**NOW THEREFORE,**in consideration of the mutual promises and agreements set forth herein, andfor other good and valuable consideration, the receipt and sufficiency of which are herebyacknowledged, the Parties agree as follows:**ARTICLE 1****DEFINITIONS**     Capitalized terms shall have the meaning set forth below and in this Agreement unlessreference to the License Agreement is specifically made with respect to such capitalized term.     **1.1**“**Additional Manufacturer**” has the meaning set forth in Section 5.5.     **1.2 “Affiliate”**of a Party means any Person that, directly or indirectly, through one or moreintermediaries, controls, is controlled by, or is under common control with such Party, as the casemay be, but for only so long as such control exists. As used in this Section 1.1, “control” means(a) direct or indirect beneficial ownership of at least 50% (or such lesser percentage which is themaximum allowed to be owned by a foreign corporation in a particular jurisdiction) of the votingshare capital or other equity interest in such Person or (b) the power to direct the management ofsuch Person by contract or otherwise.     **1.3**“**Alexza**” has the meaning set forth in the preamble.     **1.4**“**Alexza Indemnitee**” has the meaning set forth in Section 9.1     **1.5 “Alexza Know-How”**means all Know-How that is [ * ] for the research, development,importation, use, manufacture, having manufactured, sale, having sold and offering for sale of theProduct in the Field, which Know-How is Controlled by Alexza or any of its Affiliates as of theEffective Date or during the Term. For the avoidance of doubt, Alexza Know-How shall not includeany Joint Know-How.     **1.6**“**API**” means an active pharmaceutical ingredient.     **1.7**“**Applicable Laws**” means all applicable orders, regulations, requirements, guidelines andlaws of any and all supra-national, federal, state, provincial and local authorities and agencies,including without limitation all laws and regulations of such territories applicable to themaintenance of the manufacturing equipment and facilities and the Manufacturing, transportation,storage, use, handling and disposal of medical and pharmaceutical products and devices, rawmaterials, components thereof, excipients, and any hazardous materials.     **1.8**“**Approved Facility**” has the meaning set forth in Section 3.1(c).     **1.9 “Approved Supplier(s)”**has the meaning set forth in Section 3.6.[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filedseparately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of1934, as amended.
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     **1.10 “Arbitration**” has the meaning set forth in Section 11.10(c).     **1.11 “Arbitration Request**” has the meaning set forth in Section 11.10(c).     **1.12 “Arbitrators**” has the meaning set forth in Section 11.10(d)(i).     **1.13 “Autoliv**” means Autoliv ASP, Inc.     **1.14 “Baseline Package Form”**means the packaging of the Product in the form of a [ * ]consisting of [ * ] of the Product in a Primary Package Form and such number of package insertsthat is equal to the greater of (i) [ * ] or (ii) such number of package inserts as required in theNDA, appropriately labeled (i.e., in accordance with the NDA) and ready for commercial sale.     **1.15**“**BLS**” has the meaning set forth in the preamble.     **1.16**“**BLS Indemnitee**” has the meaning set forth in Section 9.1.     **1.17**“**Business Day**” means a day other than a Saturday, Sunday, or any public holiday in theUnited States or Barbados. For the avoidance of doubt, references in this Agreement to “days” meancalendar days.     **1.18**“**Certificate of Analysis**” or “**COA**” means a document identified as such and provided byAlexza to BLS that states: (a) the results of analytical tests required by the Specifications to beperformed with respect to the Product in Baseline Package Form, as applicable, (b) the quantity ofthe Product, and (c) the batch from which such Product was produced.     **1.19 “CMC”**has the meaning set forth in Section 3.3(a).     **1.20 “cGMP”**means the then-current good manufacturing practices required by the FDA, as setforth in the United States Federal Food, Drug and Cosmetic Act, as amended, and the regulationspromulgated thereunder, for the Manufacture of active pharmaceutical ingredients, intermediates,medical devices and combination products, and comparable laws or regulations applicable to theManufacture of active pharmaceutical ingredients, intermediates, medical devices and combinationproducts in jurisdictions outside the United States, as they may be updated from time to time.Good Manufacturing Practices shall include applicable quality guidelines promulgated under the ICH.     **1.21**“**Commercially Reasonable Efforts**” means that level of efforts and resources, with respectto a particular Party, at the relevant point in time, that is consistent with the usual practicefollowed by a company in the pharmaceutical industry that is in a similar position, with a similar[ * ] and with a similar [ * ] in the exercise of its reasonable scientific and business judgmentwith respect to the [ * ] and [ * ] of prescription pharmaceutical products, devices or combinationproducts, taking into consideration [ * ] and [ * ] and [ * ]. For clarity, use of CommerciallyReasonable Efforts with respect to causing a Third Party to undertake an action shall not require aParty to commit an unlawful act or breach any existing agreement with such[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filedseparately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of1934, as amended.
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Third Party.     **1.22**“**Confidential Information**” has the meaning set forth in Section 8.1.     **1.23**“**Confidentiality Agreement**” means that certain letter agreement dated [ * ] betweenAlexza andBLS.     **1.24 “Control”**(including any variations such as “**Controlled**”), in the context of intellectualproperty rights, Know-How and Confidential Information, means possession (whether by ownership orlicense, other than pursuant to this Agreement) by a Party of the ability to grant the applicablelicense under this Agreement, without violating the terms of an agreement with a Third Party.     **1.25 “Debarred Entity”**has the meaning set forth in Section 6.1(d).     **1.26 “Delivery Date”**has the meaning set forth in Section 2.6(b)(iii).     **1.27 “Destination Point”**has the meaning set forth in Section 2.6(b)(iii).     **1.28 “Device”**means any hand-held, single-use, fixed-dosage device for the administration ofAPI(s) which device relies on [ * ], which device is known as or based on, but may or may not bereferred to, as the Staccato® system.     **1.29**“**Disclosing Party**” has the meaning set forth in Section 8.1.     **1.30**“**Distributor**” means a Third Party or an Affiliate of BLS to whom BLS or an Affiliate ofBLS has granted the right to market, promote, advertise, detail, sell or distribute Product in theField in the Territory without the control of Regulatory Filings for the Product in the Field inthe Territory.     **1.31**“**DMF**” has the meaning set forth in Section 3.3(e).     **1.32 “Drug”**means loxapine, a molecule having the chemical structure set forth on **Exhibit 1.74**of the License Agreement, or any [ * ] or [ * ] of such compound.     **1.33**“**Effective Date**” has the meaning as set forth in the preamble.     **1.34**“**Expiration Dating**” means the total period that such Product is approved for use [ * ].     **1.35 “Failure Event”**has the meaning set forth in Section 5.4.     **1.36 “FDA”**means the United States Food and Drug Administration and its successor.     **1.37 “FD&C Act”**means the United States Food, Drug and Cosmetic Act, as amended, and anyregulations promulgated thereunder.     **1.38**“**Field**” means the prevention or treatment of any psychiatric and/or neurological[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filedseparately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of1934, as amended.
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indication and the symptoms associated with these indications.     **1.39 “[ * ]”**means the [ * ] Manufacturing cost of Product (including packaged for shipment)calculated in conformity with GAAP and expressed on a per Unit Manufactured basis, including thecost of:     **(a)**materials, including primary and secondary packaging and labeling material; and     **(b)**direct labor (including basic wages, labor and related payroll taxes and benefits)incurred or spent in the actual production, quality control, quality assurance, filling,packaging and labeling of the Product; and     **(c)**overhead (including [ * ] and related [ * ] and [ * ]) incurred or spent in supportof [ * ] the Product, [ * ] and costs of [ * ], in each case, to the extent attributed tothe Product. Overhead shall be allocated to production in a manner consistent with GAAP,proportionate to the total units of products Manufactured in the facility. Overhead shall [* ] activities such as [ * ], [ * ], [ * ] and [ * ];     **(d)**interim transportation, or any related transportation costs including packaging andstorage of Product as incurred in connection with the supply of Product pursuant to theterms of this Agreement; and     **(e)**any Third Party contract Manufacturer or supplier costs to the extent attributed tothe Product, as paid by Alexza.     **1.40**“**GAAP**” means generally accepted accounting principles of the United States of Americafrom time to time in force and effect, applicable as of the date on which such accountingprinciples are to be applied or on which any calculation or determination is required to be made.     **1.41 “Generic Product”**means a pharmaceutical product containing Drug [ * ], which hasobtained Marketing Approval for the same Indication as a Product and has substantially the same [ *] (i.e. [ * ] of [ * ] and [ * ]) and is marketed by an entity other than BLS, its Affiliates,Distributors or Sublicensees in the Field.     **1.42**“**Health Canada**” means Health Canada or its successor.     **1.1**“**ICH**” means the International Conference on Harmonization (of Technical Requirements forRegistration of Pharmaceuticals for Human Use).     **1.43**“**Indemnitee”**has the meaning set forth in Section 9.3.     **1.44**“**Indemnitor”**has the meaning set forth in Section 9.3.     **1.45**“**Indication**” means any disease or pathological condition for which an NDA or similarregulatory filing may be filed and approved.[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filedseparately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of1934, as amended.
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     **1.46**“**Initial Indication**” means rapid treatment of agitation associated with schizophrenia orbipolar disorder.     **1.47**“**Initial Launch Firm Commitment”**has the meaning set forth in Section 2.6(b).     **1.48**“**Inventions**” means any and all inventions, discoveries, improvements, processes andtechniques discovered, conceived or reduced to practice in the course of or as a result ofactivities under this Agreement, whether or not patentable or included in any claim of patents andpatent applications, together with all intellectual property rights therein.     **1.49**“**Joint Inventions**” means any and all Inventions discovered, conceived or reduced topractice jointly by BLS, on the one hand, and by or on behalf of Alexza or its Affiliates, on theother hand.     **1.50**“**Joint Know-How**” means all Know-How included in Joint Inventions, other than any JointPatent.     **1.51**“**Joint Patents**” means all Patents claiming any Joint Invention.     **1.52**“**Know-How**” means all tangible and intangible scientific, technical, clinical, regulatory,trade, marketing, commercial, financial or business information and materials, including compounds,solid state forms, compositions of matter, formulations, devices, techniques, processes, methods,trade secrets, formulae, procedures, tests, data, results, analyses, documentation, reports,information (including pharmacological, toxicological, non-clinical (including chemistry,manufacturing and control)), and clinical test design, methods, protocols, data, results, analyses,and conclusions, quality assurance and quality control information, regulatory documentation,information and submissions pertaining to, or made in association with, filings with any RegulatoryAuthority, knowledge, know-how, skill, and experience.     **1.53**“**Launch**” means, with respect to the Initial Indication, the first bona fide, arm’s lengthsale of a Product in a country following receipt of Marketing Approval in the U.S. of such Productby BLS or its Sublicensees in such country for use of such Product in such country in the InitialIndication. Sales of a Product for registration samples, compassionate use sales, named patientuse, inter-company transfers to Sublicensees and the like shall not constitute a Launch of theProduct.     **1.54 “Launch Forecast”**has the meaning set forth in Section 2.4(a).     **1.55**“**Losses**” has the meaning set forth in Section 9.1.     **1.56**“**Manufacture**” means to manufacture, process, prepare, make, assemble, test, label, and/orpackage, store, release and deliver the Product (or any component thereof), and each of“**Manufacturing**” and “**Manufactured**” has a corresponding meaning.     **1.57**“**Marketing Approval**” of a Product means all approvals, licenses, registrations orauthorizations of Regulatory Authorities in a country necessary for the manufacture, use, storage,import, export, distribution, promotion, marketing, offer for sale and sale of such[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filedseparately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of1934, as amended.
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Product in such country.     **1.58 “Materials”**has the meaning set forth in Section 2.5.     **1.59 “Material Supply Agreements”**has the meaning set forth in Section 6.4(d).     **1.60 “MS Coordination Committee”**has the meaning set forth in Section 2.2.     **1.61**“**NDA**” for the Product means a New Drug Application as defined in Title 21 of the U.S.Code of Federal Regulations, §314.80 et seq., and all amendments and supplements thereto, which isfiled with the FDA, or the equivalent application filed with Health Canada in Canada, including alldocuments, data, and other information concerning such Product thus filed that are necessary forgaining Marketing Approval in the Territory for such Product.     **1.62**A “**Nonconforming**” Product or “**Nonconformity**” of a Product means such Product has acharacteristic that (i) results from Alexza’s failure to Manufacture such Product in accordancewith any Regulatory Requirements, this Agreement, or the Quality Agreement, or (ii) causes suchProduct to fail to meet the Specifications.     **1.63 “Party”**or **“Parties”**means Alexza and BLS, as described in the preamble.     **1.64**“**Patent(s)**” means (a) all patents, certificates of invention, applications forcertificates of invention, priority patent filings and patent applications, and (b) any renewal,division, continuation (in whole or in part), or request for continued examination of any of suchpatents, certificates of invention and patent applications, and any and all patents or certificatesof invention issuing thereon, and any and all reissues, reexaminations, extensions, divisions,renewals, substitutions, confirmations, registrations, revalidations, revisions, and additions ofor to any of the foregoing.     **1.65**“**Person**” means any individual, corporation, partnership, limited liability company,trust, governmental entity, or other legal entity of any nature whatsoever.     **1.66 “PPI”**has the meaning set forth in Section 4.2(f).     **1.67 “Primary Package Form”**means individual Unit of the Product in [ * ], which will be usedfor inclusion in the Baseline Package Form.     **1.68**“**Product**” means any combination product consisting of: (a) Drug ([ * ]) and (b) theDevice which delivers Drug, with a dosage strength of 5 mg or 10 mg.     **1.69 “Purchase Order”**has the meaning set forth in Section 2.6.     **1.70 “Quality Agreement”**has the meaning set forth in Section 3.2.     **1.71 “Recalls”**has the meaning set forth in Section 3.17.     **1.72**“**Receiving Party**” has the meaning set forth in Section 8.1.     **1.73 “Regulatory Authority”**means any national, regional, state or local regulatory[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filedseparately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of1934, as amended.
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agency, department, bureau, commission, council or other governmental entity whose reviewand/or approval is necessary for the manufacture, packaging, use, storage, import, export,distribution, promotion, marketing, offer for sale and sale of Product.     **1.74**“**Regulatory Filings**” means all applications, approvals, licenses, registrations,notifications, registrations, submissions and authorizations made to or received from a RegulatoryAuthority in a country necessary for the development, manufacture and/or commercialization of apharmaceutical product, including any INDs, NDAs and Marketing Approvals.     **1.75 “Regulatory Requirements”**means (a) all specifications, methods of Manufacture, and otherinformation in one or more regulatory submissions related in any way to the Product, (b) cGMP, (c)as applicable, ISO 9001, 13485 and TS16949, for relevant components of the Product, as any of theforegoing may be amended from time to time, and (d) any other laws or regulations or otherrequirements imposed or enforced by a Regulatory Authority and applicable to the Product for use inthe Territory or the Manufacturing of the Product or any component of the Product listed in theNDA.     **1.76 “Samples”**has the meaning set forth in Section 3.1.     **1.77**“**Senior Executives**” has the meaning set forth in Section 11.10.     **1.78**“**Shelf Life**” of the Product as of a date means the number of months between such date andthe expiration date of such Product based on the Expiration Dating of such Product, provided thatif the Transfer Time is later than the first day of the month, for purposes of the Shelf Lifedetermination under this Agreement, the number of days between the first of the month and theTransfer Time shall not be counted when determining the Shelf Life at the Transfer Time.     **1.79**“**Shipping Point**” means the packaging facility of Alexza’s packaging contractor located in[ * ] or another location as provided for in Section 3.10(b)(iii), from which a given shipment ofProduct in Baseline Package Form is shipped for delivery to the Destination Point.     **1.80**“**Specifications**” means, (i) with respect to clinical supply of the Product, thespecifications for the Product as agreed to by the Parties in writing and (ii) with respect tocommercial supply of the Product, the specifications for the Product, as established by inclusionin the NDA or other Marketing Approval application filed for such Product and as required by FDA oranother Regulatory Authority in the Territory for approval and such other specifications, such asspecifications for packaging, storage conditions and labeling of the Product, as agreed by theParties in writing.     **1.81**“**Sublicensee**” means a Third Party or an Affiliate of BLS, other than a Distributor, towhom BLS or an Affiliate of BLS has granted a sublicense under the Alexza Technology (as defined inthe License Agreement) as permitted under Section 2.3(a) of the License Agreement. For clarity,the term “Sublicensee” shall not include (i) any wholesalers or importers that are not granted anysublicense under the Alexza Technology under Section 2.3(a) of the License Agreement or (ii) anycontract manufacturers that are granted only the right to manufacture the Product in accordancewith the terms and conditions of this Agreement and the[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filedseparately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of1934, as amended.
