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Exhibit 10.4
 [ * ] = Certain confidential information contained 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.
 EXCLUSIVE LICENSE, DEVELOPMENT, AND
COMMERCIALIZATION AGREEMENT
 This Exclusive License, Development, and Commercialization Agreement Agreement Effective Date Aradigm Corporation Aradigm Lung Rx, Inc., Lung Rx Party Parties
 Recitals
 Whereas, ®
 Whereas,
 Whereas
 Now, Therefore,
 ARTICLE 1
 Definitions
 1.1 Affiliate
 1.2 Aradigm FTE Rate




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Exhibit A
 1.3 Aradigm Improvements
 1.4 Aradigm Know-How
 1.5 Aradigm Patents Exhibit B
 1.6 Aradigm Technology
 1.7 Commercialization
 1.8 Commercially Reasonable Efforts
 [ * ] = Certain confidential information contained 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.
 2




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1.9 Confidential Information
 1.10 Control
 1.11 Development
 1.12 Development Plan
 1.13 Development Timeline
 1.14 FDA
 1.15 Field
 1.16 First Commercial Sale
 1.17 IND
 1.18 Information
 [ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
 3




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1.19 Licensed Molecule Exhibit C
 1.20 Lung Rx Know-How
 1.21 Lung Rx Patents
 1.22 Lung Rx Technology
 1.23 NDA
 1.24 Net Sales
 [ * ] = Certain confidential information contained 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.
 4




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1.25 New Intellectual Property .
 1.26 Patents
 1.27 POC Study
 1.28 Product
 1.29 PSC
 1.30 Regulatory Approval
 1.31 Regulatory Authority e.g.
 1.32 Regulatory Dossier
 [ * ] = Certain confidential information contained 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.
 5




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1.33 Senior Executive
 1.34 Successful Exhibit D
 1.35 Term
 1.36 Territory
 1.37 Third Party
 1.38 U.S.
 1.39 Valid Claim
 ARTICLE 2
 Licenses and Options
 2.1 Licenses to Lung Rx.
 (a)
 b)
 [ * ] = Certain confidential information contained 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.
 6




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2.2 License to Aradigm.
 2.3 Aradigm Retained Rights.
 2.4 Third Party Licenses.
 (a)
 (b)
 2.5 No Non-Permitted Use.
 (a)
 (b)
 [ * ] = Certain confidential information contained 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.
 7




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2.6 No Other Licenses.
 2.7 Covenant Not to Sue
 (a)
 (b)
 2.8 Right of First Option to Alternate Technology
 ARTICLE 3
 Governance
 3.1 PSC; Meetings. PSC
 (a)
 (b)
 [ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
 8




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(c)
 3.2 Responsibilities of the PSC.
 (a)
 (b)
 (c)
 (d)
 (e)
 (f)
 (g)
 (h)
 3.3 Limitation on PSCs Authority
 3.4 PSC Decisions
 [ * ] = Certain confidential information contained 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.
 9




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(a) Consensus; Good Faith; Action Without Meeting.
 (b) Failure to Reach Consensus.
 ARTICLE 4
 Development and Commercialization
 4.1 Development  Overview.
 (a)
 (b)
 (c)
 4.2 Development Plan.
 [ * ] = Certain confidential information contained 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.
 10




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(a) Scope. Development Plan Development Timeline
 (b) Initial Development Plan. Exhibit E
 (c) Updates to the Development Plans and Additional Development Plans.
 (d) Diligence.
 4.3 Development Reports and Records.
 [ * ] = Certain confidential information contained 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.
 11




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(a)
 (b) Records.
 (c) Disclosure of Inventions and Development Results.
 4.4 Standards of Conduct.
 4.5 Development Limitations.
 [ * ] = Certain confidential information contained 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.
 12




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4.6 Development Expenses.
 (a) Exhibit E
 (i)
 (ii)
 (iii)
 (b)
 [ * ] = Certain confidential information contained 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.
 13




