##### 



Exhibit 10.29


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.




RESTRUCTURING AGREEMENT

dated as of


September 28, 2004


among


ARADIGM CORPORATION


NOVO NORDISK A/S


and


NOVO NORDISK DELIVERY TECHNOLOGIES,
INC.






---



##### 





TABLE OF CONTENTS

|                                                   |  |                                                      |  |      |    | 
|-------------------------------------------------- |  | ---------------------------------------------------- |  | ---- | -- | 
|                                                   |  |                                                      |  | Page
|                                                   |  |                                                      |  |     
|ARTICLE 1                                         
|DEFINITIONS                                       
|SECTION 1.01.                                      |  | Definitions                                          |  |      | 1  | 
|SECTION 1.02.                                      |  | Other Definitional And
    Interpretative Provisions |  |      | 5  | 
|SECTION 1.03.                                      |  | Knowledge Of
    Aradigm                             |  |      | 6  | 
|                                                  
|ARTICLE 2                                         
|PRE-CLOSING ACTIVITIES: CLOSING; THE TRANSACTIONS;
|POST-CLOSING ACTIVITIES                           
|SECTION 2.01.                                      |  | Pre-closing
    Activities                           |  |      | 6  | 
|SECTION 2.02.                                      |  | Closing                                              |  |      | 6  | 
|SECTION 2.03.                                      |  | Effect of
    Closing                                |  |      | 6  | 
|SECTION 2.04.                                      |  | Post-closing
    Activities                          |  |      | 6  | 
|                                                  
|ARTICLE 3                                         
|REPRESENTATIONS AND WARRANTIES OF ARADIGM         
|SECTION 3.01.                                      |  | Corporate Existence and
    Power                    |  |      | 7  | 
|SECTION 3.02.                                      |  | Corporate
    Authorization                          |  |      | 7  | 
|SECTION 3.03.                                      |  | Governmental
    Authorization                       |  |      | 7  | 
|SECTION 3.04.                                      |  | Noncontravention                                     |  |      | 7  | 
|SECTION 3.05.                                      |  | Required and Other
    Consents                      |  |      | 7  | 
|SECTION 3.06.                                      |  | Absence of Certain
    Changes                       |  |      | 8  | 
|SECTION 3.07.                                      |  | No Undisclosed Material
    Liabilities              |  |      | 8  | 
|SECTION 3.08.                                      |  | Material
    Contracts                               |  |      | 8  | 
|SECTION 3.09.                                      |  | Litigation                                           |  |      | 9  | 
|SECTION 3.10.                                      |  | Compliance with Laws and
    Court Orders            |  |      | 9  | 
|SECTION 3.11.                                      |  | Properties                                           |  |      | 9  | 
|SECTION 3.12.                                      |  | Title to the Transferred
    Assets                  |  |      | 10 | 
|SECTION 3.13.                                      |  | Intellectual
    Property                            |  |      | 10 | 
|SECTION 3.14.                                      |  | Insurance
    Coverage                               |  |      | 11 | 
|SECTION 3.15.                                      |  | Licenses and
    Permits                             |  |      | 11 | 
|SECTION 3.16.                                      |  | Inventories and
    Supplies                         |  |      | 12 | 
|SECTION 3.17.                                      |  | Documents                                            |  |      | 12 | 
|SECTION 3.18.                                      |  | Finders
    Fees                                    |  |      | 12 | 
|SECTION 3.19.                                      |  | Employees                                            |  |      | 12 | 
|SECTION 3.20.                                      |  | Environmental
    Compliance                         |  |      | 12 | 
|SECTION 3.21.                                      |  | Representations                                      |  |      | 13 | 
|SECTION 3.22.                                      |  | Compliance With Existing
    Agreements              |  |      | 13 | 



---



##### 



|                                               |  |                                                                                                |  |      |    | 
|---------------------------------------------- |  | ---------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                               |  |                                                                                                |  | Page
|                                               |  |                                                                                                |  |     
|                                              
|ARTICLE 4                                     
|REPRESENTATIONS AND WARRANTIES OF NOVO NORDISK
|SECTION 4.01.                                  |  | Corporate Existence and
    Power                                                              |  |      | 13 | 
|SECTION 4.02.                                  |  | Corporate
    Authorization                                                                    |  |      | 13 | 
|SECTION 4.03.                                  |  | Governmental
    Authorization                                                                 |  |      | 13 | 
|SECTION 4.04.                                  |  | Noncontravention                                                                               |  |      | 13 | 
|SECTION 4.05.                                  |  | Litigation                                                                                     |  |      | 14 | 
|SECTION 4.06.                                  |  | Finders
    Fees                                                                              |  |      | 14 | 
|SECTION 4.07.                                  |  | Information                                                                                    |  |      | 14 | 
|SECTION 4.08                                   |  | Compliance with Existing
    Agreements                                                        |  |      | 14 | 
|                                              
|ARTICLE 5                                     
|COVENANTS OF ARADIGM                          
|SECTION 5.01.                                  |  | Conduct of the
    Development Program                                                         |  |      | 14 | 
|SECTION 5.02.                                  |  | Access to
    Information                                                                      |  |      | 14 | 
|SECTION 5.03.                                  |  | Notices of Certain
    Events                                                                  |  |      | 15 | 
|SECTION 5.04.                                  |  | Shareholder
    Votes                                                                          |  |      | 15 | 
|                                              
|ARTICLE 6                                     
|COVENANTS OF NOVO NORDISK                     
|SECTION 6.01.                                  |  | Access                                                                                         |  |      | 15 | 
|SECTION 6.02.                                  |  | Information                                                                                    |  |      | 16 | 
|                                              
|ARTICLE 7                                     
|COVENANTS OF THE PARTIES                      
|SECTION 7.01.                                  |  | Best Efforts; Further
    Assurances                                                           |  |      | 16 | 
|SECTION 7.02.                                  |  | Certain
    Filings                                                                            |  |      | 16 | 
|SECTION 7.03.                                  |  | Public
    Announcements                                                                       |  |      | 16 | 
|SECTION 7.04.                                  |  | Confidentiality                                                                                |  |      | 16 | 
|SECTION 7.05.                                  |  | Warn Act                                                                                       |  |      | 17 | 
|SECTION 7.06.                                  |  | Nonsolicitation                                                                                |  |      | 17 | 
|SECTION 7.07.                                  |  | Compliance with Existing
    Agreements                                                        |  |      | 17 | 
|                                              
|ARTICLE 8                                     
|EMPLOYEE BENEFITS                             
|SECTION 8.01.                                  |  | Employment
    Offers                                                                          |  |      | 18 | 
|SECTION 8.02.                                  |  | Employee Benefits
    Definitions                                                              |  |      | 18 | 
|SECTION 8.03.                                  |  | Employee Benefits
    Representations                                                          |  |      | 18 | 
|SECTION 8.04.                                  |  | Employee Benefits
    Covenants                                                                |  |      | 19 | 
|SECTION 8.05.                                  |  | No Third Party
    Beneficiaries                                                               |  |      | 20 | 
|                                              
|ARTICLE 9                                     
|CONDITIONS TO CLOSING                         
|SECTION 9.01.                                  |  | Conditions to Obligations
    of the Parties                                                   |  |      | 20 | 
|SECTION 9.02.                                  |  | Conditions to Obligations
    of Novo Nordisk and Novo Nordisk Delivery Technologies,
    Inc. |  |      | 20 | 
|SECTION 9.03.                                  |  | Conditions to Obligation
    of Aradigm                                                        |  |      | 21 | 



---



##### 



|                          |  |                                                            |  |      |     | 
|------------------------- |  | ---------------------------------------------------------- |  | ---- | --- | 
|                          |  |                                                            |  | Page
|                          |  |                                                            |  |     
|                         
|ARTICLE 10               
|SURVIVAL; INDEMNIFICATION
|SECTION 10.01.            |  | Survival                                                   |  |      | 22  | 
|SECTION 10.02.            |  | Indemnification                                            |  |      | 22  | 
|SECTION 10.03.            |  | Procedures                                                 |  |      | 22  | 
|                         
|ARTICLE 11               
|TERMINATION              
|SECTION 11.01.            |  | Grounds for
    Termination                                |  |      | 23  | 
|SECTION 11.02.            |  | Effect of
    Termination                                  |  |      | 23  | 
|                         
|ARTICLE 12               
|MISCELLANEOUS            
|SECTION 12.01.            |  | Notices                                                    |  |      | 23  | 
|SECTION 12.02.            |  | Amendments and
    Waivers                                 |  |      | 24  | 
|SECTION 12.03.            |  | Expenses                                                   |  |      | 24  | 
|SECTION 12.04.            |  | Successors and
    Assigns                                 |  |      | 24  | 
|SECTION 12.05.            |  | Governing
    Law                                          |  |      | 24  | 
|SECTION 12.06.            |  | Jurisdiction                                               |  |      | 24  | 
|SECTION 12.07.            |  | Waiver of Jury
    Trial                                   |  |      | 25  | 
|SECTION 12.08.            |  | Counterparts; Third Party
    Beneficiaries; Effectiveness |  |      | 25  | 
|SECTION 12.09.            |  | Entire
    Agreement                                       |  |      | 25  | 
|SECTION 12.10.            |  | Bulk Sales
    Laws                                        |  |      | 25  | 
|SECTION 12.11.            |  | Severability                                               |  |      | 25  | 
|SECTION 12.12.            |  | Specific
    Performance                                   |  |      | 25  | 
|Exhibit A                 |  | Amended
    and Restated License Agreement                 |  |      | A-1 | 
|Exhibit B                 |  | Asset
    Purchase Agreement                               |  |      | B-1 | 
|Exhibit C                 |  | Sublease
    Agreement                                     |  |      | C-1 | 
|Exhibit D                 |  | Contract
    Manufacturing Agreement                       |  |      | D-1 | 
|Exhibit E                 |  | Quality
    Agreement                                      |  |      | E-1 | 
|Exhibit F                 |  | Amended
    and Restated Stock Purchase Agreement          |  |      | F-1 | 
|Exhibit G                 |  | Transition
    Services Agreement                          |  |      | G-1 | 
|Exhibit H                 |  | Assignment
    Agreements                                  |  |      | H-1 | 
|Appendix A                |  | Press
    Release                                          |  |      |     | 
|Appendix B                |  | Form
    of Cooley Godward Opinion                         |  |      |     | 





---



##### 



RESTRUCTURING AGREEMENT

AGREEMENT dated as of September 28, 2004 by
and among Aradigm Corporation, a corporation duly organized and
existing under the law of the State of California
(Aradigm), Novo Nordisk A/S, a company duly
organized and existing under the law of Denmark (Novo
Nordisk)and Novo Nordisk Delivery Technologies, Inc.,
a corporation duly organized and existing under the law of the
State of Delaware (Novo Nordisk Delivery Technologies,
Inc.). Capitalized terms used herein and not otherwise
defined shall have the respective meanings assigned to them in
Article 1.

WITNESSETH:

WHEREAS, Aradigm and Novo Nordisk desire to
restructure their existing arrangements regarding, among other
things, the development and commercialization of the Development
Program (as such term is defined in the Amended and Restated
License Agreement) as set forth in this Agreement; and

WHEREAS, it is intended that the foregoing shall
be effected on the terms and subject to the applicable
conditions contained herein and in the other Transaction
Agreements.

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.
(a) The following terms, as used herein, shall have the
following meanings:

Affiliateshall mean, with respect to any
Person, any other Person directly or indirectly controlling,
controlled by or under common control with such other Person.
For the purposes hereof controlshall mean
the power to direct or cause the direction of the management and
the policies of any Person, whether through the ownership of a
majority of the outstanding voting securities of such Person, by
contract or otherwise.

Amended and Restated License
Agreementshall mean the Amended
and Restated License Agreement, to be entered into as of the
Closing, by and between Aradigm and Novo Nordisk, in the form
attached hereto as Exhibit A.

Amended and Restated Stock Purchase
Agreementshall mean the Amended
and Restated Stock Purchase Agreement, to be entered into as of
the Closing, by and between Aradigm, Novo Nordisk and Novo
Nordisk Pharmaceuticals, Inc., in the form attached hereto as
Exhibit F.

Aradigm Balance Sheetshall mean the unaudited balance sheet
of Aradigm as of June 30, 2004.

Aradigm Balance Sheet Dateshall mean June 30, 2004.

Aradigm Employee Stock Purchase
Planshall mean the employee
stock purchase plan of Aradigm as in effect immediately prior to
the date hereof.

Aradigm Intellectual Property
Rightsshall mean the Aradigm
Patent Rights, the Aradigm Selected Pulmonary Delivery Patent
Rights and the Aradigm Know-How, as each is defined in the
Amended and Restated License Agreement.

Aradigm Material Adverse Effectshall mean (i) an effect on the
condition (financial or otherwise), business, assets, results of
operations or prospects of Aradigm, which impairs, or is
reasonably likely to impair, the ability of Aradigm to perform
in any material respect any of its obligations under the
Transaction Agreements or (ii) a material adverse effect on
the business opportunity represented by the Development Program.

1



---



##### 



Asset Purchase Agreementshall mean the Asset Purchase
Agreement, to be entered into as of the Closing, by and between
Aradigm and Novo Nordisk Delivery Technologies, Inc., in the
form attached hereto as Exhibit B.

Assignment Agreementsshall mean the Assignment Agreements,
to be entered into as of the Closing, by and among Aradigm, Novo
Nordisk Delivery Technologies, Inc. and the other parties
thereto, in the forms attached hereto as Exhibit H.

Authorizationshall mean any waiver, amendment,
consent, approval, license, franchise, permit (including
construction permits), certificate, exemption, variance or
authorization of, expiration or termination of any waiting
period requirement (including pursuant to the HSR Act) or other
action by, or notice, filing, registration, qualification,
declaration or designation with, any Person (including any
Governmental Authority).

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

CERCLAshall mean the Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
as amended, and any rules or regulations promulgated thereunder.

Competition Lawshall mean the European Commission
Merger Regulation, Sherman Act, the Clayton Act, the HSR Act,
the Federal Trade Commission Act and all other Laws that are
designed or intended to prohibit, restrict or regulate
(a) mergers, acquisitions or other business combinations or
(b) actions having the purpose or effect of monopolization
or restraint of trade or lessening of competition.

Contract Manufacturing Agreementshall mean the Contract Manufacturing
Agreement, to be entered into as of Closing, by and between
Aradigm, Novo Nordisk and Novo Nordisk Delivery Technologies,
Inc., in the form attached hereto as Exhibit D.

Co-Existence Agreementshall mean the Co-Existence Agreement
dated as of June 23, 2003 by and between Aradigm and Novo
Nordisk.

Development and License Agreementshall mean the Development and License
Agreement dated as of June 2, 1998, as amended, by and
between Aradigm and Novo Nordisk.

Development Programshall have the meaning set forth in
the Amended and Restated License Agreement.

Development Program Employeeshall mean any employee of Aradigm
listed on Schedule 1 to the Letter Agreement.

Employee Transition Planshall have the meaning set forth in
the Letter Agreement.

Environmental Lawsshall mean any federal, state, local
or foreign law (including common law), treaty, judicial
decision, regulation, rule, judgment, order, decree, injunction,
permit or governmental restriction or any agreement with any
Governmental Authority or other third party, whether now or
hereafter in effect, relating to the environment, human health
and safety or to pollutants, contaminants, wastes or chemicals
or any toxic, radioactive, ignitable, corrosive, reactive or
otherwise hazardous substances, wastes or materials.

Environmental Liabilitiesshall mean any and all liabilities
arising in connection with or in any way relating to Aradigm (or
any predecessor of Aradigm or any prior owner of all or part of
its business and assets), any property now or previously owned,
leased or operated by Aradigm, the Development Program (as
currently or previously conducted), the Transferred Assets or
any activities or operations occurring or conducted at the Real
Property (including offsite disposal), whether accrued,
contingent, absolute, determined, determinable or otherwise,
which (i) arise under or relate to any Environmental Law
and (ii) relate to actions occurring or conditions existing
on or prior to the Closing Date (including any matter disclosed
or required to be disclosed in Schedule 3.20).

2



---



##### 



Environmental Permitsshall mean all permits, licenses,
franchises, certificates, approvals and other similar
authorizations of governmental authorities relating to or
required by Environmental Laws and affecting, or relating in any
way to, the Development Program, the Real Property and the
Transferred Assets.

Estimated Purchase Priceshall mean the sum of the book values
of the equipment set forth in Part I of Annex 1 to
Exhibit A to the Asset Purchase Agreement as reflected on
the accounting books and records of Aradigm in accordance with
GAAP as of the date hereof that would be included in the
Purchased Assets if the Closing were to occur on the date hereof.

Excluded Assetsshall have the meaning set forth in
the Asset Purchase Agreement.

Excluded Liabilitiesshall have the meaning set forth in
the Asset Purchase Agreement.

GAAPshall mean generally accepted
accounting principles in the United States.

Governmental Authorityshall mean any supranational,
national, state, municipal or local government, political
subdivision or other governmental department, court, commission,
board, bureau, agency, instrumentality, or other authority
thereof, or any quasi-governmental or private body exercising
any regulatory, taxing, importing or other governmental or
quasi-governmental authority, whether domestic or foreign, or
any official of any of the foregoing.

Hazardous Substancesshall mean any pollutant, contaminant,
waste or chemical or any toxic, radioactive, ignitable
corrosive, reactive or otherwise hazardous substance, waste or
material or any substance, waste or material having any
constituent elements displaying any of the foregoing
characteristics including petroleum, its derivatives,
by-products and other hydrocarbons, and any substance, waste or
material regulated under any Environmental Law.

HSR Actshall mean the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.

Intellectual Property Rightsshall mean (i) national and
multinational statutory invention registrations, patents and
patent applications (including all reissues, divisions,
continuations, continuations-in-part, extensions and
reexaminations thereof) registered or applied for in the United
States and/or all other nations throughout the world, all
improvements to the inventions disclosed in each such
registration, patent or patent application, (ii) copyrights
(whether or not registered) and registrations and applications
for registration thereof in the United States and/or all other
nations throughout the world, including all derivative works,
moral rights, renewals, extensions, reversions or restorations
associated with such copyrights, now or hereafter provided by
law, regardless of the medium of fixation or means of
expression, and (iii) trade secrets and know-how (including
manufacturing and production processes, firmware, data and
techniques and research and development information).

Joint Steering Committeeshall have the meaning set forth in
the Development and License Agreement.

Judgmentshall mean any judicial decision,
judgment, writ, order, injunction, stipulation, award or decree
of any court, judge, justice or magistrate, including any
bankruptcy court or judge or the arbitrator in any binding
arbitration, and any order of or by any Governmental Authority.

Lawshall mean any foreign or domestic
law, statute, code, ordinance, rule, regulation, treaty,
Judgment or principles of common law or equity (including
negligence and strict liability) enacted, entered, promulgated
or applied by a Governmental Authority.

Letter Agreementshall mean the letter agreement
entered into as of the date hereof by and among Aradigm, Novo
Nordisk and Novo Nordisk Delivery Technologies, Inc.

Lienshall mean, with respect to any
property or asset, any mortgage, lien, pledge, charge, security
interest, encumbrance or other adverse claim of any kind in
respect of such property or asset. For the purposes of this
Agreement and the other Transaction Agreements, a Person shall
be deemed to own subject to a Lien any property or asset which
it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or
other title retention agreement relating to such property or
asset.

3



---



##### 



Manufacturing and Supply Agreementshall mean the Manufacturing and
Supply Agreement dated as of October 22, 2001 by and
between Aradigm and Novo Nordisk.

1933 Actshall mean the Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder.

1934 Actshall mean the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated
thereunder.

Patent Cooperation Agreementshall mean the Patent Cooperation
Agreement dated as of October 22, 2001 by and between
Aradigm and Novo Nordisk.

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.

Purchased Assetsshall have the meaning set forth in
the Asset Purchase Agreement.

Purchase Priceshall have the meaning set forth in
the Asset Purchase Agreement.

Quality Agreementshall mean the Quality Agreement, to
be entered into as of the Closing, by and between Aradigm and
Novo Nordisk Delivery Technologies, Inc., in the form attached
hereto as Exhibit E.

Required Shareholder Approvalsshall mean the approval of the
Transactions (i) in accordance with the law of the State of
California and the certificate of incorporation, bylaws and
certificate of designation of Aradigm by (A) the common
shareholders and the preferred shareholders of Aradigm, voting
together as a class and (B) the preferred shareholders of
Aradigm, voting separately as a class and (ii) by a
majority of the votes cast by proxy or in person by the common
shareholders and the preferred shareholders of Aradigm, voting
together as a class, at the special shareholders meeting
of Aradigm at which the vote described in (i)(A) above will be
held, without counting votes cast by Novo Nordisk
Pharmaceuticals, Inc. and Novo Nordisk.

Signing Dateshall mean the day and year first
above written.

Stock Purchase Agreementshall mean the Stock Purchase
Agreement dated as of October 22, 2001 by and between Novo
Nordisk Pharmaceuticals, Inc. and Aradigm.

Sublease Agreementshall mean the Sublease Agreement, to
be entered into as of the Closing, by and among Aradigm and Novo
Nordisk Delivery Technologies, Inc., in the form attached hereto
as Exhibit C.

Transactionsshall mean the transactions
contemplated by the Transaction Agreements.

Transaction Agreementsshall mean the Amended and Restated
License Agreement, the Asset Purchase Agreement, the Sublease
Agreement, the Contract Manufacturing Agreement, the Quality
Agreement, the Amended and Restated Stock Purchase Agreement,
the Letter Agreement, the Transition Services Agreement and the
Assignment Agreements.

Transferred Assetsshall mean the Purchased Assets, but
excluding the Excluded Assets.

Transition Services Agreementshall mean the Transition Services
Agreement, to be entered into as of the Closing, by and between
Aradigm and Novo Nordisk Delivery Technologies, Inc., in the
form attached hereto as Exhibit G.

4



---



##### 



(b) Each of the following terms is defined
in the Section set forth opposite such term:

|                                             |  |         |          |    
|-------------------------------------------- |  | ------- | -------- | ---
|Term                                         |  | Section
|                                             |  |        
|Approved Leave of Absence                    |  |         | 8.01     |    
|Aradigm                                      |  |         | Recitals |    
|Aradigm Proxy Statement                      |  |         | 5.04     |    
|Building 1 Landlord                          |  |         | 9.02     | (h)
|Building 1 Lease                             |  |         | 9.02     | (h)
|Closing                                      |  |         | 2.02     |    
|Closing Date                                 |  |         | 2.02     |    
|Code                                         |  |         | 8.02     |    
|Confidential Information                     |  |         | 7.04     |    
|Damages                                      |  |         | 10.02    |    
|Development Program Employee Plans           |  |         | 8.03     |    
|ERISA                                        |  |         | 8.02     |    
|ERISA Affiliate                              |  |         | 8.02     |    
|Indemnified Party                            |  |         | 10.03    |    
|Indemnifying Party                           |  |         | 10.03    |    
|Multiemployer Plan                           |  |         | 8.03     |    
|Novo Nordisk                                 |  |         | Recitals |    
|Novo Nordisk Delivery Technologies,
    Inc. |  |         | Recitals |    
|Other Consents                               |  |         | 3.05     |    
|Permits                                      |  |         | 3.15     |    
|Permitted Liens                              |  |         | 3.11     |    
|Real Property                                |  |         | 3.11     |    
|Representatives                              |  |         | 7.04     |    
|Required Consents                            |  |         | 3.05     |    
|Transferred Development Program Employees    |  |         | 8.01     |    
|WARN Act                                     |  |         | 7.05     |    
|Warranty Breach                              |  |         | 10.02    |    




SECTION 1.02.     Other
Definitional And Interpretative Provisions. 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 Appendices, Articles,
Sections, Exhibits and Schedules are to Appendices, Articles,
Sections, Exhibits and Schedules of this Agreement unless
otherwise specified. All 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.

5



---



##### 






SECTION 1.03.     Knowledge
Of Aradigm. References in this Agreement or in any of the
other Transaction Agreements to the knowledge or
best knowledge or any similar expression of Aradigm
shall be the actual knowledge, after due and diligent inquiry,
of the individuals listed on Schedule 1.03.




ARTICLE 2

PRE-CLOSING ACTIVITIES: CLOSING; THE TRANSACTIONS;

POST-CLOSING ACTIVITIES





SECTION 2.01.     Pre-closing
Activities.

(a) Aradigm, Novo Nordisk and Novo Nordisk
Delivery Technologies, Inc. agree that, prior to the Closing
Date, they will discuss, in good faith, and subject to
applicable Competition Laws, the transfer of applicable know-how
and the provision of other assistance by Aradigm to Novo Nordisk
and its Affiliates for the conduct of the Development Program.

(b) Part I of Annex 1 to
Exhibit A to the Asset Purchase Agreement contains the list
of equipment, the location thereof, the book value thereof as
reflected on the accounting books and records of Aradigm in
accordance with GAAP as of the date hereof that would be
included in the Purchased Assets if the Closing were to occur on
the date hereof, and the Estimated Purchase Price. The Parties
agree to update such list periodically (but not less than
monthly) during the period from the date hereof until Closing to
reflect (i) the addition of equipment purchased by Aradigm
for use in the Development Program with the prior written
approval of Novo Nordisk, (ii) downward adjustments that
may be required under GAAP, including normal depreciation and
amortization, to correctly state the book value of such
equipment on the accounting books and records of Aradigm as of
the date that is three (3) Business Days prior to the
Closing Date and (iii) changes otherwise agreed by the
Parties. The final version of Annex 1 to Exhibit A to the
Asset Purchase Agreement shall be completed by the Parties no
later than three (3) Business Days prior to the Closing
Date, and shall be used to determine the Purchase Price.

(c) Aradigm shall provide notice to Novo
Nordisk Delivery Technologies, Inc. no later than two
(2) Business Days prior to the Closing Date regarding the
account with a U.S. bank to which Novo Nordisk Delivery
Technologies, Inc. shall deliver the Purchase Price on the
Closing Date.




SECTION 2.02.     Closing.
(a) The closing (the Closing) of the
Transactions shall take place at the offices of Aradigm, as soon
as possible, but in no event later than five (5) Business
Days, following the satisfaction or waiver (and notice thereof
to the parties) of the conditions precedent set forth in
Article 9 below (other than conditions that by their nature
are to be satisfied at the Closing and will in fact be satisfied
at the Closing), or such other date as the parties shall agree.
At the Closing, the transactions described in
Section 2.02(b) below shall be deemed to occur
simultaneously. The date on which the Closing occurs is referred
to as the Closing Date.

(b) At the Closing, the parties shall
execute all of the Transaction Agreements to which such entities
are parties that were not previously executed and, to the extent
contemplated therein, consummate the Transactions.




SECTION 2.03.     Effect
of closing. Effective as of the Closing Date, the
Manufacturing and Supply Agreement and the Patent Cooperation
Agreement shall terminate and be of no further force and effect.




SECTION 2.04.     Post-closing
Activities.

(a) After the Closing, Aradigm agrees that
it will cooperate with and allow Novo Nordisk Delivery
Technologies, Inc. reasonable access to any of its personnel who
have knowledge of the Development Program such that Novo Nordisk
Delivery Technologies, Inc. may, to its reasonable satisfaction,
become informed as to the operation, transition and
specifications of the Development Program and the Purchased
Assets.

(b) At any time after the Closing, each
Party may (upon reasonable prior written notice to the other
Party) request the ability to copy and/or certify documents that
are in the possession of the other Party and that, in the case
of a request by Novo Nordisk or Novo Nordisk Delivery
Technologies, Inc., relate to the

6



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Development Program and other AERx development
activities, and in the case of a request by Aradigm, relate to
its prior conduct of the Development Program or other AERx
development activities. Upon receipt of any such notice, the
Party possessing such documents shall, subject to applicable
Competition Laws and/or confidentiality obligations to third
parties, provide the requesting Party with reasonable access to
such documents, and the Party making such request shall bear all
costs of such copying and/or certification.


(c) Novo Nordisk Delivery Technologies, Inc.
agrees to reimburse Aradigm for fifty percent (50%) of the
replacement cost to Aradigm of purchasing the equipment listed
on Schedule 2.04(c).




ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF ARADIGM

Aradigm represents and warrants to Novo Nordisk
and Novo Nordisk Delivery Technologies, Inc. as of the date
hereof and as of the Closing Date that:




SECTION 3.01.     Corporate
Existence and Power. Aradigm is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of California and has all corporate powers and
all governmental licenses, authorizations, permits, consents and
approvals required to carry on its business as now conducted.
Aradigm has heretofore delivered to Novo Nordisk true and
complete copies of the certificate of incorporation and bylaws
of Aradigm as currently in effect.




SECTION 3.02.     Corporate
Authorization. The execution, delivery and performance by
Aradigm of the Transaction Agreements and the consummation of
the Transactions are within Aradigms corporate powers and,
except for the Required Shareholder Approvals, have been duly
authorized by all necessary corporate action on the part of
Aradigm. This Agreement constitutes, and when executed each
other Transaction Agreement will constitute, a valid and binding
agreement of Aradigm enforceable against Aradigm in accordance
with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, moratorium or similar laws of general
application relating to or affecting creditors rights or
by general principles of equity.




SECTION 3.03.     Governmental
Authorization. The execution, delivery and performance by
Aradigm of the Transaction Agreements and the consummation of
the Transactions require no action by or in respect of, or
filing with, any Governmental Authority other than
(i) compliance with any applicable requirements of any
Competition Law; (ii) compliance with applicable
requirements of Environmental Laws; and (iii) compliance
with any applicable requirements of the 1933 Act, the
1934 Act and any other applicable securities laws, whether
U.S., state or foreign.




SECTION 3.04.     Noncontravention.
The execution, delivery and performance by Aradigm of the
Transaction Agreements and the consummation of the Transactions
do not and will not (i) violate the certificate of
incorporation, bylaws or certificate of designation of Aradigm,
(ii) assuming compliance with the matters referred to in
Section 3.03, violate any applicable Law,
(iii) assuming the obtaining of all Required Consents (as
defined below) and Other Consents (as defined below), constitute
a default under or give rise to any right of termination,
cancellation or acceleration of any right or obligation, or to a
loss of any benefit relating to the Development Program to which
Aradigm is entitled under any provision of any agreement or
other instrument binding upon Aradigm or by which any of the
Transferred Assets is or may be bound or (iv) result in the
creation or imposition of any Lien on the Real Property or any
Transferred Asset, other than Permitted Liens (as defined below).




SECTION 3.05.     Required
and Other Consents. (a) Schedule 3.05(a) sets
forth each agreement, contract or other instrument binding upon
Aradigm or any Permit (as defined below) (including any
Environmental Permit) requiring a consent or other action by any
Person as a result of the execution, delivery and performance by
Aradigm of the Transaction Agreements, except such consents or
actions as would not, individually or in the aggregate, have an
Aradigm Material Adverse Effect if not received or taken by the
Closing Date (the Required Consents).

7



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(b) Schedule 3.05(b) sets forth each
other consent or action by any Person (the Other
Consents) under such agreements, contracts or other
instruments or such Permits that is necessary with respect to
the execution, delivery and performance by Aradigm of the
Transaction Agreements.




SECTION 3.06.     Absence
of Certain Changes. Since the Aradigm Balance Sheet Date,
the Development Program has been conducted in the ordinary
course consistent with past practices and there has not been:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) any event, occurrence, development or
    state of circumstances or facts which, individually or in the
    aggregate, has had or is reasonably likely to have an Aradigm
    Material Adverse Effect;                                                                                                                                                                                                                                                                                                                           
|
| | (b) any incurrence, assumption or guarantee
    by Aradigm of any indebtedness for borrowed money with respect
    to the Development Program;                                                                                                                                                                                                                                                                                                                                                                                       
|
| | (c) any creation or other incurrence of any
    Lien on the Real Property or any Transferred Asset other than in
    the ordinary course of business consistent with past practices;                                                                                                                                                                                                                                                                                                                                                 
|
| | (d) any damage, destruction or other
    casualty loss (whether or not covered by insurance) affecting
    the Development Program, the Real Property or any Transferred
    Asset which, individually or in the aggregate, has had or is
    reasonably likely to have an Aradigm Material Adverse Effect;                                                                                                                                                                                                                          
|
| | (e) any transaction or commitment made, or
    any contract or agreement entered into, by Aradigm relating to
    the Development Program, the Real Property or any Transferred
    Asset (including the acquisition or disposition of any assets)
    or any relinquishment by Aradigm of any contract or other right,
    in either case, material to the Development Program, other than
    (i) transactions and commitments in the ordinary course of
    business consistent with past practices and (ii) the
    Transactions;
|
| | (f) any change in any method of accounting
    or accounting practice by Aradigm with respect to the
    Development Program except for any such change after the date
    hereof required by reason of a concurrent change in GAAP;                                                                                                                                                                                                                                                                                                 
|
| | (g) any (i) employment, deferred
    compensation, severance, retirement or other similar agreement
    entered into with any Development Program Employee (or any
    amendment to any such existing agreement), (ii) grant of
    any severance or termination pay to any Development Program
    Employee or (iii) change in compensation or other benefits
    payable to any Development Program Employee pursuant to any
    severance or retirement plans or policies thereof;                                                
|
| | (h) any labor dispute, other than routine
    individual grievances, or any activity or proceeding by a labor
    union or representative thereof to organize any Development
    Program Employees, which Development Program Employees were not
    subject to a collective bargaining agreement at the Aradigm
    Balance Sheet Date, or any lockouts, strikes, slowdowns, work
    stoppages or threats thereof by or with respect to Development
    Program Employees; or                                                     
|
| | (i) any capital expenditure, or commitment
    for a capital expenditure, for additions or improvements to the
    Real Property or any of the Transferred Assets, that has not
    been in accordance with planned capital spending for the
    Development Program or otherwise approved in writing by Novo
    Nordisk.                                                                                                                                                                                                           




SECTION 3.07.     No
Undisclosed Material Liabilities. There are no liabilities
of Aradigm of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, other than:



| |                                                                                                          
| | ---------------------------------------------------------------------------------------------------------
| | (a) liabilities provided for in the Aradigm
    Balance Sheet or disclosed in the notes thereto;         
|
| | (b) liabilities incurred in the ordinary
    course of business since the Aradigm Balance Sheet Date; and
|
| | (c) other undisclosed liabilities which,
    individually or in the aggregate, are not material.         




SECTION 3.08.     Material
Contracts. (a) Except for the Transaction Agreements,
the Development and License Agreement, the Patent Cooperation
Agreement, the Stock Purchase Agreement, the Manufacturing

8



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and Supply Agreement and the Co-Existence
Agreement, and the Contracts disclosed in Schedule 3.08,
with respect to the Development Program, Aradigm is not a party
to or bound by:




| |                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) any lease (whether of real or personal
    property);                                                                                                                                                                                                                                                                                                                                                                             
|
| | (ii) any agreement for the sale or purchase
    of materials, supplies, goods, services, equipment or other
    assets providing for either (A) annual payments by Aradigm
    of $10,000 or more or (B) aggregate payments by Aradigm of
    $50,000 or more;                                                                                                                                                                        
|
| | (iii) any partnership, joint venture or
    other similar agreement or arrangement;                                                                                                                                                                                                                                                                                                                                                   
|
| | (iv) any agreement relating to the
    acquisition or disposition of any business (whether by merger,
    sale of stock, sale of assets or otherwise);                                                                                                                                                                                                                                                                                
|
| | (v) any agreement relating to indebtedness
    for borrowed money or the deferred purchase price of property
    (in either case, whether incurred, assumed, guaranteed or
    secured by any asset);                                                                                                                                                                                                                                 
|
| | (vi) any option, license, franchise or
    similar agreement;                                                                                                                                                                                                                                                                                                                                                                         
|
| | (vii) any agency, dealer, sales
    representative, marketing or other similar agreement;                                                                                                                                                                                                                                                                                                                                             
|
| | (viii) any agreement that limits the freedom
    of Aradigm to compete in any line of business, with any Person
    or in any area within the Field (as defined in the Development
    and License Agreement) or to own, operate, sell, transfer,
    pledge or otherwise dispose of or encumber any Transferred Asset
    or which would so limit the freedom of Novo Nordisk Delivery
    Technologies, Inc. after the Closing Date;
|
| | (ix) any agreement with or for the benefit
    of any Affiliate of Aradigm; or                                                                                                                                                                                                                                                                                                                                                        
|
| | (x) any other agreement, commitment,
    arrangement or plan not made in the ordinary course of business
    that is material to the Development Program.                                                                                                                                                                                                                                                                             

(b) Each Contract disclosed in any Schedule
or required to be disclosed pursuant to this Section is a valid
and binding agreement of Aradigm and is in full force and
effect, and neither Aradigm nor, to the knowledge of Aradigm,
any other party thereto is in default or breach in any material
respect under the terms of any such Contract, and, to the
knowledge of Aradigm, no event or circumstance has occurred
that, with notice or lapse of time or both, would constitute any
event of default thereunder. True and complete copies of each
such Contract that is listed in Part II of Annex 1 to
Exhibit A to the Asset Purchase Agreement have been
delivered to Novo Nordisk.




