ELESTAT (EPINASTINE) CO-PROMOTION AGREEMENT

Promotion Agreement

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ALLERGAN SALES, INC | INSPIRE PHARMACEUTICALS, INC | ALLERGAN SALES, LLC

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Title: ELESTAT (EPINASTINE) CO-PROMOTION AGREEMENT
Governing Law: Delaware Date: 7/1/2004
Industry: Biotechnology and Drugs Law Firm: Reed Smith LLP; Sector: Healthcare

[Note: Certain portions of this document have been marked “[confidential treatment requested]” or “[c.i.]” to indicate that confidentiality has been requested for this confidential information. The portions have been omitted and filed separately with the Securities and Exchange Commission.]

ELESTAT ^™ (EPINASTINE) CO-PROMOTION AGREEMENT

THIS ELESTAT ^™ (EPINASTINE) CO-PROMOTION AGREEMENT is entered into as of December 8 ^th , 2003 by and between ALLERGAN SALES, LLC. , a Delaware limited liability company (formerly ALLERGAN SALES, INC ., a Delaware corporation), having an address of 2525 Dupont Drive, Irvine, California 92612 (hereinafter referred to as “ ALLERGAN ”), and INSPIRE PHARMACEUTICALS, INC. , a Delaware corporation, having an address of 4222 Emperor Boulevard, Suite 200, Durham, North Carolina 27703 (hereinafter referred to as “ INSPIRE ”).

RECITALS

WHEREAS, INSPIRE and ALLERGAN and its Affiliates, Allergan, Inc. and Allergan Pharmaceuticals Holdings (Ireland) Ltd., are parties to that certain License, Development and Marketing Agreement dated as of June 22, 2001, as amended (the “ Restasis/INS365 Agreement ”), under which INSPIRE, among other things, is retaining sales representatives and building a sales force; and

WHEREAS, ALLERGAN has exclusive rights to Elestat in the Territory (as each is hereinafter defined) by virtue of a Development and License Agreement dated December 15, 1999 (the “ Existing Agreement ”) with Boeringer Ingelheim International GmbH (“ BII ”); and

WHEREAS, ALLERGAN has received Regulatory Approval (as hereinafter defined) to market and sell Elestat in the Territory; and

WHEREAS, INSPIRE desires to provide a professional Sales Force (as hereinafter defined), and ALLERGAN desires to engage such Sales Force, to Call on the Field of Use (as each such term is hereinafter defined), all subject to the terms and conditions set forth in this Agreement (as hereinafter defined).

AGREEMENT

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

1.	DEFINITIONS.

1.1 “ AAA ” shall have the meaning assigned to such term in Section 12.9.1 hereof.

1.2 “ ACCME ” shall have the meaning assigned to such term in Section 3.2.3 hereof.

1.3 “ ACCME Standards ” shall have the meaning assigned to such term in Section 3.2.3 hereof.

1.4 “ Adverse Reaction Reports ” shall have the meaning assigned to such term in Section 6.2.2 hereof.

1.5 “ Affiliate ” shall mean, with respect to a party, any individual, sole proprietorship, firm, partnership, corporation, trust, joint venture or other entity, whether de jure or de facto, which, directly or indirectly, controls, is controlled by or is under common control with such party. As used in this definition, “ control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the policies and management of a person or entity, whether by the ownership of stock, by contract or otherwise.

1.6 “ Agreement ” shall mean this Elestat ^™ (Epinastine) Co-Promotion Agreement together with all appendices, exhibits and schedules hereto, as the same may hereinafter be amended or supplemented from time to time in accordance with the Agreement.

1.7 “ ALLERGAN ” shall have the meaning assigned to such term in the preamble hereof.

1.8 “ ALLERGAN Indemnified Claim ” shall have the meaning assigned to such term in Section 10.2.2 hereof.

1.9 “ ALLERGAN Indemnified Parties ” shall have the meaning assigned to such term in Section 10.2.1 hereof.

1.10 “ AMA ” shall have the meaning assigned to such term in Section 3.2.2 hereof.

1.11 “ AMA Guidelines ” shall have the meaning assigned to such term in Section 3.2.2 hereof.

1.12 “ Anti-Kickback Statute ” shall have the meaning assigned to such term in Section 3.2.2 hereof.

1.13 “ Applicable Laws ” shall mean: (a) all applicable federal, state and local laws, ordinances, rules and regulations applicable to this Agreement or the activities contemplated hereunder, including without limitation, the FD&C Act and equivalent state laws and regulations, whether such laws and regulations are now or hereafter in effect; and (b) any requirements under any license agreement applicable to Elestat in the Territory including, without limitation, the Existing Agreement.

1.14 “ BII ” shall have the meaning assigned to such term in the recitals.