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License Agreement for BLS or its Affiliates or Sublicensees for commercialization in the Fieldin the Territory.     **1.82 “Supply Forecast”**has the meaning set forth in Section 2.4(b).     **1.83**“**Term**” has the meaning set forth in Section 10.1.     **1.84**“**Territory**” means the United States and Canada.     **1.85**“**Third Party**” means any Person other than Alexza, BLS or any Affiliate of either Alexzaor BLS.     **1.86 “Third Party Claim”**has the meaning set forth in Section 9.1.**1.87 “Transfer Price”**has the meaning set forth in Section 4.2(a).     **1.88 “Transfer Time”**has the meaning set forth in Section 3.15.     **1.89**A “**Unit**” of the Product means one complete and integrated unit consisting of the Deviceand Drug included in the Baseline Package Form.     **1.90**“**United States**” or **“U.S.”**means the United States of America and all of its territoriesand possessions and the District of Columbia.**ARTICLE 2****SUPPLY OF THE PRODUCT**     **2.1 Supply and Purchase of the Product.**Subject to the terms of this Agreement, commencingwith the first approval of the NDA for the Product in the Territory and continuing during the Term,Alexza shall Manufacture and supply the Product exclusively to BLS (including its Sublicensees andDistributors) for use in the Field for the Territory, and BLS shall purchase exclusively fromAlexza, all of BLS’ and its Sublicensees’ and Distributors’ requirements of Product (and Devicesfor samples and demonstration only) for use in the Field for the Territory in such quantities asBLS shall order pursuant to and in accordance with this ARTICLE 2.     **2.2 Supply and Manufacturing Coordination Committee.**The Parties shall establish a supply andmanufacturing coordination committee (the “**MS Coordination Committee**”) to coordinate Product demandand supply and oversee change of control, CMC and other quality related matters no later than [ *]. The MS Coordination Committee shall consist of such number of representatives of each Partywith the appropriate experience and authority in manufacturing and supply management of theProduct. The MS Coordination Committee shall meet at least [ * ], via telephone conference orotherwise. The Parties acknowledge that the MS Coordination Committee is to coordinate decisionsand information and shall not be required for approval of decisions that are the responsibilitiesof the respective Parties or as set forth in this Agreement.[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filedseparately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of1934, as amended.
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     **2.3 Planning Forecast.**Within [ * ] after the Effective Date, and continuing to be updated onor before [ * ] of each calendar year thereafter, BLS shall provide Alexza with a written [ * ]sales Unit forecast, by [ * ], of BLS’ requirements for the Product on a [ * ] basis. Thisforecast shall be for capacity planning purposes only and shall not, constitute a firm order orhave any binding effect. The Parties shall review the forecast on not less than a [ * ] basis toassess the available Manufacturing capacity of Alexza (currently estimated at approximately [ * ]Units).     **(a)**To the extent that the forecast quantities are expected to exceed the then existingavailable capacity of Alexza at its facility in [ * ], the Parties shall meet and discuss ingood faith whether to expand Alexza’s then current Manufacturing capacity up to the maximumestimated capacity. In the event Alexza has committed to expand its Manufacturing capacityup to the maximum estimated capacity based on BLS’ planning forecast, BLS shall notifyAlexza at least [ * ] in advance with respect to any material increase of its supplyforecast and Alexza shall not be deemed in breach of this Agreement for its inability tosupply such increased amount of Product due to the capacity constraints under such capacityexpansion plan for the period in which Alexza had less than [ * ] notice of any materialincrease of BLS’ supply forecast that would impact capacity planning as long as Alexza isusing Commercially Reasonable Efforts in carrying out the capacity expansion plan adoptedbased on BLS’ original planning forecast.     **(b)**In addition, to the extent that the forecast quantities are expected to exceed thethen maximum Manufacturing capacity (including expansion) in [ * ], the Parties shalldiscuss whether to select and qualify an additional Manufacturing facility or undertakeother alternatives. In the event Alexza has committed to qualify an additionalManufacturing facility or undertake other alternatives based on BLS’ planning forecast, BLSshall notify Alexza at least [ * ] in advance with respect to any material increase of itssupply forecast and Alexza shall not be deemed in breach of this Agreement for its inabilityto supply such increased amount of Product due to the capacity constraints under thecapacity expansion plan for the period in which Alexza had less than [ * ] notice of anymaterial increase of BLS’ supply forecast that would impact capacity planning as long asAlexza is using Commercially Reasonable Efforts in carrying out the capacity expansion planadopted based on BLS’ original planning forecast.     **(c)**Subject to Section 2.3(a) and Section 2.3(b) above, as the case may be, Alexza is [* ] to Manufacture and supply the Product to BLS in accordance with this Agreement [ * ].     **2.4 Rolling Forecast.**     **(a) Launch Forecast.**BLS shall provide Alexza with its initial non-binding [ * ] monthforecast (**“Launch Forecast“**) not less than [ * ] prior to the first anticipated delivery date ofthe Product to BLS, which anticipated delivery date shall be provided by BLS and may be adjusted byBLS in good faith after consultation with Alexza. No later than [ * ] after Alexza’s receipt ofthe Launch Forecast, representatives of each Party on the MS Coordination Committee shall meet andshall work collaboratively to prepare and adopt a supply plan for the Launch. The[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filedseparately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of1934, as amended.
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Launch Forecast shall be a best estimate, as of the time such Launch Forecast is delivered, ofthe initial rolling forecast to be delivered pursuant to Section 2.4(b), and BLS shall not deviatefrom such estimate without [ * ].     **(b) Rolling Forecast.**Commencing within [ * ] after the receipt of the Marketing Approvalwith respect to the NDA filing for the Product, BLS shall deliver to Alexza an initial writtenmonthly [ * ] month rolling forecast of the quantities of the Product required by BLS and itsSublicensees and Distributors. Thereafter, no later than [ * ] prior to the beginning of the nextmonthly period, BLS shall provide Alexza with an updated [ * ] month rolling forecast of thequantities of the Product required by BLS and its Sublicensees and Distributors (each suchsubsequent forecast or the initial forecast, a “**Supply Forecast**”). Alexza shall notify BLS aspromptly as practicable but in any event within [ * ] after Alexza’s receipt of any Supply Forecastof any inability of Alexza to supply to BLS any quantities of the Product that Alexza is expectedto ship to BLS pursuant to any such Supply Forecast received from BLS. For clarity, the provisionor receipt of such notification about Alexza’s inability to supply shall not constitute a waiver onBLS’ part of Alexza’s obligations to supply the Product to BLS in accordance with the terms andconditions of this Agreement, nor a deemed admission of breach or default on the part of Alexza.     **(c) Initial [ * ] Month Binding Commitments.**Subject to Section 2.3(a) and Section 2.3(b)hereof, each of the first [ * ] months of each Supply Forecast shall constitute a mutually bindingcommitment to order and supply the total quantity of Product set forth in the Supply Forecast forsuch period. Each commitment shall be represented by a Purchase Order delivered in accordance withSection 2.6. The monthly purchase quantity for each of the first [ * ] months set forth in suchPurchase Order shall be not less than [ * ]% nor more than [ * ]% of the average monthly purchasequantity for such [ * ] months based on the quantities for such period set forth in such PurchaseOrder.     **(d) Permitted Modifications to Supply Forecasts.**Projections for months [ * ] through [ * ]of each rolling Supply Forecast and each month thereafter shall be made in good faith and shallconstitute BLS’ best estimates of future orders but shall not be binding on BLS or Alexza, providedthat (i) the Supply Forecast for any month in the [ * ] through [ * ] months of any SupplyForecast may vary from the Supply Forecast made for that calendar month when it was the [ * ]calendar month in a Supply Forecast by an amount that does not exceed [ * ] percent ([ * ]%) of theforecasted quantity for that calendar month and (ii) (A) prior to obtaining a [ * ] ExpirationDating of the Product, the Supply Forecast for any month in the [ * ] through [ * ] months of anySupply Forecast may not be less than [ * ] percent ([ * ]%) and not more than [ * ] percent ([ *]%) of the quantity set forth in the Supply Forecast made for that calendar month when it was the [* ] calendar month in such Supply Forecast and (B) after obtaining a [ * ] Expiration Dating of theProduct, the Supply Forecast for any month in the [ * ] through [ * ] months of any Supply Forecastmay vary from the Supply Forecast made for that calendar month when it was the [ * ] calendar monthin such Supply Forecast by an amount that does not exceed [ * ] percent ([ * ]%) of the forecastedquantity for that calendar month.     **(e) Remaining Forecast.**The forecast for any month in the [ * ] through [ * ] calendar monthsof any Supply Forecast may vary from the forecast made for that calendar month in the previousSupply Forecast consistent with BLS’ good faith estimates for its[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filedseparately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of1934, as amended.
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requirements for that calendar month.     **(f) Excess Orders.**BLS may deliver to Alexza a Purchase Order for Product volumes in excessof those specified in any prior Supply Forecast and/or in excess of the percentage variancespermitted in Section 2.4(d). Alexza shall provide notification to BLS as soon as practicable but inany event within [ * ] after the delivery of such Supply Forecast, of any excess that Alexzadetermines it will deliver to BLS, Alexza shall use Commercially Reasonable Efforts to Manufactureany quantity of the Product ordered by BLS in excess of [ * ] percent ([ * ]%) of the committedquantity determined in accordance with Section 2.4(c), but in any event Alexza’s failure toManufacture any such excess quantity shall not be a breach of this Agreement. BLS shall bear anyreasonable increase in the Manufacturing costs of the Product supplied in excess of the quantitiesaccepted by Alexza under Section 2.4(c); provided that such increase shall be approved by BLS priorto Alexza’s undertaking the Manufacture of such excess quantity and incurring such increase.     **(g) Forecast Modification upon Generic Entry.**Notwithstanding anything contained in Section2.4(d) to the contrary, BLS shall, for [ * ] following the date of the first entry of [ * ] aGeneric Product, have the right to submit one (1) modification of the then operative SupplyForecast, which modification may alter the Supply Forecast for the Product with the same [ * ] assuch Generic Product for months [ * ] through [ * ] and such modifications to the Supply Forecastmay exceed the permitted variances set forth in Section 2.4(d) by any amount.     **(h) Forecast Modification upon Out-patient Approval.**In anticipation of out-patient MarketingApproval or non approval thereof, BLS may submit an additional Launch Forecast as provided inSection 2.4(a). Following such delivery, the Parties shall meet and discuss in good faith amodification of the then operative Supply Forecast, which modification may alter the SupplyForecast for such Product for months [ * ] through [ * ] with the understanding that suchmodifications to the Supply Forecast may exceed the permitted variances set forth in Section 2.4(d)by any amount.     **2.5 Materials; Safety Stock.**BLS acknowledges that Alexza may stock the Drug, Device, othercomponents, containers, labels, packaging materials and related items necessary for the Manufactureof Product (**“Materials“**) based on the rolling forecasts provided by BLS pursuant to Section 2.4.Alexza shall maintain at all times an inventory of Materials necessary for Manufacturing suchquantity of the Product that is equal to, at a minimum, the average monthly forecasted quantity ofthe Product for the upcoming [ * ] month period based on the then-current Supply Forecast providedby BLS; provided that after the Launch and before the end of the [ * ] months after the Launch, theMS Coordination Committee shall discuss and recommend an increase to such required minimum quantityof safety stock to the Parties for the Parties to decide.[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filedseparately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of1934, as amended.
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     **2.6 Orders.**     **(a) Clinical Supplies.**For clinical supplies, BLS shall deliver to Alexza a Purchase orderfor quantities of Product. Parties will mutually agree on a delivery date of clinical supplies,which will depend on the special requirements (e.g., dose strength, labeling, and packaging) andBLS’ demand priority with respect to then existing BLS orders.     **(b) Commercial Supplies**.     **(i) Launch Purchase Order**. BLS shall deliver to Alexza, as soon as reasonablypracticable after delivery of the Launch Forecast, but in any event not later than [ * ]after the Marketing Approval of the NDA for the Initial Indication, a firm purchase orderfor the initial quantities of the Product having the applicable Shelf Life set forth inSection 3.15 to be purchased for the initial [ * ] months’ period for the Launch of theProduct (the “**Initial Launch Firm Commitment**”).     **(ii) Continuing Purchase Orders**. In each month following the Launch purchase orderpursuant to Section 2.6(b)(i), BLS shall submit to Alexza a monthly firm purchase order topurchase the Product having the applicable Shelf Life set forth in Section 3.15 (togetherwith the Launch purchase order, each, a “**Purchase Order**”) not less than [ * ] prior to eachmonth of each [ * ]-month commitment period in the rolling forecast.     **(iii) Terms.**Each Purchase Order shall specify the quantity ordered, the requireddelivery date (which shall not be (A) less than [ * ] following the date of the initialPurchase Order and (B) less than [ * ] following the date of any Purchase Order other thanthe initial Purchase Order) (the “**Delivery Date**”), the destination point in the Territory(the “**Destination Point**”) and any special instructions or invoicing information. Alexzashall acknowledge and accept the Purchase Order from BLS made in accordance with thisSection 2.6(b)(i) or Section 2.6(b)(ii) within [ * ], and any terms or conditions of suchpurchase order which conflict or are inconsistent with the terms of the Agreement shall bevoid and rejected. Alexza may not reject the quantity of the Product in any Purchase Orderunless, subject to Sections 2.4(f) and 2.4(i), the quantity set forth in the Purchase Orderis less than [ * ] percent ([ * ]%) of or in excess of [ * ] percent ([ * ]%) of thecommitted quantity determined in accordance with Section 2.4(c) and the variance permittedunder Section 2.4(d). In the event of excess quantity ordered, the rejection shall onlyapply with respect to such excess quantity.     **2.7 Variances in Quantities Delivered.**Quantities of the Product actually delivered by Alexzamay vary from the quantities specified in a Purchase Order by [ * ] percent ([ * ]%). BLS shall beinvoiced only for the quantity of the Product actually delivered to and received by BLS and uponBLS’ request, Alexza shall promptly deliver quantities of any shortfall as soon as practicable. Inany event, Alexza shall use Commercially Reasonable Efforts to achieve a monthly delivery varianceof (a) less than [ * ] percent ([ * ]%) for the initial [ * ] months after the Launch and (b) lessthan [ * ] percent ([ * ]%) thereafter.[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filedseparately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of1934, as amended.
