Exhibit 10.13


 


Execution copy 92904


 


CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED
FROM THIS DOCUMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE
OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.


 


SUPPLY AGREEMENT


 


THIS SUPPLY AGREEMENT (the “Agreement”), is
made and entered into effective as of this 29th day of September,
2004, by and among Dr. Reddy’s Laboratories, Inc., a New Jersey
corporation having its principal place of business at 200 Somerset Corporate Boulevard,
7th Floor., Bridgewater, New Jersey 08807 and Dr. Reddy’s
Laboratories Limited, a corporation organized under the laws of India, having
its principal place of business at 7-1-27 Ameerpet, Hyderabad - 500 016, India
(collectively “Reddy”, and Aradigm Corporation, a California corporation
having its principal place of business at 3929 Point Eden Way, Hayward, CA
94545 (“Aradigm”).


 


W  I  T  N  E  S
S  E  T  H:


 


WHEREAS, Reddy is engaged in the business of
manufacturing and supplying various bulk drug substances to pharmaceutical
companies; and


 


WHEREAS, Aradigm is engaged in, among other
things, the preparation, manufacture, distribution and sale of drug products;
and


 


WHEREAS, Aradigm desires to purchase the drug
substance identified in Schedule 1 annexed hereto, as such Schedule may
be amended or supplemented from time to time, from Reddy, and Reddy is willing
to manufacture and sell the drug substance to Aradigm, upon the terms and
conditions set forth herein.


 


NOW, THEREFORE, the parties hereto agree as
follows:


 


1.             Definitions.  As used in this Agreement, the following
definitions shall apply:


 


“Affiliate”
means any entity controlling, controlled by or under the common control of
Aradigm or Reddy, as the case may be.  For
the purpose of this Agreement, “control” shall mean the direct or indirect
ownership of at least fifty (50%) percent of the outstanding voting shares or
other voting rights of the subject entity, or the ability, directly or
indirectly, to direct or cause the direction of management and policies of such
entity.


 


“ANDA”
means any abbreviated new drug application required to manufacture, market and
sell finished dosage forms of the Drag Product (as defined below) in the United
States and its territories and possessions filed by or on behalf of Aradigm’s
Designated Manufacturer with the FDA pursuant to 21 U.S.C. 355(j), and any
amendments thereto which may be filed by Aradigm’s or its Designated
Manufacturer from time to time, and any foreign equivalent of such application.


 


“cGMP”
means current Good Manufacturing Practices, as established by the FDA or its
foreign equivalent. 


 


“Commercial
Sale Date” means the date of the first commercial sale by Aradigm or its
Affiliate of a Drug Product.


 


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Execution copy 92904


 


“Designated
Manufacturer” means a manufacturer of the Drug Product who is an Affiliate
of Aradigm or with whom Aradigm has entered into a manufacturing agreement, as
set forth on Exhibit A, as the same shall be supplemented by
Aradigm from time to time.


 


“DMF”
means the open and closed portions of the Drug Master File required to
manufacture, market and sell Drug Substance in bulk form in the United States,
filed with the FDA and to be maintained by Reddy with the FDA.


 


“Drug
Produce” means any pharmaceutical product suitable for human use that
contains Drug Substance.


 


“Drug
Substance” means the drug substance identified in Schedule 1 annexed
hereto, supplied in bulk form meeting the Specifications.  It is understood that such drug substance
shall only be used by Aradigm in connection with research and development or
commercialization of the Drug Product(s) identified in Schedule 1
in the Territory.


 


“FDA”
means the United States Food and Drug Administration.


 


“Regulatory
Approval” means the procurement of the registrations, permits and approvals
required by applicable government authorities for the manufacture, importation
into, marketing, sale and distribution of the Drug Substance or the Drug
Product in the Territory, including, without limitation, the DMF and the ANDA.


 


“Specifications”
means the specifications set forth in the applicable United States
Pharmacopoeia monograph (should such a monograph be published), the applicable
European Pharmacopoeia monograph (should such monograph be published), the DMF,
the specifications set forth in this Agreement, including without limitation,
those set forth on Exhibit B hereto which Exhibit B
shall be supplemented from time to time as additional Drug Substances are added
to this Agreement and as mutually agreed upon by the parties hereto.