1.15 “ Breaching Party ” shall have the meaning assigned to such term in Section 8.2.

1.16 “ Calendar Quarter ” shall mean each of the three (3) month periods commencing with January 1st, April 1st, July 1st and October 1st and ending, respectively, on the following March 31st, June 30th, September 30th and December 31 ^st .

1.17 “ Call ” shall mean a visit by a member of the Sales Force to the Field of Use.

1.18 “ cGMP ” shall mean current Good Manufacturing Practice as promulgated under and in accordance with the U.S. Federal Food, Drug, and Cosmetic Act, Title 21 of the U.S. Code of Federal Regulations Parts 210 and 211, as such may be amended from time to time, or any successor thereto.

1.19 “ Commercial Year ” shall mean the First Commercial Year and thereafter each calendar year of 365 days (or 366 days in a leap year) during the Term; provided that the last Commercial Year shall end on the final day of the Term.

1.20 “ Confidential Information ” shall have the meaning assigned to such term in Section 11.1.1 hereof.

1.21 “ Definitive Agreement ” shall have the meaning assigned to such term in Section 3.10.1 hereof.

1.22 “ Direct Competitor ” shall mean any Third Party that manufactures, markets or sells any then currently promoted prescription ophthalmic product.

1.23 “ Effective Date ” shall mean the date set forth in the preamble hereof.

1.24 “ Elestat ” shall mean ALLERGAN’s proprietary ophthalmic anti-allergy product epinastine ophthalmic solution 0.05%, in finished pharmaceutical form, in any formulation, packaged for sale (or, as applicable, distribution as samples) to Third Parties.

1.25 “ Elestat Labeling ” shall mean: (a) the FDA full prescribing information for Elestat, including any required patient information; and (b) all labels and other written, printed or graphic matter upon any container, wrapper or any package insert or outsert utilized with, or for, Elestat.

1.26 “ Elestat Tail Payments ” shall have the meaning assigned to such term in Section 4.2.1 hereof.

1.27 “ Elestat Tail Year ” shall mean [confidential treatment requested] twelve (12)-month periods following the expiration or termination of this Agreement; the first such Elestat Tail Year shall commence on the first day after the effective date of such termination or expiration and end on the last day of the last month of such twelve (12)-month period and so on year-by-year.

1.28 “ Existing Agreement ” shall have the meaning assigned to such term in the recitals hereof.

1.29 “ FDA ” shall mean the United States Food and Drug Administration or any successor entity.

1.30 “ FD&C Act ” shall mean the United States Federal Food, Drug and Cosmetics Act, Title 21 of the U.S. Code Section 321 et seq ., as amended, and the regulations promulgated thereunder from time to time.

1.31 “ Field of Use ” shall mean the fields of Ophthalmology, Optometry and Allergist prescribers.

1.32 “ First Commercial Year ” shall mean the period commencing on the Effective Date and ending on December 31, 2004.

1.33 “ GAAP ” shall mean generally accepted accounting principles in the United States, consistently applied by the party at issue.

1.34 “ Information ” shall have the meaning assigned to such term in Section 11.1.1 hereof.

1.35 “ INSPIRE ” shall have the meaning assigned to such term in the preamble hereof.

1.36 “ INSPIRE Indemnified Claim ” shall have the meaning assigned to such term in Section 10.1.2 hereof.

1.37 “ INSPIRE Indemnified Parties ” shall have the meaning assigned to such term in Section 10.1.1 hereof.

1.38 “ IMS ” shall mean IMS Health Incorporated or any successor organization.

1.39 “ JCC ” or “ Joint Commercialization Committee ” shall mean the Joint Commercialization Committee formed by the parties pursuant to the Restasis/INS365 Agreement to coordinate marketing, promotion and detailing strategies, plans and budgets under such Restasis/INS365 Agreement.

1.40 “ Liabilities ” shall have the meaning assigned to such term in Section 10.1.1 hereof.

1.41 “ Marketing Plan ” and “ Marketing Plans ” shall have the meanings assigned to such terms in Section 2.2.

1.42 “ Marketing Costs ” shall have the meaning assigned to such term in Section 3.4 hereof.

1.43 “ NDA ” shall mean a New Drug Application in the U.S. as defined in Title 21 of the U.S. Code of Federal Regulations, Section 314.50, et. seq.

