LICENSE AGREEMENT

TABLE OF CONTENTS

iii

1.1    “ 2006 Senior Notes ” has the meaning set forth in Section 7.1(e).

1.2    “ Acceptable Label ” means, for a Subject Product in the United States, FDA-approved labeling for the treatment of bacterial conjunctivitis, where such label: (a) indicates dosing of such Subject Product of not more than two (2) times daily for seven (7) days, (b) permits expiration dating of such Subject Product of no less than eighteen (18) months, and (c) has a comparable side effect profile to ocular antibiotics being marketed as of the Effective Date. 

1.3    “ Affiliate ” means a corporation or non-corporate business entity that, directly or indirectly, controls, is controlled by, or is under common control with the Person specified. An entity will be regarded as in control of another entity if: (a) it owns, directly or indirectly, at least 50% of the voting securities or capital stock of such entity, or has other comparable ownership interest with respect to any entity other than a corporation; or (b) it possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the corporation or non-corporate business entity, as applicable, whether through the ownership or control of voting securities, by contract or otherwise. 

1.4    “ AzaSite Patent Rights ” means, collectively, (a) (i) all Patent Rights related to any Subject Product or its manufacture or use that are Controlled by InSite or an Affiliate of InSite as of the Effective Date, including without limitation all patents and patent applications listed as “AzaSite Patent Rights” in Schedule 1 , as may be amended by the Parties from time to time, and (ii) all Patent Rights with priority based on such patents or patent applications or on any application on which the priority of such patents or patent applications is based, (b) all Patent Rights, other than those set forth in the foregoing clause (a), that are Controlled by InSite or an Affiliate of InSite as of the Effective Date or at any time thereafter during the Term and are necessary to make, have made, use, sell, offer for sale or import any Subject Product in the Field in the Territory, and (c) all Patent Rights related to any InSite Developments that are Controlled by InSite or an Affiliate of InSite. Notwithstanding the foregoing, the term “AzaSite Patent Rights” shall not include the Container Patent Rights, the DuraSite Patent Rights, the Columbia Patent Rights or the Pfizer Patent Rights. 

1.5    “ AzaSite Trademark ” means the trademark AzaSite™.

1.6    “ Breach Notice ” has the meaning set forth in Section 10.3.

1.7    “ Breaching Party ” has the meaning set forth in Section 10.3.

1.8    “ Business Day ” means any day, except Saturday and Sunday, on which commercial banking institutions in New York are open for business. Any reference in this Agreement to “day” whether or not capitalized shall refer to a calendar day, not a Business Day.

1.9    “ Cardinal ” means Cardinal Health PTS, LLC.

1.10    “ Cardinal Agreement ” means the Manufacturing Services Agreement entered into by InSite and Cardinal on September 12, 2005.

1.11    “ Columbia ” means Columbia Laboratories, Inc.

1.12    “ Columbia Agreement ” means the letter agreement entered into by and between InSite and Columbia on February 27, 1992. 

1.13    “ Columbia Patent Rights ” means all Patent Rights licensed to InSite under the Columbia Agreement related to any Subject Product or its manufacture or use, including without limitation all patents listed as “Columbia Patent Rights” in Schedule 1 , in each case to the extent Controlled by InSite or an Affiliate of InSite as of the Effective Date and any time thereafter during the Term.

1.14    “ Commercially Reasonable Efforts ” means, with respect to the efforts of a particular Party to complete specific tasks or obligations under this Agreement, the efforts and resources that would be used, consistent with prevailing pharmaceutical industry standards, by a company of similar size and scope to such Party with respect to a product or potential product at a similar stage in its development or product life and of similar market potential, taking into account efficacy, safety, the anticipated Regulatory Authority approved labeling, the competitiveness of alternative products in the marketplace or under development, the profitability of the product including the royalties payable to Third Party licensors, the patent and other proprietary position of the product, the likelihood of Regulatory Approval, the commercial value of the product and other relevant factors. Commercially Reasonable Efforts shall be determined on a country-by-country basis for a particular product or potential product, and it is anticipated that the level of effort will change over time, reflecting changes in the status of the product or potential product and the market involved. 

1.15    “ Confidential Information ” of a Party means all secret, confidential or proprietary information or data, whether provided in written, oral, graphic, video, computer or other form, provided by such Party (the “ Disclosing Party ”) to the other Party (the “ Receiving Party ”) pursuant to this Agreement (including information generated by or on behalf of such Party pursuant to this Agreement and disclosed to the other Party), which may include without limitation information relating to the Disclosing Party’s existing or proposed research, development efforts, sales and supply forecasts, financial projections, other sales and marketing information, patent applications, business or products and any other materials that have not been made available by the Disclosing Party to the general public. The terms of this Agreement shall also be deemed Confidential Information of each Party, except to the extent disclosed pursuant to Section 8.4 herein. Notwithstanding the foregoing sentences, the term “Confidential Information” shall not include any information or materials that the Receiving Party can demonstrate:

(a)    were already known to the Receiving Party (other than under an obligation of confidentiality), at the time of disclosure by the Disclosing Party to the extent such Receiving Party has documentary evidence to that effect;

(b)    were generally available to the public or otherwise part of the public domain at the time of its disclosure to the Receiving Party;

(c)    became generally available to the public or otherwise part of the public domain after its disclosure or development, as the case may be, and other than through any act or omission of the Receiving Party in breach of its confidentiality obligations under this Agreement;

(d)    were subsequently lawfully disclosed to the Receiving Party by a Third Party who had no obligation to the Disclosing Party not to disclose such information to others;

(e)    were independently discovered or developed by or on behalf of the Receiving Party without the use of the Confidential Information belonging to the other Party and the Receiving Party has documentary evidence to that effect; or

(f)    is approved for release by the Disclosing Party in writing.

1.16    “ Container Patent Rights means, collectively, (a) (i) all patents and patent applications listed as “Container Patent Rights” in Schedule 1 , as may be amended by the Parties from time to time, and (ii) all Patent Rights with priority based on such patents or patent applications or on any application on which the priority of such patents or patent applications is based, and (b) all Patent Rights, other than those set forth in the foregoing clause (a), that are Controlled by InSite or an Affiliate of InSite as of the Effective Date or at any time thereafter during the Term and are necessary to make, have made, use, sell, offer for sale or import any Subject Product in the Field in the Territory.

1.17    “ Control ,” “ Controls ,” or “ Controlled ” means, with respect to specific materials, Know-How or Patent Rights, that the applicable Party owns or has a license under such materials, Know-How or Patent Rights and has the ability to grant to the other Party licenses or sublicenses thereto as contemplated under this Agreement without violating the terms of any agreement or other arrangement with, or the rights of, any Third Party existing as of the date on which such license or sublicense is granted.

1.18    “ Coordination Committee ” has the meaning set forth in Section 3.7.

1.19    “ Course of Action ” has the meaning set forth in Section 11.6(a).

1.20    “ Current Indication ” means bacterial conjunctivitis. 

1.21    “ Current Product ” means the Subject Product with the composition and formulation described in the IND with the number 62,873 or NDA with the number 50-810, as each may be amended, for the Current Indication.