SECTION 3.09.     Litigation.
There is no action, suit, investigation or proceeding pending
against Aradigm, the Development Program, the Real Property or
any Transferred Asset before any court or arbitrator or before
or by any Governmental Authority or, to the knowledge of
Aradigm, any basis therefor or threat thereof, which,
individually or in the aggregate, could reasonably be expected
to have an Aradigm Material Adverse Effect or which in any
manner challenges or seeks to prevent, enjoin, alter or
materially delay the Transactions.




SECTION 3.10.     Compliance
with Laws and Court Orders. Aradigm is not in violation of,
has not since June 2, 1998 violated, and to the knowledge
of Aradigm is not under investigation with respect to and has
not been threatened to be charged with or given notice of any
violation of, any Law or Authorization applicable to the Real
Property, the Transferred Assets or the conduct of the
Development Program.




SECTION 3.11.     Properties.
(a) Schedule 3.11(a) correctly describes all leasehold
interests in real property to be subleased pursuant to the
Sublease Agreement to Novo Nordisk Delivery Technologies, Inc.
and assigned to Novo Nordisk Delivery Technologies, Inc.
pursuant to the Assignment Agreements (collectively, the
Real Property), which Aradigm leases, any
title insurance policies and surveys with respect thereto in the
possession of Aradigm, and any Liens thereon, specifying the
name of the lessor, the lease term and basic annual rent.

(b) Schedule 3.11(b) correctly
describes all personal property included in the Transferred
Assets, including machinery, equipment (including computer
hardware, computer software and other computer parts

9



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and accessories), furniture, spare and
replacement parts, and other tangible property, which Aradigm
owns, leases or subleases, and any Liens thereon, specifying in
the case of leases or subleases, the name of the lessor or
sublessor, the lease term and basic annual rent.


(c) Aradigm has good and marketable,
indefeasible, fee simple title to, or, in the case of the Real
Property or leased personal property, has valid leasehold
interests in, the Transferred Assets and the Real Property. No
Real Property or Transferred Asset is subject to any Lien,
except:



| |                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) Liens disclosed on the Aradigm Balance
    Sheet;                                                                                                                                                                                                                                                               
|
| | (ii) Liens for taxes not yet due or being
    contested in good faith (and for which adequate accruals or
    reserves have been established on the Aradigm Balance
    Sheet); or                                                                                                                                  
|
| | (iii) Liens which do not materially detract
    from the value of such Transferred Asset, or do not materially
    interfere with any present or intended use of such Transferred
    Asset or the Real Property
    (clauses (i) - (iii) of this
    Section 3.11(c) are, collectively, the Permitted
    Liens).

(d) There are no developments affecting the
Real Property or any of the Transferred Assets pending or, to
the knowledge of Aradigm threatened, which might materially
detract from the value or materially interfere with any present
or intended use by Novo Nordisk Delivery Technologies, Inc. of
such Real Property or Transferred Assets.

(e) All leases of Real Property or personal
property are in good standing and are valid, binding and
enforceable in accordance with their respective terms and there
does not exist under any such lease any default or any event
which with notice or lapse of time or both would constitute a
default.

(f) To the knowledge of Aradigm, the plants,
buildings and structures included in the Real Property and the
Transferred Assets currently have access to (1) public
roads or valid easements over private streets or private
property for such ingress to and egress from all such plants,
buildings and structures and (2) water supply, storm and
sanitary sewer facilities, telephone, gas and electrical
connections, fire protection, drainage and other public
utilities, in each case as is necessary for the conduct of the
Development Program as it has heretofore been conducted and as
planned to be conducted by Novo Nordisk Delivery Technologies,
Inc. None of the structures on the Real Property encroaches upon
real property of another Person, and no structure of any other
Person substantially encroaches upon any Real Property.

(g) To the knowledge of Aradigm, the Real
Property, and its continued use, occupancy and operation as
currently used, occupied and operated, does not constitute a
nonconforming use under any applicable building, zoning,
subdivision and other land use and similar laws, regulations and
ordinances.




SECTION 3.12.     Title
to the Transferred Assets. Upon consummation of the
Transactions, Novo Nordisk Delivery Technologies, Inc. will have
acquired good and marketable title in and to, or a valid
leasehold interest in, each of the Transferred Assets, free and
clear of all Liens, except for Permitted Liens.




SECTION 3.13.     Intellectual
Property. (a) Schedule 3.13(a)(i) contains a true
and complete list of the patents and patent rights included
within the Aradigm Patent Rights. Schedule 3.13(a)(ii)
contains a true and complete list of all agreements (whether
written or otherwise, including license agreements, research
agreements, development agreements, distribution agreements,
settlement agreements, consent to use agreements and covenants
not to sue) to which Aradigm or any of its Affiliates is a party
or otherwise bound, granting or restricting any right to use,
exploit or practice any Aradigm Intellectual Property Rights in
connection with the Development Program as currently conducted.

(b) To the knowledge of Aradigm, the Aradigm
Intellectual Property Rights constitute all the Intellectual
Property Rights necessary for the Development Program as
currently conducted (other than Intellectual Property Rights of
Novo Nordisk). Except as set forth in the Development and
License Agreement and the Patent Cooperation Agreement, Aradigm
knows of no restrictions on the disclosure, use, license,
sublicense or transfer of the Aradigm Intellectual Property
Rights as contemplated by the Amended and Restated License
Agreement. The consummation of the Transactions will not alter,
impair or extinguish

10



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any Aradigm Intellectual Property Rights, except
with respect to those Intellectual Property Rights licensed or
sublicensed to Aradigm pursuant to agreements or contracts
listed on Schedule 3.05(b).


(c) To the knowledge of Aradigm, neither
Aradigm nor any of its Affiliates has infringed, misappropriated
or otherwise violated any Intellectual Property Right of any
third party. There is no claim, action, suit, investigation or
proceeding pending against, or, to the knowledge of Aradigm,
threatened against or affecting, the Development Program or any
of the Transferred Assets (1) based upon, or challenging or
seeking to deny or restrict, the rights of Aradigm in any of the
Aradigm Intellectual Property Rights, (2) alleging that the
use of the Aradigm Intellectual Property Rights or any services
provided, processes used or products manufactured, used,
imported or sold with respect to the Development Program
conflict with, misappropriate, infringe or otherwise violate any
Intellectual Property Right of any third party or
(3) alleging that Aradigm or any Affiliate of Aradigm
infringed, misappropriated or otherwise violated any
Intellectual Property Right of any third party. Neither Aradigm
nor any of its Affiliates has received from any third party a
written offer: (a) in which such third party states that a
license may be necessary to avoid infringement of such third
partys patents or (b) for which Aradigm sought advice
from an independent outside patent counsel with respect to the
question of infringement.

(d) None of the Aradigm Intellectual
Property Rights that is material to the operation of the
Development Program has been adjudged invalid or unenforceable
in whole or part, and, to the knowledge of Aradigm, all patents
that are part of such Aradigm Intellectual Property Rights are
valid and enforceable.

(e) Aradigm holds all right, title and
interest in and to all Aradigm Intellectual Property Rights,
free and clear of any Lien. In each case where a patent or
patent application or copyright registration or copyright
application included in the Aradigm Intellectual Property Rights
is held by assignment, the assignment has been duly recorded
with the Governmental Authority from which the patent or
registration issued or before which the application or
application for registration is pending.

(f) To the knowledge of Aradigm, no Person
has infringed, misappropriated or otherwise violated any Aradigm
Intellectual Property Right. Aradigm has taken reasonable steps
in accordance with normal industry practice to maintain the
confidentiality of all confidential Intellectual Property
Rights. None of the Intellectual Property Rights that are
material to the Development Program and the value of which to
the Development Program is contingent upon maintaining the
confidentiality thereof, has been disclosed other than to
employees, representatives and agents of Aradigm and its
licensees, all of whom are bound by written confidentiality
agreements substantially in the form previously disclosed to
Novo Nordisk.

(g) None of the patents and patent
applications included in the Aradigm Intellectual Property
Rights that are material to the Development Program has been the
subject of an interference, protest, public use proceeding or
third party re-examination request.




SECTION 3.14.     Insurance
Coverage. Aradigm has furnished to Novo Nordisk Delivery
Technologies, Inc. a list of all insurance policies and fidelity
bonds relating to the Transferred Assets, the business and
operations of the Development Program and its officers and
employees. There is no claim by Aradigm pending under any of
such policies or bonds as to which coverage has been questioned,
denied or disputed by the underwriters of such policies or bonds
or in respect of which such underwriters have reserved their
rights. All premiums payable under all such policies and bonds
have been timely paid, Aradigm has otherwise complied fully with
the terms and conditions of all such policies and bonds and such
policies and bonds are in full force and effect. Aradigm does
not know of any threatened termination of coverage under any of
such policies or bonds. After the Closing Aradigm shall continue
to have coverage under such policies and bonds with respect to
events occurring prior to the Closing.




SECTION 3.15.     Licenses
and Permits. Schedule 3.15 correctly describes each
license (other than those listed on Schedule 3.13(a)),
franchise, permit, certificate, approval or other similar
authorization affecting, or relating in any way to, the
Development Program (the Permits) together
with the name of the Governmental Authority issuing such Permit.
Except as set forth on Schedule 3.15, (i) the Permits
are valid and in full force and effect, (ii) Aradigm is not
in default, and no condition exists that with notice or lapse of
time or both would constitute a default, under the Permits and
(iii) none of the Permits will, assuming the

11



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related Required Consents and Other Consents have
been obtained prior to the Closing Date, be terminated or
impaired or become terminable, in whole or in part, as a result
of the Transactions. Upon consummation of the Transactions, Novo
Nordisk Delivery Technologies, Inc. will, assuming the related
Required Consents and Other Consents have been obtained prior to
the Closing Date, have all of the right, title and interest in
all the Permits listed in subsection c of Part II of
Annex A 1 to Exhibit A to the Asset Purchase
Agreement.





SECTION 3.16.     Inventories
and Supplies. Since the Aradigm Balance Sheet Date, the
inventories and supplies related to the Development Program have
been maintained in the ordinary course of business.




SECTION 3.17.     Documents.
None of the documents or information delivered to the
shareholders of Aradigm in connection with the Transactions,
including the Aradigm Proxy Statement (as defined below) (except
for any information contained therein that is provided in
writing by Novo Nordisk specifically for such purpose), contains
or will contain, as applicable, any untrue statement of a
material fact or omits to state a material fact necessary in
order to make the statements contained therein not misleading.




SECTION 3.18.     Finders
Fees. There is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act
on behalf of Aradigm who might be entitled to any fee or
commission from Novo Nordisk or any of its Affiliates in
connection with the Transactions.




SECTION 3.19.     Employees.
Schedule 1 to the Letter Agreement sets forth a true and
complete list of (i) the names, titles, annual salaries and
other compensation of all Development Program Employees to be
offered employment by Novo Nordisk Delivery Technologies, Inc.
and (ii) the wage rates for non-salaried Development
Program Employees to be offered employment by Novo Nordisk
Delivery Technologies, Inc. (by classification). Other than as
separately communicated in writing to Novo Nordisk, none of such
Development Program Employees has indicated to Aradigm that he
intends to resign or retire as a result of the Transactions or
otherwise within one year after the Closing Date.




SECTION 3.20.     Environmental
Compliance. (a)



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) in connection with or relating to the
    Development Program, the Real Property or the Transferred
    Assets, no notice, notification, demand, request for
    information, citation, summons or order has been received, no
    complaint has been filed, no penalty has been assessed and no
    investigation, action, claim, suit, proceeding or review is
    pending or, to the knowledge of Aradigm, threatened by any
    Governmental Authority or other Person with respect to any
    matters relating to or arising out of any Environmental Law;                                                                                                                                                              
|
| | (ii) there are no liabilities arising in
    connection with or in any way relating to the Transferred Assets
    or the Development Program of any kind whatsoever, whether
    accrued, contingent, absolute, determined, determinable or
    otherwise, arising under or relating to any Environmental Law,
    and, to the knowledge of Aradigm, there are no facts, events,
    conditions, situations or set of circumstances which could
    reasonably be expected to result in or be the basis for any such
    liability;                                                                                                                                                                                              
|
| | (iii) to the knowledge of Aradigm, none of
    the Real Property or property now or previously owned, leased or
    operated by Aradigm or any property to which Hazardous
    Substances located on or resulting from the use of any
    Transferred Asset have been transported or any property to which
    Aradigm has, directly or indirectly, transported or arranged for
    the transportation of any Hazardous Substances is listed or, to
    the knowledge of Aradigm, proposed for listing on the National
    Priorities List promulgated pursuant to CERCLA, on CERCLIS (as
    defined in CERCLA) or on any similar federal, state, local or
    foreign list of sites requiring investigation or
    cleanup; and
|
| | (iv) Aradigm is in compliance with all
    Environmental Laws and has been and is in compliance with all
    Environmental Permits; such Environmental Permits are valid and
    in full force and effect and assuming the related Required
    Consents and Other Consents have been obtained prior to the
    Closing Date, are transferable and will not be terminated or
    impaired or become terminable as a result of the Transactions.                                                                                                                                                                                                                                                                                  

(b) There has been no environmental
investigation, study, audit, test, review or other analysis
conducted which Aradigm has in its possession in relation to any
Transferred Asset or Real Property which has not been

12



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delivered to Novo Nordisk at least 10 Business
Days prior to the date hereof; provided that, as to any
such investigation, study, audit, test, review or other analysis
of which Aradigm has knowledge, Aradigm shall use its best
efforts to obtain and provide to Novo Nordisk such
investigation, study, audit, test, review or other analysis.


(c) None of the Transferred Assets is
located in New Jersey or Connecticut.

(d) For purposes of this Section 3.20,
the term Aradigm shall include any entity which is,
in whole or in part, a predecessor of Aradigm.




SECTION 3.21.     Representations.
The representations and warranties of Aradigm contained in this
Agreement, disregarding all qualifications and exceptions
contained therein relating to materiality or Aradigm Material
Adverse Effect, are true and correct with only such exceptions
as would not in the aggregate be reasonably likely to have an
Aradigm Material Adverse Effect.




SECTION 3.22.     Compliance
With Existing Agreements. Aradigm is in compliance in all
material respects with the terms and conditions of the
Development and License Agreement (other than as such terms and
conditions have been modified by the Joint Steering Committee),
the Patent Cooperation Agreement, the Stock Purchase Agreement,
the Manufacturing and Supply Agreement and the Co-Existence
Agreement.




ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF NOVO NORDISK

Novo Nordisk and Novo Nordisk Delivery
Technologies, Inc. jointly and severally represent and warrant
to Aradigm as of the date hereof and as of the Closing Date that:




SECTION 4.01.     Corporate
Existence and Power. Each of Novo Nordisk and Novo Nordisk
Delivery Technologies, Inc. is a corporation duly incorporated,
validly existing and, in the case of Novo Nordisk Delivery
Technologies, Inc., in good standing under the Laws of the State
of Delaware, and each of Novo Nordisk and Novo Nordisk Delivery
Technologies, Inc. has all corporate powers and all material
governmental licenses, authorizations, permits, consents and
approvals required to carry on its business as now conducted.




SECTION 4.02.     Corporate
Authorization. The execution, delivery and performance by
each of Novo Nordisk and Novo Nordisk Delivery Technologies,
Inc. of the Transaction Agreements to which it is a party and
the consummation of the Transactions to which it is a party are
within the corporate powers of each of Novo Nordisk and Novo
Nordisk Delivery Technologies, Inc. and have been duly
authorized by all necessary corporate action on the part of each
of Novo Nordisk and Novo Nordisk Delivery Technologies, Inc.
This Agreement constitutes, and when executed each other
Transaction Agreement to which it is a party will constitute, a
valid and binding agreement of each of Novo Nordisk and Novo
Nordisk Delivery Technologies, Inc. enforceable against each of
Novo Nordisk and Novo Nordisk Delivery Technologies, Inc. in
accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, moratorium or similar laws of
general application relating to or affecting creditors
rights or by general principles of equity.




SECTION 4.03.     Governmental
Authorization. The execution, delivery and performance by
each of Novo Nordisk and Novo Nordisk Delivery Technologies,
Inc. of the Transaction Agreements to which it is a party and
the consummation of the Transactions to which it is a party
require no material action by or in respect of, or material
filing with, any Governmental Authority other than (i) in
compliance with any Competition Law and (ii) in compliance
with any applicable requirements of the 1933 Act, the
1934 Act and any other applicable securities laws, whether
federal, state or foreign.




SECTION 4.04.     Noncontravention.
The execution, delivery and performance by each of Novo Nordisk
and Novo Nordisk Delivery Technologies, Inc. of the Transaction
Agreements to which it is a party and the consummation of the
Transactions to which it is a party do not and will not
(i) violate the charter or bylaws of either of Novo Nordisk
and Novo Nordisk Delivery Technologies, Inc. or
(ii) assuming compliance with the matters referred to in
Section 4.03, violate any applicable material Law.

13



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SECTION 4.05.     Litigation.
There is no action, suit, investigation or proceeding pending
against, or to the knowledge of Novo Nordisk, threatened against
or affecting, Novo Nordisk or Novo Nordisk Delivery
Technologies, Inc. before any court or arbitrator or before or
by any Governmental Authority which in any manner challenges or
seeks to prevent, enjoin, alter or materially delay the
Transactions.




SECTION 4.06.     Finders
Fees. There is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act
on behalf of Novo Nordisk or Novo Nordisk Delivery Technologies,
Inc. who might be entitled to any fee or commission from Aradigm
or any of its Affiliates upon consummation of the Transactions.




SECTION 4.07.     Information.
None of the information provided in writing by Novo Nordisk to
Aradigm to be included in the Aradigm Proxy Statement contains
or will contain, as applicable, any untrue statement of a
material fact, or omits to state a material fact necessary to
make such information misleading.




SECTION 4.08.     Compliance
with Existing Agreements. Each of Novo Nordisk and its
Affiliates is in compliance in all material respects with the
terms and conditions of the Development and License Agreement
(other than as such terms and conditions have been modified by
the Joint Steering Committee), the Patent Cooperation Agreement,
the Stock Purchase Agreement, the Manufacturing and Supply
Agreement and the Co-Existence Agreement.




ARTICLE 5

COVENANTS OF ARADIGM

Aradigm agrees that:




SECTION 5.01.     Conduct
of the Development Program. From the date hereof until the
Closing Date, Aradigm shall conduct the Development Program in
accordance with the Development and License Agreement in the
ordinary course consistent with past practices and shall use its
best efforts to preserve intact the business organizations and
relationships with third parties relevant to the Development
Program and to keep available the services of the Development
Program Employees. Without limiting the generality of the
foregoing, from the date hereof until the Closing Date, Aradigm
will not:



| |                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) with respect to the Development Program
    acquire a material amount of assets from, or enter into any
    license agreement with, any other Person;                                                                                                                                                                                                                                                                
|
| | (b) sell, lease, license or otherwise
    dispose of any Transferred Assets except (i) pursuant to
    existing contracts or commitments and (ii) in the ordinary
    course consistent with past practices;                                                                                                                                                                                                             
|
| | (c) agree or commit to do any of the
    foregoing; or                                                                                                                                                                                                                                                                                                                                                                   
|
| | (d) (i) take or agree or commit to take
    any action that would make any representation or warranty of
    Aradigm hereunder inaccurate in any respect at, or as of any
    time prior to, the Closing Date or (ii) knowingly omit or
    agree or commit to omit to take any action reasonably necessary
    to prevent any such representation or warranty from being
    inaccurate in any respect at any such time.




SECTION 5.02.     Access
to Information. (a) From the date hereof until the
Closing Date, Aradigm will (i) give Novo Nordisk, its
counsel, financial advisors, auditors and other authorized
representatives full access to the offices, properties, books
and records of Aradigm relating to the Development Program,
(ii) furnish to Novo Nordisk, its counsel, financial
advisors, auditors and other authorized representatives such
financial and operating data and other information relating to
the Development Program as such Persons may reasonably request
and (iii) instruct the employees and counsel of Aradigm to
cooperate with Novo Nordisk in its investigation of the
Development Program; provided that, any such access by
Novo Nordisk, its counsel, financial advisors, auditors and
other authorized representatives shall not unreasonably
interfere with the conduct of Aradigms business (other
than the Development Program). Novo Nordisk will hold, and will
use best efforts to cause its officers, directors, employees,
auditors, counsel, consultants, financial advisors and agents to
hold, in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of Law, all
confidential documents and information concerning Aradigm and
the Development

14



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Program provided to it pursuant to this
Section 5.02. No investigation by Novo Nordisk or other
information received by Novo Nordisk shall operate as a waiver
or otherwise affect any representation, warranty or agreement
given or made by Aradigm hereunder.


(b) On and after the Closing Date, Aradigm
will afford promptly to Novo Nordisk and its agents reasonable
access to its books of account, financial and other records,
information, employees and auditors to the extent necessary or
useful for Novo Nordisk in connection with any audit,
investigation, dispute or litigation or any other reasonable
business purpose relating to the Development Program;
provided that, any such access by Novo Nordisk shall not
unreasonably interfere with the conduct of the business of
Aradigm.




SECTION 5.03.     Notices
of Certain Events. Aradigm shall promptly notify Novo
Nordisk of:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) any notice or other communication from
    any Person alleging that the consent of such Person is or may be
    required in connection with the Transactions;                                                                                                                                                                                                                                                                                                       
|
| | (b) any notice or other communication from
    any Governmental Authority in connection with the Transactions;                                                                                                                                                                                                                                                                                                                                                          
|
| | (c) any actions, suits, claims,
    investigations or proceedings commenced or, to its knowledge,
    threatened against, relating to or involving or otherwise
    affecting Aradigm, the Development Program, the Real Property or
    the Transferred Assets that, if pending on the date of this
    Agreement, would have been required to have been disclosed
    pursuant to Section 3.09 or that relate to the consummation
    of the Transactions; and        
|
| | (d) the damage or destruction by fire or
    other casualty of any Real Property or Transferred Asset or part
    thereof or in the event that any Real Property or Transferred
    Asset or part thereof becomes the subject of any proceeding or,
    to the knowledge of Aradigm, threatened proceeding for the
    taking thereof or any part thereof or of any right relating
    thereto by condemnation, eminent domain or other similar
    governmental action.




SECTION 5.04.     Shareholder
Votes. Aradigm shall cause the required meetings of its
common and preferred shareholders to be duly called and held as
soon as reasonably practicable for the purpose of approving the
Transactions. The board of directors of Aradigm shall, subject
to their fiduciary duties under applicable Law as advised by
counsel, recommend adoption of the Transactions by
Aradigms common and preferred shareholders, voting
together as a class, and by Aradigms preferred
shareholders, voting separately as a class. In connection with
such meeting (i) Aradigm will promptly prepare and file
with the SEC, will use its best efforts to have cleared by the
SEC and will thereafter mail to its common and preferred
shareholders as promptly as practicable a proxy statement and
all other proxy materials for such meeting (the Aradigm
Proxy Statement) as may be required by applicable law;
(ii) Aradigm will use its best efforts to obtain the
Required Shareholder Approvals; and (iii) Aradigm will
otherwise comply with all legal requirements applicable to such
meetings. Aradigm will provide Novo Nordisk with ten
(10) Business Days to review and comment on the information
regarding the Transactions, Novo Nordisk and Novo Nordisk
Delivery Technologies, Inc. contained in the Aradigm Proxy
Statement prior to any filing thereof with the SEC and prior to
the date on which such materials are first published, sent or
given to Aradigms common and preferred shareholders and
shall use its reasonable efforts to reflect any such comments in
the Aradigm Proxy Statement.




ARTICLE 6

COVENANTS OF NOVO NORDISK

Each of Novo Nordisk and Novo Nordisk Delivery
Technologies, Inc. jointly and severally agrees that:




SECTION 6.01.     Access.
On and after the Closing Date, each of Novo Nordisk and Novo
Nordisk Delivery Technologies Inc. will afford promptly to
Aradigm and its agents reasonable access to its properties,
books, records, employees and auditors to the extent relating to
or involved in the Development Program and necessary to permit
Aradigm to determine any matter relating to its rights and
obligations hereunder or to any

15



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period ending on or before the Closing Date;
provided that, any such access by Aradigm shall not
unreasonably interfere with the conduct of the business of Novo
Nordisk and Novo Nordisk Delivery Technologies, Inc. during the
period of such access. Aradigm will hold, and will use its best
efforts to cause its officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold,
in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of Law, all
confidential documents and information concerning Novo Nordisk,
Novo Nordisk Delivery Technologies, Inc. and the Development
Program provided to it pursuant to this Section 6.01. No
investigation by Aradigm or other information received by
Aradigm shall operate as a waiver or otherwise affect any
representation, warranty or agreement given or made by Novo
Nordisk or Novo Nordisk Delivery Technologies, Inc. hereunder.





SECTION 6.02.     Information.
Each of Novo Nordisk and Novo Nordisk Delivery Technologies,
Inc. shall provide promptly all information reasonably requested
by Aradigm for inclusion in, or for use in preparing, the
Aradigm Proxy Statement.




ARTICLE 7

COVENANTS OF THE PARTIES

The parties agree that:




SECTION 7.01.     Best
Efforts; Further Assurances. Subject to the terms and
conditions of this Agreement, each of the parties hereto will
use their respective best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary
or desirable under applicable Laws to consummate the
Transactions as soon as practicable. Each of the parties hereto
agrees to execute and deliver such other documents,
certificates, agreements and other writings and to take such
other actions as may be necessary or desirable in order to
consummate or implement expeditiously the Transactions,
including without limitation to vest in Novo Nordisk Delivery
Technologies, Inc. good and marketable title or valid leasehold
interests in the Transferred Assets. Each of the parties hereto
agrees to cooperate with the other parties hereto to identify
any documentation meeting the criteria set forth in
subsection (e) of Part II of Annex 1 to
Exhibit A to the Asset Purchase Agreement, such that such
documentation forms part of the Transferred Assets.




SECTION 7.02.     Certain
Filings. The parties hereto shall cooperate with one another
(i) in determining whether any action by or in respect of,
or filing with, any Governmental Authority is required, or any
Authorizations are required to be obtained from parties to any
material contracts, in connection with the consummation of the
Transactions and (ii) in taking such actions or making any
such filings, furnishing information required in connection
therewith and seeking timely to obtain any such Authorizations.




SECTION 7.03.     Public
Announcements. The parties hereto agree to consult with each
other before issuing any press release or making any public
statement with respect to the Transaction Agreements or the
Transactions and, except for any press releases and public
statements the making of which may be required by applicable Law
or any listing agreement with any national securities exchange,
will not issue any such press release or make any such public
statement prior to such consultation; provided that, the
parties hereto agree that the press release set forth on
Appendix A shall be released on the date hereof and that
Aradigm shall furnish such press release to the United States
Securities and Exchange Commission on Form 8-K.




SECTION 7.04.     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 (i) below to use, the
Confidential Information only in connection with the Transaction
Agreements 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 in
    the normal course of the performance of their duties or to any
    financial institution providing credit to such party,

16



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) to the extent required by applicable
    Law (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 parties prompt notice of such request(s), to the
    extent practicable, so that such other parties may seek an
    appropriate protective order or similar relief (and the party
    shall cooperate with such efforts by such other parties, and
    shall in any event make only the minimum disclosure required by
    such Law)),
|
| | (iii) to the extent disclosure thereof is or
    will be made to the shareholders of Aradigm in the Aradigm Proxy
    Statement,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | (iv) to any Governmental Authority in order
    to obtain from such Governmental Authority any authorization
    required or contemplated by this Agreement or any of the other
    Transaction Agreements as long as such Governmental Authority is
    advised of the confidential nature of such information, or                                                                                                                                                                                                                                                                                                                                          
|
| | (v) 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 7.04,
Confidential Information means any
information concerning this Agreement or the parties
respective rights and obligations hereunder; provided
that, the term Confidential Information does not
include information that (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 7.05.     Warn
Act. The parties agree to cooperate in good faith to
determine whether any notification may be required under the
Worker Adjustment and Retraining Notification Act (the
WARN Act) and/or the Law of the State of
California as a result of the Transactions. Novo Nordisk will be
responsible for providing any notification that may be required
under the WARN Act with respect to any Development Program
Employees. Aradigm will be responsible for providing any
notification that may be required under the WARN Act with
respect to any employees of Aradigm who are not Development
Program Employees.




SECTION 7.06.     Nonsolicitation.
Except as provided in the Letter Agreement, Aradigm, Novo
Nordisk, and Novo Nordisk Delivery Technologies, Inc. each agree
that for a period of three (3) full years after the Signing
Date, neither it nor any of its respective Affiliates shall
solicit, directly or indirectly, for employment, in the case of
Aradigm, any Development Program Employee that is hired by Novo
Nordisk Delivery Technologies, Inc. in accordance with this
Agreement, and, in the case of Novo Nordisk and Novo Nordisk
Delivery Technologies, Inc., any other employee of Aradigm;
provided that, nothing in this Section 7.06 shall
prohibit any Party from carrying out general solicitation of
employment in any newspaper, magazine, trade publication,
electronic medium or other media. The Parties acknowledge that
irreparable harm would result from any breach of this
Section 7.06 and that there would be no adequate remedy at
law or in damages to compensate for any such breach. The Parties
agree that each Party shall be entitled to injunctive relief
requiring specific performance of this Section 7.06 by the
other Party or any of its Affiliates.




SECTION 7.07.     Compliance
with Existing Agreements. Novo Nordisk and its Affiliates
and Aradigm shall each comply in all material respects with the
terms and conditions of the Development and License Agreement,
the Patent Cooperation Agreement, the Stock Purchase Agreement,
the Manufacturing and Supply Agreement and the Co-Existence
Agreement.

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ARTICLE 8

EMPLOYEE BENEFITS




SECTION 8.01.     Employment
Offers.

(a) Novo Nordisk Delivery Technologies, Inc.
will make offers of employment to all active Development Program
Employees with employment to commence with Novo Nordisk Delivery
Technologies, Inc. as of the Closing Date. Development Program
Employees who accept Novo Nordisk Delivery Technologies,
Inc.s offer of employment and report to work as of the
Closing Date shall be Transferred Development Program
Employees.

(b) For purposes of this Agreement, any
Development Program Employee who is not actively at work on the
Closing Date due to a short-term absence for vacation, holiday,
illness or injury of shorter duration than would satisfy the
eligibility requirements to receive benefits under
Aradigms disability plans, jury duty or bereavement leave,
shall be deemed to be actively employed on the Closing Date.
With respect to any Development Program Employee who is on an
Approved Leave of Absence as of the Closing Date, Novo Nordisk
Delivery Technologies, Inc. shall make an offer of employment to
such Development Program Employee effective as of the date on
which such Development Program Employee presents himself or
herself to Novo Nordisk Delivery Technologies, Inc. for active
employment following the Closing Date and within sixteen
(16) weeks (or such longer time period as is required under
the applicable Laws of the State of California) from the Closing
Date to the same extent, if any, as Aradigm would be required to
reemploy such Development Program Employee in accordance within
applicable law. Employees on Approved Leave of
Absencemeans Development Program Employees absent
from work on the Closing Date and unable to perform their
regular job duties under approved plans or policies of the
employer or in accordance with the Family Medical Leave Act or
similar state statutes or regulations or military leave under
the Uniformed Services Employment and Reemployment Rights Act.

(c) For the avoidance of doubt, Aradigm will
retain any and all liabilities and obligations in respect of
(i) Transferred Development Program Employees relating to
employee benefits, compensation or otherwise, existing, accrued
or resulting from actions or omissions on or prior to the
Closing Date and (ii) the Development Program Employee
Plans (as defined below), regardless of when the claim arises.

(d) Novo Nordisk Delivery Technologies, Inc.
or one of its Affiliates will recognize all service of the
Transferred Development Program Employees with Aradigm or any of
its Affiliates for purposes of eligibility to participate,
vesting, severance and vacation accrual in those employee
benefit plans in which the Transferred Development Program
Employees are enrolled by Novo Nordisk Delivery Technologies,
Inc. or one of its Affiliates immediately after the Closing.




SECTION 8.02.     Employee
Benefits Definitions. The following terms, as used herein,
have the following meanings:

Codeshall mean the Internal Revenue Code
of 1986, as amended.

ERISAshall mean the Employee Retirement
Income Security Act of 1974, as amended.

ERISA Affiliateof any entity shall mean any other
entity which, together with such entity, would be treated as a
single employer under Section 414 of the Internal Revenue
Code of 1986, as amended.