 


“Term”
shall have the meaning set forth in Section 3 below.


 


“Territory”
means the United States, its commonwealths and possessions, Canada, EU and any
other countries that the parties mutually agree shall be included in this
Agreement.


 


2.             Purchase
and Side of Drug Substance.


 


(a)           Reddy agrees to sell to Aradigm not
less than fifty percent (50%) of Aradigm’s quarterly requirements for the Drug
Substance in the Territory, and Aradigm agrees to purchase, on a non-exclusive
basis from Reddy, not less than fifty percent (50%) of Aradigm’s quarterly
requirements for the Drug Substance in the Territory during the Term and upon
the terms and conditions set forth herein.


 


(b)           Notwithstanding any other provision
of this Agreement, if Reddy is unable (or anticipates an inability) to
manufacture or deliver any Drug Substance to Aradigm in a particular Territory,
Reddy shall promptly notify Aradigm in writing of the period for which such
inability (or anticipated inability) to so manufacture or deliver is expected.  If Reddy is unable to meet, or does not meet,
on a timely basis (according to Aradigm’s scheduled delivery 


 


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Execution copy 92904


 


dates for ordered Drug
Substance) Aradigm’s forecasted requirements for, or ordered (subject to the
terms of Section 5 below) amounts of the Drug Substance, anywhere in the
Territory, then Aradigm’s obligation to purchase the Drug Substance from Reddy
in accordance with Section 2(a) above shall automatically be
suspended and Aradigm may purchase such additional needed Drug Substance from a
third party for sale in such Territory; provided, that if Reddy has an
inventory of such Drug Substance that it is ready, willing and able to deliver
to Aradigm, Reddy shall use commercially reasonable efforts to supply the
backlog of Drug Substance from such remaining inventory as soon as possible.  If at any time thereafter Reddy demonstrates
to Aradigm’s reasonable satisfaction that Reddy is able to manufacture and
deliver the Drug Substance to Aradigm in amounts sufficient to meet all of
Aradigm’s requirements on a timely basis, then, subject to Aradigm’s
contractual commitments with third parties (which Aradigm shall use
commercially reasonable efforts to limit such contractual commitments to the
quantity of the Drug Substance that Aradigm reasonably determines that Reddy
will be unable to supply to Aradigm), Aradigm’s obligation to purchase the Drug
Substance from Reddy as stated in Section 2(a) above shall resume.  If Reddy’s inability to manufacture or
deliver on a timely basis sufficient amounts of the Drug Substance to cover all
of Aradigm’s orders under this Section 2 continues for a period of [***]
or more, or is repeated more that [***] ([***]) times in any [***] ([***])
month period, Aradigm may terminate this Agreement by notice in writing to
Reddy.


 


3.             Term.


 


(a)           Subject to Section 3(b) and
Section 15 hereof, the term of this Agreement (the “Term”) shall
commence on the signing date hereof, and shall for a period of ten (10) years
following the Commercial Sale Date of a Drug Product in any country in the
Territory.


 


(b)           The Term may be extended by Aradigm
for successive one (1) year periods by written notice from Aradigm to Reddy
provided at least six (6) months before the expiration of the then current
term, unless Reddy gives written notice to Aradigm within thirty (30) days
after receipt of such Aradigm extension notice that Reddy does not wish to
extend the term of the Agreement.


 


4.             Prices and Payments.


 


(a)           The price for the Drug Substance
supplied by Reddy to Aradigm pursuant to this Agreement for commercial purposes
shall be as set forth in Schedule 2 annexed hereto, which Schedule may
be amended or supplemented by written agreement of the parties from time to
time.  In addition, Aradigm shall pay for
all costs related to shipping, insurance, bacterial endotoxin, microbial, and
particulate matter tests and any additional tests Reddy may have to conduct to
provide injectable grade Drug Substance to Aradigm.


 


(b)           Aradigm shall pay Reddy for the Drug
Substance delivered hereunder within [***] ([***]) days of the date of Reddy’s
invoice for the Drug Substance.  All
payments shall be made by Aradigm to Reddy in United States dollars for the
Drug Substance delivered to Aradigm.