1.22    “ [***] Agreement ” means the letter agreement entered into by InSite and [***].

1.23    “ Disclosing Party ” has the meaning set forth in Section 1.15.

1.24    “ Domain Names ” means the internet domain names set forth in Schedule 1.24 , such domain names being owned and registered by InSite.

1.25    “ Drug Master File ” means a Drug Master File, as defined in the U.S. Federal Food, Drug, and Cosmetic Act, pursuant to 21 C.F.R. § 314.420 as amended, and the regulations promulgated thereunder (or the equivalent thereto as specified in any succeeding legislation), or any foreign equivalent thereto, with respect to the manufacture of any Subject Product or an Inspire Licensed Product.

1.26    “ DuraSite Patent Rights ” means, collectively, (a) (i) all patents and patent applications listed as “DuraSite Patent Rights” in Schedule 1 , as may be amended by the Parties from time to time, and (ii) all Patent Rights with priority based on such patents or patent applications or on any application on which the priority of such patents or patent applications is based, and (b) all Patent Rights, other than those set forth in the foregoing clause (a), that are Controlled by InSite or an Affiliate of InSite as of the Effective Date or at any time thereafter during the Term and are necessary to make, have made, use, sell, offer for sale or import any Subject Product in the Field in the Territory.

1.27    “ FDA ” means the United States Food and Drug Administration, or any successor agency thereof.

1.28    “ Field ” means the treatment, prevention or palliation of any human ocular or ophthalmic disease or condition. 

1.29    “ First Commercial Sale ” means, with regard to a particular Inspire Licensed Product in a country in the Territory, the first commercial sale by Inspire or its Affiliate or sublicensee of such Inspire Licensed Product to a Third Party for end use or consumption in such country after Inspire’s (or its Affiliate’s or sublicensee’s) receipt of Regulatory Approval for such Inspire Licensed Product in such country. Use of Inspire Licensed Products for promotional, sampling or compassionate use purposes that are customary in the prevailing pharmaceutical industry shall not be considered a commercial sale hereunder.

1.30    “ Future Development ” means any and all Know-How, developments, inventions or discoveries in the Field conceived, reduced to practice, made or developed by or on behalf of InSite or any of its Affiliates (whether or not patentable) during the Term, and any Patent Rights related thereto not otherwise licensed to Inspire under Section 2.1 of this Agreement, in each case that are: (i) Controlled by InSite or its Affiliate, (ii) used by or on behalf of InSite or its Affiliate in the context of a phase I clinical trial, and (iii) necessary or useful to develop, manufacture or commercialize any Subject Product in the Field in the Territory. Notwithstanding the foregoing, the term “Future Development” shall not include any InSite Developments or the Option Product. 

1.31    “ Future Development Option Notice ” has the meaning set forth in Section 3.8.

1.32    “ Future Development Option Term ” has the meaning set forth in Section 3.8.

1.33    “ GAAP ” means United States generally accepted accounting principles as interpreted and accepted by the Financial Accounting Standards Board and the Securities and Exchange Commission.

1.34    “ Generic Competition ” means that one or more Third Parties are marketing, for use in human beings, a Generic Equivalent in a country within the Territory.

1.35    “ Generic Equivalent ” means a [***].  

1.36    “ IND ” means an Investigational New Drug Application, as defined in the U.S. Federal Food, Drug, and Cosmetic Act, pursuant to 21 C.F.R. § 312.3 as amended, and the regulations promulgated thereunder, or the equivalent thereto as specified in any succeeding legislation.

1.37    “ Indemnitee ” has the meaning set forth in Section 9.3(a).

1.38    “ Indemnitor ” has the meaning set forth in Section 9.3(a).

1.39    “ Independent Sublicensee ” has the meaning set forth in Section 10.5.

1.40    “ Infringement Notice ” has the meaning set forth in Section 11.5(a).

1.41    “ Initial Payment ” has the meaning set forth in Section 4.1.

1.42    “ Initial Royalty Period ” has the meaning set forth in Section 5.1(a).

1.43    “ InSite Developments ” means any and all Know-How, developments, inventions or discoveries conceived, reduced to practice, made or developed by or on behalf of InSite or any of its Affiliates (whether or not patentable) at any time from the Effective Date up to and including the Transfer Date, and any Patent Rights related thereto, in each case that are Controlled by InSite or its Affiliate and are necessary or useful to develop, manufacture or commercialize any Subject Product for the Current Indication in the Field in the Territory.

1.44    “ InSite Formulation Know-How ” means the formulation of polycarbophil, sodium chloride EDTA, disodium and sterile water for irrigation, and any Know-How specifically related thereto, in each case Controlled by InSite or its Affiliate as of the Effective Date.

1.45    “ InSite Indemnitees ” has the meaning set forth in Section 9.1.

1.46    “ InSite Intellectual Property ” means, collectively, the InSite Owned Patents, the InSite Know-How, the InSite Formulation Know-How, the InSite Trademarks and the Domain Names.

1.47    “ InSite Know-How ” means, collectively, (a) all Know-How related to any Subject Product that is Controlled by InSite or any of its Affiliates as of the Effective Date, and (b) all Know-How related to any InSite Developments that is Controlled by InSite or any of its Affiliates at any time from the Effective Date up to and including the Transfer Date. Notwithstanding the foregoing, the term “InSite Know-How” shall not include the InSite Formulation Know-How. 

1.48    “ InSite License Fee ” has the meaning set forth in Section 4.1(b).

1.49    “ InSite Licensed Patents ” means, collectively, the DuraSite Patent Rights, the Columbia Patent Rights, the AzaSite Patent Rights, the Container Patent Rights and the Pfizer Patent Rights. 

1.50    “ InSite Owned Patents ” means, collectively, the DuraSite Patent Rights, the AzaSite Patent Rights and the Container Patent Rights. 

1.51    “ InSite Trademarks ” means the trademarks set forth in Schedule 1.24 , such marks being owned and registered by InSite. 

1.52    “ Inspire Blocking Patent Rights ” means all Patent Rights that are Controlled by Inspire or an Affiliate of Inspire at any time during the Term and are necessary to make, have made, use, sell, offer for sale or import Subject Products in the Field outside the Territory. 

1.53    “ Inspire Indemnitees ” has the meaning set forth in Section 9.2.

1.54    “ Inspire Improvement ” has the meaning set forth in Section 3.8(a).

1.55    “ Inspire Licensed Product ” means any Subject Product of Inspire or its Affiliate or sublicensee (a) whose manufacture, use, sale, distribution or importation by Inspire would, absent the licenses granted by InSite to Inspire herein, infringe any Valid Claim included in the InSite Licensed Patents, determined on a country-by-country basis, and/or (b) materially uses or incorporates the InSite Know-How or the InSite Formulation Know-How.

1.56    “ Inspire Royalties ” has the meaning set forth in Section 5.1.

1.57    “ Inspire Royalty Term ” has the meaning set forth in Section 5.2.

1.58    “ Inspire Trademarks ” has the meaning set forth in Section 6.2.

1.59    “ IP Communication ” has the meaning set forth in Section 7.5(h).

