION, PRODUCT LIABILITY, WARRANTIES	 	9
	IX	 	EXPORT CONTROLS	 	10
	X	 	NON-USE OF NAMES	 	10
	XI	 	ASSIGNMENT	 	10
	XII	 	TERMINATION	 	10
	XIII	 	PAYMENTS, NOTICES AND OTHER COMMUNICATIONS	 	12
	XIV	 	MISCELLANEOUS PROVISIONS	 	12

        This
Agreement is effective on the date last subscribed below (the "Effective Date"), and is by and between Sloan-Kettering Institute for Cancer
Research (hereinafter referred to as "SKI"), a New York membership corporation with principal offices at 1275 York Avenue, New York, New York 10021,
and Optimer Pharmaceuticals, Incorporated, a corporation with principal offices located at 10110 Sorrento Valley Road, Suite C, San Diego,
California 92121 (hereinafter referred to as "LICENSEE"). 

 
 

WITNESSETH    
    

        WHEREAS, SKI is the owner of certain SKI Patents (as later defined herein) and has the right to grant licenses under said SKI Patents; and 

        WHEREAS,
SKI desires to have the SKI Patents utilized in the public interest and is willing to grant a license to its interest thereunder; and 

        WHEREAS,
LICENSEE seeks to commercially develop the SKI Patents through a thorough, vigorous and diligent program of exploiting the SKI Patents whereby public utilization shall result
therefrom. 

1

 

        NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows: 

 
 

ARTICLE I—DEFINITIONS    
    

        For the purpose of this Agreement, the following words and phrases shall have the following meanings: 

	1.1
	"LICENSEE"
shall include Affiliates, that is, any person, firm, corporation or other entity controlling, controlled by, or under common control with a party hereto. The term "control"
wherever used throughout this Agreement shall mean ownership, directly or indirectly, of more than 50% of the equity capital. With regard to SKI, "Affiliate" shall mean the Memorial Sloan-Kettering
Cancer Center and the Memorial Hospital for Cancer and Allied Diseases.

	1.2
	"SKI
Patents A", "SKI Patents B", "SKI Patents C", and "SKI Patents D" shall have meanings as defined in Exhibit A. "SKI
Patents" shall mean SKI Patents A, SKI Patents B, SKI Patents C, and SKI Patents D.

	1.3
	"Field
I" shall mean the treatment or prevention of human cancer with a carbohydrate vaccine comprising Globo H as the sole antigen. Specifically excluded from Field I are
(i) vaccines comprising mixtures of more than one type of carbohydrate antigen, one of which may be Globo H, and (ii) vaccines comprising Clustered Carbohydrate Antigens (defined as an
immunogenic molecule consisting of two or more identical or different carbohydrate antigens attached to a common peptide backbone).

	1.4
	"Field
II" shall mean the treatment or prevention of human cancer with a vaccine comprising Clustered Carbohydrate Antigens wherein the carbohydrate antigens have been synthesized
using Optimer's OPopSTM Technology.

	1.5
	"Know-How"
shall mean any technical information, know-how, processes, procedures, compositions, devices, methods, formulas, protocols, techniques, designs,
data or other subject matter owned or controlled by SKI which is necessary for the manufacture, sale and/or use of Licensed Products I and Licensed Products II (collectively, "Licensed Products"), in
each case, which is not in the public domain.

	1.6
	"Licensed
Products I" shall mean any and all products which fall within Field I and which would either (i) infringe a Valid Claim of SKI Patents A but for this agreement, or
(ii) are produced or used using a process or method that would infringe a Valid Claim of SKI Patents A but for this agreement.

	1.7
	"Licensed
Products II" shall mean any and all products which fall within Field II and which would either (i) infringe at least one Valid Claim of SKI Patents A, B, C or D but
for this agreement, or (ii) are produced or used using a process or method that would infringe at least one Valid Claim of SKI Patents A, B, C or D but for this agreement.

	1.8
	"Net
Sales" of a product shall mean LICENSEE's or sublicensee's, as indicated, billings for sales of that product less the sum of the following:

	a)
	Discounts
allowed in amounts customary in the trade;

	b)
	Sales,
tariff duties and/or use taxes directly imposed and with reference to particular sales;

	c)
	Outbound
transportation prepaid or allowed;

	d)
	Amounts
allowed or credited on returns; and 

2

 

	e)
	Bad
debts and uncollectible receivables provided that, in any calendar year, such deduction will not exceed four percent (4%) of the total billings for sales of Licensed
Products and Licensed Services sold in that year. 

No
deductions shall be made for commissions paid to individuals whether they be with independent sales agencies or regularly employed by LICENSEE or its Affiliates and on its payroll, or for cost of
collections. Licensed Products shall be considered "sold" when billed or invoiced. As LICENSEE agrees to pay royalties in countries where patent protection has not been sought, and SKI is willing to
forgo its rights to seek patent protection in such countries, Net Sales of a product shall explicitly include billings for sales of that product in such countries. 

	1.9
	"Royalty
Year" shall mean each twelve month period commencing January 1 and ending December 31 during the term of this Agreement. For the first year of this Agreement,
the Royalty Year shall be the period of time between the signing of the Agreement and December 31.

	1.10
	"Foreign
Major Market Countries" shall mean the United Kingdom, Germany, France, Italy, Spain and Japan.

	1.11
	"Net
Royalty" shall mean the total royalty compensation received by LICENSEE from a sublicensee in a given Royalty Year.

	1.12
	"Valid
Claim" shall mean a claim of an issued and unexpired patent, or a claim of a pending patent application, which has not been held unpatentable, invalid or unenforceable by a
court or other government agency of competent jurisdiction in a final decision from which no appeal may be taken, and has not been admitted to be invalid or unenforceable through reissue,
re-examination, disclaimer or otherwise. Should any issued Valid Claim be challenged and held invalid or unenforceable by a court or other government agency of competent jurisdiction from
which appeal may be taken, royalty payments that, but for the holding of invalidity or unenforceability would be due under this Agreement, shall be made by LICENSEE and shall be held in escrow by SKI
until no further appeals are available. If the claim is finally held to be valid and enforceable, the amounts held in escrow, including interest, shall be released to SKI and the relevant claim shall
be reinstated as a Valid Claim hereunder. If it is finally held to be invalid or unenforceable, the amounts held in escrow, including interest, shall be released to LICENSEE. 

 
 

ARTICLE II—GRANT    
    

	2.1
	SKI
hereby grants to LICENSEE: 
	(i)
	an
exclusive, worldwide license, to SKI Patents A in Field I, to make, have made, use, sell, have sold, import and develop Licensed Products I, with the right to grant
and authorize sublicenses;

	(ii)
	an
exclusive, worldwide license, to SKI Patents B in Field II, to make, have made, use, sell, have sold, import and develop Licensed Products II, with the right to
grant and authorize sublicenses;

	(iii)
	a
nonexclusive, worldwide license to SKI Patents A and SKI Patents C in Field II, and to SKI Patents D in Field I and Field II, to make, have made, use, sell, have
sold, import and develop Licensed Products I and Licensed Products II with the right to grant and authorize sublicenses; and

	(iv)
	SKI
hereby grants to LICENSEE a non-exclusive, worldwide, royalty-free license, without the right to grant and authorize sublicenses, to SKI's
entire interest in and to the Know-How pursuant to the licenses granted in this Section 2.1. 

3

 

	2.2
	Notwithstanding
any other provisions of this Agreement, it is agreed that SKI and its Affiliates shall retain the right to practice the licensed rights granted under
Section 2.1 for its own teaching, research and patient care activities.

	2.3
	All
rights reserved to the United States Government and others under 35 USC §§200-212, as amended, shall remain and shall in no way
be affected by this Agreement.

	2.4
	LICENSEE
hereby agrees that every sublicensing agreement to which it shall be party and which shall relate to the rights, privileges and license granted hereunder shall contain a
statement describing the date upon which LICENSEE'S exclusive rights, privileges and license hereunder shall terminate.

	2.5
	LICENSEE
agrees that any sublicenses granted by it shall provide that the obligations to SKI of Article III, Sections 3.1 and 3.3, V, VII, VIII, IX, X, XI, XII,
and XIV of this Agreement shall be binding upon the sublicensee as if it were a party to this Agreement. LICENSEE further agrees to attach copies of these Articles to sublicense agreements.

	2.6
	LICENSEE
agrees to forward to SKI a copy of any and all fully executed sublicense agreements, and further agrees to timely forward to SKI a copy of sublicensing revenue reports
received by LICENSEE from its sublicensees during the preceding Royalty Year.

	2.7
	If
LICENSEE receives from sublicensees anything of value in lieu of cash payments based upon payment obligations of any sublicense under this Agreement, LICENSEE shall pay SKI royalty
or other payments as required by Section 4.1, based on the fair market value of such payment, unless SKI waives in writing such payment obligation.

	2.8
	The
license granted hereunder shall not be construed to confer any rights upon LICENSEE by implication, estoppel or otherwise as to any technology not included in the SKI Patents,
except as expressly set forth herein.

	2.9
	All
rights not specifically granted herein are reserved to SKI. SKI explicitly retains the right to grant to third parties (i) exclusive licenses to SKI Patents A outside of
Field I and Field II, (ii) exclusive licenses to SKI Patents B outside of Field II, (iii) exclusive licenses to SKI Patents C outside of Field II, and (iv) exclusive licenses to
SKI Patents D outside of Field II.

	2.10
	SKI
shall cooperate to transfer to LICENSEE all Know-How, and all data, reports, analyses and other information necessary for the manufacture, use, and sale of Licensed
Products I and/or Licensed Products II in its possession or control, in a format reasonably acceptable to LICENSEE. 

 
 

ARTICLE III—DUE DILIGENCE, REGULATORY MATTERS    
    

	3.1
	LICENSEE
and its sublicensees shall use commercially reasonable efforts to bring Licensed Products to market through a thorough, vigorous and diligent program for exploitation of the
SKI Patents and to continue active, diligent marketing efforts for one or more Licensed Products or throughout the life of this Agreement.

	3.2
	Within
sixty (60) days of the Effective Date, SKI and Licensee shall mutually agree upon a timeline for clinical development of Licensed Products I and research development of
Licensed Products II ("Timeline"). Such Timeline shall be appended as Exhibit B to this Agreement, and may be amended from time to time as
necessary and by mutual consent. In the event that agreement cannot be reached on the Timeline within sixty (60) days of the Effective Date, or any developmental milestone specified in the
Timeline are not met by LICENSEE, SKI shall have the right to terminate this Agreement in accordance with Section 12.4. 

4

 
	3.3
	In
addition, LICENSEE shall adhere to the following milestones:

	(a)
	LICENSEE
shall have delivered to SKI prior to the execution of this Agreement, its detailed business, research and development plan including, for example, relevant schedules of
capital investments needed to implement the plan, financial, equipment, facility plans, number and kind of personnel and time planned for each phase of development of the SKI Patents for a three year
period, to the extent formed by LICENSEE. Similar reports shall be provided to SKI annually to relay update and status information on LICENSEE's business, research and development progress, including
projections of activity anticipated for the next reporting year.

	(b)
	LICENSEE
shall be responsible for diligently and promptly taking all reasonable steps to secure all required and/or necessary governmental approvals to sell, exploit, or market any
and all Licensed Products. LICENSEE shall advise SKI, through annual reports described in Section 3.3(a) above of its program of development for obtaining said approvals.

	3.4
	LICENSEE's
failure to perform in accordance with Sections 3.1 and 3.2 above shall be grounds for SKI to terminate this Agreement pursuant to Section 12.4 below.

	3.5
	SKI
shall cooperate, at its sole discretion, with LICENSEE before the Food and Drug Administration, and any other regulatory agencies in all matters regarding to Licensed Products I
and Licensed Products II. 

 
 

ARTICLE IV—PAYMENTS    
    

	4.1
	For
the rights, privileges and licenses granted hereunder, LICENSEE shall pay to SKI, in the manner hereinafter provided, until the end of the last to expire patent of the SKI Patents
or until this Agreement shall be terminated, as hereinafter provided, whichever occurs first:

	(a)
	A
license issue fee of fifty thousand dollars ($50,000) payable on the Effective Date of this Agreement.

	(b)
	One
hundred and twenty thousand (120,000) shares of Optimer Pharmaceuticals, Inc. common stock, par value $0.001 per share (the "Shares"), issuable immediately on the
Effective Date of this Agreement. In connection with the issuance of the Shares, SKI shall enter into the Common Stock Issuance Agreement, attached hereto as  Exhibit C ("Common Stock Issuance
Agreement").

	(c)
	For
Licensed Products I, a royalty in an amount equal to [***] percent ([***]%) of the Net Sales of Licensed Products I by
LICENSEE or any sublicensee.

	(d)
	Subject
to Section 4.1(e), for Licensed Products II, (a) for sales made by LICENSEE, a royalty in an amount equal to [***] percent
([***]%) of the Net Sales of Licensed Products II and (b) for sales made by a sublicensee, the greater of (i) twenty percent (20%) of the Net Royalty
received by LICENSEE from the sublicensee or (ii) [***] percent of Net Sales of Licensed Products II by the sublicensee.