1.44 “ Net Sales” shall mean the gross amount invoiced for sales of Elestat by ALLERGAN, or its Affiliates, in arm’s length sales to Third Parties in the Territory, less the following deductions from such gross amounts which are actually incurred, allowed, accrued or specifically allocated:

(a) credits or allowances for damaged products, returns or rejections of Elestat and retroactive price reductions;

(b) normal and customary trade, cash and quantity discounts, allowances and credits;

(c) chargeback payments, rebates and fees (or the equivalent thereof) granted or paid to managed health care organizations or to federal, state/provincial, local and other governments, including their agencies, or to trade customers;

(d) commissions paid to Third Parties other than sales personnel, sales representatives and sales agents;

(e) the allocation of freight, postage, shipping (including insurance) and other transportation; and

(f) sales, value-added and excise taxes, tariffs and duties, and other taxes directly related to the sale (but not including taxes assessed against the income derived from such sale).

1.45 “ Non-serious Adverse Drug Experience ” shall have the meaning assigned to such term in Section 6.2.1 hereof.

1.46 “ Non-breaching Party ” shall have the meaning assigned to such term in Section 8.2 hereof.

1.47 “ Notice ” shall have the meaning assigned to such term in Section 3.10.1 hereof.

1.48 “ Outdated Stock ” shall have the meaning assigned to such term in Section 4.3.2.

1.49 “ PDMA ” shall mean the Prescription Drug Marketing Act of 1987, Title 21 of the U.S. Code of Federal Regulations, Parts 203 and 205, as amended, and any final regulations or guidances promulgated thereunder from time-to-time.

1.50 “ PhRMA ” and “ PhRMA Code ” shall have the meanings assigned to such terms in Section 3.2.2 hereof.

1.51 “ Presentation ” shall mean a Primary or Secondary Presentation.

1.52 “ Primary Presentation ” shall mean a Call during which key product attributes of Elestat are verbally promoted and detailed in the first (or only) position on such Call; provided, however , that: (1) no more than one presentation in any Call shall be considered a Primary Presentation; and (2) a majority of the Call time shall be spent detailing Elestat during the Call.

1.53 “ Promotional Materials ” shall mean all sales representative training materials and all written, printed, graphic, electronic, audio or video matter, including, but not limited to, journal advertisements, sales aids, formulary binders, reprints, direct mail, direct-to-consumer advertising, Internet postings, broadcast advertisements and sales reminder aids (for example, scratch pads, pens and other such items), in each case created by a party, or on its behalf, and used or intended for use by INSPIRE in connection with any promotion of Elestat hereunder, but excluding Elestat Labeling.

1.54 “ Proposal ” shall have the meaning assigned to such term in Section 3.10.1 hereof.

1.55 “ Regulatory Approval ” shall mean all approvals (including, but not limited to, NDA approval, labeling, pricing and reimbursement approvals), product, biologic and/or establishment licenses, registrations or authorizations of any federal, state or local regulatory agency, department, bureau or other governmental entity, which are necessary for the commercial manufacture, use, storage, importation, export, transport or sale of Elestat in the Territory.

1.56 “ Restasis/INS365 Agreement ” shall have the meaning assigned to such term in the recitals.

1.57 “ Revised Net Sales ” shall mean Net Sales multiplied by the fraction A/B where: (a) A is equal to the total prescriptions filled for Elestat in the Field of Use in the Territory, for a given period; and (b) B is equal to the total prescriptions filled for Elestat in the Territory, for a given period; as reported by IMS, Verispan or other mutually agreed upon reliable data source.

1.58 “ Sales Force ” shall mean INSPIRE’s sales personnel primarily calling on the Field of Use.

1.59 “ Secondary Presentation ” shall mean a Call during which key product attributes of Elestat, are verbally promoted and detailed in the second position on such Call; provided, however, that no more than one presentation in any Call shall be considered a Secondary Presentation.

1.60 “ Serious Adverse Drug Experience ” shall have the meaning assigned to such term in Section 6.2.1 hereof.

1.61 “ Standard Unit Cost ” shall mean ALLERGAN’s standard unit cost to manufacture Elestat including direct labor, direct material and overhead and all direct and indirect product costs incident to and necessary for production or manufacturing operations or processes, all according to GAAP applied on a consistent basis.

1.62 “ Term ” shall have the meaning assigned to such term in Section 8.1 hereof.

1.63 “ Territory ” shall mean the United States and its territories and possessions.

1.64 “ Third Party ” shall mean any entity other than ALLERGAN or INSPIRE or an Affiliate of ALLERGAN or INSPIRE.

1.65 “ Trademarks ” shall mean: (a) with respect to ALLERGAN, the logos, trademarks, trade names and service marks of ALLERGAN listed as ALLERGAN’s on Schedule A attached hereto, such marks being owned and registered by ALLERGAN or exclusively licensed to ALLERGAN by BII or an ALLERGAN Affiliate; and (b) with respect to INSPIRE, the logos, trademarks, trade names and service marks of INSPIRE listed as INSPIRE’s on Schedule A attached hereto, such marks being owned and registered by INSPIRE.

