Document:

Exhibit 10.2

 

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 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.

 

2

 

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.

 

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.

 

3

 

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, 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

 

4

 

(b)           in the case of Combination Products,

 

[***]

 

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

 

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 

 

5

 

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.

 

6

 

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

 

 

Schedule 6.1(2)

Shareholders Agreement

 

Schedule 8.5

Press Release

 

December 31, 2008

 

Optimer Pharmaceuticals, Inc.

10110 Sorrento Valley Road,
Suite C

San Diego, California 92121

 

Attention:  John Prunty, Chief Financial Officer

 

Cempra Pharmaceuticals, Inc. (the “Company”) and Optimer
Pharmaceuticals, Inc. (“Optimer”) are parties to that certain Collaborative
Research and Development and License Agreement dated March 31, 2006 (the
“License Agreement”).  Pursuant to
Sections 6.2(a) and 6.2(b) of that License Agreement, Optimer may elect, upon
written request to the Company, that it be paid certain milestone payments in
shares of Cempra capital stock (“Cempra Capital Stock”) rather than in cash,
such Cempra Capital Stock having a Fair Market Value calculated as of the date
the respective milestone is achieved equal to the value of the milestone
payments, as the case may be.  All
capitalized terms not otherwise defined in this Letter Agreement shall have the
meanings ascribed to them in the License Agreement.  

 

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

 

As a result of the Reorganization and Spin-Off, it is currently
intended that the equity holdings for the combined company will be held, and
the ultimate liquidity for that equity will be realized, at the Holding Company
level.  Therefore, the parties find it
necessary to modify Sections 1.15, 6.2(a), 6.2(b) and 6.2(e) of the License
Agreement, which refer to Cempra Capital Stock in the context of milestone
payments described in Sections 6.2(a) and 6.2(b) of the License Agreement, to refer
to Holding Company equity.  This letter
agreement reflects the parties’ mutual intent to modify those Sections so as to
use the term “Holding Company Units” in lieu of “Cempra Capital Stock” in each
phase where used or referenced.  Except as
specifically modified herein, the License Agreement shall remain in full force
and effect as originally executed.

 

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

 

 

[THE NEXT PAGE IS THE SIGNATURE PAGE]

 

 

	
  CEMPRA
  PHARMACEUTICALS, INC.

  	
  OPTIMER
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Prabhavathi Fernandes

  	
   

  	
  By:

  	
  /s/ John
  Prunty

  
	
   

  	
    Prabhavathi
  Fernandes, Ph.D.

  	
   

  	
    John
  Prunty

  
	
   

  	
    Chief
  Executive Officer and President

  	
   

  	
    Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  CEMPRA
  HOLDINGS, LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Prabhavathi Fernandes

  	
   

  	
   

  
	
   

  	
    Prabhavathi
  Fernandes, Ph.D.

  	
   

  	
   

  
	
   

  	
    Chief
  Executive Officer and PresidentExhibit 10.11

 

MICHAEL N.
CHANG

EMPLOYMENT
AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”)
dated as of June 17, 2005, is between OPTIMER PHARMACEUTICALS, INC.,
a Delaware corporation (“Company”),
and MICHAEL N. CHANG (“Executive”).
Together, Executive and Company are the “parties” and each is a “party” hereto.

 

WHEREAS, the Company and the
Executive previously entered into an employment agreement dated March 1,
2001 (the “Prior Agreement”).

 

WHEREAS, THE Company wishes for
Executive to continue in his role as Chief Executive Officer and President of
the Company.

 

NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto agree as follows:

 

1.                                       EFFECTIVENESS
OF AGREEMENT

 

1.1                                 General.  This Agreement shall become effective as of
the date hereof and shall replace, void, and supersede any section of the Prior
Agreement that conflicts with this Agreement.

 

2.                                       EMPLOYMENT
AND DUTIES

 

2.1                                 General.  The Company hereby employs the Executive, and
the Executive agrees to serve, as President and Chief Executive Officer of the
Company, upon the terms and conditions herein contained. In such capacity,
Executive shall report directly to the Board of Directors of the Company (“Board”). The Executive shall perform such
other duties and services for the Company as may be reasonably designated from
time to time by the Company and as are consistent with Executive’s title. The
Executive agrees to serve the Company faithfully and to the best of his ability
under the direction of the Company.