 


***Certain information on this page has been omitted and filed
separately with the Commission. 
Confidential treatment has been requested with respect to the omitted
portions.


 


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Execution copy 92904


 


5.             Quantity.  During the Term, Reddy shall make available
to Aradigm for purchase hereunder such quantities of the Drug Substance as
Aradigm may from time to time order; provided, however, that in the event that
Aradigm places orders at any time for more than [***]percent ([***]%) of the
requirements stated in the forecast to be delivered by Aradigm to Reddy
pursuant to Section 6 below, Reddy shall only be obligated to use
commercially reasonable efforts to fill the amounts of such orders in excess of
such one hundred fifty percent (150%) amount.


 


6.             Forecasts.


 


(a)           During the Term of this Agreement,
Aradigm shall provide Reddy with a [***] ([***]) month written forecast, which
shall be updated no less frequently than every [***] on a rolling [***] basis,
of Aradigm’s monthly anticipated requirements of the Drug Substance over the
next [***] ([***]) months from the date of the forecast.  The first [***] ([***]) months of each such
forecast shall represent a binding commitment to submit during such [***] ([***])
month period firm orders for the Drug Substance in the amounts set forth in
such forecast, and the quantities indicated for the remaining [***] ([***])
months of such forecast shall be made to assist Reddy in planning its
production and Aradigm in planning its sales, and shall be non-binding.  The minimum order quantity in a single
purchase order for any quarterly forecast period shall be [***] ([***])
kilograms.


 


(b)           Reddy shall deliver the Drug
Substance to Aradigm within [***] ([***]) days after receipt of Aradigm’s firm
purchase order unless Aradigm specifies a later date in such order.  Reddy shall use commercially reasonable
efforts to deliver Drug Substance in a shorter time if reasonably requested by
Aradigm.  The failure to deliver the Drug
Substance in a shorter time period shall not constitute a default under this
Agreement.


 


7.             Shipments.  The Drug Substance shall be shipped FOB,
Hyderabad, India (INCOTERMS 2000) and the supply price shall not be inclusive
of the costs of shipment and insurance.


 


8.             Representations and Warranties.  Each of Reddy and Aradigm represents and warrants
to the other as follows:


 


(a)           It has full corporate power and
authority to enter into this Agreement and consummate the transactions
contemplated hereby.


 


(b)           It has or will have such permits,
licenses and authorizations of governmental or regulatory authorities as are
necessary to own its respective properties, conduct its business and consummate
the transactions contemplated hereby.


 


9.             Quality; Manufacturing Practices.


 


(a)           Reddy hereby represents and warrants
that all Drag Substance supplied by Reddy to Aradigm shall meet the
Specifications and shall be free from adulteration or defects.  Any disputes between the parties regarding
the failure of the Drug Substance supplied by Reddy


 


***Certain information on this page has been omitted and filed
separately with the Commission. 
Confidential treatment has been requested with respect to the omitted
portions.


 


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Execution copy 92904


 


to Aradigm pursuant to this Agreement to meet
the Specifications shall be submitted to a mutually agreed upon independent
laboratory.  Aradigm shall initially bear
the costs of such independent laboratory. 
The findings of the independent laboratory shall be binding upon both
parties.  The party against whose favor
the independent laboratory resolves the dispute shall be responsible for the
costs of the independent laboratory, and if such party is Reddy, Reddy shall
promptly reimburse Aradigm for any costs advanced to the independent
laboratory.


 


(b)           Reddy shall manufacture the Drug
Substance in compliance with cGMP standards as the same are or from time to
time shall be established by applicable statute and regulations of the FDA or
its foreign equivalent (as applicable), and in accordance with this Agreement
and a mutually agreed upon Quality Agreement.


 


(c)           Reddy shall retain such samples of
the Drug Substance as are required and specified by Reddy’s standard operating
procedures to comply with the general retention requirements as set forth in
cGMP regulations, and shall perform stability testing as described and required
to conform with the Drug Substance’s stability protocol.