SECTION 8.03.     Employee
Benefits Representations. Aradigm hereby represents and
warrants to Novo Nordisk and Novo Nordisk Delivery Technologies,
Inc. that:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) Schedule 8.03(a) contains a correct
    and complete list identifying each employee benefit
    plan, as defined in Section 3(3) of ERISA, each
    employment, severance or similar contract, plan, arrangement or
    policy and each other plan or arrangement providing for
    compensation, bonuses, profit-sharing, stock option or other
    stock-related rights or other forms of incentive or deferred
    compensation, vacation benefits, insurance (including any
    self-insured arrangements), health or medical benefits, employee
    assistance program, disability or sick leave benefits,
    workers compensation, supplemental unemployment benefits,
    severance benefits and post-employment or retirement benefits
    (including compensation,

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | pension, health, medical or life insurance
    benefits) which is maintained, administered or contributed to by
    Aradigm or any of its Affiliates and covers any Development
    Program Employee or any former employee of the Development
    Program. Copies of such plans (and, if applicable, related trust
    or funding agreements or insurance policies) and all amendments
    thereto and written interpretations thereof have been furnished
    or made available electronically to Novo Nordisk Delivery
    Technologies, Inc. together with the most recent annual report
    (Form 5500 including, if applicable, Schedule B thereto)
    and tax return (Form 990) prepared in connection with any such
    plan or trust. Such plans are referred to collectively herein as
    the Development Program Employee Plans.Aradigm has provided Novo Nordisk Delivery Technologies,
    Inc. with, or has caused to be provided to Novo Nordisk Delivery
    Technologies, Inc., complete actuarial data (including age,
    salary, service and related data) as of the most recent
    practicable date for Aradigm employees currently expected to be
    offered positions as Development Program Employees.                                                                                                                                                                     
|
| | (b) None of Aradigm, any of its ERISA
    Affiliates or any predecessor thereof sponsors, maintains or
    contributes to, or has in the past sponsored, maintained or
    contributed to, any Employee Plan subject to Title IV of
    ERISA.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | (c) None of Aradigm, any ERISA Affiliate of
    Aradigm or any predecessor thereof contributes to, or has in the
    past contributed to, any multiemployer plan, as defined in
    Section 3(37) of ERISA (a Multiemployer
    Plan).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | (d) Each Development Program Employee Plan
    that is intended to be qualified under Section 40 1(a) of
    the Code has received a favorable determination letter, or has
    pending or has time remaining in which to file, an application
    for such determination or opinion letter from the Internal
    Revenue Service, and Aradigm is not aware of any reason why any
    such determination or opinion letter should be revoked or not be
    reissued. Aradigm has made available to Novo Nordisk Delivery
    Technologies, Inc. copies of the most recent Internal Revenue
    Service determination or opinion letter with respect to each
    such Development Program Employee Plan. Each Development Program
    Employee Plan has been maintained in material compliance with
    its terms and with the requirements prescribed by any and all
    statutes, orders, rules and regulations, including ERISA and the
    Code, which are applicable to such Development Program Employee
    Plan. No material events have occurred with respect to any
    Development Program Employee Plan that could result in payment
    or assessment by or against the Development Program, Novo
    Nordisk Delivery Technologies, Inc. or any of its Affiliates of
    any material excise taxes under Sections 4972, 4975, 4976,
    4977, 4979, 4980B, 4980D, 4980E or 5000 of the Code.
|
| | (e) There is no current or projected
    liability in respect of post-employment or post-retirement
    health or medical or life insurance benefits for any Development
    Program Employees or any retired or former employees of the
    Development Program, except as required to avoid excise tax
    under Section 4980B of the Code.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | (f) There is no contract, plan or
    arrangement covering any employee or former employee of the
    Development Program that, individually or collectively, could
    give rise to the payment of any amount that would not be
    deductible pursuant to the terms of Sections 280G or 162(m)
    of the Code. No Development Program Employee will become
    entitled to any bonus, retirement, severance, job security or
    similar benefit, or the enhancement of any such benefit, as a
    result of the transactions contemplated hereby.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (g) There is no action, suit, investigation,
    audit or proceeding pending against or involving or, to the
    knowledge of Aradigm, threatened against or involving, any
    Development Program Employee Plan before any Governmental
    Authority.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 




SECTION 8.04.     Employee
Benefits Covenants. From the date hereof until the Closing
Date:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) Except as permitted under the retention
    program separately communicated by Aradigm to Novo Nordisk and
    Novo Nordisk Delivery Technologies, Inc., Aradigm shall not
    (i) issue, deliver or sell to the Development Program
    Employees, or authorize the issuance, delivery or sale to the
    Development Program Employees of, any shares of its capital
    stock of any class or any securities convertible into or

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | exercisable for, or any rights, warrants or
    options to acquire, any such capital stock or any such
    convertible securities, other than the issuance of any shares of
    Aradigm common stock (A) upon the exercise of
    Aradigms stock options that are outstanding on the date of
    this Agreement in accordance with the present terms of those
    options or (B) pursuant to the Aradigm Employee Stock Purchase
    Plan, as the same exists on the date of this Agreement; or
    (ii) amend any term of any outstanding security of Aradigm
    held by any Development Program Employees, unless such amendment
    applies to all similar securities of Aradigm that are
    outstanding.                                                                                                                                                                                                                                                                                            
|
| | (b) Except as permitted under the retention
    program separately communicated by Aradigm to Novo Nordisk and
    Novo Nordisk Delivery Technologies, Inc. or in the ordinary
    course of business (consistent with past practice), Aradigm
    shall not (i) increase the amount of compensation of any
    Development Program Employee or, except as required by an
    existing agreement disclosed to Novo Nordisk or as required by
    Law, make any increase in any employee benefits, (ii) grant
    any severance or termination pay to any Development Program
    Employee, (iii) enter into or amend any employment,
    severance or change of control contract or arrangement with any
    Development Program Employee, (iv) adopt any additional
    employee benefit plan, (v) amend in any material respect
    any Development Program Employee Plan, or (vi) terminate
    any related group of Development Program Employees (in one
    (1) or a series of related terminations).




SECTION 8.05.     No
Third Party Beneficiaries. No provision of this Agreement
shall create any third party beneficiary or other rights in any
employee or former employee (including any beneficiary or
dependent thereof) of Aradigm or of any of its subsidiaries in
respect of continued employment (or resumed employment) with
either Novo Nordisk Delivery Technologies, Inc. or any of its
Affiliates, and no provision of this Agreement shall create any
such rights in any such persons in respect of any benefits that
may be provided, directly or indirectly, under any Development
Program Employee Plan or any plan or arrangement which may be
established by Novo Nordisk Delivery Technologies, Inc. or any
of its Affiliates. No provision of this Agreement shall
constitute a limitation on the rights of Novo Nordisk Delivery
Technologies, Inc. or any of its Affiliates after the Closing
Date to amend, modify or terminate any of its plans or
arrangements or to terminate any of its employees.




ARTICLE 9

CONDITIONS TO CLOSING




SECTION 9.01.     Conditions
to Obligations of the Parties. The obligations of the
parties hereto to consummate the Closing are subject to the
satisfaction of the following conditions:



| |                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) No provision of any applicable Law and
    no Judgment shall prohibit the consummation of the Closing.                                                                            
|
| | (b) All actions by or in respect of or
    filings with any Governmental Authority required to permit the
    consummation of the Closing shall have been taken, made or
    obtained.
|
| | (c) The waiting period (and any extension
    thereof) applicable to the Transactions under the HSR Act shall
    have been terminated or shall have expired.                         




SECTION 9.02.     Conditions
to Obligations of Novo Nordisk and Novo Nordisk Delivery
Technologies, Inc. The obligation of each of Novo Nordisk
and Novo Nordisk Delivery Technologies, Inc. to consummate the
Closing is subject to the satisfaction of the following further
conditions:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) (i) Aradigm shall have performed in
    all material respects all of its obligations hereunder required
    to be performed by it on or prior to the Closing Date,
    (ii) the representations and warranties of Aradigm
    contained in this Agreement and the other Transaction Agreements
    and in any certificate or other writing delivered by Aradigm
    pursuant hereto (disregarding all qualifications and exceptions
    contained therein relating to materiality or Aradigm Material
    Adverse Effect or any similar standard or qualification) shall
    be true at and as of the Closing Date as if made at and as of
    such time, with only such exceptions (I) as have not had
    and would not reasonably be expected to have, individually or in
    the

20



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##### 



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | aggregate, an Aradigm Material Adverse Effect or
    (II) that result solely from the announcement of the
    Transactions or actions taken by the Parties in accordance with
    the terms of this Agreement and (iii) Novo Nordisk shall
    have received a certificate signed by the President or the Chief
    Financial Officer of Aradigm to the foregoing effect.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (b) There shall not be threatened,
    instituted or pending any action or proceeding by any Person
    before any Governmental Authority, seeking to restrain, prohibit
    or otherwise interfere with the ownership, leasing or operation
    or to require divestiture or other disposition by Novo Nordisk
    or any of its Affiliates of all or any material portion of the
    Transferred Assets or all or any material portion of the
    business or assets of the operations in the United States of
    Novo Nordisk and its Affiliates, collectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | (c) Novo Nordisk shall have received an
    opinion of Cooley Godward LLP, counsel to Aradigm, dated the
    Closing Date to the effect set forth in Appendix B hereto.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | (d) Aradigm shall have executed and
    delivered the Transaction Agreements to which it is a party, and
    all deeds, bills of sale, endorsements, consents, assignments
    and other documentation to be provided at Closing pursuant to
    such Transaction Agreements and/or reasonably necessary to vest
    in Novo Nordisk Delivery Technologies, Inc. all right, title and
    interest in, to and under the Purchased Assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (e) Aradigm shall have received all Required
    Consents and all consents, authorizations or approvals from the
    Governmental Authorities referred to in Section 3.03 or
    3.20, in each case in form and substance reasonably satisfactory
    to Novo Nordisk, and no such consent, authorization or approval
    shall have been revoked.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | (f) Aradigm shall have obtained, and shall
    have provided Novo Nordisk reasonably satisfactory evidence of,
    the Required Shareholder Approvals.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | (g) The Employee Transition Plan shall have
    been implemented.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | (h) Aradigm shall have entered into an
    agreement with the landlord (Building 1
    Landlord)under the Lease Agreement dated
    January 28, 1998 between Britannia Point Eden, LLC and
    Aradigm regarding the Building 1 Premises (as defined in
    the Sublease Agreement) (as amended, the
    Building 1 Lease) in a form reasonably
    acceptable to Novo Nordisk, in which agreement Aradigm and
    Building 1 Landlord (i) agree to terminate any first
    refusal right with respect to the Additional Option Space (as
    defined in the Building 1 Lease) granted to Aradigm under
    the Building 1 Lease or, alternatively, (ii) agree to
    subordinate any such first refusal right with respect to the
    Additional Option Space to the first refusal right granted to
    the tenant under the Lease dated January 28, 1998 between
    Hayward Point Eden I Limited Partnership and Aradigm
    regarding premises located in Building G of the Britannia
    Point Eden Business Park in Hayward, Alameda County, California.
|
| | (i) Novo Nordisk shall have received all
    documents it may reasonably request relating to the existence of
    Aradigm and the authority of Aradigm for the Transaction
    Agreements to which it is a party, all in form and substance
    reasonably satisfactory to Novo Nordisk.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          




SECTION
9.03.     Conditions to Obligation
of Aradigm. The obligation of Aradigm to consummate the
Closing is subject to the satisfaction of the following further
conditions:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) Each of Novo Nordisk and Novo Nordisk
    Delivery Technologies, Inc. shall have performed in all material
    respects all of its obligations hereunder required to be
    performed by it at or prior to the Closing Date, (1) the
    representations and warranties of Novo Nordisk contained in this
    Agreement and in any certificate or other writing delivered by
    Novo Nordisk pursuant hereto shall be true in all material
    respects at and as of the Closing Date, as if made at and as of
    such date and (2) Aradigm shall have received a certificate
    signed by an officer of Novo Nordisk to the foregoing effect.
|
| | (b) Aradigm shall have received an opinion
    of the General Counsel of Novo Nordisk or Davis Polk &
    Wardwell, counsel to Novo Nordisk, dated the Closing Date
    substantially to the effect specified in Sections 4.01,
    4.02, 4.03 and 4.04. In rendering such opinion, such counsel may
    rely upon certificates of public officers, as to matters
    governed by the laws of jurisdictions other than Denmark, the
    State of                                                                                                                                                                                                     

21



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##### 



| |                                                                                                                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | California, the State of New York or the federal
    laws of the United States of America, upon opinions of counsel
    reasonably satisfactory to Aradigm, and, as to matters of fact,
    upon certificates of officers of Novo Nordisk, copies of which
    opinions and certificates shall be contemporaneously delivered
    to Aradigm.                                                   
|
| | (c) Each of Novo Nordisk and Novo Nordisk
    Delivery Technologies, Inc. shall have executed and delivered
    the Transaction Agreements to which it is a party, and all bills
    of sale, assignments and other documentation to be provided at
    Closing pursuant to such Transaction Agreements.                                                                                        
|
| | (d) Novo Nordisk Delivery Technologies, Inc.
    shall have paid to Aradigm the Purchase Price.                                                                                                                                                                                                                                                                                                 
|
| | (e) Each of Novo Nordisk and Novo Nordisk
    Delivery Technologies, Inc. shall have received all consents,
    authorizations or approvals from Governmental Authorities
    referred to in Section 4.03, in each case in form and
    substance reasonably satisfactory to Aradigm, and no such
    consent, authorization or approval shall have been revoked.                               
|
| | (f) Aradigm shall have received all
    documents it may reasonably request relating to the existence of
    Novo Nordisk and Novo Nordisk Delivery Technologies Inc. and the
    authority of each of Novo Nordisk and Novo Nordisk Delivery
    Technologies Inc. for the Transaction Agreements to which it is
    a party, all in form and substance reasonably satisfactory to
    Aradigm.




ARTICLE 10

SURVIVAL; INDEMNIFICATION




SECTION
10.01.     Survival. The
representations and warranties of the parties hereto contained
in this Agreement or in any certificate or other writing
delivered pursuant hereto or in connection herewith shall
survive the Closing until the third anniversary of the Closing
Date; provided that, the representations and warranties
in Sections 3.01, 3.02, 3.03, 3.04 and 3.20 and
Article 8 shall survive indefinitely or until the latest
date permitted by law. The covenants and agreements of the
parties hereto contained in this Agreement or in any certificate
or other writing delivered pursuant hereto or in connection
herewith shall survive the Closing indefinitely or for the
shorter period explicitly specified therein. Notwithstanding the
preceding sentence, any breach of a covenant, agreement,
representation or warranty in respect of which indemnity may be
sought under this Agreement shall survive the time at which it
would otherwise terminate pursuant to the preceding sentence, if
written notice of the inaccuracy thereof giving rise to such
right of indemnity shall have been given in accordance with
Section 10.03 to the party against whom such indemnity may
be sought prior to such time.




SECTION
10.02.     Indemnification.
(a) Effective at and after the Closing, Aradigm hereby
indemnifies Novo Nordisk and its Affiliates against and agrees
to hold each of them harmless from any and all damage, loss,
liability and expense (including reasonable expenses of
investigation and reasonable attorneys fees and expenses
in connection with any action, suit or proceeding whether
involving a third-party claim or a claim solely between the
parties hereto and any incidental, indirect or consequential
damages, losses, liabilities or expenses)
(Damages)incurred or suffered by Novo
Nordisk or any of its Affiliates arising out of:



| |                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) any misrepresentation or breach of
    warranty (each such misrepresentation and breach of warranty a
    Warranty Breach) or breach of covenant or
    agreement made or to be performed by Aradigm pursuant to this
    Agreement; or
|
| | (ii) any Excluded Liability.                                                                                                                                                                                                                 

(b) Effective at and after the Closing, Novo
Nordisk hereby indemnifies Aradigm and its Affiliates against
and agrees to hold each of them harmless from any and all
Damages incurred or suffered by Aradigm or any of its Affiliates
arising out of any Warranty Breach or breach of covenant or
agreement made or to be performed by Novo Nordisk or Novo
Nordisk Delivery Technologies, Inc. pursuant to this Agreement.




SECTION
10.03.     Procedures. The party
seeking indemnification under Section 10.02 (the
Indemnified Party) agrees to give prompt
notice to the party against whom indemnity is sought (the
Indemnifying Party) of the assertion of any
claim, or the commencement of any suit, action or proceeding in
respect of which indemnity may be sought under
Section 10.02, which notice shall include a brief
description of the

22



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##### 



specific facts relating to such claim, suit,
action or proceeding. The Indemnifying Party may at the request
of the Indemnified Party participate in and control the defense
of any such claim, suit, action or proceeding at its own
expense. The Indemnifying Party shall not be liable under
Section 10.02 for any settlement effected without its
consent of any claim, litigation or proceeding in respect of
which indemnity may be sought hereunder.





ARTICLE 11

TERMINATION




Section 11.01.     Grounds
for Termination. This Agreement may be terminated at any
time prior to the Closing:



| |                                                                                                                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) by mutual written agreement of the
    parties;                                                                                                                                                                                                                                                                
|
| | (b) by any of the parties if the Closing
    shall not have been consummated on or before January 31,
    2005; or                                                                                                                                                                                                 
|
| | (c) by any of the parties if there shall be
    any Law that makes consummation of the Transactions illegal or
    otherwise prohibited or if consummation of the Transactions
    would violate any nonappealable final order, decree or judgment
    of any Governmental Authority having competent jurisdiction.

The party desiring to terminate this Agreement
pursuant to clauses 11.01(b) and 11.01(c) shall give
written notice of such termination to the other parties.




SECTION 11.02.     Effect
of Termination.

(a) If this Agreement is terminated as
permitted by Section 11.01, such termination shall be
without liability of any party (or any stockholder or
shareholder (as applicable), director, officer, employee, agent,
consultant or representative of such party) to the other parties
to this Agreement; provided that, if such termination shall
result from the (i) willful failure of any party to fulfill
a condition to the performance of the obligations of any other
party, (ii) failure to perform a covenant of this Agreement
or (iii) breach by any party of any representation or
warranty or agreement contained herein, such party shall be
fully liable for any and all Damages incurred or suffered by the
other parties as a result of such failure or breach. The
provisions of Sections 5.02(b), 7.04, 11.02, 12.02, 12.03,
12.05 and 12.06 shall survive any termination hereof pursuant to
Section 11.01.

(b) For the avoidance of doubt, if this
Agreement is terminated as permitted by Section 11.01, the
Development and License Agreement, the Patent Cooperation
Agreement, the Manufacturing and Supply Agreement and the Stock
Purchase Agreement shall continue in full force and legal effect.




ARTICLE 12

MISCELLANEOUS




SECTION
12.01.     Notices. Any notices,
requests and other communications to any party hereunder shall
be in writing (including facsimile transmission) and shall be
given,

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          

23



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with a copy to:



| |                                 
| | --------------------------------
| | Cooley Godward LLP              
| | 3175 Hanover Street             
| | Palo Alto, California 94304-1130
| | Attention: James C. Kitch       
| | Telephone: +1 650-843-5027      
| | Telefax: +1 650-849-7400        

if to Novo Nordisk or Novo Nordisk Delivery
Technologies, Inc., 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 any party to the other
parties hereunder. All such notices, requests and other
communications shall be deemed to have been delivered within
seven (7) Business Days after dispatch and 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.




SECTION
12.02.     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
12.03.     Expenses. Except as
otherwise provided herein, all costs and expenses incurred in
connection with the Transaction Agreements shall be paid by the
party incurring such cost or expense.




SECTION
12.04.     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 that Novo Nordisk Delivery
Technologies, Inc. may transfer or assign, in whole or from time
to time in part, to one or more of its Affiliates, the right to
purchase or lease all or a portion of the Transferred Assets and
the Real Property, but no such transfer or assignment will
relieve Novo Nordisk Delivery Technologies, Inc. of its
obligations hereunder.




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




SECTION
12.06.     Jurisdiction. The
parties agree that any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of
or in connection with this Agreement shall be brought in the
United States District Court for the Southern District of New
York or any New York State court sitting in New York City, so
long as one of such courts shall have subject matter
jurisdiction over such suit, action or

24



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##### 



proceeding, and that any cause of action arising
out of this Agreement shall be deemed to have arisen from a
transaction of business in the State of New York, and each of
the parties hereby irrevocably consents to the jurisdiction of
such courts (and of the appropriate appellate courts therefrom)
in any such suit, action or proceeding and irrevocably waives,
to the fullest extent permitted by law, any objection that it
may now or hereafter have to the laying of the venue of any such
suit, action or proceeding brought in any such court or that any
such suit, action or proceeding brought in any such suit, action
or proceeding brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or
proceeding may be served on any party anywhere in the world,
whether within or without the jurisdiction of any such court.
Without limiting the foregoing, each party agrees that service
of process on such party as provided in Section 12.01 shall
be deemed effective service of process.





SECTION
12.07.     Waiver of Jury Trial.
EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT.




SECTION
12.08.     Counterparts; Third Party
Beneficiaries; Effectiveness. 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 all of the other parties hereto.
Until and unless each party has received a counterpart hereof
signed by the other party hereto, this Agreement shall have no
effect and no party shall have any right or obligation hereunder
(whether by virtue of any other oral or written agreement or
other communication). No provision of this Agreement is intended
to confer any rights, benefits, remedies, obligations or
liabilities hereunder upon any Person other than the parties
hereto and their respective successors and assigns.




SECTION
12.09.     Entire Agreement.
This Agreement, the other Transaction Agreements, the
Co-Existence Agreement and, until the Closing, if any, the
Development and License Agreement, the Patent Cooperation
Agreement, the Manufacturing and Supply Agreement and the Stock
Purchase Agreement, constitute the entire agreement between the
parties hereto 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.




SECTION
12.10.     Bulk Sales Laws. Novo
Nordisk and Aradigm each hereby waive compliance by Aradigm with
the provisions of the bulk sales, bulk
transfer or similar laws of any state. Aradigm agrees to
indemnify and hold Novo Nordisk harmless against any and all
claims, losses, damages, liabilities, costs and expenses
incurred by Novo Nordisk or any of its Affiliates as a result of
any failure to comply with any such bulk sales,
bulk transfer or similar laws.




SECTION
12.11.     Severability. If any
term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to
be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon
such a determination, the parties shall negotiate in good faith
to modify this Agreement so as to effect the original intent of
the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby be consummated
as originally contemplated to the fullest extent possible.




SECTION 12.12.     Specific
Performance. The parties hereto agree that irreparable
damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the
parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement or to enforce specifically
the performance of the terms and provisions hereof in United
States District Court for the Southern District of New York or
any New York State court sitting in New York City, in addition
to any other remedy to which they are entitled at law or in
equity; provided that, the last two (2) sentences of
Section 7.06 shall apply to specific performance of the
terms of Section 7.06.

[SIGNATURE PAGE FOLLOWS]

25



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##### 



IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.



| |                    
| | -------------------
| | ARADIGM CORPORATION



| |     |                        
| | --- | -----------------------
| | By: | /s/ RICHARD P. THOMPSON

| |                          
| | -------------------------
| |                          
| | Name: Richard P. Thompson
| | Title:  Chairman         
|
| | NOVO NORDISK MS          



| |     |                 
| | --- | ----------------
| | By: | /s/ PER VALSTORP

| |                                                  
| | -------------------------------------------------
| |                                                  
| | Name:                                            
| | Title:  Senior Vice President, Product
    Supply
|
| | NOVO NORDISK DELIVERY TECHNOLOGIES, INC.         



| |     |                 
| | --- | ----------------
| | By: | /s/ PER VALSTORP

| |                                
| | -------------------------------
| |                                
| | Name:                          
| | Title:  Chief Executive Officer

26



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##### 






EXHIBIT A

[AMENDED AND RESTATED LICENSE
AGREEMENT]

A-1



---



##### 



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

,
2004

between

ARADIGM CORPORATION

and

NOVO NORDISK A/S



A-2



---



##### 





TABLE OF CONTENTS

|                                      |  |                                                                                |  |      |      | 
|------------------------------------- |  | ------------------------------------------------------------------------------ |  | ---- | ---- | 
|                                      |  |                                                                                |  | Page
|                                      |  |                                                                                |  |     
|ARTICLE 1                            
|DEFINITIONS                          
|SECTION 1.01.                         |  | Definitions                                                                    |  |      | A-6  | 
|SECTION 1.02.                         |  | Other Defined
    Terms                                                        |  |      | A-11 | 
|SECTION 1.03.                         |  | Other Definitional and
    Interpretative Provisions                           |  |      | A-11 | 
|                                     
|ARTICLE 2                            
|RIGHTS AND OBLIGATIONS OF THE PARTIES
|SECTION 2.01.                         |  | Development
    Program                                                        |  |      | A-11 | 
|SECTION 2.02.                         |  | Review
    Committee                                                           |  |      | A-12 | 
|SECTION 2.03.                         |  | Obligations Of The
    Parties In Respect Of The Review Committee              |  |      | A-12 | 
|SECTION 2.04.                         |  | Responsibilities Of The
    Review Committee                                   |  |      | A-13 | 
|SECTION 2.05.                         |  | Diligent
    Efforts                                                           |  |      | A-13 | 
|SECTION 2.06.                         |  | Use
    Restrictions                                                           |  |      | A-13 | 
|SECTION 2.07.                         |  | Alternative
    Technology                                                     |  |      | A-13 | 
|SECTION 2.08.                         |  | Noncompetition                                                                 |  |      | A-15 | 
|SECTION 2.09.                         |  | Product
    Liability                                                          |  |      | A-15 | 
|                                     
|ARTICLE 3                            
|GRANT OF LICENSE                     
|SECTION 3.01.                         |  | License                                                                        |  |      | A-16 | 
|SECTION 3.02.                         |  | Additional License Under
    Aradigm Selected Pulmonary Delivery Patent Rights |  |      | A-16 | 
|SECTION 3.03.                         |  | Sublicense                                                                     |  |      | A-16 | 
|SECTION 3.04.                         |  | Additional
    Licenses                                                        |  |      | A-16 | 
|SECTION 3.05.                         |  | Publicly Available
    Information                                             |  |      | A-17 | 
|                                     
|ARTICLE 4                            
|SUPPLY                               
|SECTION 4.01.                         |  | Novo Nordisk Supply
    Obligations                                            |  |      | A-17 | 
|                                     
|ARTICLE 5                            
|ROYALTY PAYMENTS                     
|SECTION 5.01.                         |  | Royalty
    Payments                                                           |  |      | A-17 | 
|SECTION 5.02.                         |  | Royalty Payments
    Schedule                                                  |  |      | A-18 | 
|SECTION 5.03.                         |  | Additional Royalty
    Provisions                                              |  |      | A-18 | 
|SECTION 5.04.                         |  | Record
    Keeping                                                             |  |      | A-19 | 
|SECTION 5.05.                         |  | Audit Right                                                                    |  |      | A-19 | 
|SECTION 5.06.                         |  | Withholding
    Taxes                                                          |  |      | A-19 | 
|SECTION 5.07.                         |  | Currency                                                                       |  |      | A-19 | 

A-3



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##### 



|                                     |  |                                                             |  |      |      | 
|------------------------------------ |  | ----------------------------------------------------------- |  | ---- | ---- | 
|                                     |  |                                                             |  | Page
|                                     |  |                                                             |  |     
|                                    
|ARTICLE 6                           
|INTELLECTUAL PROPERTY               
|SECTION 6.01.                        |  | Aradigm Intellectual
    Property Rights                    |  |      | A-20 | 
|SECTION 6.02.                        |  | Novo Nordisk Intellectual
    Property Rights               |  |      | A-20 | 
|SECTION 6.03.                        |  | Notice by
    Aradigm                                       |  |      | A-21 | 
|SECTION 6.04.                        |  | Notice by Novo
    Nordisk                                  |  |      | A-21 | 
|SECTION 6.05.                        |  | Pursuit of
    Patents                                      |  |      | A-22 | 
|SECTION 6.06.                        |  | License Option In Lieu Of
    Ownership                     |  |      | A-23 | 
|                                    
|ARTICLE 7                           
|PATENT COOPERATION                  
|SECTION 7.01.                        |  | Enforcement of Patent
    Rights                            |  |      | A-23 | 
|SECTION 7.02.                        |  | Initiation of Action
    Relating to Patents                |  |      | A-23 | 
|SECTION 7.03.                        |  | Interferences                                               |  |      | A-26 | 
|SECTION 7.04.                        |  | Defense and Settlement of
    Third Party Patent Claims     |  |      | A-26 | 
|                                    
|ARTICLE 8                           
|SECRECY                             
|SECTION 8.01.                        |  | Confidentiality                                             |  |      | A-27 | 
|SECTION 8.02.                        |  | Publication
    Planning                                    |  |      | A-27 | 
|SECTION 8.03.                        |  | Term Of Confidentiality
    Provisions                      |  |      | A-28 | 
|                                    
|ARTICLE 9                           
|NOTICE                              
|SECTION 9.01.                        |  | Notice                                                      |  |      | A-28 | 
|SECTION 9.02.                        |  | Deemed Receipt of
    Notice                                |  |      | A-28 | 
|                                    
|ARTICLE 10                          
|TERM AND TERMINATION                
|SECTION 10.01.                       |  | Term                                                        |  |      | A-29 | 
|SECTION 10.02.                       |  | Termination by Novo
    Nordisk                             |  |      | A-29 | 
|SECTION 10.03.                       |  | Termination by
    Aradigm                                  |  |      | A-29 | 
|SECTION 10.04.                       |  | Termination By Either
    Party                             |  |      | A-29 | 
|SECTION 10.05.                       |  | Rights And Obligations of
    The Parties After Termination |  |      | A-29 | 
|SECTION 10.06.                       |  | Additional Effects of
    Termination or Expiration         |  |      | A-33 | 
|                                    
|ARTICLE 11                          
|DISPUTE RESOLUTION AND GOVERNING LAW
|SECTION 11.01.                       |  | Dispute
    Resolution                                      |  |      | A-33 | 
|SECTION 11.02.                       |  | Governing
    Law                                           |  |      | A-34 | 

A-4



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##### 



|                                                                 |  |                                             |  |      |      | 
|---------------------------------------------------------------- |  | ------------------------------------------- |  | ---- | ---- | 
|                                                                 |  |                                             |  | Page
|                                                                 |  |                                             |  |     
|                                                                
|ARTICLE 12                                                      
|MISCELLANEOUS                                                   
|SECTION 12.01.                                                   |  | Bankruptcy Code
    Considerations          |  |      | A-34 | 
|SECTION 12.02.                                                   |  | Binding
    Agreement                       |  |      | A-35 | 
|SECTION 12.03.                                                   |  | Severability                                |  |      | A-35 | 
|SECTION 12.04.                                                   |  | Amendments and
    Waivers                  |  |      | A-35 | 
|SECTION 12.05.                                                   |  | Expenses                                    |  |      | A-35 | 
|SECTION 12.06.                                                   |  | Successors and
    Assigns                  |  |      | A-35 | 
|SECTION 12.07.                                                   |  | Counterparts; Third Party
    Beneficiaries |  |      | A-35 | 
|SECTION 12.08.                                                   |  | Entire
    Agreement                        |  |      | A-37 | 
|Appendix A Aradigm Selected Pulmonary
    Delivery Patent Rights |  |                                             |  |     

A-5



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##### 



AMENDED AND RESTATED LICENSE
AGREEMENT

This AMENDED AND RESTATED LICENSE AGREEMENT (the
Agreement) is entered into as
of                     ,
2004 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.

A-6



---



##### 



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.

A-7



---



##### 



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.


A-8



---



##### 



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.

A-9



---



##### 



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.

A-10



---



##### 






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.

A-11



---



##### 






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.

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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.


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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

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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.

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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

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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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

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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;

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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.

A-19



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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.


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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

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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.


A-22



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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

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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

A-24



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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.

A-25



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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.

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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

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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.

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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,

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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

A-31



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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

A-32



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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 supply insulin [****] to Aradigm until the earliest of 1)
notice to Novo Nordisk by Aradigm that it no longer needs such
supply, 2) the first Regulatory Submission for the Insulin Compound
Packaged Product and the Device in the United States or the European
Union and 3) the tenth (10th) anniversary of the date of termination
of this Agreement.

(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, paying Aradigm a one-time
license fee of two million U.S. dollars ($2,000,000). Novo Nordisk
will pay a royalty of five percent (5.00%) of Net Sales (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 lower of the two (2), or
lowest of the three (3), royalty rates. Novo Nordisk shall have the
right to request a confidential review by an independent licensing
attorney (reasonably acceptable to both Parties), at the shared
expense of the Parties, of any such license, which attorney shall
inform the Parties as to whether or not Novo Nordisk is entitled to a
reduction in royalty payable for the license granted hereunder and if
so, what the adjusted royalty rate shall be.

(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.


A-33



---



##### 



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.

A-34



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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]

A-35



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##### 



| |                    
| | -------------------
| | ARADIGM CORPORATION
|
| | By:                
| |                    
| | Name:              
| | Title:             
|
| | NOVO NORDISK A/S   
|
| | By:                
| |                    
| | Name:              
| | Title:             

A-36



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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. A-37




---



##### 





EXHIBIT B

[ASSET PURCHASE AGREEMENT]



B-1



---



##### 



ASSET PURCHASE AGREEMENT

dated as of


,
2004


between


ARADIGM CORPORATION


and


NOVO NORDISK DELIVERY TECHNOLOGIES,
INC.




B-2



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##### 










TABLE OF CONTENTS

|                                                                                     |  |                                                            |  |      |      | 
|------------------------------------------------------------------------------------ |  | ---------------------------------------------------------- |  | ---- | ---- | 
|                                                                                     |  |                                                            |  | Page
|                                                                                     |  |                                                            |  |     
|ARTICLE 1
     DEFINITIONS                                                          
|SECTION 1.01.                                                                        |  | Definitions                                                |  |      | B-4  | 
|SECTION 1.02.                                                                        |  | Other Definitional And
    Interpretative Provisions       |  |      | B-5  | 
|                                                                                    
|ARTICLE 2
     PURCHASE AND SALE                                                    
|SECTION 2.01.                                                                        |  | Purchase and
    Sale                                      |  |      | B-6  | 
|SECTION 2.02.                                                                        |  | Excluded
    Assets                                        |  |      | B-6  | 
|SECTION 2.03.                                                                        |  | Assumed
    Liabilities                                    |  |      | B-6  | 
|SECTION 2.04.                                                                        |  | Excluded
    Liabilities                                   |  |      | B-6  | 
|SECTION 2.05.                                                                        |  | Assignment of Contracts
    and Rights                     |  |      | B-7  | 
|SECTION 2.06.                                                                        |  | Purchase Price;
    Allocation of Purchase Price           |  |      | B-7  | 
|SECTION 2.07.                                                                        |  | Closing                                                    |  |      | B-7  | 
|                                                                                    
|ARTICLE 3
     COVENANTS OF ARADIGM                                                 
|SECTION 3.01.                                                                        |  | Access To Information;
    Confidentiality                 |  |      | B-7  | 
|                                                                                    
|ARTICLE 4
     COVENANTS OF NOVO NORDISK DELIVERY TECHNOLOGIES. INC. AND
    ARADIGM
|SECTION 4.01.                                                                        |  | Trademarks;
    Tradenames                                 |  |      | B-8  | 
|                                                                                    
|ARTICLE 5
     TAX MATTERS                                                          
|SECTION 5.01.                                                                        |  | Tax
    Definitions                                        |  |      | B-9  | 
|SECTION 5.02.                                                                        |  | Tax Matters                                                |  |      | B-9  | 
|SECTION 5.03.                                                                        |  | Tax Cooperation;
    Allocation of Taxes                   |  |      | B-9  | 
|                                                                                    
|ARTICLE 6
     SURVIVAL; INDEMNIFICATION                                            
|SECTION 6.01.                                                                        |  | Survival                                                   |  |      | B-10 | 
|SECTION 6.02.                                                                        |  | Indemnification                                            |  |      | B-10 | 
|SECTION 6.03.                                                                        |  | Procedures                                                 |  |      | B-11 | 
|                                                                                    
|ARTICLE 7
     MISCELLANEOUS                                                        
|SECTION 7.01.                                                                        |  | Notices                                                    |  |      | B-11 | 
|SECTION 7.02.                                                                        |  | Amendments and
    Waivers                                 |  |      | B-12 | 
|SECTION 7.03.                                                                        |  | Expenses                                                   |  |      | B-12 | 
|SECTION 7.04.                                                                        |  | Successors and
    Assigns                                 |  |      | B-12 | 
|SECTION 7.05.                                                                        |  | Governing
    Law                                          |  |      | B-12 | 
|SECTION 7.06.                                                                        |  | Dispute
    Resolution                                     |  |      | B-12 | 
|SECTION 7.07.                                                                        |  | Counterparts;
    Effectiveness; Third Party Beneficiaries |  |      | B-13 | 
|SECTION 7.08.                                                                        |  | Entire
    Agreement                                       |  |      | B-13 | 
|SECTION 7.09.                                                                        |  | Bulk Sales
    Laws                                        |  |      | B-13 | 
|SECTION 7.10.                                                                        |  | Severability                                               |  |      | B-13 | 
|EXHIBIT A                                                                            |  | Assignment and Assumption
    Agreement                    |  |      | B-15 | 

B-3



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##### 



ASSET PURCHASE AGREEMENT

AGREEMENT dated as
of                     ,
2004 between Aradigm Corporation, a corporation duly organized
and existing under the law of the State of California
(Aradigm) and Novo Nordisk Delivery
Technologies, Inc., a corporation duly organized and existing
under the law of the State of Delaware (NOVO Nordisk
Delivery Technologies, Inc.).