 

2.2                                 Exclusive
Services.  Except as
may otherwise be approved in advance by the Board, and except during vacation
periods and reasonable periods of absence due to sickness, personal injury or
other disability, the Executive shall devote his full working time throughout
the Employment Term (as defined below) to the services required of him
hereunder. The Executive shall render his services exclusively to the Company
during the Employment Term, and shall use his best efforts, judgment and energy
to improve and advance the business and interests of the Company in a manner
consistent with the duties of his position. Executive may participate in
charitable and philanthropic activities so long as they don’t interfere with
his duties hereunder. However, the foregoing shall not prevent Executive from
providing services as a member of the Board of Directors of another third party
or parties nor consulting services to Pharmanex, provided that the total of all such services to such
entities cumulatively shall not exceed four
days per month.

 

2.3                                 Term
of Employment.  The
Executive’s employment under this Agreement (the “Employment Term”) shall commence as of the
effective date hereof and shall terminate on the earlier of (a) the forth
year anniversary of the date hereof, or (b) the termination of the
Executive’s employment pursuant to this Agreement. Executive may terminate his
employment with the Company at any time and for any reason upon thirty
(30) days’ prior written notice to the Company.

 

2.4                                 Reimbursement
of Expenses.  The Company
shall reimburse the Executive for reasonable travel and other business expenses
incurred by him in the fulfillment of his duties hereunder upon presentation by
the Executive of an itemized account of such expenditures, such reimbursement
to be in accordance with the Company’s policies and procedures.

 

 

3.                                       SALARY

 

3.1                                 Base
Salary.  From the date hereof, the
Executive shall receive a base salary (“Base
Salary”) at a rate of $271,695.35 per annum, payable twice monthly
in arrears in equal installments in accordance with the Company’s payroll
practices.

 

3.2                                 Annual
Review.  The Executive’s Base Salary
shall be reviewed for potential increase by Company, based upon the Executive’s
performance, not less often than annually. Any positive adjustments in Base
Salary effected as a result of such review shall be made by Company in its sole
discretion.

 

4.                                       LONG-TERM
INCENTIVE COMPENSATION

 

The Company will provide the Executive with the following long-term
incentive compensation arrangement.

 

4.1                                 Subject to the
approval of the Board, the Executive will be granted a stock option to purchase
up to 570,744 shares o the Company’s Common Stock at a price per share
equal to the fair market value per share of the Common Stock on the date of
grant (the “Option”).
Subject to Section 4.2 below, 25% of the shares subject to the Option
shall vest 12 months after the date of Executive’s vesting begins and the
remaining shares shall vest monthly over the following 36 months in equal
monthly amounts subject to Executive continuing eligibility.

 

4.2                                 Notwithstanding
the foregoing, upon (i) the occurrence of a change of control (the “Change of Control Transaction”) of the
Company (defined as the Company’s being merged with or into or combined with a
third party such that the security holders of the Company prior to such
transaction do not hold at least 50% of the securities of the resulting entity
after such transaction by virtue of such transaction), and (ii) within
twelve (12) months thereafter Executive’s employment is terminated by the
Company (or its successor in interest), then all unvested shares subject
to the Option shall immediately vest and be exercisable (and, in the case of
shares already purchased with the Company maintaining a right of repurchase,
the Company shall cease to have the right to repurchase any such unvested
shares); provided that the
Executive is employed by the Company on such transaction date.

 

5.                                       EMPLOYEE
BENEFITS

 

The Executive shall, during his employment under this Agreement, be included
to the extent eligible thereunder in all employee benefit plans, programs or
arrangements (including, without limitation, any plans, programs or
arrangements providing for retirement benefits, profit sharing, disability
benefits, health and life insurance, or vacation and paid holidays) that shall
be established or adopted by the Company for, or made available to, the Company’s
senior executives. In addition, the Company shall furnish the Executive with
the following benefits during his employment under this Agreement:

 

(a)                                  In connection
with the Prior Agreement, Executive received a relocation and housing
assistance loan (the “Loan”)
in the principal amount of $300,000. 25% of the Loan shall be forgiven each
year after the date hereof, such that the Loan shall be fully forgiven on the
four year anniversary of the date hereof, subject to the Executive being an
employee of the Company on such anniversary dates. Notwithstanding the
foregoing, subject to the Executive being an employee of the Company immediately
prior to a Change of Control Transaction, the Loan shall be forgiven
immediately prior to the close of a Change of Control Transaction.

