##### 



Exhibit 10.26

Certain confidential
information in this document, marked by brackets, has been omitted
and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

AMENDED AND RESTATED

LICENSE AGREEMENT


dated as of

January 26, 2005

between

ARADIGM CORPORATION

and

NOVO NORDISK A/S







---



##### 





TABLE OF CONTENTS

|                                      |  |                                                                                |  |      |    | 
|------------------------------------- |  | ------------------------------------------------------------------------------ |  | ---- | -- | 
|                                      |  |                                                                                |  | Page
|                                      |  |                                                                                |  |     
|ARTICLE 1                            
|DEFINITIONS                          
|SECTION 1.01.                         |  | Definitions                                                                    |  |      | 1  | 
|SECTION 1.02.                         |  | Other Defined
    Terms                                                        |  |      | 6  | 
|SECTION 1.03.                         |  | Other Definitional and
    Interpretative Provisions                           |  |      | 6  | 
|                                     
|ARTICLE 2                            
|RIGHTS AND OBLIGATIONS OF THE PARTIES
|SECTION 2.01.                         |  | Development
    Program                                                        |  |      | 6  | 
|SECTION 2.02.                         |  | Review
    Committee                                                           |  |      | 7  | 
|SECTION 2.03.                         |  | Obligations Of The
    Parties In Respect Of The Review Committee              |  |      | 7  | 
|SECTION 2.04.                         |  | Responsibilities Of The
    Review Committee                                   |  |      | 8  | 
|SECTION 2.05.                         |  | Diligent
    Efforts                                                           |  |      | 8  | 
|SECTION 2.06.                         |  | Use
    Restrictions                                                           |  |      | 8  | 
|SECTION 2.07.                         |  | Alternative
    Technology                                                     |  |      | 8  | 
|SECTION 2.08.                         |  | Noncompetition                                                                 |  |      | 10 | 
|SECTION 2.09.                         |  | Product
    Liability                                                          |  |      | 10 | 
|                                     
|ARTICLE 3                            
|GRANT OF LICENSE                     
|SECTION 3.01.                         |  | License                                                                        |  |      | 11 | 
|SECTION 3.02.                         |  | Additional License Under
    Aradigm Selected Pulmonary Delivery Patent Rights |  |      | 11 | 
|SECTION 3.03.                         |  | Sublicense                                                                     |  |      | 11 | 
|SECTION 3.04.                         |  | Additional
    Licenses                                                        |  |      | 11 | 
|SECTION 3.05.                         |  | Publicly Available
    Information                                             |  |      | 12 | 
|                                     
|ARTICLE 4                            
|SUPPLY                               
|SECTION 4.01.                         |  | Novo Nordisk Supply
    Obligations                                            |  |      | 12 | 
|                                     
|ARTICLE 5                            
|ROYALTY PAYMENTS                     
|SECTION 5.01.                         |  | Royalty
    Payments                                                           |  |      | 12 | 
|SECTION 5.02.                         |  | Royalty Payments
    Schedule                                                  |  |      | 13 | 
|SECTION 5.03.                         |  | Additional Royalty
    Provisions                                              |  |      | 13 | 
|SECTION 5.04.                         |  | Record
    Keeping                                                             |  |      | 14 | 
|SECTION 5.05.                         |  | Audit Right                                                                    |  |      | 14 | 
|SECTION 5.06.                         |  | Withholding
    Taxes                                                          |  |      | 14 | 
|SECTION 5.07.                         |  | Currency                                                                       |  |      | 14 | 

i



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##### 



|                                     |  |                                                             |  |      |    | 
|------------------------------------ |  | ----------------------------------------------------------- |  | ---- | -- | 
|                                     |  |                                                             |  | Page
|                                     |  |                                                             |  |     
|                                    
|ARTICLE 6                           
|INTELLECTUAL PROPERTY               
|SECTION 6.01.                        |  | Aradigm Intellectual
    Property Rights                    |  |      | 15 | 
|SECTION 6.02.                        |  | Novo Nordisk Intellectual
    Property Rights               |  |      | 15 | 
|SECTION 6.03.                        |  | Notice by
    Aradigm                                       |  |      | 16 | 
|SECTION 6.04.                        |  | Notice by Novo
    Nordisk                                  |  |      | 16 | 
|SECTION 6.05.                        |  | Pursuit of
    Patents                                      |  |      | 17 | 
|SECTION 6.06.                        |  | License Option In Lieu Of
    Ownership                     |  |      | 18 | 
|                                    
|ARTICLE 7                           
|PATENT COOPERATION                  
|SECTION 7.01.                        |  | Enforcement of Patent
    Rights                            |  |      | 18 | 
|SECTION 7.02.                        |  | Initiation of Action
    Relating to Patents                |  |      | 18 | 
|SECTION 7.03.                        |  | Interferences                                               |  |      | 21 | 
|SECTION 7.04.                        |  | Defense and Settlement of
    Third Party Patent Claims     |  |      | 21 | 
|                                    
|ARTICLE 8                           
|SECRECY                             
|SECTION 8.01.                        |  | Confidentiality                                             |  |      | 22 | 
|SECTION 8.02.                        |  | Publication
    Planning                                    |  |      | 22 | 
|SECTION 8.03.                        |  | Term Of Confidentiality
    Provisions                      |  |      | 23 | 
|                                    
|ARTICLE 9                           
|NOTICE                              
|SECTION 9.01.                        |  | Notice                                                      |  |      | 23 | 
|SECTION 9.02.                        |  | Deemed Receipt of
    Notice                                |  |      | 23 | 
|                                    
|ARTICLE 10                          
|TERM AND TERMINATION                
|SECTION 10.01.                       |  | Term                                                        |  |      | 24 | 
|SECTION 10.02.                       |  | Termination by Novo
    Nordisk                             |  |      | 24 | 
|SECTION 10.03.                       |  | Termination by
    Aradigm                                  |  |      | 24 | 
|SECTION 10.04.                       |  | Termination By Either
    Party                             |  |      | 24 | 
|SECTION 10.05.                       |  | Rights And Obligations of
    The Parties After Termination |  |      | 24 | 
|SECTION 10.06.                       |  | Additional Effects of
    Termination or Expiration         |  |      | 28 | 
|                                    
|ARTICLE 11                          
|DISPUTE RESOLUTION AND GOVERNING LAW
|SECTION 11.01.                       |  | Dispute
    Resolution                                      |  |      | 28 | 
|SECTION 11.02.                       |  | Governing
    Law                                           |  |      | 29 | 

ii



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##### 



|                                                                 |  |                                             |  |      |    | 
|---------------------------------------------------------------- |  | ------------------------------------------- |  | ---- | -- | 
|                                                                 |  |                                             |  | Page
|                                                                 |  |                                             |  |     
|                                                                
|ARTICLE 12                                                      
|MISCELLANEOUS                                                   
|SECTION 12.01.                                                   |  | Bankruptcy Code
    Considerations          |  |      | 29 | 
|SECTION 12.02.                                                   |  | Binding
    Agreement                       |  |      | 30 | 
|SECTION 12.03.                                                   |  | Severability                                |  |      | 30 | 
|SECTION 12.04.                                                   |  | Amendments and
    Waivers                  |  |      | 30 | 
|SECTION 12.05.                                                   |  | Expenses                                    |  |      | 30 | 
|SECTION 12.06.                                                   |  | Successors and
    Assigns                  |  |      | 30 | 
|SECTION 12.07.                                                   |  | Counterparts; Third Party
    Beneficiaries |  |      | 30 | 
|SECTION 12.08.                                                   |  | Entire
    Agreement                        |  |      | 30 | 
|Appendix A Aradigm Selected Pulmonary
    Delivery Patent Rights |  |                                             |  |     

iii



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##### 



AMENDED AND RESTATED LICENSE
AGREEMENT

This AMENDED AND RESTATED LICENSE AGREEMENT (the
Agreement) is entered into as
of January 26, 2005 by and between Aradigm Corporation, a corporation duly
organized and existing under the laws of the State of California
(Aradigm)and Novo Nordisk A/S, a company
duly organized and existing under the laws of Denmark
(Novo Nordisk).

WHEREAS, Novo Nordisk and Aradigm entered into a
Development and License Agreement dated as of June 2, 1998,
as amended by Amendment No. 1 thereto dated as of
October 22, 2001 (the Development and License
Agreement) to develop a system for pulmonary delivery
of insulin (and potentially other compounds) and under which
Aradigm granted to Novo Nordisk an exclusive, world-wide license
under certain patent rights and know-how, to use,
market, distribute, sell and sublicense products resulting from
such development program in the Field (as defined herein and
therein);

WHEREAS, Aradigm, Novo Nordisk and Novo Nordisk
Delivery Technologies, Inc., a corporation duly organized and
existing under the laws of the State of Delaware (Novo
Nordisk Delivery Technologies, Inc.)are parties to a
Restructuring Agreement dated as of September 28, 2004 (the
Restructuring Agreement) pursuant to which
they have agreed to restructure their existing arrangements
regarding the development, production and commercialization of
the Development Program (as defined herein) and to certain other
matters as set forth therein; and

WHEREAS, the amendment and restatement of the
Development and License Agreement is a precondition to
performance on the part of Aradigm, Novo Nordisk and Novo
Nordisk Delivery Technologies, Inc. of their respective
obligations under the Restructuring Agreement.

NOW, THEREFORE, in consideration of the premises
set forth above and for other good and valuable consideration,
receipt of which is hereby acknowledged, the Parties hereto
agree as follows:




ARTICLE 1

DEFINITIONS




SECTION 1.01.     Definitions.

The following terms, as used herein, shall have
the following meanings:

Affiliatesshall have the meaning set forth in
the Restructuring Agreement.

Alternative Technologyshall mean any pulmonary drug delivery
technology that may be covered by the Aradigm Selected Pulmonary
Delivery Patent Rights, but that (a) does not use any
Aradigm Know-How and (b) is not claimed by any Aradigm
Patent Rights.

Alternative Technology Effective
Datemeans the date that is the
earlier of (a) three (3) years after the delivery
(without subsequent withdrawal) as permitted under
Section 2.07(c)) by Novo Nordisk to Aradigm of an
Alternative Technology Notice for a product using a specific
insulin or insulin analog class described in such Alternative
Technology Notice and (b) the granting of Regulatory
Approval for such product.

Alternative Technology Noticemeans written notice provided by Novo
Nordisk to Aradigm pursuant to Section 2.07(c) stating that
Novo Nordisk intends to commence commercialization of a product
using an Alternative Technology to deliver insulin and insulin
analogs.

Aradigm Background IPRshall mean any and all knowledge,
information, expertise, results, improvements or inventions
(whether patentable or not), and all related intellectual
property rights, Made Jointly by the Parties or individually by
one (1) of the Parties as a part of the Development Program
under the Development and License Agreement prior to the
Effective Date and which relate to the Packaged Product (except
as specified with respect to the Program Compounds, formulations
thereof or the interactions between materials and such
formulations) and the Device. The Aradigm Background IPR shall
be included within the Aradigm Patent Rights or Aradigm
Know-How, as applicable.

1



---



##### 



Aradigm Know-Howshall mean all knowledge, information
and expertise made or developed by Aradigm prior to the
Effective Date related to the development and production of the
Device, the Packaged Product and the Program Compounds
(introduced into the Development Program prior to the Effective
Date), whether or not covered by Aradigm Patent Rights or any
other industrial or intellectual property right of Aradigm,
including but not limited to clinical data, technical data,
experimental results, specifications, techniques, methods,
processes and written materials.

Aradigm New IPRshall mean any and all knowledge,
information, expertise, results, improvements or inventions,
whether patentable or not, and all related intellectual property
rights, that are made or developed after the Effective Date and
prior to the termination of this Agreement, and that:
(a) are Made Jointly by Novo Nordisk and Aradigm or by
Aradigm alone and that relate solely to any Device (including
without limitation the manufacturing thereof) and/or Packaged
Product (including without limitation the manufacturing thereof,
except as specified with respect to the Program Compounds,
formulations thereof or the interactions between materials and
such formulations); or (b) are made or developed by Aradigm
alone and that relate solely to any method of treatment within
the Field (including without limitation medical data, algorithms
for dosing, models for predicting dosing and/or optimizing
treatment, clinical data and patient data).

Aradigm Patent Rightsshall mean any and all of
Aradigms patents and patent applications possessed by
Aradigm prior to the Effective Date (other than the Aradigm
Selected Pulmonary Delivery Patent Rights) related to the
Device, the Packaged Product and the Program Compounds
introduced into the Development Program prior to the Effective
Date, including (a) the patents and patent applications
listed on Schedule 3.13(a)(i) to the Restructuring
Agreement, (b) patents and patent applications relating to
the development, production and use of the Device, the Packaged
Product, and the Program Compounds introduced into the
Development Program prior to the Effective Date, and
(c) all continuations, continuations-in-part, divisionals
or re-issues of such patents and patent applications and any
patents issuing thereon or extensions thereof or any foreign
counterparts thereof. Extensions of patents shall include:
(i) extensions under the U.S. Patent Term Restoration
Act, (ii) extensions of patents under the Japanese Patent
Law, (iii) Supplementary Protection Certificates for
members of the European Patent Convention and other countries in
the European Economic Area and (iv) similar extensions
under any applicable law in the Territory.

Aradigm Selected Pulmonary Delivery
Patent Rightsshall mean the
patent claims listed in Appendix A and Obvious Variants
thereof.

Baselinesshall mean the forecast amounts of Net
Sales of the Insulin Compound Packaged Products and the Device
separately communicated to Aradigm prior to the date hereof and
Baselineshall mean the forecast amount for
any particular calendar year following First Marketing of the
Insulin Compound Packaged Products and the Device by any member
of the Novo Nordisk Affiliate Group or any permitted
sublicensees thereof.

Broad Regulatory Approvalshall mean, with respect to Packaged
Products and the Device, Regulatory Approval authorizing
marketing thereof for the treatment of patients with diabetes
mellitus (type 1 and type 2).

Business Dayshall mean a day, other than Saturday,
Sunday or other day on which commercial banks in New York, New
York are authorized or required by law to close.

Co-Existence Agreementshall have the meaning set forth in
the Restructuring Agreement.

Development Programshall mean the development of the
Packaged Product and the Device, including the pre-clinical and
clinical development programs required for registration and
approval of the Packaged Product and the Device in the Territory
conducted by the Parties under the Development and License
Agreement prior to the Effective Date, and as thereafter
conducted by Novo Nordisk in accordance with this Agreement.

2



---



##### 



Deviceshall mean: (a) any pulmonary
delivery device that (i) has been developed in the course
of the Development Program prior to the Effective Date, and
(ii) is based on the device technology described by the
Aradigm Patent Rights or utilizing Aradigm Know-How; and
(b) any improved or later generation version thereof, in
each case, together with any accessories, used to administer any
Program Compound contained in a disposable unit dose package,
developed in the course of the Development Program after the
Effective Date.

Diligent Effortsshall mean, with respect to efforts of
any Party hereto, no less than the efforts that such Party
applies to: (a) development, manufacture or
commercialization of its own compounds or products with similar
regulatory requirements and market potential; and
(b) prosecution, maintenance and/or defense of intellectual
property rights of similar importance.

Effective Dateshall mean the date hereof.

Fieldshall mean pulmonary administration of
insulin, insulin analogs and any other compounds whose principal
therapeutic effect is to control blood glucose levels in humans,
including but not limited to glucagon-like peptide
(GLP), GLP-1 and analogs of GLP.