W I T N E S S E T H:

WHEREAS, Aradigm, Novo Nordisk Delivery
Technologies, Inc. and Novo Nordisk A/S, a company duly
organized and existing under the law of Denmark (Novo
Nordisk)entered into a Restructuring Agreement dated
as of September 28,2004 (the Restructuring
Agreement) pursuant to which they agreed to
restructure the existing arrangements between Aradigm and Novo
Nordisk regarding, among other things, the development and
commercialization of the Development Program; and

WHEREAS, it is a precondition to performance on
the part of Aradigm, Novo Nordisk Delivery Technologies, Inc.
and Novo Nordisk of their respective obligations under the
Restructuring Agreement that Aradigm and Novo Nordisk Delivery
Technologies, Inc. enter into this Agreement pursuant to which
Aradigm will transfer certain assets upon the terms and subject
to the conditions hereinafter set forth.

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.

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

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

Amended and Restated License
Agreementshall have the meaning
set forth in the Restructuring Agreement.

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

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

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

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

Deviceshall have the meaning set forth in
the Amended and Restated License Agreement.

Device Manufacturing Facilityshall have the meaning set forth in
the Sublease Agreement.

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

Estimated Purchase Priceshall have the meaning set forth in
the Restructuring Agreement.

Facilitiesshall mean the facilities referred to
by the parties hereto as (i) Building 1
(but only with respect to the Device Manufacturing Facility), to
be subleased by Novo Nordisk Delivery Technologies, Inc. from
Aradigm pursuant to the Sublease Agreement, and
Building 2 and Building 3, the
leases in respect thereof to be assigned to Novo Nordisk
Delivery Technologies, Inc. by Aradigm pursuant to the
Assignment Agreements.

Insulin Compound Packaged Productshall have the meaning set forth in
the Amended and Restated License Agreement.

B-4



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##### 



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

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

London Interbank Offered Rateshall mean the rate for three-month
deposits in United States dollars that appears on the display
designated as page 3750 on Moneyline Telerate,
Inc. (or such other page as may replace the 3750 page on
that service or such other service or services as may be
nominated by the British Bankers Association for the
purposes of displaying London interbank offered rates for
U.S. dollar deposits) as of 11:00 a.m., London time,
on the date on which the 10-day period referred to in
Section 5.03(c) shall have expired without payment.

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

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

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.

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

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

(b) Each of the following terms is defined
in the Section set forth opposite such term:

|                                  |  |                     
|--------------------------------- |  | --------------------
|Term                              |  | Section             
|                                  |  |                     
|Accounting Referee                |  | 2.06                
|Allocation Statement              |  | 2.06                
|Apportioned Obligations           |  | 5.03                
|Aradigm Trademarks and Tradenames |  | 4.01                
|Assumed Liabilities               |  | 2.03                
|Code                              |  | 5.01                
|Contracts                         |  | Annex 1 of Exhibit A
|Damages                           |  | 6.02                
|Excluded Assets                   |  | 2.02                
|Excluded Liabilities              |  | 2.04                
|Indemnified Party                 |  | 6.03                
|Indemnifying Party                |  | 6.03                
|Novo Nordisk                      |  | Recitals            
|Post-Closing Tax Period           |  | 5.03                
|Pre-Closing Tax Period            |  | 5.01                
|Purchased Assets                  |  | 2.01                
|Purchase Price                    |  | 2.06                
|Restructuring Agreement           |  | Recitals            
|Tax                               |  | 5.01                
|Taxing Authority                  |  | 5.01                
|Transfer Taxes                    |  | 5.03                
|Warranty Breach                   |  | 6.02                




SECTION 1.02.     Other
Definitional and Interpretative Provisions. 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,

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Exhibits and Schedules are to Articles, Sections,
Exhibits and Schedules of this Agreement unless otherwise
specified. All 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

PURCHASE AND SALE




SECTION 2.01.     Purchase
and Sale. Upon the terms and conditions of this Agreement,
Novo Nordisk Delivery Technologies, Inc. agrees to purchase from
Aradigm and Aradigm agrees to sell, convey, transfer, assign and
deliver, or cause to be sold, conveyed, transferred, assigned
and delivered, to Novo Nordisk Delivery Technologies, Inc. on
the date hereof, free and clear of all Liens, other than
Permitted Liens, all of Aradigms right, title and interest
in, to and under the assets, identified on Annex 1 of
Exhibit A hereto (the Purchased Assets).

EXCEPT AS SET FORTH IN THE RESTRUCTURING
AGREEMENT: (i) THE PURCHASED ASSETS ARE BEING TRANSFERRED
TO NOVO NORDISK DELIVERY TECHNOLOGIES, INC. AS IS,
AND WHERE IS, AND (ii) ARADIGM MAKES NO
REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED WITH
RESPECT TO THE DESIGN, OPERABILITY OR CONDITION OF THE PURCHASED
ASSETS OR ANY PART THEREOF; AS TO THE MERCHANTABILITY OR FITNESS
FOR ANY PARTICULAR PURPOSE; OR WITH RESPECT TO INFRINGEMENT OF
THIRD PARTY RIGHTS.




SECTION 2.02.     Excluded
Assets. Novo Nordisk Delivery Technologies, Inc. expressly
understands and agrees that all other assets of Aradigm (the
Excluded Assets) shall be excluded from the
Purchased Assets.




SECTION 2.03.     Assumed
Liabilities. Upon the terms and subject to the conditions of
this Agreement, Novo Nordisk Delivery Technologies, Inc. agrees,
effective on the date hereof, to assume only the liabilities and
obligations of Aradigm arising under the Contracts (other than
liabilities or obligations attributable to any failure by
Aradigm to comply with the terms thereof prior to the date
hereof) (the Assumed Liabilities).




SECTION 2.04.     Excluded
Liabilities. Notwithstanding any provision in this Agreement
or any other writing to the contrary, Novo Nordisk Delivery
Technologies, Inc. is assuming only the Assumed Liabilities and
is not assuming any other liability or obligation of Aradigm (or
any predecessor of Aradigm or any prior owner of all or part of
its businesses and assets) of whatever nature, whether presently
in existence or arising hereafter. All such other liabilities
and obligations shall be retained by, and remain obligations and
liabilities of, Aradigm (all such liabilities and obligations
not being assumed being herein referred to as the
Excluded Liabilities). Notwithstanding any
provision in this Agreement or any other writing to the
contrary, Excluded Liabilities shall include without limitation:



| |                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) any liability or obligation of Aradigm,
    or any member of any consolidated, affiliated, combined or
    unitary group of which Aradigm is or has been a member, for
    Taxes (except as provided in Article 5);                                                                                                             
|
| | (b) any liability or obligation relating to
    employee benefits or compensation arrangements existing on or
    prior to the Closing, including any liability or obligation
    under any of Aradigms employee benefit agreements, plans
    or other arrangements listed on Schedule 8.03(a) of the
    Restructuring Agreement;

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| |                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (c) any liability of Aradigm related to the
    Facilities existing on or prior to the Closing;                                                                                         
|
| | (d) any liability of Aradigm related to
    litigation that is pending as of the date hereof, including
    those matters set forth on Schedule 3.09 of the
    Restructuring Agreement;
|
| | (e) any Environmental Liability to the
    extent caused or contributed to by Aradigm;                                                                                                  
|
| | (f) any liability of Aradigm contemplated by
    Section 2.09 of the Amended and Restated License
    Agreement; and                                                                    
|
| | (g) any liability or obligation relating to
    an Excluded Asset.                                                                                                                      




SECTION 2.05.     Assignment
of Contracts and Rights. Anything in this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an
agreement to assign any Purchased Asset or any claim or right or
any benefit arising thereunder or resulting therefrom if such
assignment, without the consent of a third party thereto, would
constitute a breach or other contravention of such Purchased
Asset or in any way adversely affect the rights of Novo Nordisk
Delivery Technologies, Inc. or Aradigm thereunder.




SECTION 2.06.     Purchase
Price; Allocation of Purchase Price. The purchase price for
the Purchased Assets (the Purchase Price)
shall be the Estimated Purchase Price, as set forth in
Annex 1 of Exhibit A and as adjusted in accordance
with Section 2.01(b) of the Restructuring Agreement. The
Purchase Price shall be paid by Novo Nordisk Delivery
Technologies, Inc. to Aradigm on the date hereof.

(a) As soon as practicable after the
Closing, Novo Nordisk Delivery Technologies, Inc. shall deliver
to Aradigm a statement (the Allocation
Statement), allocating the Purchase Price (plus
Assumed Liabilities, to the extent properly taken into account
under Section 1060 of the Code) among the Purchased Assets
in accordance with Section 1060 of the Code. If within
30 days after the delivery of the Allocation Statement
Aradigm notifies Novo Nordisk Delivery Technologies, Inc. in
writing that Aradigm objects to the allocation set forth in the
Allocation Statement, Novo Nordisk Delivery Technologies, Inc.
and Aradigm shall use commercially reasonable efforts to resolve
such dispute within twenty (20) days. In the event that
Novo Nordisk Delivery Technologies, Inc. and Aradigm are unable
to resolve such dispute within twenty (20) days, Novo
Nordisk Delivery Technologies, Inc. and Aradigm shall jointly
retain a nationally recognized accounting firm (the
Accounting Referee) to resolve the disputed
items. Upon resolution of the disputed items, the allocation
reflected on the Allocation Statement shall be adjusted to
reflect such resolution. The costs, fees and expenses of the
Accounting Referee shall be borne equally by Novo Nordisk
Delivery Technologies, Inc. and Aradigm.

(b) Each of Aradigm and Novo Nordisk
Delivery Technologies, Inc. agrees to (i) be bound by the
Allocation Statement and (ii) act in accordance with the
Allocation Statement in the preparation, filing and audit of any
Tax return (including filing Form 8594 with its federal
income Tax return for the taxable year that includes the date of
the Closing).

(c) Not later than thirty (30) days
prior to the filing of their respective Forms 8594 relating to
the transactions contemplated by this Agreement, each party
hereto shall deliver to the other party a copy of its
Form 8594.




SECTION 2.07.     Closing.
The Closing shall take place as contemplated in
Section 2.02 of the Restructuring Agreement.




ARTICLE 3

COVENANTS OF ARADIGM

Aradigm agrees that:




SECTION 3.01.     Access
To Information; Confidentiality.

(a) From the date hereof until
December 31,2005, Aradigm will (i) give Novo Nordisk
Delivery Technologies, Inc., its counsel, financial advisors,
auditors and other authorized representatives full access to

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the offices, properties, books and records of
Aradigm relating to Aradigms conduct of the Development
Program, (ii) furnish to Novo Nordisk Delivery
Technologies, Inc., its counsel, financial advisors, auditors
and other authorized representatives such financial and
operating data and other information relating to the Development
Program as such Persons may reasonably request and
(iii) instruct the employees of and counsel to Aradigm to
cooperate with Novo Nordisk Delivery Technologies, Inc. in its
review, analysis and synthesis of information concerning the
Development Program. No investigation by Novo Nordisk Delivery
Technologies, Inc. or other information received by Novo Nordisk
Delivery Technologies, Inc. shall operate as a waiver or
otherwise affect any representation, warranty or agreement given
or made by Aradigm hereunder.


(b) Aradigm will afford promptly to Novo
Nordisk Delivery Technologies, Inc. and its agents reasonable
access to its books of account, financial and other records
(including accountants work papers), information,
employees and auditors to the extent necessary or useful for
Novo Nordisk Delivery Technologies, Inc. in connection with any
audit, investigation, dispute or litigation or any other
reasonable business purpose relating to the Development Program;
provided that, any such access by Novo Nordisk Delivery
Technologies, Inc. shall not unreasonably interfere with the
conduct of the business of Aradigm.




ARTICLE 4

COVENANTS OF NOVO NORDISK DELIVERY TECHNOLOGIES,
INC. AND ARADIGM

Novo Nordisk Delivery Technologies, Inc. and
Aradigm agree that:




SECTION 4.01.     Trademarks;
Tradenames. Except as set forth in the other subsections of
this Section 4.01, Novo Nordisk Delivery Technologies, Inc.
and its Affiliates shall not use any of the marks or names set
forth on Schedule 4.01 (collectively or individually as the
context requires, the Aradigm Trademarks and
Tradenames).



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) After the Closing, Novo Nordisk Delivery
    Technologies, Inc. and its Affiliates shall have the right to
    use existing supplies of (i) Device and Insulin Compound
    Packaged Product manufactured prior to the Closing Date for use
    in clinical trials, and (ii) existing packaging, labeling,
    containers, supplies, advertising materials, technical data
    sheets and any similar materials, in each case bearing any
    Aradigm Trademarks and Tradenames, until the date the items in
    (i) and (ii) are exhausted. Novo Nordisk Delivery Technologies,
    Inc. and its Affiliates shall comply with all applicable laws
    and regulations in any use of packaging or labeling containing
    the Aradigm Trademarks and Tradenames.
|
| | (b) Novo Nordisk Delivery Technologies, Inc.
    and its Affiliates shall not be obligated to change the Aradigm
    Trademarks and Tradenames on goods in the hands of
    investigators, doctors and patients at the time of the
    expiration of a time period set forth in Section 4.01(a)
    above. The obliteration of the Aradigm Trademarks and Tradenames
    shall be deemed compliance with the covenant not to use the
    Aradigm Trademarks and Tradenames pursuant to this
    Section 4.01(b).                                                                                                                                                                                                                                                    
|
| | (c) Novo Nordisk Delivery Technologies, Inc.
    shall, to its knowledge, take no action inconsistent with
    Aradigms exclusive ownership of the Aradigm Trademarks and
    Tradenames. In any materials in which any Aradigm Trademarks and
    Tradenames appear, Novo Nordisk Delivery Technologies, Inc.
    shall display a trademark legend in a form substantially similar
    to the following (tailored to reflect the applicable trademark
    or trade name being used):
           is a registered
    trademark of Aradigm Corporation or its affiliates in the United
    States and other countries.                                                                                                                                            

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ARTICLE 5

TAX MATTERS




SECTION 5.01.     Tax
Definitions. The following terms, as used herein, have the
following meanings:

Codemeans the Internal Revenue Code of
1986, as amended.

Pre-Closing Tax Periodmeans (i) any Tax period ending
on or before the date hereof and (ii) with respect to a Tax
period that commences before but ends after the date hereof, the
portion of such period up to and including the date hereof.

Taxmeans (i) any tax, governmental
fee or other like assessment or charge of any kind whatsoever
(including withholding on amounts paid to or by any Person),
together with any interest, penalty, addition to tax or
additional amount imposed by any Governmental Authority (a
Taxing Authority) responsible for the
imposition of any such tax (domestic or foreign), or
(ii) liability for the payment of any amounts of the type
described in (i) as a result of being party to any
agreement or any express or implied obligation to indemnify any
other Person.




SECTION 5.02.     Tax
Matters. Aradigm hereby represents and warrants to Novo
Nordisk Delivery Technologies, Inc. that:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) Aradigm has timely paid all Taxes which
    will have been required to be paid on or prior to the date
    hereof, the non-payment of which would result in a Lien on any
    Purchased Asset, would otherwise adversely affect the
    Development Program or would result in Novo Nordisk Delivery
    Technologies, Inc. becoming liable or responsible therefor.                                                                                                                                                                                                                                                                                      
|
| | (b) Aradigm has established, in accordance
    with generally accepted accounting principles applied on a basis
    consistent with that of preceding periods, adequate reserves for
    the payment of, and will timely pay, all Taxes which arise from
    or with respect to the Purchased Assets or the operation of the
    Development Program and are incurred in or attributable to the
    Pre-Closing Tax Period, the non-payment of which would result in
    a Lien on any Purchased Asset, would otherwise adversely affect
    the Development Program or would result in Novo Nordisk Delivery
    Technologies, Inc. becoming liable therefor.




SECTION 5.03.     Tax
Cooperation; Allocation of Taxes.

(a) Novo Nordisk Delivery Technologies, Inc.
and Aradigm agree to furnish or cause to be furnished to each
other, upon request, as promptly as practicable, such
information and assistance relating to the Development Program
and the Purchased Assets (including access to books and records)
as is reasonably necessary for the filing of all Tax returns,
the making of any election relating to Taxes, the preparation
for any audit by any taxing authority, and the prosecution or
defense of any claim, suit or proceeding relating to any Tax.
Novo Nordisk Delivery Technologies, Inc. and Aradigm shall
retain all books and records with respect to Taxes pertaining to
the Assets for a period of at least six years following the date
hereof. On or after the end of such period, each party hereto
shall provide the other with at least 10 days prior written
notice before destroying any such books and records, during
which period the party receiving such notice can elect to take
possession, at its own expense, of such books and records.
Aradigm and Novo Nordisk Delivery Technologies, Inc. shall
cooperate with each other in the conduct of any audit or other
proceeding relating to Taxes involving the Purchased Assets or
the Development Program.

(b) All real property taxes, personal
property taxes and similar ad valoremobligations levied
with respect to the Purchased Assets for a taxable period which
includes (but does not end on) the date hereof (collectively,
the Apportioned Obligations) shall be
apportioned between Aradigm and Novo Nordisk Delivery
Technologies, Inc. based on the number of days of such taxable
period included in the Pre-Closing Tax Period and the number of
days of such taxable period after the date hereof (such portion
of such taxable period, the Post-Closing Tax
Period). Aradigm shall be liable for the proportionate
amount of such taxes that is attributable to the Pre-Closing Tax
Period, and Novo Nordisk Delivery Technologies, Inc. shall be
liable for the proportionate amount of such taxes that is
attributable to the Post-Closing Tax Period.

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(c) All excise, sales, use, value added,
registration stamp, recording, documentary, conveyancing,
franchise, property, transfer, gains and similar Taxes, levies,
charges and fees (collectively, Transfer
Taxes) incurred in connection with the transactions
contemplated by this Agreement shall be borne by Aradigm and
Novo Nordisk Delivery Technologies, Inc. as follows: Each Party
shall bear fifty percent (50.0%) of the Transfer Taxes,
calculated on an after-tax basis, taking into account any
deductions or other benefits received on the tax returns of the
parties hereto and their respective Affiliates. Novo Nordisk
Delivery Technologies, Inc. and Aradigm shall cooperate in
providing each other with any appropriate resale exemption
certifications and other similar documentation.

(d) Apportioned Obligations and Taxes
described in Section 5.03(c) shall be timely paid, and all
applicable filings, reports and returns shall be filed, as
provided by applicable law. The paying party shall be entitled
to reimbursement from the non-paying party in accordance with
Sections 5.03(b) or 5.03(c), as the case may be. Upon
payment of any such Apportioned Obligation or Tax, the paying
party shall present a statement to the non-paying party setting
forth the amount of reimbursement to which the paying party is
entitled under Section 5.03(b) or (c), as the case may be,
together with such supporting evidence as is reasonably
necessary to calculate the amount to be reimbursed. The
non-paying party shall make such reimbursement promptly but in
no event later than 10 days after the presentation of such
statement. Any payment not made within such time shall bear
interest at the London Interbank Offered Rate plus
5.00% per annum until paid.




ARTICLE 6

SURVIVAL; INDEMNIFICATION




SECTION 6.01.     Survival.
The representations and warranties of the parties hereto
contained in this Agreement or in any certificate or other
writing delivered pursuant hereto or in connection herewith
shall survive the Closing indefinitely or until the latest date
permitted by law. The covenants and agreements of the parties
hereto contained in this Agreement or in any certificate or
other writing delivered pursuant hereto or in connection
herewith shall survive the Closing indefinitely or for the
shorter period explicitly specified therein, except that for
such covenants and agreements that survive for such shorter
period, breaches thereof shall survive indefinitely or until the
latest date permitted by law. Notwithstanding the preceding
sentence, any breach of covenant, agreement, representation or
warranty in respect of which indemnity may be sought under this
Agreement shall survive the time at which it would otherwise
terminate pursuant to the preceding sentence, if notice of the
inaccuracy thereof giving rise to such right of indemnity shall
have been given to the party against whom such indemnity may be
sought prior to such time.




SECTION 6.02.     Indemnification.

(a) Effective at and after the Closing,
Aradigm hereby indemnifies Novo Nordisk Delivery Technologies,
Inc. and its Affiliates against and agrees to hold each of them
harmless from any and all damage, loss, liability and expense
(including reasonable expenses of investigation and reasonable
attorneys fees and expenses in connection with any action,
suit or proceeding whether involving a third-party claim or a
claim solely between the parties hereto and any incidental,
indirect or consequential damages, losses, liabilities or
expenses) (Damages)incurred or suffered by
Novo Nordisk Delivery Technologies, Inc. or any of its
Affiliates arising out of:



| |                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) any misrepresentation or breach of
    warranty (each such misrepresentation and breach of warranty a
    Warranty Breach) or breach of covenant or
    agreement made or to be performed by Aradigm pursuant to this
    Agreement; or
|
| | (ii) any Excluded Liability.                                                                                                                                                                                                                 

(b) Effective at and after the Closing, Novo
Nordisk Delivery Technologies, Inc. hereby indemnifies Aradigm
and its Affiliates against and agrees to hold each of them
harmless from any and all Damages incurred or suffered by
Aradigm or any of its Affiliates arising out of any Warranty
Breach or breach of

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covenant or agreement made or to be performed by
Novo Nordisk Delivery Technologies, Inc. pursuant to this
Agreement.





SECTION 6.03.     Procedures.
The party seeking indemnification under Section 6.02 (the
Indemnified Party) agrees to give prompt
notice to the party against whom indemnity is sought (the
Indemnifying Party) of the assertion of any
claim, or the commencement of any suit, action or proceeding in
respect of which indemnity may be sought under
Section 6.02, which notice shall include a brief
description of the specific facts relating to such claim, suit,
action or proceeding. The Indemnifying Party may at the request
of the Indemnified Party participate in and control the defense
of any such suit, action or proceeding at its own expense. The
Indemnifying Party shall not be liable under Section 6.02
for any settlement effected without its consent of any claim,
litigation or proceeding in respect of which indemnity may be
sought hereunder.




ARTICLE 7

MISCELLANEOUS




SECTION 7.01.     Notices.
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                                     
| | 3175 Hanover Street                                    
| | Palo Alto, California 94304-1 130                      
| | Attention: James C. Kitch                              
| | Telephone: +1 650-843-5027                             
| | Telefax: +1 650-849-7400                               
|
| | if to Novo Nordisk Delivery Technologies, Inc.,
    to:
|
| | Novo Nordisk Delivery Technologies, Inc.               
| | c/o 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                               
|
| | with a copy to:                                        
|
| | Attention: Vice President, Business Development        
| | Telephone: +45 44 42 39 00                             
| | Telefax: +45 44 42 16 98                               

or such other address or facsimile number as such
party may hereafter specify for the purpose by notice to the
other parties hereto. 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.

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SECTION 7.02.     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 hereto, or in the case of a waiver, by the party against
whom the waiver is to be effective.

(b) No failure or delay by either party
hereto 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 7.03.     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 7.04.     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 hereto may assign, delegate or otherwise transfer any
of its rights or obligations under this Agreement without the
consent of each other party hereto; except that Novo Nordisk
Delivery Technologies, Inc. may transfer or assign, in whole or
from time to time in part, to one or more of its Affiliates, the
right to purchase all or a portion of the Purchased Assets, but
no such transfer or assignment will relieve Novo Nordisk
Delivery Technologies, Inc. of its obligations hereunder.




SECTION 7.05.     Governing
Law. This Agreement shall be governed by and construed in
accordance with the law of the State of New York.




SECTION 7.06.     Dispute
Resolution.

(a) All disputes arising out of this
Agreement shall be settled as far as possible by negotiations
between the parties hereto. If the parties hereto 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 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 thirty (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 chose 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 hereto.

(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 hereto at
the discretion of the tribunal.

(e) The arbitration decision shall be
rendered as soon as possible, not later, however, if possible,
than six (6) months after the constitution of the
arbitration tribunal. The arbitration decision shall be final
and binding upon both parties hereto and the parties hereto
agree that any award granted pursuant to such decision may be

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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 hereto 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 hereto otherwise agree in writing.
The official arbitration language shall be English.




SECTION 7.07.     Counterparts;
Effectiveness; 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 all of the other parties hereto.
Until and unless each party hereto has received a counterpart
hereof signed by the other party hereto, this Agreement shall
have no effect and no party hereto shall have any right or
obligation hereunder (whether by virtue of any other oral or
written agreement or other communication). No provision of this
Agreement is intended to confer any rights, benefits, remedies,
obligations or liabilities hereunder upon any Person other than
the parties hereto and their respective successors and assigns.




SECTION 7.08.     Entire
Agreement. This Agreement and the other Transaction
Agreements constitute the entire agreement between the parties
hereto with respect to the subject matter of this Agreement and
supersedes all prior agreements and understandings, both oral
and written, between the parties hereto with respect to the
subject matter of this Agreement.




SECTION 7.09.     Bulk
Sales Laws. Novo Nordisk Delivery Technologies, Inc. and
Aradigm each hereby waive compliance by Aradigm with the
provisions of the bulk sales, bulk
transfer or similar laws of any state. Aradigm agrees to
indemnify and hold Novo Nordisk Delivery Technologies, Inc.
harmless against any and all claims, losses, damages,
liabilities, costs and expenses incurred by Novo Nordisk
Delivery Technologies, Inc. or any of its Affiliates as a result
of any failure to comply with any such bulk sales,
bulk transfer or similar laws.




SECTION 7.10.     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
hereto. However, if the intent of the parties hereto cannot be
preserved, this Agreement shall be either renegotiated or
terminated.

[SIGNATURE PAGE FOLLOWS]

B-13



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IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.



| |                    
| | -------------------
| | ARADIGM CORPORATION



| |     | 
| | --- | 
| | By: | 

| |      
| | -----
| |      
| | Name:

| |        | 
| | ------ | 
| | Title: | 



| |                      
| | ---------------------
| | NOVO NORDISK DELIVERY
| | TECHNOLOGIES, INC.   



| |     | 
| | --- | 
| | By: | 

| |      
| | -----
| |      
| | Name:

| |        | 
| | ------ | 
| | Title: | 

B-14



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| |  | 
| |  | 
| |  | 

EXHIBIT A

ASSIGNMENT AND ASSUMPTION AGREEMENT

ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as
of                     ,
2004, between Aradigm Corporation, a corporation duly organized
and existing under the laws of the State of California
(Aradigm)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.).

W I T N E S S E T H :

WHEREAS, Aradigm and Novo Nordisk Delivery
Technologies, Inc. have concurrently herewith consummated the
purchase by Novo Nordisk Delivery Technologies, Inc. of the
Purchased Assets pursuant to the terms and conditions of the
Asset Purchase Agreement
dated                     ,
2004 between Aradigm and Novo Nordisk Delivery Technologies,
Inc. (the Asset Purchase Agreement; terms
defined in the Asset Purchase Agreement and not otherwise
defined herein being used herein as therein defined); and

WHEREAS, pursuant to the Asset Purchase
Agreement, Novo Nordisk Delivery Technologies, Inc. has agreed
to assume certain liabilities and obligations of Aradigm with
respect to the Purchased Assets and the Development Program.

NOW, THEREFORE, in consideration of the sale of
the Purchased Assets and in accordance with the terms of the
Asset Purchase Agreement, Aradigm and Novo Nordisk Delivery
Technologies, Inc. agree as follows:

1. (a) Aradigm does hereby sell,
transfer, assign and deliver to Novo Nordisk Delivery
Technologies, Inc. all of the right, title and interest of
Aradigm in, to and under the Purchased Assets; provided
that, no sale, transfer, assignment or delivery shall be
made of any or any material portion of any of the Contracts or
Permits if an attempted sale, assignment, transfer or delivery,
without the consent of a third party, would constitute a breach
or other contravention thereof or in any way adversely affect
the rights of Aradigm or Novo Nordisk Delivery Technologies,
Inc. thereunder.

(b) Novo Nordisk Delivery Technologies, Inc.
does hereby accept all the right, title and interest of Aradigm
in, to and under all of the Purchased Assets (except as
aforesaid) and Novo Nordisk Delivery Technologies, Inc. assumes
and agrees to pay, perform and discharge promptly and fully when
due all of the Assumed Liabilities and to perform all of the
obligations of Aradigm to be performed under the Contracts
except to the extent liabilities thereunder constitute Excluded
Liabilities.

2. This Agreement shall be governed by and
construed in accordance with the law of the State of New York.

3. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the
same instrument.

IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed as of the day and year
first above written.



| |                    
| | -------------------
| | ARADIGM CORPORATION



| |     | 
| | --- | 
| | By: | 

| |       
| | ------
| |       
| | Name: 
| | Title:

B-15



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| |                      
| | ---------------------
| | NOVO NORDISK DELIVERY
| | TECHNOLOGIES, INC.   



| |     | 
| | --- | 
| | By: | 

| |       
| | ------
| |       
| | Name: 
| | Title:

B-16



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EXHIBIT C [SUBLEASE AGREEMENT] C-1




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##### 



Sublease Agreement This Sublease Agreement (Sublease)is dated as of    , 2004
(the Effective Date) by and between Aradigm Corporation,a California
corporation (Aradigm), Novo Nordisk Delivery Technologies, Inc.,a Delaware
corporation, and, solely for the purposes of Section 16, Novo Nordisk A/S,a
company organized under the laws of Denmark (Novo Nordisk). RECITALS A.Aradigm is tenant under that certain Lease dated as of January 28, 1998
between Britannia Point Eden, LLC, a California limited liability company
(Prime Landlord) and Aradigm as amended by that certain First Amendment to
Lease dated as of December 16, 1998 and that certain Second Amendment to Lease
dated as of December 31, 2003 (collectively, the Building 1 Lease),
respecting certain improved premises (the Building 1 Premises) commonly known
as 3929 Point Eden Way, Hayward, California 94545 consisting of approximately
72,467 square feet, as more particularly described therein. The Building 1
Lease is attached hereto as Exhibit A. The Building 1 Premises contain
Aradigms corporate offices and an approximately 5,100 square foot device
manufacturing facility (the Device Manufacturing Facility), as more
particularly described in Exhibit Battached hereto and incorporated herein by
this reference. B.Aradigm, Novo Nordisk Delivery Technologies, Inc. and Novo Nordisk have
entered into a Restructuring Agreement dated as of September 28, 2004 (the
Restructuring Agreement) pursuant to which they agreed to restructure the
existing arrangements between Aradigm and Novo Nordisk regarding, among other
things, the development and commercialization of the Development Program (as
defined therein). C.In accordance with the Restructuring Agreement, the parties are to
enter into a short term sublease of the Device Manufacturing Facility, pursuant
to the terms and subject to the conditions set forth in this Sublease. Now Therefore, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Novo Nordisk, Novo Nordisk
Delivery Technologies, Inc. and Aradigm agree as follows: 1. Demise Aradigm hereby subleases to Novo Nordisk Delivery Technologies, Inc. and
Novo Nordisk Delivery Technologies, Inc. hereby subleases from Aradigm, the
Device Manufacturing Facility, upon and subject to the terms and conditions set
forth in this Section 1. Novo Nordisk Delivery Technologies, Inc. shall be
responsible for constructing such demising walls and doors as the parties agree
are needed to segregate the Device Manufacturing Facility from the balance of
Building 1. To the degree that such segregation is not practicable, the
parties will agree on and implement policies to minimize the risk of any
disruption or other adverse effect that might result from an incomplete
segregation. C-2




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2. Term The term of this Sublease (the Term) shall commence on the Effective
Date and shall end on the last day of the fourteenth month following the
Effective Date (the Termination Date). Notwithstanding the foregoing, the
Termination Date may be extended by mutual written agreement of Aradigm and
Novo Nordisk, subject to consent of Prime Landlord, if required, and Novo
Nordisk Delivery Technologies, Inc. may terminate this Sublease at any time
during the Term upon thirty (30) days prior written notice to Aradigm. 3. Use Novo Nordisk shall be permitted to use the Device Manufacturing Facility
solely for the assembly of Devices for use in the Development Program in a
manner consistent with the permitted uses under the Building 1 Lease. 4. Rent 4.1 Base Rent.Starting on the Effective Date, Novo Nordisk Delivery
Technologies, Inc. shall pay as base rent (Base Rent) for the Device
Manufacturing Facility, in advance, on or before the first day of each month,
without deduction or offset, monthly rent in the amount of ten thousand one
hundred thirty-four dollars and twenty-eight cents ($10,134.28). Base Rent and
Additional Rent (defined below) shall be payable to Aradigm at the address
stated herein for Aradigm. Base Rent and Additional Rent shall collectively be
referred to herein as Rent. Rent for any period that includes both days
during the Term and outside the Term shall be prorated on a per diem basis
based upon the number of days in the period in question that are during and
outside the Term. 4.2 Additional Rent. (a)Novo Nordisk Delivery Technologies, Inc. shall pay to Aradigm, as
additional rent (Additional Rent), Novo Nordisk Delivery Technologies, Inc.s
Pro Rata Share of Operating Expenses accruing under and as defined in the
Building 1 Lease during the term of this Sublease, together with all other
expenses of Aradigm occasioned by Novo Nordisk Delivery Technologies, Inc.s
use of the Device Manufacturing Facility. (b)For purposes hereof, Novo Nordisk Delivery Technologies, Inc.s Pro
Rata Share means seven and four hundredths percent (7.04%) (based on square
footage of Building 1). (c)For the calculation of Additional Rent, Aradigm shall provide Novo
Nordisk Delivery Technologies, Inc. a copy of each notice of Prime Landlords
estimate of Operating Expenses and each annual Statement (as defined in
Article 5 of the Building 1 Lease) delivered by Prime Landlord pursuant to
Article 5 of the Building 1 Lease, in each case, which is applicable to any
portion of the Term. (d)Payments of Additional Rent attributable to the Operating Expenses
shall be made (i) on or before the first day of each calendar month in the case
of estimated Operating Expenses and (ii) within 20 days after receipt of each
annual Statement, in C-3




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the case of actual Operating Expense adjustments made pursuant to Section
5.4(a) of the Building 1 Lease. (e)Novo Nordisk Delivery Technologies, Inc. shall pay as Additional Rent
any portion of any real property taxes or assessments paid by Aradigm pursuant
to Section 4.2 of the Prime Lease attributable in whole or in part to the
Device Manufacturing Facility which portion shall be (i) the Pro Rata Share if
such payment is attributable to the entire Building 1 Premises, (ii) the entire
payment if such payment is attributable to the Device Manufacturing Facility
only, or (iii) prorated based upon the square footage of the Device
Manufacturing Facility and the square footage of any other portion of the
Building 1 Premises to which such payment applies. (f)Aradigm shall pay to Novo Nordisk Delivery Technologies, Inc. the
portion of any payment received from Prime Landlord pursuant to Section 5.4(a)
or 5.4(b) of the Building 1 Lease attributable in whole or in part to the
Device Manufacturing Facility which portion shall be (i) the Pro Rata Share if
such payment is attributable to the entire Building 1 Premises, (ii) the entire
payment if such payment is attributable to the Device Manufacturing Facility
only, or (iii) prorated based upon the square footage of the Device
Manufacturing Facility and the square footage of any other portion of the
Building 1 Premises to which such payment applies. 5. Utilities 5.1Novo Nordisk Delivery Technologies, Inc. shall pay to Aradigm its Pro
Rata Share of the costs of all utilities, maintenance and insurance provided to
the Building 1 Premises during the term of the Sublease, whether by Aradigm or
Prime Landlord. Payment shall be made within twenty (20) days after receipt by
Novo Nordisk Delivery Technologies, Inc. of a copy of each invoice from the
provider of the applicable utility, maintenance or insurance. 6. As-Is Subject to Prime Landlords service, maintenance or repair obligations
under the Building 1 Lease and the provisions of this Sublease, Novo Nordisk
Delivery Technologies, Inc. accepts the Device Manufacturing Facility and all
improvements in an as is condition. 7. Incorporation of Master Lease 7.1Except as otherwise provided in this Sublease, all of the terms and
provisions of the Building 1 Lease (the Incorporated Provisions) are
incorporated into and made a part of this Sublease, and the rights and
obligations of the parties under the Building 1 Lease are hereby imposed upon
the parties hereto with respect to the Device Manufacturing Facility, Aradigm
being substituted for Landlord in the Building 1 Lease, Novo Nordisk
Delivery Technologies, Inc. being substituted for the Tenant in the Building
1 Lease and the Device Manufacturing Facility being substituted for the
Premises in the Building 1 Lease; provided, however, that the term Landlord
in the following sections of the Building 1 Lease shall mean (i) Prime Landlord
(subject to Aradigms obligations under Paragraph 10 of this Sublease), not
Aradigm: 8.1, 9.6(a), 9.6(d), 10.1(b), 15.1, 15.2, 15.4, 17.4; and (ii) both
Prime Landlord and Aradigm: 7.1, 7.3 and 7.4. Notwithstanding the foregoing,
the following C-4