	(e)
	For
any product in Field II that is not covered by a Valid Claim of SKI Patents B, (a) for sales made by LICENSEE, a royalty in an amount equal to [***]
percent ([***]%) of the Net Sales of such product and (b) for sales made by a sublicensee, the greater of (i) [***] percent
([***]%) of the Net Royalty received by LICENSEE from the sublicensee or (ii) [***] percent of Net Sales of such product by the sublicensee.

	(f)
	For
each of Licensed Products I, milestone payments as follows in the event that such milestone is achieved by LICENSEE and not a sublicensee:

	•
	[***]
dollars ($[***]) upon commencement of Phase III clinical studies; 

5

 

	•
	[***]
dollars ($[***]) upon first New Drug Application (NDA) filing;

	•
	[***]
dollars ($[***]) upon marketing approval in the United States;

	•
	[***]
dollars ($[***]) upon market approval in each and any of the Foreign Major Market Countries.

	(g)
	Subject
to Section 4.1(h), for each of Licensed Products II, milestone payments as follows in the event that such milestone is achieved by LICENSEE and not a
sublicensee:

	•
	[***]
dollars ($[***]) upon commencement of Phase I clinical studies;

	•
	[***]
dollars ($[***]) upon commencement of Phase II clinical studies;

	•
	[***]
dollars ($[***]) upon commencement of Phase III clinical studies;

	•
	[***]
dollars ($[***]) upon first New Drug Application (NDA) filing;

	•
	[***]
dollars ($[***]) upon marketing approval in the United States;

	•
	[***]
dollars ($[***]) upon market approval in each and any of the Foreign Major Market Countries.

	(h)
	For
any product in Field II that is not covered by a Valid Claim of SKI Patents B, milestone payments as follows in the event that such milestone is achieved by LICENSEE and not a
sublicensee:

	•
	[***]
dollars ($[***]) upon commencement of Phase I clinical studies;

	•
	[***]
dollars ($[***]) upon commencement of Phase II clinical studies;

	•
	[***]
dollars ($[***]) upon commencement of Phase III clinical studies;

	•
	[***]
dollars ($[***]) upon first New Drug Application (NDA) filing;

	•
	[***]
dollars ($[***]) upon marketing approval in the United States;

	•
	[***]
dollars ($[***]) upon market approval in each and any of the Foreign Major Market Countries.

	(i)
	LICENSEE
shall pay SKI [***] percent ([***]%) of all income from sublicensees including (i) sublicense fees,
(ii) sublicense maintenance fees, (iii) milestone payments and (iv) premiums over fair market value in the sale of LICENSEE's equity pursuant to Article 2.7, but excluding
(i) verifiable research and development support and expense reimbursement, (ii) royalties, (iii) sale of equity at fair market value, and, (iv) in cases where SKI Patents
are sublicensed in combination with non-SKI technology, the pro-rata contribution of the non-SKI technology.

	(j)
	Annual
minimum royalty payments, starting in the Royalty Year commencing January 1 after the Execution Date, in the amount of [***] dollars
($[***]). The minimum royalty payments shall be credited against the earned royalty payments required in Section 4.1(c), 4.1(d) and 4.1(e) above for
the same Royalty Year, and shall be paid within thirty days following the end of the Royalty Year.

	(k)
	Patent
expenses according to the terms of Article VI.

	4.2
	No
multiple royalties shall be payable because any Licensed Products, its manufacture, use, lease or sale are or shall be covered by more than one of the SKI Patents patent
applications or SKI Patents patents licensed under this Agreement. 

6

 
	4.3
	Royalty
payments shall be paid in United States dollars in New York, NY, or at such other place as SKI may reasonably designate consistent with the laws and regulations
controlling in any foreign country, but not in any other currency. If any currency conversion shall be required in connection with the payment of royalties hereunder, such conversion shall be made by
using the exchange rate prevailing at the J.P. Morgan Chase Bank (N.A.) on the last business day of the calendar quarterly reporting period to which such royalty payments relate.

	4.4
	Interest

	(a)
	LICENSEE
shall pay to SKI interest on any amounts not paid when due. Such interest will accrue from the forty-fifth (45th) day after the payment was due at a rate two
percent (2%) above the daily prime interest rate, as determined by J.P. Morgan Chase or its successor entity, on each day the payment is delinquent, and the interest payment will be due and
payable on the first day of each month after interest begins to accrue, until full payment of all amounts due SKI is made.

	(b)
	SKI's
rights to receive such interest payments shall be in addition to any other rights and remedies available to SKI.

	(c)
	If
the interest rate required in this Subsection exceeds the legal rate in a jurisdiction where a claim for such interest is being asserted, the required interest rate shall be
reduced, for such claim only, to the maximum interest rate allowable in the jurisdiction. 

 
 

ARTICLE V—REPORTS AND RECORDS    
    

	5.1
	LICENSEE
shall keep full, true and accurate books of account containing all particulars that may be necessary for the purpose of showing the amounts payable to SKI hereunder. Said
books and records shall be maintained for a period of no less than five (5) years following the period to which they pertain. For the term of this Agreement, upon thirty (30) days prior
written notice, LICENSEE shall allow SKI's own accountants or independent accountants selected by SKI, which independent accountants shall be reasonably acceptable to LICENSEE and after entering into
a confidentiality agreement with LICENSEE, to inspect such books and records for the sole purpose of verifying LICENSEE's royalty statement or compliance in other respects with this Agreement. In the
case of independent accountants, such accountants shall report to SKI only whether there has been a royalty underpayment and, if so, the amount thereof. Such inspections shall be during normal working
hours of LICENSEE, and shall occur no more frequently than once per calendar year. Should such inspection lead to the discovery of a greater than ten percent (10%) discrepancy in reporting to SKI's
detriment, LICENSEE agrees to pay the full cost of such inspection.

	5.2
	LICENSEE,
within thirty (30) days after June 30 and December 31 of each year, shall deliver to SKI true and accurate reports, giving such particulars of the
business conducted by LICENSEE and its sublicensees during the preceding three-month period under this Agreement as shall be pertinent to a royalty accounting hereunder. These shall include at least
the following, to be itemized per Licensed Product:

	(a)
	Number
of Licensed Products commercially used, manufactured and sold, rented or leased.

	(b)
	Total
billings for Licensed Products commercially used, sold, rented or leased.

	(c)
	Deductions
applicable as provided in Paragraph 1.8.

	(d)
	Total
royalties due.

	(e)
	Names
and addresses of all sublicensees of LICENSEE.

	(f)
	Total
royalty income from all revenues subject to sublicensees' royalties. 

7

 

	(g)
	Total
sublicensing fee income.

	5.3
	With
each such report submitted, LICENSEE shall pay to SKI the royalties due and payable under this Agreement. If no royalties shall be due, LICENSEE shall so report.

	5.4
	Milestone
payments shall be reported and paid with each such report submitted. 

 
 

ARTICLE VI—PATENT PROSECUTION    
    

	6.1
	LICENSEE
shall be responsible for and pay all past and future costs and expenses incurred by SKI for the preparation, filing, prosecution, issuance, and maintenance of SKI Patents A
and SKI Patents B. Such costs and expenses incurred prior to December 31, 2001 shall be reimbursed to SKI by LICENSEE in four equal semiannual payments beginning on July 1, 2002. Such
costs and expenses incurred subsequent to January 1, 2002 and prior to the Effective Date of this Agreement shall be paid by LICENSEE within forty-five (45) days of the
Effective Date. Such costs and expenses incurred after the Effective Date shall be paid by LICENSEE as they are incurred. SKI shall be solely responsible for all past and future costs and expenses
incurred for the preparation, filing, prosecution, issuance, and maintenance of SKI Patents C and SKI Patents D.

	6.2
	SKI
shall diligently prosecute and maintain the SKI Patents in the United States and in such countries as are determined by SKI and agreed to by LICENSEE, using counsel of its
choice. If LICENSEE declines in writing to bear the expense of filing patent applications in any foreign countries in which SKI wishes to obtain patent protection, then SKI may file and prosecute such
applications at its own expense and any license granted hereunder shall exclude such countries.

	6.3
	SKI
shall provide LICENSEE with copies of all relevant documentation so that LICENSEE may be informed and to give LICENSEE reasonable opportunity to advise SKI and comment on the
continuing prosecution. LICENSEE agrees to keep this documentation confidential. 

 
 

ARTICLE VII—INFRINGEMENT    
    

	7.1
	LICENSEE
shall assume primary responsibility for enforcing SKI Patents A and SKI Patents B within relevant commercial markets in Field I and Field II, respectively. In exercising
these responsibilities, LICENSEE shall promptly contact alleged third party infringers and take all reasonable steps to persuade such third parties to desist from infringing the SKI Patents, including
initiating and prosecuting an infringement action if necessary, or defending a challenge to the validity of the SKI Patents. LICENSEE also shall notify SKI of each instance of alleged infringement and
shall keep SKI informed of all stages of SKI Patents enforcement. LICENSEE may use the name of SKI as party plaintiff. All costs of any action to enforce SKI Patents A and SKI Patents B taken by
LICENSEE shall be borne by LICENSEE and LICENSEE shall keep any recovery of damages derived therefrom, the excess of such recovery over such costs shall be included in LICENSEE's Net Sales. No
settlement, consent judgment or other voluntary final disposition of the suit may be entered into without the prior written consent of SKI, which consent shall not unreasonably be withheld.

	7.2
	In
the event LICENSEE becomes aware of unlicensed infringement of SKI Patents A or SKI Patents B, either through notice from SKI or by other means, and does not, within six
(6) months (a) secure cessation of the infringement; or (b) enter suit against the infringer; or (c) provide SKI with evidence of pendency of a bona fide negotiation for
sublicensing the infringer, then, thirty (30) days after giving written notice to LICENSEE, SKI shall have the right to (a) sue for the infringement at SKI's own expense, and to collect
for its own use any damages, profits and awards of whatever nature that it may recover for such infringement; and (b) terminate this Agreement according to terms of Article XII. 

8

 
	7.3
	Each
party shall promptly notify the other in writing in the event that a third party shall bring a claim of infringement against SKI or LICENSEE, either in the United States
or in any foreign country in which there are SKI Patents.

	7.4
	In
the event LICENSEE is sued for patent infringement, threatened with such suit, or enjoined from exercising its license rights granted hereunder, LICENSEE may terminate this
Agreement according to Article XII or contest the action against it. In any such action, LICENSEE shall be fully responsible for all its costs, including expenses, judgements and
settlements, and shall be entitled to proceeds that it may recover, including judgements, settlements and awards, the excess of such recovery over such costs shall be included in LICENSEE's Net Sales.

	7.5
	In
any infringement suit as either party may institute to enforce the SKI Patents against third parties pursuant to this Agreement, or in any infringement action brought against
either party by a third party, each party hereto shall, at the request and expense of the other party, cooperate in all respects and, to the extent possible, have its employees testify when requested
and make available relevant records, papers, information, samples, specimens, and the like. 

 
 

ARTICLE VIII—INDEMNIFICATION, PRODUCT LIABILITY, WARRANTIES    
    

	8.1
	LICENSEE
shall at all times during the term of this Agreement and thereafter, indemnify, defend and hold SKI and its Affiliates, their Board of Managers, officers, employees and
affiliates, harmless against all claims and expenses, including legal expenses and reasonable attorneys' fees, arising out of the death of or injury to any person or persons or out of any damage to
property and against any other claim, proceeding, demand, expense and liability of any kind whatsoever resulting from the production, manufacture, sale, use, lease, consumption or advertisement of the
Licensed Products arising from any obligation of LICENSEE hereunder, except to the extent such claims or expenses are caused by the gross negligence or willful misconduct of SKI, and its Affiliates,
their Board of Managers, officers, or employees.

	8.2
	For
the term of this Agreement, upon the commencement of clinical use, production, sale, or transfer, whichever occurs first, of any Licensed Products, LICENSEE shall obtain and carry
in full force and effect general liability insurance which shall protect LICENSEE and SKI in regard to events covered by Section 8.1 above. Such insurance shall be written by a reputable
insurance company, shall list SKI as an additional named insured thereunder, shall be endorsed to include liability coverage, and shall require thirty (30) days written notice to be given to
SKI prior to any cancellation or material change thereof. The limits of such insurance shall not be less than one million dollars ($1,000,000) per occurrence with an annual aggregate of three million
dollars ($3,000,000) for personal injury, death or property damage. LICENSEE shall provide SKI with Certificates of Insurance evidencing the same.

	8.3
	SKI
represents and warrants that: (i) it is a New York membership corporation duly organized validly existing and in good standing under the laws of New York;
(ii) the execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate action on the part of SKI; (iii) to SKI's best knowledge, SKI is the
sole and exclusive owner of all right, title and interest in and to the SKI Patents and Know-How, with the exception of SK625B, listed in Exhibit A, which is jointly owned with the
Trustees of Columbia University in the City of New York; (iv) SKI has the right to grant the rights and licenses granted herein; (v) the SKI Patents and Know-How are
free and clear of any lien, encumbrance, or security interest; (viii) there are no threatened or pending actions, suits, investigations, claims or proceedings in any way relating to the SKI
Patents or Know-How.

	8.4
	In
the event that any indemnitee intends to claim indemnification under this Article VIII it shall promptly notify the other party in writing of such potential liability. The
indemnifying party shall have the right to control the defense thereof. The affected indemnitees shall cooperate fully with 

9

 

the
indemnifying party and its legal representatives in the investigation and conduct of any liability covered by this Article VIII. Notwithstanding the foregoing, neither party shall have
indemnity obligations for any claim if the indemnitee seeking indemnification makes any admission, settlement or other communication regarding such claim without the prior written consent of the
indemnifying party. 

