exv10w4





Exhibit 10.4



SECURITY AGREEMENT




          THIS SECURITY AGREEMENT, dated as of July 30, 2009 (this “Agreement”), is entered into
by and among ARADIGM CORPORATION, a California corporation (“Debtor”), IGOR GONDA, an
individual (“Gonda”), JEFFERY GRIMES, an individual (“Grimes”), and NANCY PECOTA,
an individual (“Pecota” and, together with each of Gonda and Grimes, each a “Secured
Party” and, collectively, the “Secured Parties”).




          WHEREAS, Gonda currently serves as an executive officer of Debtor and may in the future
become entitled to certain severance-related benefits pursuant to the terms and conditions of (i)
that certain Amended and Restated Change of Control Agreement, dated as of July 30, 2009, between
Debtor and Gonda (as the same may be modified, amended or supplemented from time to time the
“Gonda Change of Control Agreement”) and (ii) the Aradigm Corporation Executive Officer
Severance Benefit Plan maintained by Debtor (as such plan may be modified, amended or supplemented
from time to time, the “Executive Officer Severance Benefit Plan”);




          WHEREAS, Grimes currently serves as an executive officer of Debtor and may in the future
become entitled to certain severance-related benefits pursuant to the terms and conditions of (i)
that certain Amended and Restated Change of Control Agreement, dated as of July 30, 2009, between
Debtor and Grimes (as the same may be modified, amended or supplemented from time to time, the
“Grimes Change of Control Agreement”) and (ii) the Executive Officer Severance Benefit
Plan;




          WHEREAS, Pecota serves as an executive officer of Debtor and may in the future become
entitled to certain severance-related benefits pursuant to the terms and conditions of (i) that
certain Amended and Restated Change of Control Agreement, dated as of July 30, 2009, between
Debtor and Pecota (as the same may be modified, amended or supplemented from time to time, the
“Pecota Change of Control Agreement”) and (ii) the Executive Officer Severance Benefit
Plan; and




          WHEREAS, in consideration of the continued employment of each of Gonda, Grimes and Pecota and
to align further their respective interests with those of the stockholders of Debtor, Debtor
desires to grant a continuing security interest in and to the Collateral (defined below) in order
to secure the prompt and complete payment, observance and performance of Debtor’s obligations to
make severance-related payments pursuant to the terms and conditions of the Gonda Change of Control
Agreement, the Grimes Change of Control Agreement, the Pecota Change of Control Agreement and the
Executive Officer Severance Benefit Plan.




          NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:




          SECTION 1 Definitions; Interpretation.




          (a) As used in this Agreement, the following terms shall have the following meanings:




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          “Affected Secured Party” means (i) with respect to the occurrence of an Event of
Default of the type specified in Section 7(a) hereof, Gonda, (ii) with respect to the
occurrence of an Event of Default of the type specified in Section 7(b) hereof, Grimes and
(iii) with respect to the occurrence of an Event of Default of the type specified in Section
7(c) hereof, Pecota.




          “Code” means the Internal Revenue Code of 1986, as
amended.




          “Collateral” has the meaning set forth in
Section 2 hereof.




          “Controlled Foreign Corporation” means a “controlled foreign corporation” as defined
in the Internal Revenue Code of 1986.




          “Documents” means this Agreement, the Gonda Change of Control Agreement, the Grimes
Change of Control Agreement, the Pecota Change of Control Agreement and the Executive Officer
Severance Benefit Plan.




          “Event of Default” has the meaning set forth in Section 7 hereof, and shall
include each Gonda Event of Default, each Grimes Event of Default and each Pecota Event of
Default.




          “Executive Officer Severance Benefit Plan” has the meaning ascribed to such term in
the Recitals to this Agreement.




          “Future Lender” means any lender or other Person who provides financing to Debtor on
a secured basis from and after the date hereof.




          “Gonda Change of Control Agreement” has the meaning ascribed to such term in the
Recitals to this Agreement.




          “Gonda Event of Default ” has the meaning ascribed to such term in Section 7(a)
hereof.