 


(d)           In the event of a product recall that
is determined to be caused by the deficiency or non-compliance of the Drug
Substance as API (e.g., failure to comply with the Specifications or cGMP or
existence of a latent defect), Reddy shall promptly replace the same amount of
the Drug Substance as being recalled free of any charge, including without
limitation the cost of transport.


 


10.          Regulatory Approvals.


 


(a)           Reddy shall maintain compliance with
the FDA or its foreign equivalents, as applicable, with respect to the Drug
Substance that it provides to Aradigm.


 


(b)           Reddy shall provide Aradigm with the
open sections of the DMF and basic technical files, working standards, impurity
standards, if available, and other information pertaining to the Drug Substance
that are necessary or useful for Aradigm to file an ANDA for any Thug Product
in the United States or its foreign equivalents.


 


(c)           Reddy shall obtain and maintain all
necessary or relevant licenses, approvals and certifications and other
authorizations necessary to maintain and operate its Drug Substance production
site.


 


(d)           Reddy shall successfully pass an FDA
Pre-approval Inspection (PM) if such PAI is required for approval of Aradigm’s
ANDA for delivery of the Drug Substance via Aradigm’s drug delivery system.


 


(e)           Reddy shall provide Aradigm with
prompt notice of its receipt of any FDA notices (including 483 notices) of
violation or deficiency letters relating solely to Aradigm’s application and
file with respect to the Drug Substance, or equivalent foreign notices or
letters.  Reddy shall deliver to Aradigm,
as soon as commercially reasonable following receipt, copies of all reports,
data, information and correspondence from the FDA, any state or local
authorities, or their foreign equivalents with respect to Aradigm’s application
and file as it relates to the Drug Substance. 
Reddy shall deliver to Aradigm copies of any written response,
information, data or


 


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Execution copy 92904


 


correspondence delivered by Reddy to the FDA,
any state or local authorities, or their foreign equivalents with respect to
the Drug Substance and Aradigm’s application and file associated therewith.  Reddy shall use commercially reasonable
efforts to cooperate with Aradigm in connection with any response required by
Aradigm to any inquiry from the FDA, any state or local authorities, or their
foreign equivalents with respect to the Drug Substance and Aradigm’s
application and file associated therewith.


 


11.          Audit Right.


 


(a)           Reddy shall have the right at any
time and from time to time to nominate a firm of independent certified public
accountants to have access to the applicable records of Aradigm during
reasonable business hours solely for the purpose of verifying, at the auditing
party’s expense, that Aradigm has purchased, during the applicable period
subject of the audit, not less than fifty percent (50%) of Aradigm’s
requirements for the Drug Substance as set forth in Section 2 above.  Such audit shall not cover any time periods
more than [***] ([***]) years prior to the date of the audit, and may not be
conducted more than [***] per year.  In
the event that the auditing accountant finds that Aradigm has been purchasing
less than fifty percent (50%) of Aradigm’s requirements for the Drug Substance
as set forth in Section 2 above, Aradigm shall (a) pay the cost of
that audit (within [***] ([***]) days of its receipt of notice of the results
of the audit), (b) be subject (if so elected by Reddy) to [***] audits for
the following [***] ([***]) years, and (c) [***] pay to Reddy the
difference between the amount of its actual purchases and the aggregate
purchase price for the amount of the Drug Substance representing such fifty
percent (50%) of its requirements, together with interest at [***] percent ([***]%)
per annum on such difference for the period of time that Aradigm did not
purchase fifty percent (50%) of its requirements.


 


(b)           Reddy shall keep complete records for
its manufacture of Drug Substance that is provided to Aradigm for at least [***]
([***]) years from the date such records are generated.  Aradigm shall have the right to audit such
records at least [***] a year by giving Reddy [***] ([***]) days prior written
notice.  Reddy shall permit any
regulatory authority to inspect the Production site as permitted or required by
applicable laws and regulation.


 


12.          Review of Process.  Aradigm shall have the right, upon written
notice to Reddy and following execution and delivery of a Common Interest,
Non-Waiver of Privilege and Confidentiality Agreement, to review, from time to
time, through independent United States patent counsel for each party, Reddy’s
process for the manufacture of the bulk form of the Drug Substance to ensure
that such process does not infringe the valid rights of any third parties.