	8.5
	Except
as otherwise expressly set forth in this Agreement, NEITHER PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT
LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND VALIDITY OF SKI PATENTS CLAIMS, ISSUED OR PENDING. 

 
 

ARTICLE IX—EXPORT CONTROLS    
    

        It is understood that SKI is subject to United States Laws and regulations controlling the export of technical data, computer software, laboratory
prototypes and other commodities (including the Arms Export Control Act, as amended and the Export Administration Act of 1979), and that its obligations hereunder are contingent on compliance with
applicable United States export laws and regulations. The transfer of certain technical data and commodities may require a license from the cognizant agency of the United States
Government and/or written assurances by LICENSEE that LICENSEE shall not export data or commodities to certain foreign countries without prior approval of such agency. SKI neither represents that a
license shall not be required nor that, if required, it shall be issued. 

 
 

ARTICLE X—NON-USE OF NAMES    
    

        LICENSEE shall not use the names of SKI or its Affiliates, nor any of their employees, nor any adaptation thereof, in any advertising, promotional or sales
literature without prior written consent obtained from SKI in each case; provided that once a particular disclosure has been approved, further disclosures which do not differ materially therefrom may
be made by LICENSEE without obtaining any further consent of SKI. 

 
 

ARTICLE XI—ASSIGNMENT    
    

	11.1
	This
Agreement may not be assigned by LICENSEE without prior written consent from SKI.

	11.2
	Notwithstanding
the foregoing prohibition, LICENSEE may without SKI's consent assign this Agreement to any entity that it may merge into, consolidate with, or transfer substantially
all of its assets ("substantially" being EIGHTY PERCENT (80%) or more thereof) to which this Agreement relates, so long as the successor surviving corporation in any such merger, consolidation,
transfer or reorganization assumes in writing the obligations of this Agreement. Such merger, consolidation, transfer or reorganization shall not in itself be a breach of this Article XI,
nor be any default under this Agreement. 

 
 

ARTICLE XII—TERMINATION    
    

	12.1
	Unless
earlier terminated pursuant to this Article XII, this Agreement shall terminate upon the later to occur of (a) the last to expire of the SKI Patents or
(b) twenty (20) years.

	12.2
	SKI
may terminate this Agreement if LICENSEE becomes insolvent or, a petition in bankruptcy is filed against LICENSEE and is consented to, acquiesced in or remains undismissed for
thirty (30) days; or makes a general assignment for the benefit of creditors, or a receiver is appointed for LICENSEE, and LICENSEE does not return to solvency before the expiration of a thirty
(30) day period. 

10

 
	12.3
	Should
LICENSEE fail to pay SKI license fees, royalties and patent expenses due and payable hereunder for more than thirty (30) days, SKI shall have the right to terminate
this Agreement on thirty (30) days written notice, unless LICENSEE shall pay SKI within the thirty (30) day period, all such license fees, royalties and patent expenses and interest due
and payable. Upon the expiration of the thirty (30) day period, if LICENSEE shall not have paid all such royalties, patent expenses and interest due and payable, the rights, privileges and
license granted hereunder shall terminate.

	12.4
	As
set out in Section 3.2, should the parties fail to agree upon a Timeline within sixty (60) days of the Effective Date, of if LICENSEE should fail to meet a
development milestone as specified in the Timeline, SKI shall have the right to terminate this Agreement and the rights, privileges and license granted hereunder by sixty (60) days' notice to
LICENSEE. Such termination shall become effective unless mutual agreement is reached, or LICENSEE shall have reached the necessary milestone prior to the expiration of the sixty (60) day
period.

	12.5
	Upon
any material breach of this Agreement by LICENSEE, other than those occurrences set out in Sections 12.1, 12.2 and 12.3, hereinabove, which shall always take
precedence in that order over any material breach or default referred to in this Section 12.3, SKI shall have the right to terminate this Agreement and the rights, privileges and license
granted hereunder by sixty (60) days' notice to LICENSEE. Such termination shall become effective unless LICENSEE shall have cured any such breach prior to the expiration of the sixty
(60) day period.

	12.6
	Upon
written notice to the LICENSEE for the material breach of the Common Stock Issuance Agreement by the LICENSEE and the failure to cure such material breach within sixty
(60) days, the licenses granted under this Agreement may be terminated by SKI.

	12.7
	LICENSEE
shall be entitled to terminate this Agreement upon (i) sixty (60) days advance written notice to SKI, (ii) in the event of SKI's material breach of any
of the provisions of this Agreement, which breach is not cured (if capable of being cured) within this sixty (60) day period, or (iii) if conditions of Section 7.4 apply.

	12.8
	Upon
termination of this Agreement for any reason, nothing herein shall be construed to release either party from any obligation that matured prior to the effective date of such
termination.

	12.9
	Other
than any claim arising from LICENSEE's failure to pay undisputed license fees or patent expenses due under this contract, any controversy or bona fide disputed claim arising
between the parties to this Agreement, which dispute cannot be resolved by mutual agreement shall, by the election of either party, be resolved by submitting to dispute resolution before a
fact-finding mediation body composed of one or more experts in the field, selected by mutual agreement within thirty days of written request by either party. Said dispute resolution shall
be held in New York at such place as shall be mutually agreed upon in writing by the parties. The fact-finding body shall determine who shall bear the cost of said resolution. In
the event that the parties cannot mutually agree within said thirty (30) days on the dispute resolution body, the parties will go to arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association.

	12.10
	In
the event of any termination of this Agreement any sublicenses granted by LICENSEE shall remain in force and effect and shall be assigned by LICENSEE to SKI, provided, that such
sublicensee is currently in good standing with regard to its obligations under the sublicense or has cured any default or breach within the period provided in such sublicense, and further provided,
that the financial obligations of each such sublicensee shall be limited to those due SKI hereunder for the practice of such a sublicense.

	12.11
	Article VIII,
and Article X of this Agreement shall survive termination. 

11

 
 
 

ARTICLE XIII—PAYMENTS, NOTICES AND OTHER COMMUNICATIONS    
    

        Any payment, notice or other communication pursuant to this Agreement shall be sufficiently made or given when delivered by courier or other means providing proof
of delivery to such party at its address below or as it shall designate by written notice given to the other party: 

        In
the case of SKI: 

Sloan-Kettering
Institute for Cancer Research

1275 York Avenue

New York, New York 10021 

Attention:
James S. Quirk

Senior Vice President

Research Resources Management 

        In
the case of LICENSEE: 

Optimer
Pharmaceuticals, Inc.

10110 Sorrento Valley Road, Suite C

San Diego, California, 92121

Attention: Michael N. Chang, CEO 

 
 

ARTICLE XIV—MISCELLANEOUS PROVISIONS    
    

	14.1
	This
Agreement shall be construed, governed, interpreted and applied in accordance with the laws of the State of New York, except that questions affecting the construction and
effect of any patent shall be determined by the law of the country in which the patent was granted.

	14.2
	Except
as expressly provided in this Agreement, neither party shall use for its own benefit or the benefit of any third party, or disclose to any third party, any confidential,
proprietary or trade secret information (the "Confidential Information") received from the other party hereto, during the term of this Agreement and for five (5) years thereafter. All
Confidential Information must be designated as such by disclosing party in writing at or before the disclosure is made in writing, or within thirty (30) days of such disclosure.

	14.3
	Notwithstanding
Section 14.2 above, Confidential Information shall not include any of the following information which the receiving party can demonstrate by contemporaneous
written evidence:

	a)
	was
already known to the receiving party, other than under an obligation of confidentiality, at the time of disclosure;

	b)
	was
generally available to the public or otherwise part of the public domain at the time of disclosure to the receiving party;

	c)
	became
generally available to the public or otherwise part of the public domain after its disclosure and other than through any act or omission of the receiving party in breach of this
Agreement;

	d)
	was
independently developed by the receiving party without reference to any information or materials disclosed by the disclosing party; or

	e)
	was
subsequently disclosed to the receiving party by a person other than a party without breach of any legal obligation to the disclosing party. 

In
addition, either party may disclose Confidential Information of the other (i) to their legal representatives, employees and Affiliates, and legal representatives and employees of Affiliates, 

12

 

consultants
and sublicensees, to the extent such disclosure is reasonably necessary to achieve the purposes of this Agreement; (ii) in connection with the filing and support of patent
applications as necessary; or (iii) if disclosure is compelled to be disclosed by a court order or applicable law or regulation, provided that the party compelled to make such disclosure
(x) requests confidential treatment of such information, and (y) provides the other party with reasonable advance notice of the compelled disclosure to provide adequate time to seek a
protective order. 

	14.4
	The
provisions of this Agreement are severable, and in the event that any provisions of this Agreement shall be determined to be invalid or unenforceable under any controlling body
of the law, such invalidity or unenforceability shall not in any way affect the validity or enforceability of the remaining provisions hereof.

	14.5
	The
failure of either party to assert a right hereunder or to insist upon compliance with any term or condition of this Agreement shall not constitute a waiver of that right or
excuse a similar subsequent failure to perform any such term or condition by the other party.

	14.6
	The
relationship of the parties hereto is that of independent contractors. The parties hereto are not deemed to be agents, partners or joint ventures of the other for any purpose as
a result of this Agreement or the transactions contemplated thereby.

	14.7
	Neither
party shall lose any rights hereunder or be liable to the other party for damages or losses (except for payment obligations) on account of failure of performance by the
defaulting party if the failure is occasioned by war, strike, fire, Act of God, earthquake, flood, lockout, embargo, governmental acts or orders or restrictions, failure of suppliers, or any other
reason where failure to perform is beyond the reasonable control and not caused by the negligence, intentional conduct or misconduct of the nonperforming party and the nonperforming party has exerted
all reasonable efforts to avoid or remedy such force majeure; provided, however, that in no event shall a party be required to settle any labor dispute or disturbance.

	14.8
	NEITHER
PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES ARISING OUT OF THE PERFORMANCE OF THIS AGREEMENT, HOWEVER CAUSED, UNDER ANY
THEORY OF LIABILITY, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

	14.9
	At
any time or from time to time on and after the date of this Agreement, Licensor shall at the written request of LICENSEE (i) deliver to LICENSEE such records, data or other
documents in compliance with the provisions of this Agreement, (ii) execute, and deliver or cause to be delivered, all such consents, documents or further instruments of transfer or license,
and (iii) take or cause to be taken all such actions, as LICENSEE may reasonably deem necessary or desirable in order for LICENSEE to obtain the full benefits of this Agreement and the
transactions contemplated hereby.

	14.10
	This
Agreement sets forth the entire agreement and understanding of the parties with respect to the subject matter hereof, and supersedes all prior discussions, agreements and
writings in relating thereto. This Agreement may not be altered, amended or modified in any way except by a writing signed by both parties.

	14.11
	This
Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be an original and all such counterparts shall together constitute
but one and the same agreement. 

13

 

        IN
WITNESS WHEREOF, authorized representatives of the parties have signed and dated this Agreement below. 

	 	Sloan-Kettering Institute

for Cancer Research	 	 	Optimer Pharmaceuticals, Inc.
	
 	

 	
 	

 	

 
	By:	/s/ James S. Quirk
	 	By:	/s/ Michael N. Chang

	 	James S. Quirk

Senior Vice President

Research Resources Management	 	 	Michael N. Chang

CEO

	
 	

 	
 	

 	

 
	Date:	6/17/02
	 	Date:	7/31/02

14

  

 
 

EXHIBIT A    
    

        SKI Patents A, SKI Patents B, SKI Patents C, and SKI Patents D shall mean the United States patents and patent applications listed under the respective
subheadings below and their continuations, continuations-in-part, divisionals; and other continuing applications; reissues; re-examinations; extensions of any kind;
substitutions; registrations and corresponding foreign patents and patent applications: 

	SKI Patents A
	SK625A	 	US patent 5,708,163 "Synthesis of the Breast Tumor-Associated Antigen Defined by Monoclonal Antibody MBrl and Uses Thereof"
	SK625AZ	 	US patent 6,090,789 "Synthesis of the Breast Tumor-Associated Antigen Defined by Monoclonal Antibody MBrl and Uses Thereof"
	SK625C	 	US patent application 09/017,611 "Synthesis of Glycoconjugates of the Globo-H Epitope and Uses Thereof"
	SKI Patents B
	SK759	 	US patent application 09/083,776 "alpha-O-Linked Glycoconjugates With Clustered (2, 6)-Epitopes, Methods of Preparation and Uses Thereof"
	SK816	 	US patent application 09/276,595 "Trimeric Antigenic O-Linked Glycopeptide Conjugates, Methods of Preparation and Uses Thereof"
	SK 893	 	US patent application 09/641,742 "Novel Glycoconjugates, Glycoamino Acids, Intermediates Thereto, and Uses Thereof"
	SKI Patents C
	SK625	 	US patent 5,543,505 "Synthetic Compounds Which Bind to H. Pylori, and Uses Thereof"
	SK625B	 	US patent 6,303,120 "Synthesis of Glycoconjugates of the Lewis Y Epitope and Uses Thereof," which is jointly owned by SKI and The Trustees of Columbia University in the City of New York.
	SK719	 	US patent 6,238,668 "Colon Cancer KH-1 and N3 Antigens"
	SK719Z	 	US patent application 09/833,327 "Colon Cancer KH-1 and N3 Antigens"
	SK760	 	US patent application 09/534,712 "Fucosyl GM1-KLH Conjugate Vaccine Against Small Cell Lung Cancer"
	SKI Patents D
	SK883	 	US patent application 09/794,905 "Affinity Matrix Bearing Tumor-Associated Carbohydrate- or Glycopeptide-Based Antigens and Uses Thereof"

15

 
 
 

EXHIBIT B
  
    Clinical Development Milestones—Timeline
  
    [Not Attached]    
    

16

 
 
 

EXHIBIT C
  
    Common Stock Issuance Agreement    
    

        THIS COMMON STOCK ISSUANCE AGREEMENT (this "Agreement") is entered into as of June 14, 2002, by and between Optimer Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), and Sloan-Kettering Institute for Cancer Research, a membership corporation organized under the laws of New York ("Investor"). 