1.60    “ Know-How ” means all non-public information, results and data of any type whatsoever, in any tangible or intangible form whatsoever, whether or not patentable, including databases, practices, methods, techniques, specifications, formulations, formulae, knowledge, skill, experience, data (including pharmacological, medicinal chemistry, biological, chemical, biochemical, toxicological and clinical study data), analytical and quality control data, stability data, studies and procedures, and manufacturing process and development information, results and data (other than such Know-How which is or becomes the subject of a Patent Right).

1.61    “ Knowledge ” means, with respect to a particular fact or matter, the applicable Party or its Affiliate is actually aware of that fact or matter as of the Effective Date following a reasonable internal review and discussion with such Party’s or Affiliate’s officers and employees who could reasonably be expected to be aware of such fact or matter. 

1.62    “ Lien ” means (a) any interest in property (whether real, personal or mixed and whether tangible or intangible) which secures an obligation owed to, or a claim by, a Person other than the owner of such property, whether such interest is based on the common law, statute or contract, including, without limitation, any such interest arising from a lease, license, mortgage, charge, pledge, hypothecation, security agreement, conditional sale, trust receipt or deposit in trust, or arising from a consignment of bailment given for security purposes (other than a trust receipt or deposit given in the ordinary course of business which does not secure any obligation for borrowed money), (b) any encumbrance upon such property which does not secure such an obligation, (c) any exception to or defect in the title to or ownership interest in such property, including, without limitation, reservations, rights of entry, possibilities of reverter, encroachments, easements, rights of way, restrictive covenants and licenses, and (d) any other claim, charge or commitment. For the avoidance of doubt, “Lien” shall not include any of the Material Agreements or any other license under the InSite Intellectual Property, or other agreements not related to the Subject Products or the InSite Intellectual Property, that InSite enters into in its ordinary course of business after the Effective Date. 

1.63    “ Losses ” has the meaning set forth in Section 9.1.

1.64    “ Material Agreements ” means, collectively, the Pfizer Agreement, the Columbia Agreement, the Cardinal Agreement and the [***] Agreement.

1.65    “ Milestone Payment ” has the meaning set forth in Section 4.2.

1.66    “ Minimum Royalty ” has the meaning set forth in Section 5.3.

1.67    “ Minimum Royalty Date ” means the first Quarter Start Date that is at least one year (365 days) after the date of the First Commercial Sale of an Inspire Licensed Product in the United States. 

1.68    “ Minimum Royalty Period ” means the one-year period commencing on the Minimum Royalty Date or any yearly anniversary thereof, as applicable.

1.69    “ NDA ” means a New Drug Application pursuant to 21 U.S.C. § 505(b)(1) or § 505(b)(2) submitted to the FDA or any successor application or procedure required for Regulatory Approval to commence sale of a Subject Product. 

1.70    “ Net Sales ” means the gross amounts invoiced by Inspire, any of its Affiliates or any of its sublicensees for sales of Inspire Licensed Products to Third Parties, less the total of the following deductions to the extent customary in the prevailing pharmaceutical industry and actually allowed or incurred in connection with such sales: 

(a)    trade, cash and quantity discounts;

(b)    excise, sales and other consumption taxes and custom duties to the extent included in the invoice price;

(c)    freight, handling, insurance and other transportation or distribution charges and fees to the extent included in the invoice price;

(d)    amounts repaid, credited or accrued by reason of returns, rejections, defects or recalls or because of chargebacks, allowances, adjustments, retroactive price reductions, refunds or billing errors;

(e)    payments and rebates related to the sale of such Inspire Licensed Products accrued, paid or deducted pursuant to agreements (including, but not limited to, managed care agreements) with Third Parties or governmental regulations;

(f)    any amounts actually written off or specifically identified as uncollectible, in accordance with GAAP consistently applied; and

(g)    any other similar and customary deductions taken in accordance with GAAP consistently applied.

1.71    “ New Indication ” means any indication for any Subject Product other than for bacterial conjunctivitis.

1.72    “ Non-Breaching Party ” has the meaning set forth in Section 10.3.

1.73    “ Option Notice ” has the meaning set forth in Section 2.10.

1.74    “ Option Product ” means the topical anti-infective product for human ophthalmic indications, as formulated with the InSite Formulation Know-How and described in the IND with the number 76,074, as such IND may be amended, containing only the following active ingredients in addition to other ingredients as described in such IND: (a) the chemical compound known as azithromycin or any salts, esters or hydrates thereof, and (b) the chemical compound known as dexamethasone or any salts, esters or hydrates thereof. .

1.75    “ Option Product Phase I Clinical Trial ” means a clinical trial, having the study number C-06-502-001, to determine the safety of the Option Product (as formulated with the InSite Formulation Know-How and described in the IND with the number 76,074, as such IND may be amended) in humans, as more fully described in 21 C.F.R. § 312.21(a).

1.76    “ Option Term ” has the meaning set forth in Section 2.10.

1.77    “ Patent Rights ” means the rights and interests in and to all issued patents and pending patent applications, including without limitation, all provisional applications, substitutions, continuations, continuations-in-part, divisions, and renewals, all letters patent granted thereon, and all patents-of-addition, reissues, reexaminations and extensions or restorations by existing or future extension or restoration mechanisms (including regulatory extensions), and all supplementary protection certificates, together with any foreign counterparts thereof anywhere in the Territory.

1.78    “ Person ” or “ person ” means any individual, firm, corporation, partnership, limited liability company, trust, unincorporated organization or other entity or a government agency or political subdivision thereto, and shall include any successor (by merger or otherwise) of such Person.

1.79    “ Pfizer ” means Pfizer Inc.

1.80    “ Pfizer Agreement ” means the Exclusive License Agreement entered into by InSite and Pfizer on February 15, 2007, relating to the Pfizer Patent Rights, as in effect from time to time.

1.81    “ Pfizer Patent Rights ” means all Patent Rights licensed to InSite under the Pfizer Agreement related to any Subject Product or its manufacture or use, including without limitation all patents and patent applications listed as “Pfizer Patent Rights” in Schedule 1 , in each case to the extent Controlled by InSite or an Affiliate of InSite as of the Effective Date and any time thereafter during the Term.

1.82    “ Prosecution ” or “ Prosecute ” means the preparation, filing, prosecution, issuance and maintenance (including, without limitation, interference, opposition and similar third party proceedings before the relevant patent office) of any patent applications or patents.

1.83    “ PTO ” means the United States Patent and Trademark Office.

1.84    “ Publishing Party ” has the meaning set forth in Section 8.3.

1.85    “ Quarter Start Date ” means January 1, April 1, July 1, and October 1 of any applicable year.

1.86    “ Receiving Party ” has the meaning set forth in Section 1.15.

1.87    “ Redemption Amount ” has the meaning set forth in Section 4.1(a).

1.88    “ Regulatory Approval ” means the issuance by the applicable Regulatory Authority of an action letter indicating that an NDA or foreign equivalent, as applicable, is approved. For avoidance of doubt, Regulatory Approval does not mean that the Regulatory Authority issues an action letter indicating that an NDA or foreign equivalent is approvable.