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4.7 Regulatory Coordination.
 (a)
 (b)
 (c)
 (d)
 (e)
 [ * ] = Certain confidential information contained 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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(f)
 (g)
 4.8 Product Withdrawals and Recalls.
 4.9 Adverse Event Reporting.
 [ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
 15




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(a)
 (i) Adverse Event
 (ii)
 (iii)
 (b)
 4.10 Commercialization of Product.
 4.11 Diligence Obligations.
 (a)
 (b)
 [ * ] = Certain confidential information contained 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.
 16




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(c)
 4.12 Other Inhalation Devices.
 (a)
 (b)
 4.13 Additional Obligations of Aradigm.
 (a) Information
 (b) Cooperation
 [ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
 17




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(c) AERx Expenses.
 ARTICLE 5
 Manufacturing
 5.1 Manufacturing Responsibility
 (a)
 (b)
 5.2 Transfer of Manufacturing Technology.
 (a)
 [ * ] = Certain confidential information contained 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.
 18




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(b)
 (c)
 5.3 Lung Rx Supply Obligations. ®
 ARTICLE 6
 Fees and Payments
 6.1 Upfront Fee.
 (a)
 [ * ] = Certain confidential information contained 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.
 19




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b)
 6.2 Additional Consideration
 (a) License Fee
 (b) Purchase of Shares
 6.3 Milestone Payments.
 Milestone Event
    
    Milestone PaymentFirst to occur of (i) the issuance of purchasing
requisitions for a [*]; and (ii) the first anniversary
of the Effective Date;
    
    [*]First to occur of (i) the completion of the [*]; and
(ii) the second anniversary of the Effective Date;
    
    [*]First to occur of (i) [*], and (ii) the third
anniversary of the Effective Date.
    
    [*]
  [ * ] = Certain confidential information contained 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.
 20




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6.4 Royalties.
 (a)
 (b)
 (c)
 (d)
 (e)
   [ * ] = Certain confidential information contained 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.
 21




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6.5 Royalty Reduction.
 (a)
 (b)
  [ * ] = Certain confidential information contained 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.
 22




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6.6 Accrual of Royalties.
 6.7 Compulsory Licenses
 6.8 Commercial Hardship
 ARTICLE 7
 Payments; Records; Audits
 7.1 Payment; Reports.
 7.2 Exchange Rate; Manner and Place of Payment.
 [ * ] = Certain confidential information contained 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.
 23




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7.3 Tax Withholding.
 7.4 Records; Audits.
 7.5 Late Payments.
 ARTICLE 8
 Intellectual Property
 8.1 Filing Prosecution and Maintenance of Patents.
 8.2 Ownership of New Intellectual Property.
 (a) Prostacyclin Field
 [ * ] = Certain confidential information contained 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.
 24




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(b) Pulmonary
Delivery Field)
 (c) New Intellectual Property
 (d)
 8.3 Filing, Prosecution and Maintenance of New Intellectual Property
   8.4 Cooperation.
 (a)
 [ * ] = Certain confidential information contained 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.
 25




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(b) Patent
Comment Dispute) Neutral Lawyer)
 8.5 Infringement by Third Parties.
 (a) Notice
 (b) Right to Bring Suit Enforcing Party
 (c) Cooperation; Settlement.
 [ * ] = Certain confidential information contained 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.
 26




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(d) Recoveries. pro rata
 8.6 Infringement of Third Party Rights.
 8.7 Product Trademark; License to Aradigm Trademark
 ® ® ® ®
  [ * ] = Certain confidential information contained 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.
 27




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ARTICLE
9
 Representations and Warranties
 9.1 Mutual Representations, Warranties and Covenants.
 (a)
 (b)
 (c)
 (d)
 9.2 Aradigm Representations and Warranties.
 [ * ] = Certain confidential information contained 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.
 28




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Exhibit B Exhibit B
 9.3 Lung Rx Representations and Warranties.
 9.4 Disclaimer.
 [ * ] = Certain confidential information contained 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.
 29