        THE
PARTIES HEREBY AGREE AS FOLLOWS: 

        1.    Purchase and Sale of Common Stock.    Subject to the terms and conditions of this Agreement, Investor agrees to
purchase and the Company agrees to issue and sell to Investor one hundred and twenty thousand (120,000) shares (the "Shares") of the Common Stock of the Company, par value $0.001 (the "Common Stock")
in partial consideration for Investor's entering into a License Agreement with the Company dated the date hereof, in the form attached hereto as  Exhibit A (the "License Agreement"). The Company
shall deliver a certificate to Investor representing the Shares hereunder upon the Company's
receipt of a duly executed copy of the License Agreement from Investor. 

        2.    Representations and Warranties of the Company.    The Company hereby represents and warrants to Investor that,
except as set forth in the Schedule of Exceptions attached hereto as Exhibit B, the statements in the following paragraphs of this
Section 2 are true and correct as of the date hereof: 

        2.1    Organization and Good Standing.    The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which it is required to do so, except to the extent
that any failure or failures to so qualify would not, either singly or in the aggregate, have a material adverse effect on its business or properties. True, correct and complete copies of the Restated
Certificate of Incorporation (the "Restated Certificate") and Bylaws of the Company as in effect on the date hereof are annexed hereto as Exhibits C and
D, respectively. 

        2.2    Authorization.    All corporate action on the part of the Company, its officers, directors and stockholders
necessary for the authorization, execution and delivery of this Agreement and the License Agreement, the performance of all obligations of the Company hereunder and thereunder, including, without
limitation, the authorization, sale and issuance of the Shares being sold hereunder has been taken. Each of this Agreement and the License Agreement constitutes a valid and legally binding obligation
of the Company, enforceable in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies. 

        2.3    Valid Issuance of Shares.    The Shares that are being issued to the Investor hereunder, when issued, sold and
delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid and nonassessable and will be free of restrictions on
transfer, other than restrictions on transfer under this Agreement and under applicable state and federal securities laws. 

        2.4    Capitalization.    The authorized and issued capital and rights to purchase securities of the Company will
consist immediately prior to the sale of the Shares of: 

        2.4.1    Preferred Stock.    19,000,000 shares of preferred stock, par value $0.001 (the "Preferred Stock"), 5,000,000
of which have been designated Series A Convertible Preferred Stock (the "Series A Preferred Stock"), 3,400,000 of which are issued and outstanding, and 14,000,000 of which have been
designated Series B Convertible Preferred Stock (the "Series B 

17

 

Preferred
Stock"), 8,954,431 of which are issued and outstanding. The outstanding shares of Preferred Stock are convertible as of the date hereof into an aggregate of Common Stock at a ratio of 1.2
shares of Common Stock for each share of Preferred Stock; provided, however, that the conversion ratio of the Preferred Stock may be subject to adjustment in the future. 

        2.4.2    Common Stock.    29,000,000 shares of Common Stock, par value $0.001 of which 4,046,973 shares are issued and
outstanding and 120,000 shares of which will be issued pursuant to this Agreement. 

        2.4.3    Other Rights.    Except for (a) the conversion privileges of the Preferred Stock, (b) options
to purchase up to 2.5 million shares of Common Stock granted or reserved for grant to employees, consultants, officers or directors, and (c) 30,000 warrants, there are not outstanding
any options, warrants, rights (including conversion or preemptive rights) or agreements for the purchase or acquisition from the Company of any shares of its capital stock. 

        The
designations, rights, preferences and limitations in respect of the Common Stock, the Series A Preferred Stock and the Series B Preferred Stock are as set forth in the
Company's Amended and Restated Certificate of Incorporation (the "Restated Certificate") and as provided by law. All outstanding shares of capital stock of the Company are duly authorized, fully paid
and non-assessable. 

        2.5    No Conflict.    To the Company's knowledge, the execution, delivery and performance of, and the consummation of
the transactions contemplated by, this Agreement and the License Agreement, including, without limitation, the offer, sale, issuance and delivery of the Shares pursuant to this Agreement, have not
resulted and will not result in (a) any violation of, or default under, or conflict with, or constitute, with or without the passage of time, the giving of notice, any violation of, or default
under or give rise to any right of termination, cancellation or acceleration under (i) any term or provision of the Restated Certificate or Bylaws, (ii) any material term or provision of
any (A) contract, agreement, instrument, arrangement or understanding, or (B) judgment, order, writ, injunction or decree of any court, government agency or any arbitrator, in each case,
to which the Company is a party or by which it or its properties or assets are bound, or (iii) any statute, rule or regulation applicable to the Company or its properties or assets, except for
such violations, defaults or conflicts which could not, either singly or in the aggregate, reasonably be expected to have a material adverse effect on the business or properties of the Company or
(b) the creation of any security interest, mortgage, pledge, lien, charge or other encumbrance (each, an "Encumbrance") upon any of the properties or assets of the Company, except for such
Encumbrances which could not, either singly or in the aggregate, reasonably be expected to have a material adverse effect on the business or properties of the Company. 

        2.6    Governmental Consents.    To the Company's knowledge, no consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of the Company is required in connection with the consummation of
the transactions contemplated by this Agreement, except for such filings as are required pursuant to applicable federal and state securities laws and blue sky laws, which filings will be effected
within the required statutory period. 

        2.7    Offering.    Subject to the accuracy of Investor's representations in Section 3, the offer and sale of
the Shares to be issued in conformity with the terms of this Agreement constitute transactions exempt from the registration requirements of Section 5 of the Securities Act of 1933, as amended
(the "Act"), and in compliance with all applicable state securities or blue sky laws. 

        2.8    Compliance with Law and Charter Documents and Agreements.    The Company is not, in any materially adverse
effect, in violation or default of any provisions of its Restated Certificate or 

18

 

Bylaws,
as amended to date. To the Company's knowledge, the Company is in compliance with all applicable statutes, laws, rules, regulations, orders, judgments, writs, injunctions or decrees of the
United States of America and all states, foreign countries or other governmental bodies and agencies and all courts or arbitrators having jurisdiction over the Company's business or properties, except
where any failure or failures to be in compliance therewith could not, either singly or in the aggregate, reasonably be expected to have a material adverse effect on the business or properties of the
Company. 

        2.9    Registration Rights.    Except as provided in the Investors' Rights Agreement, the Company has not granted or
agreed to grant to any person or entity any rights (including piggyback registration rights) to have any securities of the Company registered with the United States Securities and Exchange Commission
or any other governmental authority. 

        2.10    Intellectual Property.    To the Company's knowledge and inclusive of the License Agreement, the Company has
all right, title and interest in, or a valid and binding license or other right to use, all of the intellectual property which is currently used by the Company in the conduct of its business, except
to the extent that any failure or failures to have such rights has not had and would not, either singly or in the aggregate, be reasonably likely to have a material adverse effect on the business or
properties of the Company. 

        2.11    No Defaults; Contracts.    To the Company's knowledge, the Company has performed all obligations required to
be performed by it and is not in breach or default under any contract, commitment or instrument, which breach or default (or breaches or defaults), would, either singly or in the aggregate, have a
material adverse effect on the business or properties of the Company, and no event or condition
has occurred which, with the giving of notice or passage of time, or both, would constitute such a breach or default. 

        2.12    Litigation.    To the Company's knowledge, there is no action, suit, proceeding or investigation pending, or
to the Company's knowledge, currently threatened against the Company or its assets or properties or that questions the validity of this Agreement or the License Agreement or the right of the Company
to enter into this Agreement or the License Agreement or to consummate the transactions contemplated hereby or thereby. 

        2.13    Financial Statements.    Exhibit E sets forth the
following financial statements of the Company (collectively, the "Financial Statements"): (i) the audited consolidated balance sheet as of December 31, 2001 (the "Balance Sheet") and
(ii) the audited consolidated statements of operations, stockholders' equity and cash flows of the Company for the twelve (12) month period ended December 31, 2001. 

        2.13.2    Integrity of Financial Statements; No Undisclosed Liabilities.    The Financial Statements:
(i) present fairly the financial position and the results of operations, stockholders' equity and cash flows of the Company at the dates and for the periods indicated, except that they are
subject to normally recurring year-end and audit adjustments, which adjustments, individually or in the aggregate, will not be material, (ii) are in accordance with the books and
records of the Company and (iii) have been prepared in accordance with generally accepted accounting principles consistently applied ("GAAP). To the Company's knowledge, except as set forth in
the Financial Statements, the Company has no material liabilities, contingent or otherwise, other than (A) liabilities incurred in the ordinary course of business subsequent to
December 31, 2001 and (B) obligations under contracts and commitments incurred in the ordinary course of business and not required under GAAP to be reflected in the Financial Statements,
which, either singly or in the aggregate, are not material to the financial condition or operating results of the Company. 

19

 

        2.13.3    No Material Adverse Change.    To the Company's knowledge, since the date of the Balance Sheet, there has
not been any material adverse change in the condition (financial or otherwise), assets, liabilities, operations, earnings, stockholders' equity, cash flows or prospects of the Company. 

        2.14    Solvency.    The Company has not admitted in writing its inability to pay its debts generally as they become
due, filed or consented to the filing against it of a petition in bankruptcy or a petition to take advantage of any insolvency act, made an assignment for the benefit of creditors, consented to the
appointment of a receiver for itself or for the whole or any substantial part of its property, or had a petition in bankruptcy filed against it, been adjudicated a bankrupt, or filed a petition or
answer seeking reorganization or arrangement under the federal bankruptcy laws or any other laws or of the United States or any other jurisdiction. 

        2.15    Related Party Transactions.    All agreements between the Company and its officers, directors or affiliates
(as defined in Rule 405 of the Act) have been authorized in accordance with Delaware law. 

        3.    Representations and Warranties of the Investor.    

        Investor
hereby represents, warrants and covenants that: 

        3.1    Authorization.    Investor has full power and authority to enter into this agreement and such agreement
constitutes its valid and legally binding obligation, enforceable in accordance with its terms. 

        3.2    Purchase Entirely for Own Account.    This Agreement is made with Investor in reliance upon Investor's
representation to the Company, which by Investor's execution of this Agreement Investor hereby confirms, that the Shares to be received by Investor will be acquired for investment for Investor's own
account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that Investor has no present intention of selling, granting any participation in or
otherwise distributing the same. By executing this Agreement, Investor further represents that Investor does not have any contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with respect to any of the Shares. Notwithstanding the foregoing, the Company acknowledges that the inventors of the patent
rights that are the subject of the License Agreement may share with Investor the proceeds from the ultimate sale of the Shares. 

        3.3    Disclosure of Information.    Investor believes it has received all the information it considers necessary or
appropriate for deciding whether to purchase the Shares. Investor further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and
conditions of the offering of the Shares and the business, properties, prospects and financial condition of the Company. 

        3.4    Investment Experience.    Investor is an investor in securities of companies in the development stage and
acknowledges that it is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating
the merits and risks of the investment in the Shares. Investor also represents it has not been organized for the purpose of acquiring the Shares. 

        3.5    Restricted Securities.    Investor understands that the Shares it is purchasing are characterized as
"restricted securities" under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable
regulations the Shares may be resold without registration under the Act only in certain limited circumstances. In the absence of an effective registration statement covering the Shares or an available
exemption from registration under the Act, the Shares must be held 

20

 

indefinitely.
In this regard, Investor represents that it is familiar with SEC Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Act, including
without limitation the Rule 144 condition that current information about the Company be available to the public. 

        3.6    Further Limitations on Disposition.    Without in any way limiting the representations set forth above,
Investor further agrees not to make any disposition of all or any portion of the Shares unless and until the transferee has agreed in writing for the benefit of the Company to be bound by all terms of
this Agreement and the License Agreement (if any) applicable to the Shares, and: 

        3.6.1 There
is then in effect a registration statement under the Act covering such proposed disposition and such disposition is made in accordance with such registration
statement; 

        3.6.2 Such
disposition is to be made pursuant to SEC Rule 144 or any successor rule (provided that the Company is furnished with satisfactory evidence of compliance
with SEC Rule 144 or such successor rule); or 

        3.6.3 (i) If
such proposed disposition is prior to the initial public offering of securities of the Company or is not made pursuant to Section 3.6.1 or 3.6.2
hereof, Investor shall have notified the Company of the proposed disposition and shall have furnished the Company with a reasonably detailed statement of the circumstances surrounding the proposed
disposition, and (ii) if requested by the Company, Investor shall have furnished the Company with an opinion of counsel reasonably satisfactory to the Company that such disposition will not
require registration of such shares under the Act. The parties agree that the Company may restrict the transfer of the Shares pursuant to this Section 3.6.3 in its discretion unless furnished
with such an opinion. 