 


13.          Confidentiality.


 


(a)           Any information pertaining to the
Drug Substance that has been or will be communicated by Reddy to Aradigm and/or
the Designated Manufacturer under this Agreement and identified as “confidential,”
and any information communicated by Aradigm and/or the Designated Manufacturer
to Reddy under this Agreement and identified as “confidential,” which may
include without limitation, trade secrets, business methods and plans, pricing,
cost,


 


***Certain information on this page has been omitted and filed
separately with the Commission. 
Confidential treatment has been requested with respect to the omitted
portions.


 


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Execution copy 92904


 


manufacturing and customer information, shall
be referred to herein as the “Confidential Information” of the disclosing party.  All such Confidential Information received by
Aradigm, the Designated Manufacturer or Reddy, respectively, shall be treated
by the receiving party, and its respective affiliates, officers, directors,
employees, agents and representatives, as Confidential Information and shall
not be disclosed to any third parties or used for any purpose other than as
contemplated under this Agreement; provided, however, that
particular Confidential Information shall not be subject to the restrictions
and prohibitions set forth in this section to the extent that the receiving
party can demonstrate that such information:


 


(i)            is available to the public in public
literature or otherwise, or after disclosure by one party to the other becomes
public knowledge through no default of the party receiving such confidential
information;


 


(ii)           was known to the receiving party
prior to the receipt of such Confidential Information by such party, whether
received before or after the date of this Agreement;


 


(iii)          is obtained by the receiving party
from a source other than the party supplying such Confidential Information; or


 


(iv)          is developed independently by the
receiving party without reference to any Confidential Information disclosed to
it.


 


Notwithstanding the foregoing, a party may
disclose the other party’s Confidential Information to the extent such
disclosure is required pursuant to any order of a court having jurisdiction or
any lawful action of a governmental or regulatory agency; provided that such
party will promptly give notice to the disclosing party and make a reasonable
effort to obtain, or cooperate in the disclosing party’s efforts to obtain, a
protective order or confidential treatment covering such Confidential
Information and limiting its disclosure and use solely for the purposes for
which the order, law or regulation require disclosure.


 


(b)           Each party shall take all precautions
as it normally takes with its own confidential information to prevent any
improper disclosure of such confidential information to any independent third
party; provided, however, that such confidential information may be disclosed
within the limits required to obtain any authorization from the FDA or any
other United States or other applicable governmental or regulatory agency or,
with the prior written consent of the other party, which shall not be
unreasonably withheld, as may otherwise be required in connection with the
purpose of this Agreement.


 


(c)           Each party acknowledges that in the
event of a breach of the provisions of this Section by such party,
remedies that exist at law may be inadequate for the non-breaching, party and
agrees that, in addition to any remedy available at law, the non-breaching
party shall be entitled to seek injunctive relief to prevent the breach or
threatened breach of any of the provisions of this Agreement.


 


(d)           Aradigm shall require any Designated
Manufacturer who shall receive Confidential Information from Reddy to agree to
be bound by the provisions of this Section.


 


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Execution copy 92904


 


(e)           This Section 13 and the
obligations contained herein shall survive expiration or termination of this
Agreement for any reason whatsoever for a period of three (3) years.


 


14.          Indemnification.


 


(a)           Reddy shall defend, indemnify and
hold Aradigm, the Designated Manufacturer and their respective Affiliates,
officers, directors, employees, agents, successors and assigns harmless from
and against any and all loss, liability, damage, cost or expense (including,
without limitation, reasonable attorneys’ fees) (collectively, “Losses”)
arising out of any third party claim, allegation, action, suit, or proceeding
directly or indirectly arising from or related to any breach of Reddy’s
representations, warranties or covenants under the Agreement; provided,
however, that Reddy shall not be required to indemnify Aradigm with respect to
any such Losses directly or indirectly arising from or related to (i) any
claim by any third party that the manufacture and sale of the Drug Substance or
Drug Product infringes any patent held by such third party, (ii) Aradigm’s
breach of its obligations, representations, warranties or covenants hereunder, (iii) from
information supplied by Aradigm or contained in regulatory filings by Aradigm,
or (iv) Aradigm’s negligence.