 

(b)                                 Four (4) weeks
vacation per annum.

 

2

 

6.                                       TERMINATION
OF EMPLOYMENT

 

6.1                                 Termination
Without Cause.

 

6.1.1                        Severance.  Subject to the provisions of
Sections 6.1.3 and 6.1.4, if, prior to the expiration of the
Employment Term, the Executive’s employment is terminated by the Company
without Cause (as defined below), the Company shall continue to pay the
Executive the Base Salary (at the rate in effect on the date of such
termination) for twelve (12) months (such period being referred to
hereinafter as the “Severance Period”),
at such intervals as the same would have been paid had the Executive remained
in the active service of the Company. The Executive shall have no further right
to receive any other compensation or benefits after such termination or
resignation of employment, except as determined in accordance with the terms of
the employee benefit plans or programs of the Company or as provided in this
Agreement.

 

6.1.2                        Accelerated
Vesting.  To the
extent that any of the shares would have vested at the end of the twelve months
after Executive is terminated under Section 4 of this Agreement but for
the termination of the Executive without Cause, all such shares which would
have vested within the twelve months had Executive remained employed shall vest
at the Company’s declared termination date, and Executive shall have ninety
(90) days from the Company’s declared termination date to exercise the
Option. The Company shall notify Executive within ten days after the necessary
calculations under Section 4 have been completed (which calculations shall
be made no later than thirty (30) days after the termination date in
question) as to whether any of the shares have vested. This provision shall
survive termination of the Agreement.

 

6.1.3                        Conditions
Applicable to the Severance Period.  (a) If, during the Severance Period, the
Executive breaches any of his obligations under Section 8, the Company
may, upon written notice to the Executive, terminate the Severance Period and
cease to make any further payments or provide any benefits described in Section 6.1.1.
(b) If, during the Severance Period, the Executive obtains other
employment, then the Base Salary payments due shall be reduced by an amount
equivalent (dollar for dollar) to what Executive receives from such other
employment. Executive shall promptly notify Company of such employment and
other payments.

 

6.1.4                        Death
During Severance Period.  In
the event of the Executive’s death during the Severance Period, payments of
Base Salary under Section 6.1.1 shall continue to be made during the
remainder of the Severance Period to the beneficiary designated in writing for
this purpose by the Executive or, if no such beneficiary is specifically
designated, to the Executive’s estate.

 

6.1.5                        Date
of Termination.  The date of
termination of employment without Cause shall be the date specified in a
written notice of termination to the Executive as the last day of the Executive’s
employment.

 

6.1.6                        Constructive
Termination.  The term “Constructive
Termination” means:

 

(a)                                  the continued
assignment to Executive of any duties or the continued material reduction in
Executive’s duties, either of which is materially inconsistent with Executive’s
position with the Company, for thirty (30) calendar days after Executive’s
delivery of written notice to the Company objecting to such assignment or reduction;
or

 

(b)                                 the relocation
of the principal place for the rendering of Executive’s services hereunder to a
location more than thirty (30) miles from the Company’s business offices
in the San Diego Area; or

 

(c)                                  a material
reduction in compensation and benefits under this Agreement, which remains in
effect for thirty (30) calendar days after Executive delivers written
notice to the Company of such material reduction which reduction is not
applicable to all Company’s senior executive employees.

 

3

 

None of the foregoing will constitute a Constructive Termination to the
extent mutually agreed upon in advance of the occurrence thereof by the
Executive and the Company. A Constructive Termination will be treated as a
termination of the Executive by the Company without Cause for all purposes
within this Agreement.

 

6.2                                 Termination
for Cause: Resignation.

 

6.2.1                        General.  If, prior to the expiration
of the Employment Term, the Executive’s employment is terminated by the Company
for Cause, or the Executive resigns from his employment hereunder, the
Executive shall be entitled only to payment of his Base Salary as then in
effect through and including the date of termination or resignation. The
Executive shall have no further right to receive any other compensation or
benefits after such termination or resignation of employment, except as
determined in accordance with the terms of the employee benefit plans or
programs of the Company or as provided in this Agreement.