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Paragraphs of the Building 1 Lease are not incorporated herein: 1.1, 1.2,
1.3, 1.4, 2.1, 2.2, 2.3, 2.4, 2.5, 3.1, 3.2, 4.2, 5.1, 5.2, 5.3, 5.4, 5.5, 6.1,
7.2, 10.1(a), 11.1, 11.2, 15, 16.1, 17.1, 17.8, 17.11, 17.15, 17.16, 17.19,
Exhibit A, Exhibit B, Exhibit C, Exhibit D and First Amendment to Lease. 7.2As incorporated herein and applicable hereunder, unless otherwise
provided herein, the Incorporated Provisions are deemed changed as follows: (a)References to a specific section or article number of, or exhibit or
schedule to, the Building 1 Lease preceded by the word this are deemed
changed by deleting the word this and adding the phrase of the Building 1
Lease as incorporated hereby after such section, article, schedule or exhibit
reference. (b)The words hereof, herein, hereunder and similar words are deemed
to refer to the provision of the Building 1 Lease in which they appear as
incorporated herein by reference. (c)With respect to Section 13.1: (i)each instance of the phrase six (6) months from the date
of the damage or destruction in the case of damage or destruction
occurring prior to the last year of the term of this Lease, or
exceeds shall be deemed deleted; (ii)each instance of the phrase in the case of damage or
destruction occurring during the last year of the term of this
Lease shall be deemed deleted; (iii)the phrase pursuant to Section 10.1(b) hereof in the
19th line shall be deemed deleted; (iv)the phrase Landlord fails in the 32nd line is deemed
changed to the phrase Prime Landlord and Aradigm fail; (v)the parenthetical proviso beginning on the 37th line shall
be deemed deleted; and (vi)following each reference to Section 2.4 and Exhibit C
there shall be deemed inserted the phrase of the Building 1
Lease. (d)Except as otherwise expressly set forth herein, the time limits set
forth in the Building 1 Lease for the giving of notices, making demands,
performance of any act, condition or covenant, or the exercise of any right,
remedy or option, are changed for the purposes of incorporation into this
Sublease, by shortening the same in each instance, as appropriate, so that
notices may be given, demands made, or any act, condition or covenant
performed, or any right, remedy or option hereunder exercised, by Aradigm or
Novo Nordisk Delivery Technologies, Inc., as the case may be (and each party
covenants that it will do so), at least three (3) days (not including
Saturdays, Sundays and legal holidays in the state of California) prior to the
expiration of the time limit, taking into account the maximum grace C-5




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period, if any, relating thereto contained in the Building 1 Lease. Each
party shall promptly deliver to the other party copies of all notices, requests
or demands which relate to the Device Manufacturing Facility or the use or
occupancy thereof after receipt of same from Prime Landlord. In the case of
any time limit described above which is one or two days after the giving of the
notice applicable thereto, such notice shall be delivered by facsimile as
provided in Paragraph 18 hereof. 8. Compliance and Repairs Notwithstanding anything to the contrary in this Sublease, (i) Novo
Nordisk Delivery Technologies, Inc.s repair obligations hereunder shall not
include the making of any capital repairs or improvements to the Device
Manufacturing Facility unless, and to the extent, required due to Novo Nordisk
Delivery Technologies, Inc.s negligence or willful misconduct; and (ii) Novo
Nordisk Delivery Technologies, Inc. shall not be responsible for compliance
with any laws, codes, ordinances or other governmental directives where such
compliance is not related specifically to Novo Nordisk Delivery Technologies,
Inc.s change in the use and occupancy of the Device Manufacturing Facility
during the Term or triggered by Novo Nordisk Delivery Technologies, Inc.s
alterations or improvements to the Device Manufacturing Facility. 9. Conflicts 9.1In the event of any conflict between this Sublease and the Building 1
Lease, as between Aradigm and Novo Nordisk Delivery Technologies, Inc., the
terms and conditions of this Sublease shall control. 9.2Nothing in this Sublease shall diminish the rights of either party
under any Transaction Agreement (as defined in the Restructuring Agreement). 10. Aradigms Obligations 10.1Aradigm covenants that during the term of this Sublease it shall at
all times comply with all provisions of the Building 1 Lease and fulfill all
its obligations thereunder other than those, if any, which are to be fulfilled
directly by Novo Nordisk Delivery Technologies, Inc. 10.2If Prime Landlord shall default in any of its obligations to Aradigm
with respect to the Device Manufacturing Facility, Aradigm shall not, except as
and to the extent hereinafter set forth, be obligated to bring any action or
proceeding or to take any steps to enforce Aradigms rights against Prime
Landlord other than, upon the written request of Novo Nordisk Delivery
Technologies, Inc., making a demand upon Prime Landlord to perform its
obligations under the Building 1 Lease with respect to the Device Manufacturing
Facility. If following the making of such demand and the expiration of any
applicable grace period granted to Prime Landlord under the Building 1 Lease,
Prime Landlord shall fail to perform its obligations under the Building 1
Lease, then Novo Nordisk Delivery Technologies, Inc. shall have the right to
take such action in its own name. If (a) any such action against Prime
Landlord in Novo Nordisk Delivery Technologies, Inc.s name is barred by reason
of lack of privity, non-assignability or otherwise, and (b) the failure of
Prime Landlord to perform its obligations under the Building 1 Lease has, or
may have, a materially adverse effect upon Device Manufacturing C-6




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Facility or Novo Nordisk Delivery Technologies, Inc.s permitted use
thereof then, subject to and upon the following terms, Novo Nordisk Delivery
Technologies, Inc. may bring such action in Aradigms name and Aradigm shall
execute all documents reasonably required in connection therewith, provided (i)
the same is without cost and expense to Aradigm, (ii) Novo Nordisk Delivery
Technologies, Inc. shall indemnify Aradigm in connection therewith, and (iii)
Novo Nordisk Delivery Technologies, Inc. is not in default hereunder. 10.3Except as expressly otherwise provided herein Aradigm shall have no
obligation to Novo Nordisk Delivery Technologies, Inc. for the performance by
Prime Landlord of any obligations and representations of Prime Landlord under
the Building 1 Lease, except to use commercially reasonable efforts to enforce
Prime Landlords obligations and representations under the Building 1 Lease. 11. Quiet Enjoyment 11.1Provided Novo Nordisk Delivery Technologies, Inc. is not in default
under this Sublease beyond any applicable periods of notice and cure, Aradigm
covenants and agrees not to (a) voluntarily cancel or surrender the Building 1
Lease without the prior consent of Novo Nordisk Delivery Technologies, Inc. nor
(b) consent to any modification, amendment or supplement to the Building 1
Lease which will deprive Novo Nordisk Delivery Technologies, Inc. of the
benefits under this Sublease except to a de minimis extent and/or to the extent
such failure to consent could result in a default by Aradigm under the Building
1 Lease. Aradigm shall promptly forward to Novo Nordisk Delivery Technologies,
Inc. any default or termination notice with respect to the Building 1 Lease
received by Aradigm and this Sublease shall terminate in the event of any such
termination of the Building 1 Lease. A termination of the Building 1 Lease due
to the default of Aradigm, other than a default resulting from or attributable
to any corresponding default of Novo Nordisk Delivery Technologies, Inc. under
this Sublease, shall be considered a voluntary cancellation or surrender of the
Building 1 Lease under this subparagraph. 11.2Aradigm covenants that Novo Nordisk Delivery Technologies, Inc., upon
paying the Rent and performing its obligations hereunder and subject to all the
terms and conditions of this Sublease shall peacefully and quietly have, hold
and enjoy the Device Manufacturing Facility throughout the Term or until this
Sublease is terminated as provided by this Sublease. 12. Insurance Novo Nordisk Delivery Technologies, Inc. shall maintain with regard to the
Device Manufacturing Facility only, for the benefit of Novo Nordisk Delivery
Technologies, Inc. and Aradigm, the insurance coverages required of tenant by
Paragraph 10.1 of the Building 1 Lease and shall name Aradigm as an additional
insured thereunder. 13. Surrender Notwithstanding any provision to the contrary, Novo Nordisk Delivery
Technologies, Inc. shall surrender the Device Manufacturing Facility upon
expiration or termination of this Sublease for any reason in the same condition
existing as of the Effective C-7




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Date, normal wear and tear excepted, except that Novo Nordisk and Novo
Nordisk Delivery Technologies, Inc., as applicable, shall retain title to and
remove all inventory, equipment and other personal property acquired pursuant
to the Transaction Agreements. 14. Assignment and Subletting Novo Nordisk Delivery Technologies, Inc. shall not assign this Sublease or
sublet all or any portion of the Device Manufacturing Facility, or allow any
other person or entity to occupy all or any portion of the Device Manufacturing
Facility, or otherwise transfer any right, title or interest in this Sublease
or the Device Manufacturing Facility, by operation of law or otherwise, without
the express written consent of (i) Aradigm, which Aradigm may grant or withhold
in its sole and absolute discretion and (ii) Prime Landlord in accordance with
the provisions of Section 11.1 and 11.2 of the Building 1 Lease.
Notwithstanding the foregoing provisions, however, Novo Nordisk Delivery
Technologies, Inc. may assign this Sublease or sub-sublet the Device
Manufacturing Facility, or any portion thereof, without Aradigms or Prime
Landlords consent (but with prior or substantially concurrent written notice
to Aradigm and Prime Landlord), to any entity (i) which controls, is controlled
by, or is under common control with Novo Nordisk Delivery Technologies, Inc. or
(ii) to which is assigned the Amended and Restated License Agreement (as
defined in the Restructuring Agreement). Any such attempted transfer shall be
deemed null and void. 15. Late Payments; Expenses Any payment under this Sublease that is not paid when due shall bear
interest at the London Interbank Offered Rate (as defined in the Asset Purchase
Agreement) plus five percent (5%) per annum until paid in full. In addition,
the collecting party shall be entitled to recover from the non-paying party its
expenses, including reasonable attorneys fees and costs, incurred in enforcing
this Sublease. 16. Parent Guarantee. Novo Nordisk hereby guarantees the performance in full of the obligations
of Novo Nordisk Delivery Technologies, Inc. under this Sublease. 17. Estoppel Aradigm hereby certifies to the Novo Nordisk Delivery Technologies, Inc.
that (i) it is not in default under the Building 1 Lease nor to its knowledge
is there any event which with notice or lapse of time or both would constitute
a default by Aradigm thereunder and (ii) to its knowledge, Prime Landlord is
not in default under the Building 1 Lease nor is there any event which with
notice or lapse of time or both would constitute a default by Prime Landlord
thereunder. 18. Notices. All notices required or permitted to be given under this Sublease shall be
given in writing and shall be sent by: (a) hand delivery; (b) registered mail,
return receipt requested; (c) C-8




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overnight delivery service; or (d) facsimile transmission, with
confirmation received, and shall be sent or delivered as follows: If to Novo Nordisk Technologies, Inc. or Novo Nordisk N/A: Novo Nordisk A/SNovo AlleDK-2880 BagsvaerdDenmarkAttention: General CounselTelephone: +45 44 44 88 88Telefax: +45 44 42 18 30with a copy to:Attention: Vice President, Business DevelopmentTelephone: +45 44 42 39 00Telefax: +45 44 42 16 98If to Aradigm Corporation:Aradigm Corporation3929 Point Eden WayHayward, California 94545Attention: Chief Financial OfficerTelephone: +1 510-265-9000Telefax: +1 510-265-0277with a copy to:Cooley Godward LLP3175 Hanover StreetPalo Alto, California 94304-1130Attention: James C. KitchTelephone: +1 650-843-5027Telefax: +1 650-849-7400
 19. Governing Law This Sublease shall in all respects be governed by, and construed and
enforced in accordance with, the laws of the State of California, United
States. C-9




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20. Successors and Assigns This Sublease shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns. 21. Counterparts This Sublease may be executed in multiple counterparts, each of which
shall be deemed an original. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] C-10




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Executed to be effective as of the Effective Date. Aradigm Corporation,a California corporationBy:Name:Title: Novo Nordisk Delivery
Technologies, Inc.,a Delaware corporationBy:Name:Title: Novo Nordisk A/S,a corporation organized under the laws of Denmark, as guarantor, solely for the purposes of Section 16By:Name:Title: C-11




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EXHIBIT A [Building 1 Lease] C-12




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EXHIBIT D [CONTRACT MANUFACTURING AGREEMENT] D-1




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CONTRACT MANUFACTURING AGREEMENT This Contract Manufacturing Agreement(the Agreement) is made and
entered into as of , 2004 by and between Novo Nordisk Delivery
Technologies, Inc., a Delaware corporation (Novo Nordisk Delivery
Technologies, Inc.) and Aradigm Corporation, a California corporation
(Aradigm). Novo Nordisk Delivery Technologies, Inc. and Aradigm may be
referred to herein as a Party or, collectively, as Parties. Recitals WHEREAS, Novo Nordisk A/S 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 A/S 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 therein); WHEREAS, Aradigm, Novo Nordisk A/S and 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 therein) and to
certain other matters as set forth therein; WHEREAS, as part of such transaction, the Parties are entering into an
Amended and Restated License Agreement dated as of the even date herewith (the
Amended and Restated License Agreement) pursuant to which they have agreed to
alter the rights and responsibilities of Aradigm and Novo Nordisk A/S with
respect to the Development Program; and WHEREAS, as part of such transaction, the Parties are entering into this
Agreement to provide Aradigm the right to purchase certain devices and dosage
forms from Novo Nordisk Delivery Technologies, Inc. on the terms set forth
below. 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: Agreement  1.
    
    Definitions.  1.1
    
    The following terms, as used herein, shall have the following meanings: Act means the United States Food, Drug and Cosmetics Act of 1938, as the
same may be amended or re-enacted from time to time. D-2




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Actual Capacitymeans the calculated net annual production capacity
measured in time of the existing Facility when staffed to produce three (3)
fifteen liter (15L) lots per two (2) months and three to five (3-5)
devices/shift. Affiliatehas the meaning set forth in the Restructuring Agreement. APImeans, for each Packaged Dosage Form, the active pharmaceutical
ingredient of that Packaged Dosage Form that is provided by Aradigm to Novo
Nordisk Delivery Technologies, Inc. under this Agreement prior to Manufacture
into a Formulation. Applicable Laws means the Act, together with any regulations promulgated
thereunder, and any equivalent applicable laws and regulations within the
European Union, Canada, and Japan. Batchmeans a specific quantity of Packaged Devices and/or Packaged
Dosage Forms that in each case is intended to have uniform character and
quality, within specified limits, and is produced according to a single
manufacturing order during the same cycle of Manufacture as defined under
Applicable Laws. Business Dayhas the meaning set forth in the Amended and Restated
License Agreement. cGMPsmeans all Applicable Laws related to the Manufacture of the
Packaged Dosage Forms and Packaged Devices including the current Good
Manufacturing Practice regulation and guidelines promulgated under the Act at
21 CFR (chapters 210, 211, 600 and 610), as the same may be amended or
re-enacted from time to time. Closing Datehas the meaning set forth in the Restructuring Agreement. Contract Quartermeans any three (3) calendar month period beginning on
the first day of the 1st, 4th, 7th and 10th months of each calendar year. Defectsmeans current or latent Significant Deviations, foreign
material, contaminant, defect, and/or adulteration under Applicable Laws. Devicemeans any pulmonary delivery device used in clinical trials that
is: (a) in compliance with the applicable Specifications; (b) identical to the
iDMS device that is being produced for the iDMS program and that is based on
the Aradigm device technology licensed under the Amended and Restated License
Agreement; and (c) intended to be used to administer Dosage Forms in human
clinical trials. Development Program has the meaning set forth in the Restructuring
Agreement. Diligent Effortsmeans, with respect to efforts of any Party hereto, no
less than the efforts that such Party applies to development or manufacture of
its own devices or dosage forms with similar regulatory requirements. D-3




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Dosage Formmeans the iDMS identical Primary Packaging, containing
Formulation, that is made by Novo Nordisk Delivery Technologies, Inc. for
Aradigm. Facilitiesmeans the facilities located at: (a) Building 2 at 3955 Trust
Way, Hayward, California 94545, including manufacturing facility #1 (MF1) (b)
Building 3 at 3920 Point Eden Way, Hayward, California 94545; and (c) Building
1 (Device Manufacturing facilities only) at 3929 Point Eden Way, Hayward,
California 94545; or (d) any other location agreed to in writing by the
Parties. FDAmeans the United States government agency known as the Food and Drug
Administration, or any successor thereto. Formulationmeans the inhalation solution that is Manufactured by Novo
Nordisk Delivery Technologies, Inc. under the Agreement in accordance with the
applicable Specifications and that contains an API provided by Aradigm and
Other Excipients. Full Manufacturing Costmeans the cost of raw materials (excluding the
API and Other Excipients provided by Aradigm, unless otherwise stated),
components, labor (production), quality (labor, reagents and external
analysis), third party royalties, freight, import duties, taxes and reasonably
allocated facilities costs, depreciation of equipment and facilities, lease of
equipment and facilities, product and professional support, and manufacturing
overheads relating to the production of the specified items. Full
Manufacturing Cost will also include an allocation of unusable manufacturing
capacity, to be defined as two and one-half (2.5) months per twelve (12) month
period, such allocation to be made based on Aradigms actual usage of the
Facilities during such period as a percentage of Actual Capacity. iDMSmeans the insulin Diabetes Management System developed under the
Development Program (as defined in the Amended and Restated License Agreement). Manufactureand Manufacturingmean the following operations required
to produce and assemble Formulations, Packaged Dosage Forms and/or Packaged
Devices from API and iDMS identical materials using then current
Specifications: upstream processing; formulation; form, fill, & seal;
downstream processing; quality control; quality assurance and testing (solely
for iDMS identical testing); and packaging and related services. Manufacturing Requirements Documentsor MRDrefers to the Aradigm
documents that describe the requirements for Manufacturing, testing, storage
and release of Packaged Dosage Forms and/or Packaged Devices at a specific site
and shall identify critical and non-critical parameters relating to the
Formulation and process and shall include the associated tech transfer
documents. Master Batch Recordmeans, for a given Packaged Device or Packaged
Dosage Form, the current approved manufacturing instructions to be followed by
Novo Nordisk Delivery Technologies, Inc. with respect to the Manufacture,
handling and storage of that Packaged Device or Packaged Dosage Form, and their
components. D-4




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Other Excipientsmeans any raw materials or components, which are
different from then current raw materials and components provided by Aradigm
and used for iDMS. Packaged Devicemeans the Device, contained in Secondary Packaging, that
is intended for use in phase 2 and/or phase 3 clinical trials. Packaged Dosage Formsmeans the disposable Dosage Forms, contained in
Secondary Packaging, that are intended for use in phase 2 and/or phase 3
clinical trials. Personmeans 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. Primary Packagingmeans those packaging components that are or may be in
direct contact with the Device or the Formulation contained in a Dosage Form.
The primary packaging components of a Dosage Form are the nozzle layer, the lid
layer, the blister layer and the label laminate. Quality Agreementmeans the Quality Agreement, dated as of the even date
herewith, for any Packaged Devices and Packaged Dosage Forms that are
Manufactured by Novo Nordisk Delivery Technologies, Inc., describing the
quality control and regulatory responsibilities of the Parties with respect to
such Packaged Devices and Packaged Dosage Forms. Regulatory Agencymeans the FDA (within the United States) and any other
governmental authority (national, federal, provincial and/or local) in the EU,
Japan, and Canada that is a counterpart to the FDA or otherwise has
jurisdiction over the Manufacture or approval of any Packaged Device or
Packaged Dosage Form. Secondary Packagingmeans bulk packaging that is used for containment,
for storage, for shipment, or for identification of materials or as otherwise
agreed in writing between the Parties. Significant Changemeans any change that: (a) materially affects the
scope or content of a previously filed and active Investigational New Drug
Application for the Packaged Dosage Forms and/or Packaged Devices; (b) may
require revalidation; or (c) would result in changing or modifying the
Specifications. Significant Deviationmeans any material non-conformity from established
requirements as provided in the applicable product registration, applicable
validation and/or qualification documents as well as applicable Batch
production records and associated procedures, methods and Specifications. Specificationsmean the quality control and technical procedures, test
results, storage conditions, transportation conditions, requirements, standards
and other data and documentation with respect to API, Devices, Formulation,
Dosage Forms, Other Excipients, Primary Packaging, and Secondary Packaging (and
the excipients and components thereof). D-5




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Third Partymeans any entity other than Novo Nordisk Delivery
Technologies, Inc., Aradigm or any of their Affiliates. Transaction Agreementshas the meaning set forth in the Restructuring
Agreement. 1.2 Other Defined Terms.Each of the following terms is defined in the Section
set forth opposite such term: Term
    
    SectionAgreement
    
    RecitalsAmended and Restated License Agreement
    
    RecitalsAradigm
    
    RecitalsConfidential Information
    
    
    7.1
    (d)Damages
    
    
    8.1DEA
    
    
    2.4Dedicated Equipment
    
    
    2.9Deficiency Notice
    
    
    5.4Development and License Agreement
    
    RecitalsDMF
    
    
    6.3Firm Order
    
    
    3.3Forecast
    
    
    3.2GLP
    
    
    6.4Indemnified Party
    
    
    8.3Indemnifying Party
    
    
    8.3Manufacturing Responsibilities
    
    
    2.2Novo Nordisk Delivery Technologies, Inc.
    
    RecitalsParties
    
    RecitalsParty
    
    RecitalsRestructuring Agreement
    
    RecitalsSOPs
    
    
    2.1Term
    
    
    10.1
 1.3 Other Definitional and Interpretative Provisions.Unless specified
otherwise, in this Agreement the obligations of any Party consisting of more
than one (1) person are joint and D-6




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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, and Exhibits are to
Articles, Sections, and Exhibits of this Agreement unless otherwise specified.
All Exhibits 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 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 Party include the
successors and permitted assigns of that Party. References from or through any
date mean, unless otherwise specified, from and including or through and
including, respectively. 2. Scope of Work. 2.1 General. This Agreement, the Quality Agreement, and other exhibits hereto
shall serve as a supply agreement governing the Manufacture, purchase and
supply of Packaged Dosage Forms and/or Packaged Devices between the Parties.
Each Party shall use Diligent Efforts to perform the responsibilities assigned
to such Party as defined herein. Promptly after the Closing Date, Novo Nordisk
Delivery Technologies, Inc. shall prepare detailed standard operating
procedures (SOPs) to facilitate the performance of the Parties obligations
under this Agreement, including SOPs for managing change control in accordance
with Section 2.5. Novo Nordisk Delivery Technologies, Inc. shall submit such
SOPs to Aradigm for review and approval, such approval not to be unreasonably
withheld or delayed. 2.2 Manufacture and Supply. During the Term, Novo Nordisk Delivery
Technologies, Inc. shall Manufacture and supply to Aradigm such quantities of
each Packaged Device and/or Packaged Dosage Form as may be ordered by Aradigm
in accordance with Section 3.3 for the compensation described in Article 4.
All such Manufacture and supply shall occur at the Facilities unless otherwise
agreed in writing by the Parties. Aradigm shall deliver the applicable MRDs
and Specifications at least twelve (12) weeks prior to the planned
Manufacturing to permit Novo Nordisk Delivery Technologies, Inc. to update its
SOPs and other documents; provided that, if Aradigm does not meet such 12-week
timeline, then Novo Nordisk Delivery Technologies, Inc. shall use reasonable
efforts to accommodate such planned Manufacturing. Novo Nordisk Delivery
Technologies, Inc. shall Manufacture and supply each order of Packaged Device
and/or Packaged Dosage Form in accordance with the applicable MRD, Quality
Agreement, and Applicable Laws (hereinafter collectively the Manufacturing
Responsibilities). For the avoidance of doubt, Novo Nordisk Delivery
Technologies, Inc. shall Manufacture and supply the Dosage Forms and Devices
for Aradigm that are identical to the dosage forms and devices produced for the
Product (as defined in the Amended and Restated License Agreement) and Device
(as defined in the Amended and Restated License Agreement) D-7




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using the then current Novo Nordisk Delivery Technologies, Inc. Specifications,
with the exception of API and Specifications with respect to Other Excipients.
Additionally, Novo Nordisk Delivery Technologies, Inc. may reject Aradigms
request to Manufacture or supply Aradigm with any of the excluded products
identified on Exhibit A, as amended from time to time, or any products that
contain proteolytic activity, allergenic excipients, penicillins,
cephalosporins, potent steroids and hormones, cytotoxics, viable
micro-organisms or vira or substances that can cause anaphylaxis, and/or have
unknown toxicity. Novo Nordisk Delivery Technologies, Inc. may reject
Aradigms request to Manufacture any Dosage Forms that cannot be introduced
under cGMPs into a facility that also makes Product (as defined in the Amended
and Restated License Agreement) for phase 3a and b clinical trials. 2.3 Materials. (a)Novo Nordisk Delivery Technologies, Inc.Novo Nordisk Delivery
Technologies, Inc. shall purchase and test all raw materials and components
identical to iDMS (other than API and Other Excipients) necessary for such
Manufacture in accordance with the then current Specifications. Novo Nordisk
Delivery Technologies, Inc. shall notify Aradigm in writing prior to changing
any supplier of components of the Packaged Device and Packaged Dosage Form.
Novo Nordisk Delivery Technologies, Inc. shall at all times maintain an
inventory of all materials and components (excluding API and Other Excipients)
sufficient in its reasonable judgment to Manufacture the relevant Packaged
Dosage Forms and/or Packaged Devices to fill Aradigms binding orders and
forecasts for at least the following one (1) month or such different period of
time as may be agreed in writing by the Parties. (b)Aradigm. Aradigm shall (at Aradigms expense) purchase and provide Novo
Nordisk Delivery Technologies, Inc., in accordance with the delivery schedule
agreed to in writing by the Parties, with all API and Other Excipients that are
necessary to produce Formulations, such APIs and Other Excipients to be free
from any Defects. Aradigm shall supply Other Excipients that are of
pharmacopoeia quality, provided that Other Excipients of such quality are
available. Furthermore, Aradigm shall (at Aradigms expense) provide to Novo
Nordisk Delivery Technologies, Inc. all analytical methods, Specifications,
including verified cleaning methods, and other documentation necessary to
Manufacture and supply the applicable Packaged Dosage Forms and/or Packaged
Devices under this Agreement. For clarity, Aradigm will be responsible for
developing and conducting analytical testing for all non-iDMS identical
materials and components and cleaning agents including API and Other Excipients
and testing to verify cleaning of Novo Nordisk Delivery Technologies, Inc.s
facilities after manufacture of Dosage Forms. Aradigm will be responsible for
qualifying and approving all non-iDMS identical materials, components and its
suppliers. In the event that any API and Other Excipients contain Defects,
Aradigm shall promptly replace such API and Other Excipients and Novo Nordisk
Delivery Technologies, Inc.s obligations to manufacture and supply Packaged
Dosage Forms will be extended for an amount of time provided that, the capacity
limitations set forth in Section 3.1(a) are not exceeded. Aradigm shall
provide all test results and release certificates to Novo Nordisk Delivery
Technologies, Inc. related to API, Other Excipients, components, in-process
controls tests and cleaning tests conducted by Aradigm. 2.4 Compliance with Laws. Novo Nordisk Delivery Technologies, Inc. shall
comply with all Applicable Laws related to: (a) the transportation, storage,
use, handling and disposal of D-8




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controlled substances and/or hazardous materials in connection with its
obligations under this Agreement; and (b) Novo Nordisk Delivery Technologies,
Inc.s Manufacture of Packaged Device and Packaged Dosage Form under this
Agreement. Novo Nordisk Delivery Technologies, Inc. covenants that it shall
not use, in any capacity, the services of any person who is disbarred under
Applicable Law. Novo Nordisk Delivery Technologies, Inc. shall maintain during
the Term all government permits and Drug Enforcement Administration (DEA)
licenses required for the conduct of the actions and procedures that it
undertakes pursuant to this Agreement. 2.5 Change Control. Novo Nordisk Delivery Technologies, Inc. shall notify
Aradigm in writing if Novo Nordisk Delivery Technologies, Inc. wishes to make
any Significant Change. Novo Nordisk Delivery Technologies, Inc. shall not
make any Significant Change without Aradigms prior written consent, which
shall not be unreasonably withheld or delayed. 2.6 Reprocess and Rework. Novo Nordisk Delivery Technologies, Inc. shall not
rework or reprocess any Packaged Dosage Forms or Packaged Devices without prior
written consent from Aradigm. Novo Nordisk Delivery Technologies, Inc. shall
document appropriately all rework and reprocessing conducted under this
Agreement. 2.7 Deviations. Novo Nordisk Delivery Technologies, Inc. shall notify Aradigm
within three (3) business days after its discovery of any Packaged Dosage Form
or Packaged Devices Batch failure or Significant Deviation, and Novo Nordisk
Delivery Technologies, Inc. shall use Diligent Efforts to replace such Packaged
Dosage Forms or Packaged Device at Aradigms expense, except in the event such
failure or Significant Deviation arose or resulted from the gross negligence or
willful misconduct of Novo Nordisk Delivery Technologies, Inc., in which case
such replacement shall occur at no expense to Aradigm (except for the cost of
replacing API and Other Excipients, which shall be at Aradigms expense). 2.8 Storage and Handling. Novo Nordisk Delivery Technologies, Inc. shall store
and handle all API, iDMS identical materials, components, work-in-process
materials, and finished Packaged Dosage Forms and Packaged Devices as set forth
in the applicable Specifications, MRDs, and in accordance with cGMPs, and shall
conform to established safety practices and procedures set forth in Aradigms
then-current material safety data sheet. In addition, Novo Nordisk Delivery
Technologies, Inc. shall take such actions as are reasonably necessary to
protect API and Other Excipients from damage, theft, and deterioration. If
requested by Aradigm in writing, Novo Nordisk Delivery Technologies, Inc. shall
return or destroy, at Aradigms expense, any unused API in accordance with
Aradigms written instructions. 2.9 Equipment and Facilities. Aradigm shall notify Novo Nordisk Delivery
Technologies, Inc. in writing if any additional equipment is required for
Manufacturing of Packaged Dosage Forms (Dedicated Equipment). Aradigm shall
purchase, deliver, and maintain (or cause to be maintained) such Dedicated
Equipment at its own expense. If such Dedicated Equipment becomes an
integrated part of the Facilities, Novo Nordisk Delivery Technologies, Inc.
shall validate and maintain the cGMP status of such Dedicated Equipment at
Aradigms expense. D-9




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3. Capacity, Forecasts and Ordering. 3.1 Supply Capacity. Subject to Section 3.1(a), Novo Nordisk Delivery
Technologies, Inc. shall maintain sufficient production capacity for the
current and forecasted requirements of Packaged Device and/or Packaged Dosage
Form, as set forth in the applicable Forecast as defined below. (a)Capacity Limits. During the Term, Novo Nordisk Delivery Technologies, Inc.
shall provide Aradigm with the Manufacturing capacity, which includes Device
production and packaging, indicated in the chart below for each of the three
(3) process groups (i.e., upstream processing; compounding/filling; and
downstream processing, including handle lamination through packaging).
Notwithstanding the foregoing, if Novo Nordisk Delivery Technologies, Inc.
provides Aradigm with ninety (90) days prior written notice that Novo Nordisk
Delivery Technologies, Inc. needs additional capacity for itself to provide
Device and/or Dosage Forms for the phase 3 insulin trial that it will conduct,
then Novo Nordisk Delivery Technologies, Inc. may shift the capacity allocated
to Aradigms requirements as set forth in this Agreement as follows: (i) in
2005, Novo Nordisk Delivery Technologies, Inc. may shift the
1/6th of actual
capacity to the fourth Contract Quarter of 2005 or split the 1/6th of actual
capacity between the first and second half of 2005; (ii) in 2006, Novo Nordisk
Delivery Technologies, Inc. may shift the 1/4 of actual capacity to either of
the last 2 Contract Quarters of 2006 or split the 1/4 of actual capacity
between the first and second half of 2006; and (iii) in 2007, Novo Nordisk
Delivery Technologies, Inc. may shift the 1/4th of actual capacity to either of
the last 2 Contract Quarters of 2007 or split the 1/4th of actual capacity
between the first and second half of 2007. For the avoidance of doubt, the
table below lists calendar year capacity. Therefore, in the event that this
Agreement terminates before December 31, 2007, Aradigm will only have a
corresponding proportional amount of capacity for that year. Contract Year
    
    Capacity for Each Unit Operation2005
    
    1/6th of actual capacity2006
    
    1/4th of actual capacity2007
    
    1/4th of actual capacity
 Notwithstanding this Section 3.1, Novo Nordisk Delivery Technologies, Inc.
shall not be obligated to provide Aradigm with the Manufacturing capacity
related to use of the sterile core and other filling activities, as described
above, if, in its sole discretion, it concludes that the provision of such
Manufacturing capacity would, in any manner, impair Novo Nordisk Delivery
Technologies, Inc.s ability to supply any capacity related to its activities
under the Amended and Restated License Agreement. 3.2 Forecasts. Within ten (10) days of the Closing Date, and on the 15th day
of the first month of each Contract Quarter thereafter, Aradigm will provide
Novo Nordisk Delivery Technologies, Inc. with a six (6) Contract Quarter
rolling forecast of Aradigms orders for Packaged Dosage Forms and/or Packaged
Devices on a worldwide basis (each a Forecast). D-10