          “Gonda Secured Obligations” means, collectively, (i) the obligation of Debtor to make
severance-related payments to Gonda, whether absolute or contingent, due or to become due, now
existing or hereafter arising, under the Gonda Change of Control Agreement in accordance with the
terms and provisions thereof and (ii) the obligation of Debtor to make severance-related payments
to Gonda, whether absolute or contingent, due or to become due, now existing or hereafter arising,
under the Executive Officer Severance Benefit Plan in accordance with the terms and provisions
thereof; provided, however, to the extent that any severance payment (or portion
thereof) payable to Gonda pursuant to the Gonda Change of Control Agreement or the Executive
Officer Severance Benefit Plan is not exempt from Section 409A of the Code, such severance payment
(or portion thereof) shall not constitute a Gonda Secured Obligation hereunder.




          “Grimes Change of Control Agreement” has the meaning ascribed to such term in the
Recitals to this Agreement.




          “Grimes Event of Default ” has the meaning ascribed to such term in Section 7(b)
hereof.




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          “Grimes Secured Obligations” means, collectively, (i) the obligation of Debtor to
make severance-related payments to Grimes, whether absolute or contingent, due or to become due,
now existing or hereafter arising, under the Grimes Change of Control Agreement in accordance with
the terms and provisions thereof and (ii) the obligation of Debtor to make severance-related
payments to Grimes, whether absolute or contingent, due or to become due, now existing or
hereafter arising, under the Executive Officer Severance Benefit Plan in accordance with the terms
and provisions thereof; provided, however, to the extent that any severance
payment (or portion thereof) payable to Grimes pursuant to the Grimes Change of Control Agreement
or the Executive Officer Severance Benefit Plan is not exempt from Section 409A of the Code, such
severance payment (or portion thereof) shall not constitute a Grimes Secured Obligation hereunder.





          “Incurred Costs” has the meaning specified in Section 8(b) hereof.




          “Lien” means any mortgage, deed of trust, pledge, security interest, assignment,
deposit arrangement, charge or encumbrance, lien, or other type of preferential arrangement.




          “Pecota Change of Control Agreement” has the meaning ascribed to such term in the
Recitals to this Agreement.




          “Pecota Event of Default ” has the meaning ascribed to such term in Section 7(c)
hereof.




          “Pecota Secured Obligations” means, collectively, (i) the obligation of Debtor to make
severance-related payments to Pecota, whether absolute or contingent, due or to become due, now
existing or hereafter arising, under the Pecota Change of Control Agreement in accordance with the
terms and provisions thereof and (ii) the obligation of Debtor to make severance-related payments
to Pecota, whether absolute or contingent, due or to become due, now existing or hereafter arising,
under the Executive Officer Severance Benefit Plan in accordance with the terms and provisions
thereof; provided, however, to the extent that any severance payment (or portion
thereof) payable to Pecota pursuant to the Pecota Change of Control Agreement or the Executive
Officer Severance Benefit Plan is not exempt from Section 409A of the Code, such severance payment
(or portion thereof) shall not constitute a Pecota Secured Obligation hereunder.




          “Person” means an individual, corporation, partnership, joint venture, trust,
unincorporated organization, governmental agency or authority, or any other entity of whatever
nature.




          “Pro Rata Share” means, with respect to any Affected Secured Party at any time, the
quotient (expressed as a percentage) obtained by dividing (i) the aggregate amount of all Secured
Obligations owed to such Affected Secured Party at such time by (ii) the aggregate amount of all
Secured Obligations owed to all Affected Secured Parties at such time.




          “Releasing Secured Party” has the meaning specified in Section 18
hereof.




          “Secured Obligations” means, collectively, the Gonda Secured Obligations, the Grimes
Secured Obligations and the Pecota Secured Obligations.




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          “UCC” means the Uniform Commercial Code as the same may, from time to time, be in
effect in the State of California.




          (b) Where applicable and except as otherwise defined herein, terms used in this Agreement
shall have the meanings assigned to them in the UCC.




          (c) In this Agreement, (i) the meaning of defined terms shall be equally applicable to both the
singular and plural forms of the terms defined; and (ii) the captions and headings are for
convenience of reference only and shall not affect the construction of this Agreement.




          SECTION 2 Security Interest. As security for the payment and performance of the
Secured Obligations, Debtor hereby grants to each Secured Party a security interest in all of
Debtor’s right, title and interest in, to and under all of its personal property, wherever located
and whether now existing or owned or hereafter acquired or arising, including all accounts,
chattel paper, commercial tort claims, deposit accounts, documents, equipment (including all
fixtures), general intangibles, instruments, inventory, investment property, letter-of-credit
rights, other goods, money and all products, proceeds and supporting obligations of any and all of
the foregoing (collectively, the “Collateral”). This Agreement shall create a continuing
security interest in the Collateral which shall remain in effect until terminated in accordance
with Section 18 hereof. Anything herein to the contrary notwithstanding, in no event shall
the Collateral include, and Debtor shall not be deemed to have granted a security interest in, any
of Debtor’s right, title or interest in any of the outstanding voting capital stock or other
ownership interests of a Controlled Foreign Corporation (as defined below) in excess of 65% of the
voting power of all classes of capital stock or other ownership interests of such Controlled
Foreign Corporation entitled to vote.