First Marketed Product and Deviceshall be deemed to mean the first of
any of the following products for which First Marketing by any
member of the Novo Nordisk Affiliate Group or any permitted
sublicensees thereof shall have occurred: (1) the Insulin
Compound Packaged Product and the Device, (2) any Packaged
Product (relating to Program Compounds other than the Insulin
Compound) and the Device and (3) any products using an
Alternative Technology to deliver a specific insulin or insulin
analog class (in such case, only to the extent that royalties
are payable under Section 2.07(e)(i)).

First Marketingshall mean the making available for
sale of the applicable product in commercial quantities for the
first time in any country in the Territory.

First Marketing Commencement Dateshall mean the date on which the
applicable First Marketing shall have commenced.

[****]

Insulin Compoundshall mean recombinant human insulin.

Insulin Compound Packaged Productshall mean the disposable unit dose
packages developed in the course of the Development Program
containing Insulin Compound, packaged for use with the Device
for pulmonary delivery of such Insulin Compound.

Joint Marketing Partnersshall mean any co-marketers,
co-promoters and/or rental sales forces.

Later Marketed Product and Deviceshall be deemed to mean any and all of
the following products for which First Marketing by any member
of the Novo Nordisk Affiliate Group or any permitted
sublicensees thereof shall have occurred following First
Marketing of the First Marketed Product and Device: (1) the
Insulin Compound Packaged Product and the Device, (2) any
Packaged Product (relating to Program Compounds other than the
Insulin Compound) and the Device or (3) any products using
an Alternative Technology to deliver a specific insulin or
insulin analog class (in such case, only to the extent that
royalties are payable under Section 2.07(e)(i)).

Know-Howshall mean the Aradigm Know-How and
Novo Nordisk Know-How, collectively.

Made Jointlyshall mean made jointlyas such term is interpreted under applicable
U.S. patent law.

Net Salesshall mean the invoiced gross revenue
from sales of the applicable product, when invoiced to any third
party in an arms length transaction less: (a) Trade,
cash and/or quantity discounts or rebates, if any;
(b) Credits or allowances given for rejection or return of
such products previously sold as well as the cost of replacement
products, including shipping and other incidental charges
related thereto; (c) Any tax or governmental charge other
than income tax levied on the sale thereof or customs duties
associated therewith;



---

**** Certain confidential
information in this document, marked by brackets, has been omitted
and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.


3



---



##### 



and (d) Freight, insurance and other similar
expenses billed separately to the customer. Upon a request by
Aradigm or Novo Nordisk, as the case may be, supported by
suitable documentation reflecting actual operating experience,
the Parties will agree on a fixed percentage of Net Sales of the
applicable product to represent item (d).


Novo Nordisk Affiliate Groupshall mean Novo Nordisk and its
Affiliates, collectively.

Novo Nordisk Background IPRshall mean any and all knowledge,
information, expertise, results, improvements or inventions
(whether patentable or not), and all related intellectual
property rights, Made Jointly by the Parties or individually by
one (1) of the Parties as a part of the Development Program
under the Development and License Agreement prior to the
Effective Date and which relate to any Program Compound,
formulations thereof or the interactions between materials and
such formulations, but excluding aspects of the formulation
relating to the aerosolization of the Program Compounds. The
Novo Nordisk Background IPR shall be included within the Novo
Nordisk Patent Rights or Novo Nordisk Know-How, as applicable.

Novo Nordisk Know-Howshall mean all knowledge, information
and expertise made or developed by Novo Nordisk prior to the
Effective Date related to the Insulin Compound or that Novo
Nordisk otherwise has contributed (or will contribute) to the
Development Program, whether or not covered by Novo Nordisk
Patent Rights or any other industrial or intellectual property
right of Novo Nordisk, including but not limited to technical
data, experimental results, specifications, techniques, methods,
processes and written materials.

Novo Nordisk New IPRshall mean (a) any and all
knowledge, information, expertise, results, improvements or
inventions, whether patentable or not, and all related
intellectual property rights, made or developed by Novo Nordisk
alone as a part of the Development Program after the Effective
Date and prior to the termination of this Agreement that relate
solely to any Device (including without limitation the
manufacturing thereof) and/or Packaged Product (including
without limitation the manufacturing thereof); (b) any and
all knowledge, information, expertise, results, improvements or
inventions, whether patentable or not, and all related
intellectual property rights, Made Jointly by Novo Nordisk and
Aradigm or by Novo Nordisk alone as a part of the Development
Program after the Effective Date and prior to the termination of
this Agreement and which relate solely to any method of
treatment within the Field (including without limitation medical
data, algorithms for dosing, models for predicting dosing and/or
optimizing treatment, clinical data and patient data); and
(c) any and all results, improvements or inventions,
whether patentable or not, and all related intellectual property
rights, Made Jointly by Novo Nordisk and Aradigm, by Aradigm
alone or by Novo Nordisk alone as a part of the Development
Program after the Effective Date and prior to the termination of
this Agreement and which relate to any Program Compound,
formulations thereof or the interactions between materials and
such formulations.

Novo Nordisk Patent Rightsshall mean any and all of Novo
Nordisks patents and patent applications possessed by Novo
Nordisk prior to the Effective Date related to any Program
Compound, including (a) patents and patent applications
relating to the production, development and use of any Program
Compound and (b) all continuations, continuations-in-part,
divisionals or re-issues of such patents and patent applications
and any patents issuing thereon or extensions thereof or any
foreign counterparts thereof. Extensions of patents shall
include: (i) extensions under the U.S. Patent Term
Restoration Act, (ii) extensions under the Japanese Patent
Law, (iii) Supplementary Protection Certificates for
members of the European Patent Convention and other countries in
the European Economic Area and (iv) similar extensions
under any applicable law in the Territory.

Obvious Variantshall mean any patent claim for which
the United States Patent and Trade Office could properly issue a
double patenting rejection in respect of the specific claims of
the patents listed in Appendix A if the claim in question
were presented by itself in a new patent application owned by
Aradigm. For non-U.S. patent and non-U.S. patent
applications, a claim that is an Obvious Variant of one
(1) or more claims listed in Appendix A is any claim
that, if it were presented in a new U.S. patent application
owned by Aradigm, could properly be the subject of a double
patenting rejection by the United States Patent and Trade
Office. For the avoidance of doubt, Obvious Variants of the
claims listed in Appendix A shall be included in the
license granted under Section 3.02.

4



---



##### 



Packaged Productshall mean any disposable unit dose
package developed in the course of the Development Program
containing the Insulin Compound or other Program Compounds,
packaged for use with the Device for pulmonary delivery of such
Insulin Compound or other Program Compounds.

Partiesshall mean the parties hereto and
Partyshall mean any one of the parties
hereto.

Patent Rightsshall mean the Aradigm Patent Rights,
patent rights under the Aradigm New IPR, Aradigm Selected
Pulmonary Patent Rights, Novo Nordisk Patent Rights and patent
rights under the Novo Nordisk New IPR, collectively.

Personshall mean an individual, corporation,
partnership, limited liability company, association, trust or
other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.

Program Compoundsshall mean the Insulin Compound and
any other insulin compounds, insulin analog compounds and
non-insulin compounds included in the Development Program by
Novo Nordisk in its sole discretion.

Regulatory Approvalshall mean the granting of a
commercial marketing authorization for (a) a Packaged
Product for delivery of a Program Compound using the Device,
(b) the Device or (c) any product based on any
Alternative Technology, as the case may be.

Regulatory Submissionshall mean the filing of an
application for a commercial marketing authorization for
(a) a Packaged Product for delivery of a Program Compound
using the Device, (b) the Device or (c) any product
based on any Alternative Technology, as the case may be.

Stage 1 Commercialization
Periodshall mean the period
commencing on the applicable First Marketing Commencement Date
and ending on the third anniversary thereof.

Stage 2 Commercialization
Periodshall mean the period
commencing on the expiration of the applicable Stage 1
Commercialization Period and ending on the first anniversary
thereof.

Stage 3 Commercialization
Periodshall mean the period
commencing on the expiration of the applicable Stage 2
Commercialization Period and ending on the termination of this
Agreement; provided that, in the event of a termination
by Novo Nordisk pursuant to either or both of Section 10.02
and Section 10.04, the Stage 3 Commercialization
Period shall end on the later of (A) the date that is ten
(10) years from the First Marketing of any Packaged Product
and the Device, or another pulmonary product, as the case may
be, and (B) the expiration date of the last patent required
to cover the Packaged Product and the Device, or another
pulmonary product, as the case may be, and the development,
manufacturing, use, marketing, distribution, sale, offer for
sale, importation and/or exportation thereof in and from the
Territory.

Status Reportshall mean the status report on the
Development Program to be provided by Novo Nordisk to Aradigm at
meetings of the Review Committee as contemplated by
Section 2.04(f) in a form consistent with Novo
Nordisks practice.

Territoryshall include any and all countries of
the world.

Transaction Agreementsshall have the meaning set forth in
the Restructuring Agreement.

5



---



##### 






SECTION 1.02.     Other
Defined Terms. Each of the following terms is defined in the
Section set forth opposite such term:

|                                             |  |         
|-------------------------------------------- |  | --------
|Term                                         |  | Section 
|                                             |  |         
|Agreement                                    |  | Recitals
|Aradigm                                      |  | Recitals
|Bankruptcy Code                              |  | 12.01(a)
|Confidential Information                     |  | 8.01(d) 
|Development and License Agreement            |  | Recitals
|Directly Infringing Product                  |  | 7.02(c) 
|Field Claim                                  |  | 7.02(b) 
|Field Infringement                           |  | 7.04(a) 
|Independent Auditor                          |  | 5.05(a) 
|Non-Insulin Compound                         |  | 2.07(b) 
|Novo Nordisk                                 |  | Recitals
|Novo Nordisk Delivery Technologies,
    Inc. |  | Recitals
|Representatives                              |  | 8.01(d) 
|Restructuring Agreement                      |  | Recitals
|Review Committee                             |  | 2.02    
|Royalty Paying Party                         |  | 5.02    
|Royalty Receiving Party                      |  | 5.02    
|substantially the same as                    |  | 7.02(c) 




SECTION 1.03.     Other
Definitional and Interpretative Provisions. Unless specified
otherwise, in this Agreement the obligations of any Party
consisting of more than one person are joint and several. The
words hereof, herein and
hereunder and words of like import used in this
Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement. The captions herein
are included for convenience of reference only and shall be
ignored in the construction or interpretation hereof. References
to Articles, Sections, Exhibits and Schedules are to Appendices,
Articles, Sections, Exhibits and Schedules of this Agreement
unless otherwise specified. All Appendices, Exhibits and
Schedules annexed hereto or referred to herein are hereby
incorporated in and made a part of this Agreement as if set
forth in full herein. Any capitalized terms used in any Exhibit
or Schedule but not otherwise defined therein, shall have the
meaning as defined in this Agreement. Any singular term in this
Agreement shall be deemed to include the plural, and any plural
term the singular. Whenever the words include,
includes or including are used in this
Agreement, they shall be deemed to be followed by the words
without limitation, whether or not they are in fact
followed by those words or words of like import.
Writing, written and comparable terms
refer to printing, typing and other means of reproducing words
(including electronic media) in a visible form. References to
any agreement or contract are to that agreement or contract as
amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof. References to any
Person include the successors and permitted assigns of that
Person. References from or through any date mean, unless
otherwise specified, from and including or through and
including, respectively.




ARTICLE 2

RIGHTS AND OBLIGATIONS OF THE PARTIES




SECTION 2.01.     Development
Program. Novo Nordisk shall conduct the Development Program
in its sole discretion and at its own expense.

6



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SECTION 2.02.     Review
Committee. The Parties shall establish a Review Committee
(Review Committee)within thirty
(30) calendar days of the Effective Date. The first meeting
of such Review Committee shall be held no later than
April 1, 2005. The Review Committee shall



| |                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) consist of up to three
    (3) representatives of each Party, as notified by such
    Party to the other Party from time to time in writing. Other
    non-voting representatives of a Party may attend each meeting
    upon the approval of the Review Committee;                                                                                                                                               
|
| | (b) be chaired by a representative of Novo
    Nordisk from the Effective Date until December 31, 2005;
    provided that, after such date a representative from
    Aradigm will chair the Review Committee from January 1,
    2006 until December 31, 2006, and thereafter the Parties
    will alternate chairing the Review Committee on a calendar year
    basis;                                              
|
| | (c) meet periodically (at least once every
    six (6) months). Meetings shall be convened by the
    chairperson with at least thirty (30) calendar days prior
    written notice and such notice shall include an agenda. Either
    Party may request the chairperson to call a meeting, but in no
    event shall any Party request the chairperson to call more than
    four (4) meetings per calendar year; and
|
| | (d) have minutes drafted of each meeting by
    the chairperson and signed by one representative of each Party.                                                                                                                                                                                                                                                                                                       




SECTION 2.03.     Obligations
Of The Parties In Respect Of The Review Committee.
(a) The Parties agree that during the meetings of the
Review Committee at which the semi-annual technology review
required under Section 2.04 shall take place, they shall
disclose and provide reasonable details relating to:
(i) intellectual property rights and/or know-how with
potential application in the Field in general and in later
generation Packaged Products and Devices in particular; and
(ii) plans, programs, results and ongoing developments that
could lead to or result in Aradigm New IPR or Novo Nordisk New
IPR, as applicable, including Aradigm New IPR and Novo Nordisk
New IPR relating to later generation Packaged Products and
Devices. For the avoidance of doubt, the obligation of Novo
Nordisk to disclose and provide reasonable details under this
Section 2.03 shall extend only to plans, programs, results
and ongoing developments within the Development Program.

(b) After Aradigm discloses and provides
reasonable details relating to its intellectual property rights
with potential application in the Field in accordance with
Section 2.03(a), the Parties shall discuss and determine in
good faith whether or not such intellectual property rights
constitute Aradigm New IPR, Novo Nordisk New IPR or neither. In
the event such determination requires further research and/or
development to evaluate the utility of such intellectual
property rights within the Development Program, the Parties
shall agree in writing to the scope and design of such research
and/or development activities pursuant to consulting
arrangements as contemplated by Section 2.04(c) below. The
Parties shall discuss in good faith and agree whether or not any
knowledge, information, expertise, results, improvements or
inventions, whether patentable or not, and all related
intellectual property rights, made or developed by Aradigm
solely, Novo Nordisk solely, or Aradigm and Novo Nordisk jointly
arising out of any such further research and/or development
following disclosure of such Aradigm intellectual property
rights constitute Aradigm New IPR, Novo Nordisk New IPR or
neither. In the event the Parties determine that the Aradigm
intellectual property rights have applications outside the
Development Program or have applications both inside and outside
the Development Program, upon written request by Novo Nordisk to
Aradigm, Aradigm shall in good faith consider granting, but
shall have no obligation to grant, a license under such
intellectual property rights to Novo Nordisk for applications
outside of the Development Program on terms to be agreed in
writing between the Parties.

(c) Novo Nordisk shall provide Aradigm with
a copy of a presentation relating to any Status Report to be
delivered at a Review Committee meeting at least ten
(10) days prior to such Review Committee meeting.