1.66 “ United States ” or “ U.S. ” shall mean The United States of America.

1.67 “ Urgent Regulatory Information ” shall have the meaning assigned to such term in Section 6.2.1 hereof

2.	OBJECTIVES; MANAGEMENT.

2.1 Management; The JCC .

2.1.1 It is the objective of the parties to market, promote and detail Elestat to the Field of Use during the Term in accordance with the provisions of this Agreement. In order to coordinate their efforts, management of the parties activities hereunder shall be the responsibility of the Joint Commercialization Committee. In addition to its obligations under the Restasis/INS365 Agreement, the JCC shall meet at mutually agreeable times and locations, but in no case less than once per Calendar Quarter, to formulate, coordinate, and implement Marketing Plans for Elestat and to make any determinations required under this Agreement including, without limitation, Sections 3.3, 3.12, 6.3 and 11.1.3. Meetings will be conducted according to the procedures set out in, and the JCC shall be governed by and all decisions shall be made in accordance with, the provisions of Sections 6.1, 6.3, 6.4 and 6.5 of the Restasis/INS365 Agreement; provided however, that if the JCC Executive Officers (as that term is defined in the Restasis/INS365 Agreement) cannot reach a mutually acceptable decision within fifteen (15) days after a matter in dispute under this Agreement has been referred to them, then INSPIRE, subject to Section 3.4 shall have final decision-making authority with respect to disputes relating to the promotion and detailing of Elestat, and ALLERGAN shall have final decision-making authority with respect to disputes relating to: (1) material legal issues that could reasonably be expected to adversely impact the Regulatory Approvals; (2) pricing, product positioning, sales strategy and channel placement of Elestat; or (3) regulatory compliance issues; except that all decisions of the JCC relating to allocation of costs described in subsections (e), (f) and (g) of Section 2.1.2 must be made by unanimous decision of the JCC members.

2.1.2 In addition to the responsibilities set forth elsewhere in this Agreement, the JCC shall provide input and recommendations regarding the marketing of Elestat to the Field of Use during the Term, and shall, without limitation, perform the following functions:

(a) review and approve each Marketing Plan in accordance with the procedure set forth in Section 2.2;

(b) review and approve decisions relating to pricing, product positioning, sales strategy, supply chain management including pipeline inventory and channel placement of Elestat;

(c) determine the overall product strategy for Elestat under this Agreement and review all major promotional, sales and strategic decisions;

(d) provide a mechanism for the exchange of Information between the parties;

(e) review and approve any recommended or required post-Regulatory Approval clinical trials including, without limitation, determinations regarding the necessity for such clinical trials and an appropriate allocation between the parties of the costs for same;

(f) oversee, approve and coordinate any additional communication activities or other strategic marketing activities to be undertaken during the Term, including, without limitation, a determination of an appropriate allocation between the parties of the costs for same;

(g) review, approve and coordinate any additional services/activities contemplated in this Agreement to be provided by INSPIRE to assist ALLERGAN in performing its responsibilities hereunder including, without limitation, those set forth in Section 3.12, along with an appropriate allocation between the parties of the costs for same;

(h) review and provide guidance with respect to any actual or anticipated difficulties ALLERGAN is encountering in meeting market demand for Elestat; and

(i) if ALLERGAN decides to develop a line extension to Elestat during the Term, ALLERGAN will promptly inform INSPIRE and negotiate in good faith through the JCC to reach a development and commercialization agreement for such line extension with INSPIRE.

(j) such other functions as may be assigned to the JCC pursuant to this Agreement or as may be agreed upon by the parties, in writing, from time to time.

2.2 Marketing Plan . Inspire shall submit a detailed marketing plan for Elestat in the Field of Use covering the first three Commercial Years ( i.e. , through December 31, 2006) within thirty (30) days of the Effective Date and, thereafter, for the fourth Commercial Year and each subsequent Commercial Year, not later than August 1 of the prior Commercial Year (each a “ Marketing Plan ” and, collectively, the “ Marketing Plans ”), to the JCC for its review and which shall be approved by the JCC within thirty (30) days in order to allow the proper lead time for production of product requirements. Each Marketing Plan shall include: (a) a comprehensive marketing, promotion and detailing strategy for Elestat in the Field of Use; (b) a good faith sales forecast (which shall be consistent with, and in addition to, the forecasts provided pursuant to Section 3.11.6); and (c) a budget of Marketing Costs . The Marketing Plans shall also include a unit forecast, by month, of the number of samples required by INSPIRE. ALLERGAN hereby agrees that it shall be responsible for and shall provide the data, information and cooperation reasonably requested by INSPIRE to produce and implement each Marketing Plan. Although the parties intend to work cooperatively, INSPIRE shall be the party responsible for implementing the activities referenced in the Marketing Plan.