1.89    “ Regulatory Authority ” means any national (e.g., the FDA), state, provincial or local regulatory agency, department, bureau, commission, council or other governmental entity involved in or responsible for regulation of medicinal products intended for human use in any country. 

1.90    “ Regulatory Dossier ” means the technical, medical and scientific registrations, authorizations and approvals (including, without limitation, approvals of NDAs or foreign equivalents, supplements and amendments, pre- and post- approvals, pricing and third party reimbursement approvals, and labeling approvals) of any Regulatory Authority necessary for the development (including the conduct of clinical trials), manufacture, distribution, marketing, promotion, offer for sale, use, import, reimbursement, export or sale of a Subject Product in the Field in a regulatory jurisdiction in the Territory, together with all related correspondence to or from any Regulatory Authority and all documents referenced in the complete regulatory chronology for each NDA or foreign equivalent, including the IND, NDA and supplemental new drug applications (sNDAs), or foreign equivalents in the Territory. 

1.91    “ Reserved Interests ” has the meaning set forth in Section 2.5.

1.92    “ Reviewing Party ” has the meaning set forth in Section 8.3.

1.93    “ [***] ” means [***].

1.94    “ [***] Agreement ” means the Commercial Supply/Purchase Agreement entered into by InSite and [***] on April 1, 2005. 

1.95    “ Scientific Publication ” has the meaning set forth in Section 8.3.

1.96    “ SEC ” has the meaning set forth in Section 8.2.

1.97    “ Security Agreement ” has the meaning set forth in Section 7.1(e).

1.98    “ Senior Secured Notes ” has the meaning set forth in Section 7.1(e).

1.99    “ Serious Adverse Drug Experience ” means any of an “adverse drug experience,” a “life-threatening adverse drug experience,” a “serious adverse drug experience,” or an “unexpected adverse drug experience,” as those terms are defined at either 21 C.F.R. § 312.32 or 21 C.F.R. § 314.80 or relevant foreign regulation within the Territory.

1.100    “ Subject Product ” means any topical anti-infective product for human ocular or ophthalmic indications, in any dosage strength or size, for any mode of ocular or ophthalmic administration, containing as the sole active ingredient the chemical compound known as azithromycin or any salts, esters or hydrates thereof.

1.101    “ Term ” has the meaning set forth in Section 10.1.

1.102    “ Territory ” means the United States and Canada and their respective territories and possessions.

1.103    “ Third Party(ies) ” means any Person other than InSite, Inspire and their respective Affiliates.

1.104    “ Third Party Claim ” has the meaning set forth in Section 9.1.

1.105    “ Third Party Manufacturers ” means Third Parties who have been engaged by InSite to perform services or supply facilities or goods (including, without limitation, any Subject Product) in connection with the manufacture, testing or packaging of any Subject Product by InSite.

1.106    “ Title 11 ” has the meaning set forth in Section 10.9.

1.107    “ Transfer Date ” has the meaning set forth in Section 3.3(a).

1.108    “ Valid Claim ” means a claim of an issued and unexpired patent, or a claim of a pending patent application, within the InSite Licensed Patents, which claim has not been held invalid, unpatentable or unenforceable by a court or other government agency of competent jurisdiction from which no appeal can be further taken, and has not been held or admitted to be invalid, unpatentable or unenforceable through abandonment, re-examination or disclaimer, opposition procedure, nullity suit or otherwise, which claim, but for the licenses granted herein, would be infringed by the manufacture, sale or importation of an Inspire Licensed Product; provided, however, that if a claim of a pending patent application shall not have issued within three (3) years after the filing date from which such claim takes priority, such claim shall not constitute a Valid Claim for the purposes of this Agreement unless and until such claim shall issue in a patent.

1.109    “ Wind-Down Period ” has the meaning set forth in Section 10.6(c).

1.110    “ Withholding Taxes ” has the meaning set forth in Section 5.5.

2.1    Licenses . 

(a)    Subject to the terms and conditions of this Agreement, InSite hereby grants to Inspire a royalty-bearing, exclusive (even as to InSite and its Affiliates, except as provided in Section 2.1(d)) right and license, with the right to grant sublicenses, under the AzaSite Patent Rights and the InSite Know-How: (i) to develop, have developed, make, have made, use, have used, market, have marketed, commercialize, have commercialized, offer for sale, sell, have sold, import and have imported Subject Products in the Field in the Territory, and (ii) to develop, have developed, make, have made, use and have used Subject Products anywhere in the world for the purpose of marketing, commercialization or sale of Subject Products in the Field in the Territory.

(b)    Subject to the terms and conditions of this Agreement, InSite hereby grants to Inspire a royalty-bearing, non-exclusive right and license, with the right to grant sublicenses, under the DuraSite Patent Rights, the Container Patent Rights, the Columbia Patent Rights and the InSite Formulation Know-How: (i) to develop, have developed, make, have made, use, have used, market, have marketed, commercialize, have commercialized, offer for sale, sell, have sold, import and have imported Subject Products in the Field in the Territory, and (ii) to develop, have developed, make, have made, use and have used Subject Products anywhere in the world for the purpose of marketing, commercialization or sale of Subject Products in the Field in the Territory. Notwithstanding the non-exclusive nature of the foregoing grant (but subject to Section 2.1(d)), InSite hereby expressly covenants that it shall not, and shall cause its Affiliates and licensees not to, directly or indirectly: (x) practice the DuraSite Patent Rights, the Container Patent Rights or the Columbia Patent Rights or use the InSite Formulation Know-How (1) to develop, have developed, make, have made, use, have used, market, have marketed, commercialize, have commercialized, offer for sale, sell, have sold, import or have imported any Subject Products in the Field in the Territory, or (2) to develop, have developed, make, have made, use or have used any Subject Products anywhere in the world for the purpose of marketing, commercialization or sale of any Subject Products in the Field in the Territory; or (y) grant to any Third Party any right or license under the DuraSite Patent Rights, the Container Patent Rights, the Columbia Patent Rights or the InSite Formulation Know-How to conduct any of the activities set forth in the foregoing clause (x).

(c)    Subject to the terms and conditions of this Agreement, InSite hereby grants to Inspire a royalty-bearing, exclusive (even as to InSite and its Affiliates, except as provided in Section 2.1(d)) right and sublicense, with the right to grant further sublicenses, under the Pfizer Patent Rights, in each case to the extent not greater than the rights and licenses granted to InSite under the Pfizer Agreement: (i) to develop, have developed, make, have made, use, have used, market, have marketed, commercialize, have commercialized, offer for sale, sell, have sold, import and have imported Subject Products in the Field in the Territory, and (ii) to develop, have developed, make, have made, use and have used Subject Products anywhere in the world for the purpose of marketing, commercialization or sale of Subject Products in the Field in the Territory. 