7



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SECTION 2.04.     Responsibilities
Of The Review Committee. The Review Committee shall be
responsible for the following matters:



| |                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) ensuring optimal cooperation between the
    Parties;                                                                                                                                                                                      
|
| | (b) conducting semi-annual technology
    reviews within the field of pulmonary administration of drugs;                                                                                                                                       
|
| | (c) identifying and recommending, subject to
    the Parties agreement, consulting and other assignments to
    be performed by Aradigm under the Development Program or as
    contemplated by Section 2.03(b) at Novo Nordisks
    expense;
|
| | (d) reviewing the status, process and
    strategy for prosecution and maintenance of patents in
    accordance with Article 6 and addressing any issues or
    developments arising therefrom;                                                
|
| | (e) overseeing ongoing implementation of the
    technology transfer process contemplated in the Restructuring
    Agreement;                                                                                                                  
|
| | (f) reviewing any Status Report on the
    Development Program presented by Novo Nordisk; and                                                                                                                                                  
|
| | (g) discussing any other matters as mutually
    agreed between the Parties.                                                                                                                                                                   




SECTION 2.05.     Diligent
Efforts. Novo Nordisk agrees that it will use its Diligent
Efforts to develop and commercialize the Insulin Compound
Packaged Product and the Device, including without limitation
the following:



| |                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) Novo Nordisk must use Diligent Efforts
    to clinically develop and register the Insulin Compound Packaged
    Product and the Device until it has obtained Broad Regulatory
    Approval of such Insulin Compound Packaged Product and the
    Device in the United States and the European Union;                                                                                                        
|
| | (b) Novo Nordisk must fund the Development
    Program for the Insulin Compound Packaged Product and the Device
    with [****] until a Regulatory Submission for Broad Regulatory
    Approval of such Insulin Compound Packaged Product and the
    Device has been made in the United States and the European Union;                                                                                         
|
| | (c) until receipt of Broad Regulatory
    Approval by Novo Nordisk in the United States and the European
    Union, Novo Nordisk must expend [****] and                                                                                                                                                                                                                                                         
|
| | (d) within the three-year period following
    Novo Nordisks receipt of Broad Regulatory Approval in the
    United States in respect of the Insulin Compound Packaged
    Product and the Device, a member of the Novo Nordisk Affiliate
    Group or any permitted sublicensees thereof must accomplish
    First Marketing of the Insulin Compound Packaged Product and the
    Device in the United States.

For purposes of this Section 2.05, any
reference to amounts in U.S. dollars to be funded or expended by
Novo Nordisk shall be calculated on a pro rata basis for any
calendar year in which this Agreement is not in full force and
effect for the entire calendar year based on the actual number
of days elapsed prior to the end of such calendar year.




SECTION 2.06.     Use
Restrictions.Aradigm shall use Insulin Compounds supplied
by Novo Nordisk, the Novo Nordisk Know-How and the know-how
included within Novo Nordisk New IPR only as provided for in
this Agreement. Novo Nordisk shall use the Aradigm Know-How and
know-how included within Aradigm New IPR only as provided for in
this Agreement.




SECTION 2.07.     Alternative
Technology.(a) Subject to the terms of this Agreement,
Novo Nordisk shall have the right to develop and commercialize
products based on Alternative Technology for pulmonary delivery
of insulin, insulin analogs, and non-insulin compounds within
the Field.





---

**** Certain confidential
information in this document, marked by brackets, has been omitted
and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.


8



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(b) In the event that Novo Nordisk commences
clinical trials in humans for any product based on any
Alternative Technology to deliver a non-insulin compound (a
Non-Insulin Compound), such Non Insulin
Compound will then be excluded from the Field, and Aradigm shall
have the right to research, develop and/or commercialize
(directly or through licensees) products based on Aradigm Patent
Rights, Aradigm Selected Pulmonary Delivery Patent Rights,
Aradigm New IPR and/or Aradigm Know-How to deliver such
Non-Insulin Compound or any compound that is in the same
chemical class as such Non-Insulin Compound; provided
that, Aradigm shall not be entitled to any license,
including any implied license, under any patent rights or
know-how of Novo Nordisk covering such Non-Insulin Compound.
Novo Nordisk shall notify Aradigm in writing prior to the first
dosing of the first patient in the first such clinical trial, if
any.

(c) Aradigm hereby acknowledges that:
(i) subject to the terms of this Agreement, Novo Nordisk
may be simultaneously conducting research and development alone
or in collaboration with third parties on products using an
Alternative Technology to deliver insulin and insulin analogs;
and (ii) Novo Nordisk may supply insulin and insulin
analogs to third parties free of charge for use in such third
parties clinical studies using such third parties
pulmonary delivery technology in exchange for rights in such
technology in the Field; provided that, notwithstanding
the foregoing, in the event that Novo Nordisk is conducting
research on and developing any products using any Alternative
Technology to deliver a specific insulin or insulin analog
class, Novo Nordisk shall provide an Alternative Technology
Notice to Aradigm of its intention to commence commercialization
of such product at least three (3) years prior to First
Marketing of such product; provided further that, Novo
Nordisk shall not deliver any Alternative Technology Notice
within twelve (12) months of the Effective Date. The
Alternative Technology Notice may be withdrawn by Novo Nordisk,
without penalty, for a specific insulin or insulin analog class
at any time during the twelve (12) months following
delivery of the Alternative Technology Notice.

(d) From receipt of the Alternative
Technology Notice until, if applicable, such notice is withdrawn
as permitted under Section 2.07(c), the licenses described
in Section 3.01 and Section 3.02 shall become
non-exclusive to the extent necessary to permit Aradigm to
discuss the product opportunity with potential marketing
partners, prepare for potential development activities, and/or
engage in exploratory trials, for the delivery of the specific
insulin or insulin analog class that is the subject of such
Alternative Technology Notice. In the event that Novo Nordisk
has not withdrawn such Alternative Technology Notice within
twelve (12) months as permitted under Section 2.07(c),
the licenses described in Section 3.01 and
Section 3.02 shall become non-exclusive, and the license
described in Section 3.04(b) shall include the Field, to
the extent necessary to enable Aradigm, alone or in
collaboration with one (1) marketing partner, to develop
and, from and after the Alternative Technology Effective Date,
to commercialize devices and/or dose packages for the delivery
of the specific insulin or insulin analog class that is the
subject of such Alternative Technology Notice. Thereafter, for
each Alternative Technology Notice delivered by Novo Nordisk,
Aradigm may engage one (1) additional marketing partner in
accordance with the procedures, for the purposes, on the
timetables and subject to the limitations, set forth in this
Section 2.07. Notwithstanding anything else contained
herein, if Novo Nordisk withdraws the Alternative Technology
Notice for a specific insulin or insulin analog class at any
time during the twelve (12) months following delivery of
the Alternative Technology Notice, then the licenses granted
under Section 3.01 and Section 3.02 shall become
exclusive again with respect to the specific insulin or insulin
analog class that is the subject of such withdrawn Alternative
Technology Notice.

(e) No later than two (2) years after
receipt of the Alternative Technology Notice, without subsequent
withdrawal by Novo Nordisk, Aradigm may elect, by notifying Novo
Nordisk in writing, to market, either alone or in collaboration
with one (1) marketing partner, an insulin or insulin
analog class that it would have the right to commercialize from
and after the Alternative Technology Effective Date.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) In the event that Aradigm delivers
    written notice to Novo Nordisk that Aradigm will not market or
    fails to deliver any notice regarding its intent to market,
    either alone or in collaboration with one (1) marketing
    partner, an insulin or insulin analog class that it would have
    the right to commercialize from and after the Alternative
    Technology Effective Date, notwithstanding Section 2.07(d),
    then the license granted to Novo Nordisk pursuant to
    Section 3.01 and Section 3.02 shall remain exclusive
    with respect thereto, and: (A) until the sixth (6th)
    anniversary of the earlier of (I) First Marketing of a
    Packaged Product and the Device and (II) First Marketing of
    any product based on an Alternative

9



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Technology that has been described in the
    applicable Alternative Technology Notice, Aradigm shall be
    entitled to a royalty (in accordance with Section 5.01) on
    the Net Sales by any member of the Novo Nordisk Affiliate Group,
    or any permitted sublicensees thereof, of the product described
    in the applicable Alternative Technology Notice (whether or not
    such product is covered by any Aradigm Selected Pulmonary
    Delivery Patent Rights); and (B) following the sixth (6th)
    anniversary of the earlier of (I) and (II) above,
    Aradigm shall be entitled to a royalty (in accordance with
    Section 5.01) on the Net Sales by any member of the Novo
    Nordisk Affiliate Group, or any permitted sublicensees thereof,
    of (1) any Packaged Product and the Device and (2) any
    product based on an Alternative Technology that has been
    described in the applicable Alternative Technology Notice to the
    extent that, and for so long as, such product is covered by any
    of the Aradigm Selected Pulmonary Delivery Patent Rights.
|
| | (ii) In the event that Aradigm delivers
    written notice to Novo Nordisk that Aradigm will market, either
    alone or in collaboration with one (1) marketing partner,
    any insulin or insulin analog class similar to the insulin or
    insulin analog class specified in the applicable Alternative
    Technology Notice, then Aradigm shall be entitled to a royalty
    only on Net Sales of any Packaged Product and the Device in
    accordance with Section 5.01 and shall not be entitled to a
    royalty on any product based on an Alternative Technology that
    has been described in such Alternative Technology Notice.                                                                                                                                                                                                                                                                                                                                                                                                                                                      

(f) To the extent that Novo Nordisk obtains
Regulatory Approval of any product using any Alternative
Technology prior to the expiration of three (3) years
following delivery of an Alternative Technology Notice for such
product to Aradigm pursuant to Section 2.07(c), Aradigm and
Novo Nordisk agree to negotiate in good faith regarding the
potential for Novo Nordisk to commence First Marketing of such
product using any Alternative Technology prior to the expiration
of such three (3) year period; provided that,
nothing in this Section 2.07(f) shall serve to limit in any
way Aradigms rights or obligations hereunder or to provide
Novo Nordisk with a right to commence First Marketing of any
product using any Alternative Technology until the expiration of
three (3) years following delivery of the Alternative
Technology Notice for such product to Aradigm pursuant to
Section 2.07(c).




SECTION 2.08.     Noncompetition.For so long as the license granted to Novo Nordisk under
Section 3.01 is exclusive in the Field, except for
activities and agreements otherwise expressly permitted under
this Agreement, Aradigm shall be prohibited from entering into
any agreement with any third party with respect to any
activities within the Field, and shall not conduct any work
program in the Field with Insulin Compound or any other Program
Compound provided by any third party supplier without the prior
written consent of Novo Nordisk.




SECTION 2.09.     Product
Liability.Subject to the terms of this Section 2.09,
product liabilities that are incurred prior to the first
Regulatory Submission will be allocated between the Parties
based on the fault or relative fault of the Parties. If
negligence or fault cannot be so determined or allocated, then
such liability shall be borne 80% by Novo Nordisk and 20% by
Aradigm. Until the first Regulatory Submission, Aradigm shall be
responsible for product liability to the extent such liability
is attributable to: (a) any failure by Aradigm prior to the
Effective Date to manufacture the Packaged Product and/or the
Device in accordance with applicable standards and practices;
(b) defects or flaws in design that are caused by Aradigm
until the subsystem of the Packaged Product and/or Device as to
which any such defect or flaw in design relates shall have been
validated and verified by Novo Nordisk; or (c) Aradigms
negligence. Following the first Regulatory Submission, Novo
Nordisk shall assume responsibility for all product liability
arising out of the conduct of the Development Program and the
practice by any member of the Novo Nordisk Affiliate Group of
the licenses granted to Novo Nordisk in this Agreement and
Aradigm shall have no responsibility for any product liability
arising out of the practice by any agent or permitted
sublicensees of any member of the Novo Nordisk Affiliate Group
of the licenses granted to Novo Nordisk in this Agreement.

10



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ARTICLE 3

GRANT OF LICENSE




SECTION
3.01.     License.Subject to
the terms of this Agreement, Aradigm hereby grants Novo Nordisk
a world-wide, exclusive, royalty-bearing license under the
Aradigm Patent Rights (including applicable Aradigm Background
IPR), Aradigm Selected Pulmonary Delivery Patent Rights, Aradigm
New IPR and Aradigm Know-How (including applicable Aradigm
Background IPR) to (a) develop, manufacture, use, market,
distribute, sell, offer for sale, have made, import and/or
export any Packaged Product and the Device in and from the
Territory for use within the Field, with the right to sublicense
its customers and Joint Marketing Partners pursuant to
Section 3.03, and (b) otherwise exercise and perform
its rights and obligations under this Agreement.




SECTION
3.02.     Additional License Under
Aradigm Selected Pulmonary Delivery Patent Rights.(a) Subject to the terms of this Agreement, Aradigm
hereby grants Novo Nordisk a world-wide, exclusive,
royalty-bearing license, under the Aradigm Selected Pulmonary
Delivery Patent Rights to develop, manufacture, use, market,
distribute, sell, offer for sale, have made, import and/or
export products described in an Alternative Technology Notice
that are covered by the Aradigm Selected Pulmonary Delivery
Patent Rights in and from the Territory for use within the
Field, with the right to sublicense its customers and Joint
Marketing Partners pursuant to Section 3.03.

(b) For purposes of this Section 3.02,
the patent claims listed in Appendix A, including
Obvious Variants of those claims as defined herein,
are the only claims that Novo Nordisk will be licensing under
this section and this license will not imply a license to any
other patent claim held by Aradigm either issued, pending or in
a future patent yet to be filed, unless such patent claim is an
Obvious Variant of the patents listed in Appendix A. Novo
Nordisk expressly disclaims any right to license the Aradigm
Patent Rights, including patents (other than patents also listed
in Appendix A and Obvious Variants thereof) listed in
Schedule 3.13(a)(i) of the Restructuring Agreement by
reason of the license granted under Section 3.02. Novo
Nordisk acknowledges that some of the non-licensed patent claims
contained in the Aradigm Patent Rights, including the patents
(other than patents also listed in Appendix A and Obvious
Variants thereof) listed in Schedule 3.13(a)(i) of the
Restructuring Agreement may be required to gain freedom to
operate but that nevertheless there is no implied license
thereunder granted to Novo Nordisk.




SECTION 3.03.     Sublicense.Subject to the terms of this Agreement, Aradigm hereby
grants Novo Nordisk the right to sublicense its customers and
Joint Marketing Partners, under Novo Nordisks licenses
under the Aradigm Patent Rights (including applicable Aradigm
Background IPR), Aradigm Selected Pulmonary Delivery Patent
Rights, Aradigm New IPR and Aradigm Know-How (including
applicable Aradigm Background IPR) in this Agreement (as
applicable) to: (a) use any Packaged Product and the Device
and (b) market, distribute, sell, offer to sell, import
and/or export any Packaged Product and the Device, so long as
said items were bought from any member of the Novo Nordisk
Affiliate Group or from a Joint Marketing Partner.




SECTION 3.04.     Additional
Licenses.(a) Subject to the terms of this Agreement,
Aradigm shall and hereby does grant Novo Nordisk a perpetual,
world-wide, non-exclusive, royalty-free license under any
Aradigm New IPR Made Jointly by Novo Nordisk and Aradigm to
develop, manufacture, use, market, distribute, sell, offer for
sale, have made, import and/or export any product outside the
Field, with the right to sublicense its customers and Joint
Marketing Partners pursuant to Section 3.03.