3.	PROMOTION OF ELESTAT.

3.1 Grant . During the Term, and subject to the terms and conditions of this Agreement, ALLERGAN hereby grants to INSPIRE the exclusive right to co-promote and detail

Elestat under this Agreement under ALLERGAN’s Trademarks in the Field of Use in the Territory. This provision shall not preclude ALLERGAN from marketing, promoting and detailing Elestat (or, subject to Section 3.10, granting to Third Parties the right to market, promote and detail Elestat): (a) outside the Field of Use; or (b) outside the Territory. This provision shall also not preclude ALLERGAN from marketing, co-marketing, promoting, co-promoting and detailing any other product in the Field of Use in the Territory.

3.2 Promotion Efforts . During the Term, and subject to the terms and conditions of this Agreement, INSPIRE shall, in cooperation with ALLERGAN, use commercially reasonable efforts to market, promote and detail Elestat utilizing qualified field sales staff as its Sales Force in accordance with the then-current Marketing Plan. In addition, each party agrees:

3.2.1 that ALLERGAN shall have the exclusive right and obligation to manage reimbursement for Elestat in the appropriate reimbursement channels (health maintenance organizations, pharmacy benefit management companies and institutional customers); provided that: (1) ALLERGAN shall use the same diligence it employs with respect to similar products of similar commercial size in the ophthalmology and allergy therapeutic areas to such entities and institutions and (2) INSPIRE shall be fully updated of all ALLERGAN efforts through the JCC meetings. In carrying out its obligations under this Section 3.2.1, ALLERGAN agrees to [confidential treatment requested].

3.2.2 that each party shall, in all material respects, conform its practices and procedures relating to the marketing, detailing and promotion of Elestat to all Applicable Laws and guidelines, including the PDMA, the Federal Health Care Programs Anti-Kickback Law, Title 42 of the U.S. Code Section 1320a-7b(b) (the “ Anti-Kickback Statute ”), the Pharmaceutical Research and Manufacturers of America (“ PhRMA ”) Code of Pharmaceutical Marketing Practices (the “ PhRMA Code ”) and the American Medical Association (“ AMA ”) Guidelines on Gifts to Physicians from Industry (the “ AMA Guidelines ”), as the same may be amended from time to time, and shall promptly notify the other party of, and provide the other party with a copy of, any correspondence or other reports with respect to the marketing, detailing and promotion of Elestat submitted to or received from the U.S. Department of Health and Human Services or its components (including the FDA and the Office of the Inspector General), PhRMA or the AMA relating to such laws, regulations and guidelines;

3.2.3 that each party shall, in all material respects, conform its practices and procedures relating to educating the medical community in the United States with respect to Elestat to the Accreditation Council for Continuing Medical Education (“ ACCME ”) Standards for Commercial Support of Continuing Medical Education (the “ ACCME Standards ”) and any applicable and enforceable FDA regulations or guidelines, as the same may be amended from time to time, and promptly notify the other party of, and provide the other party with a copy of, any correspondence or other reports submitted to or received from the ACCME with respect to Elestat relating to the ACCME Standards or such FDA regulations;

3.2.4 that each party shall, in connection with the promotion and detailing of Elestat hereunder, make no statement, representation or warranty, oral or written, to Third Parties, concerning Elestat that is inconsistent with, or contrary to, the Elestat Labeling or Promotional Materials; and

3.2.5 that each party shall, in all material respects, conform its practices and procedures relating to sampling in the Territory to sampling practices and procedures in compliance with the PDMA.

3.3 Detailing Requirements . During each Commercial Year, INSPIRE shall use commercially reasonable efforts to market, promote and detail Elestat to the Field of Use in the Territory. INSPIRE further agrees to use commercially reasonable efforts to have its Sales Force provided a minimum of [confidential treatment requested] Calls during each month (which amount shall be prorated for any periods of less than a month) of the spring and fall allergy seasons (as determined by the JCC) with the Sales Force as provided in Section 3.6. During such spring and fall allergy seasons, INSPIRE agrees that the sales detail commitment shall be, at a minimum, a Secondary Presentation for all called upon physicians in the Field of Use. INSPIRE shall maintain records of Calls made by its Sales Force that will accurately represent the number of Primary and Secondary Presentations made for Elestat in the Field of Use. During the Term, INSPIRE shall issue reports to ALLERGAN within thirty (30) days after the end of each month showing the number of Primary and Secondary Presentations made in the Field of Use for Elestat. Additionally, for the first six (6) months of this Agreement, INSPIRE shall provide ALLERGAN with an accurate weekly report of total prescriptions for Elestat in the Field of Use for the preceding week, to the extent that such data is available on a timely basis from IMS. ALLERGAN shall be entitled to audit the source data and documents used to compile such reports pursuant to the provisions of Article 7.