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The first Contract Quarter of each Forecast will be binding, and the two
subsequent Contract Quarters of each Forecast may represent a deviation of up
to plus or minus twenty-five percent (25%) from the previous Forecast for such
Contract Quarter. All remaining Contract Quarters of each Forecast will be
prepared on a reasonable basis, but will be nonbinding. 3.3 Orders. Aradigm shall submit to Novo Nordisk Delivery Technologies, Inc.
written purchase orders for Packaged Device and/or Packaged Dosage Form in
accordance with the applicable Forecast (each, a Firm Order). Each such
purchase order will specify the quantity ordered, the required delivery dates,
and any special instructions or invoicing information. 4. Compensation. 4.1 Clinical. Aradigm shall reimburse Novo Nordisk Delivery Technologies, Inc.
for the Full Manufacturing Cost of Manufacturing all Packaged Device and/or
Packaged Dosage Form ordered by Aradigm pursuant to this Agreement. 4.2 Payments. Novo Nordisk Delivery Technologies, Inc. shall invoice Aradigm
for the Full Manufacturing Cost for each shipment of Packaged Device and/or
Packaged Dosage Form ordered by Aradigm pursuant to this Agreement. Aradigm
shall pay Novo Nordisk Delivery Technologies, Inc. the amount owed pursuant to
each such invoice in advance of shipment, in accordance with the compensation
described in Section 4.1 within thirty (30) days of receiving each such
invoice. All amounts owed under this Agreement shall be paid in the legal
currency of the United States. 5. Delivery and Acceptance. 5.1 Quality Control Sample. Novo Nordisk Delivery Technologies, Inc. shall
provide Aradigm with the following: (a) a quality control sample of such Batch
for the purpose of confirming that such Batch meets the Specifications; (b) a
copy of the manufacturing Batch records and all relevant documentation for such
Batch, together with written confirmation that such Batch records have been
reviewed and approved by the quality assurance unit; and (c) and results of
analysis performed by Novo Nordisk Delivery Technologies, Inc. in connection
with its obligations under this Agreement. The quality control sample shall
consist of Packaged Device and/or Packaged Dosage Form sampled so as to be
representative of the Batch. No Batch of Packaged Dosage Forms or Packaged
Devices shall be deemed to have been accepted until the quality control sample
and associated documentation related to such Batch have been accepted by
Aradigm pursuant to Section 5.4, such acceptance not to be unreasonably
withheld or delayed. 5.2 Shipping and Title. Novo Nordisk Delivery Technologies, Inc. shall ship
Batches to Aradigm as soon as practicable after such Batches are released by
Aradigm pursuant to the Quality Agreement, unless otherwise agreed in writing
by the Parties. Packaged Dosage Forms containing controlled substances shall
be shipped as soon as practicable. Aradigm will use Diligent Efforts to release
all Batches within six (6) weeks of the receipt of deliverables specified in
Section 5.1 above. Unless otherwise agreed in writing by the Parties, all
shipments shall be shipped FCA (Incoterms, 2000) the Facility at Aradigms
expense, and Aradigm shall bear all
risk of loss or damage after the Batch of Packaged Device and/or Packaged
Dosage Form is D-11




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shipped from the Facility. Novo Nordisk Delivery Technologies,
Inc. will package all Packaged Dosage Forms in accordance with the
Specifications. Title to all API shall at all times remain with Aradigm.
Title to all Packaged Dosage Forms and Packaged Devices shall in each case
transfer to Aradigm upon shipment of such Packaged Dosage Forms and Packaged
Device from the Facility. 5.3 Delivery. Novo Nordisk Delivery Technologies, Inc. shall deliver all
batches of Packaged Dosage Forms and/or Packaged Devices hereunder on the
scheduled delivery dates as set forth in the relevant Firm Orders; however,
Novo Nordisk Delivery Technologies, Inc. may, if it provides Aradigm with at
least ninety (90) days prior written notice, delay delivery of any clinical
Batch of Packaged Device and/or Packaged Dosage Form for up to sixty (60) days.
In the event of four (4) or more instances of late delivery of more than
thirty (30) days over a minimum period of twelve (12) consecutive months for
reasons due to Novo Nordisk Delivery Technologies, Inc.s default, such late
deliveries may, at Aradigms discretion, be treated as a material breach of
this Agreement for the purpose of Section 10.2(a). Upon Aradigms receipt of
such prior notification of a potential delivery delay, Aradigm and Novo Nordisk
Delivery Technologies, Inc. shall use Diligent Efforts to make up the delay
during the release period. 5.4 Approval. Aradigm shall review documentation for the Packaged Dosage Forms
and Packaged Devices Manufactured by Novo Nordisk Delivery Technologies, Inc.
upon receipt thereof and, within six (6) weeks of its receipt, shall give Novo
Nordisk Delivery Technologies, Inc. written notice (a Deficiency Notice) of
all claims for Packaged Dosage Forms and Packaged Devices that contains a
Significant Deviation. If Aradigm does not provide Novo Nordisk Delivery
Technologies, Inc. with written notice of its rejection of the Batch within
such six (6) weeks, then the Batch shall be deemed to have been accepted by
Aradigm at the end of the six-week period after delivery of the Batch
documentation and the quality control sample. Aradigm shall pay Novo Nordisk
Delivery Technologies, Inc. for any rejected Batch; provided that, Aradigm
shall have the right to reject and return, at no expense to Aradigm (except for
the cost of replacing API and Other Excipients, which shall be at Aradigms
expense), any portion of any shipment of Packaged Device and/or Packaged Dosage
Form that contains a Significant Deviation, without invalidating any remainder
of such shipment, to the extent that such Significant Deviation arises from
Novo Nordisk Delivery Technology Inc.s gross negligence or willful misconduct. 6. Audits, Record Keeping, and Visits. 6.1 General Audits. Aradigm may audit the Facilities during reasonable hours
once per year during the Term for determining Novo Nordisk Delivery
Technologies, Inc.s compliance with the terms of this Agreement and the
Quality Agreement. Aradigm shall provide Novo Nordisk Delivery Technologies,
Inc. with sixty (60) days written notice in advance of each such audit, and
Novo Nordisk Delivery Technologies, Inc. shall cooperate with Aradigm during
each such audit. 6.2 Regulatory Audits.Each Party shall promptly notify the other Party in
writing in advance of any inspection of the Facilities by any Regulatory Agency
that potentially relates to the Manufacture and supply of Packaged Device or
Packaged Dosage Form. Prior to and during
each inspection by a Regulatory Agency, each Party shall provide reasonably
requested D-12




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assistance to support such inspection. In the event that such
inspection relates to the Packaged Device and Packaged Dosage Form, each Party
shall inform and provide copies to the other Party of any critical or major
observations made during any such inspection. 6.3 Record Keeping. During the term of this Agreement, Novo Nordisk Delivery
Technologies, Inc. shall keep complete and accurate accounts, notes, data and
records of the work performed under this Agreement. Novo Nordisk Delivery
Technologies, Inc. shall also maintain during the term of this Agreement, and
for three (3) years after the expiration of the shelf life of Packaged Device
and/or Packaged Dosage Form (as applicable), complete and accurate records
pertaining to the Manufacture, testing, storage and shipping of Packaged Dosage
Forms, Packaged Devices and the Facilities as required by Applicable Laws,
including maintaining all records for controlled substances in accordance with
DEA and other governmental regulations. Additionally, Novo Nordisk Delivery
Technologies, Inc. shall maintain a Drug Master File (DMF) and all necessary
current manufacturing licenses (including DEA permits) in accordance with the
guidelines provided by Regulatory Authorities and provide Aradigm with letters
of access to such DMF. 6.4 Facility Visits.From time to time during the Term, Aradigm may bring
Third Parties (who are potential or existing partners with Aradigm) into the
Facility upon fourteen (14) days prior written notice and with Novo Nordisk
Delivery Technologies, Inc.s consent; provided that, Novo Nordisk Delivery
Technologies, Inc. shall not be obligated to grant consent when Aradigms
partners are engaged in the field of (a) 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 and/or (b) insulin,
insulin analogs, GLP, GLP-1 and analogs of GLP. 7. Confidential Information. 7.1 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 D-13




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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)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
(a) is or becomes generally available to the public other than as a result of a
disclosure by a Party or its Representatives in violation of this Agreement or
any of the Transaction Agreements, (b) 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 (c) 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. As used herein, Representative means a
Partys partners, directors, officers, employees, agents, counsel, investment
advisers or representatives. 8. Indemnities and Insurance. 8.1 Novo Nordisk Delivery Technologies, Inc.Novo Nordisk Delivery
Technologies, Inc. shall defend, indemnify and hold harmless Aradigm against
any damage, judgment, liability, loss, cost or other expense, including
reasonable legal fees resulting from a third party action or claim arising out
of personal injury or death or property damage (collectively, Damages)
proximately caused by: (i) Novo Nordisk Delivery Technologies, Inc.s material
default or breach of this Agreement, including any failure to meet applicable
Manufacturing Responsibilities; or (ii) Novo Nordisk Delivery Technologies,
Inc.s gross negligence or willful misconduct in the performance of its
obligations under this Agreement. Notwithstanding anything to the contrary,
such obligation of indemnity will not apply to the extent that such Damages are
proximately caused by: (1) Aradigms material default or breach of this
Agreement; (2) Aradigms gross negligence or willful misconduct in the
performance of its obligations under this Agreement; (3) any defect, latent
defect or failure to comply with applicable Specifications of API and Other
Excipients and which is not caused by Novo Nordisk Delivery Technologies, Inc.;
or (4) any defect or latent defect in Packaged Dosage Forms and/or D-14




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Packaged Devices that is introduced after delivery by Novo Nordisk Delivery
Technologies, Inc. pursuant to Article 5, and which Novo Nordisk Delivery
Technologies, Inc. did not cause. 8.2 Aradigm. Aradigm shall defend, indemnify and hold harmless Novo Nordisk
Delivery Technologies, Inc. against any Damages proximately caused by: (i)
Aradigms material default or breach of this Agreement; (ii) Aradigms gross
negligence or willful misconduct in the performance of its obligations under
this Agreement; (iii) any failure to comply with applicable Specifications of
API and Other Excipients and which is not caused by Novo Nordisk Delivery
Technologies, Inc.; and (iv) any defect or latent defect in Packaged Dosage
Forms and/or Packaged Devices that is introduced after delivery by Novo Nordisk
Delivery Technologies, Inc. pursuant to Article 5 or the result of a design
defect in the Device, and which Novo Nordisk Delivery Technologies, Inc. did
not cause. Notwithstanding anything to the contrary, such obligation of
indemnity will not apply to the extent that such Damages are proximately caused
by: (1) Novo Nordisk Delivery Technologies, Inc.s material default or breach
of this Agreement, including any failure to meet applicable Manufacturing
Responsibilities or any defect or latent defect in a Packaged Device and/or
Packaged Dosage Form as delivered by Novo Nordisk Delivery Technologies, Inc.
pursuant to Article 5; or (2) Novo Nordisk Delivery Technologies, Inc.s gross
negligence or willful misconduct in the performance of its obligations under
this Agreement. 8.3 Procedures. The Party (the Indemnified Party) seeking indemnification
under Section 8.1 or Section 8.2, as applicable, agrees to give prompt written
notice to the Party against whom indemnity is sought (the Indemnifying Party)
of the assertion of any claim, or the commencement of any suit, action or
proceeding in respect of which indemnity may be sought under such Section 8.1
or Section 8.2, which notice shall include a brief description of the specific
facts relating to such claim, suit, action, or proceeding. The Indemnifying
Party may at the request of the Indemnified Party participate in and control
the defense of any such suit, action or proceeding at its own expense. The
Indemnifying Party shall not be liable under Section 8.1 or Section 8.2, as
applicable, for any settlement effected without its consent of any claim,
litigation or proceeding in respect of which indemnity may be sought hereunder. 8.4 Insurance. Novo Nordisk Delivery Technologies, Inc. shall carry insurance
against such risks, losses, and other casualties that can be reasonably insured
against and in such amounts as are reasonable under the circumstances,
including workmens compensation insurance, general liability insurance, and
product liability insurance covering Formulation, Packaged Dosage Forms and
Packaged Devices during Manufacturing. Aradigm shall carry insurance against
such risks, losses, and other casualties that can be reasonably insured against
and in such amounts as are reasonable under the circumstances, including
insurance for API, Other Excipients, and for Packaged Device and/or Packaged
Dosage Form from point of shipment to destination. 9. Representations and Warranties. 9.1 Novo Nordisk Delivery Technologies, Inc.Novo Nordisk Delivery
Technologies, Inc. warrants that all Packaged Device and/or Packaged Dosage
Form delivered hereunder shall: (a) be Manufactured by Novo Nordisk Delivery
Technologies, Inc. in accordance with the Manufacturing Responsibilities,
including the procedures described in the applicable Master Batch Records supplied to Novo Nordisk Delivery Technologies,
Inc. by Aradigm; and (b) D-15




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conform to the applicable Specifications at the time
of release. Novo Nordisk Delivery Technologies, Inc. represents and warrants
that it does not use in any capacity the services of any person who is debarred
under Applicable Law. 10. Term and Termination. 10.1 Term. The term of this Agreement shall begin on the Closing Date and
expire three (3) years thereafter (the Term), unless earlier termination
pursuant to Section 10.2. 10.2 Termination. (a)With Cause. Either Party may terminate this Agreement for any
material breach of this Agreement by the other Party if such breach is not
cured within sixty (60) days after the breaching Party receives written notice
of such breach by the nonbreaching Party. Such termination shall be effective
upon expiration of such sixty (60) day period. (b)Automatic. This Agreement shall automatically terminate upon the
expiration or earlier termination of the Amended and Restated License
Agreement. 10.3 Remedies. Termination of this Agreement shall not affect the rights and
obligations of the Parties that accrued prior to the effective date of such
termination. Except as set forth in Section 2.7, the rights and remedies
provided to each Party in this Agreement are cumulative and in addition to any
other rights and remedies available to such Party at law or in equity. 10.4 Survival. The provisions of Articles 1, 7, 8, 9 and 11 and Sections 6.3,
10.3 and 10.4 shall survive termination or expiration of this Agreement as
specified in this Agreement, or, if not specified in this Agreement, then such
provisions shall survive indefinitely. 11. Miscellaneous. 11.1 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 (1) 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 (3) 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 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. D-16




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(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 (6) 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. 11.2 Notices. Any notices, requests and other communications to any party
hereunder shall be in writing (including facsimile transmission) and shall be
given, if to Novo Nordisk Delivery Technologies, Inc. or to Novo Nordisk A/S to: :
    
    Novo Nordisk A/SNovo AlleDK-2880 BagsvaerdDenmarkAttention: General CounselTelephone: +45 44 44 88 88Telefax: +45 44 42 18 30and:
    
    Attention: Vice President, Business DevelopmentTelephone: +45 44 42 39 00Telefax: +45 44 42 16 98if to Aradigm:
    
    Aradigm Corporation3929 Point Eden WayHayward, California 94545Telephone: +1 510-265-9000Telefax: +1 510-265-0277
 D-17




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Attn: Chief Financial Officerwith a copy to:
    
    Cooley Godward llp5 Palo Alto Square3000 El Camino RealPalo Alto, CA 94306Telephone: +1 650-843-5027Telefax: +1 650-849-7400Attn: James C. Kitch, Esq.
 or to such other addresses and telecopier numbers as may from time to time be
notified by any party to the other parties hereunder. All such notices,
requests and other communications shall be deemed to have been delivered within
seven (7) Business Days after dispatch and 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. 11.3 Governing Law. This Agreement shall in all respects be governed by, and
construed and enforced in accordance with, the laws of the State of New York,
United States. The United Nations Convention on Contracts for the
International Sale of Goods (or any successor thereto) does not apply to this
Agreement. 11.4 Independent Contractors. The relationship between Novo Nordisk Delivery
Technologies, Inc. and Aradigm is that of independent contractors, and not
agents, joint venturers or partners of the other. Therefore, neither Novo
Nordisk Delivery Technologies, Inc. nor Aradigm shall have the power to bind
the other Party to any agreement. 11.5 Force Majeure. Each Party shall be excused for any failure or delay in
performing any of its obligations under this Agreement if such failure or delay
is caused by any accident, explosion, fire, storm, earthquake, flood, or other
act of God, any failure or delay of transportation, shortage of or inability to
obtain supplies, equipment, fuel, or labor or any other circumstance or event
beyond its reasonable control; however, any such failure or delay resulting
from one (1) or more of the above causes must be cured as soon as is
practicable after the occurrence of such cause(s) but in no event more than one
hundred twenty (120) days after the date of occurrence; provided that, in the
event the Party is making Diligent Efforts to remedy the failure or delay in
performing, such time period shall be extended accordingly. 11.6 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. 11.7 Assignment. Neither Party may assign this Agreement hereunder without the
prior written consent of the other Party, except that (a) Novo Nordisk Delivery
Technologies, Inc. may assign this Agreement to an Affiliate, or any successor
in interest by merger or sale of all or substantially all of its business to
which this Agreement relates; and (b) Aradigm may assign this Agreement to an
Affiliate, or any successor in interest by merger or sale of all or
substantially all of its business to which this Agreement relates, that in each
case is not a Novo Nordisk D-18




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Competitor. A Novo Nordisk Competitor means any
Person that is engaged in the field of (a) 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 GLP,
GLP-1 and analogs of GLP and/or (b) insulin, insulin analogs, GLP, GLP-1 and
analogs of GLP. Notwithstanding anything to the contrary, the assignor shall
remain liable and responsible for the performance and observance of all its
duties and obligations hereunder. Any assignment not in accordance with this
Section 11.7 shall be null and void. 11.8 Amendment; Waiver. (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. 11.9 Severability. If any provision of this Agreement is found by a court of
competent jurisdiction to be unenforceable, then such provision will be
construed, to the extent feasible, so as to render the provision enforceable,
and if no feasible interpretation would save such provision, it will be severed
from the remainder of this Agreement. The remainder of this Agreement will
remain in full force and effect, unless the severed provision is essential and
material to the rights or benefits received by either Party. In such event,
the Parties will negotiate, in good faith, and substitute a valid and
enforceable provision or agreement that most nearly implements the Parties
intent in entering into this Agreement 11.10 Construction. No rule of strict construction will be applied in the
interpretation or construction of this Agreement. The Section and Article
headings are included in this Agreement merely for convenience of reference,
and they are not to be considered part of this Agreement or used in the
interpretation of this Agreement. Time is of the essence in the performance
of obligations under this Agreement. This Agreement is in the English language
only, which language shall be controlling in all respects, and all versions
hereof in any other language shall be for accommodation only and shall not be
binding upon the Parties. In the event of any conflict or ambiguity between
this Agreement, the Quality Agreement (any Addenda attached thereto) or any
other Exhibit hereto, this Agreement will control. 11.11 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. D-19




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11.12 Performance by Affiliates and Subcontractors. Each Partys obligations
under this Agreement may be performed solely by such Partys Affiliates and
subcontractors upon the other Partys prior written consent. Wherever a Party
delegates responsibility to any of its Affiliates or local operating entities,
the Parties agree that such entities shall not make decisions inconsistent with
this Agreement, amend the terms of this Agreement, or act contrary to its terms
in any way. 11.13 Guaranty. Novo Nordisk A/S hereby guarantees the performance by Novo
Nordisk Delivery Technologies, Inc. and its Affiliates and approved
subcontractors of all their obligations under the Agreement. Novo Nordisk A/S
executes this Agreement solely for the purpose of acting as guarantor of the
performance of Novo Nordisk Delivery Technologies, Inc. and its Affiliates and
approved subcontractors under this Section 11.13. [Signature Page Follows] D-20




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In Witness Whereof, the Parties have executed this Agreement as of the
Closing Date. NOVO NORDISK DELIVERY
    
    
    
    ARADIGM CORPORATIONTECHNOLOGIES, INC.By:
    
    
    
    
    
    By:Name:
    
    
    
    
    
    Name:Title:
    
    
    
    
    
    Title:NOVO NORDISK A/S (solely for purposes
as Guarantor under Section 11.13)By:Name:Title:
 D-21




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Exhibit A EXCLUDED PRODUCTS Excluded products are any products that contain proteolytic activity,
allergenic excipients, penicillins, cephalosporins, potent steroids and
hormones, cytotoxics, viable micro-organisms or vira or substances that can
cause anaphylaxis, and/or have unknown toxicity. D-22




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EXHIBIT E [QUALITY AGREEMENT] E-1




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QUALITY AGREEMENT BETWEEN NOVO NORDISK DELIVERY TECHNOLOGIES, INC. and ARADIGM CORPORATION E-2




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QUALITY AGREEMENT This Quality Agreement(the Quality Agreement) is made and entered into
effective as of , 2004 by and between Novo Nordisk Delivery
Technologies, Inc., a Delaware corporation (Novo Nordisk Delivery
Technologies, Inc.) and Aradigm Corporation, a California corporation
(Aradigm). Novo Nordisk Delivery Technologies, Inc. and Aradigm may be
referred to herein as a Party or, collectively, as Parties. Recitals WHEREAS, Novo Nordisk A/S 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 A/S 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 therein); WHEREAS, Aradigm, Novo Nordisk A/S and 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 therein) and to
certain other matters as set forth therein; WHEREAS, as part of such transaction, the Parties are entering into an
Amended and Restated License Agreement dated as of the even date herewith (the
Amended and Restated License Agreement) pursuant to which they have agreed to
alter the rights and responsibilities of Aradigm and Novo Nordisk A/S with
respect to the Development Program; and WHEREAS, as part of such transaction, the Parties are entering into a
Contract Manufacturing Agreement dated as of the even date herewith (the
Contract Manufacturing Agreement) to provide Aradigm the right to purchase
certain devices and product from Novo Nordisk Delivery Technologies, Inc. on
the terms set forth below, and the Parties are entering into this Quality
Agreement to specify the applicable quality and/or technical requirements and
responsibilities for the manufacture of such devices and products. 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: E-3




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Agreement 1. Definitions. 1.1The following terms, as used herein, shall have the following
meanings: Approval and its cognates means the mutual approval of Novo Nordisk Delivery
Technologies, Inc. and Aradigm, which approval shall include but not be limited
to agreement with a proposed change, an investigation and/or Significant
Deviation report provided in writing and signed by the Parties or their
authorized delegates. cGMPs has the meaning set forth in the Contract Manufacturing Agreement. Focus Visitsmeans site visits, other than audits, to address specific
actions, to resolve issues (for example, investigations, validations,
Significant Deviation resolution and regulatory agency inspections) and/or to
observe Packaged Dosage Forms and/or Packaged Device Manufacturing activities.
The meaning of Focus Visits shall not include routine auditing requirements. Manufacturing Requirements Documents or MRD has the meaning set forth in
the Contract Manufacturing Agreement. Significant Change has the meaning set forth in the Contract Manufacturing
Agreement. Significant Deviation has the meaning set forth in the Contract Manufacturing
Agreement. Specifications has the meaning set forth in the Contract Manufacturing
Agreement. 1.2 Other Defined Terms.Each of the following terms is defined in the Section
set forth opposite such term, or, if not defined below or in Section 1.1, the
meaning as set forth in the text of the Contract Manufacturing Agreement: Term
    
    SectionAmended and Restated License Agreement
    
    RecitalsAradigm
    
    RecitalsDevelopment and License Agreement
    
    RecitalsNovo Nordisk Delivery Technologies, Inc.
    
    RecitalsParties
    
    RecitalsParty
    
    RecitalsQuality Agreement
    
    RecitalsRestructuring Agreement
    
    Recitals
 E-4




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1.3 Other Definitional and Interpretative Provisions. Unless specified
otherwise, in this Quality Agreement the obligations of any Party consisting of
more than one (1) person are joint and several. The words hereof, herein
and hereunder and words of like import used in this Quality Agreement shall
refer to this Quality Agreement as a whole and not to any particular provision
of this Quality 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, and Addenda are to Articles,
Sections, and Addenda of this Quality Agreement unless otherwise specified.
All Addenda annexed hereto or referred to herein are hereby incorporated in and
made a part of this Quality Agreement as if set forth in full herein. Any
capitalized terms used in any Addendum but not otherwise defined therein, shall
have the meaning as defined in this Agreement. Any singular term in this
Quality 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 Quality 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 Party include
the successors and permitted assigns of that Party. References from or through
any date mean, unless otherwise specified, from and including or through and
including, respectively. 2. Scope. This Quality Agreement covers the Manufacture of the Packaged Dosage Forms
and/or Packaged Devices ordered by Aradigm pursuant to the Contract
Manufacturing Agreement, and any applicable analytical/biological testing and
inspection performed by Novo Nordisk Delivery Technologies, Inc. on behalf of
Aradigm. 3. Purpose. This Quality Agreement specifies the quality and/or technical requirements and
responsibilities necessary for the Manufacture of Packaged Dosage Forms and/or
Packaged Devices at the Facilities provided by Novo Nordisk Delivery
Technologies, Inc. to Aradigm. All provisions of this Quality Agreement are to
be read in conjunction with the current Contract Manufacturing Agreement. This
Quality Agreement is an integral and enforceable part of the Contract
Manufacturing Agreement. 4. Manufacturing Standards. 4.1Standards. At all times and in all respects, Novo Nordisk Delivery
Technologies, Inc. will comply with the requirements of the cGMPs, the
applicable MRD, all testing methods, Approved master Batch record, and relevant
written SOPs. 4.2Documentation. Novo Nordisk Delivery Technologies, Inc. and Aradigm will
jointly Approve the qualification and/or validation protocols and reports on
the processes transferred from Aradigm and implemented by Novo Nordisk Delivery
Technologies, E-5




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Inc.. Once Approved, no Significant Changes to the process, associated
procedures and/or Batch related documentation described in such documentation
shall be permitted unless such changes are mutually Approved prior to
implementation by the Parties in accordance with the mutually agreed upon
change control process. MRD, inspection, analyses and packaging of the Dosage
Forms and/or Device changes must be Approved by both Parties in writing using
the mutually agreed upon change control procedures. It is the responsibility
of Novo Nordisk Delivery Technologies, Inc. to supply to Aradigm all applicable
documentation related to Manufacture of the Packaged Dosage Forms for Approval
by Aradigm when said documents are created or if substantial modifications are
made. Before destruction of any Manufacturing records held by Novo Nordisk
Delivery Technologies, Inc., Novo Nordisk Delivery Technologies, Inc. shall
provide Aradigm with prior written notice of the intended destruction and, if
requested by Aradigm, will provide Aradigm with copies of any such records or,
if required by Applicable Laws, originals. 4.3Specifications. Aradigm will provide Specification requirements for
non-iDMS identical components, Other Excipients, API, container closures,
in-process, and final release. Novo Nordisk Delivery Technologies, Inc. will
provide Specification requirements for iDMS identical components, excipients,
container closures, in-process, and final release. Aradigm is responsible to
ensure that the Specifications appropriately reflect the requirements listed in
the MRD. Novo Nordisk Delivery Technologies, Inc. will comply with all
Specifications mutually agreed upon for the Packaged Dosage Forms and the
Packaged Device unless otherwise authorized by appropriate exception
documentation Approved by Aradigm, provided that, such Approval shall not to be
unreasonably withheld or delayed. 4.4Sampling and Testing. (a)Aradigm will be responsible for sampling of Other Excipients, API and
non-iDMS identical components. Novo Nordisk Delivery Technologies, Inc. will
be responsible for all other sampling of all iDMS identical materials and the
Packaged Dosage Forms. (b)Aradigm will be responsible for developing and carrying out tests and
analyses (including in-process testing and the release of starting material) of
each Batch of Other Excipients, components and materials, Packaged Dosage
Forms, all cleaning samples and API not identical to iDMS. Novo Nordisk
Delivery Technologies, Inc. will be responsible for all other analytical
testing (including microbiology testing, in-process testing, final Packaged
Dosage Forms sterility testing, and the release of starting material) on all
other materials identical to iDMS materials. Aradigm shall provide all test
results and release certificates to Novo Nordisk Delivery Technologies, Inc.
related to API, Other Excipients, components, in-process control tests, and
cleaning tests conducted by Aradigm. E-6




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4.5Shipment of Packaged Dosage Forms and/or Packaged Devices. Novo Nordisk
Delivery Technologies, Inc. will package and ship all Packaged Dosage Forms
and/or Packaged Devices according to Approved Specifications and SOPs. 4.6Subcontracting. Except as set forth in the Contract Manufacturing
Agreement, Novo Nordisk Delivery Technologies, Inc. shall not subcontract any
aspects of the Manufacturing and/or testing of Packaged Dosage Forms and/or
Packaged Devices without prior written authorization of Aradigm.
Notwithstanding anything in the foregoing sentence, Novo Nordisk Delivery
Technologies, Inc. is permitted to subcontract any aspects of the Manufacturing
and/or testing that is currently already subcontracted by Aradigm. 4.7Batch Approval and Final Release. (a)The applicable SOPs will describe the process for Batch release and
communication of Batch related documentation for release purposes, in
accordance with the principles described in Sections 4.7(b) and (c) below. (b)Novo Nordisk Delivery Technologies, Inc. will be responsible for Batch
Approval of Dosage Form according to Specifications. Novo Nordisk Delivery
Technologies, Inc. will Approve the final assembly of Packaged Devices
(excluding final calibration and performance tests, which will be Approved by
Aradigm). (c)Aradigm will be responsible for final release of Packaged Dosage Forms
and Packaged Devices. Novo Nordisk Delivery Technologies, Inc. will provide
Aradigm with the results of tests, certificates of analysis, certificate of
compliance and, if required by Aradigm, copies of Batch documentation arising
out of its obligations under the Contract Manufacturing Agreement relating
thereto. 4.8Deviations. Deviations shall be managed by the use of SOPs. 4.9Labeling. Novo Nordisk Delivery Technologies, Inc. will label the bulk
Packaged Dosage Forms and Packaged Devices as required under Applicable Law,
the Specifications, and applicable transportation requirements. 5. Health and Safety. Aradigm shall provide Novo Nordisk Delivery Technologies, Inc. with any
necessary material safety data and information concerning the safe handling,
storage, transportation and disposal of the Packaged Dosage Forms and/or the
Packaged Device. Upon the request of Novo Nordisk Delivery Technologies, Inc.,
Aradigm shall provide the underlying data and documentation for the material
safety data previously provided to Novo Nordisk Delivery Technologies, Inc. by
Aradigm. E-7




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6. Audits/Regulatory Contacts. 6.1Regulatory Inspections. Because Aradigm owns the regulatory licenses for
Packaged Dosage Forms and/or Packaged Devices the regulatory responsibility for
maintaining such licenses and any supplements or filings thereto shall be the
sole responsibility of Aradigm. Similarly, it shall be the sole responsibility
of Novo Nordisk Delivery Technologies, Inc. to maintain a compliant cGMPs
posture with regard to the Facilities and any Manufacture of Packaged Dosage
Forms and/or Packaged Device performed there. To permit and ensure that the
Parties perform their respective regulatory compliance obligations, each Party
shall provide the other Party with copies of all communications received from
any Regulatory Authority concerning the Packaged Dosage Forms and/or Packaged
Device within five (5) business days. Novo Nordisk Delivery Technologies, Inc.
and Aradigm, as the case may be, shall submit copies of all proposed
communications concerning the Packaged Dosage Forms and/or Packaged Device to
be made to any Regulatory Authority for review and comment by the other Party.
The other Party shall respond promptly but in no case later than two weeks from
receipt of communications from Novo Nordisk Delivery Technologies, Inc. or
Aradigm, as the case may be. It shall be the responsibility of Novo Nordisk
Delivery Technologies, Inc. or Aradigm, as the case may be, to ensure that due
consideration has been given to all comments made by the other Party and shall
notify the other Party in writing and prior to any submission to the FDA or
other Regulatory Authority of any such communications, if it declines to
address the other Partys comments, stating the reason(s) therefor. Any
decision by Novo Nordisk Delivery Technologies, Inc. or Aradigm, as the case
may be to decline the other Partys input will require direct discussions
between the senior quality management officers of each Party prior to
submission of such communications to the FDA or other Regulatory Authority. 6.2Reporting Requirements. Aradigm will fulfill all reporting requirements of
the FDA and all other Regulatory Agencies with respect to the Packaged Dosage
Forms and/or Packaged Device. Aradigm will be responsible for all regulatory
communication as pertains to Packaged Dosage Forms and/or Packaged Device. 7. Customer Complaints and Adverse Event Reporting. 7.1Complaint Handling. Aradigm will be responsible for all first line
customer support, including handling medical and technical inquires and
complaints. In the event Aradigm is unable to resolve a complaint or inquiry,
Aradigm will forward such complaint to Novo Nordisk Delivery Technologies, Inc.
Novo Nordisk Delivery Technologies, Inc. will be responsible for providing
Aradigm with the available information and material or additional information
that may be reasonably obtained to enable Aradigm to respond to any such
inquiry as soon as reasonably possible. 7.2Adverse Events. Aradigm shall promptly notify Novo Nordisk Delivery
Technologies, Inc. if Aradigm becomes aware of any adverse events with respect
to the quality of the Packaged Dosage Forms and/or Device that have been
Manufactured at the Facilities. Aradigm is responsible for responding directly
to the Person who has reported the adverse event, provided that, Aradigm shall
provide copies of all proposed responses to Novo Nordisk Delivery Technologies,
Inc. for review and comment. Novo Nordisk E-8




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Delivery Technologies, Inc. shall respond to the proposed response from Aradigm
within fifteen (15) days. It shall be the responsibility of Aradigm to ensure
that due consideration has been given to all comments made by Novo Nordisk
Delivery Technologies, Inc. and shall notify Novo Nordisk Delivery
Technologies, Inc. in writing and prior to any response, if practicable, if it
declines to address Novo Nordisk Delivery Technologies, Inc.s comments,
stating the reason(s) therefor. Additionally, each Party shall immediately
notify the Authorized Quality Representative of the other Party of any
information it receives relating to the quality of the Packaged Dosage Forms
and/or Packaged Device in human clinical trials, which in the notifying Partys
judgment, relates to the Manufacturing process of the Packaged Dosage Forms
and/or Packaged Device. Any determinations on how to address the information
impacting product quality and safety shall be the responsibility of the Aradigm
Authorized Quality Representative. 8. Recalls. The Parties have the responsibility to notify each other within twenty-four
(24) hours of a situation which could be reasonably expected to result in a
recall and/or withdrawal of Packaged Dosage Forms and/or Packaged Device. The
sole decision to recall the Packaged Dosage Forms and/or the Packaged Device
shall reside with Aradigm, pursuant to Aradigms written policy. Aradigm will
be responsible for formal notification of the Governmental Authorities (as such
term is defined in the Restructuring Agreement). Aradigm shall provide copies
of all proposed notifications for review and comment by Novo Nordisk Delivery
Technologies, Inc. Novo Nordisk Delivery Technologies, Inc. shall respond
within fifteen (15) days to the proposed notification from Aradigm. It shall
be the responsibility of Aradigm to ensure that due consideration has been
given to all comments made by Novo Nordisk Delivery Technologies, Inc. and
shall notify Novo Nordisk Delivery Technologies, Inc. in writing and prior to
any notification if it declines to address Novo Nordisk Delivery Technologies,
Inc.s comments, stating the reason(s) therefor. 9. The Retention of Raw Material Samples. Novo Nordisk Delivery Technologies, Inc. shall retain samples of all non-active
materials provided by Novo Nordisk Delivery Technologies, Inc. for at least one
(1) year past the expiration date for the last Batch of Packaged Dosage Forms
and/or Packaged Device impacted by the materials used in its manufacture in
accordance with Novo Nordisk Delivery Technologies, Inc.s SOPs for such
material retention; provided that, this standard shall not apply to materials
having an expiry date that occurs prior to one year after the Batch expiry
date. The samples shall be of a size, which will allow full analytical and
microbiological testing in duplicate, if required. The samples shall be stored
under conditions recommended by the supplier of the materials concerned and be
appropriately labeled with relevant details of identity. Novo Nordisk Delivery
Technologies, Inc. shall have a procedure for retention of raw material
samples, as required by cGMPs. 10. The Disposal of Packaged Dosage Forms, Packaged Devices and/or Retained
Samples that are Rejected, Non-Conforming, or
       Expired. E-9




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Novo Nordisk Delivery Technologies, Inc. shall have a procedure for the
disposal of in-process and final Packaged Dosage Forms, Packaged Devices and/or
retained samples thereof that are rejected, non-conforming or expired. Novo
Nordisk Delivery Technologies, Inc. may dispose of the Packaged Dosage Forms or
Packaged Device or retained samples thereof according to such procedure. 11. Conflict Resolution. Any disputes or conflicts relating to this Quality Agreement will be resolved
by the Parties pursuant to Section 11.1 of the Contract Manufacturing
Agreement. 12. Roles and Responsibilities. In addition to the roles and responsibilities provided for in the Contract
Manufacturing Agreement, roles and responsibilities between Novo Nordisk
Delivery Technologies, Inc. and Aradigm are identified in the applicable SOPs.
If there is a conflict between SOPs and the Contract Manufacturing Agreement or
the Quality Agreement, the meaning of the Contract Manufacturing Agreement
shall take precedence over the meaning of the Quality Agreement and the meaning
of the Quality Agreement shall take precedence over the meaning of the SOPs,
unless any of these agreements will compromise the US and/or the European cGMP
compliance of Novo Nordisk Delivery Technologies, Inc., in which case the cGMP
compliance rules shall take precedence. 13. Communication. All communication regarding this Quality Agreement will be between the
Authorized Quality Representatives. 14. Authorized Quality Representatives (or Designee). The list of each Partys Authorized Quality Representative will be maintained
by each Party. Each Party shall notify the other Party in writing of any
change in a Partys Authorized Quality Representative, temporary or otherwise. 14.1Aradigms Authorized Quality Representative is Aradigms officer
responsible for Quality. 14.2Novo Nordisk Delivery Technologies, Inc.s Authorized Quality
Representatives is the head of Quality at Novo Nordisk Delivery Technologies,
Inc. Delivery Technologies, Inc. 15. Amendments. This Quality Agreement may be amended from time to time with written addenda
that are agreed to by the Parties and attached hereto (each, an Addendum and
collectively, the Addenda). Such Addenda are intended to provide added
clarity and/or procedural definition. Addenda to this Quality Agreement shall
be adopted based upon Approval of the Authorized Quality Representatives
identified in Section 14 of this Quality E-10




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Agreement. Any conflict or ambiguity between the terms of this Quality
Agreement and any Addendum shall be governed by the terms of this Quality
Agreement. [SIGNATURE PAGE FOLLOWS] E-11




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IN WITNESS WHEREOF, the Parties hereto have caused this Quality Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written. ARADIGM CORPORATIONBy:Name:Title: NOVO NORDISK DELIVERY TECHNOLOGIES, INC.By:Name:Title: E-12




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EXHIBIT F [AMENDED AND RESTATED STOCK PURCHASE AGREEMENT] F-1




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The attached draft shall not be considered final as to any party unless executed and delivered
by such party. AMENDED AND RESTATED STOCK PURCHASE AGREEMENT ARADIGM CORPORATION , 2004 F-2




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TABLE OF CONTENTS 1.
    