        3.7    Restrictive Legends.    It is understood that the certificates evidencing the Shares may bear one or all of the
following legends in substantially the following form(s): 

        3.7.1     These
securities have not been registered or qualified under the securities act of 1933, as amended (the "act") or the securities or blue sky laws of
CALIFORNIA or any other state and may not be
offered and sold unless registered and/or qualified pursuant to the relevant provisions of federal and state securities or blue sky laws or an exemption from such registration or qualification is
applicable. Therefore, no sale or transfer of this security shall be made, no attempted sale or transfer shall be valid, and the issuer shall not be required to give any effect to any such transaction
unless (a) such transaction shall have been duly registered under the act and qualified or approved under applicable state or blue sky laws, or (b) such transaction is pursuant to
rule 144 promulgated under the act or (c) the issuer shall have received an opinion of counsel reasonably satisfactory to it that such registration, qualification or approval is not
required. 

        3.7.2    Removal of Legend.    Notwithstanding anything herein to the contrary, the restrictions imposed by
Section 3.6 hereof and this Section 3.7 on the transferability of any of the Shares shall cease and terminate when: (a) any such Shares are transferred or otherwise disposed of in
accordance with the intended method of disposition set forth in a registration statement or such other method that does not require that the securities transferred bear the legend set forth in
Section 3.7.1 hereof; or (b) the holder of such Shares has met the requirements for transfer pursuant to subparagraph (k) of Rule 144 (or any successor rule) promulgated by
the Commission under the Securities Act. Whenever the restrictions imposed by Section 3.6 hereof and this Section 3.7 have terminated as described in the immediately preceding sentence
or, in the opinion (reasonably acceptable to the Company) of counsel to the holder of the Shares, have otherwise terminated, a holder of a certificate for such Shares as to which such restrictions
have terminated shall be entitled to receive from the Company, 

21

 

without
expense, a new certificate not bearing the restrictive legend set forth in Section 3.7.1 hereof and not containing any other reference to the restrictions imposed by this Agreement. 

        3.7.3     Any
legend required by the laws of the State of California, including any legend required by the California Department of Corporations and Sections 417
and 418 of the California Corporations Code. 

        3.8    Tax Advisors.    Investor has reviewed with its own tax advisors the federal, state foreign and local tax
consequences of this investment, where applicable, and the transactions contemplated by this Agreement. With respect to such tax consequences, Investor is relying solely on such advisors and not on
any statements or representations of the Company or any of its agents and understands that Investor (and not the Company) shall be responsible for Investor's own tax liability that may arise as a
result of this investment or the transactions contemplated by this Agreement. 

        3.9    Investor's Counsel.    Investor acknowledges that Investor has had the opportunity to review this Agreement,
the exhibits attached hereto and the transactions contemplated by this Agreement with Investor's own legal counsel. Investor is relying solely on Investor's legal counsel and not on any statements or
representations of the Company or any of the Company's agents, including Wilson Sonsini Goodrich & Rosati, for legal advice with respect to this investment or the transactions contemplated by
this Agreement. 

        3.10    Market Stand-off Agreement.    Investor hereby agrees that, during the period of duration
specified by the Company and the lead underwriter in the initial public offering of the Company's Common Stock pursuant to a registration statement filed under the Act, it shall not, to the extent
requested by the Company or such underwriter, directly or indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale), grant any option to purchase or otherwise
transfer or dispose of (other than to donees who agree to be similarly bound) any securities of the Company held by it at any time during such period except Common Stock included in such registration;
provided, however, that in no event shall such period exceed one hundred eighty (180) days following the effective date of the registration statement. 

        In
the event of any stock dividend, stock split, recapitalization or other change affecting the Company's outstanding Common Stock effected without receipt of consideration, then any
new, substituted or additional securities distributed with respect to the Shares shall be immediately subject to the provisions of this Section 3.10. 

        In
order to enforce the foregoing covenant, the Company and Investor agree that the Company may impose stop-transfer instructions with respect to the securities of Investor
until the end of such period. 

        Notwithstanding
the foregoing, the obligations described in this Section 3.10 shall not apply to a registration relating solely to employee benefit plans on
Form S-l or Form S-8 or similar forms which may be promulgated in the future, or a registration relating solely to an SEC Rule 144 transaction on
Form S-4 or similar forms which may be promulgated in the future. 

        The
obligations of Investor under this Section 3.10 shall be conditioned upon similar agreements with at least the same duration being in effect with each other stockholder who is
an officer, director or holder of at least 120,000 shares (subject to appropriate adjustments for stock splits, stock dividends, combinations and other recapitalizations) of Common Stock (directly or
on a Common Stock equivalent basis). In addition, if any such officer, director or shareholder of the Company is released from any such agreement, Investor shall be so released with respect to a
number of Shares that bears the same proportion to the total number of Shares held by the Investor as the number of shares of Common Stock that are released from such lock up bears to 

22

 

the
total number of shares of Common Stock held by such officer, director or stocker, as the case may be. 

        3.11    Rule 144 Compliance.    With a view to making available the benefits of certain rules and regulations
of the Securities and Exchange Commission (the "Commission") which may at any time permit the sale of
the Shares to the public without registration, ninety (90) days after any registration statement covering a public offering of securities of the Company under the Act shall have become
effective and at all times thereafter when any Shares are not eligible for sale under SEC Rule 144(k), the Company agrees to: (i) make and keep public information available, as those
terms are understood and defined in SEC Rule 144; (ii) use its commercially reasonable efforts to file with the Commission in a timely manner all reports and other documents required of
the Company under the Securities Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act"); and (iii) furnish to each holder of the Shares forthwith upon request a written
statement by the Company as to Company "s compliance with the reporting requirements of SEC Rule 144 and of the Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so filed by the Company as such holder may reasonably request in availing itself of any rule or regulation of the Commission
allowing such holder to sell any Shares without registration. 

        4.    California Commissioner of Corporations    

        4.1    Corporate Securities Law.    

        THE
SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION
25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT. 

        5.    COVENANTS    

        5.1    Financial Statements; Access to Officers; Confidentiality.    So long as Investor holds at least a majority of
the Shares issued hereunder (subject to appropriate adjustments for stock splits, stock dividends, combinations and other recapitalizations), the Company shall provide to Investor, as soon as
practicable after the end of each fiscal year, and in any event within 120 days thereafter, a consolidated balance sheet of the Company and its subsidiaries, if any, as of the end of such
fiscal year, and consolidated statements of income, stockholders' equity and cash flows of the Company and its subsidiaries, if any, for such year, prepared in accordance with generally accepted
accounting principles, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and all audited and certified by a public accounting firm of
nationally recognized standing selected by the Company. In addition, from time to time, during regular business hours and upon reasonable prior written notice, the Company shall permit representatives
of Investor to discuss Company affairs with Company officers; provided, that the Company is not obligated to discuss any matters to the extent necessary to preserve the attorney-client privilege, to
protect proprietary information or for other similar reasons. Investor agrees, and agrees to cause its representatives to agree, to hold in confidence and trust and not to use or disclose any
confidential or proprietary information of Company disclosed to Investor hereunder. Notwithstanding the foregoing, this Section 5.1 shall not be applicable to disclosures made to Investor
pursuant to the License Agreement, as to which the License Agreement shall govern. 

23

 

        5.2    Termination.    The rights set forth in Section 5.1 shall terminate and be of no further force or effect
upon the earlier of (a) the date of which the sale of securities pursuant to a registration statement filed by the Company under the Act in connection with the firm commitment underwriting of
its securities to the general public is consummated; (b) the date on which the Company first becomes subject to the periodic reporting requirements of Sections 12(g) or 15(d) of the Securities
Exchange Act, as amended; or (c) the first date on which Investor no longer holds a majority of the Shares issued hereunder. 

        5.3    Put Right.    

        If
the Company and Investor agree that the Investor or any Affiliate of the Investor (as defined in the License Agreement) shall conduct clinical trials in connection with Licensed
Product I and/or Licensed Product II (as such term is defined in the License Agreement) then, in any such event, Investor shall have the right (the "Put Right"), at any time thereafter, exercisable by
notice to the Company, from time to time, to require the Company to purchase any or all of the Shares at a purchase price (the "Put Price") equal to the Appraised Value (as hereinafter defined) of the
Shares as of the date of such notice (the "Put Date"), determined in accordance with this section 4.3. The Put Price shall be payable by bank or cashier's check payable in New York Clearing
House funds or by wire transfer of immediately available federal funds to an account designated by Investor. 

        For
purposes of this Agreement, "Appraised Value" shall mean, the fair market value of the Shares if publicly traded. If the Shares are not public traded, the Appraised Value shall be
determined in a good faith determination by the Company's Board of Directors. 

        6.    Miscellaneous    

        6.1    Survival.    The warranties, representations and covenants of the Company and Investor contained in or made
pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing for a period of one (1) year. 

        6.2    Successors and Assigns.    Except as otherwise provided herein, the terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any Shares). Nothing in this Agreement, express or implied, is intended
to confer upon any party, other than the parties hereto or their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement. 

        6.3    Governing Law.    This Agreement shall be governed by and construed under the laws of the State of California
as applied to agreements among California residents entered into and to be performed entirely within California. 

        6.4    Dispute Resolution.    Any controversy or bona fide disputed claim arising between the parties to this
Agreement, which dispute cannot be resolved by mutual agreement shall, by the election of either party, be resolved by submitting to dispute resolution before a fact-finding mediation body
composed of one or more experts in the field, selected by mutual agreement within thirty (30) days of written request by either party. Said dispute resolution shall be held in California at
such place as shall be mutually agreed upon in writing by the parties. The fact-finding body shall determine who shall bear the cost of said resolution. In the event that the parties
cannot mutually agree within said thirty (30) days on the dispute resolution body, the parties will go to arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. 

        6.5    Titles and Subtitles.    The titles and subtitles used in this Agreement are used for convenience only and are
not to be considered in construing or interpreting this Agreement. 

24

 

        6.6    Notices.    All notices required or permitted hereunder shall be in writing and shall be deemed effectively
given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, if not, then on the
next business day; (iii) three days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one day after deposit with a nationally
recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications shall be sent to the address as set forth on the signature page hereof or at such other address as such party may designate by ten
days advance written notice to the other parties hereto. 

        6.7    Finder's Fee.    Each party represents that it neither is nor will be obligated for any finders' fee or
commission in connection with this transaction. Investor agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finders' fee (and
the costs and expenses of defending against such liability or asserted liability) for which Investor or any of its officers, partners, employees or representatives is responsible. The Company agrees
to indemnify and hold harmless Investor from any liability for any commission or compensation in the nature of a finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Company or any of its officers, employees or representatives is responsible. 

        6.8    Expenses.    Each party shall pay all costs and expenses that it incurs with respect to the negotiation,
execution, delivery and performance of this Agreement. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 

        6.9    Amendments and Waivers.    Any term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and Investor. 

        6.10    Severability.    If one or more provisions of this Agreement are held to be unenforceable under applicable
law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its
terms. 

        6.11    Entire Agreement.    This Agreement and the License Agreement (including any schedules and exhibits hereto or
thereto) constitute the entire agreement among the parties and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically
set forth herein or therein. 

        6.12    Counterparts.    This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument. 

        [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK] 

25

 

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	

 	
 	

 	
 	
OPTIMER PHARMACEUTICALS, INC.
	

 	
 	

 	
 	

By:	
 	

 
	 	 	 	 	 	 	
 Michael N. Chang

CEO
	

 	
 	

Address:	
 	

10110 Sorrento Valley Road, Suite C

San Diego, California 92121
	

 	
 	

 	
 	
INVESTOR:
	

 	
 	

 	
 	
SLOAN-KETTERING INSTITUTE FOR

CANCER RESEARCH
	

 	
 	

By:	
 	

 	
 	

 
	 	 	 	 	 	 	
 James S. Quirk

Senior Vice President

Research Resources Managment
	

 	
 	

Address:	
 	

1275 York Avenue

New York, NY 10021

26

 
 

EXHIBIT A
  
    LICENSE AGREEMENT    
    

 
 

[Please see, "License Agreement for SKI's Technology, "Carbohydrate Cancer Vaccines"' attached
  as this Exhibit 10.5 to this Amendment No. 3 to
  Optimer Pharmaceuticals, Inc.'s
Form S-1 Registration Statement]    

 
 

EXHIBIT B
  
    SCHEDULE OF EXCEPTIONS
  
    [No Attachment]    

 
 

EXHIBIT C
  
    RESTATED CERTIFICATE OF INCORPORATION    
    

 
 

AMENDED AND RESTATED
  
    CERTIFICATE OF INCORPORATION
  
    OF
  
    OPTIMER PHARMACEUTICALS, INC.    
    

        (Pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware) 

The
original Certificate of Incorporation of the Corporation was filed with the Secretary of the State of Delaware on November 18, 1998. 