 

6.2.2                        Date
of Termination.  The date of
termination for Cause shall be the date specified in a written notice of
termination to the Executive as the last day of the Executive’s employment. The
date of resignation shall be the date specified in the written notice of
resignation from the Executive to the Company as the last day of the Executive’s
employment, which shall be no more than three months and no less than thirty
(30) days in advance, or if no date is specified therein, receipt by the
Company of written notice of resignation from the Executive.

 

6.3                                 Cause.  Termination for “Cause” shall mean termination of the Executive’s employment
because of:

 

(a)                                  any act or
omission that constitutes a material breach by the Executive of any of his
obligations under this Agreement or his failure to discharge the duties
lawfully assigned to him by the Board;

 

(b)                                 the willful and
continued failure or refusal of the Executive to substantially perform the
duties required of him in his position with the Company, which failure is not
cured within twenty (20) days following written notice of such failure;

 

(c)                                  any willful
violation by the Executive of any material law or regulation applicable to the
business of the Company or any of its subsidiaries or affiliates, or the Executive’s
conviction of, or a plea of nolo contendere
to, a felony, or any act by the Executive of common law fraud or its
equivalent, or any Executive violation of a Company policy applicable to all
employees which is materially detrimental to the Company, all as determined by
a disinterested majority of the Board of Directors; or

 

(d)                                 any other
misconduct by the Executive that is materially injurious to the financial
condition or business reputation of, or is otherwise materially injurious to,
the Company or any of its subsidiaries or affiliates.

 

7.                                       DEATH
OR DISABILITY

 

In the event of termination of employment by reason of death or
Disability (as hereinafter defined), the Executive (or his estate, as
applicable) shall be entitled to Base Salary through the date of termination.
Other benefits shall be determined in accordance with the terms of the benefit
plans maintained by the Company, and the Company shall have no further
obligation hereunder. In addition, the Executive (or his estate or the
person or persons to whom the Options may have been transferred by will or by
the laws of descent and distribution, as applicable) may, but only within
twelve months after Executive ceases to be an employee, exercise Executive’s
Options to the extent Executive was entitled to exercise such Options on the
date of his death or on the date he is terminated by the Company by reason of
Disability. To the extent that the Executive was not otherwise entitled to

 

4

 

exercise
the Options on such date, or if he (or his estate or the person or persons
to whom the Options may have been transferred by will or by the laws of descent
and distribution, as applicable) fails to exercise the Options within the time
specified in the preceding sentence, such Options will terminate. For purposes
of this Agreement, “Disability”
means a physical or mental disability or infirmity of the Executive, as
determined by a physician of recognized standing selected by the Company, that
prevents (or, in the opinion of such physician, is reasonably expected to
prevent) the normal performance of his duties as an employee of the Company for
any continuous period of 180 days, or for 180 days during any one
12-month period.

 

8.                                       CONFIDENTIALITY
AND NONSOLICITATION

 

8.1                                 Key-Employee
Covenants.  The
Executive agrees to perform his obligations and duties and to be bound by the
terms of the Key-Employee Covenants attached hereto as Appendix A which
are incorporated by reference and which shall be in force unless otherwise
expressly modified by this Agreement.

 

8.2                                 Certain
Remedies.  Without
intending to limit the remedies available to the Company, the Executive agrees
that a breach of any of the covenants contained in the Key-Employee Covenants
will result in material and irreparable injury to the Company or its
subsidiaries or affiliates for which there is no adequate remedy at law, that
it will not be possible to measure damages for such injuries precisely and
that, in the event of such a breach or threat thereof, the Company shall be
entitled to seek a temporary restraining order or a preliminary or permanent
injunction, or both, without bond or other security, restraining the Executive
from engaging in activities prohibited by the Key-Employee Covenants or such
other relief as may be required specifically to enforce any of the covenants in
the Key-Employee Covenants. Such injunctive relief in any court shall be
available to the Company in lieu of, or prior to or pending determination in,
any arbitration proceeding.