    AGREEMENTS OF THE PARTIES
    
    F-41.1 Definitions
    
    F-41.2 Amendment and Restatement of Purchase Agreement
    
    F-41.3 Market Stand-Off Agreements
    
    F-51.4 Public Offering Lock-Up
    
    F-61.5 Demand Registration
    
    F-62.
    
    REPRESENTATIONS AND WARRANTIES OF THE PARTIES
    
    F-72.1 Legal Power
    
    F-72.2 Due Execution
    
    F-73.
    
    COVENANTS OF ARADIGM
    
    F-73.1 Access to Information
    
    F-73.2 Delivery of Certain Information
    
    F-84.
    
    COVENANTS OF NOVO NORDISK
    
    F-94.1 Voting Agreement
    
    F-95.
    
    MISCELLANEOUS
    
    F-95.1 Governing Law
    
    F-95.2 Successors and Assigns
    
    F-95.3 Entire Agreement
    
    F-105.4 Severability
    
    F-105.5 Amendment and Waiver
    
    F-105.6 Delays or Omissions
    
    F-105.7 Notices, etc
    
    F-105.8 Information Confidential
    
    F-115.9 Specific Performance
    
    F-125.10 Titles and Subtitles
    
    F-125.11 Counterparts
    
    F-12
 F-3




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AMENDED AND RESTATED STOCK PURCHASE AGREEMENT This Amended and Restated Stock Purchase Agreement(the Agreement) is
made and entered into as of  , 2004, by and among Aradigm
Corporation,a corporation duly organized and existing under the law of the
State of California (Aradigm), Novo Nordisk A/S,a company organized and
existing under the Law of Denmark (Novo Nordisk) and Novo Nordisk
Pharmaceuticals, Inc.a corporation duly organized and existing under the law
of the State of Delaware (Novo Nordisk Pharmaceuticals, Inc.). Recitals WHEREAS, pursuant to a Stock Purchase Agreement dated as of June 2, 1998
by and between Aradigm and Novo Nordisk, Novo Nordisk purchased 1,020,612
shares (the Initial Shares) of Aradigms Common Stock, no par value (the
Common Stock); WHEREAS, pursuant to a Stock Purchase Agreement dated as of October 22,
2001 by and between Aradigm and Novo Nordisk Pharmaceuticals, Inc. (the
Purchase Agreement), Novo Nordisk Pharmaceuticals, Inc. purchased 6,847,757
shares of Common Stock (together with the Initial Shares, the Shares); WHEREAS, Aradigm, Novo Nordisk and Novo Nordisk Delivery Technologies,
Inc., a corporation duly organized and existing under the law of the State of
Delaware (Novo Nordisk Delivery Technologies, Inc.) entered into a
Restructuring Agreement dated as of September 28, 2004 (the Restructuring
Agreement); and WHEREAS, it 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 that Aradigm, Novo Nordisk and
Novo Nordisk Pharmaceuticals, Inc. amend and restate the Purchase 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: 1. Agreements of the Parties 1.1 Definitions. All capitalized terms used herein but not defined herein
shall have the meanings set forth in the Restructuring Agreement. 1.2 Amendment and Restatement of Purchase Agreement.The Purchase
Agreement is hereby amended and restated in its entirety. Aradigm and Novo
Nordisk Pharmaceuticals, Inc. agree to accept the rights and obligations
contained in this Agreement in lieu of their rights and obligations under the
Purchase Agreement. F-4




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1.3Market Stand-Off Agreements. (a)Subject to Section 1.3(b), Novo Nordisk and Novo Nordisk
Pharmaceuticals, Inc. hereby agree that prior to the earlier of (i) First
Marketing (as such term is defined under the Amended and Restated License
Agreement dated as of the date hereof by and between Aradigm and Novo Nordisk
Delivery Technologies, Inc. (the Amended and Restated License Agreement) in
the Territory (as such term is defined under the Amended and Restated License
Agreement), (ii) the acquisition of, or the commencement of a tender offer
acceptance of which is recommended by Aradigms Board of Directors for, all or
substantially all of the outstanding Common Stock by a third party other than
Common Stock beneficially owned by such third party, (iii) the termination by
Aradigm or Novo Nordisk of the Amended and Restated License Agreement, (iv) the
filing by Aradigm of a voluntary petition for bankruptcy protection (or the
filing of an involuntary petition that is not dismissed or withdrawn within 60
days after it is filed), (v) the initiation by Aradigm of an assignment for the
benefit of creditors or other similar insolvency proceeding, (vi) the cessation
of all of Aradigms business activities, (vii) a judicial or other governmental
determination of the insolvency of Aradigm, (viii) the occurrence of a material
change in Aradigms business activities that is incompatible with accepted
ethical standards within the pharmaceutical industry, and (ix) January 1, 2009
(the Market Stand-Off Period), neither of them shall, directly or indirectly,
sell, offer to sell, contract to sell, pledge, grant any option for sale or
purchase of, agree to sell or otherwise transfer or dispose of any of the
Shares. Aradigm may impose stop-transfer instructions with respect to the
Shares until the end of the Market Stand-Off Period. (b)Notwithstanding the restrictions set forth in Section 1.3(a), Novo
Nordisk and/or Novo Nordisk Pharmaceuticals, Inc. may sell the Shares in any
sale, transfer or other disposition made to an Affiliate of Novo Nordisk that
agrees to be bound by the provisions of this Agreement. In addition, Novo
Nordisk and Novo Nordisk Pharmaceuticals may (i) no later than six (6) months
after the completion of any transaction or series of related transactions in
which holders of Common Stock other than Novo Nordisk and Novo Nordisk
Pharmaceuticals, Inc. have transferred in excess of thirty percent (30%) of the
outstanding Common Stock (all such shares of Common Stock that are so
transferred being referred to as the Transferred Shares) to a third party,
transfer up to the number of shares then held by Novo Nordisk and Novo Nordisk
Pharmaceuticals, Inc. multiplied by a fraction, the numerator of which shall be
the total number of Transferred Shares and the denominator of which shall be
the total number of shares of Common Stock held by shareholders other than Novo
Nordisk and Novo Nordisk Pharmaceuticals, Inc. and (ii) sell, offer to sell,
contract to sell, pledge, grant any option for sale or purchase of, agree to
sell or otherwise transfer and/or dispose of some or all of the Shares to
employees of Novo Nordisk Delivery Technologies, Inc. pursuant to the
arrangements contemplated in the offer letters delivered to the Development
Program Employees (as such term is defined in the Restructuring Agreement) on
or prior to the Closing Date, the option grants contemplated therein and
delivery of Shares in connection with the exercise of any such options or
pursuant to such other equity incentive plans or arrangements as may be
approved by Aradigm, such approval not to be unreasonably withheld or delayed.
Aradigm will lift the stop-transfer instructions with respect to any of the
Shares transferred pursuant to arrangements set forth in (i) and (ii) above. F-5




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1.4 Public Offering Lock-Up.In addition, Novo Nordisk and Novo Nordisk
Pharmaceuticals, Inc. hereby agree that during the time period recommended by a
nationally-recognized underwriter not to exceed one hundred eighty (180) days
following the effective date of a registration statement of Aradigm filed under
the 1933 Act, to the extent requested by such underwriter, neither Novo Nordisk
nor Novo Nordisk Pharmaceuticals, Inc. shall sell or otherwise transfer or
dispose of the Shares at any time during such period (except for any Shares
included in such registration or any sale, transfer or other disposition of any
Shares made to an Affiliate of Novo Nordisk that agrees to be bound by the
provisions of this Agreement); provided, that: (a)Such agreement shall be applicable only to registration statements of
Aradigm which cover Common Stock (or other securities) to be sold on its behalf
to the public; (b)Such agreement shall be applicable only if Novo Nordisk (together with
its Affiliates) holds at least five percent (5%) of the Common Stock then
outstanding; and (c)All officers and directors of Aradigm and any other stockholders
owning at least five percent (5%) of the Common Stock then outstanding
(excluding stockholders that acquired their positions in the public market)
enter into similar agreements. During the period in which this Section 1.4 remains in effect, if Novo Nordisk
and Novo Nordisk Pharmaceuticals, Inc. are requested to enter into such a
lock-up agreement in connection with a public offering of Common Stock in which
any other shareholders of Aradigm are allowed to sell shares held by them, Novo
Nordisk and Novo Nordisk Pharmaceuticals, Inc. shall have a piggyback right
at their option to include shares of Common Stock then held by them in such
offering on a pro rata basis with such other selling shareholders. 1.5 Demand Registration.If at any time after the Market Stand-Off Period
Novo Nordisk and Novo Nordisk Pharmaceuticals, Inc. desire to effect the
registration on Form S-3 or other applicable form under the 1933 Act of any of
the Shares owned by them or any of their Affiliates (Registrable Shares),
they may make one (1) written request (the Demand Request) that Aradigm
effect such registration; providedthat such request is made no earlier than
(i) sixty (60) days prior to the expiration of the Market Stand-Off Period or
(ii) sixty (60) days prior to the expiration of any lock-up period required
of Novo Nordisk and Novo Nordisk Pharmaceuticals, Inc. by the underwriters in
connection with a public offering by Aradigm. The Demand Request will specify
the number of Registrable Shares proposed to be sold and will also specify the
intended method of disposition thereof. Upon receipt of such Demand Request,
Aradigm shall, at its own expense (which expense shall include all fees and
expenses of counsel, public accountants or other advisors or experts retained
by Aradigm, all reasonable fees and expenses of counsel for Novo Nordisk, Novo
Nordisk Pharmaceuticals, Inc. and their Affiliates (which counsel shall be
selected by Novo Nordisk and Novo Nordisk Pharmaceuticals, Inc.) in an amount
which shall not exceed fifty thousand dollars ($50,000), all filing fees, all
fees and expenses incurred to comply with blue sky or other securities laws,
all printing expenses and all internal expenses of Aradigm, but shall not
include underwriting fees, discounts or commissions attributable to the sale of
the Registrable Shares, out-of-pocket expenses of Novo Nordisk, Novo Nordisk
Pharmaceuticals, Inc. or any of their Affiliates, transfer taxes or the fees
and expenses of underwriters counsel) prepare and file with
the SEC a registration statement on Form S-3 or F-6




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other applicable form (the
Resale Registration Statement) under the 1933 Act to provide for the resale
by Novo Nordisk, Novo Nordisk Pharmaceuticals, Inc. and their Affiliates of the
number of Registrable Shares specified in the Demand Request. In the event
Novo Nordisk and Novo Nordisk Pharmaceuticals, Inc. deliver to Aradigm a Demand
Request prior to the end of a Market Stand-Off Period or a lock-up period,
Aradigm shall use its reasonable efforts to file and cause the Resale
Registration Statement to be effective prior to the expiration of such Market
Stand-Off Period or lock-up period, as the case may be. In all other cases,
Aradigm will use its reasonable efforts to cause the Resale Registration
Statement to be filed and become effective as soon as reasonably practicable
after receipt of the Demand Request. Aradigm shall cause the Resale
Registration Statement filed pursuant to this Section 1.4 to remain effective
for no less than six (6) months (or, if earlier, until the date all of the
Registrable Shares covered by the Resale Registration Statement have been
sold); provided, however,Aradigm may suspend the use of, or delay the
effective date of, any Resale Registration Statement by giving written notice
to the sellers identified therein, if Aradigm shall have determined, in its
good faith reasonable judgment, that such suspension or delay in the effective
date of the Resale Registration Statement is advisable because the filing or
effectiveness of the Resale Registration Statement would be detrimental to
Aradigm and its shareholders; and provided furtherthat Aradigm suspends the
use of or delays the effective date of all other registration statements of
Aradigm that register the securities of Aradigm being or to be resold by the
holders thereof. Any suspension or delay in the effective date of the Resale
Registration Statement by Aradigm pursuant to this Section 1.4 shall be for the
shortest reasonable period of time (but shall not exceed one hundred twenty
(120) days). 2. Representations And Warranties Of the Parties Aradigm, Novo Nordisk and Novo Nordisk Pharmaceuticals, Inc., each hereby
represents and warrants as follows: 2.1 Legal Power.It has the requisite legal power to enter into this
Agreement and to carry out and perform its obligations under the terms of this
Agreement. 2.2 Due Execution.This Agreement has been duly authorized, executed and
delivered by it, and, upon due execution and delivery by it, this Agreement
will be a valid and binding agreement of it. 3. Covenants of Aradigm 3.1 Access to Information.So long as Novo Nordisk and Novo Nordisk
Pharmaceuticals, Inc., together with their Affiliates, own at least five
percent (5%) of the Common Stock outstanding, Aradigm will afford promptly to
Novo Nordisk and Novo Nordisk Pharmaceuticals, Inc. and their authorized agents
reasonable access to the properties, books, records, employees and auditors of
Aradigm to the extent reasonably related to their holding of shares of Common
Stock. Without limiting the generality of the foregoing, Aradigm agrees to
make its auditors and appropriate employees available to Novo Nordisk and Novo
Nordisk Pharmaceuticals, Inc. to discuss the accounting practices and
policies of Aradigm with respect to certain items in order to allow Novo
Nordisk to properly account for such items in its books and records as may be
necessary. F-7




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3.2 Delivery of Certain Information. (a)So long as Novo Nordisk is required to report its share of Aradigms
earnings or loss from its investment in Aradigm under the equity method of
accounting, Aradigm shall cause to be prepared and delivered to Novo Nordisk
the following information, which, in the case of financial information, shall
be prepared in accordance with GAAP consistently applied: (i)no later than thirty (30) Business Days after the end of each fiscal
month, an unaudited consolidated balance sheet of Aradigm as of the end of such
fiscal month and the related unaudited consolidated statements of income and
cash flows for such fiscal month and for the elapsed portion of the fiscal year
ended with the last day of such month, and where Aradigm prepares such
financial information, setting forth in comparative form the figures for the
corresponding periods in the previous fiscal year for the periods in such
fiscal year and providing corresponding information indicating the total number
of shares of Common Stock issued and outstanding, the total number of shares of
Common Stock issuable upon exercise of issued and outstanding incentive stock
options, the total changes reflected in the consolidated statements of income
due to the grant or exercise of incentive stock options (if any) and a summary
narrative explaining the reason for and the financial impact of changes in
accounting principles having a material impact on Aradigms operations (if
any); providedthat if Aradigm believes that the financial information required
to be delivered to Novo Nordisk pursuant to this Section 3.2(a) will not be
available for delivery within the time prescribed by this Section 3.2(a), then
Aradigm shall (i) promptly (but in no event later than thirty (30) Business
Days after the end of the relevant fiscal month) deliver to Novo Nordisk an
estimated unaudited consolidated balance sheet of Aradigm as of the end of such
fiscal month and the related estimated unaudited consolidated statements of
income and cash flows for such fiscal month and for the elapsed portion of the
fiscal year ended with the last day of such month (in each case clearly
indicating that such financial information represents estimates) and (ii)
deliver to Novo Nordisk the final version of such financial information no
later than five (5) Business Days after Aradigm prepares the final version of
the estimated financial information; (ii)within ten (10) days of receipt, any notice or other communication
from any lender, bank or other person to whom Aradigm is indebted, alleging the
existence of any facts or circumstances that, individually or in the aggregate,
constitute or with the passing of time would constitute, a default under, or
give rise to any termination, cancellation or acceleration of any right or
obligation of Aradigm or to a loss of any benefit to which Aradigm is entitled
under any provision of any note, loan, credit or similar instrument or
agreement; and (iii)no later than April 30, July 31, October 31, and January 31 of each
calendar year in which Novo Nordisk is required to report its share of
Aradigms earnings or loss from its investment in Aradigm under the equity
method of accounting, a condensed forecasted statement of income representing
one (1) quarterly forecast for a three (3) month period only once every three
(3) months. (b)Novo Nordisk promptly shall deliver written notification to Aradigm at
such time when Novo Nordisk is no longer required to report its share of
Aradigms earnings or loss from its investment in Aradigm under the equity
method of accounting. F-8




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4. Covenants of Novo Nordisk 4.1 Voting Agreement. (a)Novo Nordisk agrees that at each election of directors of Aradigm in
which the shareholders are entitled to elect directors of Aradigm, neither Novo
Nordisk nor any of its Affiliates that holds Shares will nominate, or vote any
shares of Common Stock so as to elect, any person who is employed by Novo
Nordisk or any of its Affiliates, including without limitation any of their
respective current and past directors and officers, and current employees,
advisors and sales agents. Except as expressly set forth in this Section
4.1(a), nothing in this Agreement shall restrict or otherwise limit the rights
of Novo Nordisk and Novo Nordisk Pharmaceuticals, Inc. to vote Shares held by
them in their discretion on any matters to be voted upon by the shareholders of
Aradigm. (b)Subject to Section 4.1(c), Novo Nordisk and Novo Nordisk
Pharmaceuticals, Inc. acknowledge that each certificate representing the Shares
will be endorsed with the following restrictive legend: THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE TERMS AND CONDITIONS OF AN AGREEMENT WHICH PLACES
CERTAIN RESTRICTIONS ON THE VOTING OF THE SHARES REPRESENTED
HEREBY. ANY PERSON ACCEPTING ANY INTEREST IN SUCH SHARES
SHALL BE DEEMED TO AGREE AND SHALL BECOME BOUND BY ALL THE
PROVISIONS OF SUCH AGREEMENT. A COPY OF SUCH AGREEMENT WILL
BE FURNISHED TO THE RECORD HOLDER OF THIS CERTIFICATE
WITHOUT CHARGE UPON WRITTEN REQUEST TO ARADIGM CORPORATION
AT ITS PRINCIPAL PLACE OF BUSINESS. (c)The provisions of Sections 4.1(a) and (b) shall not be binding upon
successors in interest to any of the Shares who are not Affiliates of Novo
Nordisk. (d)Aradigm agrees to remove the legend set forth in Section 4.1(b) from
any Shares (i) held by Novo Nordisk or any of its Affiliates upon the
expiration of the Market Stand-Off Period or (ii) that are transferred or
otherwise disposed of by Novo Nordisk or any of its Affiliates to a third party
that is not an Affiliate of Novo Nordisk in compliance with the terms and
conditions of this Agreement. 5. Miscellaneous. 5.1 Governing Law.This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents, made and to be performed entirely within the State of
California. 5.2 Successors and Assigns.Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, F-9




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executors, and administrators of the
parties hereto; provided that, any third party that is not an Affiliate of Novo
Nordisk to whom any Shares are transferred in compliance with the terms and
conditions of this Agreement shall not be bound by the terms and conditions of
this Agreement. The foregoing notwithstanding, no party may assign its rights
or obligations hereunder to any other person, except that Novo Nordisk or Novo
Nordisk Pharmaceuticals, Inc. may assign its rights hereunder to one or more
Affiliates of Novo Nordisk; provided, that such Affiliate(s) agree to be bound
by the provisions of this Agreement. 5.3 Entire Agreement.This Agreement, together with the Restructuring
Agreement and the other agreements described therein, constitutes the entire
agreement between the parties hereto with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and
written with respect to the subject matter hereof. 5.4 Severability.In case any provision of this Agreement shall be
invalid, illegal, or unenforceable, it shall, to the extent practicable, be
modified so as to make it valid, legal and enforceable and to retain as nearly
as practicable the intent of the parties, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby. 5.5 Amendment and Waiver.Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance, either retroactively or prospectively, and either for
a specified period of time or indefinitely), with the written consent of
Aradigm, Novo Nordisk and Novo Nordisk Pharmaceuticals, Inc. Any amendment or
waiver effected in accordance with this Section shall be binding upon Novo
Nordisk and Novo Nordisk Pharmaceuticals, Inc., each future holder of the
Shares, and Aradigm. 5.6 Delays or Omissions.No delay or omission to exercise any right,
power or remedy accruing to Novo Nordisk, Novo Nordisk Pharmaceuticals, Inc. or
any subsequent holder of any Shares upon any breach, default or noncompliance
of Aradigm under this Agreement, shall impair any such right, power, or remedy,
nor shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of any similar breach, default
or noncompliance thereafter occurring. It is further agreed that any waiver,
permit, consent, or approval of any kind or character on Novo Nordisks or Novo
Nordisk Pharmaceuticals, Inc.s part of any breach, default or noncompliance
under this Agreement or any waiver on Novo Nordisks or Novo Nordisk
Pharmaceuticals, Inc.s part of any provisions or conditions of this Agreement
must be in writing and shall be effective only to the extent specifically set
forth in such writing, and that all remedies, either under this
Agreement, by law, or otherwise afforded to Novo Nordisk or Novo Nordisk
Pharmaceuticals, Inc., shall be cumulative and not alternative. 5.7 Notices, etc.All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
(a) upon personal delivery, (b) on report of successful transmission by
facsimile machine that automatically generates a printed report indicating
whether transmission was completed successfully, at the conclusion of each
transmission, (c) on the first Business Day after receipted delivery to a
courier service which guarantees next business-day delivery, under
circumstances in which such guaranty is F-10




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applicable, or (d) on the earlier of
delivery or five (5) Business Days after mailing by United States certified by
mail, postage and fees prepaid, to the appropriate party at the address set
forth below or to such other address as the part so notifies the other in
writing: (a)if to Aradigm, to: Aradigm Corporation3929 Point Eden WayHayward, California 94545Telephone: (510) 265-8850Facsimile: (510) 265-0277Attention: Chairman and Chief Executive Officerwith a copy to:Cooley Godward llp3175 Hanover StreetPalo Alto, CA 94304-1130Attention: James C. Kitch, Esq.Facsimile: (650) 849-7400
 (b)if to Novo Nordisk and/or Novo Nordisk Pharmaceuticals, Inc., to: Novo Nordisk Pharmaceuticals, Inc.100 College Road WestPrinceton, New Jersey 08540Attention: Phil Fornecker, Chief Financial OfficerTelephone: (609) 989-5800Telefax: (609) 987-2792Novo Nordisk A/SNovo AlleDK-2880 BagsvaerdDenmarkAttention: General CounselTelephone: +45 44 44 88 88Telefax: +45 44 42 18 30
 or to such other addresses and telecopier numbers as may from time to time be
notified by either party to the other hereunder. 5.8 Information Confidential.Novo Nordisk and Novo Nordisk
Pharmaceuticals, Inc. acknowledge that any non-public information regarding
Aradigm received by them pursuant hereto is confidential and for their use
only, and they will refrain from using such information or disclosing or
disseminating such information to any other person (other than their employees,
affiliates, agents, or partners having a need to know the contents of such
information and their attorneys, in each case who are made aware of this
Section 5.8), except in connection with the F-11




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exercise of rights under this
Agreement, unless such information (i) becomes available to the public
generally, (ii) was or becomes available to Novo Nordisk and Novo Nordisk
Pharmaceuticals, Inc. on a non-confidential basis from a source other than
Aradigm, which source is or was (at time of receipt of the relevant
information) not, to the best of their knowledge, bound by a confidentiality
agreement with (or other confidentiality obligation to) Aradigm or (iii) is
required to be disclosed by a Governmental Authority (as such term is defined
in the Restructuring Agreement). 5.9 Specific Performance.The parties hereto hereby declare that it is
impossible to measure in money the damages which will accrue to a party hereto
or to its successors or assigns by reason of a failure to perform any of the
obligations under Section 4 of this Agreement and agree that the terms of
Section 4 of this Agreement shall be specifically enforceable. If any party
hereto or its successors or assigns institutes any action or proceeding to
specifically enforce the provisions of Section 4 of this Agreement, any party
against whom such action or proceeding is brought hereby waives the claim or
defense therein that such party or such successor or assign has an adequate
remedy at law, and such party shall not offer in any such action or proceeding
the claim or defense that such remedy at law exists. 5.10 Titles and Subtitles.The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement. 5.11 Counterparts.This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument. F-12




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The foregoing Agreement is hereby executed as of the date first above
written. Aradigm Corporation
    
    
    
    Novo Nordisk A/SBy:
    
    
    
    
    
    By:Richard P. Thompson
    
    
    
    
    
    Name:Chairman
    
    
    
    
    
    Title:Novo Nordisk Pharmaceuticals, Inc.By:Name:Title:
 F-13




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EXHIBIT G [TRANSITION SERVICE AGREEMENT G-1




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TRANSITION SERVICES AGREEMENT dated as of , 2004 between ARADIGM CORPORATION and NOVO NORDISK DELIVERY TECHNOLOGIES, INC. G-2




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ARTICLE 1DEFINITIONSSection 1.01. Definitions
    
    
    G-5Section 1.02. Other Definitional and Interpretative Provisions
    
    
    G-7ARTICLE 2SERVICESSection 2.01. Provision Of Services
    
    
    G-8Section 2.02. Service Limitations
    
    
    G-8Section 2.03. Exceptions to Obligations
    
    
    G-8Section 2.04. Additional Services
    
    
    G-8ARTICLE 3TERMSection 3.01. Term
    
    
    G-9ARTICLE 4COMPENSATIONSection 4.01. Charges for Services
    
    
    G-9Section 4.02. Payment Terms
    
    
    G-10ARTICLE 5GENERAL OBLIGATIONS; STANDARD OF CARESection 5.01. Performance Standards
    
    
    G-10Section 5.02. Disclaimer of Warranties
    
    
    G-10Section 5.03. Transitional Nature of Services; Changes
    
    
    G-10Section 5.04. Transitional Assistance
    
    
    G-10Section 5.05. Good Faith Cooperation
    
    
    G-11Section 5.06. Alternatives
    
    
    G-11ARTICLE 6TERMINATIONSection 6.01. Termination
    
    
    G-11Section 6.02. Survival
    
    
    G-12Section 6.03. User Identifications, Passwords
    
    
    G-12
 G-3




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ARTICLE 7RELATIONSHIP BETWEEN THE PARTIESSection 7.01. Relationship Between The Parties
    
    
    G-12ARTICLE 8SUBCONTRACTORSSection 8.01. Subcontractors
    
    
    G-12ARTICLE 9USE OF INFORMATION; CONFIDENTIALITYSection 9.01. Confidentiality
    
    
    G-13Section 9.02 . Access to Computer Systems
    
    
    G-14ARTICLE 10INDEMNIFICATION AND INTELLECTUAL PROPERTYSection 10.01. Indemnification
    
    
    G-14Section 10.02. Allocation of Rights
    
    
    G-15Section 10.03. Existing Ownership Rights Unaffected
    
    
    G-15Section 10.04. No Other Obligations
    
    
    G-15ARTICLE 11FORCE MAJEURESection 11.01. Force Majeure
    
    
    G-16ARTICLE 12DISPUTE RESOLUTION, GOVERNING LAW AND CONTINUITY OF SERVICESection 12.01. Dispute Resolution
    
    
    G-16Section 12.02. Governing Law
    
    
    G-17Section 12.03. Continuity of Service and Performance
    
    
    G-17ARTICLE 13MISCELLANEOUSSection 13.01. No Third Party Beneficiaries
    
    
    G-18Section 13.02. Counterparts and Facsimile Signature
    
    
    G-18Section 13.03. Notices
    
    
    G-18Section 13.04. Amendments and Waivers
    
    
    G-18Section 13.05. Severability
    
    
    G-18Section 13.06. Successors and Assigns
    
    
    G-18Section 13.07. Entire Agreement
    
    
    G-19
 G-4




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TRANSITION SERVICES AGREEMENT TRANSITION SERVICES AGREEMENT (the Agreement), effective as of the
Effective Date (as defined below), by and between Aradigm Corporation, a
corporation duly organized and existing under the laws of the State of
California (Aradigm) 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.). W I T N E S S E T H: WHEREAS, Aradigm, Novo Nordisk A/S, a company duly organized and existing
under the law of Denmark (Novo Nordisk) and 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 existing arrangements between Aradigm and Novo Nordisk
regarding, among other things, the development and commercialization of the
Development Program and to certain other matters as set forth therein; and WHEREAS, it 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 that Aradigm and Novo Nordisk
Delivery Technologies, Inc. enter into this 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  Section 1.01 . Definitions. (a) The following terms, as used herein, shall have the following
meanings: Affiliate shall have the meaning set forth in the Restructuring
Agreement. Amended and Restated License Agreement shall have the meaning set forth
in the Restructuring Agreement. Asset Purchase Agreement shall have the meaning set forth in the
Restructuring Agreement. G-5




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Development Programshall have the meaning set forth in the Amended and
Restated License Agreement. Effective Date shall mean the Closing Date (as defined in the
Restructuring Agreement). EURIBOR shall mean the offered rate per annum for deposits in U.S.
dollars for a period of three months as such rate appears on the display
designated as page 248 on the Telerate service. Intellectual Property Rights shall have the meaning set forth in the
Restructuring Agreement. Know-How shall have the meaning set forth in the Amended and Restated
License Agreement. 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. Real Property shall have the meaning set forth in the Restructuring
Agreement. Receiving Party shall mean Novo Nordisk Delivery Technologies, Inc. or
any of its Affiliates who receive any Services hereunder. Services shall mean the services, functions and tasks of the Service
Providers described in the Transition Services Schedules, as they may be
changed or supplemented during the term of this Agreement pursuant to the terms
of this Agreement. If any service, function or task not specifically described
in this Agreement is an inherent or necessary part of the performance of the
Services, it will be deemed included within the scope of the Services. Transaction Agreements shall have the meaning set forth in the
Restructuring Agreement. Transferred Assets shall have the meaning set forth in the Restructuring
Agreement. Transition Services Schedules shall mean the transition services
schedules (each such schedule, a Schedule) describing the Services, the
related charges, the frequency of billing and the term of such Services
attached to this Agreement. (b) Each of the following terms is defined in the Section set forth
opposite such term: G-6




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Term
    
    SectionAdditional Services
    
    2.04Aradigm
    
    RecitalsAradigm Computer Systems
    
    9.02Damages
    
    10.01Expiration Date
    
    3.01Force Majeure Event
    
    11.01Novo Nordisk
    
    RecitalsNovo Nordisk Delivery Technologies, Inc.
    