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ARTICLE 10
 Confidentiality
 10.1 Confidential Information. Confidential
Information
 10.2 Exceptions.
 10.3 Authorized Disclosure.
 (a)
 [ * ] = Certain confidential information contained 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.
 30




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(b)
 (c)
 (d)
 (e)
 10.4 Terms of Agreement.
 10.5 Publicity.
 10.6 Publication.
 [ * ] = Certain confidential information contained 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.
 31




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ARTICLE 11
 Term and Termination
 11.1 Term. Term
 11.2 Termination for Breach.
 11.3 Termination by Lung Rx.
 (a)
 (b)
 (c)
 11.4 Effect of Termination; Surviving Obligations.
 (a)
 (i)
 [ * ] = Certain confidential information contained 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.
 32




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(ii)
 (iii)
 (b)
 (i)
 (ii)
 (iii)
 (c)
    [ * ] = Certain confidential information contained 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.
 33




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(d) .
 11.5 Damages; Relief.
 11.6 Rights in Bankruptcy.
 (a)
 (b) Licensor Licensee
 [ * ] = Certain confidential information contained 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.
 34




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ARTICLE 12
 Indemnification
 12.1 Indemnification by Aradigm. Lung Rx Indemnitee Losses
 12.2 Indemnification by Lung Rx. Aradigm Indemnitee
 12.3 Control of Defense.
 [ * ] = Certain confidential information contained 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.
 35




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12.4 Insurance.
 ARTICLE 13
 Dispute Resolution
 13.1 Disputes Dispute
 13.2 Escalation.
 13.3 Arbitration.
 [ * ] = Certain confidential information contained 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.
 36




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Panel Rules Party Arbitrator Neutral Arbitrator
 13.4 Court Actions
 ARTICLE 14
 General Provisions
 14.1 Governing Law.
 14.2 Entire Agreement; Modification.
 [ * ] = Certain confidential information contained 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.
 37




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14.3 Relationship Between the Parties.
 14.4 Performance by Affiliates, Sublicensees and Subcontractors.
 14.5 Non-Waiver.
 14.6 Assignment.
 (a)
 (b)
 [ * ] = Certain confidential information contained 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.
 38




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i.e.,
 14.7 No Third Party Beneficiaries.
 14.8 Severability.
 14.9 Notices.
  
  
 [ * ] = Certain confidential information contained 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.
 39




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14.10 Force Majeure.
 14.11 Limitation of Liability
 14.12 Further Actions.
 14.13 Interpretation.
 (a) Captions and Headings.
 [ * ] = Certain confidential information contained 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.
 40




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(b) Singular and Plural.
 (c) Articles, Sections & Subsections.
 (d) Days.
 (e) Ambiguities.
 (f) English Language.
 (g) Exemplary Term.
 14.14 Counterparts.
 [Remainder of this page intentionally left blank.]
 [ * ] = Certain confidential information contained 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.
 41




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In Witness Whereof, License, Development, and Commercialization Agreement
 Aradigm Corporation
    
    Lung Rx, Inc.By:
    
    /s/ Igor Gonda
    
    By:
    
    /s/ [*]Name:
    
    Igor Gonda
    
    Name:
    
    [*]Title:
    
    President and Chief Executive Officer
    
    Title:
    
    [*]
 [ * ] = Certain confidential information contained 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.
 42




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Exhibit A
 Aradigm FTE Calculation Methodology
  [ * ] = Certain confidential information contained 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.
 43




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Exhibit B
 Certain Aradigm Patents
  [ * ] = Certain confidential information contained 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.
 44




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Exhibit C
 Licensed Molecule
 
 [ * ] = Certain confidential information contained 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.
 45




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Exhibit D
 In vivo and In vitro Bridging POC Study and Success Criteria for AERx Essence Ò technology with Treprostinil
  [ * ] = Certain confidential information contained 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.
 46




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Exhibit E
 Initial Development Plan
  [ * ] = Certain confidential information contained 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.
 47