3.4 Marketing Costs . INSPIRE shall bear all cost and expense of its marketing, promotion, advertising, and detailing activities hereunder including, without limitation, its costs to develop and create Promotional Materials (as set forth in the budget of the applicable Marketing Plan and approved by the JCC), as well as the costs associated with its Sales Force occasionally performing minor administrative functions in support of ALLERGAN’s customer support activities. INSPIRE agrees its annual out-of-pocket costs for promotion and advertising (excluding detailing and Sales Force costs) (“ Marketing Costs ”) shall not be less than two million dollars ($2,000,000) for the First Commercial Year and each Commercial Year thereafter (which amount shall be prorated for any Commercial Year of less than twelve (12) months) during the Term.

3.5 Samples . Notwithstanding any other provision of this Agreement, all product samples supplied by ALLERGAN to INSPIRE shall be delivered to INSPIRE’s Sales Force at ALLERGAN’s Standard Unit Cost plus shipping and handling expenses. ALLERGAN shall ship the samples, at least quarterly, along with an invoice for same, to INSPIRE in accordance with the month-by-month forecast for samples set forth in the Marketing Plan for such Commercial Year, payment to be made by INSPIRE within thirty (30) days of delivery. INSPIRE shall be entitled to audit ALLERGAN’s calculation of Standard Unit Cost, as well as shipping and handling expenses pursuant to the provisions of Article 7 hereof.

3.6 Sales Force . INSPIRE hereby agrees that no later than forty five (45) days after the later of: (a) the first physical shipment of Elestat to the trade by ALLERGAN; or (b) January 1, 2004;

and thereafter through-out the Term, the Sales Force shall be comprised of [confidential treatment requested] sales persons who are full time employees of INSPIRE and that are making Calls on the Field of Use. INSPIRE shall not permit any of its sales personnel to promote Elestat unless such sales personnel have been fully trained and qualified in accordance with Section 3.11.3. INSPIRE shall be responsible for the compliance of its Sales Force with all relevant terms of this Agreement and the Marketing Plan. INSPIRE shall give prompt written notice to ALLERGAN of the date on which the Sales Force commences promoting Elestat in the Field of Use hereunder.

3.7 Proprietary Rights in Elestat . Except as may be necessary for INSPIRE to market, promote and detail Elestat as contemplated in this Agreement: (a) ALLERGAN retains and shall at all times retain all proprietary rights and proprietary interests in Elestat until sold by Allergan; and (b) INSPIRE will neither have nor represent that it has any control or proprietary or property interests in Elestat. Except with respect to ALLERGAN’s Trademarks or as otherwise as set forth in this Agreement, nothing contained herein shall be deemed to grant INSPIRE a license or other right or interest in any patent, trademark, copyright or other similar intellectual property of ALLERGAN.

3.8 Promotional Materials .

3.8.1 During the Term, other than launch materials and any materials that have been created by ALLERGAN and approved by the JCC for use by INSPIRE, INSPIRE shall create and develop Promotional Materials relating to Elestat consistent with the Marketing Plan, it being understood that: (1) the costs of all Promotional Materials created by INSPIRE shall be borne by INSPIRE pursuant to Section 3.4; and (2) ALLERGAN shall provide all materials reasonably requested by INSPIRE in order to create and develop such Promotional Materials. All Promotional Materials shall be subject to review and approval by ALLERGAN’s Regulatory Compliance Department, such approval not to be unreasonably withheld or delayed. The parties shall establish a tracking system, or utilize ALLERGAN’s tracking system (if appropriate and mutually agreed), for Promotional Materials to ensure that all such Promotional Materials are accurately tracked and submitted to the FDA. ALLERGAN will file all Promotional Materials with the FDA if and as required by FDA regulations.

3.8.2 Except as otherwise provided in this Agreement, neither party shall distribute or have distributed any materials including, for the avoidance of doubt, any Promotional Materials bearing the name of the other without the prior written approval of such party.

3.8.3 ALLERGAN shall own all right, title and interest in and to the Promotional Materials, including all copyrights appurtenant thereto. For purposes of clarification, ALLERGAN acknowledges and agrees that it is obtaining no rights in or to any trademarks owned by INSPIRE (including, for the avoidance of doubt, INSPIRE’s Trademarks) or any copyrighted or copyrightable materials related to INSPIRE’s business or any products marketed and sold by INSPIRE. ALLERGAN hereby grants to INSPIRE the right, during the Term, to use all Promotional Materials generated pursuant to a Marketing Plan in connection with its marketing, promotion and detailing of Elestat hereunder. INSPIRE agrees that ALLERGAN may use any promotional, Phase IV or marketing materials generated by INSPIRE outside the Territory without charge.