          SECTION 3 Financing Statements and other Action. Debtor hereby authorizes each Secured
Party to file at any time and from time to time any financing statements describing the Collateral,
and Debtor shall execute and deliver to each Secured Party, and Debtor hereby authorizes each
Secured Party to file (with or without Debtor’s signature), at any time and from time to time, all
amendments to financing statements, assignments, continuation financing statements, termination
statements, account control agreements, and other documents and instruments, in form reasonably
satisfactory to such Secured Party, as such Secured Party may reasonably request, to perfect and
continue perfected, maintain the priority of or provide notice of the security interest of such
Secured Party in the Collateral and to accomplish the purposes of this Agreement. Without limiting
the generality of the foregoing, Debtor ratifies and authorizes the filing by each Secured Party of
any financing statements filed prior to the date hereof.




          SECTION 4 Representations and Warranties. Debtor represents and warrants to each
Secured Party that:




          (a) Debtor is duly organized, validly existing and in good standing under the law of the
jurisdiction of its organization and has all requisite power and authority to execute, deliver and
perform its obligations under this Agreement.




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          (b) The execution, delivery and performance by Debtor of this Agreement have been duly
authorized by all necessary action of Debtor, and this Agreement constitutes the legal, valid and
binding obligation of Debtor, enforceable against Debtor in accordance with its terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization,
moratorium or similar law relating to or affecting creditors’ rights generally.




          (c) No authorization, consent, approval, license, exemption of, or filing or registration
with, any governmental authority or agency, or approval or consent of any other Person, is required
for the due execution, delivery or performance by Debtor of this Agreement, except for any filings
necessary to perfect any Liens on any Collateral.




          (d) Debtor’s chief executive office and principal place of business (as of the date of this
Agreement) is located at the address set forth in Schedule 1; Debtor’s jurisdiction of
organization and organizational identification number are set forth in Schedule 1; Debtor’s
exact legal name is as set forth in the first paragraph of this Agreement; and all other locations
where Debtor conducts business or Collateral is kept (as of the date of this Agreement) are set
forth in Schedule 1.




          (e) Debtor has rights in or the power to transfer the Collateral and Debtor is the sole and
complete owner of the Collateral.




          SECTION 5 Covenants. So long as any of the Secured Obligations remain unsatisfied,
Debtor agrees that:




          (a) Debtor shall appear in and defend any action, suit or proceeding which may affect to a
material extent any applicable Secured Party’s right or interest in, the Collateral.




          (b) Debtor shall give prompt written notice to each Secured Party (and in any event not later
than 30 days following any change described below in this subsection) of: (i) any change in the
location of Debtor’s chief executive office or principal place of business; (ii) any change in the
locations set forth in Schedule 1; (iii) any change in its name; (iv) any changes in its
identity or structure in any manner which might make any financing statement filed hereunder
incorrect or misleading; (v) any change in its registration as an organization (or any new such
registration); or (vi) any change in its jurisdiction of organization.




          (c) Debtor shall pay and discharge all taxes, fees, assessments and
governmental charges or levies imposed upon it with respect to the Collateral prior to the date on
which penalties attach thereto, except to the extent such taxes, fees, assessments or governmental
charges or levies are being contested in good faith by appropriate proceedings.




          SECTION 6 Rights of Secured Party; Authorization; Appointment. Each Secured Party
shall have the right to, in the name of Debtor, or in the name of such Secured Party or otherwise,
upon notice to but without the requirement of assent by Debtor, and Debtor hereby constitutes and
appoints such Secured Party (and any of such Secured Party’s agents designated by such Secured
Party) as Debtor’s true and lawful attorney-in-fact, with full power and authority to sign and file
any of the financing statements and other documents and instruments which must be executed or filed
to perfect or continue perfected, maintain the




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priority of or provide notice of such Secured Party’s security interest in the Collateral, execute
any and all such other documents and instruments, and do any and all acts and things for and on
behalf of Debtor, which such Secured Party may deem reasonably necessary or advisable to maintain,
protect, realize upon and preserve the Collateral and such Secured Party’s security interest
therein and to accomplish the purposes of this Agreement. The foregoing power of attorney is
coupled with an interest and irrevocable so long as the Secured Obligations have not been paid and
performed in full. Debtor hereby ratifies, to the extent permitted by law, all that any Secured
Party shall lawfully and in good faith do or cause to be done by virtue of and in compliance with
this Section 6.