 

9.                                       ARBITRATION

 

Any dispute or controversy arising under or in connection with this
Agreement that cannot be mutually resolved by the parties hereto shall be
settled exclusively by arbitration pursuant to the rules of the American
Arbitration Association in San Diego before one arbitrator of exemplary
qualifications and stature with experience in such similar disputes. The
parties shall choose an independent arbitrator meeting such qualifications
within thirty (30) business days after demand for arbitration is made; if
they cannot so agree, then an arbitrator meeting such qualifications shall be
selected by the American Arbitration Association in accordance with its then
current commercial.  Judgment may be
entered on the arbitrator’s award in any court having jurisdiction. The
arbitrator shall be empowered to enter an equitable decree mandating specific
enforcement of the terms of this Agreement. No discovery shall be permitted in
arbitration, other than an exchange of documents, and the number of hearing days
shall be limited to five (5) in total, all consecutive. The party that
prevails in any arbitration hereunder shall be reimbursed by the other party
hereto for its reasonable legal fees and out-of-pocket expenses directly
attributable to such arbitration, and such other party shall bear all expenses
of the arbitrator. The arbitration award shall specify the factual and legal
basis for the award and issue a written decision for same.

 

10.                                 MISCELLANEOUS

 

10.1                           Communications.  All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered or on the fifth business day after
mailed if delivered personally or mailed by registered or certified mail
(postage prepaid, return receipt requested) to the party at the following
addresses (or at such other

 

5

 

address for a party as shall
be specified by like notice, except that notices of changes of address shall be
effective upon receipt):

 

(a)                        if to the
Company:

 

c/o Optimer, Inc.

10130 Sorrento Valley Rd.,

Suite C

San Diego, CA 92121

 

(b)                       if to the
Executive:

 

[address]

 

10.2                           Waiver
of Breach: Severability.  (a) The
waiver by the Executive or the Company of a breach of any provision of this
Agreement by the other party hereto shall not operate or be construed as a
waiver or any subsequent breach by either party.

 

(b)                       The parties
hereto recognize that the laws and public policies of various jurisdictions may
differ as to the validity and enforceability of covenants similar to those set
forth herein. It is the intention of the parties that the provisions hereof be
enforced to the fullest extent permissible under the laws and policies of each
jurisdiction in which enforcement may be sought, and that the un-enforceability
(or the modification to conform to such laws or policies) of any
provisions hereof shall not render unenforceable, or impair, the remainder of
the provisions hereof. Accordingly, if at the time of enforcement of any
provision hereof, a court of competent jurisdiction holds that the restrictions
stated herein are unreasonable under circumstances then existing, the parties
hereto agree that the maximum period, scope, or geographic area reasonable
under such circumstances will be substituted for the stated period, scope or
geographical area and that such court shall be allowed to revise the
restrictions contained herein to cover the maximum period, scope and
geographical area permitted by law.

 

10.3                           Assignment;
Successors.  No right,
benefit or interest hereunder shall be assigned, encumbered, charged, pledged,
hypothecated or be subject to any setoff or recoupment by the Executive. This
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company; provided,
however that the Company may not
assign this Agreement without Executive’s consent.

 

10.4                           Entire
Agreement.  This
Agreement and the Appendices attached hereto, (collectively the “Agreement”) which are incorporated herein
by this reference, contain the entire agreement of the parties with respect to
the subject matter hereof, and on and after the Effective Time, and except as
otherwise set forth herein, supersedes all prior agreements, promises,
covenants, arrangements, representations and warranties between them, whether
written or oral, with respect to the subject matter hereof.

 

10.5                           Withholding.  The payment of any amount pursuant to this
Agreement shall be subject to applicable withholding and payroll taxes, and
such other deductions as may be required under the Company’s employee benefit
plans, if any.

 

10.6                           Governing
Law.  This Agreement shall be
governed by, and construed with, the law of the State of California.

 

10.7                           Headings.  The headings in this Agreement are for convenience
only and shall not be used to interpret or construe any of its provisions.

 

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

 

6

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed, has agreed and accepted terms hereof, and the Executive has hereunto
set his hand, as of the day and year first above written.