3.9 ALLERGAN Responsibilities . ALLERGAN shall, at its expense, have the sole right and shall take such actions with respect to Elestat as would normally be done in accordance with accepted business practices and legal requirements, to maintain the authorization and/or ability to market Elestat in the Territory, including, without limitation, the following:

3.9.1 Maintaining all required Regulatory Approvals in the Territory at its expense, including without limitation, filing NDA annual reports as required.

3.9.2 Manufacturing Elestat according to cGMP and Applicable Laws (so that at the time of shipment Elestat will not be misbranded or adulterated under the FD&C Act) based on forecasts to be supplied by INSPIRE in accordance with Section 3.11.6. ALLERGAN agrees to use commercially reasonable efforts to maintain adequate days of stock of Elestat in its inventory to promptly fill orders in the Territory, subject to Section 12.8.

3.9.3 Booking sales and distribution of Elestat hereunder and performance of related services all in accordance with Applicable Laws. If INSPIRE receives any orders for Elestat in the Territory during the Term, it shall promptly refer such orders to ALLERGAN. Commencing with the month in which the first commercial sale of Elestat in the Territory occurs, and thereafter on a monthly basis, ALLERGAN shall provide to INSPIRE within twenty (20) days after the close of each month a written sales report of Elestat sales for the preceding month which report shall be considered Confidential Information of ALLERGAN subject to restrictions set forth in Article 11 and shall be used by INSPIRE for internal business purposes only and INSPIRE acknowledges that notwithstanding any other term of this Agreement, it shall be a material breach of this Agreement if INSPIRE breaches the terms of this Section 3.9.3 including, without limitation, disclosing said sales report or any portion thereof to investors, analysts or other Third Parties or providing opinions or financial projections to Third Parties based in whole or in part on said sales reports; except that INSPIRE may use said sales report to assist it to estimate its quarterly revenue and report the same as required by law after ALLERGAN’s public release of its corresponding quarterly earnings statement. Notwithstanding the foregoing, INSPIRE agrees that it will obtain prior written consent from ALLERGAN before making public any sales data obtained from ALLERGAN on sales of Elestat, other than quarterly and annual Elestat sales and forecasts of said sales in the Territory.

3.9.4 Administer trade relations, order processing, invoicing, credit and collection, inventory and receivables, chargebacks/rebates, and the overall supply chain management in order to fill orders to wholesalers.

3.9.5 Providing customer support, including handling medical queries, and performing other functions consistent with consumer practice for prescription pharmaceuticals and with the Marketing Plans; except that INSPIRE will be responsible to supply physician ordered samples and related administration.

3.9.6 Responding to product and medical complaints relating to Elestat.

3.9.7 Handling all returns of Elestat.

3.9.8 Handling all voluntary recalls and market withdrawals of Elestat. INSPIRE will make available to ALLERGAN, upon request and at its expense, all of INSPIRE’s pertinent records on Elestat that ALLERGAN may reasonably require to assist it in effecting any recall or market withdrawals.

3.9.9 Communicating with any governmental agencies and satisfying their requirements regarding Regulatory Approvals of Elestat in the Territory as more fully set forth in Section 6.2.3.

3.9.10 Reporting Adverse Reaction Reports to U.S. regulatory authorities as required by Applicable Law.

3.10 Right of First Refusal . If at any time during the Term, ALLERGAN desires to enter into an agreement with any Third Party to market, promote and/or detail Elestat outside the Field of Use in the Territory, ALLERGAN agrees as follows:

3.10.1 In the event that ALLERGAN and such Third Party reach agreement as to the terms of such an agreement, whether in the form of a proposed term sheet or non-binding letter of intent (collectively, a “ Proposal ”) ALLERGAN agrees to promptly notify INSPIRE in writing of such Proposal, which notification shall include a complete description of the terms of such Proposal (the “ Notice ”). INSPIRE shall have [confidential treatment requested] after receipt of the Notice to notify ALLERGAN if it is willing to enter into an agreement for such rights outside the Field of Use. During such [confidential treatment requested] period and, if INSPIRE notifies ALLERGAN of its willingness to enter into such an agreement on comparable or more favorable terms, ALLERGAN agrees to cease negotiations with the Third Party regarding the Proposal and INSPIRE and ALLERGAN shall promptly commence good faith negotiations, for a period of up to [confidential treatment requested], in an effort to reach a mutually acceptable definitive agreement for such marketing and promotion arrangement (a “Definitive Agreement”).