(d)    For the avoidance of doubt, (i) the licenses and rights granted to Inspire under this Agreement shall not include a right to offer for sale, sell or have sold Subject Products, and Inspire expressly covenants that it shall not sell any Subject Products, in the Territory in circumstances in which Inspire knows or reasonably should know such Subject Products will be distributed or sold outside the Territory, (ii) InSite shall retain the rights under the InSite Intellectual Property and Pfizer Patent Rights to develop, have developed, make, have made, use and have used Subject Products in the Field in the Territory solely for the purposes of distribution, sale or other commercial pursuit of Subject Products outside the Territory, (iii) InSite shall be permitted to carry out and perform its tasks and responsibilities under this Agreement, (iv) InSite shall retain the exclusive rights to develop, have developed, make, have made, use, have used, market, have marketed, commercialize, have commercialized, offer for sale, sell, have sold, import and have imported Subject Products outside the Field and/or outside the Territory, and (v) InSite retains all rights to pursue any of its Reserved Interests.

(e)    With respect to each Subject Product, on a country-by-country basis, upon the expiration of the Inspire Royalty Term applicable to such Subject Product in a specific country, the rights and licenses granted to Inspire under paragraphs (a), (b) and (c) above shall become fully paid up, royalty-free, perpetual and irrevocable with regards to such Subject Product in such country.

(f)    To the extent required by and in conformance with any applicable laws, Inspire shall mark Inspire Licensed Products with the numbers of the applicable InSite Licensed Patents.

2.2    Sublicenses . All sublicenses granted hereunder must be in writing and must contain provisions that are not inconsistent with the terms and conditions of this Agreement.

2.3    InSite Trademarks and Domain Names . 

(a)    The Parties are entering into a trademark license agreement contemporaneously with this Agreement under which InSite is granting to Inspire rights and licenses to use the InSite Trademarks and the Domain Names in connection with the marketing, commercialization and sale of Subject Products in the Field in the Territory (the “ Trademark License Agreement ”).

(b)    If Inspire and InSite enter into a definitive license agreement with respect to the Option Product pursuant to the terms of Section 2.10 (or otherwise mutually agree to enter into such an agreement despite Inspire’s failure to exercise its option under Section 2.10 or the Parties’ failure to come to an agreement within the time period for negotiation set forth therein), or if InSite makes any public announcement that it is no longer pursuing development of the Option Product, then: .

(i)    within ten (10) days after the execution of such agreement or the making of such announcement, as applicable, InSite shall assign to Inspire all of InSite’s right, title, and interest in and to the AzaSite Trademark in the Territory, including without limitation in the registration therefor, together with the good will of the business associated therewith and which is symbolized thereby, and shall execute the AzaSite Trademark Assignment Agreement attached hereto as Schedule 2.3(b) to give effect to such assignment in the United States and a comparable agreement to give effect to such assignment in Canada. InSite agrees promptly to execute and deliver such further and other documents and to perform such actions as may be necessary to give effect to the foregoing assignment. From and after the effective date of such assignment, the term “InSite Trademarks” shall not include the AzaSite Trademark for any purpose under this Agreement; and

(ii)    effective upon the execution of such agreement or the making of such public announcement, as applicable, InSite hereby transfers and assigns to Inspire all of InSite’s right, title and interest in and to the Domain Names. InSite acknowledges and agrees that Inspire is not assuming any liabilities, obligations or indebtedness of InSite related to the Domain Names accrued by InSite prior to the effectiveness of such transfer, whether arising as a result of the transactions contemplated by this Agreement or otherwise related to InSite’s business in any manner, all of which will remain solely InSite’s responsibility. Inspire shall be solely responsible for any liabilities related to the use of the Domain Names accrued by Inspire. InSite agrees promptly to execute and deliver such further and other documents and to perform such actions as may be necessary to give effect to the foregoing assignment and transfer.

(c)    In addition, if Inspire and InSite enter into a definitive license agreement with respect to the Option Product pursuant to the terms of Section 2.10 (or otherwise mutually agree to enter into such an agreement despite Inspire’s failure to exercise its option under Section 2.10 or the Parties’ failure to come to an agreement within the time period for negotiation set forth therein), then InSite shall assign to Inspire all of InSite’s right, title, and interest in and to the trademark AzaSite Plus ^TM in the Territory, including without limitation in the registration therefor, together with the good will of the business associated therewith and which is symbolized thereby. In such event, the Parties shall include the trademark AzaSite Plus ^TM as a trademark assigned under the AzaSite Trademark Assignment Agreement (for the United States) and the comparable assignment agreement (for Canada) that are executed pursuant to paragraph (b) above in order to give effect to such assignment.

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

2.5    Reserved Interests . Notwithstanding anything to the contrary herein, Inspire acknowledges and agrees that this Agreement shall not restrict or limit InSite or its Affiliates, at any time, with respect to (i) any activity, licensing or otherwise, related to any product other than the Subject Products (other than the Option Product as provided under Section 2.10 or any Future Development as provided in Section 3.8); or (ii) any activity, licensing or otherwise, related to the Option Product other than as expressly provided under Section 2.10 or related to any Future Development other than as expressly provided under Section 3.8. Inspire also acknowledges and agrees that any such activities described in clauses (i) and (ii) above, as well as all rights and interests not expressly granted to Inspire are reserved by InSite (the “ Reserved Interests ”). 

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

2.7    Registration of License . Notwithstanding anything to the contrary in Article 8, Inspire, at its expense, may register the licenses granted under this Agreement in any country of the Territory. Upon request by Inspire, InSite agrees promptly to execute any “short form” licenses consistent with the terms and conditions of this Agreement submitted to it by Inspire reasonably necessary to effect the foregoing registration in such country. 

2.8    Supply of API . The Parties are entering into a supply agreement contemporaneously with this Agreement under which InSite will supply bulk azithromycin [***] (as API), obtained from [***] under the [***] Agreement, to Inspire for Inspire’s use in manufacturing and commercializing Subject Products in final form.

2.9    Supply of Finished Product . Upon Inspire’s election within ninety (90) days after Regulatory Approval of the Current Product in the United States, InSite promptly will modify the Cardinal Agreement so that the Cardinal Agreement would only be for the purpose of commercialization outside the Territory and assist Inspire in executing a new agreement with Cardinal with identical terms to the current Cardinal Agreement, except with respect to commercialization inside the Territory, in order to transition to Inspire all rights with respect to manufacture of Subject Products in finished form for commercialization inside the Territory. During the period commencing on the First Commercial Sale of any Subject Product in the United States and continuing until the first (1 ^st ) anniversary of such date, Inspire shall, at no cost to Inspire, be permitted to use, or have used for Inspire’s benefit, the equipment owned or controlled by InSite and used by Cardinal with respect to Subject Products in connection with the Cardinal Agreement. If, after the expiration of such one (1) year period, Inspire elects to continue to use or have used such equipment, Inspire shall be permitted to do so at a reasonable market rate that the Parties shall negotiate in good faith. 