(b) Subject to the terms of this Agreement,
Novo Nordisk shall and hereby does grant Aradigm a perpetual,
world-wide, non-exclusive, royalty-free license under any Novo
Nordisk New IPR that relate solely to any Device (or
manufacturing thereof) and/or Packaged Product (or manufacturing
thereof, except the Program Compounds, formulations thereof and
the interactions between materials and such formulations) to
develop, manufacture, use, market, distribute, sell, offer for
sale, have made, import and/or export any product outside the
Field, with a right to sublicense. Such right to sublicense
shall be royalty-bearing (such royalty to be determined in
accordance with the provisions set forth in
Section 5.03(a)) to the extent that (i) Aradigm

11



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receives from the sublicensee thereof a royalty
or other compensation and (ii) without such sublicense, the
applicable product would otherwise infringe the patents included
within Novo Nordisk New IPR.


(c) Subject to the terms of this Agreement,
Novo Nordisk shall and hereby does grant Aradigm a perpetual,
world-wide, non-exclusive, royalty-free license under any Novo
Nordisk New IPR Made Jointly by Novo Nordisk and Aradigm
relating solely to any method of treatment to develop,
manufacture, use, market, distribute, sell, offer for sale, have
made, import and/or export any product outside the Field.

(d) Aradigm hereby agrees not to object to
or disagree with the use by Novo Nordisk of the AERIX trademark
pursuant to the terms of the Co-Existence Agreement.




SECTION 3.05.     Publicly
Available Information.For the avoidance of doubt, nothing
contained in this Agreement shall preclude any member of the
Novo Nordisk Affiliate Group from using any publicly-available
knowledge, information and expertise related to or disclosed in
the Patent Rights or that is otherwise publicly-available.




ARTICLE 4

SUPPLY




SECTION 4.01.     Novo
Nordisk Supply Obligations.Novo Nordisk agrees that it will
use its reasonable efforts to obtain consent from third party
suppliers to permit Aradigm to purchase inventory at a cost no
greater to Aradigm than the cost to Novo Nordisk so long as
(i) the inventory is identical to inventory purchased by
Novo Nordisk for exclusive use in the Development Program and
(ii) the delivery of such inventory is consistent in all
respects with the delivery of inventory ordered by Novo Nordisk.
Notwithstanding the foregoing, Novo Nordisk shall not be
responsible for ordering, invoicing, logistical support or
warehousing of the inventory purchased by Aradigm in accordance
with this Section 4.01 and Aradigm shall be responsible for
any and all actions relating to such ordering, invoicing,
logistical support and warehousing.




ARTICLE 5

ROYALTY PAYMENTS




SECTION 5.01.     Royalty
Payments.(a) In consideration of the license and
marketing rights granted by Aradigm in accordance with
Section 3.01 and Section 3.02, Novo Nordisk shall pay
to Aradigm:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) in the event that the First Marketed
    Product and Device is the Insulin Compound Packaged Product and
    the Device, (A) four and one-quarter percent (4.25%) of Net
    Sales thereof (if any) by any member of the Novo Nordisk
    Affiliate Group or any permitted sublicensees thereof during any
    year during the Stage 1 Commercialization Period up to and
    including the applicable Baseline for such year plus four
    and fifty-five hundredths percent (4.55%) of Net Sales thereof
    (if any) by any member of the Novo Nordisk Affiliate Group or
    any permitted sublicensees thereof in excess of the applicable
    Baseline for such year; (B) five percent (5.00%) of Net Sales
    thereof (if any) by any member of the Novo Nordisk Affiliate
    Group or any permitted sublicensees thereof during the Stage 2
    Commercialization Period up to and including the applicable
    Baseline for such period plus five and three-tenths
    percent (5.30%) of Net Sales thereof (if any) by any member of
    the Novo Nordisk Affiliate Group or any permitted sublicensees
    thereof in excess of the applicable Baseline for such period;
    and (C) six percent (6.00%) of Net Sales thereof (if any)
    by any member of the Novo Nordisk Affiliate Group or any
    permitted sublicensees thereof during any year during the Stage
    3 Commercialization Period up to and including the applicable
    Baseline in such year plus six and three-tenths percent
    (6.30%) of Net Sales thereof (if any) by any member of the Novo
    Nordisk Affiliate Group or any permitted sublicensees thereof in
    excess of the applicable Baseline for such year; or
|
| | (ii) in the event that the First Marketed
    Product and Device is any Packaged Product (relating to Program
    Compounds other than the Insulin Compound) and the Device or any
    product using an Alternative Technology to deliver a specific
    insulin or insulin analog class (in such case, only to the extent                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

12



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | that royalties are payable under
    Section 2.07(e)(i)), (A) four and four-tenths percent
    (4.40%) of Net Sales thereof (if any) by any member of the Novo
    Nordisk Affiliate Group or any permitted sublicensees thereof
    during the Stage 1 Commercialization Period; (B) five and
    fifteen-hundredths percent (5.15%) of Net Sales thereof (if any)
    by any member of the Novo Nordisk Affiliate Group or any
    permitted sublicensees thereof during the Stage 2
    Commercialization Period; and (C) six and
    fifteen-hundredths percent (6.15%) of Net Sales thereof (if any)
    by any member of the Novo Nordisk Affiliate Group or any
    permitted sublicensees thereof during the Stage 3
    Commercialization Period.

(b) In consideration of the license and
marketing rights granted by Aradigm in accordance with
Section 3.01 and Section 3.02, Novo Nordisk shall also
pay to Aradigm (i) five and one-quarter percent (5.25%) of
Net Sales of any Later Marketed Product and Device by any member
of the Novo Nordisk Affiliate Group or any permitted
sublicensees thereof during the Stage 1 Commercialization
Period; and (ii) six percent (6.00%) of Net Sales of any
Later Marketed Product and Device by any member of the Novo
Nordisk Affiliate Group or any permitted sublicensees thereof
during the Stage 2 Commercialization Period and the Stage 3
Commercialization Period; provided that: in the event
that such Later Marketed Product and Device is the Insulin
Compound Packaged Product and the Device and that Net Sales
thereof exceed the Baseline in any year during the Stage 2
Commercialization Period and the Stage 3 Commercialization
Period, Novo Nordisk shall pay to Aradigm six percent (6.00%) of
such Net Sales of such Insulin Compound Packaged Product and the
Device up to and including the applicable Baseline in such year
plus six and three-tenths percent (6.30%) of Net Sales
(if any) of such Insulin Compound Packaged Product and the
Device in excess of the applicable Baseline in such year.




SECTION 5.02.     Royalty
Payments Schedule. Payments due in accordance with
Section 5.01 and any royalty payments due under Articles 2
and 10 shall be payable within forty-five (45) days after
January 1, April 1, July 1 and October 1 of
each calendar year in which such royalties are due under this
Agreement. The Party with a royalty payment obligation hereunder
shall provide the other Party with a reconciliation report in a
form to be agreed between the Parties showing the calculation of
Net Sales for each calendar year within seventy-five
(75) days after the end of such year. In the event that a
reconciliation report demonstrates that a Party (the
Royalty Paying Party) shall have paid an
amount in excess of or less than the royalty payments due under
Section 5.01 or Articles 2 or 10, as the case may be, then
the other Party (the Royalty Receiving Party)
shall pay to the Royalty Paying Party such excess amount, or the
Royalty Paying Party shall pay to the Royalty Receiving Party
the difference between the amount otherwise due hereunder and
the amount such Royalty Paying Party shall have paid in
accordance with the first sentence of this Section 5.02, as
the case may be.




SECTION 5.03.     Additional
Royalty Provisions. (a) Any reference to
royalty-bearing or to a royalty shall
mean, unless otherwise expressly established in this Agreement,
a royalty or other compensation that will be negotiated in good
faith between the Parties in respect of the applicable patent(s)
included within the licensed intellectual property rights. Each
such royalty will be agreed on a case-by-case basis, taking into
account the non-exclusive or exclusive term, the importance of
the originators invention and the strength and commercial
importance of the applicable intellectual property rights
(including the effect of any trade secret status of any Aradigm
Know-How or Novo Nordisk Know-How, as the case may be).
Additionally, the payment schedules, audit and other provisions
of this Article 5 shall apply to the extent practicable,
unless otherwise agreed by the Parties in writing.

(b) For the avoidance of doubt, in no event
shall either Aradigm pay a royalty to Novo Nordisk or Novo
Nordisk pay a royalty to Aradigm, respectively, for Novo Nordisk
New IPR or Aradigm New IPR, respectively, if such Novo Nordisk
New IPR or Aradigm New IPR, respectively, is Made Jointly.

(c) Following the expiration of the last to
expire of the Aradigm Patents Rights, Aradigm Selected Pulmonary
Delivery Patent Rights, and patents included in the Aradigm New
IPR, if: (i) Novo Nordisk experiences a material reduction
in the gross margins of products bearing royalties under this
Agreement in the United States, any member state of the European
Union and/or Japan as a result of pricing actions by competitors
who, had such patents not expired, would be infringing one
(1) or more of the Aradigm Patents Rights, Aradigm Selected
Pulmonary Delivery Patent Rights or patents included in the
Aradigm New IPR;

13



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and (ii) Novo Nordisk is in compliance with
all of its material obligations under this Agreement at the time
of such material reduction in gross margins, then Novo Nordisk
may request a reduction in the applicable royalty rates
hereunder for the specific geographic area (whether the United
States, any member state of the European Union and/or Japan).
Within sixty (60) days of such request, the Parties will
meet to review Novo Nordisks financial and marketing
information pertinent to such request and to negotiate and agree
on a reduction in the royalty rates hereunder that is
proportionate to the reduction in gross margins experienced by
Novo Nordisk or that otherwise fairly reflects the diminished
value of the applicable products to Novo Nordisk.





SECTION 5.04.     Record
Keeping.Each Party shall maintain, for a period of three
(3) years following the last day of the year to which such
records and other financial information relate, complete and
correct records of Net Sales and other financial information
that it deems necessary to determine such Net Sales and shall
report such information as it deems relevant along with each
royalty payment made to the other Party in accordance with this
Article 5 .




SECTION 5.05.     Audit
Right.(a) Aradigm may, no more than once in respect of
each calendar year, at Aradigms expense, appoint an
independent auditor (the Independent Auditor)
reasonably acceptable to Novo Nordisk to review the payments
made by Novo Nordisk to Aradigm in accordance with the
provisions set forth in Articles 2, 5 and 10 in such calendar
year. In the event the Independent Auditor determines that
additional amounts are due to Aradigm, Novo Nordisk shall pay
such additional amounts to Aradigm and, to the extent that such
additional amounts represent at least five percent (5.00%) of
the total amounts paid to Aradigm under Section 5.02 in
respect of such calendar year, shall reimburse Aradigm for the
fees and expenses of the Independent Auditor. In the event the
Independent Auditor determines that additional amounts are due
to Aradigm representing less than five percent (5.00%) of the
total amounts paid to Aradigm under Section 5.02 in any
calendar year, then Novo Nordisk shall have no obligation to
reimburse Aradigm for the fees and expenses of the Independent
Auditor.

(b) Novo Nordisk may, no more than once in
respect of each calendar year, at Novo Nordisks expense,
appoint an Independent Auditor reasonably acceptable to Aradigm
to review the payments made (if any) by Aradigm to Novo Nordisk
in accordance with the provisions set forth in Articles 2,
5 and 10 in such calendar year. In the event the Independent
Auditor determines that additional amounts are due to Novo
Nordisk, Aradigm shall pay such additional amounts to Novo
Nordisk and, to the extent that such additional amounts
represent at least five percent (5.00%) of the total amounts
paid to Novo Nordisk under Section 5.02 in respect of such
calendar year, shall reimburse Novo Nordisk for the fees and
expenses of the Independent Auditor. In the event the
Independent Auditor determines that additional amounts
representing less than five percent ( 5.00%) of the total
amounts paid to Novo Nordisk under Section 5.02 in any
calendar year are due to Novo Nordisk, then Aradigm shall have
no obligation to reimburse Novo Nordisk for the fees and
expenses of the Independent Auditor.




SECTION 5.06.Withholding
Taxes.Under no circumstances shall either Party be required
to pay any amount in excess of or in addition to the payments
agreed under this Agreement. If any payment made by either Party
under this Agreement is subject to withholding tax, such
withholding tax shall be borne by the other Party and shall be
deducted from any such payments made. Each Party shall support
the other Party in its efforts of minimizing any such
withholding taxes and reasonably provide such other Party with
relevant information about documentation needed to reduce the
withholding tax to a legal minimum or to secure applicable
credits in respect thereof.




SECTION 5.07.     Currency.Payments under this Agreement in respect of Net Sales made,
and amounts expended, in currencies other than U.S. dollars
shall be calculated on the average daily exchange rate for the
applicable year-to-date period (i.e., from January 1 of
each year to the last Business Day of the financial quarter in
which such payment is made) for exchanging such currency into
U.S. dollars at the rate for buying U.S. dollars published in
the Wall Street Journal.

14



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ARTICLE 6

INTELLECTUAL PROPERTY




SECTION 6.01.     Aradigm
Intellectual Property Rights. (a) Except as provided in
this Article 6, Aradigm shall remain the sole owner of all
Aradigm Background IPR, Aradigm Patent Rights, Aradigm Selected
Pulmonary Delivery Patent Rights, Aradigm Know-How and Aradigm
New IPR and shall use Diligent Efforts to maintain and defend
such Aradigm Background IPR, Aradigm Patent Rights, Aradigm
Selected Pulmonary Delivery Patent Rights, Aradigm Know-How and
Aradigm New IPR.

(b) Aradigm shall be responsible for filing,
maintaining and defending any patents filed based on Aradigm
Background IPR and will timely inform Novo Nordisk of its
intentions, activities and filings in this respect. Aradigm will
grant Novo Nordisk a perpetual, world-wide, non-exclusive,
royalty-free license under the Aradigm Background IPR, to
develop, manufacture, use, market, distribute, sell, offer for
sale, have made, import and/or export any product outside the
field of pulmonary delivery, with the right to sublicense.
Should Aradigm decide not to patent an invention included in the
Aradigm Background IPR in any country, or should Aradigm decide
to abandon any such patent or patent application in any country,
then Novo Nordisk shall have the right to do so at its expense.
In such case, Novo Nordisk shall in its sole discretion have the
option of becoming the owner thereof or, in the alternative, an
exclusive licensee thereof pursuant to Section 6.06. If
Novo Nordisk elects to become the owner of any patent or patent
application based on such Aradigm Background IPR, Novo Nordisk
shall grant Aradigm a royalty-free license thereunder to
develop, manufacture, use, market, distribute, sell, offer for
sale, have made, import and/or export any product for the life
of the patent (and such license shall be limited to products
outside the Field for so long as Novo Nordisks license
under Section 3.01 remains exclusive as to any Aradigm
Patent Right and, thereafter, outside and inside the Field),
with the right to sublicense.




SECTION 6.02.     Novo
Nordisk Intellectual Property Rights. (a) Except as provided
in this Article 6, Novo Nordisk shall remain the sole owner
of all Novo Nordisk Background IPR, Novo Nordisk Patent Rights,
Novo Nordisk Know-How and Novo Nordisk New IPR.