 
 

ARTICLE I    

        The
name of this corporation is Optimer Pharmaceuticals, Inc. (the "Corporation"). 

 
 

ARTICLE II    

        The
name and address of the registered office of the corporation in the State of Delaware is The Corporation Trust Company, 1209 Orange Street, County of New Castle, Wilmington, Delaware
19801. 

 
 

ARTICLE III    

        The
purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the Delaware General Corporation Law. 

 
 

ARTICLE IV    

        The
aggregate number of shares that the corporation shall have authority to issue is 48,000,000 shares divided into 29,000,000 shares of Common Stock, each with $.001 par value ("Common
Stock"), and 19,000,000 shares of Preferred Stock, each with $.001 par value. The first series of Preferred Stock shall be designated Series A Preferred Stock ("Series A Preferred") and
shall consist of 5,000,000 shares. The second series of Preferred Stock shall be designated Series B Preferred Stock ("Series B Preferred") and shall consist of 14,000,000 shares. 

        The
relative powers, preferences, special rights, qualifications, limitations and restrictions granted to or imposed or the respective classes of the shares of capital stock or the
holders thereof are as follows: 

        1.    Dividends.    

        (a)    Dividend Preference.    The holders of outstanding shares of Series A Preferred and Series B
Preferred shall be entitled to receive dividends, on a pari-passu basis and out of any assets at the time legally available therefor, prior and in preference to any declaration or payment
of any dividend (payable other than in Common Stock) on the Common Stock, at the rate of $0.08 per annum and $0.29 per annum, respectively (as adjusted for any stock dividends, combinations or stock
splits), or, if greater (as determined on an as-converted basis for the Preferred Stock), an amount equal to that paid on the outstanding shares of Common Stock, when, as and if declared
by the Board of Directors of the Corporation; provided, however, that the Board of Directors is under no
obligation to pay dividends to such holders, and such dividends, if any, shall be noncumulative. No rights shall accrue to the holders of the Preferred Stock if dividends are not declared in any prior
year. Such dividends may be payable quarterly or otherwise as the Board of Directors may from time to time determine. All dividends per share on the Preferred Stock shall be declared and paid pro rata
(1) such that the ratio of dividends being declared and paid per share of Series A Preferred to dividends being declared and paid per share of Series B Preferred is the same as
the ratio of $0.08 to $0.29 (as adjusted for any stock dividends, combinations or stock splits), and (2) as among the holders of each series based on the number of shares of such series so
held. 

 

        (b)    Priority of Dividends.    The Corporation shall make no Distribution (as defined below) to the holders of
shares of Common Stock in any fiscal year unless and until dividends shall have been paid, or declared and set apart, upon all shares of Preferred Stock. 

        (c)    Distribution.    As used in this section, "Distribution" means the transfer of cash or property without
consideration, whether by way of dividend or otherwise (except a dividend in shares of the Corporation) or the purchase of shares of the Corporation (other than in connection with the repurchase of
shares of Common Stock issued to or held by employees, consultants, officers and directors upon termination of their employment or services pursuant to agreements providing for the right of said
repurchase) for cash or property. 

        (d)    Consent to Certain Distributions.    The holders of outstanding shares of Preferred Stock shall be deemed to
have consented to all distributions or payments to existing or terminated employees, consultants, officers and directors of the Corporation in connection with the termination of employment by or
services to the Corporation and relating to the repurchase of shares of capital stock issued to or held by such individuals pursuant to agreements with the Corporation for such repurchases that have
been approved by the Board of Directors. 

        2.    Liquidation Rights.    

        (a)    Liquidation Preference.    In the event of any liquidation, dissolution or winding up of the Corporation,
either voluntary or involuntary, the holders of Series A Preferred and Series B Preferred shall be entitled to receive, out of the assets of the Corporation, an amount equal to $1.00 and
$3.60 per share, respectively (as adjusted for any stock dividends, combinations or stock splits) plus an amount equal to all declared and unpaid dividends thereon, if any, to the date that payment is
made, before any payment shall be made or any assets distributed to the holders of Common Stock (The foregoing preferential amount payable to the holders of Preferred Stock referred to as the
"Liquidation Preference"). 

        (b)    Priority.    If upon the liquidation, dissolution or winding up of the Corporation, the assets to be
distributed among the holders of the Preferred Stock are insufficient to permit the payment to such holders of the full Liquidation Preference for their shares, then the entire assets of the
Corporation legally available for distribution shall be distributed with equal priority and pro rata among the holders of the Preferred Stock in
proportion to the numbers of shares of Preferred Stock held by them multiplied by the Liquidation Preference for such shares of Preferred Stock. 

        (c)    Deemed Liquidation.    A liquidation shall include (i) a sale, lease or disposition of all or
substantially all of the assets of the Corporation, or (ii) a merger or consolidation (in a single transaction or a series of related transactions) of the Corporation with or into any other
corporation or corporations or other entity, or any other corporate reorganization, where the stockholders of the Corporation immediately prior to such event do not retain more than fifty percent
(50%) of the voting power of and interest in the successor entity (such events being referred to hereinafter as an "Acquisition of the Corporation"). 

        (d)    Distribution after Payment of Liquidation Preference.    After payment has been made to the holders of the
Preferred Stock of the full preferential amount set forth in Section 3(a) above, the entire remaining assets and funds of the Corporation legally available for distribution, if any, shall be
distributed ratably among the holders of Preferred Stock, subject to the limitations set forth below, and the holders of Common Stock in a manner such that the amount distributed to each holder of
Common Stock and Preferred Stock shall equal the amount obtained by multiplying the entire assets and funds of the Corporation legally available for distribution pursuant to this Section 3(d)
by a fraction, the numerator of which shall be the sum of the number of shares of Common Stock then held by the holder and the number of shares of Common Stock issuable upon conversion of the shares
of Preferred Stock then held by the holder, and the denominator of which 

2

 

shall
be the sum of the total number of shares of Common Stock then outstanding and the total number of shares of Common Stock issuable upon conversion of the total number of shares of Preferred Stock
then outstanding; provided, however, that at such time as the distribution of liquidation preferences
pursuant to this Section 3(d) shall equal two (2) times the Liquidation Preference of the Preferred Stock, such holders of Preferred Stock shall not be entitled to any further
distribution pursuant to this subsection 2(d) with respect to shares of Preferred Stock. Thereafter, any remaining assets and funds legally available for distribution hereunder shall be distributed
solely to the holders of the Common Stock in a manner such that the remaining amount distributed to each holder of Common Stock shall equal the amount obtained by multiplying the entire assets and
funds of the Corporation legally available for distribution hereunder by a fraction, the numerator of which shall be the number of shares of Common Stock then held by such holder, and the denominator
of which shall be the total number of shares of Common Stock then outstanding. 

        (e)    Shares not Treated as Both Preferred Stock and Common Stock in any Distribution.    Shares of Preferred Stock
shall not be entitled to be converted into shares of Common Stock in order to participate in any distribution, or series of distributions, as shares of Common Stock, without first foregoing
participation in the distribution, or series of distributions, as shares of Preferred Stock pursuant to paragraph (a) above. 

        (f)    Noncash Distributions.    If any of the assets of the Corporation are to be distributed other than in cash
under this Section 2 or for any purpose, then the Board of Directors of the Corporation shall promptly engage independent competent appraisers to determine the fair market value of the assets
to be distributed to the holders of Preferred Stock or Common Stock. The Corporation shall, upon receipt of such appraiser's valuation, give prompt written notice to each holder of shares of Preferred
Stock or Common Stock of the appraiser's valuation. Notwithstanding the above, any securities to be distributed to the stockholders shall be valued as follows: 

          (i)  If
traded on a securities exchange, the value shall be deemed to be the average of the closing prices of the securities on such exchange over the 30-day
period ending three (3) business days prior to the closing; 

         (ii)  If
actively traded over-the-counter, the value shall be deemed to be the average of the closing bid prices over the 30-day period
ending three (3) business days prior to the closing; and 

        (iii)  If
there is no active public market, the value shall be the fair market value thereof, as mutually determined by the Corporation and the holders of not less than a
majority of the outstanding shares of Preferred Stock, provided that if the Corporation and the holders of a majority of the outstanding shares of Preferred Stock are unable to reach agreement, then
by independent appraisal by an investment banker hired and paid by the Corporation, but acceptable to the holders of a majority of the outstanding shares of Preferred Stock. 

        (g)    Notice of Transaction.    The Corporation shall give each holder of record of Preferred Stock written notice of
such impending transaction not later than ten (10) days prior to the stockholders' meeting called to approve such transaction, or ten (10) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such holders in writing of the final approval of such transaction. The first of such notices shall describe the material terms and conditions of the
impending transaction and the provisions of this Section 3, and the Corporation shall thereafter give such holders prompt notice of any material changes. The transaction shall in no event take
place sooner than ten (10) days after the Corporation has given the first notice provided for herein or sooner than ten (10) days after the Corporation has given notice of any material
changes provided for herein; provided, however, that such periods may be shortened upon 

3

 

the
written consent of the holders of Preferred Stock that are entitled to such notice rights or similar notice rights and that represent at least a majority of the voting power of all then
outstanding shares of such Preferred Stock. 

        (i)    Effect of Noncompliance.    In the event the requirements of this Section 3(g) are not complied with,
the Corporation shall forthwith cause the closing of the transaction to be postponed until such notice requirements have been complied with. 

        3.    Redemption.    

        (a)   Subject
to the rights of series of Preferred Stock which may from time to time come into existence, at the written request of holders representing a majority of the
Series B Preferred Stock, this corporation shall redeem, commencing with the ninth anniversary of the first issuance of the Series B Preferred Stock and continuing annually on the first
and second anniversary date thereafter (each a "Redemption Date"), that number of shares of Series B Preferred Stock equal to one-third, one-half, and all, respectively,
of the remaining outstanding shares of Series B Preferred Stock that are outstanding on each of those respective dates. The
redemption price for each share of Series B Preferred Stock shall be the sum of (i) $3.60 per share of Series B Preferred Stock (as adjusted for any stock dividends, combinations
or splits with respect to such shares) plus (ii) the amount of all declared but unpaid dividend thereon, less (iii) any dividend
previously paid thereon, through the respective Redemption Date (the "Series B Redemption Price"). Any redemption effected pursuant to this subsection 3(a) shall be made on a prorata
basis among the holders of the Series B Preferred Stock in proportion to the number of shares of Series B Preferred Stock then held by such holders. 

        (b)   Subject
to the rights of series of Preferred Stock which may from time to time come into existence, at least fifteen (15) but no more than thirty (30) days
prior to each Redemption Date, written notice shall be mailed, first class postage prepaid, to each holder of record (at the close of business on the business day next preceding the day on which
notice is given) of the Series B Preferred Stock to be redeemed, at the address last shown on the records of this corporation for such holder, notifying such holder of the redemption to be
effected, specifying the number of shares to be redeemed from such holder, the Redemption Date, the Redemption B Redemption Price, the place at which payment may be obtained and calling upon such
holder to surrender to this corporation, in the manner and at the place designated, his, her or its certificate or certificates representing the shares to be redeemed (the "Redemption Notice"). On the
Redemption Date, each holder of Series B Preferred Stock to be redeemed shall surrender to this corporation the certificate or certificates representing such shares, in the manner and at the
place designated in the Redemption Notice, and thereupon the Series B Redemption Price of such shares shall be payable to the order of the person whose name appears on such certificate or
certificates as the owner thereof and each surrendered certificate shall be cancelled. In the event less than all the shares represented by any such certificate are redeemed, a new certificate shall
be issued representing the unredeemed shares. 

        (c)   From
and after each Redemption Date, unless there shall have been a default in payment of the Series B Redemption Price, all rights of the holders of shares of
Series B Preferred Stock designated for redemption on such Redemption Date in the Redemption Notice as holders of Series B Preferred Stock (except the right to receive the
Series B Redemption Price, without interest, upon surrender of their certificate or certificates) shall cease with respect to such shares, and such shares shall not thereafter be transferred on
the books of this corporation or be deemed to be outstanding for any purpose whatsoever. Subject to the rights of series of Preferred Stock which may from time to time come into existence, if the
funds of the corporation legally available for redemption of shares of Preferred Stock on any Redemption Date are insufficient to redeem the total number of shares of Preferred Stock to be redeemed on
such date, those funds which are 

4

 

legally
available will be used to redeem the maximum possible number of such shares ratably among the holders of such shares to be redeemed based upon their holdings of Series B Preferred
Stock. The shares of Series B Preferred Stock not redeemed shall remain outstanding and entitled to all the rights and preferences provided herein. Subject to the rights of series of Preferred
Stock which may from time to time come into existence, at any time thereafter when additional funds of the corporation are legally available for the redemption of shares of Series B Preferred
Stock, such funds will immediately be used to redeem the balance of the shares which the corporation has become obliged to redeem on any Redemption Date but which it has not redeemed. 