 

	
   

  	
  Optimer Pharmaceuticals, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Chi-Huey Wong

  
	
   

  	
   

  	
  Name: Chi-Huey Wong

  
	
   

  	
   

  	
  Title:

  

 

Agreed
and accepted as to its duties pursuant to this Agreement:

 

 

	
  By:

  	
  /s/ Michael N. Chang

  	
   

  
	
   

  	
  Michael N. Chang

  	
   

  
	
   

  	
   

  	
   

  

 

7

 

APPENDIX A

 

KEY-EMPLOYEE COVENANTS

 

Optimer Pharmaceuticals, Inc. (the “Company”) operates in a
highly competitive industry competing for product market share as well as
recruitment and retention of key talent. The success of the Company depends on
maintaining a competitive edge in this industry through the introduction of
innovative products and attracting and retaining talents. Accordingly, as a
condition of and in consideration of employment or continued employment with
the Company pursuant to the Agreement to which this Appendix A is
attached, the parties to such Agreement acknowledge and agree as follows
(for purposes hereof, “Employee” shall be the “Executive” identified in
the Agreement):

 

1.                                       Confidential
Information:  The Employee
acknowledges that during the term of employment with the Company he or she may
develop, learn and be exposed to information about the Company and its
business, including but not limited to formulas, business plans, financial
data, vendor lists, product and marketing plans, distributor lists, and other
trade secrets which information is secret, confidential and vital to the
continued success of the Company (“Confidential Information”). The term “Confidential
shall not include, and the obligations set forth in this Section shall not
apply to, any information that (a) is publicly available, (b) becomes
publicly available without breach of this Agreement by the Employee, (c) the
Employee already possess without obligation of confidentiality, (d) the
Employee develops independently, or (e) the Employee rightfully receives
without obligation of confidentiality from a third party. The Employee agrees
that he or she will not, without the express written consent of the Company or
except as required by law or court order disclose, copy, retain, remove from
the Company’s premises or make any use of such Confidential Information except
as may be required in the course of his employment with the Company.

 

2.                                       Conflict
of Interest:  During
employment with the Company, the Employee shall not engage in any transaction
which involves a conflict of interest with the Company without the Company’s
consent. The Employee must discharge his responsibility solely on the basis of
what is in the best interest of the Company and independent of personal considerations
or relationships. Although it is difficult to identify every activity that
might give rise to a conflict of interest, and not by way of making an all
inclusive list, some of the more common circumstances and practices that might
result in such conflicts are set forth below. Should the Employee have any
questions regarding this matter, the Employee should consult with and receive
written permission from the Company’s Board of Directors.

 

a.                                       While employed
by the Company, the Employee shall maintain impartial business relationships
with vendors, suppliers and distributors.

 

b.                                      While employed
by the Company, the Employee shall not have a direct or indirect ownership
interest in vendors of the Company nor any company doing or seeking to do
business with the Company unless such ownership interest is owned by the
Employee at the time his employment with the Company commences or unless such
ownership is in the form of (a) securities in a company with publicly
traded securities (provided that the securities held by the Employee represent
less than 1% of the total outstanding securities of the company) or (b) and
interest in investment vehicles, limited partnerships, hedge funds or stock
funds where the Employee is a passive investor.

 

c.                                       While employed
by the Company, unless approved by the Company in writing, the Employee shall
not have a direct or indirect ownership in any company which competes with the
Company in any product category, unless such ownership interest is owned by the
Employee at the time his employment with the Company commences or unless (a) such
company’s securities are publicly traded and the Employee’s ownership interest
is less than 1% of the 

 

8

 

total
outstanding securities of such company, or (b) except for any ownership
interest held as of the date of this Agreement, or (c) such company’s
securities are held by an investment vehicle, limited partnership, hedge fund
or stock fund where the Employee is a passive investor in such funds.

 

d.                                      While employed
by the Company, the Employee shall not perform services of any kind for any
entity doing or seeking to do business with the Company. As to employment with
or service to another company while employed by the Company, the Employee shall
not allow any such activity to detract from his job performance, use the
Company’s time, resources, or personnel, or require such long hours to affect
his physical or mental effectiveness.

 

e.                                       The Employee
shall disclose to the Board of Directors of the Company any and all areas
posing a potential or actual conflict of interests. Said disclosure shall be
made as promptly as possible after such conflict arises.