(b) Novo Nordisk shall be responsible for
filing, maintaining and defending any patents filed based on
Novo Nordisk Background IPR and will timely inform Aradigm of
its intentions, activities and filings in this respect. Novo
Nordisk will grant Aradigm a perpetual, world-wide,
non-exclusive, royalty-free license under the Novo Nordisk
Background IPR (to the extent such Novo Nordisk Background IPR
relates to the Insulin Compound), to develop, manufacture, use,
market, distribute, sell, offer for sale, have made, import
and/or export any product outside the Field, with the right to
sublicense. Should Novo Nordisk decide not to patent an
invention included in the Novo Nordisk Background IPR in any
country, or should Novo Nordisk decide to abandon any such
patent or patent application in any country, then Aradigm shall
have the right to do so at its expense. In such case, Aradigm
shall in its sole discretion have the option of becoming the
owner thereof or, in the alternative, an exclusive licensee
thereof pursuant to Section 6.06. If Aradigm elects to
become the owner of any patent or patent application based on
such Novo Nordisk Background IPR, Aradigm shall grant Novo
Nordisk a royalty-free license thereunder to develop,
manufacture, use, market, distribute, sell, offer for sale, have
made, import and/or export any product within the Field, with
the right to sublicense.

(c) Novo Nordisk shall have the option to take
ownership of [****] (which is
included in Aradigm Background IPR as of the Effective Date) and
any divisionals, reissues or continuations thereof or become an
exclusive licensee thereof pursuant to Section 6.06. In the
event that Novo Nordisk provides Aradigm with written notice
that it wishes to take ownership of such patent applications,
then Aradigm shall take all reasonably requested steps to
consummate such transfer of ownership and Novo Nordisk will
grant Aradigm the license described in Section 6.02(b) to
develop, manufacture, use, market, distribute, sell, offer for
sale, have made, import and/or export any product outside the
Field, with right to sublicense, with respect to [****] and any
divisionals, reissues or continuations thereof.





---

**** Certain confidential
information in this document, marked by brackets, has been omitted
and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.


15



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SECTION 6.03.     Notice
by Aradigm. (a) During the term of this Agreement,
Aradigm shall provide written notice to Novo Nordisk of any
results, improvements or inventions relevant to the Field prior
to public disclosure of such results, improvements or inventions
in order to enable Novo Nordisk to determine, upon consultation
with Aradigm, the best method of protecting such results,
improvements or inventions.

(b) Aradigm shall provide periodically, but
no less than twice per calendar year, to Novo Nordisk a list of
results, improvements or inventions made by Aradigm relevant to
the Field (including without limitation changes to the
manufacturing process).

(c) Aradigm shall provide reasonable access
to its employees, contractors and suppliers to enable Novo
Nordisk to perform intellectual property audits once per
calendar year to ensure that adequate protection is sought and
maintained for intellectual property developed by Aradigm within
the Field or relevant to the Field. In the event that Novo
Nordisk determines, as a result of its intellectual property
audit or otherwise, that patent applications should be filed in
any country, Novo Nordisk shall request Aradigm to pursue such
patent applications; provided that, to the extent that
Aradigm reasonably refuses such request, and solely with respect
to any Aradigm New IPR under which Novo Nordisk is licensed
pursuant to Section 3.01, Novo Nordisk shall have the right
to file any such patent applications. In such case, Novo Nordisk
shall in its sole discretion have the option of becoming the
owner thereof or, in the alternative, an exclusive licensee
thereof pursuant to Section 6.06. If Novo Nordisk elects to
become the owner of any patent or patent application based on
such Aradigm Background IPR, Novo Nordisk shall grant Aradigm a
royalty-free license thereunder to develop, manufacture, use,
market, distribute, sell, offer for sale, have made, import
and/or export any product for the life of the patent
(provided that, such license shall be limited to products
outside the Field for so long as Novo Nordisks license
under Section 3.01 remains exclusive as to any Aradigm
Patent Right and thereafter, outside and inside the Field), with
the right to sublicense. Aradigm shall use its Diligent Efforts
to cause its employees and contractors to assist in prosecuting
any patent applications requested by Novo Nordisk in accordance
with this Section 6.03(c).

(d) Novo Nordisk shall be entitled to bring
or enter any litigation in the defense and enforcement of any
patents filed by Novo Nordisk following Aradigms
abandonment of such patent or patent application as contemplated
in Section 6.01(b), Section 6.02(b) or
Section 6.03(c) in respect of the activities of any
infringer thereof in the Field or any patents licensed
exclusively to Novo Nordisk under Section 6.06. Aradigm
agrees to be joined as a party, and Novo Nordisk agrees to pay
Aradigms reasonable litigation costs.




SECTION 6.04.     Notice
by Novo Nordisk. (a) During the term of this Agreement,
Novo Nordisk shall provide written notice to Aradigm of any
results, improvements or inventions relevant to the Development
Program (other than any results, improvements or inventions
relevant to formulation of compounds or to the interactions
between materials and formulation of compounds) prior to public
disclosure of such results, improvements or inventions to enable
Aradigm to determine, upon consultation with Novo Nordisk, the
best method of protecting the results, improvements or
inventions.

(b) Novo Nordisk shall provide periodically,
but no less than twice per calendar year, to Aradigm a list of
results, improvements or inventions made by Novo Nordisk
relevant to the Development Program (other than any results,
improvements or inventions relating to formulation of compounds
or to the interactions between materials and formulation of
compounds).

(c) Novo Nordisk shall provide reasonable
access to its employees, contractors and suppliers who are (or
have been within one (1) year of the time at which such
access is requested by Aradigm) working on the Development
Program to enable Aradigm to perform intellectual property
audits once per calendar year to ensure that adequate protection
is sought and maintained for intellectual property developed by
Novo Nordisk relevant to the Development Program (other than any
results, improvements or inventions relating to formulation of
compounds or to the interactions between materials and
formulation of compounds). In the event that Aradigm determines,
as a result of its intellectual property audit or otherwise,
that patent applications should be filed in any country, Aradigm
shall request Novo Nordisk to pursue such patent applications;
provided that, to the extent that Novo Nordisk reasonably
refuses such request, and solely with respect to any Novo
Nordisk New IPR licensed under Section 3.04(b) and (c),
Aradigm shall have the right to file any such patent
applications. In such case, Aradigm shall in its sole discretion
have the option of

16



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becoming the owner thereof or, in the
alternative, an exclusive licensee thereof pursuant to
Section 6.06. If Aradigm elects to become the owner of any
such patent application, Aradigm shall grant Novo Nordisk a
world-wide, non-exclusive, royalty-free license thereunder to
develop, manufacture, use, market, distribute, sell, offer for
sale, have made, import and/or export any product within the
Field, with the right to sublicense. Novo Nordisk shall use its
Diligent Efforts to cause its employees and contractors to
assist in prosecuting any patent applications requested by
Aradigm in accordance with this Section 6.04(c).


(d) Aradigm shall be entitled to bring or
enter any litigation in the defense and enforcement of any
patents filed by Aradigm following Novo Nordisks
abandonment of such patent or patent application as contemplated
in Section 6.02(b) or Section 6.04(c) in respect of
the activities of any infringer thereof outside the Field or any
patents licensed exclusively to Aradigm under Section 6.06.
Novo Nordisk agrees to be joined as a party, and Aradigm agrees
to pay Novo Nordisks reasonable litigation costs.




SECTION 6.05.     Pursuit
of Patents. (a) The Parties agree that Aradigms
counsel shall continue to file, prosecute and maintain all
Aradigm Background IPR, Aradigm Patent Rights, Aradigm Selected
Pulmonary Delivery Patent Rights and Aradigm New IPR that are in
each case in the Field, [****] and continuation applications
related thereto. Aradigm shall keep Novo Nordisk reasonably
informed of the progress of the applications and shall provide
Novo Nordisk with copies of all substantive communications
between Aradigm and the United States Patent and Trademark
Office (or any other relevant patent authority). Furthermore,
Aradigm shall provide Novo Nordisk with a reasonable opportunity
to comment on proposed strategies and responses relating to such
prosecution in the Field prior to their implementation by
Aradigms counsel.

(b) Aradigms costs for preparing,
filing and prosecuting additional patent applications in respect
of patents included within Aradigm Background IPR pursuant to
Section 6.05(a), and the costs of maintaining any patents
that may issue from such applications, shall be shared equally
(i.e., 50/50) between Novo Nordisk and Aradigm. In the
event that one (1) or more patents that are part of the
Aradigm Background IPR serve as the basis for recovery of
damages or other monetary award pursuant to a suit, action or
proceeding under Section 7.02, then any amounts received by
either Party from such recovery or award shall first be used to
reimburse Aradigm and Novo Nordisk for their respective expenses
related to the suit, action or proceeding, then to reimburse the
Parties for the preparation, prosecution and maintenance costs
of such patents or patent applications (to the extent incurred
pursuant to this Section 6.05(b) and not previously
reimbursed), and after such reimbursement any additional amounts
shall be shared 1:2 by Aradigm and Novo Nordisk respectively.
Further, if Aradigm licenses such patents outside the Field, or
obtains damages or other recovery by enforcing such patents
outside the Field, then, after Aradigm has recovered its duly
documented internal and external costs of enforcing such
patents, 50% of the amount of license fees reasonably allocable
to the licensing of such patents, and 50% of the amount of such
damages or other recovery, shall be paid to Novo Nordisk until
such time as Novo Nordisk has received an amount equal to the
amount of the costs of preparing, filing and maintaining such
patents (and respective applications) that were paid by Novo
Nordisk hereunder, and were not previously otherwise reimbursed.

(c) In the event that Novo Nordisk does not
agree that a particular patent application should be prepared,
filed or prosecuted pursuant to Section 6.05(a),
Aradigms costs for preparing and prosecuting such
application, and the costs of maintaining any patents that may
issue from such application, shall be the sole responsibility of
Aradigm; and any amounts received by Aradigm resulting from the
granting of licenses and/or recovery of damages or other
monetary awards shall belong to Aradigm. Should Aradigm decide
to abandon any patent application or patent that is filed,
prosecuted or maintained pursuant to this Section 6.05,
Novo Nordisk shall in its sole discretion have the option of
becoming the owner thereof or, in the alternative, an exclusive
licensee thereof pursuant to Section 6.06. If Novo Nordisk
elects to become the owner of any patent or patent application,
Novo Nordisk shall grant Aradigm a royalty-free license
thereunder to develop, manufacture, use, market, distribute,
sell, offer for sale, have made, import and/or export any
product for the life of the patent (provided that, such license
shall be limited to products outside the Field for so long as
Novo



---

**** Certain confidential
information in this document, marked by brackets, has been omitted
and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.


17



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Nordisks license under Section 3.01
remains exclusive as to any Aradigm Patent Right and thereafter,
outside and inside the Field), with the right to sublicense.





SECTION 6.06.     License
Option In Lieu Of Ownership. In each case in which a Party
has the right pursuant to this Article 6 of becoming the
owner of a patent or patent application that the other Party has
refused to file or otherwise decided to abandon, the Party
having such right may elect (in its sole discretion and by
notifying the other Party in writing) to become the exclusive
licensee thereof rather than becoming the owner. If this
election is made, then: (a) the electing Party will
prepare, file, prosecute and/or maintain (as applicable) such
patent application or patent at the electing Partys
direction and sole expense; (b) the non-electing Party
shall, and hereby does, grant the electing Party a worldwide,
exclusive, royalty-free license under such patent application or
patent, where the scope and duration of such license will be
equivalent to the scope and duration of rights such electing
Party would have had if it became the owner of such patent
application or patent under the applicable section of this
Article 6; and (c) the non-electing Party shall
continue to own such patent application or patent and shall
retain for itself the same rights to the extent it would have
been granted in the form of a non-exclusive license, with a
right to sublicense, had the electing Party become the owner of
such patent or patent application under the applicable section
of this Article 6.




ARTICLE 7

PATENT COOPERATION




SECTION 7.01.     Enforcement
of Patent Rights. (a) If Aradigm or Novo Nordisk, as
the case may be, becomes aware of (i) an actual or
potential infringement of any of the Patent Rights by a third
party practicing in the Field or an actual or potential
infringement of Aradigm Patent Rights, Aradigm Selected
Pulmonary Delivery Patent Rights or patent rights under the
Aradigm New IPR by a third party practicing outside the Field,
or (ii) the fact that a third party practicing inside or
outside the Field is challenging the enforceability or validity
of any of the Patent Rights, Aradigm or Novo Nordisk, as the
case may be, shall so notify Novo Nordisk or Aradigm, as the
case may be, in writing within fifteen (15) days. The
notice shall set forth the relevant facts (to the extent known
by the notifying Party) in reasonable detail.

(b) If Aradigm or Novo Nordisk, as the case
may be, is served by a third party with legal process initiating
any proceeding alleging (i) non-infringement of any Patent
Rights by such third party practicing in the Field,
(ii) that such third party practicing inside or outside the
Field is challenging the enforceability or validity of any
Patent Rights or (iii) anything that would adversely affect
the other Partys rights under this Agreement, including
allegations of co-ownership, co-inventorship, or implied or
explicit license, Aradigm or Novo Nordisk, as the case may be,
shall so notify Novo Nordisk or Aradigm, as the case may be, in
writing within five (5) days.




SECTION 7.02.     Initiation
of Action Relating to Patents. (a) With respect to
Aradigm Patent Rights, Aradigm Selected Pulmonary Delivery
Patent Rights or Aradigm New IPR that are licensed exclusively
to Novo Nordisk hereunder, except for those which Novo Nordisk
has the option of exclusively licensing under Section 6.06
in lieu of ownership, when action is deemed necessary or
advisable by Novo Nordisk and Aradigm to prevent infringement of
such Aradigm Patent Rights, Aradigm Selected Pulmonary Delivery
Patent Rights or Aradigm New IPR by a third party practicing or
making preparations to practice within the Field, to enforce
such Aradigm Patent Rights, Aradigm Selected Pulmonary Delivery
Patent Rights or Aradigm New IPR against such third party
practicing or making preparations to practice within the Field,
and/or to defend against an action by a third party practicing
or making preparations to practice within the Field challenging
the enforceability or the validity or asserting the
non-infringement of such Aradigm Patent Rights, Aradigm Selected
Pulmonary Delivery Patent Rights or Aradigm New IPR, then Novo
Nordisk shall have the right (but not the obligation) to
initiate any action or conduct any such suit. Aradigm shall have
the right to join, at its own expense, such action and/or suit
and to be represented in such action and/or suit by its own
counsel. Furthermore, if Aradigm is required under applicable
law to join any such suit, action, or proceeding, or if the
failure of Aradigm to be a party to such suit, action, or
proceeding would in the opinion of counsel to Novo Nordisk
result in dismissal thereof, Aradigm shall execute all papers
and perform such other acts as may be reasonably required to
permit the litigation to be conducted, and Novo Nordisk shall
reimburse

18



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Aradigm for its expenses relating to its joining
and participation thereto. If Aradigm is required to be joined
as a party in any such action by a third party practicing within
the Field challenging the enforceability or validity or
asserting the non-infringement of Aradigm Patent Rights, Aradigm
Selected Pulmonary Delivery Patent Rights or Aradigm New IPR,
then upon the request of Novo Nordisk, Aradigm shall waive any
objection to such joinder on the grounds of personal
jurisdiction, venue or forum non conveniens.