2.10    Option for Option Product License . During the period commencing on the Effective Date and continuing until the date that is the later of (a) [***], and (b) [***] days after the date on which InSite provides to Inspire data from the completed Option Product Phase I Clinical Trial [***] (the “ Option Term ”), Inspire will have the exclusive option, but not the obligation, to enter into a license agreement with InSite for the Option Product upon terms and conditions to be separately discussed and negotiated by the Parties. At the request of Inspire, InSite promptly shall afford Inspire a reasonable opportunity to review the scientific and clinical information relevant to the Option Product that are available to InSite (including during negotiations between the Parties as provided below). Inspire may exercise its option under this Section 2.10 by providing written notice (the “ Option Notice ”) to InSite on or before the expiration of the Option Term. If Inspire timely provides the Option Notice, the Parties shall negotiate in good faith and exclusively, using their respective best efforts, for a period of up to [***] days from the date of the Option Notice to enter into a definitive license agreement with respect to the Option Product prior to the expiration of such [***] day negotiating period; provided, however, that (x) if at the end of such [***] day negotiation period the Parties are actively negotiating the terms of such agreement, then such negotiation period may be extended, if mutually agreed to so extend by the Parties at such time, to a mutually acceptable time by the Parties in writing, and (y) if at the end of such [***] day negotiation period the FDA has not yet granted Regulatory Approval of the Current Product, then such negotiation period shall be extended until [***] days after the date on which the FDA grants such Regulatory Approval. If Inspire does not exercise its option under this Section 2.10 on or before the expiration of the Option Term, or if the Parties cannot come to an agreement despite such efforts after such [***] day period (or any extension thereof in accordance with this provision), then InSite shall be free to pursue any and all other opportunities with respect to the Option Product with no further obligations to Inspire. InSite represents, warrants and covenants that neither it nor its Affiliates have granted prior to the Effective Date, nor will grant during the Term, to any Third Party any license, option, first refusal, or other right or interest in or to any Patent Rights, Know-How, trademarks or internet domain names related to the Option Product that is inconsistent with this Agreement, including without limitation this Section 2.10.

2.11    Inspire Blocking Patent Rights . If and when Inspire first files or Controls any Inspire Blocking Patent Rights outside the Territory, Inspire shall notify InSite within a reasonable time after such filing. Upon InSite’s election in writing within [***] days of such notice, the Parties shall negotiate in good faith for a period of up to [***] days from the date of such election to determine a commercially reasonable royalty rate to apply to InSite’s practice under any Inspire Blocking Patent Rights in the Field outside the Territory, together with such other terms as are reasonable and customary to effectuate the license granted below, including without limitation reporting and payment obligations and audit rights (collectively, the “ Additional Terms ”). Effective upon the Parties’ agreement in writing to the Additional Terms: (i) the Additional Terms shall be incorporated by reference into this Agreement as if set forth in full herein, and (ii) subject to the Additional Terms and the terms and conditions of this Agreement, Inspire hereby grants to InSite a royalty-bearing, non-exclusive right and license, without any right to grant sublicenses, under the Inspire Blocking Patent Rights to make, have made, use, sell, offer to sell and import Subject Products in the Field outside the Territory. Notwithstanding anything to the contrary in this Agreement, InSite acknowledges and agrees that this Section 2.11 shall not affect, restrict or limit: (i) any right of Inspire or its Affiliates or sublicensees under this Agreement with respect to any Subject Products, including without limitation the rights and licenses granted to Inspire in Section 2.1, or (ii) any obligation of or restriction upon InSite or its Affiliates under this Agreement with respect to Subject Products, including without limitation the exclusive nature of the grants in Section 2.1.

3.1    Data and Materials Transfer and Right of Reference . 

(a)    In furtherance of the licenses granted by InSite to Inspire under this Agreement and the activities contemplated by this Article 3, InSite shall, or shall cause its Affiliates or Third Party contractors to, transfer promptly (but in all events within thirty (30) days following the Effective Date) to Inspire (i) an instance of any physical embodiments, to the extent necessary or useful and available, of the InSite Know-How and the InSite Formulation Know-How, and (ii) a copy of the entire Regulatory Dossier for any Subject Products for the Territory in existence as of the Effective Date. Without limiting the foregoing, InSite shall provide to Inspire copies of all final audited study reports, prepared in accordance with applicable FDA guidelines, for all studies relating to the Current Product, including without limitation those listed on Schedule 3.1(a) .

(b)    InSite shall make reasonably available to Inspire at no cost to Inspire during the period commencing on the Effective Date and continuing until the expiration of the twelve (12) month period following Regulatory Approval of the Current Product by the FDA, for up to [***] man hours, InSite’s key employees (including but not limited to key manufacturing and development personnel) for purposes of reasonable consulting with Inspire regarding the development, testing and manufacturing of the Current Product, and to enable Inspire to use the InSite Know-How and InSite Formulation Know-How in connection with the Current Product. Any support beyond such will be subject to InSite’s agreement at reasonable market rates.

(c)    InSite, to the extent it has the right to do so, hereby grants to Inspire a “Right of Reference or Use” as that term is defined in 21 C.F.R. § 314.3(b), and any foreign equivalents, to any and all regulatory filings, data and information relating to the Current Product, or to any other Subject Products developed, manufactured or commercialized by Inspire, in the Field in the Territory, including without limitation that related to pharmacology, toxicology, preclinical testing, clinical testing, chemistry, manufacturing and controls data, batch records, trials and studies, safety and efficacy, manufacturing information, analytical and quality control, including without limitation the data and information listed on Schedule 3.1(c) , and agrees to sign, and cause its Affiliates to sign, any instruments reasonably requested by Inspire in order to effect such grant. In addition, InSite will use commercially reasonable efforts to obtain, on Inspire’s behalf, a writing from applicable Drug Master File holders for the Current Product granting Inspire the right to reference such Drug Master Files. In the event that InSite is not able to obtain any such writing, InSite promptly shall establish alternative arrangements reasonably acceptable to Inspire whereby Inspire’s access to supply of the Current Product in commercially reasonable amounts for launch and marketing thereof is not impaired by the lack of such writing. In addition, upon Inspire’s request, InSite shall provide reasonable assistance to Inspire in any efforts by Inspire to obtain a writing from applicable Drug Master File holders for any other Subjects Products developed, manufactured or commercialized by Inspire granting Inspire the right to reference such Drug Master Files.

3.2    Current Product Development . InSite will be responsible for, and will bear all costs and expenses associated with, obtaining Regulatory Approval for the Current Product in each country in the Territory. InSite will not be responsible for any other development or Regulatory Approval for any other product or indication except as otherwise agreed to under the terms of Section 3.8. Subject to and without limiting the foregoing, InSite shall, using its Commercially Reasonable Efforts:

(a)    Progress NDA number 50-810 for the Current Product to Regulatory Approval of the Current Product by the FDA, including without limitation conducting all clinical trials required for the Current Product, as deemed necessary by the FDA in order to grant Regulatory Approval of the Current Product;

(b)    Address any material concerns (i.e., without resolution of which, Regulatory Approval of the Current Product cannot be obtained) raised by the FDA with regard to the Current Product, whether in an action letter indicating that the NDA for the Current Product is approvable or otherwise;

(c)    Prepare and file an application for Regulatory Approval in Canada for the Current Product and progress such application to Regulatory Approval of the Current Product by the applicable Regulatory Authority in Canada, including without limitation conducting all clinical trials required for the Current Product, as deemed necessary by such Regulatory Authority in order to grant Regulatory Approval of the Current Product in Canada;

(d)    Address any material concerns (i.e., without resolution of which, Regulatory Approval of the Current Product cannot be obtained) raised by the applicable Regulatory Authority in Canada with regard to the Current Product;

(e)    Prior to Regulatory Approval of the Current Product in each country in the Territory, keep Inspire fully and promptly informed of: (i) the preparation of all documents submitted to Regulatory Authorities and the filing of all submissions relating to Regulatory Approval of any Subject Product in the Territory; and (ii) all regulatory actions, communications and meetings with any Regulatory Authority with respect to any Subject Product in the Territory; including in each case, without limitation, with respect to labeling matters. InSite shall collaborate in good faith with Inspire in connection with all of the foregoing, and Inspire shall be permitted to attend any meeting described in clause (ii) of the preceding sentence upon Inspire’s request; and

(f)    Facilitate discussions between InSite’s Third Party Manufacturers and Inspire in order to assist Inspire in obtaining its requirements of pre-clinical, clinical and commercial supplies of the Current Product.