    RecitalsRestructuring Agreement
    
    RecitalsService Providers
    
    2.01subcontractor
    
    8.01
 Section 1.02 . Other Definitional and Interpretative Provisions.Unless specified otherwise, in this Agreement the obligations of any party hereto
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 Appendices, 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. G-7




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ARTICLE 2  Section 2.01 . Provision Of Services.On the terms and subject to the conditions contained herein, Aradigm shall provide, or shall cause third
parties designated or hired by it (such designated third parties, together with
Aradigm, the Service Providers) to provide to Novo Nordisk Delivery
Technologies, Inc. and its designated Affiliates, the Services for the time
period and to the extent specified with respect to each such Service in the
applicable Schedule. Section 2.02 . Service Limitations.Except as provided in a Schedule for a specific Service: (a) no Service Provider shall be required to provide any
Services except to the extent and at the locations such services, functions and
tasks were conducted (or contemplated to be conducted by Aradigm) as of
immediately prior to the date of the Restructuring Agreement; and (b) the
Services will be available only for purposes of conducting the Development
Program in substantially the same manner as conducted by Aradigm and Novo
Nordisk immediately prior to the Effective Date. Section 2.03 . Exceptions to Obligations.The only exceptions to the obligations of any Service Provider to provide any Service as contemplated
hereby are if (a) such Service Provider cannot provide such Service due to
causes which are outside its reasonable control as determined under Article 11
or (b) if providing such Service would be prohibited by applicable law,
regulation or court order. Section 2.04 . Additional Services. (a) From time to time after the Effective Date, the parties hereto may
identify and mutually agree upon additional services to be provided to any
Receiving Party in accordance with the terms of this Agreement (the Additional
Services). At such times, the parties hereto shall execute an additional
Schedule setting forth a description of any Additional Service, the time period
during which such Additional Service will be provided, the charge for such
Additional Service and any other terms applicable thereto. (b) As part of the Services, Aradigm will provide to the Receiving Party a
list of Aradigms preferred providers of services related to the Real Property
and the Transferred Assets, and the Receiving Party may in its discretion
engage such providers to provide services directly to the Receiving Party. If
the Receiving Party desires to engage any other provider of services in
connection with the Real Property, the Receiving Party will give to Aradigm
reasonable advance notice and will cooperate to minimize interference with the
conduct of Aradigms business. G-8




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(c) From time to time after the Effective Date, each party hereto may
reasonably request the assistance of the other partys employees listed on
Schedule 2.04(c) hereto on a consulting basis with respect to any matters
relating to AERx device and strip (including next generation devices and
strips) development, manufacturing and/or associated support activities. In
addition, each party hereto may reasonably request the assistance of additional
employees of the other party. Each party hereto will use commercially
reasonable efforts to make such requested employees available. In the event
that such an employee is available, the parties hereto shall execute a separate
consulting agreement setting forth a description of the consulting services to
be performed by such employee, the time period during which such consulting
services are to be provided, the base salary for such employee plusa mark-up
that will in no event exceed fifty percent (50%) of such base salary, and any
other terms applicable thereto. ARTICLE 3  Section 3.01 . Term.The term of this Agreement shall commence on the Effective Date and, unless earlier terminated under Section 6.01, shall
terminate no later than the second anniversary of the Effective Date (the
Expiration Date). The parties hereto agree to negotiate in good faith if any
Receiving Party needs to extend this Agreement and/or any provision of any
Service beyond its respective Expiration Date (and the parties hereby
acknowledge that the negotiation of any such extension may involve a
renegotiation of the charges set forth on the Transition Services Schedule with
respect to any such Services). This Agreement may be extended upon the mutual
agreement of the parties hereto in writing, either in whole or with respect to
one (1) or more of the Services; provided that, such extension shall only apply
to the specific Services for which this Agreement was extended. Services shall
be provided up to and including the applicable Expiration Date, subject to
earlier termination as provided herein. ARTICLE 4  Section 4.01 . Charges for Services.The Receiving Party shall pay to the Service Provider the charges set forth on the Schedules for each of the
Services listed therein (unless a particular Schedule explicitly provides that
no charge will be made). The parties hereto understand and agree that one or
more of the charges set forth on a Schedule hereto are or may be estimates
based on current usage or utilization and that the applicable charge for any
such Service may be more or less than the estimated or quoted charge on such
Schedule based on actual usage or utilization, and each party hereto agrees to
pay the amounts G-9




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associated with such actual usage or utilization; provided that, the
foregoing shall not be applicable to any charges for Services which are
expressed as a fixed cost per hour or other time period, or fixed cost per
unit, volume or similar metric. Section 4.02 . Payment Terms.Novo Nordisk Delivery Technologies, Inc. shall pay quarterly in arrears the duly-documented charges for the performance
of the specific Services based on the charges set forth on the applicable
Schedules for each of the Services. Late payments shall bear interest at the
rate equal to EURIBOR plus three percent (3.00%) per annum. ARTICLE 5  Section 5.01 . Performance Standards.Subject to Section 2.03, Aradigm shall cause each Service Provider within its control to maintain sufficient
resources to perform its obligations hereunder. Aradigm shall provide or cause
the Service Providers to provide the Services in accordance with the policies,
procedures and practices in effect as of immediately prior to the date of the
Restructuring Agreement and shall exercise the same care and skill as they
exercise in performing similar services for Aradigm and/or its Affiliates. Section 5.02 . Disclaimer of Warranties.SUBJECT TO SECTION 5.01, NO PARTY MAKES ANY WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT
LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY, BUSINESS CONTINUITY OR
FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE SERVICES, MATERIALS OR
OTHER DELIVERABLES PROVIDED, OR CAUSED TO BE PROVIDED, BY IT HEREUNDER. Section 5.03 . Transitional Nature of Services; Changes.The parties hereto acknowledge the transitional nature of the Services and that the Service
Provider may make changes from time to time in the manner of performing such
Services if the Service Provider is making similar changes in performing
similar services for itself so long as the Service Provider furnishes to the
Receiving Party reasonable advanced written notice regarding such changes. Section 5.04 . Transitional Assistance.During the term of this Agreement, Aradigm will use commercially reasonable efforts to provide to Novo
Nordisk Delivery Technologies, Inc. and its Affiliates, at Novo Nordisk
Delivery Technologies, Inc.s expense, consultation, assistance and information
as reasonably requested by them, and will otherwise perform the Services, so as
to effect a smooth transition from Novo Nordisk Delivery Technologies, Inc.s
utilization of the Services to Novo Nordisk Delivery Technologies, Inc.s G-10




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utilization of its own systems and personnel in connection with the
Development Program prior to the termination or expiration of this Agreement. Section 5.05 . Good Faith Cooperation.The parties hereto will use commercially reasonable efforts to cooperate with each other in all matters
relating to the provision and receipt of the Services. The parties hereto will
maintain in accordance with their standard document retention procedures,
documentation supporting the information relevant to charges contained in the
Transition Service Schedules and cooperate with each other in making such
information available as needed in the event of a tax audit, whether in the
United States or any other country. Section 5.06 . Alternatives.Notwithstanding anything to the contrary, if any Service Provider reasonably believes it is unable to provide a Service
(a) because of a failure to obtain necessary consents, licenses, sublicenses or
approvals or (b) for any reason pursuant to Section 2.03, the parties hereto
shall cooperate to determine the best alternative approach. Until such
alternative approach is found or the problem otherwise resolved to the
satisfaction of the parties hereto, such Service Provider shall use reasonable
efforts to continue providing the Service. To the extent an alternative
approach agreed upon by Aradigm and Novo Nordisk Delivery Technologies, Inc.
requires payment in excess of that which is included in the Service Providers
charge for the Service in question, the Receiving Party shall be responsible
for making any such payment. ARTICLE 6  Section 6.01 . Termination.(a) The parties hereto agree that if any Receiving Party chooses to discontinue any Service prior to its Expiration
Date, then such Receiving Party shall give the applicable Service Provider
prior written notice within the notice period specified in the relevant
Schedule, or if no such notice period is specified, at least thirty (30) days
prior written notice, of its intent to terminate this Agreement as to that
particular Service, which termination as to that particular service shall be
effective on the last day of the month on which the thirty (30) days prior
written notice lapses. The Receiving Party will pay the other party hereto the
fees and costs of any terminated Service up until the effective date of
termination. (a) Notwithstanding anything to the contrary contained herein, this
Agreement may be terminated, in whole or in part, at any time: (i) by the
mutual consent of the parties hereto; or (ii) by any party hereto in the event
of any material breach or default by the other party of any of its obligations
under this Agreement and the failure of such defaulting party to cure, or to
take substantial steps towards the curing of, such breach or default within
fourteen (14) days after G-11




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receipt of written notice from the non-defaulting party requesting such
breach or default to be cured. Section 6.02 . Survival.Articles 4, 9, 10 and 12 and Sections 6.02 and 6.03 and of this Agreement shall survive termination of this Agreement for the
applicable statutes of limitations. Article 13 shall survive termination of
this Agreement. Notwithstanding the foregoing, in the event of any termination
with respect to one or more, but less than all, Services, this Agreement shall
continue in full force and effect with respect to any Services not terminated
hereby. Section 6.03 . User Identifications, Passwords.Except as provided in any other Transaction Agreement, the parties hereto shall use good faith
efforts at the termination or expiration of this Agreement or any specific
Service hereto to ensure that all copies of user identifications and passwords
that provide any party hereto with access to another partys premises or
equipment are canceled or destroyed. ARTICLE 7  Section 7.01 . Relationship Between The Parties.The relationship between the parties hereto established under this Agreement is that of
independent contractors and no party hereto shall be deemed an employee, agent,
partner, or joint venturer of or with the other. Each Service Provider will be
solely responsible for any employment-related taxes, insurance premiums or
other employment benefits respecting its personnels performance of any
Services under this Agreement. Each Receiving Party agrees to grant to any
applicable Service Providers personnel reasonable access to sites, systems and
information as necessary for the Service Provider to perform its obligations
hereunder. The personnel of each party hereto shall agree to obey any and all
security regulations and other published policies of the other party relevant
to the provision or receipt of any Services. ARTICLE 8  Section 8.01 . Subcontractors.A Service Provider may, subject to mutual agreement of the parties hereto, in writing, engage a subcontractor to perform
all or any portion of its duties under this Agreement subject to the
requirements that: (a) any such subcontractor agrees in writing to be bound by
confidentiality obligations substantially similar to those set forth in Article
9; (b) any such subcontractor will perform the services for compensation as
specified in Article 4 G-12




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or if not the Service Provider agrees to pay the subcontractor the
compensation in excess of that specified in Article 4; and (c) the Service
Provider shall remain responsible for the performance of such subcontractor.
As used in this Agreement, subcontractor will mean any individual,
partnership, corporation, firm, association, unincorporated organization, joint
venture, trust or other entity engaged to perform hereunder, other than the
Service Provider. ARTICLE 9  Section 9.01 . Confidentiality.(a) Any information from time to time communicated or delivered by any party to the other party hereof, including
without limitation trade secrets, business methods, and cost, supplier,
manufacturing and customer information, shall be treated by Novo Nordisk
Delivery Technologies, Inc. and Aradigm, respectively, as confidential
information of the other party, and shall not be disclosed or revealed to any
third party whatsoever or used in any manner except as expressly provided for
herein and solely in connection with the Transaction Agreements; provided that,
such confidential information shall not be subject to the restrictions and
prohibitions set forth in this Article 9 to the extent that such confidential
information: (i) is available to the public in public literature or otherwise,
or after disclosure by one party to the other becomes public knowledge
through no default of the party receiving such confidential information;
or (ii) was known to the party (as demonstrated by the written records
of such party) receiving such confidential information with no
obligation to maintain confidentiality prior to the receipt of such
confidential information by such party, whether received before or after
the date of this Agreement; or (iii) is obtained by the party receiving such confidential
information from a third party not subject to a requirement of
confidentiality with respect to such confidential information. For the avoidance of doubt, information will not be considered to be
available to the public, in the public literature, or in the prior possession
of the Receiving Party merely because individual elements thereof are available
to the public, in the public literature, or in the prior possession of the
Receiving Party, unless the combination of such elements is available to the
public, in the public literature, or in the prior possession of the Receiving
Party. (b) Each party hereto shall take all such precautions as it normally takes
with its own confidential information to prevent any improper disclosure of
such G-13




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confidential information to any third party; provided that, such
confidential information may be disclosed: (i) pursuant to any order of a court
having jurisdiction and power to order such information to be released or made
public; (ii) within the limits required to obtain any authorization from any
governmental or regulatory agency or; (iii) with the prior written consent of
the other party hereto, which shall not be unreasonably withheld, as may
otherwise be required in connection with the purposes of this Agreement. Section 9.02 . Access to Computer Systems.If the Receiving Party (or any of its Affiliates) is given access to any computer equipment, computer,
software, network, electronic files, or electronic data storage system owned or
controlled by Aradigm (Aradigm Computer Systems), then the Receiving Party
shall limit (and, as applicable, cause its Affiliates to limit) (in each case,
other than as contemplated in the Restructuring Agreement) access and use of
such Aradigm Computer Systems solely to receive Services under this Agreement
and shall not access, attempt to access or use any Aradigm Computer Systems,
other than those specifically required to receive the Services; provided that,
Aradigm shall be obligated to put in place procedures effective in
differentiating between Aradigm Computer Systems to which the Receiving Party
and any of its Affiliates are entitled to access and the Aradigm Computer
Systems to which Aradigm or any of its Affiliates are not entitled to access.
The Receiving Party shall limit such access to those of its employees,
contractors, and advisers with a specific requirement to have such access in
connection with this Agreement, shall advise Aradigm in writing of the name of
each such Person who will be granted such access, and shall strictly follow all
Aradigms security rules and procedures for use of the Aradigm Computer
Systems. All user identification numbers and passwords disclosed to the
Receiving Party (or its Affiliates) and any of Aradigms confidential
information obtained by the Receiving Party (or its Affiliates) as a result of
their access to and use of any such Aradigm Computer Systems shall be deemed to
be, and shall be treated as, Aradigms confidential information under
applicable provisions of this Agreement. The Receiving Party agrees to
cooperate (and cause its Affiliates to cooperate) with Aradigm in the
investigation of any apparent unauthorized access by the Receiving Party or its
Affiliates to any Aradigm Computer Systems, or any apparent unauthorized
release of Aradigms confidential information by the employees, contractors, or
advisers of the Receiving Party or any of its Affiliates. ARTICLE 10  Section 10.01 . Indemnification. (a) Novo Nordisk Delivery Technologies, Inc. hereby indemnifies Aradigm
and its Affiliates against and agrees to hold each of them harmless from G-14




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any and all damage, loss, liability and expense (including reasonable
expenses of investigation and reasonable attorneys fees and any incidental,
indirect or consequential damages, losses, liabilities or expenses) (Damages)
incurred or suffered by Aradigm or any of its Affiliates (other than Damages
incurred or suffered by Aradigm or any of its Affiliates arising from any
claims made by employees of Aradigm or any of its Affiliates) that arise from
any third-party claim for personal injury or damage to property based upon the
performance of the Services by any of Aradigms employees acting as consultants
for Novo Nordisk Delivery Technologies, Inc. pursuant to Section 2.04(c),
except to the extent such third-party claim arises out of such consultants
negligence, willful misconduct or breach of obligations under this Agreement. (b) Aradigm hereby indemnifies Novo Nordisk Delivery Technologies, Inc. and its Affiliates against and agrees to hold each of them harmless from any
and all Damages incurred or suffered by Novo Nordisk Delivery Technologies, Inc.. or any of its Affiliates (other than Damages incurred or suffered by Novo Nordisk Delivery Technologies, Inc. or any of its Affiliates arising from any
claims made by employees of Novo Nordisk Delivery Technologies, Inc. or any of
its Affiliates) that arise from any third-party claim for personal injury or
damage to property based upon the performance of the Services by any of Novo
Nordisk Delivery Technologies, Inc.s employees acting as consultants for
Aradigm pursuant to Section 2.04(c), except to the extent such third-party
claim arises out of such consultants negligence, willful misconduct or breach
of obligations under this Agreement. Section 10.02 . Allocation of Rights.This Agreement and the performance of this Agreement will not affect the ownership of any Intellectual Property
Rights. Section 10.03 . Existing Ownership Rights Unaffected.No party hereto will gain, by virtue of this Agreement, any rights or ownership of copyrights,
patents, Know-How, trade secrets, trademarks or any other Intellectual Property
Rights owned by the other. Section 10.04 . No Other Obligations.NO PARTY HERETO ASSUMES ANY RESPONSIBILITY OR OBLIGATIONS WHATSOEVER, OTHER THAN THE RESPONSIBILITIES AND
OBLIGATIONS EXPRESSLY SET FORTH IN THIS AGREEMENT OR A SEPARATE WRITTEN
AGREEMENT BETWEEN THE PARTIES. NOTWITHSTANDING ANYTHING CONTAINED IN THIS
AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL ANY PARTY HERETO BE LIABLE TO ANY
OTHER PARTY HERETO FOR ANY LOST PROFITS, LOSS OF DATA, LOSS OF USE, BUSINESS
INTERRUPTION OR OTHER SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES. G-15




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ARTICLE 11  Section 11.01 . Force Majeure.Each party hereto will be excused for any failure or delay in performing any of its obligations under this Agreement,
other than the obligations to make payments pursuant to Article 4 for services
rendered, if such failure or delay is caused by a Force Majeure Event. For
purposes of this Agreement, Force Majeure Event shall mean any act of God or
the public enemy, any accident, explosion, fire, storm, earthquake, flood,
labor shortage, strike, terrorist act, or any other circumstance or event
beyond the reasonable control of such party. In any such event, obligations of
any party hereto failing to perform hereunder shall be postponed for such time
as its performance is suspended or delayed on account thereof, and the other
party hereto shall not be required to pay for services that are not performed
on the basis of a Force Majeure Event. Each party hereto will promptly notify
the other party hereto, either orally or in writing, whenever a Force Majeure
Event becomes reasonably foreseeable and shall use all commercially reasonable
efforts to overcome its effects as promptly as possible. Upon the cessation of
the Force Majeure Event, the party hereto failing to perform will use all
reasonable efforts to promptly resume, or cause any other relevant Service
Provider to resume, its performance. ARTICLE 12  Section 12.01 . Dispute Resolution.(a) All disputes arising out of this Agreement shall be settled as far as possible by negotiations between the
parties hereto. If the parties hereto cannot agree on an amicable settlement
within thirty (30) days from written submission of the matter by one (1) party
hereto to the other party hereto, 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 (3) disinterested
arbitrators, appointed pursuant to the following procedure: the party hereto
invoking arbitration shall notify the other party hereto 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 hereto shall notify the first party of its answer
to the 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. G-16




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(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 hereto. (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 (2) 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 hereto who shall be charged therewith or the allocation of the expenses
between the parties hereto at the discretion of the tribunal. (e) The arbitration decision shall be rendered as soon as possible, not
later, however, if possible, than six (6) months after the constitution of the
arbitration tribunal. The arbitration decision shall be final and binding upon
both parties hereto and the parties hereto 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 hereto
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
hereto otherwise agree in writing. The official arbitration language shall be
English. Section 12.02 . Governing Law.This Agreement shall be governed by and construed in accordance with the law of the State of New York. Section 12.03 . Continuity of Service and Performance.Unless otherwise agreed in writing, the parties hereto will continue to provide service and
honor all other commitments under this Agreement during the course of dispute
resolution pursuant to the provisions of this Article 12 with respect to all
matters not subject to such dispute, controversy or claim. G-17




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ARTICLE 13  Section 13.01 . No Third Party Beneficiaries.This Agreement shall not confer any rights or remedies upon any Person other than the parties hereto and
their respective successors and permitted assigns. Section 13.02 . Counterparts and Facsimile Signature.This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same
instrument. This Agreement may be executed by facsimile signature. Section 13.03 . Notices.All notices and other communications hereunder will be in writing and deemed to have been duly given if given in accordance
with Section 12.01 of the Restructuring Agreement and as otherwise provided in
the applicable Schedule hereto. Section 13.04 . Amendments and Waivers.The parties hereto may mutually amend any provision of this Agreement. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by all
of the parties hereto. No waiver of any right or remedy hereunder shall be
valid unless the same shall be in writing and signed by the party hereto giving
such waiver. No waiver by any party hereto with respect to any default,
misrepresentation or breach of warranty or covenant hereunder shall be deemed
to extend to any prior or subsequent default, misrepresentation or breach of
warranty or covenant hereunder or affect in any way any rights arising by
virtue of any prior or subsequent such occurrence. Section 13.05 . Severability.If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party hereto.
Upon such a determination, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties hereto
as closely as possible in an acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the fullest
extent possible. Section 13.06 . 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, as expressly provided in the
Agreement, no party hereto may assign, delegate or otherwise transfer any of
its rights or obligations under this Agreement without the consent of each
other party G-18




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hereto; except that Novo Nordisk Delivery Technologies, Inc. may transfer
or assign, in whole or from time to time in part, to one or more of its
Affiliates, the right to receive all or a portion of the Services, but no such
transfer or assignment will relieve Novo Nordisk Delivery Technologies, Inc. of
its obligations hereunder. Section 13.07 . Entire Agreement.This Agreement and the other Transaction Agreements constitute the entire agreement between the parties
hereto 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. If the terms and conditions of this
Agreement conflict with the terms and conditions of any Schedule, then the
terms and conditions of this Agreement shall govern. [SIGNATURE PAGE FOLLOWS] G-19




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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written. ARADIGM CORPORATIONBy:Name:Title:NOVO NORDISK DELIVERY TECHNOLOGIES, INC.By:Name:Title:
 G-20




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EXHIBIT H [ASSIGNMENT AGREEMENTS] H-1




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ASSIGNMENT AND ASSUMPTION OF LEASE, LANDLORD AGREEMENT AND LENDER CONSENT
 ASSIGNMENT AND ASSUMPTION OF LEASE, LANDLORD AGREEMENT AND LENDER CONSENT
(Agreement), dated as of  , 2004, between ARADIGM CORPORATION, a
California corporation (Assignor), NOVO NORDISK DELIVERY TECHNOLOGIES, INC.,
a Delaware corporation (Assignee), HAYWARD POINT EDEN I LIMITED PARTNERSHIP,
a Delaware limited partnership (Landlord) and NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY, a Wisconsin Corporation (Lender). W I T N E S S E T H : WHEREAS, Assignor is the tenant of certain premises (the Premises) (more
particularly described in Exhibit A hereto and located on real property
described in Exhibit B hereto, the Property) under a Lease dated as of
January 28, 1998 between Landlord, as landlord, and Assignor, as tenant (a
Memorandum of which is recorded in [ ], Alameda County Records), as
amended by a First Amendment to Lease dated November 30, 1998 between Landlord
and Assignor, a Second Amendment to Lease dated November 30, 1998 between
Landlord and Assignor and a Third Amendment to Lease dated December 21, 2000
between Landlord and Assignor (the Building 2 Lease); WHEREAS, Assignor and Assignee are restructuring their existing business
relationships and, accordingly, Assignor desires to assign to Assignee and
Assignee desires to acquire from Assignor all right, title and interest in and
under the Building 2 Lease, subject to and upon the terms and conditions
hereinafter set forth; WHEREAS, Landlord is the owner and holder of landlords interest under the
Building 2 Lease and desires to consent to the assignment and agree that the
cross default contained in the Building 2 Lease shall be effective only as
modified by this Agreement; and WHEREAS, Lender is the owner and holder of the mortgage described in
Exhibit C hereto covering the Property and desires to consent to this
Agreement; NOW, THEREFORE, in consideration of the agreements contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Assignee, Assignor, Landlord and Lender agree as follows: H-2




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Section 1 . Assignment.Assignor hereby assigns, transfers, sets over
and conveys to Assignee all of Assignors right, title and interest in, to and
under the Building 2 Lease including, without limitation, any rights to tenant
improvements constructed by Assignor therein and rights to the security deposit
thereunder. The tenant improvements are transferred on an as-is-where-is
basis, without representation or warranty of any kind. Section 2 . Assumption And Indemnification.(a) Assignee hereby assumes
and agrees to pay, perform and discharge, as and when due, all of Assignors
liabilities and obligations under the Building 2 Lease arising and accruing
from and after the date hereof. (b) Assignee hereby agrees to indemnify, defend and hold harmless
Assignor from and against all of Assignors obligations and liabilities under
and with respect to the Building 2 Lease and the Premises arising or accruing
from and after the date hereof. (c) Assignor hereby agrees to indemnify, defend and hold harmless Assignee
from and against all of Assignors obligations and liabilities under and with
respect to the Building 2 Lease and the Premises arising or accruing prior to
the date hereof. Section 3 . Apportionments Of Payments.Assignee or Assignor, as
applicable, shall reimburse the other for its (the reimbursing partys)
proportionate share of any payments made by the other pursuant to the Building
2 Lease attributable to any period during which the reimbursing party is in
possession of the Premises, on a per diem basis based upon the actual number of
days in the relevant payment period. Additionally, Assignee shall pay Assignor
the amount of Aradigms security deposit under the Building 2 Lease less the
sum of all amounts, if any, claimed by Landlord pursuant to Section 7(b)
hereof. Section 4 . Landlord Agreement.(a) Landlord hereby consents to the
assignment set forth in Section 1 above and agrees that Section 14.1(i)
(Cross-Default) of the Building 2 Lease shall not apply with respect to any
lease under which, at the time of any default under such lease, Assignee or any
person or entity which controls, is controlled by or is under common control of
the Assignee, is not the tenant. Section 5 . First Refusal Right.Landlord hereby ratifies and confirms
Assignees first refusal right with respect to the Option Space (as defined in
the Building 2 Lease) under Section 1.3 of the Building 2 Lease and hereby
certifies that the Property includes the Option Space. Landlord, Assignor and
Assignee acknowledge that Assignor and Landlord or Landlords affiliate are by
separate instrument terminating or subordinating to the rights of Assignee any
first refusal rights with respect to the Option Space granted to Assignor under
the Phase V Lease (as defined in the Building 2 Lease). H-3




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Section 6 . Lender Consent.Lender hereby consents to each of the
provisions of this Agreement including Landlords agreements set forth in
Sections 4 and 5 above. Section 7 . Estoppels.(a) Assignor hereby certifies to the other
parties hereto that (i) it is not in default under the Building 2 Lease nor to
its knowledge is there any event which with notice or lapse of time or both
would constitute a default by Assignor thereunder, (ii) to its knowledge,
except as set forth in Section 7(b) hereof, Landlord has no claim against the
security deposit under the Building 2 Lease nor is there any event which with
notice or lapse of time would give rise to such a claim by Landlord and (iii)
to its knowledge, Landlord is not in default under the Building 2 Lease nor is
there any event which with notice or lapse of time or both would constitute a
default by Landlord thereunder. (b) Landlord hereby certifies to the other parties that (i) the definition
of the Building 2 Lease contained in the recitals hereto correctly describes
the Building 2 Lease and that the Building 2 Lease has not been further
supplemented, amended or otherwise modified, (ii) to its knowledge, Assignor is
not in default under the Building 2 Lease nor is there any event which with
notice or lapse of time or both would constitute a default by Assignor
thereunder, (iii) Landlord holds a security deposit under the Building 2 Lease
from Assignor in the amount of $7,200 and (iv) Landlord has no existing claim
against such security deposit nor, to its knowledge, is there any event which
with notice or lapse of time or both would give rise to such a claim by
Landlord. Section 8 . Representations And Warranties.Each party hereto represents
to the others that it (the party giving the representation) has the right and
power to enter into this Agreement, that this Agreement has been duly
authorized, executed and delivered by it, and that this Agreement is valid,
binding and enforceable against it, except with regards to bankruptcy and
similar laws affecting creditors rights generally and general principles of
equity. Section 9 . Miscellaneous.(a) The parties hereto agree to execute and
deliver such further Agreements and do such further acts and things as may be
required or desirable to carry out the intent and purpose of this Agreement. (b) Any provision of this Agreement may be amended or waived if, and only
if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by the parties hereto or, in the case of a waiver, by the party
against whom the waiver is to be effective. 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. H-4




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(c) Nothing in this Agreement shall diminish the rights of either party
under the Restructuring Agreement dated September 28, 2004 between Assignor,
Assignee and Novo Nordisk A/S or any other Transaction Agreement (as defined
therein). (d) The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement is for the sole benefit of the parties hereto and
their successors and permitted assigns, and, except as otherwise contemplated
herein, nothing herein express or implied shall give or be construed to give
any person, other than the parties hereto and their successors and permitted
assigns, any legal or equitable rights hereunder. (e) This Agreement shall be governed by and construed in accordance with
the law of California, without regard to the conflicts of law rules thereof. (f) This Agreement may be executed in one or more counterparts (including
by photocopy or facsimile), each of which shall be deemed to be an original and
all of which, when taken together, shall constitute one and the same Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] H-5




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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written. ARADIGM CORPORATION, as AssignorBy:
    
    Name:Title:NOVO
NORDISK DELIVERY TECHNOLOGIES, INC., as AssigneeBy:
    
    Name:Title:HAYWARD
POINT EDEN I LIMITED PARTNERSHIP, as LandlordBy:
    

BRITTANIA
DEVELOPMENTS, INC, a California Corporation, General PartnerBy:
    
    Name:Title:NORTHWESTERN
MUTUAL LIFE INSURANCE COMPANY, as LenderBy:
    
    Name:Title:
 H-6




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STATE OF
    
    ))    ssCOUNTY OF
    
    )
 On  , 2004, before me, 
personally appeared , a of ARADIGM
CORPORATION, a corporation, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person(s) whose names(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signatures(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Notary Public
 (This area for official seal) STATE OF
    
    ))     ssCOUNTY OF
    
    )
 On  , 2004, before me, 
personally appeared , a of NOVO NORDISK
DELIVERY TECHNOLOGIES, INC., a  corporation, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person(s)
whose names(s) is/are subscribed to the within instrument and acknowledged to
me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signatures(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the
instrument. WITNESS my hand and official seal. Notary Public
 (This area for official seal) H-7




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STATE OF
    
    ))     ssCOUNTY OF
    
    )
 On  , 2004, before me, 
personally appeared , a  of BRITTANIA
DEVELOPMENTS, INC, a California corporation, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person(s) whose names(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signatures(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Notary Public
 (This area for official seal) STATE OF
    
    ))     ssCOUNTY OF
    
    )
 On  , 2004, before me,  personally
appeared , a of NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY, a  corporation, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person(s) whose names(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signatures(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Notary Public
 (This area for official seal) H-8




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EXHIBIT A [Location of Premises] H-9




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EXHIBIT B Improved real property located in the City of Hayward, County of Alameda, State
of California, more particularly described as follows: Lots 2, 3, 4, 5 and 7, Tract 4019, filed June 28, 1979, Map Book 110, Pages 97,
98 and 99, Alameda County Records. Subject to easements, restrictions and other matters of record affecting title. H-10




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Exhibit C [Description of Mortgage to be provided by Landlord and Lender] H-11




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ASSIGNMENT AND ASSUMPTION OF LEASE, LANDLORD AGREEMENT AND LENDER CONSENT
 ASSIGNMENT AND ASSUMPTION OF LEASE, LANDLORD AGREEMENT AND LENDER CONSENT
(Agreement), dated as of  , 2004, between ARADIGM CORPORATION, a
California corporation (Assignor), NOVO NORDISK DELIVERY TECHNOLOGIES, INC.,
a Delaware corporation (Assignee), HAYWARD POINT EDEN I LIMITED PARTNERSHIP,
a Delaware limited partnership (Landlord) and NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY, a Wisconsin Corporation (Lender). W I T N E S S E T H : WHEREAS, Assignor is the tenant of certain premises (the Premises) (more
particularly described in Exhibit A hereto and located on real property
described in Exhibit B hereto, the Property) under a Lease dated as of July
1, 2000 between Landlord, as landlord, and Assignor, as tenant (a Memorandum of
which is recorded in [ ], Alameda County Records) (the Building 3
Lease); WHEREAS, Assignor and Assignee are restructuring their existing business
relationships and, accordingly, Assignor desires to assign to Assignee and
Assignee desires to acquire from Assignor all right, title and interest in and
under the Building 3 Lease, subject to and upon the terms and conditions
hereinafter set forth; WHEREAS, Landlord is the owner and holder of landlords interest under the
Building 3 Lease and desires to consent to the assignment and agree that the
cross default contained in the Building 3 Lease shall be effective only as
modified by this Agreement; and WHEREAS, Lender is the owner and holder of the mortgage described in
Exhibit C hereto covering the Property and desires to consent to this
Agreement; NOW, THEREFORE, in consideration of the agreements contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Assignee, Assignor, Landlord and Lender agree as follows: Section 1 . Assignment.Assignor hereby assigns, transfers, sets over
and conveys to Assignee all of Assignors right, title and interest in, to and
under the Building 3 Lease including, without limitation, any rights to tenant
improvements constructed by Assignor therein and rights to the security deposit
thereunder. The H-12




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tenant improvements are transferred on an as-is-where-is basis, without
representation or warranty of any kind. Section 2 . Assumption And Indemnification.(a) Assignee hereby assumes
and agrees to pay, perform and discharge, as and when due, all of Assignors
liabilities and obligations under the Building 3 Lease arising and accruing
from and after the date hereof. (a) Assignee hereby agrees to indemnify, defend and hold harmless
Assignor from and against all of Assignors obligations and liabilities under
and with respect to the Building 3 Lease and the Premises arising or accruing
from and after the date hereof. (b) Assignor hereby agrees to indemnify, defend and hold harmless Assignee
from and against all of Assignors obligations and liabilities under and with
respect to the Building 3 Lease and the Premises arising or accruing prior to
the date hereof. Section 3 . Apportionments Of Payments.Assignee or Assignor, as
applicable, shall reimburse the other for its (the reimbursing partys)
proportionate share of any payments made by the other pursuant to the Building
3 Lease attributable to any period during which the reimbursing party is in
possession of the Premises, on a per diem basis based upon the actual number of
days in the relevant payment period. Additionally, Assignee shall pay Assignor
the amount of Aradigms security deposit under the Building 3 Lease less the
sum of all amounts, if any, claimed by Landlord pursuant to Section 6(b)
hereof. Section 4 . Landlord Agreement.(a) Landlord hereby consents to the
assignment set forth in Section 1 above and agrees that Section 14.1(i)
(Cross-Default) of the Building 3 Lease shall not apply with respect to any
lease under which, at the time of any default under such lease, Assignee or any
person or entity which controls, is controlled by or is under common control of
the Assignee, is not the tenant. Section 5 . Lender Consent.Lender hereby consents to each of the
provisions of this Agreement including Landlords agreement set forth in
Section 4 above. Section 6 . Estoppels.(a) Assignor hereby certifies to the other
parties hereto that (i) it is not in default under the Building 3 Lease nor to
its knowledge is there any event which with notice or lapse of time or both
would constitute a default by Assignor thereunder, (ii) to its knowledge,
except as set forth in Section 6(b) hereof, Landlord has no claim against the
security deposit under the Building 3 Lease nor is there any event which with
notice or lapse of time would give rise to such a claim by Landlord and (iii)
to its knowledge, Landlord is not in default under the Building 3 Lease nor is
there any event which with notice or lapse of time or both would constitute a
default by Landlord thereunder. H-13




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(b) Landlord hereby certifies to the other parties that (i) the definition
of the Building 3 Lease contained in the recitals hereto correctly describes
the Building 3 Lease and that the Building 3 Lease has not been further
supplemented, amended or otherwise modified, (ii) to its knowledge, Assignor is
not in default under the Building 3 Lease nor is there any event which with
notice or lapse of time or both would constitute a default by Assignor
thereunder, (iii) Landlord holds a security deposit under the Building 3 Lease
from Assignor in the amount of $10,566.43 and (iv) Landlord has no existing
claim against such security deposit nor, to its knowledge, is there any event
which with notice or lapse of time or both would give rise to such a claim by
Landlord. Section 7 . Representations And Warranties.Each party hereto represents
to the others that it (the party giving the representation) has the right and
power to enter into this Agreement, that this Agreement has been duly
authorized, executed and delivered by it, and that this Agreement is valid,
binding and enforceable against it, except with regards to bankruptcy and
similar laws affecting creditors rights generally and general principles of
equity. Section 8 . Miscellaneous.(a) The parties hereto agree to execute and
deliver such further Agreements and do such further acts and things as may be
required or desirable to carry out the intent and purpose of this Agreement. (b) Any provision of this Agreement may be amended or waived if, and only
if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by the parties hereto or, in the case of a waiver, by the party
against whom the waiver is to be effective. 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. (c) Nothing in this Agreement shall diminish the rights of either party
under the Restructuring Agreement dated September 28, 2004 between Assignor,
Assignee and Novo Nordisk A/S or any other Transaction Agreement (as defined
therein). (d) The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement is for the sole benefit of the parties hereto and
their successors and permitted assigns, and, except as otherwise contemplated
herein, nothing herein express or implied shall give or be construed to give
any person, other than the parties hereto and their successors and permitted
assigns, any legal or equitable rights hereunder. (e) This Agreement shall be governed by and construed in accordance with
the law of California, without regard to the conflicts of law rules thereof. H-14




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(f) This Agreement may be executed in one or more counterparts (including
by photocopy or facsimile), each of which shall be deemed to be an original and
all of which, when taken together, shall constitute one and the same Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] H-15




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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written. ARADIGM CORPORATION,
as      AssignorBy:
    
    Name:Title:NOVO NORDISK
DELIVERY      
TECHNOLOGIES, INC., as AssigneeBy:
    
    Name:Title:HAYWARD POINT EDEN I
LIMITED       PARTNERSHIP,as LandlordBy:
    
    BRITTANIA DEVELOPMENTS,INC, a
California Corporation,General PartnerBy:
    
    Name:Title:NORTHWESTERN MUTUAL
LIFE       INSURANCE COMPANY,as LenderBy:
    
    Name:Title:
 H-16




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STATE OF
    
    ))ssCOUNTY OF
    
    )
 On  , 2004, before me,   
personally appeared , a
of ARADIGM CORPORATION, a  corporation, personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose names(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signatures(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument. WITNESS my hand and official seal. Notary Public
 STATE OF
    
    ))ssCOUNTY OF
    
    )
 On  , 2004, before me,    
personally appeared , a
of NOVO NORDISK DELIVERY TECHNOLOGIES, INC., a 
corporation, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person(s) whose names(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their
signatures(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Notary Public
 H-17




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(This area for official seal) STATE OF
    
    ))ssCOUNTY OF
    
    )
 On  , 2004, before me, 
 personally appeared , a
of BRITTANIA DEVELOPMENTS, INC, a California corporation,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose names(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signatures(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument. WITNESS my hand and official seal. Notary Public
 (This area for official seal) STATE OF
    
    ))ssCOUNTY OF
    
    )
 On  , 2004, before me, 
 personally appeared , a
of NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, a
corporation, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person(s) whose names(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their
signatures(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Notary Public
 (This area for official seal)
 H-18




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EXHIBIT A [Location of Premises] H-19




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EXHIBIT B Improved real property located in the City of Hayward, County of Alameda, State
of California, more particularly described as follows: Lots 2, 3, 4, 5 and 7, Tract 4019, filed June 28, 1979, Map Book 110, Pages 97,
98 and 99, Alameda County Records. Subject to easements, restrictions and other matters of record affecting title. H-20




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Exhibit C [Description of Mortgage to be provided by Landlord and Lender] H-21