(b) If either (x) Novo Nordisk and
Aradigm agree in accordance with the provisions set forth in
Section 7.02(a) above that action is necessary, but Novo
Nordisk does not commence such action within
sixty (60) days of such agreement, or (y) in
respect of an Aradigm Patent Right that is not a Field Claim (as
defined below), Aradigm believes that action is necessary as to
such Patent Right, but Novo Nordisk does not agree in the
discussions above that action is necessary, then in either case
Aradigm shall have the right to initiate and conduct, at its
expense, an independent action against the third party infringer
of the Aradigm Patent Rights, Aradigm Selected Pulmonary
Delivery Patent Rights or Aradigm New IPR in the Field. If
Aradigm subsequently ceases to continue (other than by
settlement) an action initiated or conducted under this
Section 7.02(b), or such action is dismissed voluntarily or
involuntarily, then Novo Nordisk shall have the right, but not
the obligation to initiate, continue, and/or conduct, at its
expense and subject to all other applicable provisions of this
Section 7.02, an action as permitted by law against the
third party in respect of its activities in the Field within
sixty (60) days of Aradigms ceasing to continue its
action against such third party or of such dismissal. For
purposes of this Section 7.02(b), a Field
Claimis a claim in the Aradigm Patent Rights, Aradigm
Selected Pulmonary Delivery Patent Rights or patent rights under
the Aradigm New IPR that expressly and directly is limited to
activities in the Field. For purposes of Section 7.02(a)
and (b), Novo Nordisk shall not disagree, based primarily on any
contractual obligations Novo Nordisk may have to a third party,
with Aradigms belief that action is deemed necessary to
prevent infringement of such Patent Rights by a third party
practicing within the Field.

(c) If the infringement in the Field
involves sales of a Directly Infringing Product (as defined
below), and Novo Nordisk believes that action is necessary, but
Aradigm does not agree in the discussions above that action is
necessary within sixty (60) days of commencing such
discussions, then Novo Nordisk shall thereafter have the right
to initiate and conduct, at its expense, an action against the
third party based on the Directly Infringing Product, subject to
all other applicable provisions of this Section 7.02. For
purposes of this Section 7.02, a Directly
Infringing Productshall mean either (x) a
disposable unit dose package intended and capable for use to
deliver a medicament within the Field in a device that is a copy
of, or substantially the same as, a Device used or tested by
Novo Nordisk in clinical trials under this Agreement, or
(y) a pulmonary delivery device intended for and capable of
using disposable unit dose package that is a copy of, or
substantially the same as, that utilized in a Packaged Product
used or tested by Novo Nordisk in clinical trials under this
Agreement. As used herein and in Section 10.05(b)(ii) and
Section 10.05(c)(i), the term substantially the
same aswith respect to a device means that the two
devices being compared have the same general principles of
function, such as: (A) active breath control;
(B) delivery of an aerosol of fine particles; and
(C) an aerosol created from a liquid formulation of drug.
As used herein and in Section 10.05(b)(ii) and
Section 10.05(c)(i), the term substantially the
same aswith respect to a disposable unit dose package
means that the two disposable unit dose packages being compared
have the same general principles of function, such as:
(X) liquid drug formulation; and (Y) an aerosol of
fine particles created through an aerosol nozzle integrated with
a flexible porous membrane.

(d) In a suit initiated or conducted by Novo
Nordisk pursuant to Section 7.02(a)-(c), in the initiation,
conduct and settlement of the suit Novo Nordisk shall consider
in good faith the interests of Aradigm, both inside and outside
the Field. Novo Nordisk shall keep Aradigm reasonably informed
of the progress of the suit, action, or proceeding, and shall
provide Aradigm in a manner reasonably designed to preserve
attorney-client privilege with copies of all substantive
communications relating to the suit, action, or proceeding,
subject to confidentiality obligations to third parties. To the
extent that Aradigm believes that a particular strategy for
conduct and/or settlement of the suit proposed by Novo Nordisk
would have a material adverse impact on Aradigms
activities outside the Field and/or Aradigms interests
outside the Development Program, the Parties agree to meet and
discuss in good faith an alternative strategy to address
Aradigms concerns, and Novo Nordisk shall not proceed with
any strategy without Aradigms approval, which shall not

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be unreasonably withheld or delayed. Aradigm
shall fully cooperate with and supply all assistance reasonably
requested by Novo Nordisk in an action conducted by Novo Nordisk
under Section 7.02(a)-(c) above, and Novo Nordisk
shall reimburse Aradigm for its costs and expenses relating
thereto.


(e) In a suit initiated or conducted by
Aradigm pursuant to Section 7.02(b), in the initiation,
conduct and settlement of the suit Aradigm shall consider in
good faith the interests of Novo Nordisk inside the Field.
Aradigm shall keep Novo Nordisk reasonably informed of the
progress of the suit, action, or proceeding, and shall provide
Novo Nordisk in a manner reasonably designed to preserve
attorney-client privilege with copies of all substantive
communications relating to the suit, action, or proceeding,
subject to confidentiality obligations to third parties. To the
extent that Novo Nordisk believes that a particular strategy for
conduct and/or settlement of the suit proposed by Aradigm would
have a material adverse impact on Novo Nordisks interests
in the Field, the Parties agree to meet and discuss in good
faith an alternative strategy to address Novo Nordisks
concerns, and Aradigm shall not proceed with any strategy
without Novo Nordisks approval, which shall not be
unreasonably withheld or delayed. Novo Nordisk shall fully
cooperate with and supply all assistance reasonably requested by
Aradigm in such action.

(f) In any suit initiated or conducted by
Novo Nordisk pursuant to Section 7.02(a)-(c), all internal
and external costs and expenses of every kind and character
incurred by Novo Nordisk, including attorneys fees,
involved in the prosecution of the suit, shall be the
responsibility of Novo Nordisk. In any suit initiated or
conducted by Aradigm pursuant to Section 7.02(b), all
internal and external costs and expenses of every kind and
character incurred by Aradigm, including attorneys fees,
involved in the prosecution of the suit, shall be the
responsibility of Aradigm.

(g) Any damages or other monetary or
non-monetary awards recovered in such a suit initiated or
conducted by Novo Nordisk pursuant to
Section 7.02(a)-(c) shall be allocated to the Parties
in the following manner: First, Novo Nordisk and Aradigm shall
be reimbursed for their respective internal and external
expenses (including reasonable attorneys fees and costs)
incurred in the suit (to the extent not previously reimbursed in
accordance with Section 6.05(b)); and, second, the
remaining balance from such recovery shall be shared by Novo
Nordisk and Aradigm according to the following formula:
[2:1] Novo Nordisk:Aradigm. If the recovery is less than
both Parties costs, the recovery shall be allocated on a
pro rata basis based on each Partys internal and external
expenses. The determination of the value of non-monetary
benefits or awards shall be through mutual agreement between the
parties. If an agreement cannot be reached between the Parties,
then the fair value of such non-monetary benefits or awards
shall be established by arbitration conducted as provided for in
Section 10.01.

(h) Notwithstanding the above provisions,
with respect to Novo Nordisk Patent Rights and patents included
in the Novo Nordisk New IPR, Novo Nordisk shall bear the sole
responsibility for initiating and conducting any suits to defend
such rights; shall bear all costs of such suits; shall have the
right to settle any such suit without consulting with Aradigm;
and shall retain the full recovery from such suit. Novo Nordisk
will keep Aradigm reasonably informed of the status of any such
threatened, pending, or actual suit or proceeding regarding the
Novo Nordisk Patent Rights involving activity in the Field.

(i) Notwithstanding anything else contained
herein, with respect to any practice or activity outside the
Field, Aradigm (or its licensees, as applicable) shall have the
sole right and responsibility for initiating and conducting any
suits to defend or enforce the Aradigm Patent Rights, Aradigm
Selected Pulmonary Delivery Patent Rights and patents included
in the Aradigm New IPR against practice outside the Field and
shall bear all costs of such suits. To the extent that such a
suit or proceeding could have a material impact on Novo
Nordisks interests in the Field, Aradigm shall keep Novo
Nordisk reasonably informed of the status of any such suit or
proceeding regarding Aradigm Patent Rights, Aradigm Selected
Pulmonary Delivery rights and patents included in the Aradigm
New IPR outside the Field and shall offer Novo Nordisk an
opportunity to comment on Aradigms strategy in conducting,
and/or settling such suit, to the extent not prevented by
confidentiality or other contractual obligations to third
parties. Subject to the preceding provision, Aradigm shall have
the right to settle any such suit without consulting with Novo
Nordisk and shall retain the full recovery from such suit.

20



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(j) For any of the disclosure or
notification obligations of the Parties hereunder, it is
understood that all information disclosed under such obligations
is covered by the confidentiality provisions set forth in
Article 8, and further that neither Party shall be
required, by such obligations, to disclose privileged
information (e.g., information protected by work product
and/or attorney client privilege) or information in respect of
which such Party is subject to confidentiality or other
contractual obligations to third parties. However, each Party
agrees to use reasonable efforts to disclose the substance of
any such information in a manner that does not destroy the
privilege, and the Parties shall use good faith efforts to work
together to establish a procedure or relationship that enables
the disclosure of such privileged information without destroying
the privilege.




SECTION 7.03.     Interferences.
With respect to Aradigm Patent Rights and Aradigm New IPR that
are licensed to Novo Nordisk under Article 3, in the event
that any of such Aradigm Patent Rights, Aradigm Selected
Pulmonary Delivery Patent Rights or Aradigm New IPR are subject
to an interference action in the United States Patent and
Trademark Office, Aradigm shall provide Novo Nordisk with copies
of all communications relating to the interference action and
shall keep Novo Nordisk reasonably informed of the progress of
the interference action. Furthermore, Aradigm shall not enter
into any settlement agreement or take other dispositive action
in the interference without giving good faith consideration to
Novo Nordisks interests and concerns, and if such action
would have a material adverse impact on Novo Nordisks
activities in the Field, without obtaining the prior consent of
Novo Nordisk (which consent shall not be unreasonably withheld
or delayed).




SECTION 7.04.     Defense
and Settlement of Third Party Patent Claims. (a) If
conduct of the Development Program or the manufacture, use,
marketing, or sale of a Device or Packaged Product results in a
claim, suit, action, or proceeding by a third party against a
Party for patent infringement of such third partys patent
rights (a Field Infringement), the Party
first having notice of such claim of Field Infringement shall
notify the other Party in writing within fifteen (15) days.
The notice shall set forth the facts of the claim (to the extent
known by the Party having notice) in reasonable detail.

(b) If during the term of this Agreement, a
third party makes or attempts to enforce a claim, files suit, or
initiates a proceeding or any action that has the potential to
affect enforceability, validity, or exclusivity of any Patent
Rights that would materially affect rights within the Field,
then the Party having notice shall notify the other Party in
writing within fifteen (15) days. If prior to the Effective
Date, a third party made or attempted to enforce a claim, filed
suit, or initiated a proceeding or any action that has the
potential to affect enforceability, validity, or exclusivity of
any Patent Rights that would materially affect rights within the
Field, then the Party having notice shall notify the other Party
in writing within fifteen (15) days of the Effective Date
to the extent that such Party had the obligation under the
Development and License Agreement or the Patent Cooperation
Agreement to notify the other Party. Any notice to be provided
pursuant to this Section 7.04(b) shall set forth the facts
(to the extent known by the Party having notice) in reasonable
detail.

(c) Within fifteen (15) days of
notification under Section 7.04(a) or Section 7.04(b),
if applicable and upon agreement of the Parties, a senior
officer of each Party shall meet to discuss in good faith and
agree upon a strategy for responding to such third party suit,
action, or proceeding, which strategy shall accommodate both
Parties commercial interests and investment in the
Development Program. To the extent that the Parties cannot agree
to such a strategy for conduct and/or settlement of the
proceeding or suit, then the Party that is the subject of such
proceeding or suit may conduct or settle such suit in its sole
discretion, unless the other Party agrees in writing to assume
the defense of such action and bear the cost of such defense and
settlement or any final judgment at its own expense; provided
that, the Party assuming the defense of such proceeding or
suit shall bear only the excess of the cost of any final
settlement or judgment over the cost to which the Party that is
the subject of the proceeding or suit was to have paid in any
proposed final settlement that such Party had agreed to pay
prior to the assumption of the defense by the other Party.

21



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ARTICLE 8

SECRECY




SECTION 8.01.     Confidentiality.
(a) Each Party agrees that it shall use, and that it shall
cause any Person to whom Confidential Information is disclosed
pursuant to clause (b)(i) below to use, the Confidential
Information only in connection with the Transaction Agreements,
and the exercise of its rights hereunder and not for any other
purpose.

(b) Each Party further acknowledges and
agrees that it shall not disclose any Confidential Information
to any Person, except that Confidential Information may be
disclosed:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) to such Partys Representatives (as
    defined below) in the normal course of the performance of their
    duties or to any financial institution providing credit to such
    Party,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | (ii) to the extent required by applicable
    law, rule or regulation (including complying with any oral or
    written questions, interrogatories, requests for information or
    documents, subpoena, civil investigative demand or similar
    process to which a Party is subject; provided that, such
    Party shall give the other Party prompt notice of such
    request(s), to the extent practicable, so that such other Party
    may seek an appropriate protective order or similar relief (and
    the Party shall cooperate with such efforts by such other Party,
    and shall in any event make only the minimum disclosure required
    by such law, rule or regulation)),
|
| | (iii) to any governmental or regulatory
    authority or agency in order to obtain from such authority or
    agency any authorization required or contemplated by this
    Agreement or any of the other Transaction Agreements as long as
    such authority or agency is advised of the confidential nature
    of such information, or                                                                                                                                                                                                                                                                                                                                                     
|
| | (iv) as mutually agreed between the Parties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

(c) Nothing contained herein shall prevent
the use (subject, to the extent possible, to a protective order)
of Confidential Information in connection with the assertion or
defense of any claim by or against any Party.

(d) For purposes of this Section 8.01,
Confidential Information means any
information concerning this Agreement or the Parties
respective rights and obligations hereunder, including trade
secrets, business methods, cost, manufacturing and customer
information and information relating to the Patent Rights and
the Know-How in the possession of or furnished to a Party by the
other Party; provided that, the term Confidential
Information does not include information to the extent
that it (i) is or becomes generally available to the public
other than as a result of a disclosure by a Party or its
partners, directors, officers, employees, agents, counsel,
investment advisers or representatives (all such persons being
collectively referred to as Representatives)
in violation of this Agreement or any of the Transaction
Agreements, (ii) is or was available to such Party on a
non-confidential basis (as demonstrated by the written records
of such Party) prior to its disclosure to such Party by the
other Party or (iii) was or becomes available to such Party
on a non-confidential basis from a source other than the other
Party, which source is or was (at the time of receipt of the
relevant information) not, to the best of such Partys
knowledge, bound by a confidentiality agreement with (or other
confidentiality obligation to) the other Party or another Person.




SECTION 8.02.     Publication
Planning. Novo Nordisk shall be solely responsible for all
publication planning, it being understood that Novo Nordisk will
endeavor to present to the Review Committee its overall
publication planning strategy relating to the Development
Program in good time prior to implementation and will in such
event in good faith consider any reasonable suggestion made by
Aradigm for amendments to such strategy, it being at all times
understood that Novo Nordisk shall not be entitled to publish or
present any information covered by Section 8.01 without the
prior written consent of Aradigm. For other publications or
public presentations not covered by Novo Nordisks
publication planning hereunder, Novo Nordisk shall be solely
responsible for any publication in any technical or scientific
article or other presentation of any of the results of the
Development Program; provided that, Novo Nordisk shall
not publish or publicly present any conclusions regarding the
safety and efficacy of the Device and Packaged Product and/or
pulmonary delivery of drugs without first: (a) providing
Aradigm a draft of such publication or public presentation; and

22



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(b) obtaining the prior written consent of
Aradigm for the release of such publication or public
presentation, such consent not to be unreasonably withheld or
delayed. For purposes of this Section 8.02, Aradigm shall
be deemed to have consented to the release of such draft
publication or public presentation if it shall not have provided
comments to such draft publication or public presentation to
Novo Nordisk in writing within ten (10) days of its receipt
thereof.