 


(b)           Aradigm shall defend, indemnify and
hold Reddy harmless from and against any Losses arising out of any third party
claim, allegation, action, suit, or proceeding directly or indirectly arising
from or related to Aradigm’s manufacture, storage, use or sale of any Drug
Product incorporating the Drug Substance manufactured by Reddy; provided that
the foregoing obligation shall not apply with respect to Losses relating to or
any such claim, action, suit, proceeding, loss, liability, damage or expense
that is arising from or related to any breach of Reddy’s obligations,
representations, warranties or covenants under the Agreement or Reddy’s
negligence.


 


(c)           This Section 14 and the
obligations contained herein shall survive expiration or termination of this
Agreement for any reason whatsoever, to the extent such obligations arise
during the Term of this Agreement.


 


15.          Termination.


 


(a)           The Term of this Agreement may be
terminated as to the Drug Substance in a particular country in the Territory
immediately upon written notice of termination given by;


 


(i)            The non-defaulting party in the
event that the other party shall; (A) commit a material breach or default
under this Agreement, which breach or default shall not be remedied within
sixty (60) days after the receipt of written notice thereof by the party in
breach or default;


 


(ii)           Either Reddy or Aradigm if the other
party becomes insolvent, makes or has made an assignment for the benefit of
creditors, is the subject of proceedings in voluntary or involuntary bankruptcy
instituted on behalf of or against such party (except for involuntary
bankruptcies which are dismissed within ninety (90) days), or has a receiver or
trustee appointed for substantially all of its property; or


 


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Execution copy 92904


 


(iii)          The
performing party in the event described in Section 16.


 


(b)           In
the event that Aradigm is negotiating an agreement with a third party to commercialize
such third party’s formulation of Drug Substance, and such agreement would
preclude sourcing of Drug Substance from a party other than such third party,
Aradigm may terminate this Agreement by providing Reddy with sixty (60) days’
advance written notice of such termination and by fulfilling Aradigm’s payment
obligations related to all open purchase orders of Drug Substance that were
placed with Reddy prior to the date that Reddy received such notice of
termination.


 


(c)           Termination
of this Agreement (whether under this Section 15, on expiration of the
Term or otherwise) shall be without prejudice to any rights of either party
against the other that may have accrued up to the effective date of such
termination.


 


16.          Force Majeure.  If any of Reddy, Aradigm and the Designated
Manufacturer shall be prevented by fire, strike, lockouts, war, civil
disturbances, acts of God or other similar events beyond such party’s
reasonable control from performing its respective obligations hereunder, such
party shall not be liable to the other for damages pursuant to this Agreement
for so long as the condition constituting Force Majeure continues and the
nonperforming Party uses reasonable efforts to remove the condition.  The party being able to perform may, at its
sole option, extend the duration of this Agreement by a term equal in length to
the period during which the other party was unable to perform its obligations
hereunder, or waive such obligations.  Notwithstanding
the foregoing, if any Force Majeure continues for more than three (3) consecutive
months, the performing party shall have the option to terminate this Agreement
pursuant to Section 15(a)(iii).


 


17.          Retention of Records.  Whenever applicable under cGMP, all
documentation, records, raw data, and specimens pertaining to this Agreement
will be held by each party for the length of time specified in such party’s
standard operating procedure which meets cGMP guidelines.


 


18.          Insurance.  Aradigm and Reddy each agree to maintain in
force, commencing on the Commercial Sale Date and continuing for a period of [***]
([***]) months following expiration or termination of this Agreement for any
reason, product liability insurance coverage of not less than $[***] per
occurrence and in the aggregate, naming the other party and its Affiliates as
additional insureds.


 


19.          Independent
Contractors. 
Reddy and Aradigm are independent of each other and nothing contained
herein shall be construed to create a joint venture, partnership or similar
relationship.  Neither party is authorized
to, nor shall it, incur any liability whatsoever for which the other may become
directly, indirectly or contingently liable.