 

3.                                       Work
Product:  The Company
shall have the sole proprietary interest in the work product of the Employee
during his employment with the Company (“Work Product”), and the Employee
expressly assigns to the Company or its designee all rights, title and interest
in and to all copyrights, patents, trade secrets, improvements, inventions,
sketches, models and all documents related thereto, manufacturing processes and
innovations, special calibration techniques, software, service code, systems
designs and any other Work Product developed by the Employee, either solely or
jointly with others, where said Work Product relates to any business activity
or research and development activity in which the Company is involved or plans
to be involved at the time of or prior to the Employee’s creating such Work
Product or if such Work Product is developed with the use of the Company’s
time, material, or facilities; and the Employee further agrees to disclose any
and all such Work Product to the Company without delay. This provision shall
relate to Work Product created prior to the date of the Employee’s execution of
this Agreement as well as Work Product developed after execution of the
Agreement.

 

4.                                       Ethical
Standards:  The Employee
agrees to maintain the highest business ethical and legal standards in his
conduct, to be scrupulously honest and straight-forward in all of his business
dealings and to use his best efforts to avoid all situations which might
project the appearance of being unethical from a business standpoint or
illegal.

 

5.                                       Product
Resale:  As an employee of the Company,
the Employee may receive Company products and materials either at no charge or
at discount as specified from time to time by the Company in its sole
discretion. Employee agrees that the products received from the Company are
strictly limited to the Employee’s personal use and that of the Employee’s
immediate family and may not be resold, given or disposed of to any other
person or entity in a manner inconsistent with the personal use herein
described.

 

6.                                       Gratuities:  The Employee shall neither seek nor retain
gifts, gratuities, entertainment or other forms of compensation, benefit, or
persuasion from suppliers, distributors, vendors or their representatives
without the consent of the Company’s Board of Directors with the exception of
meals provided in the ordinary course of business on an infrequent basis.

 

7.                                       Non-Solicitation:  The Employee shall not in any way, directly
or indirectly, at any time during employment or within two (2) years after
either a voluntary or involuntary employment termination: (a) solicit,
divert, or take away the Company’s distributors or resellers: (b) solicit
in any manner the Company’s employees for employment with a third party or
encourage any such employee or refer any such employee (by identifying
such employee or otherwise) to a third party for employment purposes, or (c) assist
any other person in any manner or persons in an attempt to do any of the
foregoing.

 

9

 

8.                                       Acknowledgment:  The Employee acknowledges that his position
and work activities with the Company are “key” and vital to the on-going
success of the Company’s operation in each product category and in each
geographic location in which the Company operates. In addition, the Employee
acknowledges that his employment or involvement with any other multi- level
marketing company would create the impression that the Employee has left the
Company for a “better opportunity,” which could damage the Company by this
perception in the minds of the Company’s employees or independent distributors.
Therefore, the Employee acknowledges that his confidentiality and
non-solicitation covenants hereunder are fair and reasonable and should be
construed to apply to the fullest extent possible by applicable laws. The
Employee has carefully read the Agreement, has consulted with independent legal
counsel to the extent the Employee deems appropriate, and has given careful
consideration to the restraints imposed by the Agreement. The Employee
acknowledges that the terms of the Agreement are enforceable of the manner in
which the Employee’s employment is terminated, whether voluntary or
involuntary.

 

THESE COVENANTS HAVE BEEN READ, UNDERSTOOD AND FREELY
ACCEPTED BY:

 

 

	
  /s/
  MICHAEL N. CHANG

  	
   

  

 

10

 

Optimer
Pharmaceuticals, Inc.

10110 Sorrento
Valley Road, Suite C

San Diego,
CA  92121

 

October 2,
2008

 

Michael N. Chang,
Ph.D.

Optimer
Pharmaceuticals, Inc.

10110 Sorrento
Valley Road, Suite C

San Diego,
CA  92121

 

Re:                             Amendment to Employment Agreement

 

Dear Michael:

 

This Amendment (the “Amendment”)
to your Employment Agreement with Optimer Pharmaceuticals, Inc. (the “Company”) dated June 17, 2005
(the “Agreement”) amends the terms
and conditions of the Agreement to the extent provided herein.  The Company is proposing to adopt a Severance
Benefit Plan under which you will be eligible to participate (the “Plan”).  In exchange for the potential benefits you
may receive under the Plan, by your acknowledgement below, you will forego your
severance benefits currently set forth in the Agreement as they pertain to your
termination by the Company without cause.