        (d)   On
or prior to each Redemption Date, this corporation shall deposit the Series B Redemption Price of all shares of Series B Preferred Stock designated for
redemption in the Redemption Notice, and not yet redeemed or converted, with a bank or trust corporation having aggregate capital and surplus in excess of $100,000,000 as a trust fund for the benefit
of the respective holders of the shares designated for redemption and not yet redeemed, with irrevocable instructions and authority to the bank or trust corporation to publish the notice of redemption
thereof and pay the Series B Redemption Price for such shares to their respective holders on or after the Redemption Date, upon receipt of notification from the corporation that such holder has
surrendered his, her or its share certificate to the corporation pursuant to subsection (3)(b) above. As of the date of such deposit (even if prior to the applicable Redemption Date), the deposit
shall constitute full payment of the shares to their holders, and from and after the date of the deposit the shares so called for redemption on the applicable Redemption Date shall be redeemed and
shall be deemed to be no longer outstanding, and the holders thereof shall cease to be stockholders with respect to such shares and shall have no rights with respect thereto except the rights to
receive from the bank or trust corporation payment of the Series B Redemption Price of the shares, without interest, upon surrender of their certificates therefor, and the right to convert such
shares as provided in Article IV(B)(4) hereof. Such instructions shall also provide that any moneys deposited by the corporation pursuant to this subsection (3)(d) for the redemption of shares
thereafter converted into shares of the corporation's Common Stock pursuant to Article IV(B)(4) hereof prior to the Redemption Date shall be returned to the corporation forthwith upon such
conversion. The balance of any moneys deposited by this corporation pursuant to this subsection (3)(d) remaining unclaimed at the expiration of two (2) years following the Redemption Date shall
thereafter be returned to this corporation upon its request expressed in a resolution of its Board of Directors. 

        4.    Conversion.    The holders of the Preferred Stock shall have conversion rights as follows (the "Conversion
Rights"): 

        (a)    Right to Convert.    Each share of Preferred Stock shall be convertible, at the option of the holder thereof,
at any time after the date of issuance of such share at the office of the Corporation or any transfer agent for the Preferred Stock, into that number of fully-paid and nonassessable shares
of Common Stock that is equal to the Original Issue Price divided by the appropriate Conversion Price (as hereinafter defined). The Original Issue Price per share of Series A Preferred shall be
$1.00 and the Original Issue Price per share of Series B Preferred shall be $3.60. The initial Conversion Price for the Series A Preferred Stock shall be $1.00 and the initial Conversion
Price for the Series B Preferred shall be $3.00. The initial Conversion Prices for the Preferred Stock shall be subject to adjustment as provided herein. (The number of shares of Common Stock
into which each share of Preferred Stock may be converted is hereinafter referred to as the "Conversion Rate" for each such series.) Upon any decrease or increase in the Conversion Price or the
Conversion Rate for a series, as described in this Section 4, the Conversion Rate or Conversion Price for such series, as the case may be, shall be appropriately increased or decreased. 

5

 

        (b)    Automatic Conversion.    Each share of Preferred Stock shall automatically be converted into shares of Common
Stock at the then-effective Conversion Rate for such share immediately upon
either (i) the consummation of a firmly underwritten public offering that results in proceeds to the Corporation in the public offering of at least $20,000,000 (net of underwriting discounts
and commissions and offering expenses) and is at a price greater than $6.00 per share, as adjusted for stock splits, combinations and recapitalizations (a "Qualifying Public Offering"); or
(ii) the receipt by the Corporation of the consent to such conversion by the holders of not less than fifty-one (51%) percent of the then outstanding shares of Preferred Stock. 

        (c)    Mechanics of Conversion.    No fractional shares of Common Stock shall be issued upon conversion of Preferred
Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the then fair market value of such
fractional shares as determined by the Board of Directors of the Corporation. Before any holder of Preferred Stock shall be entitled to convert the same into full shares of Common Stock, and to
receive certificates therefor, he shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the Preferred Stock, and shall
give written notice to the Corporation at such office that he elects to convert the same; provided, however, that in the event of an automatic conversion pursuant to paragraph 4(b) above, the
outstanding shares of Preferred Stock shall be converted automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are
surrendered to the Corporation or its transfer agent; provided further, however, that the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon
such automatic conversion unless either the certificates evidencing such shares of Preferred Stock are delivered to the Corporation or its transfer agent as provided above, or the holder notifies the
Corporation or its transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss
incurred by it in connection with such certificates. 

        The
Corporation shall, as soon as practicable after such delivery, or after such agreement and indemnification, issue and deliver at such office to such holder of Preferred Stock, a
certificate or certificates for the number of shares of Common Stock to which he shall be entitled as aforesaid and a check payable to the holder in the amount of any cash amounts payable as the
result of a conversion into fractional shares of Common Stock, plus any declared and unpaid dividends on the converted Preferred Stock. Such conversion shall be deemed to have been made immediately
prior to the close of business on the date of such surrender of the shares of Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date; provided, however, that if the conversion is in connection with an
underwritten offer of securities registered pursuant to the Securities Act of 1933, as amended, the conversion may, at the option of any holder tendering Preferred Stock for conversion, be conditioned
upon the closing of the sale of securities pursuant to such offering, in which event the person(s) entitled to receive the Common Stock issuable upon such conversion of the Preferred Stock shall not
be deemed to have converted such Preferred Stock until immediately prior to the closing of the sale of such securities. 

        (d)    Adjustments to Conversion Price.    

        (i)    Special Definitions.    For purposes of this Section 4(d), the following definitions shall apply: 

        (1)   "Options"
shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire either Common Stock or Convertible Securities. 

        (2)   "Convertible
Securities" shall mean any evidences of indebtedness, shares or other securities convertible into or exchangeable for Common Stock. 

6

 

        (3)   "Additional
Shares of Common Stock" shall mean all shares of Common Stock issued (or, pursuant to Section 4(d)(iii), deemed to be issued) by the Corporation after
the Original Issue Date for such series of Preferred Stock, other than shares of Common Stock issued or issuable: 

        (A)  upon
conversion of shares of Preferred Stock; 

        (B)  to
officers, directors or employees of, or consultants to, the Corporation pursuant to a stock grant, option plan or purchase plan or other employee stock incentive
program or agreement approved by the Board; 

        (C)  upon
approval of the Board, to lending institutions in connection with debt financings or to equipment leasing institutions; 

        (D)  as
a dividend or distribution on Preferred Stock; 

        (E)  in
an event for which adjustments is otherwise made pursuant to Section 4(d)(vi); 

        (F)  as
a dividend on Common Stock where the Corporation declares or pays a similar Common Stock dividend per share of Preferred Stock (on an
as-converted-into-Common Stock basis) in the same manner as declared or paid on the Common Stock; and 

        (G)  pursuant
to a Qualifying Public Offering 

        (4)   "Original
Issue Date" shall mean, the date on which the first share of such series of Preferred Stock was issued. 

        (ii)    No Adjustment of Conversion Price.    No adjustment in the Conversion Price of a series of Preferred Stock
shall be made in respect of the issuance of Additional Shares of Common Stock unless the consideration per share for an Additional Share of Common Stock issued or deemed to be issued by the
Corporation is less than the Conversion Price for such series of Preferred Stock in effect immediately prior to such issue. 

        (iii)    Deemed Issue of Additional Shares of Common Stock.    In the event the Corporation at any time or from time
to time after the Original Issue Date shall issue any Options or Convertible Securities or shall fix a record date for the determination of holders of any class of securities entitled to receive any
such Options or Convertible Securities, then the maximum number of shares (as set forth in the instrument relating thereto without regard to any provisions contained therein for a subsequent
adjustment of such number) of Common Stock issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the exercise of such Options and conversions or
exchange of such Convertible Securities shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue, or, in case such a record date shall have been fixed, as of the
close of business on such record date, provided that in any such case in which Additional Shares of Common Stock are deemed to be issued: 

        (1)   except
as provided in Section 4(d)(iii)(2), no further adjustment in the Conversion Price shall be made upon the subsequent issue of Convertible Securities or
shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities; and 

        (2)   if
such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any change in the consideration payable to the Corporation,
or change in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof (other than under or by reason of provisions 

7

 

designed
to protect against dilution), the Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto) and any subsequent adjustments based
thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange
under such Convertible Securities; and 

        (3)   no
readjustment pursuant to clause (2) above shall have the effect of increasing the Conversion Price for any series of Preferred Stock to an amount which exceeds
the lower of (A) the Conversion Price for such series of Preferred Stock on the original adjustment date or (B) the Conversion Price for such
series of Preferred Stock that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date. 

        (iv)    Adjustment of Conversion Price Upon Issuance of Additional Shares of Common Stock.    In the event this
Corporation shall issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 4(d)(iii)) without consideration or for a
consideration per share less than the Conversion Price of the any series of Preferred Stock in effect on the date of and immediately prior to such issue, then and in each such event the Conversion
Price of such series of Preferred Stock shall be reduced to a price (calculated to the nearest cent) determined by multiplying such Conversion Price by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such issue plus the number of shares of Common Stock issuable upon exercise, conversion or exchange of Options or Convertible
Securities, as the case may be, that are outstanding immediately prior to such issue plus the number of shares of Common Stock which the aggregate consideration received by the Corporation for the
total number of Additional Shares of Common Stock so issued would purchase at such Conversion Price and the denominator of which shall be the number of shares of Common Stock outstanding immediately
prior to such issue plus the number of shares of Common Stock issuable upon exercise, conversion or exchange of Options or Convertible Securities, as the case may be, that are outstanding immediately
prior to such issue plus the number of such Additional Shares of Common Stock so issued; provided that for purposes of this Section 4(d)(iv) all shares of Common Stock issuable upon
conversion of Preferred Stock shall be deemed to be outstanding. 

        (v)    Determination of Consideration.    For purposes of this Section 4(d), the consideration received by the
Corporation for the issuance of any Additional Shares of Common Stock shall be computed as follows: 

        (1)    Cash and Property.    Such consideration shall: 

        (A)  insofar
as it consists of cash, be computed at the aggregate amount of cash received by the Corporation before deducting any reasonable discounts, commissions or other
expenses allowed, paid or incurred by the Corporation for any underwriting or otherwise in connection with the issuance and sale thereof; and 

        (B)  insofar
as it consists of property other than cash, be computed at the fair value thereof at the time of such issue, as determined by Board in the good faith exercise of
its reasonable business judgment; and 

        (C)  in
the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Corporation for consideration which converts
both, be the proportion of such consideration so received, computed as provided in clauses (A) and (B) above, as determined in good faith by the Board. 

8

 

        (2)    Options and Convertible Securities.    The consideration per share received by the Corporation for Additional
Shares of Common Stock deemed to have been issued pursuant to Section 4(d)(iii)(1), relating to Options and Convertible Securities, shall be determined by dividing 

        (A)  the
total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate
amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to
the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such Convertible Securities, by 

        (B)  the
maximum number of shares of Common Stock as set forth in the instruments relating thereto (without regard to any provisions contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or their conversion or exchange of such Convertible Securities. 

        (vi)    Adjustments for Subdivisions or Combinations of Common Stock.    In the event the outstanding shares of Common
Stock shall be subdivided (including by stock split or payment of a dividend in Common Stock) into a greater number of shares of Common Stock, the Conversion Prices in effect immediately prior to such
subdivision shall, concurrently with the effectiveness of such subdivision, be proportionately decreased. In the event the outstanding shares of Common Stock shall be combined (including by reverse
stock split or reclassification) into a lesser number of shares of Common Stock, the Conversion Prices in effect immediately prior to such combination shall, concurrently with the effectiveness of
such combination, be proportionately increased. Adjustments to Conversion Prices then in effect shall become effective retroactively with respect to conversions made subsequent to the record date in
the case of a dividend, and shall become effective after the effective date in the case of a subdivision or combination. 

        (vii)    Adjustments for Other Distributions.    In the event the Corporation at any time or from time to time makes
or fixes a record date for the determination of holders of Common Stock entitled to receive any distribution payable in securities of the Corporation other than shares of Common Stock and other than
as otherwise adjusted in this Section 4, then and in each such event provision shall be made (including, if applicable, an adjustment to one or more Conversion Prices after such record date) so
that the holders of Preferred Stock shall receive upon conversion thereof, in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the Corporation which
they would have received had their Preferred Stock then converted into Common Stock immediately prior to such event and had they thereafter, during the period from the date of such event to and
including the date of conversion, retained such securities receivable by them as aforesaid during such period, subject to all other adjustments called for during such period under this
Section 4 with respect to the rights of the holders of the Preferred Stock. 

        (viii)    Adjustments for Reclassification, Exchange and Substitution.    If the Common Stock issuable upon conversion
of the Preferred Stock shall be changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification or otherwise (other
than a subdivision or combination of shares provided for above), the Conversion Prices then in effect shall, concurrently with the effectiveness of such reorganization or reclassification, be
proportionately adjusted such that the Preferred Stock shall be convertible into, in lieu of the number of shares of Common Stock which the holders 

9

 

would
otherwise have been entitled to receive, a number of shares of such other class or classes of stock equivalent to the number of shares of Common Stock that would have been subject to receipt by
the holders upon conversion of the Preferred Stock immediately before that change. 

        (e)    Certificate as to Adjustments.    Upon the occurrence of each adjustment or readjustment of any Conversion
Price pursuant to this Section 4, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of
Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the
Conversion Prices at the time in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of
Preferred Stock. 