 


20.          Dispute
Resolution; Consent to Jurisdiction.  In an effort to resolve informally and
amicably any claim, controversy or dispute (whether such claim, sounds in
contract, tort, or otherwise) arising out of or relating to this Agreement or
the breach thereof (a “Dispute”), each 


 


***Certain information on this page has been omitted and filed separately
with the Commission.  Confidential
treatment has been requested with respect to the omitted portions.


 


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party shall notify the other in writing of a
Dispute hereunder that requires resolution. 
Such notice shall set forth the nature of the Dispute, the amount, if
any, involved and the remedy sought.  Each
party shall designate a representative who shall be empowered to investigate,
discuss and seek to settle the Dispute.  If
the two representatives are unable to settle the Dispute within thirty (30)
days after proper notification, the Dispute shall be submitted to the President
of each party for consideration for an additional thirty (30) days.  If the Dispute remains unresolved after said
sixty (60) day period, either party shall have a right to commence any action,
suit or proceeding with respect to such Dispute in the state or federal courts
located in the State of New York.  Aradigm
and Reddy each irrevocably consent that any legal action or proceeding against
it may be brought in the state or federal courts located in the State of New
York, and Aradigm and Reddy each submit to the personal jurisdiction of any
such courts.  Aradigm and Reddy each
further irrevocably consent to the service of any complaint, summons, notice or
other process by delivery thereof to it by any manner in which notices may be
given pursuant to this Agreement and .Aradigm and Reddy each submit to the
personal jurisdiction of such court.  Aradigm
and Reddy each further irrevocably consent to the service of any complaint,
summons, notice or other process by delivery thereof to it by any manner in
which notices may be given pursuant to this Agreement.


 


21.          Assignment.  This Agreement shall inure to the benefit of,
and shall be binding upon each of, the parties hereto and their respective
successors and assigns.  This Agreement
cannot be assigned in whole or in part by either party without the prior
written consent of the other party, except that a party may, without the prior
written consent of the other party, assign this Agreement, in whole, to an
Affiliate, provided that, Aradigm may not assign, without Reddy’s written
consent, the Agreement to any third party successor in interest acquiring all
or substantially all of the assets of Aradigm, through merger, acquisition or
other transactions.


 


22.          Notices.  Any and all notices given pursuant to this
Agreement shall be in writing, and shall be deemed to have been properly given
when delivered personally or sent by facsimile or air courier with respect,
confirmed by registered air mail, to the appropriate party at the address shown
below, or such other address as shall be specified by the parties hereto by
written notice given in accordance with this section and shall be effective
upon receipt thereof.  Any notice shall
be effective upon receipt, which shall be deemed to occur one (1) business
day after the sending of the facsimile, four (4) business days after the
sending by air courier, and seven (7) calendar days after the delivery of
a confirmation letter to the postal authorities in the country of the party by
which it is sent.


 


	
  If to Aradigm to:

  	
   

  	
  Aradigm Corporation

  
	
   

  	
   

  	
  3929 Point Eden Way

  
	
   

  	
   

  	
  Hayward, CA 94545

  
	
   

  	
   

  	
  Attn:

  	
   

  	
   

  
	
   

  	
   

  	
  Fax:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  If to Reddy to:

  	
   

  	
  Dr. Reddy’s Laboratories, Inc.

  
	
   

  	
   

  	
  200 Somerset Corporate Blvd.

  
	
   

  	
   

  	
  Bridgewater, New Jersey 08807

  
	
   

  	
   

  	
  Attn: Arun Sawhney, President, Global API

  
	
   

  	
   

  	
  Fax: 91-40-23558927

  
						



 


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92904


 


	
  And with a copy to:

  	
   

  	
  Dr. Reddy’s Laboratories, Inc.

  
	
   

  	
   

  	
  200 Somerset Corporate Blvd.

  
	
   

  	
   

  	
  Bridgewater, New Jersey 08807

  
	
   

  	
   

  	
  Attn: General Counsel

  
	
   

  	
   

  	
  Fax: 908-203-4970

  



 


23.          Amendment
and Waiver. 
This Agreement (including the Exhibits and Schedules hereto) may be
amended, modified, superseded or canceled, and any other of the terms or
conditions hereof may be modified, only by a written instrument executed by all
of the parties hereto or, in the case of a waiver, by the party waiving
compliance.  Failure of any party at any
time or times to require performance of any provision hereof shall in no manner
affect the right of such party at a later time to enforce the same, and no
waiver of any nature, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be or considered as a further or continuing
waiver of any other provision of this Agreement.