 

Contingent and
effective upon the Company’s Compensation Committee or Board of Directors duly
adopting the Plan, the Agreement shall be amended as follows:

 

1.                                      Section 6 of the Agreement shall be
amended and restated in its entirety to read as follows:

 

“6.                                TERMINATION
OF EMPLOYMENT

 

6.1                                Date of
Termination.    The date of termination
shall be the date specified in a written notice of termination to the Executive
as the last day of the Executive’s employment. The date of resignation shall be
the date specified in the written notice of resignation from the Executive to
the Company as the last day of the Executive’s employment, which shall be no
more than three months and no less than thirty (30) days in advance, or if no
date is specified therein, receipt by the Company of written notice of
resignation from the Executive.

 

6.2                                Severance
Benefits.

 

6.2.1                        General.    If,
prior to the expiration of the Employment Term, the Executive’s employment
terminates for any reason, the Executive shall be entitled to payment of his
Base Salary as then in effect through and including the date of termination or
resignation. Except as otherwise expressly provided herein, the Executive shall
have no further right to receive any other compensation or benefits under this
Agreement after such termination of employment, but may be 

 

 

eligible for other benefits in accordance
with the terms of the employee benefit plans or programs of the Company.

 

6.2.2                        Severance
Benefit Plan.  During the
Employment Term, Executive shall be eligible to participate in the Company’s
Severance Benefit Plan dated October 2, 2008, and as may be amended
thereafter (the “Severance Plan”), in
accordance with its terms. 
Notwithstanding anything to the contrary set forth in the Severance
Plan, in the event of Executive’s Constructive Termination (as such term is
defined below) Executive will be deemed to have had a “Covered Termination” as
such term is defined in the Severance Plan for all purposes of the Severance
Plan, and thereby entitled to severance benefits thereunder, subject to the
conditions set forth therein.

 

6.2.3                        Constructive
Termination.    The term “Constructive Termination” means the occurrence of one or more of the
following events, provided that Executive has first provided written notice to
the Company within 90 days of the first such occurrence of such condition
specifying the event(s) constituting Constructive Termination and
specifying that Executive intends to terminate employment not earlier than 30
days after providing such notice, and the Company (or surviving corporation)
has not cured such event(s) within 30 days (or such longer period as may
be specified by Executive in such notice) after such written notice is received
by the Company (the “Cure Period”),
and Executive resigns within thirty (30) days following the end of the Cure
Period:

 

(a)                                  a material diminution in Executive’s authority, duties
or responsibilities; or

 

(b)                                 the relocation of the
principal place for the rendering of Executive’s services hereunder to a
location that requires a one-way increase in Executive’s driving distance of
more than thirty (30) miles; or

 

(c)                                  a material reduction by the Company of the Executive’s
annual base compensation, which reduction is not applicable to all
Company’s senior executive employees.

 

However, none of the foregoing will
constitute a Constructive Termination to the extent mutually agreed upon in
advance of the occurrence thereof by the Executive and the Company.”

 

2.                                       Section 10.4
of the Agreement shall be amended and restated in its entirety to read as
follows:

 

 “10.4    Entire Agreement.    This Agreement, the Severance Plan, and the
Appendices attached hereto, (collectively the “Agreement”) which are
incorporated herein by this reference, contain the entire agreement of the
parties with respect to the subject matter hereof, and on and after the
Effective Time, and except as otherwise set forth herein, supersedes all prior
agreements, promises, 

 

2

 

covenants, arrangements, representations and
warranties between them, whether written or oral, with respect to the subject
matter hereof.”

 

Except as specifically
amended by this Amendment, the terms and conditions of the Agreement shall
remain in full force and effect.  This
Amendment may be executed in two or more counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the same
instrument.  Please sign this Amendment and
return it to the Company at your earliest convenience.

 

Sincerely,

 

	
  OPTIMER PHARMACEUTICALS, INC.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ John D. Prunty

  	
   

  
	
   

  	
  John D. Prunty

  	
   

  
	
   

  	
  Chief Financial Officer

  	
   

  
	
   

  
	
   

  
	
  ACCEPTED AND AGREED:

  
	
   

  
	
   

  
	
  /s/ Michael N. Chang, Ph.D.

  	
   

  
	
  Michael N. Chang, Ph.D.

  

 

3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00155-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00155-of-00352.parquet"}]]