          SECTION 7 Events of Default. Any of the following events which shall occur
and be continuing shall constitute an “Event of Default”:




          (a) Debtor shall fail to satisfy any of the Gonda Secured Obligations and such failure shall
continue uncured for 30 days after the date on which such Gonda Secured Obligation is to be paid or
performed by Debtor (a “Gonda Event of Default”); or




          (b) Debtor shall fail to satisfy any of the Grimes Secured Obligations and such failure shall
continue uncured for 30 days after the date on which such Grimes Secured Obligation is to be paid
or performed by Debtor (a “Grimes Event of Default”); or




          (c) Debtor shall fail to satisfy any of the Pecota Secured Obligations and such failure shall
continue uncured for 30 days after the date on which such Pecota Secured Obligation is to be paid
or performed by Debtor (a “P Event of Default”).




          SECTION 8 Remedies.




          (a) Upon the occurrence and during the continuance of one or more Events of Default, each
Affected Secured Party shall have, in addition to all other rights and remedies granted to it in
this Agreement or any other Document, all rights and remedies of a secured party under the UCC and
other applicable laws.




          (b) The cash proceeds actually received by any Affected Secured Party from the sale or other
disposition or collection of Collateral undertaken as a result of the occurrence of an Event of
Default, the application of which is not otherwise provided for herein, shall be applied (i)
first, to the payment of the reasonable costs and expenses of such Affected Secured Party
incurred in connection with such sale or other disposition or collection of Collateral
(“Incurred Costs”) and (ii) second, to the payment of the Secured Obligations then
owing to such Affected Secured Party; provided that where such cash proceeds are received
by an Affected Secured Party during the existence of more than one Event of Default, such proceeds
shall be distributed among each Affected Secured Party then extant for application (y)
first, to the Incurred Costs of such Affected Secured Parties in accordance with their
respective Pro Rata Shares and (z) second, to the payment of the Secured Obligations then
owing to such Affected Secured Parties in accordance with their respective Pro Rata Shares. Any
surplus of such proceeds which exists after the payment and performance in full of the Incurred
Costs and Secured Obligations owing to such Affected Secured Party or Affected Secured Parties, as
the case may be, shall be promptly paid over to Debtor or otherwise disposed of in accordance with




6









 







the UCC or other applicable law. Without affecting the generality of the foregoing, Debtor shall
remain liable to any applicable Affected Secured Party for any deficiency which exists after any
such sale or other disposition or collection of Collateral.




          SECTION 9 Subordination. Each Secured Party hereby agrees that the Lien and security
interest in favor of such Secured Party created hereby shall be subject, subordinate and junior in
all respects and at all times to any Liens and security interests granted by Debtor after the date
hereof in favor of any Future Lender, regardless of the time or order of attachment or perfection
of any such Liens and security interests, the time or order of the filing of financing statements
by any such Future Lender in connection therewith or any other circumstances whatsoever. Each
Secured Party further covenants and agrees that it will promptly execute and deliver to or for the
benefit of Debtor or any such Future Lender any subordination agreements or other agreements,
documents or instruments reasonably requested by Debtor or such Future Lender for the purpose of
effecting the subordination of the Lien and security interest of the Secured Parties granted by
Debtor hereunder.




          SECTION 10 Relationship Among Secured Parties.




          (a) The provisions of this Section 10 are solely for the benefit of the Secured
Parties, and Debtor shall have no rights as a third party beneficiary with respect to any of the
provisions contained in this Section 10.




          (b) Notwithstanding any provision to the contrary contained elsewhere in this Agreement, no
Secured Party shall have any duties or responsibilities, except those expressly set forth herein,
nor shall any Secured Party have or be deemed to have any fiduciary relationship with any other
Secured Party. Except as expressly otherwise provided in this Agreement, each Secured Party shall
have and may use its sole discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions which such Secured Party is
expressly entitled to take or assert under this Agreement.