 


24.          Severability.  In the event that any one or more of the
agreements, Provisions or terms contained herein shall be declared invalid,
illegal or unenforceable in any respect, the validity of the remaining
agreements, provisions of terms contained herein shall in no way be affected,
prejudiced or invalidated thereby.


 


25.          Public
Announcements. 
Reddy and Aradigm agree that neitherwill publicize or disclose the
existence of this Agreement or the subject matter hereof in any way without the
prior written consent of the other party, except as may be required to comply
with the disclosure requirements of applicable laws and regulations.  The parties agree that in the event disclosure
of the existence of this Agreement and/or any of the terms hereof or the
subject matter hereof is required by either party by law or regulation, such
party will seek the consent of the other party to make such disclosure, which
consent shall not be unreasonably withheld or delayed; provided, however, that
any such disclosure shall be limited to the minimum disclosure required.


 


26.          Entire
Agreement.  This
Agreement, together with the Exhibits and Schedules hereto, contains the entire
agreement between the parties hereto and supersedes any agreements between
Reddy and Aradigm with respect to the subject matter hereof.


 


27.          Section Headings.  The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.


 


28.          Counterparts.  This Agreement may be executed in any number
of separate counterparts, each of which shall be deemed to be an original, but
which together shall constitute one and the same instrument.  Facsimile signatures shall be considered
original signatures.


 


29.          Representations,
Warranties, and Limitation of Liability.  Neither Reddy nor Aradigm makes any
indemnity, representation, or warranty, either express or implied, with respect
to the Drug Substance, except for indemnities, representations, and warranties
expressly set forth in this Agreement.  In
no event shall either party be liable to the other party under this Agreement
for punitive, exemplary, consequential, or special damages including, without


 


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92904


 


limitation, damages related to lost good
will, lost customers, or lost profits, beyond those damages expressly provided
herein, including without limitation as provided in Section 13(c).


 


[SIGNATURE PAGE FOLLOWS]


 


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Execution
copy 92904


 


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


 


	
   

  	
  DR. REDDY’S LABORATORIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
   

  
	
   

  	
   

  	
  Name: Viswanatha R. Bonthu

  
	
   

  	
   

  	
  Title: Senior Vice President, Finance and

  
	
   

  	
   

  	
  Information Technology Services

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DR. REDDY’S LABORATORIES LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
   

  
	
   

  	
   

  	
  Name: Arun Sawhney

  
	
   

  	
   

  	
  Title: President, Global API

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARADIGM CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
   

  
	
   

  	
   

  	
  Name: Borba Venkatadri

  
	
   

  	
   

  	
  Title: Sr. V.P. Operations

  



 


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Exhibit A


 


Designated Manufacturer


 


Kingfisher Drive, Covingham, Swindon, Wiltshire, SN3 5BZ


 


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Exhibit B


 


Specifications


 


[***]


 


***Certain information on this page has been omitted and filed
separately with the Commission. 
Confidential treatment has been requested with respect to the omitted
portions.


 


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92904


 


Schedule 1


 


Drug Substance


 


	
  Drug Substances:

  	
   

  	
  To be used to manufacture the following Drug Products:

  
	
   

  	
   

  	
   

  
	
  Sumatriptan Succinate

  	
   

  	
  Intraject sumatriptan (sumatriptan injection, 6mg/.05mL as the
  succinate salt)

  



 


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Schedule 2


 


Price For Drug Substance


 


	
  Drug Substance

  	
   

  	
  Price

  
	
   

  	
   

  	
   

  
	
  Sumatriptan Succinate

  	
   

  	
  $[***] per kilogram plus the costs of [***]

  



 


***Certain information on this page has been omitted and filed
separately with the Commission. 
Confidential treatment has been requested with respect to the omitted
portions.


 


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