        (f)    Notices of Record Date.    In the event that the Corporation shall propose at any time: 

          (i)  to
declare any dividend or distribution upon its Common Stock, whether in cash, property, stock or other securities, whether or not a regular cash dividend and whether
or not out of earnings or earned surplus; 

         (ii)  to
offer for subscription pro rata to the holders of any class or series of its stock any additional shares of stock of
any class or series or other rights; 

        (iii)  to
effect any reclassification or recapitalization of its Common Stock outstanding involving a change in the Common Stock; or 

        (iv)  to
merge with or into any other corporation, or sell, lease or convey all or substantially all its property or business, or to liquidate, dissolve or wind up; 

then,
in connection with each such event, the Corporation shall send to the holders of the Preferred Stock at least 20 days' prior written notice of the date on which a record shall be taken
for such dividend, distribution or subscription rights (and specifying the date on which the holders of Common Stock shall be entitled thereto) or for determining rights to vote in respect of the
matters referred to in (iii) and (iv) above. 

        Each
such written notice shall be given by first class mail, postage prepaid, addressed to the holders of Preferred Stock at the address for each such holder as shown on the books of the
Corporation. 

        (g)    Reservation of Stock Issuable Upon Conversion.    The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock solely for the purpose of effecting the conversion of the shares of the Preferred Stock, such number of its shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all then outstanding shares of the Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall
not be sufficient to effect the conversion of all then outstanding shares of the Preferred Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose. 

        (h)    Miscellaneous.    

          (i)  All
calculations under this Section 4 shall be made to the nearest cent or to the nearest one hundredth (1/100) of a share, as the case may be. 

10

 

         (ii)  No
adjustment in the Conversion Prices of the Preferred Stock need to be made if such adjustment would result in a change in such Conversion Price of less than $0.01.
Any adjustment of less than $0.01 which is not made shall be carried forward and shall be made at the time of and together with any
subsequent adjustment which, on a cumulative basis, amounts to an adjustment of $0.01 or more in such Conversion Price. 

        5.    Voting.    Except as otherwise expressly provided herein or as required by law, the holders of Preferred Stock
and the holders of Common Stock shall vote together and not as separate classes. 

        (a)    General Voting Rights.    Each holder of shares of Preferred Stock shall be entitled to the number of votes
equal to the number of shares of Common Stock into which such shares of Preferred Stock held by such holder of Preferred Stock could then be converted. The holders of shares of the Preferred Stock
shall be entitled to vote on all matters on which the Common Stock shall be entitled to vote, unless otherwise required by applicable law. The holders of the Preferred Stock shall be entitled to
notice of any stockholders' meeting in accordance with the Bylaws of the Corporation. Fractional votes shall not, however, be permitted and any fractional voting rights resulting from the above
formula (after aggregating all shares into which shares of Preferred Stock held by each holder could be converted) shall be disregarded. Each holder of shares of Common Stock shall be entitled to one
vote for each share thereof held. 

        (b)    Board of Directors.    The Board of Directors of the Corporation shall consist of seven (7) members. 

        (i)    Voting for the Election of Series A Director.    As long as at least fifty percent (50%) of the shares
of Series A Preferred Stock that have been issued remain outstanding, the holders of Series A Preferred Stock, voting together as a series, shall be entitled to elect one
(1) member of the Corporation's board of directors (the "Series A Directors") at each meeting or pursuant to each consent of the Corporation's stockholders for the election of directors. 

        (ii)    Voting for the Election of Series B Director.    As long as at least fifty percent (50%) of the shares
of Series B Preferred Stock that have been issued remain outstanding, the holders of Series B Preferred Stock, voting together as a series, shall be entitled to elect three
(3) members of the Corporation's board of directors (the "Series B Directors") at each meeting or pursuant to each consent of the Corporation's stockholders for the election of
directors. 

        (iii)    Voting for Election of Directors.    The holders of outstanding Common Stock shall be entitled to elect two
(2) directors of the Corporation at each meeting or pursuant to each consent of the Corporation's stockholders for the election of directors. The holders of Preferred Stock and Common Stock
(voting together as a single class on an as-converted basis and not as a separate series) shall be entitled to elect any remaining directors of the Corporation. 

        (iv)    Voting of the Directors.    As long as at least fifty percent (50%) of the shares of Preferred Stock that have
been issued remain outstanding, approval of the following matters by the Board of Directors of
the Corporation shall require the consent of at least two-thirds (2/3) of the directors of the Corporation's Board of Directors: 

        (1)   Employment
of any senior executive of the Corporation; 

        (2)   Any
exclusive license of the Corporation's technology; 

        (3)   Any
consolidation or merger of the Corporation with or into any other corporation or other entity or person, or any other corporate reorganization, in which the
stockholders of the Corporation immediately prior to such consolidation, merger or 

11

 

reorganization,
own less than fifty percent (50%) of the Corporation's voting power immediately after such consolidation, merger or reorganization, or any transaction or series of related transactions
to which the Corporation is a party in which in excess of fifty percent (50%) of the Corporation's voting power is transferred; 

        (4)   Any
amendment or restatement of the Corporation's Certificate of Incorporation or Bylaws; 

        (5)   Any
increase in the number of shares of Common Stock reserved for issuance to officers, directors or employees of, or consultants to, the Corporation pursuant to a stock
grant, option plan or purchase plan or other employee stock incentive program or agreement; 

        (6)   Any
compensation agreement or plan for an executive of the Corporation; 

        (7)   Any
debt or lease financing agreement which would result in obligations of the Corporation in excess of $100,000; 

        (8)   Any
pledge of the Corporation's assets or the grant of a security interest in the Corporation's assets; or 

        (9)   A
sale, lease or other disposition of all or substantially all of the assets of the Corporation. 

        (v)    Removal of Series A Directors, Reduction of Number of Directors.    If at any time fewer than 50% of the
shares (appropriately adjusted for stock splits, stock dividends, recapitalizations, and similar events) of Series A Preferred Stock that have been issued are then outstanding, (i) the
stockholders shall be deemed to have voted, in accordance with Section 141 of the Delaware General Corporation Law, to remove the Series A Directors, (ii) the Series A
Directors shall be automatically removed, and (iii) the authorized number of directors shall be reduced by one. 

        (vi)    Removal of Series B Directors, Reduction of Number of Directors.    If at any time fewer than 50% of
the shares (appropriately adjusted for stock splits, stock dividends, recapitalizations, and similar events) of Series B Preferred Stock that have been issued are then outstanding,
(i) the stockholders shall be deemed to have voted, in accordance with Section 141 of the Delaware General Corporation Law, to remove the Series B Directors, (ii) the
Series B Directors shall be automatically removed, and (iii) the authorized number of directors shall be reduced by three. 

        Subject
to the preceding paragraph, in the case of any vacancy in the office of a director occurring among the directors elected by the holders of a class or series of stock pursuant to
this Section 5, the remaining directors so elected by that class or series may by affirmative vote of a majority thereof (or the remaining director so elected if there be but one, or if there
are no such directors remaining, by the affirmative vote of the holders of a majority of the shares of that class or series), elect a successor or successors to hold office for the unexpired term of
the director or directors whose place or places shall be vacant. Any director who shall have been elected by the holders of a class or series or stock or by any directors so elected as provided in the
immediately preceding sentence hereof may be removed during the aforesaid term of office, either with or without cause, by, and only by, the affirmative vote of the majority of the holders of the
outstanding shares of the class or series of stock entitled to elect such director or directors, given either at a special meeting of such stockholders duly called for that purpose or pursuant to a
written consent of stockholders, and any vacancy thereby created may be filled by the vote of a majority of the holders of that class or series of stock. 

12

 

        6.    Amendments and Changes.    

        (a)    No Series Voting.    Other than as expressly provided herein or provided by law, there shall be no series
voting. 

        (b)    Approval by Class.    As long as 1,500,000 shares of the Preferred Stock shall be issued and outstanding, the
Corporation shall not, without first obtaining the approval (by vote or consent as provided by law) of the holders of a majority of the total number of shares of the Preferred Stock then outstanding,
and such other consents as may be required by applicable law: 

          (i)  amend
or repeal any provision of, or add any provision to, the Corporation's Certificate of Incorporation or Bylaws, if such amendment would (x) alter or change
the rights, preferences, privileges of or powers of, or the restrictions provided for the benefit of a series of Preferred Stock, (y) increase or decrease (other than by conversion) the
authorized number of shares of the Preferred Stock or any series thereof or (z) authorize, create or issue shares of any class or series of stock having any preference or priority superior to
or in parity with the Preferred Stock; 

         (ii)  pay
or declare a dividend on shares of any class or series; 

        (iii)  merge
or consolidate with any other corporation, except into or with a wholly owned subsidiary of the Corporation with the requisite stockholder approval, or effect a
change in voting control; 

        (iv)  sell,
convey, or otherwise dispose of, all or substantially all of the property or business of the Corporation; 

         (v)  effect
an exchange, reclassification, or cancellation of shares of any class or series, other than (i) the repurchase of shares of Common Stock issued to or held
by employees, directors or consultants of or to the Corporation or any of its subsidiaries upon termination of their employment or services pursuant to agreements providing for the right of such
repurchase between the Corporation and such persons and (ii) the repurchase of shares of Common Stock in connection with the exercise of the right of first refusal pursuant to agreements
providing for the right of first refusal between the Corporation and any of its stockholders; or 

        (vi)  amend
this Section 5(b). 

        7.    Notices.    Any notice required by the provisions of this Article IV to be given to the holders of
Preferred Stock shall be deemed given if deposited in the United States mail, postage prepaid, and addressed to each holder of record at such holder's address appearing on the books of the
Corporation. 

 
 

ARTICLE V    

        1.    Limitation of Directors' Liability.    

        The
liability of the directors of the Corporation for monetary damages shall be eliminated to the fullest extent permissible under the Delaware General Corporation Law or any other
applicable law as now in effect or as hereafter adopted or amended. 

        2.    Indemnification of Corporate Agents.    

        The
Corporation is authorized to provide indemnification to directors, officers, employees, fiduciaries and agents (as defined in Section 145 of the Delaware General Corporation
Law) through Bylaw provisions, agreements with agents, vote of shareholders or disinterested directors or otherwise. 

13

 

        3.    Repeal or Modification.    

        Any
repeal or modification of the foregoing provisions of this Article V shall not adversely affect any right of indemnification or limitation of liability of an agent of the
Corporation relating to acts or omissions occurring prior to such repeal or modification. 

14

 

        IN
WITNESS WHEREOF Optimer Pharmaceuticals, Inc., has caused this Amended and Restated Certificate of Incorporation to be signed by Michael Chang, its Chief Executive
Officer, this    day of July, 2001. 

	 	Optimer Pharmaceuticals, Inc.
	

 	

/s/  MICHAEL CHANG      
 Michael N. Chang, Chief Executive Officer

15

 
 

EXHIBIT D
  
    BYLAWS    
    

 
 

[Please see, "Amended and Restated Bylaws" attached as Exhibit 3.3 to Optimer Pharmaceuticals, Inc.'s
  Registration Statement on Form S-1 filed with the Securities and Exchange Commission on November 9,
2006]    

 
 

EXHIBIT E
  
    FINANCIAL STATEMENTS    
    

[* * *] 

QuickLinks

Exhibit 10.5

Text Omitted and Filed Separately CONFIDENTIAL TREATMENT REQUESTED Under 17 C.F.R. §§ 200.80(b)(4) and 230.406

FIRST AMENDMENT TO LICENSE AGREEMENT Between Optimer Pharmaceuticals, Inc. and Sloan-Kettering Institute for Cancer Research

LICENSE AGREEMENT for SKI's technology "Carbohydrate Cancer Vaccines" (SK#6637)

TABLE OF CONTENTS

WITNESSETH

ARTICLE I—DEFINITIONS

ARTICLE II—GRANT

ARTICLE III—DUE DILIGENCE, REGULATORY MATTERS

ARTICLE IV—PAYMENTS

ARTICLE V—REPORTS AND RECORDS

ARTICLE VI—PATENT PROSECUTION

ARTICLE VII—INFRINGEMENT

ARTICLE VIII—INDEMNIFICATION, PRODUCT LIABILITY, WARRANTIES

ARTICLE IX—EXPORT CONTROLS

ARTICLE X—NON-USE OF NAMES

ARTICLE XI—ASSIGNMENT

ARTICLE XII—TERMINATION

ARTICLE XIII—PAYMENTS, NOTICES AND OTHER COMMUNICATIONS

ARTICLE XIV—MISCELLANEOUS PROVISIONS

EXHIBIT A

EXHIBIT B Clinical Development Milestones—Timeline [Not Attached]

EXHIBIT C Common Stock Issuance Agreement

EXHIBIT A LICENSE AGREEMENT

[Please see, "License Agreement for SKI's Technology, "Carbohydrate Cancer Vaccines"' attached as this Exhibit 10.5 to this Amendment No. 3 to Optimer Pharmaceuticals, Inc.'s Form S-1 Registration Statement]

EXHIBIT B SCHEDULE OF EXCEPTIONS [No Attachment]

EXHIBIT C RESTATED CERTIFICATE OF INCORPORATION

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF OPTIMER PHARMACEUTICALS, INC.

ARTICLE I

ARTICLE II

ARTICLE III

ARTICLE IV

ARTICLE V

EXHIBIT D BYLAWS

[Please see, "Amended and Restated Bylaws" attached as Exhibit 3.3 to Optimer Pharmaceuticals, Inc.'s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on November 9,
2006]

EXHIBIT E FINANCIAL STATEMENTS

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00116-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00116-of-00352.parquet"}]]