          (c) Gonda shall promptly notify the other Secured Parties of the occurrence of a Gonda Event
of Default, Grimes shall promptly notify the other Secured Parties of the occurrence of a Grimes
Event of Default and Pecota shall promptly notify the other Secured Parties of the occurrence of a
Pecota Event of Default.




          (d) Each of the Secured Parties covenants and agrees that during the existence of an Event of
Default, (i) any Affected Secured Party may, upon 5 days prior notice delivered each other Secured
Party, proceed to exercise remedies in accordance with Section 8 hereof without the consent
of any other Secured Party, subject to the Collateral proceeds sharing provisions set forth in
Section 8(b) hereof, and (ii) no such other Secured Party not then constituting an Affected
Secured Party shall take any action to hinder or delay such Affected Secured Party in connection
with the exercise by such Affected Secured Party of remedies as contemplated in the foregoing
clause (i).




          (e) Subject to Section 18 hereof, no Secured Party (whether or not any such Secured
Party then constitutes an Affected Secured Party) shall agree to release any Collateral except with
the prior written consent of the other Secured Parties.






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          (f) Each Secured Party acknowledges that the other Secured Parties have not made any
representation or warranty to it, and that no act by any Secured Party hereinafter taken,
including any review of the affairs of Debtor, shall be deemed to constitute any representation or
warranty by such Secured Party to any other Secured Party. Each Secured Party also represents that
it will, independently and without reliance upon the other Secured Parties and based on such
documents and information as it shall deem appropriate at the time, continue to make its own
decisions in taking or not taking action under this Agreement and the other Documents, and to make
such investigations as it deems necessary to inform itself as to the business, prospects,
operations, property, financial and other condition and creditworthiness of Debtor.




          SECTION 11 Notices. All notices or other communications hereunder shall be in writing
(including by facsimile transmission or by email) and mailed (by certified or registered mail),
sent or delivered to the respective parties hereto at or to their respective addresses, facsimile
numbers or email addresses set forth below their names on the signature pages hereof, or at or to
such other address, facsimile number or email address as shall be designated by any party in a
written notice to the other parties hereto. All such notices and communications shall be effective
(i) if delivered by hand, sent by certified or registered mail or sent by an overnight courier
service, when received; and (ii) if sent by facsimile transmission or electronic mail, when sent.




          SECTION 12 No Waiver; Cumulative Remedies. No failure on the part of any Secured
Party to exercise, and no delay in exercising, any right, remedy, power or privilege hereunder
shall operate as a waiver thereof with respect to such Secured Party, nor shall any single or
partial exercise of any such right, remedy, power or privilege by such Secured Party preclude any
other or further exercise thereof or the exercise of any other right, remedy, power or privilege
by such Secured Party. The rights and remedies under this Agreement are cumulative and not
exclusive of any rights, remedies, powers and privileges that may otherwise be available to any
Secured Party.




          SECTION 13 Binding Effect. This Agreement shall be binding upon, inure to the benefit
of and be enforceable by Debtor, each Secured Party and their respective successors and assigns.




          SECTION 14 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the law of the State of California, except as required by mandatory provisions of
law and to the extent the validity or perfection of the security interests hereunder, or the
remedies hereunder, in respect of any Collateral are governed by the law of a jurisdiction other
than California.




          SECTION 15 Entire Agreement; Amendment. This Agreement, together with the Documents,
contains the entire agreement of the parties with respect to the subject matter hereof and shall
not be amended nor shall any waiver of any term or provision hereof be granted, except by the
written agreement of Debtor and each Secured Party whose interests are affected by any such
amendment or waiver, as applicable; provided, however, that a Secured Party may
terminate the Lien and security interest created hereunder in favor of such Secured Party pursuant
to Section 18(c) hereof.




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          SECTION 16 Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under all applicable laws and regulations.
If, however, any provision of this Agreement shall be prohibited by or invalid under any such law
or regulation in any jurisdiction, it shall, as to such jurisdiction, be deemed modified to
conform to the minimum requirements of such law or regulation, or, if for any reason it is not
deemed so modified, it shall be ineffective and invalid only to the extent of such prohibition or
invalidity without affecting the remaining provisions of this Agreement, or the validity or
effectiveness of such provision in any other jurisdiction.




          SECTION 17 Counterparts. This Agreement may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute but one and the same
agreement.