SECTION 8.03.     Term
Of Confidentiality Provisions. This Article 8 shall
remain in force for ten (10) years from the date of
termination of this Agreement.




ARTICLE 9

NOTICE




SECTION 9.01.     Notice.
Any notice to be given under this Agreement shall be sent in
writing in English by registered airmail or telecopied,



| |                                                
| | -----------------------------------------------
| | if to Aradigm, to:                             
|
| | Aradigm Corporation                            
| | 3929 Point Eden Way                            
| | Hayward, California 94545                      
| | Attention: Chief Financial Officer             
| | Telephone: +1 510-265-9000                     
| | Telefax: +1 510-265-0277                       
|
| | with a copy to:                                
|
| | Cooley Godward LLP                             
| | Five Palo Alto Square                          
| | 3000 El Camino Real                            
| | Palo Alto, California 94306                    
| | Attention: James C. Kitch                      
| | Telephone: +1 650-843-5027                     
| | Telefax: +1 650-849-7400                       
|
| | if to Novo Nordisk, to:                        
|
| | Novo Nordisk A/ S                              
| | Novo Alle                                      
| | DK-2880 Bagsvaerd                              
| | Denmark                                        
| | Attention: General Counsel                     
| | Telephone: +45 44 44 88 88                     
| | Telefax: +45 44 42 18 30                       
|
| | and                                            
|
| | Attention: Vice President, Business Development
| | Telephone: + 45 44 42 39 00                    
| | Telefax: + 45 44 42 16 98                      

or to such other addresses and telecopier numbers
as may from time to time be notified by either Party to the
other hereunder.




SECTION 9.02.     Deemed
Receipt of Notice. Any notice sent by registered airmail
shall be deemed to have been delivered within seven
(7) working days after dispatch and any notice sent by
telex or telefax shall be deemed to have been delivered within
twenty-four (24) hours after dispatch. Notice of change of
address shall be effective upon receipt.

23



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ARTICLE 10

TERM AND TERMINATION




SECTION 10.01.     Term.
This Agreement shall commence on the Effective Date and shall
continue in full force and legal effect thereafter until
terminated in accordance with this Article 10.




SECTION 10.02.     Termination
by Novo Nordisk. (a) Novo Nordisk shall have the right
to terminate this Agreement at its sole discretion upon one
hundred and twenty (120) days prior written notice to
Aradigm.

(b) Novo Nordisk shall also have the right
to terminate this Agreement upon thirty (30) days
prior written notice to Aradigm in the event that Aradigm shall
have committed a material breach of this Agreement or any of the
other Transaction Agreements and shall have failed to remedy
such breach within sixty (60) days of written notice of
such breach.




SECTION 10.03.     Termination
by Aradigm. (a) Aradigm shall have the right to
terminate this Agreement upon thirty (30) days prior
written notice to Novo Nordisk in the event that Novo Nordisk
shall have committed a material breach of this Agreement and
shall have failed to remedy such breach within sixty
(60) days of written notice of such breach; provided
that, notwithstanding the foregoing, Novo Nordisk shall have
one hundred twenty (120) days following written notice by
Aradigm to remedy any breach of the obligations set forth in
Section 2.05(a)-(d).




SECTION 10.04.     Termination
By Either Party. Either Party, in addition to any other
remedies available to it in law, may terminate this Agreement
upon written notice to the other Party in the event such other
Party shall



| |                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) become insolvent or bankrupt;                                                                                                                                                                                                                                                                                              
|
| | (b) make an assignment for the benefit of
    its creditors;                                                                                                                                                                                                                                                                   
|
| | (c) appoint a trustee or receiver for itself
    for all or a substantial part of its property, seek
    reorganization, liquidation, dissolution, a winding arrangement,
    composition or readjustment of its debts;                                                                                                        
|
| | (d) have its controlling interests acquired
    by a third party manufacturer of an approved insulin product or
    an insulin product under clinical development at any time unless
    such manufacturer promptly and expressly assumes and agrees in
    writing to be directly bound by the terms of this
    Agreement; or
|
| | (e) have its controlling interest acquired
    by any company reasonably deemed to be a competitor by Novo
    Nordisk or Aradigm, as applicable, unless such company promptly
    and expressly assumes and agrees in writing to be directly bound
    by the terms of this Agreement.                                        




SECTION 10.05.     Rights
And Obligations Of The Parties After Termination.
(a) In the event that either Party terminates this
Agreement, both Parties shall retain perpetual, world-wide,
non-exclusive, royalty-free, licenses, to Aradigm New IPR and
Novo Nordisk New IPR Made Jointly by Aradigm and Novo Nordisk,
to the extent not already owned by such Party, to develop,
manufacture, use, market, distribute, sell, offer for sale, have
made, import and/or export any product within and outside the
Field; provided that, in the event of termination by Novo
Nordisk in accordance with the provisions set forth in
Section 10.02(b) or Section 10.04, and in the event
that Novo Nordisk elects to continue the Development Program
pursuant to Section 10.05(b)(i), the license retained by
Novo Nordisk hereunder shall be exclusive within the Field and
non-exclusive outside the Field.

(b) In the event that Novo Nordisk
terminates this Agreement in accordance with the provisions set
forth in Section 10.02(b) or Section 10.04, the
Parties hereto shall have the following additional rights and
obligations:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) in the event that Novo Nordisk, in its
    notice of termination, informs Aradigm of Novo Nordisks
    intent to continue the Development Program: (1) Novo
    Nordisk shall retain its licenses under Section 3.01 and
    Section 3.02 and pay royalties with respect thereto under
    Section 5.01 until the later of (A) the date that is
    ten (10) years from First Marketing of any Packaged Product
    and the Device and

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (B) the expiration date of the last patent
    required to cover the Packaged Product and the Device and the
    development, manufacturing, use, marketing, distribution, sale,
    offer for sale, importation and/or exportation thereof in and
    from the Territory, and (2) all rights and obligations of
    the Parties under Sections 2.02, 2.03, 2.04, 2.08, 4.01,
    6.03 and 6.04 will terminate. For the avoidance of doubt, the
    remaining provisions of this Agreement will survive, including
    Novo Nordisks license rights and payment obligations (as
    set forth in (1) above) and Novo Nordisks obligation
    to expend Diligent Efforts to clinically develop and register
    the Insulin Compound Packaged Product and the Device for Broad
    Regulatory Approval in the United States and the European Union.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (ii) in the event that Novo Nordisk fails to
    provide Aradigm with written notice of its intent to continue
    the Development Program pursuant to Section 10.05(b)(i),
    the licenses granted to Novo Nordisk under Section 3.01 and
    Section 3.02, and to its permitted sublicensees thereunder,
    shall immediately terminate, and Novo Nordisk shall be, and
    hereby is, granted a perpetual, world-wide, non-exclusive,
    royalty-bearing, license, with the right to sublicense its
    customers and Joint Marketing Partners in accordance with
    Section 3.03, under the Aradigm Patent Rights, Aradigm
    Selected Pulmonary Delivery Patent Rights, Aradigm Know-How and
    Aradigm New IPR to develop, manufacture, use, market,
    distribute, sell, offer for sale, have made, import and/or
    export pulmonary products (other than Packaged Products, Devices
    or products that are substantially the same as such Packaged
    Products or Devices) in the Field. The royalty shall be payable
    on Net Sales within the Field (by any member of the Novo Nordisk
    Affiliate Group or any permitted sublicensee thereof), if any,
    of pulmonary products that use, or are covered by, any Aradigm
    Know-How or any know-how included in the Aradigm New IPR, or
    that are covered by any Aradigm Patent Rights, Aradigm Selected
    Pulmonary Delivery Patent Rights or any patents included in the
    Aradigm New IPR. Such royalty shall be payable until the later
    of (A) the date that is ten (10) years from First
    Marketing of such pulmonary product; and (B) the expiration
    date of the last patent required to cover such pulmonary product
    and the development, manufacturing, use, marketing,
    distribution, sale, offer for sale, importation and/or
    exportation thereof in and from the Territory. The rate for such
    royalty shall be determined in accordance with the provisions
    set forth in Section 5.03(a) in respect of those patents
    and know-how licensed to Novo Nordisk by Aradigm under this
    Section 10.05(b)(ii), but in no event shall such royalty
    exceed: (X) in the case of any pulmonary products using an
    Alternative Technology to deliver a specific insulin or insulin
    analog class, (1) for a First Marketed Product and Device,
    four and one quarter percent (4.25%) of Net Sales thereof during
    the applicable Stage 1 Commercialization Period, five
    percent (5.00%) of Net Sales thereof during the applicable
    Stage 2 Commercialization Period, and six percent (6.00%)
    of Net Sales thereof during the applicable Stage 3
    Commercialization Period or (2) for any Later Marketed
    Product and Device, five and one-quarter percent (5.25%) of Net
    Sales thereof during the applicable Stage 1
    Commercialization Period and six percent (6.00%) of Net Sales
    thereof during the applicable Stage 2 Commercialization
    Period and the applicable Stage 3 Commercialization Period;
    and (Y) for any other pulmonary products, five and
    one-quarter percent (5.25%) of Net Sales thereof during the
    applicable Stage 1 Commercialization Period and six percent
    (6.00%) of Net Sales thereof during the applicable Stage 2
    Commercialization Period and the applicable Stage 3
    Commercialization Period.

(c) In the event that Novo Nordisk
terminates this Agreement in accordance with any provision
contained herein other than as set forth in
Section 10.02(b) or Section 10.04, the Parties hereto
shall have the following additional rights and obligations:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) The licenses granted to Novo Nordisk
    under Section 3.01 and Section 3.02, and to its
    permitted sublicensees thereunder, shall immediately terminate,
    and Novo Nordisk shall be, and hereby is, granted a perpetual,
    world-wide, non-exclusive, royalty-bearing license, with the
    right to sublicense its customers and Joint Marketing Partners
    in accordance with Section 3.03, under the Aradigm Patent
    Rights, Aradigm Selected Pulmonary Delivery Patent Rights,
    Aradigm Know-How and Aradigm New IPR to develop, manufacture,
    use, market, distribute, sell, offer for sale, have made, import
    and/or export pulmonary products (other than Packaged Products,
    Devices or products that are substantially the same as such
    Packaged Products or Devices) in the Field. The royalty shall be
    payable on Net Sales within the Field (by any member of the Novo
    Nordisk Affiliate Group or any permitted sublicensee thereof),
    if any,

25



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | of pulmonary products that use, or are covered
    by, any Aradigm Know-How or any know-how included in the Aradigm
    New IPR, or that are covered by any Aradigm Patent Rights,
    Aradigm Selected Pulmonary Delivery Patent Rights or any patents
    included in the Aradigm New IPR. Such royalty shall be payable
    until the later of (A) the date that is ten (10) years
    from First Marketing of such pulmonary product; and (B) the
    expiration date of the last patent required to cover such
    pulmonary product and the development, manufacturing, use,
    marketing, distribution, sale, offer for sale, importation
    and/or exportation thereof in and from the Territory. The rate
    for such royalty shall be determined in accordance with the
    provisions set forth in Section 5.03(a) in respect of those
    patents and know-how licensed to Novo Nordisk by Aradigm under
    this Section 10.05(c)(i), but in no event shall such
    royalty exceed: (X) in the case of any pulmonary products
    using an Alternative Technology to deliver a specific insulin or
    insulin analog class, (1) for a First Marketed Product and
    Device, four and one quarter percent (4.25%) of Net Sales
    thereof during the applicable Stage 1 Commercialization
    Period, five percent (5.00%) of Net Sales thereof during the
    applicable Stage 2 Commercialization Period, and six
    percent (6.00%) of Net Sales thereof during the applicable
    Stage 3 Commercialization Period; or (2) for any Later
    Marketed Product and Device, five and one-quarter percent
    (5.25%) of Net Sales thereof during the applicable Stage 1
    Commercialization Period and six percent (6.00%) of Net Sales
    during the applicable Stage 2 Commercialization Period and
    the applicable Stage 3 Commercialization Period; and
    (Y) for any other pulmonary products, five and one-quarter
    percent (5.25%) of Net Sales thereof during the applicable
    Stage 1 Commercialization Period and six percent (6.00%) of
    Net Sales thereof during the applicable Stage 2
    Commercialization Period and the applicable Stage 3
    Commercialization Period;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | (ii) Aradigm shall be, and hereby is,
    granted a perpetual, world-wide, non-exclusive, royalty-bearing
    (as described below in this Section 10.05(c)(ii)) license, with
    the right to sublicense, under the Novo Nordisk Know-How and
    know-how included within Novo Nordisk New IPR and certain claims
    under the Novo Nordisk Patent Rights and the patents included
    within Novo Nordisk New IPR, which are necessary to develop,
    manufacture, use, market, distribute, sell, offer for sale,
    import and/or export: (1) the Insulin Compound Packaged
    Product containing the Insulin Compound formulation as it exists
    on the date of termination and the Device and/or later
    generation pulmonary products in the Field derived from such
    Insulin Compound Packaged Product containing the Insulin
    Compound formulation as it exists on the date of termination and
    the Device; and (2) any pulmonary drug delivery product
    outside the Field. Novo Nordisk shall in good faith specify in
    writing to Aradigm promptly following termination the patent
    claims that describe such Insulin Compound formulation to enable
    Aradigm to practice its rights under the foregoing license, as
    further described below; provided that, if Aradigm
    notifies Novo Nordisk in writing of any additional claims that
    Aradigm believes are necessary to practice such license, then
    the Parties shall meet and discuss in good faith whether to
    specify such additional claims. For the avoidance of doubt,
    Aradigms license with respect to the Insulin Compound
    Packaged Product under the Novo Nordisk Know-How and the
    know-how included within the Novo Nordisk New TPR and the
    specific claims under the Novo Nordisk Patent Rights and the
    patents included in the Novo Nordisk New IPR permit Aradigm to
    make only (a) the exact formulation of the Insulin Compound
    as it exists at the time of termination; (b) a formulation
    of such Insulin Compound with a lower (but not higher)
    concentration of insulin, in each case falling within the
    concentration ranges in the specified claims; (c) subject
    to (b) above, a formulation of such Insulin Compound that
    increases or decreases the range of excipients or other
    non-Insulin Compound components included within such existing
    formulation, provided such excipients or other non-Insulin
    Compound components remain within a range of two (2) times
    the quality specification for such component; and/or (d) a
    formulation of such Insulin Compound to which excipients or
    other components may be added or deleted provided such
    additional excipients or other compounds do not infringe any
    intellectual property rights of Novo Nordisk or any of its
    Affiliates, other than such intellectual property rights
    licensed to Aradigm under this Section 10.05(c)(ii). Within the
    Field, such license shall be royalty-free prior to First
    Marketing of any Packaged Product and/or Device by Aradigm or
    its sublicensees; after such First Marketing, such license shall
    bear a royalty of (A) two and seven-tenths percent (2.70%)
    of Net Sales (by Aradigm, any of its Affiliates or permitted
    sublicensees) of Device and Packaged Products falling within
    (a)-(d) above for the first four (4) years following First
    Marketing and thereafter four percent (4.00%) of such Net Sales
    of the