3.3    Regulatory Matters; InSite Assistance . 

(a)    Within twenty-five (25) days after Regulatory Approval of the Current Product in any country of the Territory, InSite shall: 

(i)    submit to the FDA or equivalent foreign Regulatory Authority to transfer to Inspire ownership of, and Inspire shall own in Inspire’s name, the entire Regulatory Dossier for the Current Product (and, to the extent in existence at the time of such transfer, any other Subject Products) in such country, including without limitation NDA number 50-810 and IND number 62,873 or any foreign equivalents thereto (as applicable) in the Territory, all at no additional charge to Inspire. InSite shall execute and deliver to the applicable Regulatory Authority such documents as are required to notify such Regulatory Authority of the transfer of such NDA and IND, or foreign equivalents thereto, to Inspire. In addition, InSite promptly shall execute any and all other instruments, forms of assignment or other documents and take such further actions as Inspire may reasonably request in order to give effect to or evidence the foregoing assignments. The date on which all such assignments have been given effect in both the United States and Canada shall be deemed the “ Transfer Date ” under this Agreement; and

(ii)    use commercially reasonable efforts to obtain, on Inspire’s behalf, a writing from [***] granting Inspire the right to reference the Drug Master File held by [***] for the Current Product. In the event that InSite is not able to obtain such writing, InSite promptly shall establish alternative arrangements reasonably acceptable to Inspire whereby Inspire’s access to supply of the Current Product in commercially reasonable amounts for launch and marketing thereof is not impaired by the lack of such writing.

(b)    InSite shall retain the right to use any and all information in the Regulatory Dossier assigned to Inspire as described above, and the right of reference to all such regulatory documents, solely for purposes relating to InSite’s exercise of rights retained by it under Section 2.1(d) or otherwise not granted to Inspire under this Agreement. 

(c)    From and after the transfer of the Regulatory Dossier in any country in the Territory as provided above in paragraph (a) above:

(i)    Inspire shall have exclusive control over, and authority and responsibility for, the regulatory strategies relating to the further development and commercialization of Subject Products in such country in the Field, including, without limitation: (A) the preparation of all documents submitted to Regulatory Authorities and the filing of all submissions relating to Regulatory Approval of Subject Products in such country; and (B) all regulatory actions, communications and meetings with any Regulatory Authority with respect to Subject Products in such country. Upon the request of Inspire, InSite shall provide to Inspire on a timely basis such information in its possession relating to Subject Products as may be required for the foregoing regulatory activities, and otherwise provide reasonable assistance to Inspire, at Inspire’s expense, in complying with all regulatory obligations in such country relating to Subject Products, including without limitation, safety updates, amendments, annual reports, pharmacovigilance filings, investigator notifications, manufacturing facility inspections and certifications and product approvals.

(ii)    Inspire shall be responsible for interfacing, corresponding and meeting with all Regulatory Authorities in such country with respect to Subject Products in the Field. Except as required by applicable law or as permitted under paragraph (b) above, InSite shall not communicate directly with any Regulatory Authority in such country relating to Subject Products in the Field without the prior written consent of Inspire. In furtherance thereof, InSite shall refer all Regulatory Authority communications relating to Subject Products in the Field in such country to Inspire.

(iii)    InSite shall cooperate with Inspire, at Inspire’s expense, to provide all reasonable assistance and take all actions reasonably requested by Inspire that are necessary to comply with any law applicable to Subject Products, including, but not limited to, reporting of adverse drug experience reports (and Serious Adverse Drug Experiences) to Regulatory Authorities in such country.

(iv)    Inspire shall make available to InSite on a reasonable basis any documents in the Regulatory Dossier, and amendments thereto, for the Subject Products in such country that InSite is required by applicable law to reference in connection with seeking Regulatory Approval of Subject Products outside the Territory, provided that InSite requests such access in writing and identifies such applicable law in such request. In addition, Inspire shall consider in good faith any other reasonable request by InSite for access to information in the Regulatory Dossier for the Subject Products in such country.

3.4    Commercialization . 

(a)    Except as otherwise set forth in this Agreement, Inspire shall be solely responsible for commercialization of Inspire Licensed Products in the Field in the Territory, including without limitation with respect to:

(i)    sales and marketing;

(ii)    advertising, marketing and promotional materials;

(iii)    sales representatives and sales force matters;

(iv)    distribution;

(v)    regulatory compliance and communications and regulatory fees (e.g., adverse event reporting programs, establishment and product fees under the Prescription Drug User Fee Act), in each case to the extent such responsibilities or fees arise following Regulatory Approval of the Current Product and transfer of the Regulatory Dossier for the Current Product in the applicable country of the Territory as provided above in Section 3.3(a); and

(vi)    product inquiries and complaints.

(b)    Inspire shall use Commercially Reasonable Efforts to commercialize an Inspire Licensed Product in the Field in the Territory, promptly after (i) Regulatory Approval for such Inspire Licensed Product in the Territory has been obtained, (ii) such other approvals (including without limitation reimbursement approvals) as are necessary for the marketing of such Inspire Licensed Product in the Territory have been obtained, and (iii) the transitions as provided under Sections 2.9 (provided Inspire has made the election set forth therein) and 3.3(a) (as applicable) have been given effect (collectively, “ Launch Approval ”).

(c)    Without limiting the foregoing, Inspire agrees that it shall effect a First Commercial Sale of the Current Product in the United States no later than [***] calendar days after Launch Approval for the Current Product is obtained in the United States; provided, however, that such obligation shall be suspended during any period in which [***].

(d)    Inspire shall not include in promotional kits any Subject Products intended for sale without InSite’s consent, such consent not to be unreasonably withheld; provided, however, that the foregoing limitation shall not affect or restrict any sampling practices of Inspire.  

3.5    Reports . Every twelve (12) months following the Effective Date, Inspire shall provide InSite a written report summarizing the efforts and accomplishments of Inspire, its Affiliates and its sublicensees during the preceding twelve (12) month period in commercializing Inspire Licensed Products. 

3.6    Adverse Event Reporting . 

(a)    Each Party shall, and shall require its respective Affiliates to:

(i)    to the extent permissible under time constraints and reporting requirements, provide to the other Party in advance of initial or periodic submission to Regulatory Authorities any and all adverse event reports and Serious Adverse Drug Experience reports from clinical trials and commercial experiences with respect to Subject Products or any Inspire Licensed Products;

(ii)    provide such adverse event reports and Serious Adverse Drug Experience reports to the other Party contemporaneously with the provision of such reports to the applicable Regulatory Authority; and

(iii)    adhere to all requirements of applicable laws, rules and regulations that relate to the reporting and investigation of adverse events and Serious Adverse Drug Experiences and keep the other Party informed of such events.

(b)    If a Party contracts with a Third Party for research to be performed by such Third Party on any Subject Products or any of the Inspire Licensed Products, that Party shall require such Third Party to report to the contracting Party the information set forth above.

3.7    Coordination Committee . 

(a)    Within thirty (30) days after the Effective Date, the Parties will establish a committee to (i) discuss further development efforts related to Subject Products in the Field in the Territory following Regulatory Approval of the Current Product in each country in the Territory, (ii) manage and facilitate in an orderly manner the transition as provided above in Section 2.9 and the transition of the Regulatory Dossier in each country of the Territory as provided above in Section 3.3(a), (iii) manage and facilitate InSite’s access to the Regulatory Dossier in the United States, after the assignment thereof pursuant to Section 3.3(a), as reasonably necessary to facilitate InSite’s obtaining Regulatory Approval for the Current Product in Canada, and (iv) manage and facilitate (A) in connection with the launch of Subject Products by Inspire, Inspire’s access to Subject Products manufactured by Cardinal and (B) Inspire’s access to bottle molds and trade dress used by InSite in connection with Subject Products (the “ Coordination Committee ”). The Coordination Committee will be comprised of equal numbers of representatives of each Party, with each Party appointing two (2) representatives as members of the Coordination Committee. The Coordination Committee may change its size from time to time by mutual consent of its members. Each Party may replace its Coordination Committee representatives at any time upon written notice to the other Party.

(b)    The Coordination Committee will meet in person (or by having certain representatives of the Parties participate by telephone where necessary) no less frequently than once every six (6) months, unless otherwise agreed by the Parties. The members of the Coordination Committee may also convene or be consulted from time to time by means of telecommunications, videoconferences, electronic mail or correspondence, as deemed necessary or appropriate. Meetings of the Coordination Committee that are held in person will alternate between the offices of the Parties, or such other place as the Parties may agree. The first meeting of the Coordination Committee will take place at the offices of one of the Parties within ninety (90) days after the Effective Date.

(c)    The Coordination Committee will strive to reach consensus on any determinations with respect to further development efforts related to Subject Products in the Field in the Territory following Regulatory Approval of the Current Product in each country in the Territory; provided, however, that Inspire shall have final decision-making authority with respect to the development of Subject Products in the Field in the Territory.

(d)    The Coordination Committee will have only such purposes as are specifically stated in this Agreement, and will have no power to amend or interpret this Agreement or waive a Party’s rights or obligations under this Agreement.

3.8    Future Development . 

(a)    Subsequent to the Transfer Date, Inspire has exclusive control with respect to any further development of any Subject Product, including without limitation any New Indication, in the Field in the Territory (each such improvement an “ Inspire Improvement ”). Inspire may, at its discretion, pursue any such Inspire Improvement independently or through the Coordination Committee. Any such Inspire Improvement will be deemed a Subject Product under this Agreement and, if and to the extent such Inspire Improvement also constitutes an Inspire Licensed Product, such Inspire Improvement will be subject to Inspire Royalties payable under Article 5. No additional milestone payments will be due for any such Inspire Improvement under any circumstances. If Inspire, at its discretion, requests InSite’s assistance in developing any Inspire Improvement and InSite, at its discretion, agrees to provide such assistance, Inspire shall reimburse InSite for any such development efforts in the manner agreed by the Parties.

(b)    InSite promptly shall provide Inspire written notice of any Future Development together with the data from a completed phase I clinical trial (to determine the safety of such Future Development in humans as more fully described in 21 C.F.R. §312.21(a)) in a form suitable for submission to the FDA or equivalent Regulatory Authority (“ Future Development Option Notice ”). During the period of [***] days following the date of the Future Development Option Notice (“ Future Development Option Term ”), Inspire will have the exclusive option, but not the obligation, to enter into a license agreement with InSite for the Future Development described in the Future Development Option Notice for commercialization within the Territory upon terms and conditions to be separately discussed and negotiated by the Parties. At the request of Inspire, InSite shall promptly afford Inspire a reasonable opportunity to review the scientific and clinical information relevant to such Future Development that are available to InSite (including during negotiations between the Parties as provided below). Inspire may exercise its option under this Section 3.8 by providing written notice (the “ Future Development Option Exercise Notice ”) to InSite on or before the expiration of the Future Development Option Term. If Inspire timely provides the Future Development Option Exercise Notice, the Parties shall negotiate in good faith and exclusively, using their respective best efforts, for a period of up to [***] days from the date of the Future Development Option Exercise Notice to enter into a definitive license agreement with respect to the applicable Future Development prior to the expiration of such [***] day negotiating period; provided, however, that if at the end of such [***] day negotiation period the Parties are actively negotiating the terms of such agreement, then such negotiation period may be extended, if mutually agreed to so extend by the Parties at such time, to a mutually acceptable time by the Parties in writing. If Inspire does not exercise its option under this Section 3.8 on or before the expiration of the applicable Future Development Option Term, or if the Parties cannot come to an agreement despite such efforts after such [***] day period (or such extension as mutually agreed by the Parties in accordance with this provision), then InSite shall have no further obligation to negotiate with Inspire with respect to such Future Development. InSite represents, warrants and covenants that neither it nor its Affiliates have granted prior to the Effective Date, nor will grant during the Term, to any Third Party any license, option, first refusal, or other right or interest in or to any Patent Rights, Know-How, trademarks or internet domain names related to any Future Development that is inconsistent with this Agreement, including without limitation this Section 3.8. Notwithstanding anything to the contrary in this Agreement, InSite acknowledges and agrees that this Section 3.8 shall not affect, restrict or limit: (i) any right of Inspire or its Affiliates or sublicensees under this Agreement with respect to any Subject Products or InSite Developments, including without limitation the rights and licenses granted to Inspire in Section 2.1, or (ii) any obligation of or restriction upon InSite or its Affiliates under this Agreement with respect to Subject Products or InSite Developments, including without limitation the exclusive nature of the grants in Section 2.1.

4.1    Initial Payment . On the Effective Date, Inspire shall pay InSite Thirteen Million U.S. Dollars ($13,000,000) (the “ Initial Payment ”) as follows:

(a)    Seven Million Three Hundred Fifty-Two Thousand Six Hundred Sixty-Five Dollars and Sixty-Two Cents ($7,352,665.62) to The Bank of New York, N.A. to redeem the Senior Secured Notes (the “ Redemption Amount ”) on behalf of InSite and in the manner set forth in Section 4.3; and 

(b)    Five Million Six Hundred Forty-Seven Thousand Three Hundred Thirty-Four Dollars and Thirty-Eight Cents ($5,647,334.38) to InSite in the manner set forth in Section 4.3 (the “ InSite License Fee ”). 

4.2    Milestone Payment upon Regulatory Approval . Within fifteen (15) calendar days   following receipt by InSite of Regula