          SECTION 18 Termination. A Secured Party shall no longer be a party to this Agreement
and the Lien and security interest created under this Agreement in favor of such Secured Party
shall terminate (and such Secured Party (a “Releasing Secured Party”) shall promptly
execute and deliver to Debtor such documents and instruments reasonably requested by Debtor as
shall be necessary to evidence the termination of such Lien and security interest) upon the earlier
of: (a) the payment and performance in full of all Secured Obligations owing to such Secured Party,
(b) all Secured Obligations owing to such Releasing Secured Party having ceased to exist pursuant
to the terms of the Documents to which such Releasing Secured Party is a party and (c) such
Releasing Secured Party’s delivery of written notice to Debtor that such Releasing Secured Party
desires to terminate the Lien and security interest created hereunder in favor of such Releasing
Secured Party; provided, however, that, in the case of clauses (a), (b) or (c)
above, the Lien and security interest created hereunder in favor of any other Secured Party shall
not be affected by any termination of the Lien and security interest in favor of such Releasing
Secured Party.




[Remainder of page intentionally left blank]




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



	 	 	 	 	 	 	 
	 	 	DEBTOR:	 	 
	 
	 	 	 	 	 	 
	 	 	ARADIGM CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Virgil Thompson
 

Virgil Thompson
	 	 
	 

	 	Title:
	 	Chairman	 	 
	 
	 	 	 	 	 	 
	 	 	Aradigm Corporation	 	 
	 	 	3929 Point Eden Way	 	 
	 	 	Hayward, CA 94545	 	 
	 

	 	Attn:
	 	General Counsel	 	 
	 

	 	Fax:
	 	(510) 265-5035	 	 
	 

	 	email:
	 	grimesj@aradigm.com	 	 






Signature Page 1 to Security Agreement




 









 








	 	 	 	 	 	 	 
	 	 	GONDA:	 	 
	 
	 	 	 	 	 	 
	 	 	IGOR GONDA	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Igor Gonda
 

Igor Gonda
	 	 
	 

	 	Title:
	 	CEO & President	 	 
	 
	 	 	 	 	 	 
	 	 	Igor Gonda	 	 
	 	 	c/o Aradigm Corporation	 	 
	 	 	3929 Point Eden Way	 	 
	 	 	Hayward, CA 94545	 	 
	 

	 	Tel:
	 	(510) 265-8835	 	 
	 

	 	Fax:
	 	(510) 265-4035	 	 
	 

	 	Email:
	 	gondai@aradigm.com	 	 






Signature Page 2 to Security Agreement




 









 








	 	 	 	 	 	 	 
	 	 	GRIMES:	 	 
	 
	 	 	 	 	 	 
	 	 	JEFFERY GRIMES	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ D. Jeffery Grimes
 

	 	 
	 

	 	Name:
	 	Jeffery Grimes	 	 
	 

	 	Title:
	 	VP, Legal Affairs, General Counsel & Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	Jeffrey Grimes	 	 
	 	 	c/o Aradigm Corporation	 	 
	 	 	3929 Point Eden Way	 	 
	 	 	Hayward, CA 94545	 	 
	 

	 	Tel:
	 	(510) 265-8835	 	 
	 

	 	Fax:
	 	(510) 265-5035	 	 
	 

	 	Email:
	 	grimesj@aradigm.com	 	 






Signature Page 3 to Security Agreement




 









 











	 	 	 	 	 	 	 
	 	 	PECOTA:	 	 
	 
	 	 	 	 	 	 
	 	 	NANCY PECOTA	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Nancy E. Pecota
 

Nancy E. Pecota
	 	 
	 

	 	Title:
	 	Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	Nancy Pecota	 	 
	 	 	c/o Aradigm Corporation	 	 
	 	 	3929 Point Eden Way	 	 
	 	 	Hayward, CA 94545	 	 
	 

	 	Tel:
	 	(510) 265-8835	 	 
	 

	 	Fax:
	 	(510) 265-5077	 	 
	 

	 	Email:
	 	pecotan@aradigm.com	 	 






Signature Page 4 to Security Agreement




 









 








SCHEDULE 1

to the Security Agreement





	1.	 	Jurisdiction of Organization and Organizational Identification Number
	 
	 	 	Jurisdiction of Organization:         California
	 
	 	 	Organizational Identification No: C1517229
	 
	2.	 	Chief Executive Office and Principal Place of Business
	 
		 	3929 Point Eden Way 
Hayward,
CA 94545
	 
	3.	 	Other locations where Debtor conducts business or Collateral is kept
	 
	 	 	[                    ]