3.10.2 If, despite each party’s good faith efforts, ALLERGAN and INSPIRE are not able to reach agreement on and do not execute a Definitive Agreement within such [confidential treatment requested] period, ALLERGAN shall be free to enter into such an agreement regarding such licensing arrangement; provided, however , that the terms and conditions of any agreement with a Third Party taken as a whole shall be no more favorable to such Third Party than the material terms and conditions last offered by INSPIRE during the parties’ good faith negotiations.

3.10.3 If INSPIRE fails to contact ALLERGAN within the [confidential treatment requested] period or notifies ALLERGAN that it does not wish to enter into an agreement to market, promote and/or detail Elestat outside the Field of Use in the Territory under any terms, ALLERGAN may proceed to enter into an agreement with the Third Party signatory of the Proposal or any other Third Party. If, however, INSPIRE

notifies ALLERGAN that it is interested in acquiring the rights to market, promote and/or detail Elestat outside the Field of Use in the Territory but not on the terms set forth in the Proposal, ALLERGAN may proceed to enter into an agreement with the Third Party signatory of the Proposal; provided, however , that the material terms and conditions of any agreement with such Third Party taken as a whole shall be consistent with and in no case more favorable to such Third Party than the terms and conditions set forth in the original Proposal.

3.10.4 ALLERGAN shall promptly notify INSPIRE upon the execution of any agreement with a Third Party to market, promote and/or detail Elestat outside the Field of Use in the Territory, and shall provide a copy of the signed agreement to INSPIRE upon its request if: (1) the parties were unable to reach agreement on a Definitive Agreement under Section 3.10.2; or (2) INSPIRE, under Section 3.10.3, notifies ALLERGAN of its interest in obtaining such rights, but not on the terms set forth in the Proposal.

3.10.5 If, upon any expiration or waiver of the right of first refusal set forth in this Section 3.10, ALLERGAN enters into an agreement with any Third Party to market, promote and/or detail Elestat outside the Field of Use in the Territory, INSPIRE’s compensation hereunder shall be calculated based on Revised Net Sales in accordance with the provisions of Section 4.1.3.

3.11 INSPIRE Responsibilities . INSPIRE will work collaboratively with ALLERGAN through the JCC in connection with the marketing of Elestat in the Territory and, in addition to the rights and responsibilities set forth elsewhere in this Agreement, INSPIRE shall:

3.11.1 Use commercially reasonable efforts to commercialize Elestat in the Territory. In connection therewith, INSPIRE shall dedicate resources to the commercialization of Elestat consistent with the resources that INSPIRE, at all relevant times, would dedicate to products containing compounds with similar commercial potential to Elestat that were generated from INSPIRE’s own research efforts and that INSPIRE decided to develop commercially and market.

3.11.2 Use commercially reasonable efforts and proceed diligently to launch Elestat in the Territory as soon as possible, and in no case later than forty-five (45) days after the later of: (1) the first physical shipment of Elestat to the trade by ALLERGAN; or (2) January 1, 2004; and to perform such obligations by using, without limitation, a Sales Force with sufficient skills and experience, together with sufficient equipment and facilities.

3.11.3 INSPIRE shall, at its expense, supervise, train and maintain such competent and qualified sales representatives as may be required to promote and detail Elestat as provided herein and in the Marketing Plans, such training to include a reasonable proficiency examination for all sales representatives who will be engaged in detailing. ALLERGAN will provide reasonable assistance in the training at the launch meeting and assimilation of training materials at its expense.

3.11.4 INSPIRE shall use commercially reasonable efforts to achieve at least fifty percent (50%) of the applicable annual Net Sales forecast set forth on Schedule B , provided there have been no material stock outages (i.e., no backorders for Elestat over thirty (30) days in any Commercial Year) during such period and subject to ALLERGAN’s performance of its obligations under Section 3.9.2.

3.11.5 Commencing with the second Calendar Quarter of 2004, INSPIRE shall furnish to ALLERGAN on or before the forty-fifth (45th) day of each Calendar Quarter, a summary of information coming to INSPIRE’s attention in the Territory concerning introductions and promotional activities of products competitive with Elestat.

3.11.6 Within thirty (30) days of the Effective Date, and thereafter, by the seventh (7 ^th ) calendar day of each month, INSPIRE shall provide ALLERGAN with a good faith eighteen (18) month rolling forecast by month of estimated unit sales of Elestat in the Territory, which forecast shall, for the avoidance of doubt (and as applicable), update and supercede the forecast set forth in the Marketing Plans.

3.11.7 At ALLERGAN’s request, INSPIRE shall provide ALLERGAN with copies of any written communications disseminated by INSPIRE generally to its Sales Force relating to marketing and promotion strategy for Elestat.

3.12 Shared Responsibilities . The parties agree to share t

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