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**ARTICLE 3****MANUFACTURING**     **3.1 Manufacture of Product; Samples.**     **(a) **Alexza shall Manufacture or have Manufactured the Product to meet the Specifications, theQuality Agreement and in accordance with Regulatory Requirements, as then in effect for use,commercialization, importation and sale in the Territory.     **(b) **Alexza shall Manufacture and have Manufactured the Device or other samples of componentsof the Product (**“Samples”**) in accordance with applicable Regulatory Requirements in the U.S., asthen in effect for use by BLS (and its Affiliates, distributors or licensees) for sampling ordemonstration purposes. All Samples shall be provided at [ * ] as soon as practicable followingwritten order from BLS specifying the quantity and specifications for such Samples.     **(c) **The Product, Device and Drug and other components of the Product listed in the NDA shallbe Manufactured by or for Alexza only in the Manufacturing facilities identified in the applicableNDA or other Marketing Approval of the Product for the Territory (the “**Approved Facility”**).     **3.2 Quality Agreement.**Not later than [ * ] following the Effective Date, Alexza and BLSshall enter into a quality agreement (**“Quality Agreement”**) setting forth in detail theSpecifications, quality assurance arrangements and procedures with respect to the Manufacture ofthe Product, reporting customer complaints and conducting timely investigations, which QualityAgreement shall be incorporated herein by reference following execution by both Parties. In theevent of a conflict between any of the provisions of this Agreement and the Quality Agreement, thisAgreement shall govern except with respect to quality issues, which shall be governed by theQuality Agreement. For the avoidance of doubt, if there are any financial terms in the QualityAgreement that are in conflict with this Agreement, this Agreement shall control with respect tosuch financial terms.     **3.3 CMC Information; Drug Master File.**     **(a) **Alexza shall be responsible for compiling the required chemistry, manufacturing, andcontrols information pertaining to the Product (“**CMC**”) and shall provide such information to BLS toallow BLS to obtain and maintain Marketing Approvals in the Territory or to communicate withRegulatory Authorities about the Product.     **(b) **Alexza shall not, without the prior written consent of BLS, make any changes to the CMC(including any changes to CMC included in a DMF) that would require changes to the [ * ] or other [* ] in the Territory or require the [ * ] of [ * ] or [ * ] in the Territory; provided that, ifAlexza provides BLS with any such proposed changes, and if BLS has not (i) responded to suchchanges or (ii) acknowledged the receipt of the proposed change within a [ * ] and indicated theexpected response date which shall be within a [ * ] period after suchacknowledgement, then [ * ]. If BLS believes that a response is not practicable within such [* ] period, then the Parties shall promptly discuss and agree upon the timing for review of such[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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proposed change. For all other changes to CMC (the “**[ * ] Changes**”), Alexza shall promptlynotify BLS and such changes shall be governed by the procedures to be adopted by the MSCoordination Committee and the Quality Agreement**.**For clarity, in the event that any [ * ] or [ *] Change is made in accordance with this Section 3.3(b), then BLS shall use Commercially ReasonableEfforts to complete and file any documentation requested by Alexza or required to be filed with theapplicable Regulatory Authority in the Territory as soon as practicable.     **(c) **In the event a change in the CMC is requested or required by the FDA in the U.S., Alexzashall, [ * ] and subject to Section 3.12(a) amend the CMC and provide to BLS a draft of thecorresponding amendment to the CMC in the format reasonably requested by BLS and provide allnecessary technical assistance and services to BLS for BLS to obtain all regulatory approvals ofsuch amendment to the CMC as soon as practicable.     **(d) **If a change in the CMC is requested by BLS and such change is not requested or required byFDA or other Regulatory Authority in the Territory, Alexza shall in good faith make such change(unless such change would materially impact the cost or regulatory or commercial status of theProduct outside of the Field or Territory) and [ * ] shall bear any and all the costs and expensesresulting from any such change requested or required by BLS pursuant to this Section 3.3(d),including [ * ], if applicable. BLS shall take all necessary or appropriate actions agreed upon bythe Parties to seek the regulatory approval of such CMC modifications and shall be responsible forrelated communication with the FDA; provided that Alexza shall provide all necessary actions toassist BLS in obtaining such regulatory approval as soon as practicable, including preparing thedraft amendment to the CMC section and participating in BLS’ communications with the FDA.     **(e) **Alexza may, at its option and expense and to the extent permitted by law, file andmaintain a drug or device master file in the U.S. containing CMC information for the Product (or acomponent thereof), which shall be owned by Alexza (a “**DMF**”); provided that Alexza shall makeavailable complete and accurate copy of CMC information to BLS in the format reasonably requestedby BLS for BLS to obtain and maintain its Marketing Approval for the Product in the Field for theTerritory, and shall provide technical assistance and associated services that are [ * ] to enableBLS to obtain and maintain its Marketing Approval for the Product in the Field for the Territory.BLS and its designated Third Party Manufacturers shall have a letter of authorization to accessthose portions of the DMF relating to the Product for BLS to prepare the CMC information for theProduct or to fully exercise its rights under this Agreement, including the Manufacturing right inaccordance with Section 5.4 or Section 5.5. Alexza shall be responsible for ensuring that all DMFsare current and up to date.     **3.4 Compliance Audits and Audit Reports.**     **(a) Alexza’s Facility**. At any time during the Term, during normal business hours and uponreasonable prior notice, BLS may send a reasonable number of qualified representatives of BLSand/or its Affiliates to inspect those portions of the premises of Alexza where and when theProduct is being Manufactured (or where any individual part of the Manufacturing is beingperformed) and to review the records, facilities, and operations relating to the Manufacture (orany individual part of the Manufacturing) of Product (including the records of components ofProduct) by Alexza to ensure compliance with the relevant Regulatory[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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Requirements and the terms of the Quality Agreement. Except for any “for cause” audits, suchaudits shall occur no more than [ * ]. Alexza shall reasonably cooperate with any such audit bysuch representatives of BLS and/or its Affiliates. For purposes of clarity, any informationobtained by BLS during such visits shall be treated as Confidential Information of Alexza inaccordance with Article 8 of this Agreement.     **(b) Facilities of Approved Suppliers**. Alexza shall notify BLS in writing [ * ] (or, if notpracticable, as soon as Alexza informs such Approved Supplier of an inspection) prior to anyinspection by Alexza of the facility of any Approved Supplier, and subject to the terms of Alexza’sagreement with such Approved Supplier, BLS may send qualified representatives to participate insuch inspection as an active participant; it being understood that Alexza will be the lead partyresponsible for conducting such audit. In addition, upon BLS’ reasonable request, Alexza shallexercise its right for cause under Alexza’s agreement with an Approved Supplier to inspect thefacility of any Approved Supplier, subject to terms and conditions set forth in such agreement.For purposes of clarity, any information obtained by BLS during such visits shall be treated asConfidential Information of Alexza in accordance with Article 8 of this Agreement.     **(c) Definition of “for cause”**. For purposes of Sections 3.4(a) or 3.4(b), “**for cause**” shallmean (i) the occurrence or existence of a condition or event relating to the Manufacture of Productwhich constitutes a [ * ], (ii) BLS’ or Alexza’s receipt of a deficiency or warning letter relatedto the Manufacture of the Product or any components of the Product listed in the NDA from anyRegulatory Authority, (iii) a [ * ] of the Product, (iv) a [ * ] of any Regulatory Requirements inthe Manufacture of the Product, (v) follow up to a prior audit where substantive violations of theQuality Agreement or the relevant Regulatory Requirements were identified and not rectified to thereasonable satisfaction of BLS, or (vi) the [ * ] of any [ * ] based on the Manufacture of theProduct or any components of the Product listed in the NDA by Alexza or any Approved Supplier,which, in any case, could reasonably be expected to materially affect the Product, any componentsof the Product listed in the NDA or the ability of Alexza or BLS to exercise its rights or performits obligations under this Agreement.     **(d) Audit Reports.**     **(i)**BLS shall deliver to Alexza, as soon as reasonably practicable but in noevent later than [ * ] after the completion of any audit conducted by BLS or itsAffiliates pursuant to Section 3.4(a) or 3.4(b), a written report setting forth inreasonable detail any failure of Alexza or an Approved Supplier to comply withthe term of this Agreement, the Quality Agreement, or any Regulatory Requirementsdiscovered during the audit. Within [ * ] after receipt of that report, Alexzashall provide, in writing, to BLS a reasonably detailed timetable for responding toany such failure.     **(ii)**If BLS does not elect to or is not allowed to participate in Alexza’sinspection of an Approved Supplier’s facility pursuant to Section 3.4(b), Alexzashall deliver to BLS, as soon as reasonably practicable but in no event later than [* ] after the completion of any audit conducted by Alexza, a written report settingforth in reasonable detail any failure of the Approved Supplier to comply with theterms of this Agreement, the Quality Agreement, or any Regulatory Requirements[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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discovered during the audit and a reasonably detailed timetable for respondingto any such failure.     **(iii)**Alexza shall complete, and shall use Commercially Reasonable Efforts tocause the Approved Supplier to complete, implementation of any such changes orcorrections within the period set forth in the timetable and shall provide to BLSdocumentation reasonably satisfactory to BLS evidencing such timely implementation.Alexza’s implementation of such changes and corrections shall not affect BLS’ rightshereunder with respect to any breach by Alexza of its obligations under thisAgreement.     **3.5 Regulatory Inspections and Inquiries.**     **(a) Regulatory Inspections.**Alexza shall be responsible for handling and responding to anyinspections by any Regulatory Authority with respect to the Manufacture of the Product (or acomponent thereof) by Alexza, its Affiliates or Third Parties during the Term of this Agreement.Alexza shall provide any information requested by any applicable Regulatory Authority in connectionwith any such inspection by that Regulatory Authority related to the Manufacture of the Product.Alexza shall, and shall cause the Approved Suppliers to, promptly, but in no case later than [ * ]after receipt or notice, advise BLS of any requests for or notices of inspections by RegulatoryAuthorities concerning the Manufacture of the Product (or a component thereof). Alexza shall, andshall cause the Approved Suppliers to, furnish to BLS, as promptly as practicable but in any eventwithin [ * ] of receipt, a copy of any report or other communication received from any suchRegulatory Authority relating to such inspection. Alexza shall advise BLS of any change relatingto Alexza’s performance of its obligations hereunder made necessary by any such inspection.     **(b) Regulatory Inquiries.**Alexza shall notify BLS and, if applicable, provide BLS with copiesof any investigation, inquiry, regulatory action, or other material notice or communication from aRegulatory Authority related to the Product (or any component thereof)or the Manufacturing, promptly, but in no case later than [ * ] after Alexza becomes aware ofsuch investigation, inquiry, regulatory action, notice or communication. Alexza shall comply in atimely manner with any request for information received from any Regulatory Authority in theTerritory relating to the Manufacture of the Product or components of the Product.     **3.6 Approved Supplier**. Alexza shall purchase the materials and services set forth in **ExhibitA**only from the suppliers that are listed on **Exhibit A**(“**Approved Suppliers**”), which list may notbe amended without BLS’ prior written consent, not to be unreasonably withheld. Alexza shall beresponsible for inbound quality assurance practices in accordance with cGMP for all Materialsreceived from such Approved Suppliers for use in the Product. Alexza shall use CommerciallyReasonable Efforts to cause and shall reasonably assist its Approved Suppliers in implementingappropriate corrective and preventative actions to remedy any deficiencies observed during auditsby Alexza, and documenting such actions and outcomes to BLS.     **3.7 Product Manufacturing Permits and Approvals.**Alexza shall, [ * ], maintain (a) its DMFs,if any (but not CMC in a NDA or Marketing Approval owned by BLS), and (b) all permits, licenses,approvals, registrations, certifications, exemptions or other authorizations that[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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are necessary for the Manufacture of the Product by Alexza for BLS pursuant to the terms ofthis Agreement, including, without limitation and to the extent required by the applicableRegulatory Requirements, an establishment registration and product listing with the FDA. Alexzashall use Commercially Reasonable Efforts to ensure that each Approved Supplier obtains andmaintains during the Term of this Agreement any required permits, licenses, approvals,registrations, certifications, exemptions or other authorizations required under any applicableRegulatory Requirements for the Approved Supplier’s facility. With respect to [ * ], Alexza shalluse Commercially Reasonable Efforts to ensure that the Approved Facility of [ * ] is in compliancewith both [ * ], the quality agreement between Alexza and [ * ] and applicable SOPs of [ * ].     **3.8 Compliance with Other Applicable Laws**.     **(a) BLS’ Obligations.**BLS also shall, [ * ], maintain, or shall cause to be maintained, infull force and effect its NDAs and Marketing Approvals and any other permits, licenses, approvals,registrations, certifications, exemptions or other authorizations required by any RegulatoryRequirements and Applicable Laws in the Territory to carry out its duties and obligations underthis Agreement or the activities undertaken by it pursuant hereto or with respect to the Product.BLS shall comply with all Regulatory Requirements and any Applicable Laws in performing its dutiesand obligations under this Agreement and with respect to its use, sale and disposition of theProduct after purchase. BLS shall promptly provide to Alexza any information or data that Alexzahas requested in writing and reasonably requires to fulfill its reporting and other obligationsunder Applicable Laws in the Territory.     **(b) Alexza’s Obligations.**In addition to its obligations under Section 3.7, Alexza alsoshall, [ * ], maintain, or shall cause to be maintained, in full force and effect any othernecessary licenses, permits and other authorizations required by any Applicable Laws in theTerritory to carry out its duties and obligations under this Agreement or the activities undertakenby it pursuant hereto. Alexza shall comply with all Applicable Laws in performing its duties andobligations under this Agreement. Alexza shall promptly provide to BLS any information or datathat BLS has requested in writing and reasonably requires to fulfill its reporting and otherobligations under Applicable Laws in the Territory.     **3.9 Form of Product.**Alexza shall deliver the Product to BLS in accordance with theSpecifications in Baseline Package Form unless otherwise agreed by the Parties. If the Parties arerequired by any Regulatory Requirements or Regulatory Authority or BLS desires to make a change tothe artwork or component artwork (a) in the U.S. following Marketing Approval in the InitialIndication and such change does not constitute a change to the Specifications, or (b) in Canada,then in each case BLS shall be [ * ] such change, including [ * ] if and to the extent such changealso causes an [ * ] of Manufacturing the Product, as supported by documented evidence.     **3.10 Delivery and Acceptance.**     **(a) Delivery Date.**Subject to the terms and conditions of this Agreement, Alexza shalldeliver all Product ordered by BLS on or before the requested Delivery Date set forth on theapplicable Purchase Order no earlier than [ * ] days before and no later than [ * ] daysafter such Delivery Date; provided that such Delivery Date meets the[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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applicable minimum lead time requirement set forth in Section 2.6(b)(iii) and suchPurchase Order is within the permitted variance of BLS’ binding Supply Forecast quantities.     **(b) Shipping Terms.**     **(i)**The Product ordered by BLS pursuant to this Agreement shall be shipped toBLS for delivery by the Delivery Date in accordance with this Agreement. Subject toSection 3.10(b)(ii), unless BLS requests otherwise in writing, the Product shall bedelivered in Baseline Package Form and shipped by ship from Alexza’s packagingfacility in [ * ] to the Destination Point, [ * ] (INCOTERMS 2000) by common carrierselected by [ * ] at BLS’ expense and title to, ownership of, and risk of loss of,the Product shall transfer at the location that is immediately after the Productleaves [ * ] and enters international waters.     **(ii)**BLS may specify in a Purchase Order that it wishes to haveProduct shipped by air freight. In such event, BLS shall select the freightcarrier and pay for, or reimburse Alexza for, the cost and expense of such airshipment. All Product shipped by air shall be shipped to BLS, [ * ] (INCOTERMS2000) by common carrier selected by BLS. Title to, ownership of, and risk of lossof, the Product shipped by air shall pass from Alexza to BLS at the location that isimmediately after the Product leaves [ * ] and [ * ] in transit from [ * ] to theDestination Point.     **(iii)**At BLS’ option, BLS may request Alexza to ship the Product to BLS via amode of transportation designated by BLS in a different configuration than BaselinePackage Form and/or to a Destination Point outside the continental U.S. In thiscase, ownership, title and risk of loss to the Product shall transfer from Alexza toBLS immediately after the Product leaves [ * ] or the continental U.S., as the casemay be, in a foreign country or [ * ] while in transit to the Destination Point, andpursuant to Section 4.2(c)(i), the Parties shall agree on an appropriate adjustmentto the Transfer Price to reflect the documented incremental cost or savings withrespect to such request.     **(iv)**Alexza shall be responsible for loading the Product for shipment at theShipping Point, whether Product is shipped by ground transportation, by ship or byair. In the case of the supply of the Product for the Canadian market, BLS shall beresponsible for obtaining all licenses or other authorizations for the exportationof Product from the country where the Shipping Point is located and importation ofProduct into Canada. Alexza shall prepare and provide a negotiable bill of ladingand all other appropriate shipping documentation for custom and RegulatoryAuthorities in the Territory and shall cooperate with BLS, at [ * ] expense, inobtaining any additional documents necessary for shipment and delivery of theProduct in the Territory.     **(v)**Alexza and BLS shall cooperate with and assist each other in all aspects ofthe shipment, importation and delivery process in order to ensure the[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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expeditious delivery of the Product to the Destination Point, includingassisting in obtaining any documents that may be required. Alexza and BLS shallcoordinate and consult with one another with regard to any communications with anyRegulatory Authority regarding any shipment of Product.     **(c) Certificate of Analysis.**Alexza shall perform on each batch of Product all testsspecified in the Specifications, the NDA and applicable Regulatory Requirements before delivery ofany Product from that batch to BLS. Alexza shall deliver to BLS by facsimile or by electronic mailon or before the date of shipment of any Product to BLS a Certificate of Analysisfor each batch of Product in that shipment of Product, certifying that Product conforms to theSpecifications, along with the results of such analysis and any supporting data. If there is adisagreement in connection with a Certificate of Analysis, such dispute will be resolved with asubmission to independent testing in a procedure substantially in the manner set forth in Section3.10(d)(i).     **(d) Acceptance.**BLS shall be under no obligation to accept any shipment of Product for whichAlexza has not provided a Certificate of Analysis. BLS shall inspect all shipments of the Productpromptly upon receipt, and BLS may reject any shipment of the Product which is Nonconforming. Inorder to reject delivery of a shipment of the Product, BLS must give written notice to Alexza ofBLS’ rejection of any delivery specifying in reasonable detail the reasons for such rejectionwithin [ * ] or such longer time for shipments to Canada based on BLS’ analytical assessment but inany event not longer than [ * ] after receipt of such delivery at the Destination Point. If nosuch notice of rejection is received, BLS shall be deemed to have accepted such Product on the [ *] after delivery.     **(i)**After timely notice of rejection is received by Alexza, BLS shall cooperatewith Alexza in determining whether rejection is appropriate or justified. Alexzawill evaluate process issues and other reasons for any alleged Nonconformity.Alexza shall notify BLS as promptly as reasonably possible whether it accepts BLS’basis for any rejection. If Alexza agrees with BLS’ determination that the rejectedProduct is Nonconforming, promptly on receipt of a timely notice of rejection of ashipment of Product and no later than [ * ] after receipt of such notice, Alexzashall replace such rejected Product with conforming Product. If Alexza disagreeswith BLS’ determination that certain Product is Nonconforming, (x) promptly onreceipt of a notice of rejection of a shipment of Product and no later than [ * ]after receipt of such notice, at BLS’ request, Alexza shall replace such rejectedProduct and (y) the rejected Product shall be submitted to a mutually acceptableThird Party laboratory, which shall determine whether such Product is Nonconforming.The Parties agree that such Third Party laboratory’s determination shall be finaland binding on the Parties. The Party against whom the Third Party laboratory rulesshall bear the reasonable costs of the Third Party testing. If the Third Partylaboratory rules that the Product in question is not Nonconforming, BLS shallpurchase that batch at the agreed-upon price, irrespective of whether Alexza hasprovided replacement Product, provided that in such event BLS shall also pay for anyreplacement Product delivered if not previously paid.[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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     **(ii)**BLS shall not destroy any rejected Product until it receives writtennotification from Alexza that Alexza does not dispute that the rejected Product isNonconforming. At Alexza’s election and upon instruction from Alexza, BLS shalleither (a) destroy the Product received in the rejected delivery promptly atAlexza’s cost and provide Alexza with certification of such destruction, or (b)return such Product to Alexza at Alexza’s cost.     **3.11 Latent Defect.**BLS shall notify Alexza within [ * ] of discovery of a latent defect (asdefined in the Quality Agreement) of any Product delivered, and promptly on receipt of timelynotice but in any event no later than [ * ] after receipt of such notice, Alexza shall replace suchProduct with conforming Product.     **3.12 Change in Specifications; Other Modifications.**     **(a) Changes in Specifications**.     **(i)**Alexza may request a change in the Specifications; provided that, Alexzashall not make any changes to the Specifications without BLS’ prior writtenapproval, which approval shall not be unreasonably withheld or delayed. In theevent that such proposed change requires the [ * ] of the [ * ] or [ * ], theParties shall coordinate and collaborate in making all necessary [ * ] and Alexzashall not implement any such change unless and until such [ * ] is [ * ].Notwithstanding the foregoing, if any change to the Specification requested byAlexza would not require any [ * ] to the [ * ] or [ * ] in the Territory or requirethe [ * ] of [ * ] or [ * ] in the Territory, Alexza shall promptly notify BLS ofsuch change and such change shall be governed by the procedures to be adopted by theMS Coordination Committee and the Quality Agreement. [ * ] shall [ * ] all costs(including both implementation and regulatory costs and expenses) incurred inconnection with any changes requested by Alexza, except to the extent otherwiseagreed by the Parties pursuant to Section 4.2(d).     **(ii)**Each Party shall promptly notify the other Party of any change of theSpecifications that is required by any Regulatory Authority or in order to complywith any Regulatory Requirement applicable to the Product for use in the Field inthe Territory. Prior to the receipt of the Marketing Approval of the Product forthe Territory, such regulatory required Specification changes shall be implementedat [ * ]. After the receipt of the Marketing Approval of the Product for theTerritory, such regulatory required Specification changes shall be implemented at [* ] unless (x) such Specification changes are also [ * ] changes and (y) such [ * ]changes would apply to [ * ] and not the [ * ], in which case, such [ * ] changesshall be implemented at [ * ]. In consultation with BLS, Alexza shall, promptlymake all such regulatory required changes to the Specifications and the Partiesshall coordinate and collaborate in making all necessary Regulatory Filings with theapplication Regulatory Authority to effect such change. Alexza shall, [ * ],compile and provide to BLS the necessary information required to support any suchRegulatory Filing in the format reasonably requested by BLS, and shall provide allnecessary technical assistance[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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and services to BLS. BLS shall be responsible for making such RegulatoryFiling and paying filing fees required for such Regulatory Filing.     **(b) Other Modifications.**If any changes to the Product by Alexza do not change theSpecifications and do not require [ * ], Alexza shall promptly notify BLS and such modificationshall be governed by the procedures to be adopted by the MS Coordination Committee and the QualityAgreement. For clarity, [ * ] shall [ * ] all costs (including implementation costs) incurred inconnection with such modification requested by Alexza.     **(c) Existing Cost Reduction Plan.**The Parties acknowledge that Alexza may implement [ * ] aplan (the “**[ * ] Manufacturing Cost Reduction Plan**”) to replace certain [ * ] in the Product withan [ * ] and to replace and/or modify certain [ * ] and [ * ] in the Product in order to reduce thecost of Manufacture. Modifications pursuant to the [ * ] Manufacturing Cost Reduction Plan shall[ * ] to any [ * ] in the [ * ], but are subject to Section 3.12(a) and Section 3.12(b) and shallbe implemented in accordance with the change control procedures set forth in the Quality Agreement.     **(d) BLS’ Right to Fund Other Cost Reduction Plan.**Alexza may propose a plan for thedevelopment of a [ * ] that is intended to decrease the Manufacturing costs of the Product andshall present such plan (including the projected budget and the total costs incurred to date ofproposal in implementing such plan) to BLS. BLS shall have the right (but not the obligation) toelect to participate in funding the implementation of such plan for a reduction in the thenapplicable Transfer Price. BLS may elect to fund a mutually agreed portion of the budgeted costsof the [ * ] plan by providing Alexza with written notification of its election to do so within [ *] after receiving such plan from Alexza. Upon written notification, the Parties shall finalize aproposed budget for such plan and if BLS agrees to such plan and budget, its election shall beirrevocable. For clarification, the proposed changes set forth in such plan are subject to Section3.12(a) and Section 3.12(b) and shall be implemented in accordance with the change controlprocedures set forth in the Quality Agreement.     **(e) BLS Requested Non-Regulatory Changes.**If BLS seeks any change to the Specifications orany other modifications to the Manufacturing process and such change or modification is notrequired by any Regulatory Authority or Regulatory Requirement, it shall notify Alexza of suchproposed change in reasonable detail and Alexza shall consider such proposal in good faith. TheParties shall negotiate in good faith to implement any such change at [ * ] sole cost and the [ * ]shall be [ * ] accordingly to reflect any [ * ] in the [ * ] resulting from such change.     **3.13 Records**. Alexza shall keep complete, accurate and authentic accounts, notes, data andrecords pertaining to the Manufacture and supply of each batch of the Product, for the minimumperiod provided in 21 CFR Part 211, or longer if required by Regulatory Requirements in theTerritory or country of Manufacture, and upon [ * ] reasonable request and at [ * ] expense, shallmake available to BLS copies of or access to such records. In any event, Alexza shall notify theMS Coordination Committee of the timing of the destruction prior to destruction of any of suchaccounts, notes, data and records pertaining to the Manufacture and supply ofeach batch of the Product. After such time period, Alexza shall notify BLS prior to thedestruction of any records retained under this Section 3.13 and, at BLS’ request, shall provide[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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copies of such records to BLS. Notwithstanding the foregoing, Alexza shall at all timesmaintain such records and systems for the Parties to investigate causes of a Recall of the Productand conduct a Recall of the Product in compliance with all Applicable Laws.     **3.14 Complaints Handling and Reporting.**     **(a) **BLS shall be solely responsible for in the Field in the Territory (i) receiving allProduct complaints and reports of Product adverse events and malfunctions, and all communicationswith complainants and (ii) filing all required regulatory reports for the Product or the MarketingApprovals in the Territory, including, without limitation, any medical device reports or otheradverse event reports relating to the Product. To the extent Alexza has or receives anyinformation regarding any complaints or reports of adverse events or malfunctions relating to theProduct, Alexza shall immediately, and in no event later than [ * ] after receipt by Alexza,provide BLS with all such information.     **(b) **Promptly following BLS’ notification and documentation of a complaint or report related tothe Manufacture of Product to Alexza, Alexza shall conduct an investigation for any complaint orreport of a Product’s adverse event or malfunction that relates to the Manufacture of the Productby Alexza in accordance with the Quality Agreement and cGMP. Alexza shall use CommerciallyReasonable Efforts to provide BLS with a written report of investigation within [ * ], or othertimeframe as agreed upon by both Parties. If Alexza is not able to complete the investigationwithin [ * ] due to technical issues related to the investigation (e.g., extended testing of thecomplaint sample), Alexza shall issue an interim investigation report to BLS within [ * ] (or otheragreed timeframe), summarizing the investigation findings to date and plans to complete theinvestigation, including an estimated timeline.     **3.15 Shelf Life.**The supply of Product delivered by Alexza to BLS hereunder shall have aminimum Shelf Life at the time when the title to, ownership of, and risk of loss of, the Product ispassed from Alexza to BLS in accordance with Section 3.10(b) of this Agreement (the “**TransferTime**”) as follows:     **(a) **With respect to any Units of commercial Product supplied by Alexza prior to the approvalby a Regulatory Authority of [ * ] months Expiration Dating, the Parties shall discuss in goodfaith the minimum Shelf Life required; provided that Alexza shall not ship any commercial Producthaving a Shelf Life less than [ * ] months without the prior written consent of BLS.     **(b) **Upon approval by a Regulatory Authority of Expiration Dating of [ * ] months, with respectto commercial supply of the Product (including samples of the Product) such Product shall have aminimum Shelf Life of not less than [ * ] months; provided that [ * ], BLS shall reasonablyconsider and may accept Product with a Shelf Life between [ * ] months and [ * ] months.     **(c) **Upon approval by a Regulatory Authority of Expiration Dating of [ * ] months, withrespect to commercial supply of the Product (including samples of the Product) such Product shallhave a minimum Shelf Life of not less than [ * ] months; provided that [ * ], BLS shall reasonablyconsider and may accept Product with a Shelf Life between [ * ] months and [ * ] months.[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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     **(d) **Clinical trial material shall have a Shelf Life as mutually agreed by the Parties.     **(e) **If any Units of commercial Product with Expiration Dating of [ * ] months or less that arepurchased by BLS are returned to BLS or not saleable, then BLS may return [ * ] percent ([ * ]%) ofsuch Units of Product to Alexza, and Alexza shall, as promptly as possible, replace such returnedUnits of Product with Units of the Product with a minimum of [ * ] months Shelf Life withoutcharge; provided that the maximum number of Units of the Product that BLS may return and Alexza isrequired to replace pursuant to this Section 3.15(e) shall not exceed [ * ] Units.     **3.16 Stability Samples; Retained Samples.**Alexza shall, during the Term, take such quantitiesof quality control stability samples, from batches of Product intended for delivery to BLS, as arerequired by cGMP and applicable Regulatory Requirements and establish appropriate stabilitystudies, in each case to support the claimed Expiration Dating for the Product delivered to BLS.In addition, Alexza shall retain sufficient number of Units of the Product from each batch for atleast [ * ] after the shipment of such batch to BLS or its designee or such longer period requiredby the applicable Regulatory Requirements for record keeping, testing and regulatory purposes or asspecified in the Quality Agreement.     **3.17 Recalls**     **(a) Recalls.**Alexza and BLS each agree to notify the other within [ * ] if either Partydiscovers any issue that it reasonably believes could lead to a Product recall, product withdrawal,field correction or other related action (collectively, “**Recalls**”). If practicable, the Partiesshall promptly following notification discuss the plans for a recall, provided that [ * ] shallhave [ * ] for determining whether a Recall is necessary, and whether to cease shipping theProduct. If [ * ] decides, [ * ], that a Product Recall is necessary, the Parties shall worktogether to develop and implement a Recall plan. [ * ] shall have the [ * ] on the Recall plan andfor determining the nature and urgency of any Product Recall. [ * ] shall have the [ * ] for anyand all communications with FDA and other Regulatory Authorities related to any Recall.     **(b) Alexza’s Right to Request A Recall.**Alexza shall have the right to request BLS toinitiate a Recall of Product that [ * ] from any [ * ] defect in the Product or defect of the Drugor other components of the Product [ * ] by written notice to BLS. In the event a Recall isinitiated by BLS pursuant to an Alexza request, the Parties shall work together to develop andimplement a Recall plan and effectuate the Recall, [ * ]. [ * ] shall have the [ * ] for anyand all communications with FDA and other Regulatory Authorities related to any such Recall.     **(c) Recall Costs and Expenses.**All costs and expenses associated with implementing a Recallof a Product in the Territory shall be allocated between Alexza and BLS as follows: (i) In theevent, and to the extent, that the Recall arises out of (x) the negligence or willful misconduct ofBLS, (y) a material breach of this Agreement by BLS, or (z) the promotion, marketing, distributionor selling of a Product by BLS, then BLS shall bear the costs and expenses of the Recall (includingany out-of-pocket expenses reasonably incurred by Alexza in connection with such Recall); (ii) inthe event, and to the extent, that the Recall arises out of (x) the negligence or willfulmisconduct of Alexza, (y) a material breach of this Agreement by Alexza, or (z) the Manufacture ofthe Product, the Device, Drug or other component of the[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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Product, then Alexza shall bear the costs and expenses of the Recall (including anyout-of-pocket expenses reasonably incurred by BLS in connection with such Recall); and (iii) in theevent, and to the extent, that the Recall does not arise out of any of the circumstances describedin clause (i) or (ii) above, then the Parties shall [ * ].**ARTICLE 4****PAYMENT**     **4.1 Purchase Price for Clinical Supply.**Alexza shall Manufacture and supply the Product andDevices under this Agreement for non-commercial use by BLS for any Additional Indication andsampling or demonstration at a price equal to [ * ] per Unit.     **4.2 Purchase Price for Commercial Supply.**     **(a) **Based on the assumption of delivery of the Product in Baseline Package Form from theShipping Point, BLS shall pay to Alexza the applicable price set forth below or in Section 4.2(b),as applicable (the “**Transfer Price**”) for each Unit of the Product delivered in Baseline PackageForm delivered to BLS for commercial sale, based on the total number of Units delivered to BLS inthe applicable calendar year until the earlier of Alexza paying the Commercialization [ * ] (asdefined in the License Agreement) or it is determined that the Commercialization [ * ] is no longerpayable by Alexza:                   Transfer Price for        Product delivered in    Transfer Price for the excess of the first [ * ] Transfer Price forTotal Units delivered first [ * ] Units Units, but less than or Product delivered inper calendar year: delivered equal to [ * ] Units excess of [ * ] UnitsLess than or equalto [ * ] Units $[ * ] per Unit  N/A   N/A More than [ * ]Units, but less thanor equal to [ * ]Units $[ * ] per Unit $[ * ] per Unit  N/A More than [ * ] Units $[ * ] per Unit $[ * ] per Unit $[ * ] per Unit     **(b) **After the Commercialization [ * ] is no longer payable by Alexza, BLS shall pay to Alexzathe Transfer Price set forth below for each Unit of the Product delivered in Baseline Package Formdelivered to BLS for commercial sale, based on the total number of Units delivered to BLS in theapplicable calendar year:       Transfer Price for all ProductTotal Units delivered per calendar year: delivered in applicable calendar year:Less than [ * ] Units $[ * ] per UnitMore than or equal to [ * ] Units $[ * ] per Unit[ * ] = Certain confidential information contained in this document, marked by brackets,has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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     **(c) **The Parties agree that they will negotiate in good faith and agree to a one-timeadjustment to the [ * ] under each of the following circumstances:     **(i)**As soon as practicable and in any event within [ * ] of receipt of the initialLaunch Forecast, the Parties shall review the [ * ] to meet the Purchase Order requirementsof BLS. If the assumptions with respect to [ * ] relating to [ * ] discussed by the Partiesin establishing the [ * ] are expected to be materially different from the [ * ] that it isexpected to [ * ], Alexza shall provide all reasonably available documentation in support ofan expected change in [ * ] related to [ * ] and its proposed change to the [ * ], assupported by such documentation.     **(ii)**After the [ * ] anniversary of the Initial Launch, if Alexza reasonably expects tosell the Product forecasted in the current Supply Forecast for the [ * ] month period atless than a [ * ] (determined in accordance with the GAAP and in any event excluding in anysuch calculations all costs associated with its capacity expansion, such as costs ofdepreciation related to such expansion and any costs paid by [ * ] pursuant to Section 3.9),then, within [ * ] after the [ * ] anniversary of the initial Launch, Alexza may propose achange to the [ * ] in order for Alexza to maintain a [ * ] based on good faith assumptionconcerning the future volume and sales of the Product and provide BLS with all reasonabledocumented evidence requested by BLS supporting such [ * ] calculation.     **(d) **If BLS elects to participate in funding the implementation of a new Manufacturing plan asset forth in Section 3.12(d) with respect to a percussive device above and fulfills its fundingobligations as set forth in Section 3.12(d), then, after the applicable Regulatory Authorityapproves the use and sale of the Product Manufactured under the new plan and delivered to BLS forcommercial sale minus the reduction in Transfer Price BLS may be entitled to as result of itsfunding pursuant to Section 3.12(d), which reduction as a percentage of the reduction in cost shallbe commensurate with BLS’ percentage contribution as measured against the total cost of making thechanges necessary to implement such plan.     **(e) **For clarity, the applicable Transfer Price as set forth in Sections 4.2(a) and 4.2(b)above shall be based on the total Units delivered for the entire calendar year and shall beadjusted in each calendar year as follows:     **(i)**In each calendar year before the aggregate volume of the Product purchased by BLSand its Sublicensees in a calendar year reaches [ * ] Units, the Transfer Price shall bereset at $[ * ] per Unit (as may be adjusted in accordance with the rest of this Section4.2) for the following calendar year and shall be adjusted during such calendar year inaccordance with Section 4.2(a) or 4.2(b).     **(ii)**In the calendar year that the aggregate volume of the Product[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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purchased by BLS and its Sublicensees first reaches [ * ] Units, the Transfer Priceshall be adjusted down in accordance with Section 4.2(a) or 4.2(b), as the case may be, andthe adjusted Transfer Price shall be applied to all Units of the Product purchased or to bepurchased in such calendar year. BLS and its Sublicensees shall be entitled to a credit asa result of paying for the Product at the higher Transfer Price during such calendar year,which credit shall be applied to offset the purchase price for all future Units purchased byBLS and its Sublicensees in the following [ * ]. To the extent that the full amount of thecredit is not used within [ * ] after such credit becomes available, Alexza shall make alump sum payment for the remaining balance to BLS and its Sublicensees on or before such [ *] day. Thereafter, for so long as the number of Units purchased exceeds [ * ] in a calendaryear, the Transfer Price for the following year’s purchase shall be reset in accordancewith Section 4.2(a) or 4.2(b), as the case may be, based on Supply Forecast submitted by BLSfor the following year.     **(f) **The Transfer Price set forth in Sections 4.2(a) or 4.2(b) above shall be effective untilDecember 31 in the year of initial Launch, and shall [ * ] each subsequent [ * ] thereafter [ * ],for the [ * ] period ending [ * ] of the [ * ].     **4.3 Prepayment for Validation Lots and Initial Launch Firm Commitment.**     **(a) **Prior to the commencement of Manufacturing of the Product to be supplied to BLS forcommercial sale and after the MS Coordination Committee has adopted a Launch plan, which sets forththe timing for initiating the Manufacturing of` [ * ] validation lots of the Product, with [ * ]Units per lot, to support the Marketing Approval of the Product in the Initial Indication, Alexzashall provide BLS with an invoice for an amount that is equal to the Transfer Price multiplied by [* ] Units of Product. Alexza shall initiate the Manufacture of the [ * ] validation lots of theProduct consistent with the Launch plan adopted by the MS Coordination Committee. If any or all ofsuch [ * ] Units of the Product are returned or not saleable at the Launch, then BLS may returnsuch Units of Product to Alexza at [ * ] cost. Alexza shall replace as promptly as possible suchUnits of Product with Units of the Product meeting the applicable minimum Shelf Life requirementunder Section 3.15 without charge.     **(b) **Following the receipt of the Marketing Approval of the Product for the Initial Indicationand receipt of BLS’ Purchase Order for the Initial Launch Firm Commitment, Alexza shall provide BLSwith an invoice for an amount that is equal to the total [ * ] of the Initial Launch FirmCommitment.     **(c) **BLS shall pay invoiced [ * ] amounts set forth in each of Sections 4.3(a) and 4.3(b)within [ * ] after receipt of each such invoice. All such [ * ] amounts shall be [ * ] against theinitial Units for commercial sale delivered by Alexza to BLS.     **4.4 Payment Terms for Purchases.**     **(a) Invoice and Payment.**Except as provided in Section 4.3, Alexza shall invoice BLS inrespect of a shipment of the Product at the Transfer Time in an amount equal to the total TransferPrice for the quantity of the Product actually included in such shipment. All payments for Productwill be due and payable to Alexza [ * ] after BLS’ receipt of the invoice, unless such[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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shipment is rejected under Section 3.10(d), in which event no payment shall be due for suchrejected Product and BLS shall make payment to Alexza: (a) for any replacement Product within [ * ]after BLS accepts the replacement Product; or (b) for such original shipment (after deduction ofthe number of Units that have been replaced) within [ * ] after a Third Party laboratory, pursuantto Section 3.10(d), confirms that the Product originally delivered complies with the Specificationsand not subject to rejection.     **(b) Currency.**All references to “**Dollars**” or “**$**” means the legal currency of the UnitedStates. All payments to be made under this Agreement shall be made in Dollars, unless expresslyspecified to the contrary herein.     **(c) Late Payments**. Any payments or portions thereof due hereunder which are not paid when dueshall bear interest equal to the prime rate as reported by the Federal Reserves of the UnitedStates at http://www.federalreserve.gov/Releases/H15/Update/, on the date such payment is due, plusan additional [ * ] percent ([ * ]%) per [ * ] calculated on the number of days such payment is delinquent.**ARTICLE 5****SECURITY OF SUPPLY**     **5.1 Risk Mitigation Plan.**BLS understands and acknowledges that Alexza does not currentlyManufacture all components of the Product but instead works with one or more Approved Suppliers toobtain certain components necessary to Manufacture the Product and is bound by the terms of theagreements with suppliers, including Approved Suppliers. Alexza shall prepare, develop and adoptwithin [ * ] of the Effective Date a risk mitigation plan to reasonably ensure its ability to meetthe BLS requirements for Products under the terms of this Agreement and to ensure its ability torespond to potential catastrophic events. Alexza shall consult with and reasonably consider BLS’input in finalizing such risk mitigation plan. In any event, Alexza shall use CommerciallyReasonable Efforts to (a) minimize any supplier delays or disruptions, (b) implement appropriatemeasures to respond to potential catastrophic events and (c) promptly implement such riskmitigation plan and comply with it during the term of this Agreement. The MS CoordinationCommittee shall conduct annual review and assessment of the risk mitigation plan and theimplementation and compliance thereof.     **5.2 Allocation.**If Alexza experiences a shortage of Product and is unable to supply the fullquantity of Product ordered pursuant to this Agreement, Alexza shall allocate such availableProduct based on [ * ] allocation of Product based on [ * ] (i.e., reasonably estimated [ * ]) of [* ] of [ * ] for Product; provided that in any event [ * ] shall [ * ] receiving the Product [ * ]with respect to available Product. Alexza shall work with BLS to meet BLS’ supply needs forProduct during the period that any Product shortage conditions exist.     **5.3 Cooperation.**In the event Alexza determines that shortage conditions will occur, or inthe event of a Force Majeure (including supplier delay that gives rise to shortage conditions),Alexza will promptly notify BLS of such conditions and the Parties shall discuss in good faithappropriate mechanisms to address such shortage conditions.[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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     **5.4 Back-up Manufacturing.**At any time after the first [ * ] months following Launch, ifeither (i) for a [ * ]-month period, Alexza fails to meet at least [ * ] percent ([ * ]%) of itsaggregate supply obligation in Article 2 for such [ * ] month] period or (ii) in such month when itbecomes mathematically impossible, based on (x) shortfalls in deliveries by Alexza in successivepreceding months for Alexza and (y) the outstanding Purchase Orders and Supply Forecast, for Alexzato avoid the event specified in clause (i) above, then [ * ]. For clarity, in calculating whatpercentage of Alexza’s supply obligation has been met, (A) only Units of the Product that have beenreceived and not rejected by BLS pursuant to Section 3.10(d) shall be included (B) any quantity ofshortfall that is delivered later than [ * ] after the Delivery Date shall not constitute quantityof Product delivered (i.e. shall be excluded from the numerator in the calculation) and (C) anyquantity not fulfilled in accordance with this Agreement shall beincluded in calculating Alexza’s supply obligation (i.e. included in the denominator in thecalculation). Upon a [ * ], BLS shall have the right, within [ * ] after such [ * ] upon writtennotice to Alexza, to elect to make or have made the Product (including the Device and othercomponents of the Product). Within [ * ] after BLS’ notice to Alexza, the Parties shall agree upona transition plan to minimize any disruption to the supply of the Product. The transition planshall include a mutually agreed-upon schedule for transition activities. To enable exercise of theManufacturing rights under this Section 5.4 upon a [ * ], Alexza agrees [ * ], to provide one (1)Third Party Manufacturer designated by BLS with technical assistance in the manner set forth inSection 10.4(f).     **5.5 Additional Manufacturing.**At any time after a calendar year in which the number of Unitspurchased by BLS and its Sublicensees exceeds [ * ] Units or earlier if the Parties agree pursuantto Section 2.3, BLS shall have a right, upon written notification to Alexza, to elect to have aThird Party manufacturer that is selected by Alexza and reasonably acceptable to BLS, qualified toManufacture the Product (an “**Additional Manufacturer**”). Alexza shall thereafter prepare anestimated budget and implementation plan for approval by BLS to enable such Third Party toManufacture the Product. Upon approval of the implementation plan and budget, Alexza shall enterinto an agreement with such Third Party Manufacturer to conduct transition activities pursuant tothe transition plan and in compliance with Section 10.4(f) to sublicense and otherwise enable theThird Party Manufacturer to Manufacture the Product. All costs and expenses in engaging andqualifying the Third Party Manufacturer in accordance with the implementation plan (includingcapital equipment costs) shall be borne by [ * ] unless the Parties and/or such Third PartyManufacturer agree otherwise. The agreement with the Third Party Manufacturer shall provide thatupon the occurrence of [ * ] the agreement shall be [ * ], [ * ] and [ * ] any and all [ * ] of [ *] prior to [ * ]. Following completion of the qualification of such Third Party Manufacturer inaccordance with the agreed upon implementation plan, [ * ] shall [ * ] the costs and expenses ofany annual maintenance for maintaining the capabilities of the Third Party Manufacturer inaccordance with the implementation plan until, [ * ], [ * ] starts to use such Third PartyManufacturer to Manufacture the Product, in which case, [ * ] shall [ * ] all costs and expenses ofsuch annual maintenance, unless the Parties and such Third Party Manufacturer agree otherwise.With BLS’ prior approval, which shall not be unreasonably withheld or delayed, but conditioned uponthe Parties’ reaching an agreement on how to compensate BLS for its costs and expenses incurred inengaging and qualifying the Third Party Manufacturer, Alexza may use such Third Party Manufacturerto Manufacture and supply a portion or the entire Product ordered by BLS. With BLS’ priorapproval, [ * ], and conditioned upon the Parties’ reaching an agreement on how to compensate BLSfor its costs and[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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expenses incurred in engaging and qualifying the Third Party Manufacturer, Alexza may accessBLS or the Third Party Manufacturer for Manufacture of the Product for use outside of the Field inthe Territory or outside of the Territory. Notwithstanding the foregoing, Alexza shall consider ingood faith whether BLS should be chosen pursuant to this Section 5.5 as the “AdditionalManufacturer” instead of the Third Party Manufacturer.     **5.6 Implementation and Transition.**In the event that BLS or a Third Party Manufacturer shallhave the rights to Manufacture the Product pursuant to Section 5.4 or Section 5.5, the Partiesshall conduct transition activities pursuant to the transition plan and in compliance with Section10.4(f). In addition, Alexza shall use Commercially Reasonable Efforts to supply BLS and itsSublicensees with their requirements of the Product, pursuant to this Agreement until such time asBLS or a Third Party Manufacturer engaged by BLS is capable of supplying the Product.     **5.7 Third Party Suppliers**. Alexza shall use Commercially Reasonable Efforts to obtain theconsent of Third Party suppliers of the Materials for the Product to provide, upon the exercise ofBLS’ rights under Section 5.4 or Section 5.5, BLS or a Third Party Manufacturer with the right toreceive such Materials on the same terms as that in effect for Alexza for use with the Manufactureof the Product for use and sale in the Field in the Territory. In addition, with respect to [ * ],Alexza shall use such Commercially Reasonable Efforts to obtain such consent not later than thedate of the [ * ]. If Alexza is unable to obtain consent from [ * ] reasonably acceptable to BLS,BLS and Alexza shall thereafter jointly proceed with efforts to obtain such consent. If no consentis obtained, Alexza agrees to [ * ] thereafter [ * ] permitting [ * ] to Manufacture and supply the[ * ] for BLS or its designated Third Party Manufacturer and to [ * ] license under AlexzaTechnology (as defined in the License Agreement) to permit [ * ] to Manufacture and supply the [ *] to BLS or its designated Third Party Manufacturer upon notice from BLS of a [ * ] under thisAgreement. For clarity, the rights in the [ * ] consent may only be exercised by BLS upon a [ * ]or upon use of a Third Party Manufacturer in accordance with Section 5.5. In addition, Alexzashall notify the MS Coordination Committee prior to terminating any Material Supply Agreement.Further, Alexza shall notify BLS immediately upon its receipt of any written notice from anyApproved Supplier relating to Alexza’s breach or such Approved Supplier’s exercise of itstermination right under the applicable Material Supply Agreement and shall assist BLS in obtainingthe right to continue such Material Supply Agreement.**ARTICLE 6****REPRESENTATIONS, WARRANTIES AND COVENANTS**     **6.1 Mutual Representations, Warranties and Covenants**. Each Party hereby represents, warrantsand covenants to the other Party as of the Effective Date as follows:     **(a) **The execution, delivery, and performance of this Agreement have been duly authorized byall necessary actions;     **(b) **This Agreement constitutes a valid obligation of such Party and is binding and[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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enforceable against such Party in accordance with the terms hereof;     **(c) **Such Party has the corporate power and authority and the legal right to enter into thisAgreement and to perform its obligations hereunder, and there is no contractual restriction orobligation binding on such Party which would be materially contravened by execution and delivery ofthis Agreement or by the performance or observance of its terms;     **(d) **Such Party is not currently using, and will not in the future use, in any capacity, inconnection with the performance of its duties or obligations hereunder, the services of any personor entity debarred or subject to debarment under 21 U.S.C. §335a or otherwise disqualified orsuspended from performing services or otherwise subject to any restrictions or sanctions by the FDAor any other Regulatory Authority or professional body (a “**Debarred Entity**”). Such Party is notand, during the term of this Agreement, shall not be a Debarred Entity. Such Party shallimmediately notify the other Party in writing if either such Party or any person or entity who isperforming services on its behalf hereunder is or becomes a Debarred Entity or if any action,claim, investigation, or other legal or administrative proceeding is pending or, to the best ofsuch Party’s knowledge, threatened, that would make the other Party or any person or entityperforming services hereunder a Debarred Entity or would preclude the other Party from performingits obligations under this Agreement;     **(e) **Such Party will not take or permit its Affiliates, licensees, Sublicensees or Distributorsto take, any action to make the Product unfit for commerce under any Regulatory Requirements in anycountries in the Territory where the Product is approved for sale (including, but not limited to,not being adulterated or misbranded as defined under the FD&C Act or becoming an article that maynot, under the FD&C Act, be introduced into interstate commerce); and     **(f) **Such Party will not use any patent, trademark, copyright or other intellectualproperty rights or Confidential Information of a Third Party in performing its obligations andexercising its rights hereunder to which it does not own or does not possess a license.     **6.2 Product Warranties.**Alexza represents, warrants and covenants that the Product suppliedto BLS at the Transfer Time:     **(a) **will comply with the Specifications;     **(b) **will be Manufactured and stored in compliance with Regulatory Requirements;     **(c) **will not be unfit for commerce under any Regulatory Requirements in any countries in theTerritory where the Product is approved for sale (including, but not limited to, not beingadulterated or misbranded as defined under the FD&C Act or an article that may not, under the FD&CAct, be introduced into interstate commerce);     **(d) **will have no material defect in workmanship;     **(e) **will have such minimum Shelf Life as required under Section 3.15 of this Agreement; and[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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     **(f) **assuming payment in full by BLS, will be free and clear of all security interests, liensand other encumbrances of any kind or character.     **6.3 Replacement.**In the event of a breach of a warranty pursuant to Section 6.2, Alexza shallbear all costs, including transportation costs, in connection with the replacement of anyNonconforming Product. Alexza shall have the right to inspect defective Product to determine thevalidity of warranty claims under Section 6.2 and in compliance with all Regulatory Requirements;provided that such inspection or determination does not delay Alexza’s replacing the Product. [ *]     **6.4 Additional Representations, Warranties and Covenants of Alexza.**     **(a) **To the Best of its Knowledge, the Manufacturing of the Product does not infringe anypatent right of a Third Party or constitute a misappropriation of any trade secret of any ThirdParty. “Best of its Knowledge” means, as applied to Alexza, that [ * ] know, [ * ] a particularfact or other matter.     **(b) **Alexza shall prepare, process, assemble, test, package, label, store, handle, release,deliver and otherwise Manufacture the Product, including inspecting and conducting all necessaryanalysis with respect to the each component, Drug and other Materials prior to incorporating theminto the Product to comply with the Specifications, the Quality Agreement, this Agreement and incompliance with all Applicable Laws and Regulatory Requirements.     **(c) **The Product will be Manufactured, tested, packaged, labeled and stored prior to deliveryat the Approved Facilities, which are and shall remain, for the term of this Agreement, registeredwith the FDA and in compliance with Section 3.7.     **(d) Exhibit A**sets forth a true and complete list of all agreements with Approved Suppliers(the “**Material Supply Agreements**”). Alexza has provided or made available true and complete copiesof the Material Supply Agreements in effect as of the Effective Date. Alexza is not in breach ordefault under such Material Supply Agreements in any material respect. Alexza has not waived orallowed to lapse or terminate any of its rights under such Material Supply Agreements.     **6.5 Warranty Limitations or Disclaimers.**THE WARRANTIES, LIMITATIONS AND DISCLAIMERSDESCRIBED IN THIS ARTICLE 6 ARE EXCLUSIVE AND SUPERSEDE ANY OTHER WARRANTY LIMITATIONS ANDDISCLAIMERS GIVEN BY EITHER PARTY, WHETHER WRITTEN OR ORAL. EXCEPT FOR THE EXPRESS WARRANTIES INSECTIONS 6.1, 6.2 AND 6.4 OF THIS AGREEMENT, ALEXZA MAKES NO WARRANTIES OF ANY KIND WITH RESPECT TOTHE PRODUCT OR ANY COMPONENT THEREOF, WHETHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO,ANY IMPLIED WARRANTIES OF MERCHANTABILITY OF FITNESS FOR A PARTICULAR PURPOSE, OR ANY IMPLIEDWARRANTIES ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING, OR USAGE OF TRADE. BLS SHALL NOTMAKE ANY REPRESENTATION OR WARRANTY ON BEHALF OF ALEXZATHAT EXCEEDS THE EXPRESS WARRANTIES IN SECTIONS 6.1, 6.2 AND 6.4 OF THIS AGREEMENT.NOTWITHSTANDING THE FOREGOING, NOTHING CONTAINED[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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HEREIN SHALL LIMIT OR OTHERWISE SUPERSEDE THE REPRESENTATIONS AND WARRANTIES GIVEN BY EITHERPARTY UNDER THE LICENSE AGREEMENT; PROVIDED, HOWEVER, THAT ANY BREACH OF THOSE REPRESENTATIONS ANDWARRANTIES SHALL BE GOVERNED BY THE LICENSE AGREEMENT.**ARTICLE 7****INTELLECTUAL PROPERTY**     **7.1 Existing Intellectual Property.**Each Party shall retain all rights, except to the extentlicensed to the other Party pursuant to the License Agreement, in all intellectual property rightsowned or controlled by such Party prior to the Effective Date or developed or acquired by suchParty during the term of this Agreement.     **7.2 New Intellectual Property.**All inventions made under this Agreement shall be deemed madeunder the License Agreement and subject to the provisions of ownership and licenses set forth underthe License Agreement.**ARTICLE 8****CONFIDENTIALITY**     **8.1 Confidential Information.**Except to the extent expressly authorized by this Agreement orotherwise agreed to in writing by the Parties, the Parties agree that the receiving Party (the“**Receiving Party**”) shall keep confidential and shall not publish or otherwise disclose or use forany purpose other than as provided for in this Agreement any confidential or proprietaryinformation and materials, patentable or otherwise, in any form (written, oral, photographic,electronic, visual or otherwise) which is disclosed to it by the other Party (the “**DisclosingParty**”) including, but not limited to, all information concerning the Device and/or Product,information disclosed by one Party to the other pursuant to the Confidentiality Agreement and anyother technical or business information of whatever nature (collectively, “**ConfidentialInformation**”).     **8.2 Exceptions.**Notwithstanding Section 8.1 above, the obligations of confidentiality and nonuse shall not apply to Confidential Information that, in each case as demonstrated by competentevidence:     **(a) **was already known to the Receiving Party or any of its Affiliates, other thanunder an obligation of confidentiality, at the time of disclosure;     **(b) **was generally available to the public or was otherwise part of the public domain at thetime of its disclosure to the Receiving Party;     **(c) **became generally available to the public or otherwise part of the public domain after itsdisclosure by the Disclosing Party and other than through any act or omission of the ReceivingParty or any of its Affiliates in breach of this Agreement;     **(d) **was subsequently lawfully disclosed to the Receiving Party or any of its Affiliates[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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by a Person other than the Disclosing Party, and who, to the best knowledge of the ReceivingParty, did not directly or indirectly receive such information directly or indirectly from theDisclosing Party under an obligation of confidence; or     **(e) **was developed by the Receiving Party or its Affiliate without use of or reference to anyproprietary information or materials disclosed by the Disclosing Party.     **8.3 Permitted Disclosures.**Notwithstanding the provisions of Section 8.1, each Party maydisclose Confidential Information belonging to the other Party as expressly permitted by thisAgreement or if and to the extent such disclosure is reasonably necessary in the followinginstances:     **(a) **filing or prosecuting Patents as permitted by this Agreement;     **(b) **prosecuting or defending litigation as permitted by this Agreement;     **(c) **complying with applicable court orders or governmental regulations; and     **(d) **disclosure to Third Parties in connection with due diligence or similar investigations byor on behalf of a Third Party in connection with a potential license to, distribution agreementwith or collaboration with such Third Party (including entry into any such agreement), or apotential merger or acquisition by such Third Party, and disclosure to potential Third Partyinvestors in confidential financing documents, provided, in each case, that any such Third Partyagrees to be bound by similar terms of confidentiality and non-use at least as stringent as thoseset forth in this ARTICLE 8.     Notwithstanding the foregoing, in the event a Party is required to make a disclosure of theother Party’s Confidential Information pursuant to Section 8.3(b) or 8.3(c), it shall, except whereimpracticable, give reasonable advance notice to the other Party of such disclosure and use effortsto secure confidential treatment of such information at least as diligent as such Party would useto protect its own confidential information, but in no event less thanreasonable efforts; provided that any Confidential Information so disclosed shall still besubject to the restrictions on use set forth in this ARTICLE 8. In any event, the Parties agree totake all reasonable action to avoid disclosure of Confidential Information hereunder.     **8.4 Confidentiality of this Agreement and its Terms.**Except as otherwise provided in thisARTICLE 8, each Party agrees not to disclose to any Third Party the existence of this Agreement orthe terms of this Agreement without the prior written consent of the other Party hereto, exceptthat each Party may disclose the terms of this Agreement that are not otherwise made public ascontemplated by Section 8.5 below and as permitted under Section 8.3.     **8.5 Public Announcements**.     **(a) **As soon as practicable following the Effective Date hereof, the Parties shall each issue amutually agreed to press release announcing the existence of this Agreement substantially in theapplicable form attached to the License Agreement as Exhibit 8.5(a). Except as required by law(including, without limitation, disclosure requirements of the U.S. Securities and ExchangeCommission (“**SEC**”), the NASDAQ stock exchange or any other stock exchange on[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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which securities issued by a Party or its Affiliates are traded), neither Party shall make anyother public announcement concerning this Agreement or the subject matter hereof without the priorwritten consent of the other, which shall not be unreasonably withheld or delayed; provided that itshall not be unreasonable for a Party to withhold consent with respect to any public announcementcontaining any of such Party’s Confidential Information. In the event of a required publicannouncement, to the extent practicable under the circumstances, the Party making such announcementshall provide the other Party with a copy of the proposed text of such announcement sufficiently inadvance of the scheduled release to afford such other Party a reasonable opportunity to review andcomment upon the proposed text.     **(b) **The Parties shall coordinate in advance with each other in connection with the filing ofthis Agreement (including redaction of certain provisions of this Agreement) with the SEC, theNASDAQ stock exchange or any other stock exchange or governmental agency on which securities issuedby a Party or its Affiliate are traded, and each Party shall use reasonable efforts to seekconfidential treatment for the terms proposed to be redacted; provided that each Party shallultimately retain control over what information to disclose to the SEC, the NASDAQ stock exchangeor any other stock exchange or governmental agency, as the case may be, and provided further thatthe Parties shall use their reasonable efforts to file redacted versions with any governing bodieswhich are consistent with redacted versions previously filed with any other governing bodies.Other than such obligation, neither Party (nor its Affiliates) shall be obligated to consult withor obtain approval from the other Party with respect to any filings to the SEC, the NASDAQ stockexchange or any other stock exchange or governmental agency.     **8.6 Publication of the Product Information.**Publication of any non-public scientific ortechnical information with respect to any Inventions or the Product shall be subject to priorreview as follows: (a) at least [ * ] prior to submission of an original manuscript forpublication, (b) at least [ * ] prior to abstract submission for poster or podium presentation, or(c) at least [ * ] prior to an oral or poster presentation, as the case may be, each Party shallprovide to the other Party a draft copy thereof for such other Party’s review (unless such Party isrequired by law to publish such information sooner, in which case such Party shall provide suchdraft copy to the other Party as much in advance of such publication as possible). The publishingParty shall consider in good faith any comments provided by the other Party during such timeperiod. In addition, the publishing Party shall, at the other Party’s reasonable request, removetherefrom any Confidential Information of such other Party. This Section 8.6 shall not apply tothose publications listed as “ongoing” in the Pre-Commercialization Transition Plan as well asabstracts accepted for presentation and their associated posters listed in thePre-Commercialization Transition Plan which Alexza has delivered to BLS. Publications listed as“planned” in the Pre-Commercialization Transition Plan as well as other future publications yet tobe determined shall not be published without the prior approval of the other Party, which approvalshall not be unreasonably withheld. The contribution of each Party shall be noted in allpublications or presentations by acknowledgment or co-authorship, whichever is appropriate.     **8.7 Prior Non-Disclosure Agreements.**As of the Effective Date, the terms of this Article 8shall supersede any prior non-disclosure, secrecy or confidentiality agreement between the Parties(or their Affiliates) except the License Agreement dealing with the subject of this Agreement,including without limitation the Confidentiality Agreement. Any information disclosed under suchprior agreements shall be deemed disclosed under this Agreement and the[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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License Agreement.**ARTICLE 9****INDEMNIFICATION**     **9.1 Indemnification by BLS**. BLS shall indemnify and hold harmless each of Alexza and itsAffiliates, and the directors, officers, shareholders and employees of such entities and thesuccessors and assigns of any of the foregoing (the “**Alexza Indemnitees**”), from and against any andall losses, liabilities, damages, penalties, fines, costs and expenses (including reasonableattorneys’ fees and other expenses of litigation) (“**Losses**”) from any claims, actions, suits orproceedings brought by a Third Party (a “**Third Party Claim**”) incurred by any Alexza Indemnitee,arising from, or occurring as a result of: (a) gross negligence or willful misconduct of BLS, itsAffiliates, Sublicensees, Distributors or other subcontractors; and (b) any material breach of anyrepresentations, warranties or covenants by BLS under this Agreement , except to the extent suchThird Party Claims fall within the scope of the indemnification obligations of Alexza set forth inSection 9.1(a) or (b).     **9.2 Indemnification by Alexza**. Alexza shall indemnify and hold harmless each of BLS and itsAffiliates and the directors, officers, shareholders, employees and agents of such entities and thesuccessors and assigns of any of the foregoing (the “**BLS Indemnitees**”), from and against any andall Losses from any Third Party Claims incurred by any BLS Indemnitee, arising from, or occurringas a result of: (a) gross negligence or willful misconduct of Alexza or its Affiliates, licenseesor subcontractors; and (b) any material breach of any representations, warranties or covenants byAlexza under this Agreement, except to the extent such Third Party Claims fall within the scope ofthe indemnification obligations of BLS set forth in Section 9.1(a), or (b).     **9.3 Indemnification Procedures**. A Party that intends to claim indemnification under thisArticle 9 (the “**Indemnitee**”) shall promptly notify the indemnifying Party (the “**Indemnitor**”) inwriting of any Third Party Claim, in respect of which the Indemnitee intends to claim suchindemnification. The Indemnitee shall provide the Indemnitor with reasonable assistance, at theIndemnitor’s expense, in connection with the defense of the Third Party Claim for which indemnityis being sought. The Indemnitee may participate in and monitor such defense with counsel of itsown choosing at its sole expense; provided, however, the Indemnitor shall have the right to assumeand conduct the defense of the Third Party Claim with counsel of its choice. The Indemnitor shallnot settle any Third Party Claim without the prior written consent of the Indemnitee, not to beunreasonably withheld, unless the settlement involves only the payment of money. So long as theIndemnitor is actively defending the Claim in good faith, the Indemnitee shall not settle any suchThird Party Claim without the prior written consent of the Indemnitor. If the Indemnitor does notassume and conduct the defense of the Third Party Claim as provided above, (a) the Indemnitee maydefend against, and consent to the entry of any judgment or enter into any settlement with respectto the Third Party Claim in any manner the Indemnitee may deem reasonably appropriate (and theIndemnitee need not consult with, or obtain any consent from, the Indemnitor in connectiontherewith), and (b) the Indemnitor shallremain responsible to indemnify the Indemnitee as provided in this Article 9. The failure todeliver written notice to the Indemnitor within a reasonable time after the commencement of any[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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action with respect to a Third Party Claim shall only relieve the Indemnitor of itsindemnification obligations under this Article 9, if and to the extent the Indemnitor is actuallyprejudiced thereby.     **9.4 Survival of Indemnification Obligations.**The provisions of this Article 9 shall survivethe termination or expiration of this Agreement.     **9.5 Limitation of Liability.**EXCEPT FOR LIABILITY FOR BREACH OF ARTICLE 8 AND INDEMNIFICATIONOBLIGATIONS UNDER THIS ARTICLE 9, NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTYANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT.NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, THE TOTAL AGGREGATE LIABILITY OF ALEXZAUNDER THIS AGREEMENT RESULTING FROM A FAILURE TO SUPPLY THE PRODUCT SHALL NOT EXCEED $[ * ];PROVIDED THAT THE FOREGOING CAP SHALL NOT APPLY TO ANY BREACH BY ALEXZA OF ITS OBLIGATIONS UNDERTHIS AGREEMENT (INCLUDING ITS OBLIGATIONS TO ALLOCATE THE PRODUCT TO BLS PURSUANT TO SECTION 5.2)OTHER THAN ITS FAILURE TO SUPPLY THE PRODUCT IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.     **9.6 Insurance.**Each Party, at its own expense, shall maintain product liability and otherappropriate insurance (including D&O insurance) with an insurance carrier that has a minimum ratingof AM best A-7 in an amount consistent with industry standards for a company in a similar positionto such Party during the Term, which shall include, but not be limited to, (i) product liabilityinsurance in the minimum amount of $[ * ] per occurrence and in the aggregate and (ii) generalliability insurance in the minimum amount of $[ * ] in the aggregate (during the time when eitherParty conducts human clinical trials using the Product and/or commercializes the Product) and $[ *] umbrella coverage. In addition, Product liability insurance shall be maintained at the samelevel for not less than [ * ] years after expiration or earlier termination of this Agreement.Clinical trial insurance shall only be required to be maintained at the same level for [ * ] afterthe last clinical trial conducted by the applicable Party for the Product. Each Party shallprovide the other Party with written notice at least [ * ] prior to any cancellation, nonrenewal ormaterial change in the insurance described in clauses (i) and (ii) above and shall name the otherParty as an additional insured with respect to such insurance. Each Party shall provide acertificate of insurance evidencing such coverage to the other Party upon request. Each Partyshall provide a certificate of insurance evidencing its D&O insurance annually. It is understoodthat such insurance shall not be construed to create a limit of either Party’s liability withrespect to its indemnification obligations under this Article 9.**ARTICLE 10****TERM**     **10.1 Term.**This Agreement shall become effective upon the Effective Date and shall[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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remain in full force and effect for the duration of the Royalty Term (as such term isdefined under the License Agreement), unless earlier terminated pursuant to Section 10.2 below (the“**Term**”). The Parties may extend the term of this Agreement by mutual agreement pursuant to Section10.4(f)(i).     **10.2 Termination.**     **(a) Mutual Agreement.**This Agreement may be terminated in its entirety at any time uponmutual written agreement between the Parties.     **(b) Material Breach.**Either Party may terminate this Agreement at any time upon writtennotice to the other Party if the other Party is in material default or breach of this Agreement andsuch material default or breach is not cured within [ * ] ([ * ] in the case of a Party’s failureto pay any undisputed amounts due hereunder) after written notice thereof is delivered to thedefaulting or breaching Party.     **(c) Bankruptcy.**This Agreement may be terminated in its entirety by a Party upon thebankruptcy or insolvency of, or the filing of an action to commence insolvency proceedings againstthe other Party, or the making or seeking to make or arrange an assignment for the benefit ofcreditors of the other Party, or the initiation of proceedings in voluntary or involuntarybankruptcy, or the appointment of a receiver or trustee of such Party’s property that is notdischarged within [ * ].     **(d) Termination of the License Agreement**. This Agreement shall be terminated in its entiretyupon termination of the License Agreement.     **(e) Termination for Failure Event.**This Agreement may be terminated by BLS in its entiretyupon [ * ] written notice following a Failure Event, if such Failure Event is not cured by Alexzawithin such [ * ] notice period.     **(f) Force Majeure.**This Agreement may be terminated in its entirety as a result of theoccurrence of a Force Majeure Event pursuant to Section 11.4(c).     **10.3 No Waiver.**The termination or expiration of this Agreement, as the case maybe, shall not act as a waiver of any breach of this Agreement and shall not act as a releaseof either Party from any liability or obligation incurred under this Agreement through the date ofsuch termination or expiration, including payments due Alexza pursuant to this Agreement.     **10.4 Consequences of Termination.**     **(a) The License Agreement**. Upon expiration or termination of this Agreement for any reason(other than pursuant to Section 10.2(d)), the License Agreement shall remain in full force andeffect.     **(b) Cumulative Remedies.**Except as expressly stated otherwise herein and Section 13.1 of theLicense Agreement as it is applied to Section 10.5 of this Agreement, remedies hereunder arecumulative, and nothing in this Agreement shall prevent either Party, in the case of[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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a breach, from not terminating this Agreement and seeking to enforce its rightshereunder.     **(c) Return of Confidential Information**. Upon expiration or termination of this Agreement inits entirety, unless otherwise directed by BLS, Alexza shall promptly return all BLS ConfidentialInformation to BLS, except for a single copy and/or sample for documentation purposes only. Uponexpiration or termination of this Agreement in its entirety, unless otherwise directed by Alexzaand subject to Section 10.4(f), BLS shall promptly return all Alexza Confidential Information toAlexza, except for a single copy and/or sample to be retained for documentation purposes only.     **(d) Accrued Obligations**. Except as set forth herein, any termination or expiration of thisAgreement shall not relieve either Party of any obligation which has accrued prior to the effectivedate of such termination or expiration, which obligations shall remain in full force and effect forthe period provided therein.     **(e) Remedies**. Termination of this Agreement in accordance with and fulfillment of allobligations set forth in this Article 10 shall not affect any other rights or remedies that may beavailable to a Party in law or equity.     **(f) Technical Assistance.**     **(i)**Prior to the expiration of this Agreement or effective date of any termination ortermination of this Agreement by BLS under Section 10.2(b), 10.2(c), 10.2(e) or 10.2(f), theParties shall negotiate in good faith a new supply agreement. In the event the Partiescannot enter into a new supply agreement prior to the expiration or termination of thisAgreement, the Parties shall agree upon a transition plan to minimize any disruption to thesupply of the Product. The transition plan shall include a mutually agreed-upon schedulefor transition activities, under which Alexza shall transferManufacturing-related Alexza Know-How [ * ].     **(ii)**If BLS elects to Manufacture or have Manufactured the Product pursuant to Section5.4 or Section 5.5 above or as a result of termination by BLS pursuant to Section 10.2(b),10.2(c), 10.2 (e) or 10.2(f), to the extent that a Third Party Manufacturer has not beenpreviously qualified or it is required to be re-qualified, Alexza shall, [ * ], makeavailable personnel with the knowledge and experience required to transfer to BLS or theThird Party Manufacturer (or a Third Party designated by BLS if no Third Party Manufacturerhas been previously qualified) all Alexza Know-How, including Alexza’s DMF(s), required toestablish Manufacturing capability and take all necessary action reasonably required toallow BLS to Manufacture or have Manufactured the Product in conformance with all RegulatoryRequirements and the Specifications. Alexza Know-How shall be provided based upon theprinciple of avoiding supply disruption and Alexza shall provide or cause to be provided toBLS or the Third Party Manufacturer with any then-existing documentation, technicalinformation and other Alexza Know-How, in a form and format useable by BLS, that arenecessary for the Manufacture of the Product (including components of the Product). Suchdocumentation, technical information and other Alexza Know-How shall include: (a) copies offlow charts of the Manufacturing procedures and work instructions related to Manufacturingthe Product, (b) a list of all[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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equipment, including the source of the equipment, utilized in the production ofthe Product, (c) copies of all current Specifications for the Product, (d) copies of allstandard operating procedures for the Manufacturing procedures to be transferred, (e) allenvironmental conditions necessary to Manufacture the Product and copies of any existingexternal environmental impact studies based on the materials or methods employed in theManufacturing method to be transferred, and (f) such other documentation as the Parties maymutually agree, in each case of the foregoing subsections (a) through (f), that arenecessary to Manufacture the Device and Product.     **(iii)**Alexza shall assign that portion of its supply agreements with Approved Suppliersrelated to the Product in the Field in the Territory to BLS and upon BLS’ request, assignthat portion of its supply agreements with other suppliers with respect to the portionrelated to the Product in the Field in the Territory. If prior consent of any ApprovedSuppliers is required and such consent has not been obtained notwithstanding Alexza’sefforts in accordance with Section 5.7, Alexza shall continue to purchase the applicableMaterial from such Approved Supplier on behalf of BLS and in accordance with BLS’instructions.     **(iv)**In addition, Alexza shall use Commercially Reasonable Efforts to supply BLS andits Sublicensees with their requirements of the Product, pursuant to this Agreement, untilthe earlier of (A) the [ * ] of the expiration or the effective date of termination, or (B)such time as BLS or its Third Party Manufacturer is capable ofreasonably supplying the Product.     **(g) Outstanding Purchase Order**. Except in cases of the termination of this Agreementfor a Force Majeure Event or as otherwise expressly set forth in this Agreement, thetermination of this Agreement shall not affect Purchase Orders placed by BLS and accepted byAlexza at the time that the notice of termination is given and until the time any suchtermination becomes effective. Upon receipt of the notice of termination, Alexza shallimmediately suspend and cause to be suspended all Manufacturing activities hereunder exceptthe activities for fulfilling BLS’ outstanding Purchase Orders. Except for its obligationto make payment with respect to such outstanding Purchase Orders, BLS shall have noliability to Alexza for any costs that Alexza may have incurred (or to which Alexza may havecommitted) in connection with Materials used by Alexza in Manufacturing the Product prior tothe effectiveness of any notice of termination by BLS. After its delivery of thetermination notice, BLS shall have no obligation to submit any additional Supply Forecast orPurchase Order.     **10.5 Effects of Termination as A Result of Termination of the License Agreement under CertainCircumstances.**Upon the [ * ] termination of this Agreement pursuant to Section 10.2(d) as aresult of the termination of the License Agreement by [ * ] under Section 12.3(a) of the LicenseAgreement or termination by Alexza under Section 12.2(b) of the License Agreement, the followingshall apply:     **(a)**[ * ] for documented expenses for the following :     **(i)**all Expenses (as defined in the License Agreement) to [ * ] or [ * ][ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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and other [ * ] and [ * ] to [ * ] to [ * ] or to [ * ] in order to complywith applicable Regulatory Requirements for use by Alexza or its licensees;     **(ii)**all Expenses to modify (or replace, if replacement is the only feasibleoption) [ * ] to [ * ] to [ * ] and any other [ * ] (and not otherwise used byAlexza) on the Product;     **(iii)**[ * ] costs and expenses associated with [ * ] in the [ * ] that havebeen [ * ] within [ * ] after the effective date of the BLS termination notice;     **(iv)**prior to the Marketing Approval in the Initial Indication, all [ * ] ofthe [ * ] by BLS pursuant to this Agreement and all [ * ] for [ * ] to fulfill theinitial launch order by BLS (and not otherwise used) or otherwise included inProduct and [ * ] related to the foregoing; and     **(v)**after the Marketing Approval in the Initial Indication, payment for the [ *] portion of the [ * ] that is operative at the time of delivery of thetermination notice; provided that unless BLS requests a cancellation of such [* ], Alexza shall deliver to BLS the quantities of the Product for such [ * ] inaccordance with this Agreement;     **(b)**For clarity, no mark-up shall apply to Expenses incurred with respect to paymentshereunder, payments made under one subsection shall not be required if such costs andexpenses would also be included in another one of the foregoing subsections and BLS shallnot be required to make payment at termination if it has made such payment pursuant to otherSections of this Agreement. Moreover, the foregoing list shall not relieve Alexza of itsobligation to mitigate damages. The total amount subject to reimbursement by BLS set forthin subsections (a)(i)-(v) above, together with the total amount that BLS is responsible forunder Section [ * ] of the License Agreement shall not exceed the higher of (Y) $[ * ] or(Z) the total purchase price (i.e., the number of Units multiplied by the applicableTransfer Price for the binding portion of the Supply Forecast) for canceled Product at thetime of notice of termination. For clarity, once the total amount of reimbursement paymentsreaches the maximum amount determined in accordance with the foregoing sentence, noreimbursement for other items set forth in Section 10.5(a) shall be allowed.     **(c)**Except as otherwise set forth above, [ * ] obligation to reimburse Expensessubmitted pursuant to Section 10.5(a) shall terminate within [ * ] after the effective dateof [ * ] notice of termination. In any event, [ * ] shall be afforded the right andreasonable access to audit the amounts subject to reimbursement hereunder, which right shallexpire [ * ] after the expiration of the [ * ] reimbursement period.     **10.6 Survival.**The terms of Sections [ * ] and [ * ], Articles [ * ] and [ * ] and, withrespect to the Product Manufactured and supplied to BLS prior to the effective date of thetermination of this Agreement, Sections [ * ] and [ * ] shall survive any termination or expirationof this Agreement.[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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**ARTICLE 11****MISCELLANEOUS**     **11.1 Notices.**Any notice or communication required or permitted under this Agreement shall bein writing in the English language, delivered personally, sent by facsimile (and promptly confirmedby personal delivery, registered or certified mail or overnight courier), sent byinternationally-recognized courier or sent by registered or certified mail, postage prepaid to thefollowing addresses of the Parties (or such other address for a Party as may be at any timethereafter specified by like notice):   **To Alexza:** **To BLS:**   Alexza Pharmaceuticals, Inc. Biovail Laboratories International SRL2091 Stierlin Court Welches,  Christ ChurchMountain View, CA 94043 Barbados WI, BB17154Telephone: + 1-650-944-7000 Telephone: +1-246-418-6411Facsimile: + 1-650-944-7988 Facsimile: +1-246-437-7085Attention: Chief Executive Officer Attention:  Chief Operating Officer   **with a copy to:** **with a copy to:**   Cooley Godward Kronish LLP Biovail Corporation3175 Hanover St. 7150 Mississauga Road, Mississauga,Palo Alto, CA 94306 Ontario, Canada, L5N 8M5Telephone: +1-650-843-5000 Telephone: + (905) 286-3186Facsimile: +1-650-843-4000 Facsimile: + (905) 286-3370Attention: Glen Y. Sato Attention: Vice-President, Associate  General Counsel     Any such notice shall be deemed to have been given (a) when delivered if personally delivered;(b) on the next Business Day after dispatch if sent by confirmed facsimile or byinternationally-recognized overnight courier; and/or (c) on the fifth (5th) Business Day followingthe date of mailing if sent by mail or other internationally-recognized courier.     **11.2 Entire Agreement.**This Agreement (including the Quality Agreement and Exhibits attachedhereto and any letter delivering information referenced herein), together with the provisions ofthe License Agreement explicitly referenced to, constitutes the entire agreement between theParties relating to the subject matter hereof and supersedes and cancels all previous express orimplied agreements and understandings, negotiations, writings and commitments, either oral orwritten, in respect of the subject matter hereof. Each of the Parties acknowledges and agrees thatin entering into this Agreement, and the documents referred to in it, it does not rely on, andshall have no remedy in respect of, any statement, representation, warranty or understanding(whether negligently or innocently made) of any person (whether party to this Agreement or not)other than as expressly set out in this Agreement or the License Agreement.[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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Nothing in this clause shall, however, operate to limit or exclude any liability forfraud.     **11.3 Assignment.**This Agreement shall not be assignable or otherwise transferred, nor may anyrights or obligations hereunder be assigned or transferred, by either Party to any Third Partywithout the prior written consent of the other Party; except that either Party may assign orotherwise transfer this Agreement without the consent of the other Party to an entitythat acquires all or substantially all of the business or assets of the assigning Partyrelating to the subject matter of this Agreement, whether by merger, acquisition or otherwise,provided that the acquiring Person assumes this Agreement in writing or by operation of law. Inaddition, BLS shall have the right to assign, subcontract or delegate this Agreement or any or allof its obligations or rights hereunder to an Affiliate or a Third Party upon written notice toAlexza; provided, however, BLS shall remain fully and unconditionally obligated and responsible forthe full and complete performance of this Agreement by such Affiliate or Third Party and in noevent shall such assignment, subcontracting or delegation be deemed to relieve BLS’ liabilities orobligations to Alexza under this Agreement. Alexza shall, at the request of BLS, enter into suchsupplemental agreements with the applicable Affiliates or Third Party as may be necessary oradvisable to permit such Affiliates or Third Party to avail itself of any rights or perform anyobligations of BLS hereunder. Subject to the foregoing, this Agreement shall inure to the benefitof each Party, its successors and permitted assigns. Any assignment of this Agreement or therights under this Agreement in contravention of this Section 11.3 shall be null and void.     **11.4 Force Majeure**. If the performance of any part of this Agreement by either Party (otherthan making payment when due) is prevented, restricted, interfered with or delayed by any reason orcause beyond the reasonable control of such Party (including fire, flood, earthquake, storm,embargo, power shortage or failure, acts of war, insurrection, riot, terrorism, strike, lockout orother labor disturbance, shortage of raw materials, epidemic, failure or default of publicutilities or common carriers, acts of God or any acts, omissions or delays in acting of the otherParty) (a “**Force Majeure Event**”), the Party so affected shall, upon giving written notice to theother Party, be excused from such performance to the extent of such Force Majeure Event, providedthat the affected Party shall use its substantial efforts to avoid or remove such causes ofnon-performance and shall continue performance with the utmost dispatch whenever such causes areremoved.     **(a) **If either Party becomes aware that a Force Majeure Event has occurred or is imminent orlikely, it shall immediately notify the other.     **(b) **The Party which is subject to such Force Majeure Event shall exert all reasonable effortsto overcome it and the other Party shall be entitled to suspend the performance of its obligationshereunder during the duration of such Force Majeure Event.     **(c) **Such Party shall keep the other informed as to the progress of overcoming such ForceMajeure Event and the other Party shall have the right to terminate this Agreement in the eventsuch Force Majeure Event is not overcome with [ * ] ([ * ]) days after it first occurs.     **11.5 Interpretation.**The captions to the several Articles and Sections of this Agreement arenot a part of this Agreement but are included for convenience of reference and shall not affect itsmeaning or interpretation. In this Agreement (a) the word “including” shall be[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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deemed to be followed by the phrase “without limitation” or like expression; (b) thesingular shall include the plural and vice versa; and (c) masculine, feminine and neuterpronouns and expressions shall be interchangeable. Each accounting term used herein that is notspecifically defined herein shall have the meaning given to it under GAAP consistently applied, butonly to the extent consistent with its usage and the other definitions in this Agreement.     **11.6 No Partnership or Joint Venture.**Nothing in this Agreement or any action which may betaken pursuant to its terms is intended, or shall be deemed, to establish a joint venture orpartnership between BLS and Alexza. Neither Party to this Agreement shall have any express orimplied right or authority to assume or create any obligations on behalf of, or in the name of, theother Party, or to bind the other Party to any contract, agreement or undertaking with any ThirdParty.     **11.7 Severability.**In the event any provision of this Agreement should be held invalid,illegal or unenforceable in any jurisdiction, the Parties shall negotiate in good faith and enterinto a valid, legal and enforceable substitute provision that most nearly reflects the originalintent of the Parties. All other provisions of this Agreement shall remain in full force and effectin such jurisdiction. Such invalidity, illegality or unenforceability shall not affect thevalidity, legality or enforceability of such provision in any other jurisdiction.     **11.8 Amendment.**This Agreement may not be amended or modified except by an instrument inwriting signed by authorized representatives of BLS and Alexza.     **11.9 Governing Law.**This Agreement and all questions regarding the existence, validity,interpretation, breach or performance of this Agreement, shall be governed by, and construed andenforced in accordance with, the laws of the State of [ * ], United States, without reference toits conflicts of law principles with the exception of [ * ].     **11.10 Dispute Resolution.**In the event of any dispute under this Agreement, the Parties shallrefer such dispute to the senior executives of the respective Parties responsible for theManufacturing and supply of the Products for attempted resolution by good faith negotiations within[ * ] after such referral is made. If such executives are unable to resolve the dispute withinsuch [ * ] period, then the Parties shall refer such dispute to the Chief Executive Officer ofAlexza and the President, and if designated, the Chief Operating Officer of BLS (collectively, the“**Senior Executives**”) for attempted resolution by good faith negotiations within [ * ] after suchreferral is made. If the Senior Executives are unable to resolve the dispute within the timeallotted, either Party may proceed as set forth below.     **(a) Alternative Dispute Resolution.**Any dispute controversy or claim arising out of orrelating to the validity, construction, enforceability or performance of this Agreement, includingdisputes relating to an alleged breach or to termination of this Agreement and including any claimof inducement by fraud or otherwise, shall be settled by mediation and arbitration in the mannerdescribed below (except any dispute regarding the validity or enforceability of a patent ortrademark applicable to a Product, which shall be submitted to a court of competent jurisdiction inthe country in which such patent or trademark right exists):     **(b) Mediation.**The Senior Executives shall select a mediator with appropriate[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted andfiled separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of theSecurities Exchange Act of 1934, as amended.
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expertise in the subject matter to which the dispute relates, who will be engaged toresolve the dispute. If the Senior Executives cannot agree on a mediator, either Party may submitthe matter to mediation under the ICC ADR Rules. If the Parties are unable to resolve theirdispute through mediation within [ * ] after selection of the mediator(s), either Party may seekappropriate resolution through arbitration as described below.     **(c) Arbitration.**Except as provided in paragraph (ii) below, any dispute, controversy orclaim arising out of or relating to the validity, construction, enforceability or performance ofthis Agreement which is not resolved by mediation, including disputes relating to alleged breach orto termination of this Agreement, other than disputes which are expressly prohibited herein frombeing resolved by this mechanism, shall be settled by binding Alternative Dispute Resolution(“**Arbitration**”) in the manner described below: If a Party intends to begin an Arbitration toresolve a dispute, such Party shall provide written notice (the “**Arbitration Request**”) to the otherParty informing such other Party of such intention and the issues to be resolved. From the date ofthe Arbitration Request and until such time as any matter has been finally settled by Arbitration,the running of the time periods contained in Section 10.2(b) as to which Party must cure a breachof this Agreement shall be suspended as to the subject matter of the dispute. Within [ * ] afterthe receipt of the Arbitration Request, the other Party may, by written notice to the Partyinitiating Arbitration, add additional issues to be resolved.     **(d) Procedure.**The Arbitration shall be conducted pursuant to the then-current InternationalChamber of Commerce (ICC) Rules. Notwithstanding those rules, the following provisions shall applyto the ADR hereunder:     **(i) Arbitrators.**The arbitration shall be conducted by a panel of three arbitrators(the “**Arbitrators**”). The Arbitrators shall be fluent in the English language, have not lessthan twenty (20) years of experience with U.S. law and pharmaceutical and/or devicemanufacturing. Each Party shall nominate an arbitrator for confirmation by the ICC and thetwo Party-appointed arbitrators shall nominate the chairman for confirmation by the ICC. Ifthe Party-appointed arbitrators cannot agree on the chairman within ten (10) days aftertheir appointment, the chairman will be appointed by the ICC.     **(ii) Proceedings.**The arbitration shall be completed within [ * ] of appointment ofthe arbitrators, unless a Party can demonstrate to the Arbitrators that the complexity ofthe issues or other reasons warrant the extension of one or more of the time tables. TheArbitrators shall render a written opinion setting forth findings of fact and conclusions oflaw with the reason therefor stated. A transcript of the evidence adduced at the hearingshall be made and, upon request, shall be made available to each Party. The Arbitratorsshall, in rendering a decision, apply the substantive law of the State of [ * ], withoutregard to its conflict of laws provisions, except that the interpretation of and enforcementof this Section 11.10 shall be governed by the Federal Arbitration Act. The proceedingshall take place in [ * ]. The fees of the Arbitrators and ICC shall be paid by the losingParty, which shall be designated by the Arbitrators. If the Arbitrators are unable todesignate a losing Party, it shall so state and the fees shall be split equallybetween the Parties.     **(iii) Award.**Subject to Section 11.10(d)(ii), the Arbitrators are empowered to[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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award any remedy allowed by law, including money damages, prejudgment interest andattorneys’ fees, and to grant final, complete, interim, or interlocutory relief, includinginjunctive relief.     **(iv) Costs.**Except as set forth in Sections 11.10(d)(ii) and (iii) above, each Partyshall bear its own legal fees and costs.     **(v) Confidentiality.**The Arbitration proceeding shall be confidential and theArbitrators shall issue appropriate protective orders to safeguard each Party’s ConfidentialInformation. Except as required by law, no Party shall make (or instruct the Arbitrators tomake) any public announcement with respect to the proceedings or decision of the Arbitratorswithout prior written consent of each other Party. The existence of any dispute submittedto Arbitration, and the award, shall be kept in confidence by the Parties and theArbitrators, except as required in connection with the enforcement of such award or asotherwise required by applicable law.     **(vi) Language.**All pleadings, complaints and other documents filed or presented inconnection with, and all proceedings in, any dispute resolution proceeding described in thisSection 11.10 must be in the English language.     **(vii)**EACH PARTY HERETO WAIVES ITS RIGHT TO TRIAL OF ANY ISSUE BY JURY.     **11.11 No Waiver.**The failure of either Party to enforce at any time for any period theprovisions of or any rights deriving from this Agreement shall not be construed to be a waiver ofsuch provisions or rights or the right of such Party thereafter to enforce such provisions.     **11.12 Counterparts.**This Agreement may be executed in one or more counterparts, and by therespective Parties in separate counterparts, each of which when executed shall be deemed to be anoriginal but all of which taken together shall constitute one and the same Agreement.**{SIGNATURES APPEAR ON THE NEXT PAGE}**[ * ] = Certain confidential information contained in this document, marked by brackets, hasbeen omitted and filed separately with the Securities and Exchange Commission pursuant to Rule24b-2 of the Securities Exchange Act of 1934, as amended.
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     **IN WITNESS WHEREOF**, each Party hereto has executed or caused this Agreement to beexecuted on its behalf as of the Effective Date.      **ALEXZA PHARMACEUTICALS, INC.**