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Packaged Product and the Device; and
    (B) four percent (4.00%) of Net Sales (by Aradigm, any of
    its Affiliates or sublicensees) of later generation pulmonary
    products derived from such Device and/or Packaged Products.
    Outside the Field, such royalty shall bear a royalty determined
    in accordance with the provisions set forth in
    Section 5.03(a). Additionally, Aradigm shall retain its
    license under Section 3.04(b), which license shall be
    expanded to include the ability to develop, manufacture, use,
    market, distribute, sell, offer for sale, have made, import
    and/or export any product inside the Field; and
|
| | (iii) Novo Nordisk shall supply insulin to
    Aradigm in accordance with the provisions set forth in
    Section 10.05(f) until the date of the first Regulatory
    Submission if, and only if, Novo Nordisk shall have terminated
    this Agreement prior to First Marketing of the Insulin Compound
    Packaged Product and the Device.                                                                                                                                                                                                                                                                                                                          

(d) In the event that Aradigm terminates
this Agreement in accordance with the provisions set forth in
Section 10.03 or Section 10.04, Aradigm shall be, and
hereby is, granted a perpetual, world-wide, non-exclusive
license, with the right to sublicense, under the Novo Nordisk
Know-How and know-how included within Novo Nordisk New IPR and
certain claims under the Novo Nordisk Patent Rights and the
patents included within Novo Nordisk New IPR, which are
necessary to develop, manufacture, use, market, distribute,
sell, offer for sale, import and/or export: (1) the Insulin
Compound Packaged Product containing the Insulin Compound
formulation as it exists on the date of termination and the
Device and/or later generation pulmonary products in the Field
derived from such Insulin Compound Packaged Product containing
the Insulin Compound formulation as it exists on the date of
termination and the Device; and (2) any product outside the
Field. Such royalty shall be royalty-free in the Field and
royalty-bearing (as determined in accordance with the provisions
set forth in Section 5.03(a)) outside the Field. Novo
Nordisk shall in good faith specify in writing to Aradigm
promptly following termination the patent claims that describe
such Insulin Compound formulation to enable Aradigm to practice
its rights under the foregoing license, as further described
below; provided that, if Aradigm notifies Novo Nordisk in
writing of any additional claims that Aradigm believes are
necessary to practice such license, then the Parties shall meet
and discuss in good faith whether to specify such additional
claims. For the avoidance of doubt, Aradigms license with
respect to the Insulin Compound Packaged Product under the Novo
Nordisk Know-How and the know-how included within the Novo
Nordisk New IPR and the specific claims under the Novo Nordisk
Patent Rights and the patents included in the Novo Nordisk New
IPR permit Aradigm to make only (a) the exact formulation
of the Insulin Compound as it exists at the time of termination;
(b) a formulation of such Insulin Compound with a lower
(but not higher) concentration of insulin, in each case falling
within the concentration ranges in the specified claims;
(c) subject to (b) above, a formulation of such
Insulin Compound that increases or decreases the range of
excipients or other non-Insulin Compound components included
within such existing formulation, provided such excipients or
other non-Insulin Compound components remain within a range of
two (2) times the quality specification for such component;
and/or (d) a formulation of such Insulin Compound to which
excipients or other components may be added or deleted provided
such additional excipients or other compounds do not infringe
any intellectual property rights of Novo Nordisk or any of its
Affiliates, other than such intellectual property rights
licensed to Aradigm under this Section 10.05(d).
Additionally, Aradigm shall retain its license under
Section 3.04(b), which license shall be expanded to include
the ability to develop, manufacture, use, market, distribute,
sell, offer for sale, have made, import and/or export any
product inside the Field. In the event that Aradigm terminates
this Agreement prior to the first Regulatory Submission of the
Insulin Compound Packaged Product and the Device, Novo Nordisk
shall supply insulin to Aradigm in accordance with the
provisions set forth in Section 10.05(f).

(e) In the event that either Party
terminates this Agreement in accordance with the provisions set
forth herein, other than in accordance with the provisions set
forth in Section 10.02(b) or Section 10.04 as and to
the extent requested in writing by Aradigm, Novo Nordisk will
cooperate with Aradigm to transfer the technology and any
related development or production equipment (as specified by
Aradigm) back to Aradigm, and Aradigm will pay Novo Nordisk:
(i) for its transfer activities (on terms and conditions
substantially similar to those set forth in the Transition
Services Agreement and the Restructuring Agreement); and
(ii) the replacement value for any custom-made equipment
and the fair market value for

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any equipment that is not custom-made to Novo
Nordisk for any such equipment; provided that, Novo
Nordisk shall be entitled to payment of fair market value for
any custom-made equipment in respect of which Novo Nordisk does
not provide Aradigm with reasonably satisfactory evidence of its
intention to replace such equipment. Additionally, Aradigm shall
be entitled to use the data generated under the Development
Program to work with a third party and shall have reasonable
access to the relevant sections of applicable regulatory filings
by any member of the Novo Nordisk Affiliate Group; provided
that, it is expressly understood that neither Aradigm nor
any marketing partner of Aradigm shall have access to any
Regulatory Approval in respect of Novo Nordisk bulk insulin or
Novo Nordisk Know-How, production process details or other
information relating to the production of bulk insulin by Novo
Nordisk or any of its Affiliates.


(f) In the event that either Party
terminates this Agreement in accordance with the provisions set
forth herein, other than in accordance with the provisions set
forth in Section 10.02(b) or Section 10.04 and if, and
only if, such termination occurs prior to First Marketing of the
Insulin Compound Packaged Product and the Device, Novo Nordisk
shall [****].

(g) In the event that either Party
terminates this Agreement in accordance with the provisions set
forth herein, Aradigm agrees that it will not use, directly or
indirectly, any Novo Nordisk Know-How or other confidential
information received from Novo Nordisk pursuant to this
Agreement, and Novo Nordisk agrees that it will not use,
directly or indirectly, any Aradigm Know-How or other
confidential information received from Aradigm pursuant to this
Agreement, in either case other than as expressly provided
herein.

(h) In the event that Novo Nordisk terminates this
Agreement for any reason, Novo Nordisk may elect to have granted to
it a (1) non-exclusive, royalty-bearing (as described below)
license to Aradigms [****], claims [****] or (2) a
semi-exclusive, royalty-bearing (as described below) license to
Aradigms [****], claims [****], in respect of which patent
Aradigm may only further license such patent to [****], in each case
by notifying Aradigm in writing within one (1) month of
the delivery of the termination notice and, in the case of (2) above,
[****]. Novo Nordisk will pay a royalty of [****] (by any member of
the Novo Nordisk Affiliate Group) of products covered by one (1)
or more of the licensed claims from Aradigm's [****]; provided
that,
in the event that Aradigm licenses the [****] patent to [****], Novo
Nordisk will pay Aradigm the [****].  [****].

(i) Upon termination of this Agreement,
Aradigm undertakes to return, upon Novo Nordisks written
request, all written documentation embodying Novo Nordisk
Know-How and any and all remaining Program Compound to Novo
Nordisk, except and to the extent retention thereof is
reasonably necessary during any post termination period in which
Novo Nordisk continues to supply insulin to Aradigm. In the
event that Aradigm terminates this Agreement in accordance with
the provisions set forth in Section 10.03, Novo Nordisk
shall return, upon Aradigms written request, all written
documentation embodying Aradigm Know- How to Aradigm.




SECTION 10.06.     Additional
Effects of Termination or Expiration. Termination or
expiration of this Agreement shall not affect the continuing
validity and enforceability of Sections 5.02, 5.03, 5.04,
5.05, 5.06, 5.07, 6.01, 6.02, 6.06, Articles 7, 8, 9, 10,
11 and 12 and the applicable definitions in Article 1 of
this Agreement. All confidential information provided under the
Agreement shall be returned to the respective Parties within
ninety (90) days of the termination date, except as
otherwise contemplated by this Agreement and except as to
confidential information required by the Parties to exercise
their respective rights under this Agreement.




ARTICLE 11

DISPUTE RESOLUTION AND GOVERNING LAW




SECTION 11.01.     Dispute
Resolution. (a) All disputes arising out of this
Agreement shall be settled as far as possible by negotiations
between the Parties. If the Parties cannot agree on an amicable
settlement within thirty (30) days from written submission
of the matter by one Party to the other Party, the matter shall
be submitted for decision and final resolution to arbitration to
the exclusion of any courts of law, under the Arbitration Rules
of the American Arbitration Association.

(b) The arbitration tribunal shall be
composed of three disinterested arbitrators, appointed pursuant
to the following procedure: the Party invoking arbitration shall
notify the other Party stating the substance of its claim and
the name and address of the arbitrator it has chosen, who may be
a citizen of any country. Within thirty (30) days of
receipt of such notification, the other Party shall notify the
first party of its answer to the



---

**** Certain confidential
information in this document, marked by brackets, has been omitted
and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.


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claim made, any counterclaim that it wishes to
assert in the arbitration, and the name and address of its
arbitrator, who may be a citizen of any country. If this is not
done within the 30-day period, appointment of the second
arbitrator shall be made in accordance with the Arbitration
Rules of the American Arbitration Association upon request of
the initiating Party.


(c) The arbitrators shall choose a third
arbitrator, who shall serve as president of the tribunal thus
composed. If the arbitrators fail to agree upon the choice of a
third arbitrator within thirty (30) days from the
appointment of the second arbitrator, the third arbitrator will
be appointed in accordance with the Arbitration Rules of the
American Arbitration Association upon the request of the
arbitrators or either of the Parties.

(d) The arbitrators shall decide the dispute
by majority decision and in accordance with the laws of the
State of New York. The decision shall be rendered in writing,
shall state the reasons on which it is based, and shall bear the
signatures of at least two arbitrators. It shall also identify
the members of the arbitration tribunal, and the time and place
of the award granted. Finally, it shall determine the expenses
of the arbitration and the Party who shall be charged therewith
or the allocation of the expenses between the Parties at the
discretion of the tribunal.

(e) The arbitration decision shall be
rendered as soon as possible, not later, however, if possible,
than six months after the constitution of the arbitration
tribunal. The arbitration decision shall be final and binding
upon both Parties and the Parties agree that any award granted
pursuant to such decision may be entered forthwith in any court
of competent jurisdiction. This arbitration clause and any award
granted pursuant to an arbitration decision thereunder shall be
enforceable against the Parties in accordance with the 1958
Convention on the Recognition and Enforcement of Foreign
Arbitral Awards, as amended.

(f) The seat of arbitration shall be New
York City, unless the Parties otherwise agree in writing. The
official arbitration language shall be English.




SECTION 11.02.     Governing
Law. This Agreement shall be governed by and construed in
accordance with the law of the State of New York.




ARTICLE 12

MISCELLANEOUS




SECTION 12.01.     Bankruptcy
Code Considerations. (a) The Parties agree that this
Agreement is an executory contract (involving
continuing executory obligations of Aradigm to provide licenses
of the Aradigm Patent Rights, the Aradigm Selected Pulmonary
Delivery Patent Rights, the Aradigm New IPR and the Aradigm
Know-How, Novo Nordisk to provide licenses of the Novo Nordisk
Patent Rights, Novo Nordisk New IPR and the Novo Nordisk
Know-How, and continuing executory obligations to pay royalties
hereunder), under which Aradigm and Novo Nordisk, as the case
may be, is a licensor of a right to intellectual
property, and that this Agreement is governed under
11 U.S.C. § 365(n) of the United States
Bankruptcy Code (Bankruptcy Code).

(b) The Parties further agree that the
Aradigm Patent Rights, the Aradigm Selected Pulmonary Delivery
Patent Rights, the Aradigm New IPR and the Aradigm Know-How, the
Novo Nordisk Patent Rights, Novo Nordisk New IPR and the Novo
Nordisk Know-How collectively constitute the intellectual
property (as such term is defined in
section 11 U.S.C. § 101(35A) of the
Bankruptcy Code) being licensed hereunder. If a Party as debtor
in possession or a trustee of bankruptcy for a Party in a case
under the Bankruptcy Code, rejects this Agreement, the other
Party may elect to retain its rights under this Agreement as
provided for in 11 U.S.C. § 365(n). In addition,
if a Party as debtor in possession or a trustee of bankruptcy
for a Party in a case under the Bankruptcy Code chooses to
assign this Agreement to any Person as may be permitted under
the Bankruptcy Code, such Party or such trustee shall only
assign this Agreement to an assignee that, in conformity with
section 11 U.S.C. § 365(f) of the Bankruptcy
Code, affirmatively agrees to assume all of such Partys
obligations under this Agreement, and that provides adequate
assurance of future performance.

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SECTION 12.02.     Binding
Agreement. This Agreement shall not be binding upon the
Parties until it has been signed herein below by or on behalf of
each Party, in which event it shall be effective as of the
Effective Date.




SECTION 12.03.     Severability.
If any provision in any Article of this Agreement is found by
competent authority to be invalid, illegal or unenforceable in
any respect for any reason, the validity, legality and
enforceability of such other Article in every other respect and
the remainder of this Agreement shall continue in effect so long
as the Agreement still expresses the intent of the Parties.
However, if the intent of the Parties cannot be preserved, this
Agreement shall be either renegotiated or terminated.




SECTION 12.04.     Amendments
and Waivers. (a) Any provision of this Agreement may be
amended or waived if, but only if, such amendment or waiver is
in writing and is signed, in the case of an amendment, by each
Party to this Agreement, or in the case of a waiver, by the
Party against whom the waiver is to be effective.

(b) No failure or delay by any Party in
exercising any right, power or privilege hereunder shall operate
as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive
of any rights or remedies provided by law.




SECTION 12.05.     Expenses.
Except as otherwise provided herein, all costs and expenses
incurred in connection with this Agreement shall be paid by the
Party incurring such cost or expense.




SECTION 12.06.     Successors
and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the Parties hereto and
their respective successors and assigns; provided that,
no Party may assign, delegate or otherwise transfer any of its
rights or obligations under this Agreement without the consent
of each other Party hereto, except pursuant to the provisions of
Articles 3 and 10.




SECTION 12.07.     Counterparts;
Third Party Beneficiaries. This Agreement may be signed in
any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement shall become
effective when each Party hereto shall have received a
counterpart hereof signed by the other Party hereto. No
provision of this Agreement is intended to confer upon any
person other than the Parties hereto any rights or remedies
hereunder.




SECTION 12.08.     Entire
Agreement. This Agreement and the other Transaction
Agreements constitute the entire agreement between the Parties
with respect to the subject matter of this Agreement and
supersede all prior agreements and understandings, both oral and
written, between the Parties with respect to the subject matter
of this Agreement.

[SIGNATURE PAGE FOLLOWS]

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| |                                                      
| | -----------------------------------------------------
| | ARADIGM CORPORATION                                  
|
| | By: /s/ Thomas C. Chesterman                         
| |                                                      
| | Name: Thomas C. Chesterman                           
| | Title: Sr. Vice President and Chief Financial
Officer
|
| | NOVO NORDISK A/S                                     
|
| | By: /s/ Per Valstorp                                 
| |                                                      
| | Name: Per Valstorp                                   
| | Title: Senior Vice President, Product Supply         





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Appendix A
Aradigm Selected Pulmonary Delivery Patent Rights
 
 
 
[****]   ****
    
    Certain confidential information in this document, marked by brackets, has been
omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended.