**1.2**“***Additional Indication Development Plan***” shall mean the plan for development of Productfor the prevention or treatment of one or more Additional Indication(s) for the Territory, as maybe adopted and amended in accordance with this Agreement.     **1.3**“***Affiliate***” of a Party shall mean any Person that, directly or indirectly, through one ormore intermediaries, controls, is controlled by, or is under common control with such Party, as thecase may be, but for only so long as such control exists. As used in this Section 1.3, “control”shall mean (i) direct or indirect beneficial ownership of at least 50% (or such lesser percentagewhich is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction) ofthe voting share capital or other equity interest in such Person or (ii) the power to direct themanagement of such Person by contract or otherwise.     **1.4**“***Agitation***” shall mean, as defined in [ * ], [ * ], excluding [ * ] as defined in [ * ].     **1.5**“***Alexza Background Patents***” shall mean all Patents that are: (a) [ * ] for the research,development, importation, use, manufacture, having manufactured, sale, having sold and offering forsale of the Product in the Field in the Territory, (b) Controlled by Alexza or any of itsAffiliates as of the Effective Date or during the Term, and (c) covering the [ * ] and/or [ * ].Alexza Background Patents existing as of the Effective Date are set forth on ***Exhibit 1.8***.     **1.6**“***Alexza Indemnitees***” shall have the meaning set forth in Section 11.1.     **1.7**“***Alexza Know-How***” shall mean 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.     **1.8**“***Alexza Patents***” shall mean Alexza Product Patents and Alexza Background Patents. For theavoidance of doubt, Alexza Patents shall not include any Joint Patents. A list of Alexza Patentsas of the Effective Date is set forth on ***Exhibit 1.8***, which list shall be updated from time to timeupon written agreement between the Parties.     **1.9**“***Alexza Product Patents***” shall mean all Patents that are: (a) [ * ] for the research,development, importation, use, manufacture, having manufactured, sale, having sold and offering forsale of the Product in the Field in the Territory, (b) Controlled by Alexza or any of itsAffiliates as of the Effective Date or during the Term, and (c) primarily covering the Product andnot otherwise covering (x) the [ * ] or (y) [ * ] and the [ * ] that [ * ]. Alexza Product Patentsexisting as of the Effective Date are set forth on ***Exhibit 1.8****.*     **1.10**“***Alexza Technology***” shall mean all Alexza Know-How, Alexza Patents and Alexza’s interestin Joint Patents and Joint Know-How.     **1.11**“***Alexza Trademarks” and “Alexza Copyrights***” shall mean (a) all Trademarks of Alexza,including the trademarks “Alexza” and “Staccato” and trade name “Adasuve” and other[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and ExchangeCommission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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Trademarks all as set forth on ***Exhibit 1.11****;*and (b) all copyrights (including registrationsand applications therefor), copyrightable works which are [ * ] for the research, development,importation, use, manufacture, having manufactured, sale, having sold and offering for sale of theProduct in the Field in the Territory, respectively.     **1.12**“***API***” shall mean an active pharmaceutical ingredient.     **1.13**“***Applicable Laws***” shall mean the applicable provisions of any and all national,supranational, regional, state and local laws, treaties, statutes, rules, regulations,administrative codes, guidance, ordinances, judgments, decrees, directives, injunctions, orders,permits (including Marketing Approvals) of or from any court, arbitrator, Regulatory Authority orgovernmental agency or authority having jurisdiction over or related to the subject item.     **1.14**“***Auditor***” shall have the meaning set forth in Section 7.5.     **1.15**“***Authorized Generic***” means any Product that is sold in the Territory with the consent,authorization or license of BLS and dispensed as if such Product were a Generic Product.     **1.16**“***Bankruptcy Laws***” shall have the meaning set forth in Section 13.6.     **1.17**“***Baseline Gross Sales***” shall have the meaning set forth in Section 6.3(c).     **1.18**“***Best Knowledge***” shall have the meaning set forth in Section 10.2.     **1.19**“***BLS Indemnitees***” shall have the meaning set forth in Section 11.2.     **1.20**“***BLS Know-How***” shall mean all Know-How with respect to the Devices that are generated byBLS during the Term pursuant to this Agreement.     **1.21**“***BLS Patents***” shall mean all Patents that claim Inventions with respect to the Devicesgenerated by BLS during the Term pursuant to this Agreement.     **1.22*****“BLS Technology***” shall mean all BLS Know-How and BLS Patents, including BLS’ interest inJoint Patents and Joint Know-How.     **1.23**“***BLS Trademark***” shall have the meaning set forth in Section 9.9.     **1.24**“***Budget***” shall mean the budget included within the applicable Development Plan forconducting the clinical or non-clinical studies, regulatory activities (including making regulatoryfilings) and other activities under such Development Plan.     **1.25**“***Business Day***” shall mean a day other than a Saturday or Sunday or any public holiday inthe United States, Barbados or Canada. For the avoidance of doubt, references in this Agreement to“days” shall mean calendar days.[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and ExchangeCommission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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     **1.26**“***Calendar Quarter***” shall mean a period of three consecutive months during a Calendar Yearbeginning on and including January 1st, April 1st, July 1st orOctober 1st.     **1.27**“***Calendar Year***” shall mean a period of twelve consecutive months beginning on andincluding January 1st.     **1.28**“***Change of Control***” shall mean either: (a) a sale of all or substantially all of theassets of a Party in one or a series of integrated transactions not in the ordinary course ofbusiness to a Third Party; or (b) the acquisition of a Party by a Third Party by means of anytransaction or series of related transactions (including any stock acquisition, merger orconsolidation); in either case, in which a transaction or series of transactions the holders ofoutstanding voting securities of such Party immediately prior to such transaction do notbeneficially own, directly or indirectly, at least [ * ]% of the combined outstanding voting powerof the acquiring entity (or of such Party if it is the surviving entity in such transaction(s)described in subsection (b)), or its direct or indirect parent entity, immediately after suchtransaction or series of related transactions. For clarity, Change of Control shall not includefinancing transactions (other than financing transactions involving a strategic partner(s)),through public offering, private equity financing or otherwise.     **1.29**“***Collaboration Committee***” shall have the meaning set forth in Section 3.1(a).     **1.30**“***Commercially Reasonable Efforts***” shall mean that level of efforts and resources, withrespect to a particular Party, at the relevant point in time, that is consistent with the usualpractice followed by that Party, in the exercise of its reasonable scientific and business judgmentrelating to other prescription pharmaceutical products owned or licensed by it or to which it hasexclusive rights, which have [ * ] and are [ * ] or [ * ] similar to the applicable Product, takinginto account measures of [ * ], [ * ] and [ * ], [ * ], the [ * ] of the [ * ], the [ * ] of the [* ] or [ * ], the [ * ] involved, the [ * ] of the [ * ] (including, without limitation, [ * ] and[ * ]) and other relevant factors, including without limitation [ * ], and/or [ * ] factors.     **1.31**“***Commercial Strategy***” shall have the meaning set forth in Section 5.1.     **1.32*****“Commercialization [ * ]***” shall have the meaning set forth in Section 6.6(a).     **1.33**“***Competing Product***” shall mean a product, other than the Product, that has been approvedfor, or is being developed for approval for, acute and intermittent prevention or treatment ofAgitation.     **1.34**“***Contractors***” shall have the meaning set forth in Section 10.2(j)(i).     **1.35**“***Confidential Information***” shall have the meaning set forth in Section 8.1.     **1.36**“***Confidentiality Agreement***” shall mean that certain letter agreement dated [ * ] betweenAlexza andBLS.[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and ExchangeCommission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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     **1.37**“***Control***” (including any variations such as “***Controlled***”), in the context of intellectualproperty rights, Know-How and Confidential Information, shall mean possession (whether by ownershipor license, other than pursuant to this Agreement) by a Party of the ability to grant theapplicable license under this Agreement, without violating the terms of an agreement with a ThirdParty.     **1.38**“***Costs and Expenses***” shall mean costs and expenses paid to Third Parties (or payable toThird Parties and accrued in accordance with GAAP) by either Party.     **1.39 “*****Cumulative [ * ] Amount***” shall have the meaning set forth in Section 6.6(b).     **1.40**“***Development Plan***” shall mean the Initial Indication Development Plan or an AdditionalIndication Development Plan and “***Development Plans***” shall mean the Initial Indication DevelopmentPlan and the Additional Indication Development Plan(s), collectively.     **1.41**“***Device***” shall mean any hand-held, single-use, fixed-dosage device for the administrationof API(s) which device relies on [ * ], which device is known as or based on, but may or may not bereferred to, as the Staccato® system.     **1.42**“***Disclosing Party***” shall have the meaning set forth in Section 8.1.     **1.43**“***Distribution Agreement***” shall mean an agreement or arrangement between BLS or anAffiliate of BLS and a Distributor with respect to the right of such Distributor to market,promote, advertise, detail, sell and distribute the Product in the Field in the Territory.     **1.44**“***Distributor***” shall mean a Third Party or an Affiliate of BLS to whom BLS or an Affiliateof BLS has granted the right to market, promote, advertise, detail, sell or distribute the Productin the Field in the Territory without the control of Regulatory Filings for the Product in theField in the Territory.     **1.45**“***Effective Date***” shall have the meaning set forth in the opening paragraph of thisAgreement.     **1.46**“***Existing NDA***” shall have the meaning set forth in Section 4.2(a).     **1.47**“***Expenses***” shall mean the Costs and Expenses incurred by a Party or any of its Affiliatesin conducting the clinical or non-clinical studies, regulatory activities (including makingregulatory filings) and other activities in accordance with the applicable Development Plan(s).     **1.48*****“FDA***” shall mean the United States Food and Drug Administration and its successor.     **1.49**“***Field***” shall mean the prevention or treatment of any psychiatric and/or neurologicalindication and the symptoms associated with these indications.[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and ExchangeCommission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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     **1.50**“***First Commercial Sale***” shall mean, on a country-by-country basis and Product-by-Productbasis, the first *bona fide*, arm’s length sale of a Product in a country following receipt ofMarketing Approval of such Product in such country for use of such Product in such country. Salesof a Product for registration samples, compassionate use sales, named patient use, inter-companytransfers to Affiliates of a Party and the like shall not constitute a First Commercial Sale.     **1.51**“***FTE***” shall mean the equivalent of one (1) full-time individual’s work time for a twelve(12) month period ([ * ] ([ * ]) hours), with such individual having appropriate professionalscientific and/or technical or managerial experience. For clarity, in the case that any individualworks partially in conducting the activities that are subject to the FTE-based reimbursement underthis Agreement and partially on other activities (including activities that are pursuant to thisAgreement, but not subject to the FTE-based reimbursement) in a given fiscal year, then thefull-time equivalent to be attributed to such individual’s work for the FTE calculation shall beequal to the actual amount of the time that such individual spent working in conducting theactivities that are subject to the FTE-based reimbursement under this Agreement.     **1.52**“***FTE Rate***” shall mean $[ * ] per FTE.     **1.53**“***GAAP***” shall mean generally accepted accounting principles of the United States ofAmerica from 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.     **1.54**“***Generic Product***” shall have the meaning set forth in Section 6.3(c).     **1.55**“***Good Clinical Practices***” or “***GCP***” shall mean the then-current standards, practices andprocedures promulgated or endorsed by the FDA as set forth in the guidelines entitled “Guidance forIndustry E6 Good Clinical Practice: Consolidated Guidance,” including related regulatoryrequirements imposed by the FDA and comparable regulatory standards, practices and procedures injurisdictions outside the United States, as they may be updated from time to time.     **1.56**“***Good Laboratory Practices***” or “***GLP***” shall mean the then-current good laboratory practicestandards promulgated or endorsed by the FDA as defined in 21 C.F.R. Part 58, and comparableregulatory standards in jurisdictions outside the United States, as they may be updated from timeto time.     **1.57**“***Good Manufacturing Practices***” or “***GMP***” shall mean the then-current good manufacturingpractices required by the FDA, as set forth in the United States Federal Food, Drug and CosmeticAct, as amended, and the regulations promulgated thereunder, for the manufacture and testing ofactive pharmaceutical ingredients, intermediates, medical devices and combination products, andcomparable laws or regulations applicable to the manufacture and testing of active pharmaceuticalingredients, intermediates, medical devices and combination products in jurisdictions outside theUnited States, as they may be updated from time to time.[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and ExchangeCommission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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Good Manufacturing Practices shall include applicable quality guidelines promulgated under theICH.     **1.58**“***Health Canada***” shall mean Health Canada or its successor.     **1.59**“***ICH***” shall mean the International Conference on Harmonization (of Technical Requirementsfor Registration of Pharmaceuticals for Human Use).     **1.60**“***IND***” shall mean an Investigational New Drug Application (including any amendmentsthereto) filed with the FDA pursuant to 21 C.F.R. §312 before commencement of clinical trials of apharmaceutical product, or any comparable filings with Health Canada in Canada, including clinicaltrial applications.     **1.61**“***Indemnitee***” shall have the meaning set forth in Section 11.3.     **1.62**“***Indemnitor***” shall have the meaning set forth in Section 11.3.     **1.63**“***Indication***” shall mean any disease or pathological condition for which an NDA or similarregulatory filing may be filed and approved.     **1.64**“***Initial Indication***” shall mean rapid treatment of agitation associated withschizophrenia or bipolar disorder.     **1.65**“***Initial Indication Development Plan***” shall mean the plan for development of Product forthe prevention or treatment of the Initial Indication in the United States as agreed to by theParties.     **1.66**“***Intervening Event***” shall have the meaning set forth in Section 15.1.     **1.67**“***Inventions***” shall mean 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.     **1.68**“***Joint Inventions***” shall mean 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.     **1.69**“***Joint Know-How***” shall mean all Know-How included in Joint Inventions, other than anyJoint Patent.     **1.70**“***Joint Patents***” shall mean all Patents claiming any Joint Invention.     **1.71**“***Know-How***” shall mean all tangible and intangible scientific, technical, clinical,regulatory, trade, marketing, commercial, financial or business information and materials,[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and ExchangeCommission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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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 controlinformation, regulatory documentation, information and submissions pertaining to, or made inassociation with, filings with any Regulatory Authority, knowledge, know-how, skill, andexperience.     **1.72**“***Losses***” shall have the meaning set forth in Section 11.1.     **1.73**“***Loxapine***” shall mean the compound with a structure set forth on ***Exhibit 1.73***, or any [ *] or [ * ] of such compound.     **1.74**“***Marketing Approval***” of a Product shall mean 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 Product in suchcountry.     **1.75**“***Material Agreements***” shall have the meaning set forth in Section 10.2(l).     **1.76**“***NDA***” of a Product shall mean 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 for such Product.     **1.77**“***Net Sales***” shall mean the gross amounts invoiced by BLS, its Affiliates and/orSublicensees for sales of Product to Third Parties (other than Sublicensees), less deductionsactually incurred, allowed, paid, accrued or otherwise specifically identified as related to, andspecifically allocated on a pro rata basis with BLS’ (or its Affiliate’s or Sublicensee’s) otherproducts to, the Product by BLS, its Affiliates and/or Sublicensees using GAAP applied on aconsistent basis for:          **(a)**trade, cash and quantity discounts or rebates actually allowed or taken;          **(b)**credits or allowances given or made for rejection of or return of previously sold Product(including as a result of recalls, market withdrawals and other corrective actions), forretroactive price reductions and billing errors, or other allowances specifically identifiable asrelating to the Product, including allowances and credits related to inventory management orsimilar agreements with wholesalers;          **(c)**governmental and other rebates (or equivalents thereof) granted to managed health careorganizations, pharmacy benefit managers (or equivalents thereof), national, state/provincial,local, and other governments, their agencies and purchasers, and reimbursers, or to tradecustomers;[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and ExchangeCommission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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          **(d)**costs of freight, insurance, and other transportation charges directly related to thedistribution of such Product, to the extent included in gross invoiced sales prices;          **(e)**taxes, duties or other governmental charges (including any tax such as a value added orsimilar tax or government charge other than an income tax) levied on or measured by the billingamount for such Product, as adjusted for rebates and refunds;          **(f)**bad debt recognized by BLS, its Affiliates and/or Sublicensees for accounting purposes asnot collectible not to exceed [ * ] percent ([ * ]%) of the gross invoiced sales prices; and          **(g)**any item substantially similar in character or substance to the foregoing.     In no event shall any particular amount identified above be deducted more than once incalculating Net Sales (i.e., no “double counting” of reductions). Sales of Product between BLS andits Affiliates or Sublicensees for resale shall be excluded from the computation of Net Sales, butthe subsequent resale of such Product by an Affiliate or Sublicensee, as applicable, to a ThirdParty shall be included within the computation of Net Sales. Notwithstanding anything to thecontrary herein, sale, disposal or use of Product for marketing, regulatory, development orcharitable purposes, such as clinical trials, preclinical trials, compassionate use, named patientuse, or indigent patient programs, without consideration, shall not be deemed a sale hereunder.     **1.78**“***Party***” shall mean Alexza or BLS individually, and “***Parties***” shall mean Alexza and BLScollectively.     **1.79**“***Patent(s)***” shall mean (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.     **1.80**“***Patent Term Extension***” means any term extensions, supplementary protection certificates,regulatory exclusivity and equivalents thereof offering patent protection beyond the initial termwith respect to any issued Patents.     **1.81**“***Person***” shall mean any individual, corporation, partnership, limited liability company,trust, governmental entity, or other legal entity of any nature whatsoever.     **1.82**“***Phase IV Commitments***” shall mean studies conducted after receipt of a Marketing Approvalfor the Product in the U.S. that is necessary to fulfill commitments made to the FDA as a conditionfor the receipt of such Marketing Approval other than REMS programs.[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and ExchangeCommission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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     **1.83**“***Pre-Commercialization Transition Plan***” shall have the meaning set forth in Section5.1(b).     **1.84**“***Product***” shall mean any combination product consisting of (a) Loxapine ([ * ]) and (b)the Device which delivers Loxapine.     **1.85**“***Post Marketing Studies***” shall mean any REMS programs and/or non-Phase IV Commitmentstudies conducted after the receipt of Marketing Approval for the Product in the U.S. but that arenot conducted to fulfill commitments made to the FDA as a condition for the receipt of suchMarketing Approval.     **1.86**“***Receiving Party***” shall have the meaning set forth in Section 8.1.     **1.87**“***Regulatory Authority***” shall mean any national, regional, state or local regulatoryagency, department, bureau, commission, council or other governmental entity whose review and/orapproval is necessary for the manufacture, packaging, use, storage, import, export, distribution,promotion, marketing, offer for sale and sale of Product.     **1.88**“***Regulatory Filings***” shall mean 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.     **1.89**“***REMS***” shall mean risk evaluation and mitigation strategy.     **1.90**“***Responsible Party***” shall have the meaning set forth in Section 4.3(a).     **1.91**“***Royalty Term***” shall have the meaning set forth in Section 6.3(d).     **1.92**“***SEC***” shall have the meaning set forth in Section 8.5(a).     **1.93**“***Senior Executives***” shall have the meaning set forth in Section 14.1.     **1.94**“***sNDA***” shall mean a supplemental NDA.     **1.95*****“Staccato Technology”***shall mean Alexza’s proprietary technology and the intellectualproperty rights thereto, for the vaporization of a pharmaceutical composition via rapid-heating toform a condensation aerosol that allows rapid systemic drug delivery to humans through deep lunginhalation.     **1.96**“***Sublicensee***” shall mean a Third Party or an Affiliate of BLS, other than a Distributor,to whom BLS or an Affiliate of BLS has granted a sublicense under the Alexza Technology aspermitted under Section 2.3(a) of this Agreement. For clarity, the term “Sublicensee” shall notinclude (i) any wholesalers or importers that are not granted any[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and ExchangeCommission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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sublicense under the Alexza Technology under Section 2.3(a) or (ii) any contract manufacturersthat are granted only the right to manufacture the Product in accordance with the terms andconditions of the Supply Agreement and herein for BLS or its Affiliates or Sublicensees forcommercialization in the Field in the Territory.     **1.97**“***Supply Agreement***” shall have the meaning set forth in Section 5.1(c).     **1.98**“***Term***” shall have the meaning set forth in Section 12.1     **1.99**“***Territory***” shall mean Canada and the United States.     **1.100**“***Third Party***” shall mean any Person other than Alexza, BLS and their respectiveAffiliates.     **1.101**“***Third Party Claim***” shall have the meaning set forth in Section 11.1.     **1.102**“***Trademarks***” shall mean trademarks, trade names, trade dresses, domain names, logos andbrandings.     **1.103**“***United States***” or “***U.S.***” shall mean the United States of America, including itsterritories and possessions and the District of Columbia.     **1.104**“***Valid Claim***” shall mean (a) an unexpired claim of an issued patent which has not beenfound to be unpatentable, invalid or unenforceable by a court or other authority in the subjectcountry, from which decision no appeal is taken or can be taken; or (b) a claim of a pending patentapplication which has not been pending for more than [ * ] ([ * ]) years since the date of itsfirst substantive office action.     **1.105**“***Validation Milestone***” shall have the meaning set forth in Section 6.2.     **1.106**“***Wind-down Period***” shall mean any period after the effective date of termination of thisAgreement, in its entirety or on a country-by-country basis, during which Parties are required towind-down development activities pursuant to Section 13.2(a), 13.3(a) or 13.4(a), as the case maybe.**ARTICLE 2****GRANT OF LICENSE**     **2.1 Licenses to BLS Under Alexza Technology.**          **(a) Technology License to BLS.**Subject to the terms and conditions of this Agreement, Alexzahereby grants and causes its Affiliates to grant to BLS:[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and ExchangeCommission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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               **(i) **a royalty-bearing license under the Alexza Technology to research, develop, import, use,sell, have sold and offer for sale the Product in the Field in the Territory, with such licensebeing exclusive under the Alexza Product Patents and Alexza Know-How and non-exclusive under theAlexza Background Patents;               **(ii) **a worldwide license under the Alexza Technology to manufacture and have manufactured theProduct for use and sale in the Field in the Territory, with such license being co-exclusive withAlexza under the Alexza Product Patents and Alexza Know-How and non-exclusive under the AlexzaBackground Patents, provided that such license under this Section 2.1(a)(ii) shall be royalty-freeso long as BLS pays royalties on the Net Sales of the Product manufactured or have manufacturedunder such license in connection with the exercise of BLS’ license under Section 2.1(a)(i) above;and               **(iii) **a non-exclusive and royalty-free license solely to conduct clinical and non-clinicaldevelopment activities with respect to the Product outside the Territory in accordance with Section2.1(c), solely for the purpose of researching, developing, importing, using, selling, having soldand offering for sale the Product in the Field in the Territory; provided that if there is a ThirdParty licensee of the Product for the country outside of the Territory in which BLS proposes toconduct such clinical and non-clinical development activities, then BLS shall notify and discussits proposed activities with such Third Party licensee.For clarity, the license to BLS to manufacture and have manufactured the Product shall include theright for BLS to manufacture and have manufactured the Device solely for use as a component of theProduct in the Field in the Territory, and BLS shall not exercise such license to manufactureand/or have manufactured the Product or the Device: (i) unless and until BLS has the right to do sounder the Supply Agreement or (ii) pursuant to Section 13.5 of this Agreement.          **(b) Trademark and Copyright License to BLS.**Subject to the terms and conditions of thisAgreement, Alexza hereby grants and causes its Affiliates to grant to BLS under the AlexzaTrademarks and Alexza Copyrights (i) an exclusive and royalty-free license to research, develop,manufacture, have manufactured, import, use, sell, have sold and offer for sale Product in theField in the Territory and (ii) a non-exclusive and royalty-free license solely to conduct clinicaland non-clinical development activities with respect to the Product outside the Territory inaccordance with Section 2.1(c) below, solely for the purpose of researching, developing, importing,using, selling having sold and offering for sale the Product in the Field in the Territory.For clarity, if an Alexza Trademark is not adopted for the initial launch as the Trademark for theProduct pursuant to Section 9.9, then Alexza shall have the right to use such Alexza Trademark withany other product.          **(c) Limitation on Non-Exclusive License Outside the Territory**. For clarity, the licensegranted to BLS under Section 2.1(a)(ii) or 2.1(b)(ii) shall not include the right[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and ExchangeCommission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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for BLS to, by itself or through its Affiliate or a Third Party, seek Marketing Approval for,make Regulatory Filings for, or commercialize the Product outside the Territory.          **(d) Covenant Not to Grant Other Non-exclusive License.**Alexza covenants not to grant anyother non-exclusive license to any Third Party under the Alexza Background Patents to research,develop, manufacture, have manufactured, import, use, sell, have sold and offer for sale theProduct in the Field in the Territory.     **2.2 Licenses to Alexza.**          **(a)**Subject to the terms and conditions of this Agreement, BLS hereby grants to Alexza aroyalty-free, fully-paid, non-exclusive license, with the right to grant sublicenses, under: (i)BLS Patents; and (ii) BLS Know-How to the extent incorporated into the Product and/or the method ofmaking or using of the Product (but in any event excluding BLS Know-How regarding the marketing,commercial, financial or business information with respect to the Product), in each case for Alexzato make, have made, use, sell, offer for sale and import (i) the Product outside the Field in theTerritory and for any use outside the Territory and (ii) any other product that is comprised ofAPI(s) delivered by the Device.          **(b)**Subject to the terms and conditions of this Agreement, BLS hereby grants to Alexza aroyalty-free, fully-paid, non-exclusive license to use the BLS Trademark solely in connection withAlexza’s making, having made, use, selling, offering for sale and import of the Product outside theTerritory for use in a rapid treatment of agitation associated with any psychiatric and/orneurological indication.          **(c)**BLS covenants that all Patents that claim Inventions with respect to the Device generatedduring the Term pursuant to this Agreement by BLS and its Affiliates will be owned by BLS.          **(d)**BLS represents and warrants to Alexza that it has the right to grant to Alexza thelicenses under Sections 2.2(a) and 2.2(b), and hereby covenants to include contractual requirementsrequiring its Sublicensees and subcontractors (if and to the extent such subcontractors arereasonably expected to generate any Invention) to grant to BLS the licenses under Patents andKnow-How of such Sublicensees and subcontractors similar to those granted by BLS to Alexza underSection 2.2(a), with the right to sublicense to Alexza.     **2.3 Sublicensees; Subcontractors; Distributors.**          **(a) Right to Sublicense and Subcontract.**BLS shall have the right to sublicense to itsAffiliates any of the rights or obligations of BLS under this Agreement, including the licensesgranted pursuant to Section 2.1(a) and Section 2.1(b). In addition, BLS shall have the right, withprior written notice to Alexza, to sublicense and subcontract to Third Parties any or all of therights acquired under this Agreement, including the right to sublicense or subcontract BLS’ rightsunder Section 2.1(a) and Section 2.1(b) with respect to the Product in any or all of thejurisdictions in the Territory. All sublicense and subcontract agreements shall[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and ExchangeCommission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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be consistent with and shall be subject to the terms and conditions of this Agreement. BLSshall provide a copy of any such sublicense agreement, subject to redaction of financial terms andother provisions that do not relate to this Agreement. BLS shall remain responsible for theperformance of its Sublicensees and subcontractors hereunder.          **(b) Right to Engage Distributors.**BLS shall have the right to engage Distributors under thisAgreement, provided that BLS shall remain responsible for the performance of its Distributorshereunder, including without limitation the compliance of Applicable Laws by such Distributors inconnection with the distribution of the Product hereunder. In the event of termination of thisAgreement pursuant to Section 12.2(b) for breach by BLS, any Third Party Distributor or Third PartySublicensee shall, from the effective date of such termination, automatically become a directlicensee of Alexza with respect to the rights licensed hereunder and sublicensed to the Third PartyDistributor or Third Party Sublicensee by BLS; provided, however, that such Third Party Distributoror Third Party Sublicensee is not in breach of its Distribution Agreement or sublicense and suchThird Party Distributor or Third Party Sublicensee agrees to comply with all the terms of thisAgreement to the extent applicable to the rights sublicensed to it by BLS; provided further that,in no event shall Alexza have greater obligations with respect to such Third Party Distributor orThird Party Sublicensee than it has with respect to BLS hereunder.          **(c) BLS Responsibility.**BLS shall remain fully and unconditionally obligated and responsiblefor the full and complete performance of this Agreement by its Sublicensees, Distributors and/orother subcontractors and in no event shall BLS’ sublicensing, subcontracting or delegation of thetasks assigned to it under this Agreement be deemed to relieve BLS’ liabilities or obligations toAlexza under this Agreement.     **2.4 Rights Reserved.**Except for the rights and licenses expressly granted in this Agreement,Alexza retains all rights under its intellectual property, including the Alexza Technology, and BLSretains all rights under its intellectual property, including BLS Technology, and no rights shallbe deemed granted by one Party to the other Party by implication, estoppel or otherwise. Further,notwithstanding the grants of exclusive rights in Section 2.1, Alexza retains the right to: (a)perform or have performed all of its obligations under this Agreement, including, but not limitedto, to conduct development activities as contemplated by Article 4 and to make and have made theProduct for supply to BLS as contemplated by Article 5 and the Supply Agreement; (b) manufacture,have manufactured the Product in the Field in the Territory solely for the purpose of researching,developing, importing, using, selling having sold and offering for sale the Product for use outsidethe Field in the Territory and/or for any use outside the Territory; and (c) perform and grantlicenses or sublicenses solely to conduct clinical and non-clinical development activities withrespect to the Product in the Territory solely for the purpose of researching, developing,importing, using, selling, having sold and offering for sale the Product outside the Field in theTerritory and/or for any use outside the Territory; provided that if Alexza’s Third Party licenseeof the Product for the country outside of the Territory proposes to conduct such clinical andnon-clinical development activities in the Territory, then such Third Party Licensee shall notifyand discuss its proposed activities with[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and ExchangeCommission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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BLS. For the avoidance of doubt, the license granted to BLS under Section 2.1 does not conferany rights to BLS with respect to any product comprising the Device and any API other thanLoxapine, or any product comprising the Device and Loxapine together with one or more other API(s).     **2.5 Technology Transfer.**          **(a) Transfer of Non-Manufacturing Know-How.**BLS shall regularly consult with Alexza tofacilitate the transfer of Alexza Know-How other than manufacturing Know-How. No later than [ * ]([ * ]) days after the Effective Date, Alexza shall, [ * ], make available to BLS personnel ofAlexza who are knowledgeable or experienced in the use of the Product in the Field to facilitatethe transfer of Alexza Know-How (other than manufacturing Know-How) existing as of the EffectiveDate to effect the transfer within [ * ] days of the Effective Date. BLS shall cooperate with suchtransfer and shall promptly undertake to complete the transfer and shall be responsible for costsand expenses related to any delays or failure caused by BLS to affect transfer on a reasonable andmutually agreed schedule for transfer within the [ * ]-day period and Alexza shall be responsiblefor costs and expenses related to the transfer of any Alexza Know-How existing as of Effective Datethat is not transferred to BLS within the [ * ]-day period. In addition, during the Term, Alexzashall inform BLS on a [ * ] basis about all new Alexza Know-How that is obtained or generated by oron behalf of Alexza during such [ * ] period and at BLS’ request, transfer such new Alexza Know-Howto BLS at BLS’ Costs and Expenses (for clarity [ * ]).          **(b) Transfer of Manufacturing Know-How.**Transfer of Alexza Know-How with respect tomanufacture of the Product shall be in accordance with the Supply Agreement and Section 13.5.     **2.6 Off-Label Use.**During the Term of this Agreement, Alexza shall use Commercially ReasonableEfforts to prevent (as to itself and its Affiliates), and shall include and enforce contractualobligations on its other licensees, sublicensees and distributors of the Product to useCommercially Reasonable Efforts to prevent, any and all off-label uses of the Product or anycombination product that is comprised of Loxapine and one or more other APIs delivered by theDevice in the Field in the Territory. During the Term of this Agreement, BLS shall useCommercially Reasonable Efforts to prevent (as to itself and its Affiliates), and shall include andenforce contractual obligations for its Sublicensees and Distributors to use CommerciallyReasonable Efforts to prevent, any and all off-label uses of the Product outside the Field oroutside the Territory.     **2.7 Non-Competition**.          **(a) Non-Competition.**Each Party hereby covenants not to, and agrees to cause its Affiliatesnot to, directly or indirectly, through a licensee, sublicensee, distributor or otherwise,research, develop, import, manufacture, have manufactured, sell, have sold and offer for sale aCompeting Product in the Territory during the Term. For clarity, nothing herein shall[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and ExchangeCommission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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be deemed to (i) limit the rights pursuant to Section 2.4 retained by Alexza with respect tothe Product or a Competing Product outside of the Field in the Territory or outside of theTerritory or (ii) limit the rights of BLS or its Affiliates or distributors in selling, promoting,marketing or otherwise commercializing any product that is being commercialized by BLS or itsAffiliates or Distributors as of the Effective Date.          **(b) Acquisition of Competing Product.**Notwithstanding Section 2.7(a), during the Term, in theevent that (i) a Party obtains a Competing Product as a result of a merger with, or acquisition ofor by, any Third Party in the Territory, then the Party that obtained the Competing Product in theTerritory, shall, within [ * ] ([ * ]) days after the closing of such merger or acquisition, either(A) upon the election of either Party, enter into a binding written agreement whereby such Partygrants an economic benefit to the other Party in exchange for any erosion of the market for theProduct in the Territory, it being understood that neither Party shall be obligated to enter intosuch an agreement; provided that if the Parties fail to enter into such agreement within [ * ] ([ *]) days, then the Party acquiring such a Competing Product shall comply with the terms ofsubsection (B) or (C); (B) enter into a binding written agreement to sell, transfer, assign ordivest all of its rights in and to such Competing Product in the Territory to a Third Party andconsummate the sale, transfer, assignment or divestiture of its rights not later than [ * ]following the acquisition of such Competing Product; or (C) terminate the development and/orcommercialization of such Competing Product in the Territory, as applicable, within [ * ] ([ * ])days following the acquisition of the Competing Product (unless and to the extent required tocontinue commercialization of such Competing Product by a governmental authority, in which case theParties shall enter into a mutually acceptable agreement of the type contemplated by the foregoingclause (A)).**ARTICLE 3****GOVERNANCE**     **3.1 Collaboration Committee**.          **(a) Establishment.**Within [ * ] ([ * ]) days following the Effective Date, Alexza and BLSshall establish a joint collaboration committee (the “***Collaboration Committee***”) to oversee, reviewand coordinate development, manufacture, regulatory strategy and commercialization of the Productin the Field in the Territory.          **(b) Duties.**The Collaboration Committee shall:               **(i) **review, coordinate, and discuss the overall development and regulatory strategies forcommercializing the Product in the Field in the Territory;               **(ii) **provide a forum for the Parties to present and discuss the Development Plans and materialchanges to the Development Plans, including Budgets contained therein;[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and ExchangeCommission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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               **(iii) **provide a forum for the Parties to present any proposals regarding material development,and regulatory and manufacturing matters pertaining to the Product in the Territory and seek inputfrom the Parties on the foregoing matters;               **(iv) **provide a forum for the Parties to exchange information and coordinate their respectiveactivities with respect to development, regulatory and manufacturing matters pertaining to theProduct in the Territory and outside the Territory;               **(v) **review (A) the Commercialization Plan and exchange information with respect to BLS’prelaunch, launch and subsequent commercialization activities with respect to the Product and (B)commercialization activities of Alexza pertaining to the Product outside the Territory; and               **(vi) **perform such other duties as are specifically assigned by the Parties to theCollaboration Committee pursuant to this Agreement.     **3.2 Collaboration Committee Membership.**The Collaboration Committee shall consist ofindividuals appropriately qualified and of appropriate seniority to discuss the development,manufacturing and commercialization activities of the Parties and shall be responsible forcoordinating communications, managing the roles, responsibilities and timelines for such activitiesbased on the Development Plan. The Collaboration Committee shall be composed of four members, twoof whom shall be nominated by Alexza and two of whom shall be nominated by BLS*.*Any member of theCollaboration Committee may designate an appropriately qualified substitute to attend and performthe functions of that member at any meeting of the Collaboration Committee. Each Party may, withthe consent of the other Party, such consent not to be unreasonably withheld or delayed, invitenon-member representatives of such Party to attend meetings of the Collaboration Committee.     **3.3 Meetings.**All Collaboration Committee meetings shall be held as often as the members maydetermine, but in any event Collaboration Committee meetings shall occur not less than once per [ *]. Such meetings may be held in person, or by any means of telecommunications or video conference,as the members deem necessary or appropriate; *provided, however,*that at least one CollaborationCommittee meeting per [ * ] shall be held in person at [ * ] offices in [ * ]. [ * ] of the [ * ]in-person meetings shall be held at [ * ] offices in [ * ].     **3.4 Minutes.**Minutes for each of the Collaboration Committee meetings shall be prepared by aBLS or an Alexza member of the Collaboration Committee on an alternating basis. The draft minutesshall be sent to all members of the Collaboration Committee for comment promptly after each suchmeeting (but in no event more than [ * ] ([ * ]) days after each such meeting). All actions notedin the minutes shall be reviewed and approved at subsequent meetings of the CollaborationCommittee; *provided*that if the Parties cannot agree as to the content of the minutes by the timethe Collaboration Committee next meets, such minutes shall be finalized to reflect any areas ofdisagreement.[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and ExchangeCommission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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     **3.5 Expenses.**Each Party shall bear its own costs, including expenses incurred by the membersnominated by it in connection with their activities as members of the Collaboration Committee.     **3.6 Subcommittees.**From time to time, the Collaboration Committee may establish subcommitteesto oversee particular projects or activities within the scope of authority of the CollaborationCommittee, as it deems necessary or advisable. Each subcommittee shall consist of such number ofrepresentatives of each Party as the Collaboration Committee determines is appropriate from time totime and shall meet with such frequency as the Collaboration Committee shall determine. No laterthan [ * ] prior to the anticipated First Commercial Sale of the Product in the Territory, theCollaboration Committee shall establish a Launch Subcommittee, which shall meet regularly (at leastonce per [ * ]) to exchange information and coordinate pre-launch activities.     **3.7 Discontinuation of Participation**. The Collaboration Committee (and any subcommitteeestablished under Section 3.6) shall continue to exist until the first to occur of: (a) the Partiesmutually agreeing to disband the committee; or (b) Alexza providing to BLS written notice of itsintention to disband and no longer participate in such committee. Once Alexza has provided suchwritten notice, such committee shall have no further obligations under this Agreement and BLS shallhave the right to solely decide, without consultation with Alexza, any matters related to theProduct for use in the Field in the Territory.**ARTICLE 4****DEVELOPMENT AND REGULATORY ACTIVITIES**     **4.1 Development Plans.**The Parties have agreed to the Initial Indication Development Plan(including a Budget contained therein) for the Initial Indication. The Collaboration Committeeshall review and consider the Development Plans and any changes to the Development Plans on anongoing basis, and in no event less frequently than once [ * ]. All material changes to theDevelopment Plans shall be agreed to by the Parties in writing.     **4.2 Development Responsibilities**.          **(a) Responsibilities for Obtaining NDA Approval for Initial Indication.**Alexza shall continueto be responsible for conducting and funding all development and regulatory activities (includingmaking regulatory filings and paying fees for regulatory filings) associated with obtaining theapproval by the FDA of the NDA for the Product for the Initial Indication that has been filed byAlexza prior to the Effective Date (the “***Existing NDA***”). Upon approval by the FDA of such NDA,Alexza shall be responsible for conducting and funding any Phase IV Commitments that arise from andsolely relate to the approval of the Product for the Initial Indication, and [ * ] shall beresponsible for conducting and funding any Post-Marketing Studies that arise from and solely relateto the approval of the Product for the Initial Indication; provided that, if the aggregate amountof the Expenses that [ * ] is so responsible for with respect[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and ExchangeCommission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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to any and all Post-Marketing Studies is expected to exceed $[ * ], then the Parties shallrefer the matter to the Senior Executives of the Parties who shall negotiate in good faith how toproceed in light of such expected excess amount.          **(b) Responsibilities for Enabling Out-patient Use of the Product in the Initial Indication.**In addition, Alexza shall be responsible for conducting and funding any and all developmentactivities and regulatory activities (with [ * ] paying regulatory filing fees to the applicableRegulatory Authority and such regulatory filings being made under [ * ] name) as required by theFDA for the approval of any sNDA or NDA for the out-patient use of the Product in the InitialIndication in the event such approval is required by the FDA prior to the sale of the Product forthe out-patient use of the Product in the Initial Indication; provided that the aggregate amount ofthe Expenses that Alexza is so responsible for under this Section 4.2(b), together with the amountof the Phase IV Commitments that Alexza is responsible for under Section 4.2(a), shall in no eventexceed $[ * ]. Upon approval by the FDA of such sNDA or NDA, as the case may be, with respect tothe Product for its use on an out-patient basis in the Initial Indication, BLS shall be responsiblefor conducting and funding any Phase IV Commitments and/or Post-Marketing Studies with respect tosuch out-patient use; provided that, if the aggregate amount of the Expenses that BLS is soresponsible for with respect to out-patient use in the Initial Indications is expected to exceed $[* ], then the Parties shall refer the matter to the Senior Executives who shall negotiate in goodfaith how to proceed in light of such expected excess amount.          **(c) Additional Development Activities for Initial Indication.**In the event that the FDA doesnot approve the Existing NDA for the Product for the treatment of the Initial Indication (byissuing a non**-**approvable letter or an approvable letter which requires the Parties to conductadditional development and/or regulatory activities, or otherwise), then BLS shall have the option,which may be exercised by written notice to Alexza within [ * ] ([ * ]) days after suchdetermination, to elect to do one of the following:               **(i) **have additional development and/or regulatory activities conducted, as required to secureapproval by the FDA of the Existing NDA for the Product for the treatment of the InitialIndication, which shall be conducted in accordance with the proposed amendment to the InitialIndication Development Plan, as proposed and presented by Alexza to the Collaboration Committee ingood faith with the objective that such proposed activities shall be sufficient, in the reasonablejudgment of the Parties, for securing approval by the FDA of the Existing NDA, and such activities(including fees for additional regulatory filings) shall be funded by [ * ], provided that [ * ]’sfunding obligation for Expenses for such additional development studies shall in any event notexceed $[ * ]; The amendment to the Initial Indication Development Plan shall also set forth theestimated timeline for completing such activities and for making additional Regulatory Filings forsecuring approval by the FDA of the Existing NDA.               **(ii) **terminate this Agreement;[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and ExchangeCommission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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               **(iii) **terminate with respect to the Initial Indication under this Agreement; or               **(iv) **proceed with other arrangements as agreed to by the Parties.In the event that BLS elects to have additional development and/or regulatory activities conductedin accordance with Section 4.2(c)(i) or Section 4.2(c)(iv) above, (A) if the additional RegulatoryFilings required for securing approval by the FDA of the Existing NDA are not made within thetimeline set forth in the amendment to the Initial Indication Development Plan or (B) if the FDAdoes not approve the Existing NDA for the Product for the treatment of the Initial Indicationwithin [ * ] ([ * ]) months after the additional Regulatory Filings are made (by issuing anon**-**approvable letter or an approvable letter which requires the Parties to conduct additionaldevelopment and/or regulatory activities, or otherwise), then BLS shall have the option, which maybe exercised by written notice to Alexza within [ * ] ([ * ]) days after such determination, toelect one of the options set forth in (ii), (iii) or (iv) above.          **(d) Responsibilities for Additional Indication.**If BLS elects to pursue one or more otherIndication(s) in the Field (each, an “***Additional Indication***”), it shall notify the CollaborationCommittee of its decision, and the Collaboration Committee shall discuss which additionalnon-clinical and clinical studies are required by the FDA to secure approval by the FDA of an NDAfor the Product in the U.S. for such other Indication(s). Such additional development studiesshall be conducted in accordance with an Additional Indication Development Plan prepared by BLS andpresented to and discussed by the Collaboration Committee. [ * ] shall be responsible for fundingand conducting all (i) [ * ] studies to support the use of the Product for treating AdditionalIndication other than schizophrenia or bipolar disorder and (ii) new [ * ] development, new [ * ]technology and/or study supplies for developing the Product for such Additional Indication;provided that the aggregate amount of costs and expenses (including [ * ] internal FTE costscalculated at the FTE Rate) for which [ * ] is responsible shall not exceed $[ * ]. [ * ] shall beresponsible for funding and conducting all other activities under such Additional IndicationDevelopment Plan except those for which [ * ] is responsible.     **4.3 Conduct of Development Activities**.          **(a) Compliance with Development Plan and Applicable Laws.**All development and regulatoryactivities for obtaining Marketing Approval of Product in the Field in the United States shall beconducted by and on behalf of the Parties in accordance with the Development Plans and the otherprovisions of this Agreement. Each Party shall conduct the development activities for which it isthe responsible Party (the *“****Responsible Party****”*) under the Development Plans in accordance with theDevelopment Plans (including the applicable Budgets contained therein) and this Agreement. EachParty shall conduct those activities for which it is the Responsible Party under the DevelopmentPlans in compliance in all material respects with all Applicable Laws and in accordance with GLPand GCP (when applicable) under the Applicable Laws of the country in which such activities areconducted.[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and ExchangeCommission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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          **(b) Diligence.**The Responsible Party shall use Commercially Reasonable Efforts to conduct andcomplete the studies and activities assigned to it in the Development Plans in order to achieve thegoals of the Development Plans in accordance with the timelines specified therein. Withoutlimiting the foregoing, each Party shall proceed diligently and in a timely manner with respect tothe studies and activities for which it is the Responsible Party under the applicable DevelopmentPlan by using its good faith efforts to allocate sufficient time, effort, equipment and facilitiesto such development activities and to use personnel with sufficient skills and experience as arerequired to accomplish such studies and activities in accordance with the Development Plans and theterms of this Agreement.          **(c) Information Regarding Development Activities.**Each Party shall maintain records, insufficient detail and in good scientific manner appropriate for patent and regulatory purposes,which shall fully and properly reflect all work done and results achieved by or on behalf of suchParty in the performance of its development activities under this Agreement. Each Party shall keepthe Collaboration Committee appropriately informed of the status of clinical and preclinicalstudies and other activities with respect to Product in the Field conducted under the DevelopmentPlans. Upon request by the Collaboration Committee, without limiting the foregoing, each Partyshall promptly provide the Collaboration Committee with summaries of data and results and, ifrequested by the Collaboration Committee, all supporting data and results generated or obtained inthe course of such Party’s performance of studies and activities under the Development Plans. Uponreasonable prior written notice, each Party shall have the right to inspect records and notebooksreflecting the work done and results achieved by or on behalf of the other Party or its Affiliatesin the performance of its development activities with respect to the Device and Product in theField pursuant to the Development Plans.     **4.4 Regulatory Responsibilities for Initial Indication**          **(a) Responsibilities for Filing and Securing NDA in the U.S.**Alexza shall be responsible forfiling and securing the approval by the FDA of the Existing NDA for the Product in the U.S. for thetreatment of the Initial Indication at Alexza’s expense; provided that once the NDA has beentransferred to BLS pursuant to Section 4.4(b) below, BLS, as the holder of the NDA, shall take allactions necessary or appropriate to facilitate the maintenance of such NDAs and will be responsiblefor all related communication with the FDA at [ * ] expense.          **(b) Transfer of NDA.**In the event that Alexza obtains the approval of the Existing NDA forthe Product for the treatment of the Initial Indication as described in Section 4.4(a) above, thenwithin [ * ] ([ * ]) days after Alexza obtains such approval by the FDA of such NDA, Alexza shalltransfer to BLS, [ * ], the approval of the NDA to enable BLS to commercialize the Product in theField in the Territory and to manage any additional development of the Product in the Territory inconnection with the treatment of the Initial Indication.          **(c) Responsibility for Filing and Securing sNDA in the U.S.**Alexza shall be responsible forconducting and funding any and all regulatory activities required for filing[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and ExchangeCommission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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sNDA or NDA and securing the approval of such sNDA or NDA by the FDA to enable the out-patientuse of the Product in the Initial Indication to the extent such an sNDA or NDA approval is requiredfor the commercialization of the Product in the out-patient setting; provided that such regulatoryfilings shall be made in BLS’ name and [ * ] shall be responsible for paying the filing fees to theapplicable Regulatory Authority. BLS shall assist Alexza with the filing of such sNDA or NDA. AtBLS’ request, Alexza shall assist BLS with its communication with the Regulatory Authority.          **(d) Marketing Approval for Canada.**BLS may, at its sole discretion, obtain Marketing Approvaland pricing and/or reimbursement approval in Canada for the Product for the treatment of theInitial Indication and shall be responsible for, and shall bear all costs associated with,obtaining all such approvals for Canada for the Product for the treatment of the InitialIndication. Alexza shall use Commercially Reasonable Efforts to assist BLS in respect of anyregulatory requirements in Canada relating to the Product for the treatment of the InitialIndication.     **4.5 Regulatory Responsibilities for Additional Indication**          **(a) Marketing Approvals for the U.S.**If BLS elects to pursue one or more AdditionalIndication, then BLS shall be responsible for filing and securing the approval of the NDA by theFDA for the Product in the U.S. for such Additional Indication(s) in accordance with a DevelopmentPlan prepared by BLS and presented to the Collaboration Committee. BLS shall bear all costsassociated with such regulatory activities. For clarity, Alexza shall be responsible for fundingand conducting certain development activities in accordance with Section 4.2(d).          **(b) Marketing Approvals for Canada.**If BLS elects to pursue any Additional Indication, thenBLS may, at its sole discretion, obtain Marketing Approval for Canada for the Product for theAdditional Indication and shall be responsible for, and shall bear all costs associated with,obtaining all such Marketing Approvals for Canada for the Product for any such Indication. Alexzashall use Commercially Reasonable Efforts to assist BLS in respect of any regulatory requirementsin Canada relating to the Product for the Additional Indication.     **4.6 Regulatory Activities**.          **(a) Conduct of Regulatory Activities.**Each Party shall conduct all of those regulatoryactivities for which it is the Responsible Party as set forth in Section 4.4 or Section 4.5, as thecase may be and shall fund all regulatory activities for obtaining Marketing Approval in theTerritory in accordance with Section 4.5 above. Each Party shall conduct such regulatoryactivities for which it is the Responsible Party in compliance with this Agreement and inaccordance with the Development Plan (including the Budget set forth therein) and shall useCommercially Reasonable Efforts to obtain Marketing Approval in the Field in the Territory. Alexzamay not conduct any development (including regulatory) activities with respect to any Product inthe Field in the Territory without BLS’ prior written consent, except pursuant to a[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and ExchangeCommission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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Development Plan. Upon request by the Responsible Party, the other Party shall provide reasonable assistanceto the Responsible Party in relation to the performance by the Responsible Party of such regulatoryactivities under this Agreement.          **(b) Regulatory Communications.**During the period that a Party is the Responsible Party forregulatory activities with respect to Product for the Initial Indication in the United States, suchResponsible Party shall timely inform the other Party of all of its scheduled meetings with theFDA, invite such other Party to attend in such meetings as observers, and, if such other Partyelects not to attend such meetings, provide such other Party with summaries of its meeting with theFDA promptly after each meeting. In addition, each Party shall promptly provide the other Partywith copies of all written communications and summary of material oral discussions with theRegulatory Authority with respect to the Product in the Field in the Territory. In addition to theinformation required to be provided to the other Party in other provisions of this Agreement, BLSshall timely provide Alexza with summaries of its material communications and correspondence withthe Regulatory Authorities in the Territory with respect to safety and manufacturing issues withrespect to Device or Product for use in the Field in the Territory and Alexza shall timely provideBLS with summaries of its material communications and correspondence with the RegulatoryAuthorities with respect to safety and manufacturing issues with respect to the Device or Productfor use outside the Field in the Territory or for use outside the Territory.          **(c) Alexza’s Right to Reference or Access NDA or sNDA.**Alexza and its Affiliates shall havethe right to access and reference to BLS’ NDA and sNDA for the Product (including data included orreferenced therein) in connection with any Marketing Approvals it may seek for its own Product foruse outside the Field in the Territory or for any use outside of the Territory. Alexza’s otherlicensees shall have the right to reference to BLS’ NDA and sNDA for the Product in connection withany Marketing Approvals they may seek for their own Product for use outside the Field in theTerritory or for any use outside the Territory.          **(d) BLS’ Right of Reference.**BLS and its Affiliates, Distributors and Sublicensees shall havethe right to access and reference to all Regulatory Filings (including data included or referencedtherein) Controlled by Alexza or its Affiliates and the right to reference to all RegulatoryFilings (including data included or reference therein) Controlled by Alexza’s other licensees tothe extent permitted under the agreement between Alexza and such other licensees, in each case,with respect to Product (x) for use outside the Field in the Territory and (y) for use outside theTerritory, in each case, solely in connection with any Marketing Approval BLS or itsAffiliates, Distributors or Sublicensees may seek to obtain with respect to Product in theField in the Territory.          **(e) Pharmacovigilance.**Prior to Alexza’s entering into a collaboration with a Third Partypartner for the development and/or commercialization of the Product outside the Territory oroutside of the Field, [ * ] shall be responsible, at its own expense, for maintaining the globalsafety database for the Product. After Alexza’s entering into such collaboration, Alexza, BLS andsuch Third Party partner shall discuss in good faith and agree upon the party[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with theSecurities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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responsible for the subsequent maintenance of such global safety database for the Product and the allocation of costsfor such maintenance between [ * ] and such Third Party partner in connection therewith. At alltimes, the Party (and, if applicable, Alexza’s Third Party partner) not responsible for suchmaintenance shall promptly provide to the Party responsible for such maintenance all safetyinformation coming into the possession of such Party that is necessary or useful for maintainingthe global safety database for the Product. Each Party shall cooperate, and shall cause itsAffiliates, licensees, Distributors and Sublicensees to cooperate, in implementing apharmacovigilance mutual alert process with respect to the Product to comply with all applicablelegal obligations of Regulatory Authorities. The Parties shall enter into a pharmacovigilanceagreement on terms no less stringent than those required by ICH guidelines, including (i) providingdetailed procedures regarding the maintenance of core safety information and the exchange of safetydata relating to the Product worldwide within appropriate timeframes and in an appropriate formatto enable each party to meet both expedited and periodic regulatory reporting requirements; and(ii) ensuring compliance with the reporting requirements of all applicable Regulatory Authoritieson a worldwide basis for the reporting of safety data in accordance with standards stipulated inthe ICH guidelines, and all applicable regulatory and legal requirements regarding the managementof safety data.     **4.7 Clinical Manufacturing and Supply.**Alexza will manufacture and supply the Product for useby the Parties in connection with the development of the Product in the Field in the Territory forclinical development as set forth in the Supply Agreement. Alexza shall perform such manufactureand supply at its own expense with respect to the Product used in the studies for which Alexza isthe Responsible Party pursuant to Section 4.2. BLS shall [ * ] Alexza [ * ] (as defined in theSupply Agreement) for the Product used in the studies for which BLS is the Responsible Partypursuant to Section 4.2.     **4.8 Expenses Report and Audit Right**. In order to demonstrate the aggregate amount of Expensesfor which it is responsible pursuant to Section 4.2(a), Section 4.2(b), Section 4.2(c)(i) orSection 4.2(d) has reached the applicable maximum amount of funding obligation set forth therein, aParty shall provide to the other Party a written report of all Expenses which it has paid orcommitted to pay, together with documented supporting evidence. The other Party shall have theright to cause an independent, certified public accounting firm reasonably acceptable to the otherParty to audit the other Party’s records relating to Expenses to confirm the amount of the Expensesreflected in such report. The auditing Party shall bear the full cost of such audit unless suchaudit discloses an over-reporting by the audited Party of more than [ * ] percent ([ * ]%) of theamount of Expenses, in which case, the audited Party shall bear the full cost of such audit.     **4.9 Alexza’s Development Efforts Outside the Territory or Outside the Field.**Alexza agreesand acknowledges that it is in the Parties’ mutual interests to keep BLS reasonably informed as tothe efforts of Alexza or Alexza’s licensees or collaborators in developing any Product for use (i)outside the Territory or (ii) outside the Field in the Territory, in each case subject to Alexza’sobligations with its Third Party partner(s). Each Party shall provide through the CollaborationCommittee, and shall use Commercially Reasonable Efforts to cause its[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with theSecurities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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licensees and collaborators to provide, regular summaries of development activities, including Regulatory Filings and summaryresults of all preclinical studies and clinical trials prepared according to applicable nationaland international (e.g., ICH, GCP, GLP, and GMP) guidelines, in each case, with respect to anyProduct being developed by such Party or its licensees and collaborators; provided that if Alexza’slicensees and collaborators provide such regular summaries to BLS, BLS agrees to provide suchregular summaries to Alexza’s licensees and collaborators with respect to any Product beingdeveloped by Alexza for use outside of the Field or outside of the Territory. In addition, Alexzashall use Commercially Reasonable Efforts not to conduct and shall use its Commercially ReasonableEfforts to require its licensees not to conduct any clinical studies with respect to the Productthat would [ * ] that would have an adverse impact on the Product as it is being developed orcommercialized by BLS, its Affiliates, Distributors or Sublicensees pursuant to this Agreement.BLS shall use Commercially Reasonable Efforts not to conduct any clinical studies with respect tothe Product that would [ * ] that would have an adverse impact on the Product as it is beingdeveloped or commercialized by Alexza, its Affiliates, Distributors or Sublicensees outside of theField or outside of the Territory. If a Party believes that activities that would [ * ] that wouldhave an adverse impact on the Product as it is being developed or commercialized by such Party, thepotentially aggrieved Party shall notify the other Party and the Parties shall discuss in goodfaith any actions that should be undertaken by the notified Party to limit or otherwise terminatesuch clinical studies.**ARTICLE 5****COMMERCIALIZATION AND PROMOTION; MANUFACTURE AND SUPPLY**     **5.1 Commercialization of Product**.          **(a) BLS’ Commercialization Rights.**BLS shall have the exclusive right to and shall useCommercially Reasonable Efforts to: (i) establish the strategy for the commercialization of theProduct in the Field in the Territory (the “***Commercial Strategy***”) and (ii) commercialize theProduct in the Field in the Territory. It is anticipated that BLS will enter into distribution andsupply agreement(s) with its Affiliate(s) or Third Party(ies) for the commercialization of theProduct in the Field in the Territory. BLS shall commercialize or cause to be commercialized atleast one Product in the Field in each jurisdiction in the Territory where it has received aMarketing Approval to do so. BLS and its Sublicensees and Distributors shall have the right to setthe terms of sales for the Product in the Field and book all such sales in the Territory.          **(b) Commercialization Coordination**. Within [ * ] ([ * ]) months of the Effective Date, BLSshall prepare and submit to the Collaboration Committee for review and discussion acommercialization plan setting forth the goals, Commercialization Strategies andplans for the prelaunch activities, launch and subsequent commercialization of the Product inthe Field in the Territory and the level of anticipated sales force and promotion efforts dedicatedto the Product, together with the budget in connection therewith (the “**Commercialization Plan**”).BLS shall use or cause to be used Commercially Reasonable Efforts to conduct the[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with theSecurities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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commercialization activities in accordance with such Commercialization Plan, which may be amended and updated by BLSfrom time to time. BLS shall consult with and provide regular updates to Alexza through theCollaboration Committee regarding the Commercial Strategy and shall discuss coordination ofcommercial activities in the Field in the Territory with activities in the rest of the world. TheParties have jointly developed a transition plan (the “***Pre-Commercialization Transition Plan***”) fortransferring to BLS or its Sublicensees or Distributors ongoing Alexza prelaunch activities (as setforth in such transition plan) with respect to the Product. The start of the hand-off shall beginon [ * ], after which date the costs and expenses of such prelaunch activities shall be theresponsibility of BLS.          **(c) Manufacture and Supply**. Alexza shall have the responsibility to manage the manufacture,packaging, labeling and supply of the Product to BLS for sale in the Territory for the InitialIndication as long as BLS has not terminated its obligations under this Agreement with respect tothe Initial Indication pursuant to Section 4.2(c)(iii), and any Additional Indication if BLS haselected to pursue such Additional Indication pursuant to Section 4.2(d), in each case as set forthin the supply agreement entered into contemporaneously with this Agreement (the “***SupplyAgreement***”).     **5.2 Territory Compliance**. Alexza and its Affiliates and licensees (i) shall not, directly orindirectly, commercialize any Product in the Field in the Territory, and (ii) shall promptly ceaseselling or distributing any Product to any Third Party, or otherwise assisting any Third Party, whois commercializing or attempting to commercialize or distribute any Product in the Field in theTerritory. BLS and its Affiliates, Distributors and Sublicensees (i) shall not, directly orindirectly, commercialize any Product outside the Field in the Territory or for any use outside theTerritory, and (ii) shall promptly cease selling or distributing any Product to any Third Party, orotherwise assisting any Third Party, who is commercializing or attempting to commercialize ordistribute any Product outside the Field in the Territory or for any use outside the Territory.     **5.3 Compliance with Applicable Laws**. BLS shall comply with all Applicable Laws in performingits duties and obligations under this Agreement and with respect to its use, sale and dispositionof the Product after purchase.**ARTICLE 6****PAYMENTS**     **6.1 Initial Payment.**In consideration for the licenses and rights granted to BLS hereunder,BLS shall pay to Alexza a payment in the amount of US$40,000,000 by wire transfer of immediatelyavailable funds into an account designated by Alexza within [ * ] Business Days after the EffectiveDate.     **6.2 Milestone Payments.**In further consideration for the licenses and rights granted to BLShereunder, BLS shall pay to Alexza the milestone payments set out below following the[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with theSecurities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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first achievement of the corresponding milestone. A Party shall notify the other Party in writing within[ * ] ([ * ]) days after the achievement of each milestone event, and Alexza shall invoice BLS atthe time of or following such notice for the applicable milestone payment. BLS shall pay to Alexzathe amounts set forth below within [ * ] ([ * ]) days after its receipt of Alexza’s invoice.         **Milestone Event** **Milestone Payment**  **1.**  (i) Completion of [ * ] of the [ * ] consisting of the following: (a)[ * ] and [ * ] per [ * ] and (b) [ * ] consisting of a [ * ] at [ * ] of[ * ] and (ii) provision of [ * ] by [ * ] to [ * ] that the [ * ] iscompleted (the “[ * ] ***Milestone***”).] US$[ * ]          **2.**  Subject to [ * ], [ * ] of the [ * ] for the Product [ * ]. US$[ * ]          **3.**  [ * ] of the Product in the [ * ]. US$[ * ]          **4.**  [ * ] of the Product in the [ * ], [ * ] of the Product [ * ] if [ * ].* US$[ * ] *  If [ * ] for [ * ], this milestone shall be payable upon the [ * ] of the Product [ * ] in the[ * ].Any milestone payment payable by BLS pursuant to this Section 6.2 shall be made no more than oncewith respect to the achievement of each such milestone event. For clarity, if development of aProduct is discontinued and a replacement Product is developed, then milestone payments shall bedue only for any milestone events achieved by the replacement Product for which milestone paymenthad not been paid by BLS with respect to the discontinued Product.     **6.3 Royalty Payments.**          **(a) Royalty Rate.**Subject to Sections 6.3(b), 6.3(c) and 6.3(d) and other terms and conditionsof this Agreement, in further consideration for the licenses and rights granted to BLS under thisAgreement, on a Product-by-Product basis, BLS shall pay to Alexza royalties on a quarterly basis atthe applicable royalty rate set forth below with the royalty based on aggregate annual Net Sales ofsuch Product in the Territory:     **Aggregate Annual Net Sales of A Product in the Territory** **Royalty Rate** For the portion of aggregate annual Net Sales of less than orequal to US$[ * ]  10%      For any portion of aggregate annual Net Sales greater than US$[ *] and less than or equal to US$[ * ]  [ * ]%      For any portion of aggregate annual Net Sales greater than US$[ *] and less than or equal to US$[ * ]  [ * ]%      For any portion of aggregate annual Net Sales greater than US$[ * ]  25% [ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with theSecurities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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          **(b) Third Party Licenses.**If, during the Term, BLS determines that it is necessary to obtaina license from any Third Party to any Patent(s) in order to research, develop, import, use,manufacture, have manufactured, sell, have sold and offer for sale the Device or Product for use inthe Field in the Territory, an amount equal to [ * ]% of any license fees, royalties, milestonepayments and other payments paid to such Third Party under such license shall be deducted fromroyalties otherwise due to Alexza under this Agreement; provided in no event shall such deductionreduce the royalties otherwise payable to Alexza under this Agreement by more than an amount equalto [ * ]% in any Calendar Quarter; *provided*that [ * ].          **(c) Generic Competition.**If the total amount of gross sales of the Product by BLS, itsAffiliates, Distributors and Sublicensees decreases as a result of the launch of a Generic Productin the Territory, the royalty rate applicable to the Net Sales of a Product set forth in Section6.3(a) shall be adjusted as follows (i) reduced by [ * ]% (to [ * ]%, [ * ]%, [ * ]% and [ * ]%respectively) upon the reduction of the total amount of gross sales in [ * ] by BLS, itsAffiliates, Distributors and Sublicensees by greater than [ * ]% (but less than or equal to [ *]%), compared with the Baseline Gross Sales by BLS, its Affiliates, Distributors and Sublicenseesof such Product and (ii) reduced by [ * ]% (to [ * ]%, [ * ]%, [ * ]% and [ * ]% respectively) uponthe reduction of the total amount of gross sales for [ * ] by BLS, its Affiliates, Distributors andSublicensees by greater than [ * ]%, compared with the Baseline Gross Sales by BLS, its Affiliates,Distributors and Sublicensees of such Product. For the purposes of this Section 6.3(c), theamount of gross sales of such Product shall be ascertained by reputable published marketing data(e.g. by reference to sales data collected by IMS) or as otherwise mutually agreed. The term“***Baseline Gross Sales***” shall mean the average amount of total [ * ] gross sales by BLS, itsAffiliates, Distributors and Sublicensees for the [ * ] immediately prior to the launch of thefirst Generic Product in the Territory. The term “***Generic Product***” refers to a pharmaceuticalproduct containing Loxapine [ * ], which has obtained Marketing Approval for the same Indication asa Product and has substantially the same [ * ] (i.e. [ * ] of [ * ] and [ * ]) and is marketed byan entity other than BLS, its Affiliates, Distributors or Sublicensees in the Field.          **(d) Royalty Term.**On a country-by-country basis and Product-by-Product basis, BLS’ obligationto make royalty payments pursuant to this Section 6.3 will commence upon the First Commercial Saleof a Product in a country in the Territory and shall continue until the later of (i) expiration ofthe [ * ] of such Product in the Field in such country, and (ii) [ * ] years after the FirstCommercial Sale of such Product in such country (the “***Royalty Term***”); provided that if during anyremaining Royalty Term, only the Joint Patents contain a Valid Claim that covers the make, use,sale, offer for sale or importation of a Product in the Field in a country, then the royalty ratesset forth in Section 6.3(a) shall be reduced by [ * ] percent ([ * ]%) with respect to such Productin such country for such remaining Royalty Term. The Product shall be royalty-free under thisAgreement after the expiration of the Royalty Term[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with theSecurities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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     **6.4 Royalty Reports; One Royalty.**During the term of this Agreement following the FirstCommercial Sale of a Product, BLS shall furnish to Alexza a quarterly written report (**“*****RoyaltyReport*****”**) for the calendar quarter showing the Net Sales of all units of the Product subject toroyalty payments sold by BLS and its Affiliates, Sublicensees and Distributors on a country bycountry basis in the Territory during the reporting period and the royalties payable under thisAgreement. Royalty Reports shall be due on the [ * ] ([ * ]) day following the close of eachcalendar quarter. Royalties shown to have accrued by each Royalty Report shall be due and payableon the date such Royalty Report is due. BLS shall keep complete and accurate records in sufficientdetail to enable the royalties payable hereunder to be determined. Only one royalty shall be dueby BLS to Alexza with respect to the sale of the same unit of the Product.     **6.5 Obligations under Existing Third Party Agreements.**Alexza shall be solely responsible forany and all payments, fees or other costs payable under its agreements with Third Parties existingas of the Effective Date or in connection with the manufacture and supply of the Product, Device orcomponents thereof.     **6.6 Commercialization [ * ]**.          **(a) Commercialization [ * ]**. If on the date that is [ * ] years from the payment date of the[ * ] Milestone the Cumulative [ * ] Amount is less than $5 million, Alexza shall pay BLS on such [* ] anniversary date in immediately available funds the amount of shortfall (the “***Commercialization***[ * ]”). Once the Cumulative [ * ] Amount reaches $5 million, Alexza shall no longer be obligatedto pay any Commercialization [ * ]. Notwithstanding the foregoing, if the [ * ] does not [ * ] forthe [ * ] for the [ * ] of the [ * ] by [ * ] a [ * ], or if the [ * ] which requires the [ * ] or[ * ] and [ * ] set forth in [ * ] or [ * ], the Commercialization [ * ] shall be calculated andpaid in [ * ] equal installments by [ * ]. The first such installment shall be paid within [ * ]([ * ]) days following [ * ] by [ * ] under either [ * ] or [ * ], with the remaining [ * ]installments being paid within [ * ] after the date of [ * ] of such [ * ].          **(b) Cumulative [ * ] Amount**. The “***Cumulative***[ * ] ***Amount***” shall be calculated by adding thesum of the [ * ] Amount for each of the [ * ] periods following the payment date of the [ * ]Milestone. The [ * ] Amount for each applicable [ * ] period shall be computed at the rate of $[ *] for every [ * ] in the applicable [ * ] period [ * ], where such amount for any [ * ] periodshall not exceed $[ * ].     **6.7 Authorized Generics.**In the event that a Generic Product is reasonably expected to belaunched in the Territory and BLS decides to launch an Authorized Generic of the Product, theParties shall negotiate in good faith appropriate adjustments to this Agreement and the SupplyAgreement as may be necessary to allow such launch of an Authorized Generic. BLS shall not launchan Authorized Generic of the Product if the Parties cannot reach an agreement notwithstanding theirgood faith efforts. Without the prior written consent of Alexza, BLS shall not launch anAuthorized Generic of the Product earlier than [ * ] ([ * ]) Business Days prior to the anticipatedFirst Commercial Sale of a Third Party Generic Product of the Product. BLS may[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with theSecurities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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use any Trademark for its Authorized Generics and Section 9.9 shall not apply with respect to BLS’ AuthorizedGenerics.**ARTICLE 7****PAYMENTS, BOOKS AND RECORDS**     **7.1 Payment Method.**All payments to Alexza under this Agreement shall be made by bank wiretransfer in immediately available funds to an account in the name of Alexza designated in writingby Alexza. Payments hereunder shall be considered to be made as of the day on which they arereceived by Alexza’s designated bank.     **7.2 Payment Currency; Currency Conversion.**          **(a) United States Dollars.**Unless otherwise expressly stated in this Agreement, all amountsspecified to be payable under this Agreement are in United States Dollars and shall be paid inUnited States Dollars.          **(b) Currency Conversion.**Net Sales in Canada invoiced in currency other than United StatesDollars, shall be converted to United States Dollars using an exchange rate equal to the average ofthe exchange rates for converting Canadian Dollars into U.S. Dollars, as published on the EuropeanCentral Bank website, during the Calendar Quarter for which a payment is due.     **7.3 Taxes.**A Party receiving a payment shall pay any and all taxes levied on such payment.If the fiscal or taxing authorities of any relevant jurisdiction assert that amounts are requiredto be withheld from the payments due to a Party hereunder, or the tax laws in one or morejurisdictions have changed so as to explicitly require such treatment, the Party made aware of suchassertion or change in law shall inform the other Party within [ * ] ([ * ]) days and shall consultwith the other Party regarding the consequences of such assertion or change. If Applicable Lawsrequire that taxes be deducted and withheld from a payment, the remitting Party shall (i) deductthose taxes from the payment, (ii) pay the taxes to the proper taxing authority, (iii) sendevidence of the obligation together with proof of payment to the other Party within [ * ] ([ * ])days following that payment and (iv) provide such assistance as the other Party may reasonablyrequire in obtaining any refund of such amounts to which the other Party may be entitled, to theextent that such assistance does not cause the remitting Party to incur any liability in respect ofthe taxes asserted to be due.     **7.4 Records.**BLS shall keep, and require its Affiliates and Sublicensees to keep, complete,true and accurate books of accounts and records for the purpose of determining the amounts payableto Alexza pursuant to this Agreement. Such books and records shall be kept for such period of timerequired by law, but no less than at least [ * ] years following the end of the Calendar Quarter towhich they pertain. Such records shall be subject to inspection in accordance with Section 7.5.[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with theSecurities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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     **7.5 Audits.**Upon not less than [ * ] ([ * ]) days’ prior written notice, BLS shall permit anindependent, certified public accountant selected by Alexza and reasonably acceptable to BLS, whichacceptance will not be unreasonably withheld or delayed (for the purposes of this Section 7.5, the“***Auditor***”), to audit or inspect those books or records of BLS, its Affiliates andSublicensees that relate to Net Sales and Royalty Reports for the sole purpose of verifying(a) the royalties payable hereunder in respect of Net Sales, (b) the withholding taxes, if any,required by Applicable Law to be deducted as a payment by BLS in respect of such Net Sales and (c)the exchange rates used in determining the amount of United States dollars. The Auditor shalldisclose to Alexza only the amount and accuracy of payments reported and actually paid or otherwisepayable under this Agreement. The Auditor shall send a copy of the report to BLS at the same timeit is sent to Alexza. Such inspections may be made no more than once each [ * ] and during normalbusiness hours. Such records for any particular Calendar Quarter shall be [ * ]. Inspectionsconducted under this Section 7.5, shall be at the expense of Alexza, unless a variation or errorproducing an underpayment in amounts payable exceeding an amount equal to [ * ]% of the amount paidfor a period covered by the inspection is established, in which case all reasonable costs relatingto the inspection for such period and any unpaid amounts that are discovered shall be paid by BLS.Alexza shall endeavor in such inspection not to disrupt the normal business activities of BLS, orits Affiliates or Sublicensees. Promptly after receiving the audit report, if BLS is found to haveunderpaid Alexza, BLS shall submit to Alexza such underpayment discovered in such audit and if BLSis found to have overpaid Alexza, BLS shall have the right to offset such overpayment discovered insuch audit.     **7.6 Financial Reporting and Auditing Cooperation**. In the event that BLS and/or any of itsAffiliates determine, based on its analysis and subsequent discussions with their auditors, thatBLS or any one of its Affiliate is required to consolidate Alexza under GAAP, Alexza shall, for solong as BLS or its Affiliate is required to so consolidate, (a) provide to BLS and its Affiliateall financial information that BLS determines is necessary in order for BLS to prepare suchconsolidated financial statements, in each case within a time period sufficient to permit BLS andits Affiliate to consolidate the financial results and (b) collaborate in good faith with BLS andits Affiliate to provide information as reasonably necessary (including by permitting BLS to use ordisclose to its lenders Alexza’s financial information and financial statements under appropriateconfidentiality agreements) to enable BLS and its Affiliate to determine their compliance with anyother covenants under their credit agreements with their lenders and to comply with any othercovenants under such credit agreements if such covenants become applicable to Alexza as a result ofsuch consolidation requirement, provided that in no event shall any such other accommodationrestrict Alexza’s ability to conduct its operations in the normal course of business and providedfurther that BLS shall engage in good faith negotiations with its lenders to exempt and waivecompliance with such requirement.     **7.7 Late Payment**. Any undisputed amounts not paid within [ * ] ([ * ]) days after the datedue under this Agreement shall be subject to interest from the foregoing date through and includingthe date upon which payment is received, calculated at the interest rate equal to [ * ] percentagepoints ([ * ]%) over the “bank prime loan” rate, which shall be the average rate published in theFederal Reserve Bulletin H.15 or successor thereto during the Calendar Quarter[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with theSecurities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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immediately prior to the date on which such payment is due, calculated daily on the basis of a 365-day year, or, iflower, the highest rate permitted under applicable law.     **7.8 Right to Offset.**Each Party hereby acknowledges and agrees that the other Party shall beentitled to offset, in part or in full, from time to time, any and all amounts owed to suchParty under this Agreement, against any and all amounts due and unpaid by the other Partyunder this Agreement, unless such amounts are subject to an unresolved good faith payment dispute.**ARTICLE 8****CONFIDENTIALITY**     **8.1 Confidential Information.**Except to the extent expressly authorized by this Agreement orotherwise agreed 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 andnon-use 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 than under anobligation 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 by aPerson other than the Disclosing Party, and who, to the best knowledge of the Receiving Party, didnot directly or indirectly receive such information directly or indirectly from the DisclosingParty 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.[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with theSecurities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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     **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 the otherParty’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 than reasonable efforts; *provided*that any Confidential Information so disclosed shall still be subject to the restrictions on useset forth in this Article 8. In any event, the Parties agree to take all reasonable action toavoid 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 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 hereto as ***Exhibit*****8.5(a)**Except as required by law (including, withoutlimitation, disclosure requirements of the U.S. Securities and Exchange Commission (“***SEC***”), theNASDAQ stock exchange or any other stock exchange on which securities issued by a Party or itsAffiliates are traded), neither Party shall make any other public announcement concerning thisAgreement or the subject matter hereof without the prior written consent of the other, which shallnot be unreasonably withheld or delayed; *provided*that it shall not be unreasonable for a Party towithhold consent with respect to any public announcement[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with theSecurities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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containing any of such Party’s Confidential Information. In the event of a required public announcement, to the extentpracticable under the circumstances, the Party making such announcement shall provide the otherParty with a copy of the proposed text of such announcement sufficiently in advance of thescheduled release to afford such other Party a reasonable opportunity to review and comment uponthe 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) withthe SEC, the NASDAQ stock exchange or any other stock exchange or governmental agency on whichsecurities issued by a Party or its Affiliate are traded, and each Party shall use reasonableefforts to seek confidential treatment for the terms proposed to be redacted; *provided*that eachParty shall ultimately retain control over what information to disclose to the SEC, the NASDAQstock exchange or any other stock exchange or governmental agency, as the case may be, and *providedfurther*that the Parties shall use their reasonable efforts to file redacted versions with anygoverning bodies which are consistent with redacted versions previously filed with any othergoverning bodies. Other than such obligation, neither Party (nor its Affiliates) shall beobligated to consult with or obtain approval from the other Party with respect to any filings tothe SEC, the NASDAQ stock exchange 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 [ * ] ([ * ]) days prior to submission of an original manuscriptfor publication, (b) at least [ * ] days prior to an abstract submission for poster or podiumpresentation, or (c) at least [ * ] days prior to an oral or poster presentation, as the case maybe, each Party shall provide to the other Party a draft copy thereof for such other Party’s review(unless such Party is required by law to publish such information sooner, in which case such Partyshall provide such draft copy to the other Party as much in advance of such publication aspossible). The publishing Party shall consider in good faith any comments provided by the otherParty during such time period. In addition, the publishing Party shall, at the other Party’sreasonable request, remove therefrom any Confidential Information of such other Party. This Section8.6 shall not apply to those publications listed as “ongoing” in the Pre-CommercializationTransition Plan as well as abstracts accepted for presentation and their associated posters listedin the Pre-Commercialization Transition Plan. Publications listed as “planned” in thePre-Commercialization Transition Plan as well as other future publications yet to be determinedshall not be published without the prior approval of the other Party, which approval shall not beunreasonably withheld. The contribution of each Party shall be noted in all publications orpresentations 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) dealing with the subject of this Agreement, including without limitation theConfidentiality Agreement. Any information disclosed under such prior agreements shall be deemeddisclosed under this Agreement.[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with theSecurities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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**ARTICLE 9****PATENT PROSECUTION AND ENFORCEMENT**     **9.1 Ownership of Intellectual Property**.          **(a) Alexza Technology and BLS Technology.**Alexza has, and shall retain all right, title andinterest in and to, the Alexza Technology. BLS has, and shall retain all right, title and interestin and to, the BLS Technology.          **(b) Inventions.**A Party shall have and retain all right, title and interest in all Inventionswhich are made, conceived, reduced to practice or generated solely by one or more employees oragents of such Party and or its Affiliates, licensees or sublicensees or other Persons acting underits authority in the course of or as a result of this Agreement. Inventorship shall be determinedin accordance with the U.S. patent law. The Parties shall jointly own all right, title andinterest in all Joint Inventions and Joint Patents resulting therefrom. Subject to the rights andlicenses granted under this Agreement, each Party can use, and grant licenses to use, any JointInvention and Joint Patent without the other Party’s consent and has no duty to account to theother Party for such use or license, and each Party hereby waives any right it may have under thelaws of any country to require any such consent or accounting.     **9.2 Patent Prosecution and Maintenance.**          **(a) Alexza Patents.**               **(i) Initial Responsibility.**Alexza shall be responsible for the preparation, filing,prosecution and maintenance of all Alexza Patents, [ * ]. Alexza shall keep BLS informed in atimely manner, but not less frequently than once per [ * ], of progress with regard to thepreparation, filing, prosecution and maintenance of Alexza Patents in the Territory. Alexza shallconsider and adopt in good faith the requests and suggestions of BLS with respect to strategies forfiling and prosecuting Alexza Patents in the Territory.               **(ii) Option of BLS to Prosecute, Maintain and Enforce.**In the event that Alexza desires toabandon or cease prosecution and/or maintenance of any Alexza Product Patent in the Territory,Alexza shall provide reasonable prior written notice to BLS of such intention to abandon (whichnotice shall, to the extent possible, be given no later than [ * ] calendar days prior to the nextdeadline for any action that must be taken with respect to any such Alexza Product Patent in therelevant patent office). In such case, at BLS’ sole discretion, upon written notice from BLS, BLSmay elect to continue prosecution and/or maintenance of any such Alexza Product Patent [ * ]**,**andAlexza shall execute such documents and perform such acts, [ * ], as may be reasonably necessary toeffect an assignment of Alexza’s entire right, title, and interest in and to such Alexza ProductPatents to BLS. Any such assignment shall be completed in a timely manner to allow BLS to continueprosecution and/or maintenance of any such Alexza Product Patent. Any Alexza Product Patents soassigned shall [ * ]. In addition, in the event that Alexza desires to abandon or ceaseprosecution and/or maintenance of any Alexza[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with theSecurities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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Background Patent in the Territory, Alexza shall provide reasonable prior written notice and explanation to BLS of such intention to abandon andshall consult with BLS about such abandonment.          **(b) BLS Patents.**               **(i) Initial Responsibility.**BLS shall be responsible for the preparation, filing, prosecutionand maintenance of BLS Patents, [ * ]. BLS shall keep Alexza informed in a timely manner, but notless frequently than a [ * ] basis, of progress with regard to the preparation, filing, prosecutionand maintenance of BLS Patents. BLS will consider in goodfaith the requests and suggestions of Alexza with respect to strategies for filing andprosecuting BLS Patents.     **(ii) Option of Alexza to Prosecute, Maintain and Enforce.**In the event that BLS desires toabandon or cease prosecution and/or maintenance of any BLS Patent, BLS shall provide reasonableprior written notice to Alexza of such intention to abandon (which notice shall, to the extentpossible, be given no later than [ * ] ([ * ]) calendar days prior to the next deadline for anyaction that must be taken with respect to such BLS Patent in the relevant patent office). In suchcase, at Alexza’s sole discretion, upon written notice from Alexza, Alexza may elect to continueprosecution and/or maintenance of any such BLS Patent [ * ], and BLS shall execute such documentsand perform such acts, [ * ], as may be reasonably necessary to effect an assignment of BLS’ entireright, title, and interest in and to such BLS Patents to Alexza. Any such assignment shall becompleted in a timely manner to allow Alexza to continue prosecution and/or maintenance of any suchBLS Patent. Any BLS Patents so assigned shall [ * ] and shall [ * ].          **(c) Joint Patents**.               **(i) Initial Responsibility**. Alexza shall be responsible for the preparation, filing,prosecution and maintenance of Joint Patents worldwide, subject to the rest of this Section 9.2(c).Alexza shall be responsible for preparing, filing, prosecuting and maintaining all Joint Patents,using a patent counsel selected by Alexza and reasonably acceptable to BLS; *provided*that [ * ] thecost and expenses of the preparation, filing, prosecution and maintenance of Joint Patents, and [ *].               **(ii) Cooperation.**Alexza shall consult with BLS in preparing Joint Patent applications andshall consider and adopt in good faith BLS’ comments and suggestions prior to the filing of anyJoint Patent application. Alexza shall keep BLS fully informed of progress with regard to thepreparation, filing, prosecution and maintenance of the Joint Patents in and outside the Territory.Alexza shall:                    **(1) **provide BLS with a copy of the final draft of any proposed application at least [ * ] ([ *]) days prior to filing the same in any patent office worldwide, unless otherwise agreed by patentcounsel for both parties, and Alexza shall consider in good faith any comments or revisionssuggested by BLS or its counsel;[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with theSecurities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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                    **(2) **promptly provide BLS with a copy of each patent application as filed, together with anotice of its filing date and serial number;                    **(3) **provide BLS with a copy of any action, communication, letter, or other correspondenceissued by the relevant patent office within at least [ * ] ([ * ]) days of receipt thereof, andAlexza shall consult with BLS regarding responding to the same and shall consider in good faith anycomments, strategies, and the like proposed by BLS;                    **(4) **provide BLS with a copy of any response, amendment, paper, or other correspondence filedwith the relevant patent office within [ * ] ([ * ]) days of Alexza’s receipt of the as-fileddocument;                    **(5) **promptly notify BLS of the allowance, grant, or issuance of such Joint Patents; and                    **(6) **consult with BLS regarding the countries to be filed and maintained, the payment ofannuities, taxes and maintenance fees for any such Joint Patents.               **(iii) Option of BLS to Prosecute, Maintain and Enforce.**In the event that Alexza desires toabandon or cease prosecution and/or maintenance of any Joint Patent, Alexza shall providereasonable prior written notice to BLS of such intention to abandon (which notice shall, to theextent possible, be given no later than [ * ] ([ * ]) calendar days prior to the next deadline forany action that must be taken with respect to such Joint Patent in the relevant patent office). Insuch case or if [ * ] related to any such Joint Patent, at BLS’ sole discretion, upon writtennotice from BLS, BLS may elect to continue prosecution and/or maintenance of any such Joint Patent[ * ], and Alexza shall execute such documents and perform such acts, [ * ], as may be reasonablynecessary to effect an assignment of Alexza’s entire right, title, and interest in and to suchJoint Patent to BLS. Any such assignment shall be completed in a timely manner to allow BLS tocontinue prosecution and/or maintenance of any such Joint Patent. Any Patents so assigned shall [* ].               **(iv) BLS Declines Responsibility.**If BLS [ * ] related to any Joint Patent, upon writtennotice from Alexza, BLS shall assign its entire right, title, and interest in and to any such JointPatent to Alexza. Any Patents so assigned shall [ * ] and shall [ * ].     **9.3 Infringement by Third Parties.**          **(a) Notice.**In the event that either Alexza or BLS becomes aware of any infringement orthreatened infringement by a Third Party of any Patents that are subject to the prosecution,maintenance or enforcement by a Party under this Agreement, it will notify the other Party inwriting to that effect. Any such notice shall include evidence to support an allegation ofinfringement or threatened infringement by such Third Party.          **(b) Alexza Patents.**Subject to this Section 9.3(b), Alexza shall have the first right, asbetween Alexza and BLS, to bring and control any action or proceeding with respect to[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with theSecurities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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infringement of any Alexza Patent worldwide, at its own expense and by counsel of its own choice. BLS shallhave the right, at its own expense, to be represented in any such action by counsel of its ownchoice, and Alexza and its counsel shall reasonably cooperate with BLS and its counsel instrategizing, preparing and presenting any such action or proceeding. With respect to the AlexzaBackground Patents listed in the Orange Book, upon BLS’ written request [ * ], Alexza shall bringan action or proceeding with respect to infringement of any Alexza Background Patent described inthe preceding sentence within [ * ] ([ * ]) days after its receipt of such request. With respectto the Alexza Product Patents, if Alexza fails to bring an action or proceeding with respect toinfringement of any Alexza Product Patent described in the preceding sentence within (i)[ * ] ([ * ]) days following the notice of alleged infringement or (ii) [ * ] ([ * ]) daysbefore the time limit, if any, set forth in the appropriate laws and regulations for the filing ofsuch actions, whichever comes first, BLS shall have the right, but not the obligation (i.e. it hasthe right to indulge such infringement), to bring and control any such action at its own expenseand by counsel of its own choice. Upon BLS’ request, Alexza shall timely join as party-plaintiffin any such litigation and to cooperate with BLS in connection with such infringement action,including timely filing such action in Alexza’s name if required. Except as otherwise agreed to bythe Parties as part of a cost-sharing arrangement, any recovery or damages realized as a result ofsuch action or proceeding shall be used first to reimburse the Parties’ documented out-of-pocketlegal expenses relating to the action or proceeding, and any remaining damages [ * ] shall be [ *], and any damages [ * ] shall be [ * ].          **(c) BLS Patents.**Subject to this Section 9.3(c), BLS shall have the first right (but not theobligation), as between Alexza and BLS, to bring and control any action or proceeding with respectto infringement of any BLS Patent worldwide, at its own expense and by counsel of its own choiceand the right to retain all damages resulted from its enforcement action.          **(d) Joint Patents**. Any action or proceeding with respect to infringement of any Joint Patentworldwide may only be brought by [ * ], [ * ]. Except as otherwise agreed to by the Parties aspart of a cost-sharing arrangement, any recovery or damages from an action or proceeding relatingto Joint Patents shall be [ * ].          **(e) Cooperation.**In the event a Party brings an infringement action in accordance with thisSection 9.3, the other Party shall cooperate fully, including, if required to bring such action,the furnishing of a power of attorney or being named as a party to such action.     **9.4 Infringement of Third Party Rights.**Each Party shall promptly notify the other in writingof any allegation by a Third Party that the activity of either of the Parties pursuant to thisAgreement infringes or may infringe the intellectual property rights of such Third Party. Alexzashall have the sole right to control any defense of any such claim involving alleged infringementof Third Party rights by Alexza’s activities at its own expense and by counsel of its own choice,and BLS shall have the right, at its own expense, to be represented in any such action by counselof its own choice. BLS shall have the sole right to control any defense of any such claiminvolving alleged infringement of Third Party rights by BLS’ activities at its own[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with theSecurities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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expense and by counsel of its own choice, and Alexza shall have the right, at its own expense, to be representedin any such action by counsel of its own choice. Notwithstanding the foregoing, in the event thatin any foregoing infringement action, suit or proceeding against BLS or its Affiliates for theirpractice of the Alexza Technology in researching, developing, importing, using, manufacturing orhaving manufactured (solely using the manufacturing process covered by the Alexza Technologytransferred by Alexza to BLS), selling, and offering for sale the Device or Product for use in theField in the Territory, BLS is required to pay such Third Party a damage award, Alexza shall beresponsible for and pay an amount equal to [ * ] percent ([ * ]%) of such damage award bypermitting BLS to reduce up to [ * ] percent ([ * ]%) of its quarterly payments to Alexza in thesame manner as set forth in Section 6.3(b) hereof.     **9.5 Consent for Settlement.**Neither Party shall enter into any settlement or compromise ofany action or proceeding under this Article 9 which would impose any material non-monetaryobligations or any restrictions on the substantive rights of other Party without the prior writtenconsent of such other Party, which consent shall not be unreasonably withheld. For clarity, anyright of BLS with respect to its ability to develop or commercialize the Product for use in theField in the Territory shall be deemed a substantive right of BLS.     **9.6 Patent Term Extensions**. The Parties shall discuss and recommend for which, if any, of thePatents within the Alexza Patents and BLS Patents the Parties should seek Patent Term Extensions inthe Territory. Alexza, in the case of the Alexza Patents, and BLS in the case of the BLS Patents,shall have the final decision-making authority with respect to applying for any such Patent TermExtensions in the Territory, and shall act with reasonable promptness in light of the developmentstage of the Product to apply for any such Patent Term Extensions, where it so elects; provided,however, that if in a particular country or jurisdiction in the Territory only one such Patent canobtain a Patent Term Extension, then the Parties shall consult in good faith to determine whichsuch Patent should be the subject of efforts to obtain a Patent Term Extension, and in any event [* ] decision on such matter shall control in the case of a disagreement. The Party that does notapply for an extension hereunder shall cooperate fully with the other Party in making such filingsor actions, for example and without limitation, making available all required regulatory data andinformation and executing any required authorizations to apply for such Patent Term Extension. Allexpenses incurred in connection with activities of each Party with respect to the Patent(s) forwhich such Party seeks Patent Term Extensions pursuant to this Section 9.6 shall be [ * ].     **9.7 Paragraph IV Notices**. If either Party receives a notice under 21 U.S.C. §355(b)(2)(A)(iv)or §355(j)(2)(A)(vii)(IV) or a notice of allegations pursuant to the Patented Medicines (Notice ofCompliance) regulations in Canada concerning an Alexza Patent (a “***Paragraph IV Notice***”), then itshall provide a copy of such notice to the other Party within [ * ] Business Days after its receiptthereof. With respect to Alexza Background Patents listed in the Orange Book, upon BLS’ writtenrequest [ * ], Alexza shall initiate patent infringement litigation based on a Paragraph IV Noticeconcerning an Alexza Background Patent listed in the Orange Book within [ * ] ([ * ]) days afterits receipt of BLS’ request. With respect to Alexza Product Patents, BLS, as the owner of the NDAor sNDA with respect to the Product for use in the Field[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with theSecurities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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in the Territory at such time, shall have the first right, but no obligation, to initiate patent infringement litigation based on a ParagraphIV Notice concerning an Alexza Product Patent, at its own expense. In the event BLS initiates suchpatent infringement litigation, upon request of BLS, Alexza shall timely join as party-plaintiff inany such litigation and shall cooperate with BLS in connection with such infringement action,including timely filing such action in Alexza’s name if required. Except as otherwise agreed to bythe Parties as part of a cost-sharing arrangement, any recovery or damages realized as a result ofsuch action or proceeding shall be used first to reimburse the Parties’ documented out-of-pocketlegal expenses relating to the action or proceeding, and any remaining damages [ * ] shall be [ *], and any damages [ * ] shall be [ * ].     **9.8 Orange Book Listing.**Alexza and BLS shall agree as to which of the Alexza Patents, theBLS Patents and the Joint Patents shall be listed in the Orange Book, but in any event includingthe Alexza Patents listed in Exhibit 1.8 described as “listed in the NDA” and theAlexza Product Patents. Alexza shall advise BLS of the issuance of any new Alexza Patentswithin [ * ] ([ * ]) Business Days after such Alexza Patents are issued. BLS shall provide Alexzawith written notice of its intent to list appropriate Alexza Patents in the Orange Book, and shallprovide Alexza with a copy of all draft submission [ * ] ([ * ]) Business Days before the deadlinefor such listing. Alexza shall consider such notice, and if Alexza approves ([ * ]) such listing,BLS shall be responsible for such listing.     **9.9 Trademarks.**The Product shall be sold in the Territory under the Alexza TrademarkAdasuveTM unless such Alexza Trademark is determined to be unacceptable to the Regulatory Authorityin the Territory, in which event BLS shall collaborate in good faith with Alexza and select aTrademark from the two alternatives proposed by Alexza or select a new Trademark (such newTrademark, the “***BLS Trademark***”), with the goal not to delay the launch of the First Commercial Saleof the Product in the Territory. BLS shall prominently display on the Product sold in theTerritory the Alexza Trademarks Staccato® and Adasuve (or the alternative Alexza Trademark, ifselected by BLS). BLS shall register and own BLS Trademark in the Territory and Alexza shallprovide all reasonable assistance required by BLS in connection therewith. Alexza will have theright to use the Alexza and Staccato Trademarks on the Device for any product inside and outsidethe Territory. Alexza will have the right to use Adasuve, the alternative Alexza Trademark (if itis selected by BLS) or the BLS Trademark used with the Product in connection with Alexza’scommercialization of the Product outside the Territory for use as a rapid treatment of agitationassociated with any psychiatric and/or neurological indication. In any event, Alexza shall be ableto use any Alexza Trademark other than Adasuve (or the alternative Alexza Trademark, if it isselected by BLS) for any other product for any purpose, and shall use the Alexza Trademark Adasuve(or the alternative Alexza Trademark, if it is selected by BLS) for sale of the Product outside ofthe Territory in the Field unless such Alexza Trademark (or alternative Alexza Trademark) isdetermined to be unacceptable to the Regulatory Authority in the Territory. BLS shall use AlexzaTrademarks only in accordance with Alexza’s written guidelines therefor to ensure the integrity andquality of the Alexza Trademarks, and shall not use such Alexza Trademarks in connection with theusing, promotion, marketing, distributing, selling or offering for sale of any product other thanthe Product. Alexza shall use the BLS Trademark only in accordance with BLS’ written guidelinestherefor to ensure[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with theSecurities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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the integrity and quality of the BLS Trademark, and shall not use the BLSTrademark in connection with the using, promotion, marketing, distributing, selling or offering forsale of any product other than the Product or for an Indication other than for use as a rapidtreatment of agitation associated with any psychiatric and/or neurological indication.**ARTICLE 10****REPRESENTATIONS, WARRANTIES AND COVENANTS**     **10.1 Mutual Representations, Warranties and Covenants.**Each Party hereby represents andwarrants to the other Party, as of the Effective Date, as follows:          **(a) Duly Organized.**Such Party is a corporation or a Barbados international society withrestricted liability, duly organized, validly existing and in good standing under the laws of thejurisdiction of its incorporation or organization, is qualified to do business and is ingood standing as a foreign corporation in each jurisdiction in which the conduct of itsbusiness or the ownership of its properties requires such qualification and failure to have suchwould prevent such Party from performing its obligations under this Agreement.          **(b) Due Authorization; Binding Agreement.**The execution, delivery and performance of thisAgreement by such Party have been duly authorized by all necessary corporate or organizationalaction. This Agreement is a legal and valid obligation binding on such Party and enforceable inaccordance with its terms and does not (i) to such Party’s knowledge and belief, violate any law,rule, regulation, order, writ, judgment, decree, determination or award of any court, governmentalbody or administrative or other agency having jurisdiction over such Party or (ii) conflict with,or constitute a default under, any agreement, instrument or understanding, oral or written, towhich such Party is a party or by which it is bound.          **(c) Consents.**Such Party has obtained, or is not required to obtain, the consent, approval,order or authorization of any Third Party, or has completed, or is not required to complete anyregistration, qualification, designation, declaration, or filing with, any Regulatory Authority orgovernmental authority, in connection with the execution and delivery of this Agreement and theperformance by such Party of its obligations under this Agreement.     **10.2 Representations, Warranties and Covenants of Alexza.**As used in this Section 10.2, ***“BestKnowledge”***means, as applied to Alexza, that [ * ] knows, [ * ] a particular fact or other matter.Alexza represents and warrants to BLS that as of the Effective Date:          **(a) Right to Grant License.**(i) Alexza owns all right, title and interest in and to, or has alicense, sublicense or otherwise permission to use and license, all of the Alexza Technology freeand clear of all encumbrances; (ii) Alexza has not previously assigned, transferred, conveyed orotherwise encumbered or granted, and will not during the Term assign, transfer, convey or otherwiseencumber its right, title and interest in any of the Alexza Technology or any rights granted to BLShereunder for the research, development, importation,[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with theSecurities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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use, manufacture, having manufactured, sale, and offer for sale of the Product in the Field in the Territory except any non-exclusive licensegranted to a Third Party solely for providing contract research or development services to Alexza;(iii) specifically, there are no existing agreements, options, commitments, or rights, with, of orto any person to acquire or obtain any rights to, any of the Alexza Technology for the research,development, importation, use, manufacture, having manufactured, sale, and offer for sale of theProduct in the Field in the Territory except any non-exclusive license granted to a Third Partysolely for providing contract research or development services to Alexza; and (iv) no royalties,license fees or other payments are required to be paid to any Third Party in connection with theexecution, delivery and performance of this Agreement, or in connection with the research,development, importation, use, manufacture, having manufactured, sale, and offer for sale of theDevice or Product.          **(b) Scope of License.*****Exhibit 1.8***and ***Exhibit 1.11***set forth true and complete lists of allAlexza Patents and Alexza Trademarks and Copyrights Controlled by Alexza or its Affiliates as ofthe Effective Date. ***Exhibit 1.8***and ***Exhibit 1.11***also indicate the current status, date andcountry of filing and issuance. The Alexza Patents and Alexza Know-How constitute all intellectual property Controlled by Alexza and its Affiliates that is [ * ]for the research, development, importation, use, manufacture, having manufactured, sale and offerfor sale of the Product in the Field in the Territory as of the Effective Date and to the BestKnowledge of Alexza there is not any other Patent necessary for such purposes that is notControlled by Alexza (including any intellectual property Controlled by any Third Party supplier ofthe Device or Product) as of the Effective Date. All official fees, maintenance fees and annuitiesfor the Alexza Patents, Alexza Trademarks and Alexza Copyrights have been paid through theEffective Date.          **(c) Patent Status.**To Alexza’s Best Knowledge (i) all issued Patents listed on ***Exhibit 1.8***are in full force and effect, valid, subsisting and enforceable, and inventorship of each Patent isproperly identified on such Patents; (ii) none of the Patents listed on ***Exhibit 1.8***is currentlyinvolved in any interference, reissue, reexamination, or opposition proceeding and (iii) neitherAlexza nor any of its Affiliates has received any written notice from any person, or has knowledge,of such actual or threatened proceeding.          **(d) Non-Infringement by Third Parties.**To Alexza’s Best Knowledge, there are no activities byThird Parties that would constitute infringement of the Alexza Patents or misappropriation of theAlexza Know-How.          **(e) Non-Infringement of Third Party Rights.**To Alexza’s Best Knowledge, research,development, importation, use, manufacture, having manufactured, sale and offer for sale of theDevice or the Product in the Field in the Territory as contemplated by Alexza as of the EffectiveDate will not infringe or misappropriate any Patent or other intellectual property Controlled by aThird Party. Neither Alexza nor any of its Affiliates has received any written notice from anyPerson, or has knowledge of, any actual or threatened claim or assertion that the use or practiceof the Alexza Patents or Alexza Know-How infringes or misappropriates the intellectual propertyrights of a Third Party.[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with theSecurities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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          **(f) Non-Action or Claim.**There are no actual, pending, or to Alexza’s Best Knowledge, allegedor threatened adverse actions, suits, claims, interferences or formal governmental investigations(i) involving any Alexza Technology (to the extent related to the Product), the Device or theProduct, including without limitation, in connection with the conduct of any clinical trials ormanufacturing activities, or (ii) questioning the validity of this Agreement or any action taken byAlexza in connection with the execution of this Agreement, in each case, by or against Alexza orany of its Affiliates in or before any court, Regulatory Authority or other governmental authority.There are no material unsatisfied judgments or outstanding orders, injunctions, decrees,stipulations or awards (whether rendered by a court, an administrative agency or an arbitrator)against Alexza with respect to any Alexza Technology, the Device or the Product.          **(g) No Granting of Third Party Patent Enforcement or Prosecution Rights.**Neither Alexza norany of its Affiliates has entered into any contract (i) granting any Third Party the right to bringinfringement actions with respect to, or otherwise to enforce rights with respect to, any of theAlexza Know-How or Alexza Patents or (ii) granting any Third Party the right to control theprosecution of any of the Alexza Patents.          **(h) Employee Agreements.**To Alexza’s Best Knowledge, all current and former employees andconsultants of Alexza and its Affiliates who are or have been substantively involved in the design,review, evaluation or development of the Alexza Know-How or Alexza Patents have executed writtencontracts or are otherwise obligated to protect the confidential status and value thereof and tovest in Alexza or its Affiliates exclusive ownership of the Alexza Know-How or Alexza Patents.          **(i) No Governmental Funding.**None of the Alexza Technology is developed involving the use ofany governmental funding.          **(j) Additional Legal Compliance.**               **(i) **To Alexza’s Best Knowledge, Alexza and its Affiliates and any outsourcing company andcontract research organization to which Alexza or its Affiliates have subcontracted activities inconnection with Device and the Product (the “***Contractors***”) have complied with all Applicable Laws,permits, governmental licenses, registrations, approvals, concessions, franchises, authorizations,orders, injunctions and decrees in the research, development, manufacture and use of the Product,the Device or any component thereof, and neither Alexza nor any of its Affiliates or itsContractors has received any written notice from any Regulatory Authority claiming that any suchactivities as conducted by them are not in such compliance.               **(ii) **No governmental authority (including the FDA) has commenced or, to Alexza’s BestKnowledge, threatened to initiate any action to enjoin production of the Device, the Product or anycomponent thereof at any facility, nor has Alexza or any of its[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with theSecurities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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Affiliates or, to the Best Knowledge of Alexza, any of its Contractors, received any notice to such effect since January 1, 2005.               **(iii) **All development activities conducted by Alexza and its Affiliates and to Alexza’s BestKnowledge Contractors relating to the Product, the Device and/or any component thereof have beenconducted in compliance with all Applicable Laws, including without limitation all GCP, GLP and GMPwhen applicable.               **(iv) **To Alexza’s Best Knowledge, no employee or agent of Alexza or any of its Affiliates orContractors has made an untrue statement of a material fact to any Regulatory Authority withrespect to the Product, the Device and/or any component thereof (whether in any Regulatory Filingsor otherwise), or failed to disclose a material fact to any Regulatory Authority required to bedisclosed with respect to the Product, the Device and/or any component thereof.               **(v) **Alexza has made available to BLS a true, correct and complete copy of (A) all IND and NDAsubmissions associated with the Product, (B) all correspondence with Regulatory Authoritiesregarding the IND or NDA, (C) all clinical studies included in IND and NDA for the Product, and (D)all minutes of meetings and telephone conferences with Regulatory Authorities with respect to theIND, NDA or the Product.               **(vi) **To Alexza’s Best Knowledge, Alexza has disclosed or otherwise provided BLS with allinformation that would have, or would be reasonably likely to have, a material effect on theability of BLS to develop or commercialize Product in the Field in the Territory under the termsand conditions of this Agreement and that relates to (A) the Alexza Technology, (B) any Third Partyintellectual property rights or claims that relate to the commercialization or development ofProduct in the Territory, (C) the safety or efficacy of the Device or Product and (D) the abilityof a company with reasonable manufacturing capability to manufacture the Device, the Product or anycomponent thereof, assuming the completion of the transfer of the Alexza Know-How related to themanufacturing of the Product to such company in accordance with the Supply Agreement.          **(k) Debarment.**Alexza is not debarred under the United States Federal Food, Drug and CosmeticAct and it does not, and will not during the Term, employ or use the services of any Person who isdebarred, in connection with the development, manufacture or commercialization of the Device orProduct. In the event that Alexza becomes aware of the debarment or threatened debarment of anyPerson providing services to Alexza, including the Party itself and its Affiliates, Contractors,licensees or Sublicensees, which directly or indirectly relate to activities under this Agreement,BLS shall be immediately notified in writing.          **(l) Material Agreements.**Alexza has provided true and complete copies of all materialagreements with Third Parties that are [ * ] for the research, development, importation, use,manufacture, having manufactured, sale, and offer for sale of the Device and the Product andcomponents thereof in the Field in the Territory (the “***Material Agreements***”).[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with theSecurities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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Alexza is not in breach or default of any Material Agreement and has not waived or allowed tolapse or terminate any of its rights under any Material Agreement.     **10.3 Disclaimer.**EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, OR ANY OTHER AGREEMENTCONTEMPLATED HEREUNDER, NEITHER PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANYKIND, EITHER EXPRESS OR IMPLIED, AND EACH PARTY EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES OFMERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE OR USE, NON-INFRINGEMENT, VALIDITY ANDENFORCEABILITY OF PATENTS, OR THE PROSPECTS OR LIKELIHOOD OF DEVELOPMENT OR COMMERCIAL SUCCESS OFTHE PRODUCT.**ARTICLE 11****INDEMNIFICATION**     **11.1 Indemnification of Alexza.**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 or (b) any material breach of anyrepresentations, warranties or covenants by BLS under this Agreement or the Supply Agreement,except to the extent such Third Party Claims fall within the scope of the indemnificationobligations of Alexza set forth in Section 11.2(a) or (b).     **11.2 Indemnification of BLS.**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, licensees orsubcontractors or (b) any material breach of any representations, warranties or covenants by Alexzaunder this Agreement or the Supply Agreement, except to the extent such Third Party Claims fallwithin the scope of the indemnification obligations of BLS set forth in Section 11.1(a) or (b).     **11.3 Procedure.**A Party that intends to claim indemnification (the “***Indemnitee***”) under thisArticle 11 shall promptly notify the indemnifying Party (the “***Indemnitor***”) in writing of any ThirdParty Claim, in respect of which the Indemnitee intends to claim such indemnification. TheIndemnitee shall provide the Indemnitor with reasonable assistance, at the Indemnifying Party’sexpense, in connection with the defense of the Third Party Claim for which indemnity is beingsought. The Indemnitee may participate in and monitor such defense with[ * ] = 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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counsel of its own choosing at its sole expense; provided, however, the Indemnitor shall havethe right to assume and conduct the defense of the Third Party Claim with counsel of its choice.The Indemnitor shall not settle any Third Party Claim without the prior written consent of theIndemnitee, not to be unreasonably withheld, unless the settlement involves only the payment ofmoney. So long as the Indemnitor is actively defending the Claim in good faith, the Indemniteeshall not settle any such Third Party Claim without the prior written consent of the Indemnitor.If the Indemnitor does not assume and conduct the defense of the Third Party Claim as providedabove, (a) the Indemnitee may defend against, and consent to the entry of any judgment or enterinto any settlement with respect to the Third Party Claim in any manner the Indemnitee may deemreasonably appropriate (and the Indemnitee need not consult with, or obtain any consent from, theIndemnitor in connection therewith), and (b) the Indemnitor will remain responsible to indemnifythe Indemnitee as provided in this Article 11. The failure to deliver written notice to theIndemnitor within a reasonable time after the commencement of any action with respect to a ThirdParty Claim shall only relieve the Indemnitor of its indemnification obligations under this Article11. if and to the extent the Indemnitor is actually prejudiced thereby.     **11.4 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 (during the time wheneither Party conducts human clinical trials using the Product and/or commercializes the Product)and (ii) general liability insurance in the minimum amount of $[ * ] in the aggregate and $[ * ]umbrella coverage. In addition, Product liability insurance shall be maintained at the same levelfor not less than [ * ] ([ * ]) years after expiration or earlier termination of this Agreement andClinical trial insurance shall be required to be maintained at the same level for [ * ] ([ * ])years after the last clinical trial conducted by the applicable Party for the Product. Each Partyshall provide the other Party with written notice at least [ * ] ([ * ]) days prior to anycancellation, nonrenewal or material change in the insurance described in clauses (i) and (ii)above and shall name the other Party as an additional insured with respect to such insurance. EachParty shall provide a certificate of insurance evidencing such coverage to the other Party uponrequest. Each Party shall provide a certificate of insurance evidencing its D&O insuranceannually. It is understood that such insurance shall not be construed to create a limit of eitherParty’s liability with respect to its indemnification obligations under this Article 11.**ARTICLE 12****Term and Termination**     **12.1 Term.**This Agreement shall commence on the Effective Date, and unless terminated earlieras provided in this Article 12, shall continue in full force and effect on a country-by-country andProduct-by-Product basis until BLS has no remaining payment obligations in such country withrespect to such Product (the “***Term***”). Upon expiration (but not[ * ] = 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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an earlier termination) of this Agreement in a country with respect to a Product, BLS shallhave a perpetual, exclusive, fully paid-up, royalty free license under the Alexza Know-How in suchcountry to research, develop, import, use, manufacture, have manufactured, sell, have sold andoffer for sale such Product in the Field in such country.     **12.2 Early Termination.**Each Party shall have the right to terminate this Agreement in itsentirety or on a Product-by-Product or country-by-country basis before the end of the Term:          **(a) **by mutual written agreement of the Parties;          **(b) **upon written notice by either Party if the other Party is in material breach of thisAgreement and has not cured such breach within [ * ] ([ * ]) days ([ * ] ([ * ]) days with respectto any payment breach) after notice from the terminating Party requesting cure of the breach. Anysuch termination shall become effective at the end of such [ * ] ([ * ]) day ([ * ] ([ * ]) daywith respect to any payment breach) period unless the breaching Party has cured any such breach ordefault prior to the end of such period; or          **(c) **upon the bankruptcy or insolvency of, or the filing of an action to commence insolvencyproceedings against the other Party, or the making or seeking to make or arrange an assignment forthe benefit of creditors of the other Party, or the initiation of proceedings in voluntary orinvoluntary bankruptcy, or the appointment of a receiver or trustee of such Party’s property, ineach case that is not discharged within [ * ] ([ * ]) days.     **12.3 Other BLS Termination Rights.**          **(a) Voluntary Termination.**BLS shall have the right to terminate this Agreement in itsentirety, for any or no reason upon ninety (90) days’ written notice.          **(b) Section 4.****2(c)****Termination.**BLS has the right to terminate this Agreement in its entiretypursuant to Section 4.2(c)(ii) or this Agreement with respect to the Initial Indication pursuantto Section 4.2(c)(iii) by giving at least ninety (90) days’ written notice to Alexza.          **(c) Termination for Safety Reasons**. BLS may terminate this Agreement in its entirety or on aProduct-by-Product or country-by-country basis at any time during the Term immediately uponproviding written notice to Alexza if the Data and Safety Monitoring Board or any RegulatoryAuthority in the United States imposes a clinical hold on any clinical trial for a Product for [ *] ([ * ]) consecutive months.          **(d) Termination of Supply Agreement**. BLS may terminate this Agreement in its entirety at anytime during the Term immediately upon providing written notice to Alexza if BLS terminates theSupply Agreement in accordance with Sections 10.2(b), 10.2(c) or 10.2(e), provided that suchtermination occurs within sixty (60) days of notice of termination to Alexza.[ * ] = 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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          **(e) Withdrawal of Marketing Approval**. BLS may terminate this Agreement in its entirety at anytime during the Term immediately upon providing written notice to Alexza if the Marketing Approvalfor the Product has been withdrawn in the United States as a result of a requirement by the FDA(other than as a result of a material breach of this Agreement by BLS), provided that suchtermination occurs within [ * ] ([ * ]) days of notice of termination to Alexza.          **(f) Product Recalls**. BLS may terminate this Agreement in its entirety at any time during theTerm upon ninety (90) days prior written notice to Alexza if there has been a [ * ] recall of theProduct, provided that such recall is the direct result of (i) the negligence or willful misconductof Alexza, (ii) a material breach of the Supply Agreement by Alexza or (iii) the manufacture of theProduct, Loxapine or other components of the Product by or on behalf of Alexza.     **12.4 Change of Control of Alexza.**In the event of any Change of Control of Alexza, Alexzashall notify BLS promptly, but in no event later than [ * ] ([ * ]) Business Days following theexecution of the agreement contemplating the transaction that constitutes a Change of Control, andBLS and the acquiror shall meet within [ * ] ([ * ]) days of the closing of such Change of Controltransaction. Within [ * ] ([ * ]) days following such meeting, BLS shall have the option, upon [ *] ([ * ]) days’ notice, to elect that all Regulatory Filings made in Alexza’s name for the Productin the Territory shall be immediately transferred to BLS, and BLS shall assume Alexza’sresponsibility under the Development Plan(s) (including [ * ]), and Alexza shall be deemed to haveelected to no longer participated in the Collaboration Committee and subcommittees thereof. In theevent that BLS elects the foregoing, the Parties shall enter into an appropriate and customarywritten amendment reflecting such changes. For the avoidance of doubt, BLS shall be entitled, inits sole discretion, to make the elections provided for in this Section 12.4 upon each occurrenceof a Change of Control.**ARTICLE 13****Effect of Expiration or Termination**     **13.1 Accrued Obligations.**     The expiration or termination of this Agreement, in whole or part, for any reason shall notrelease either Party from any liability which, at the time of such expiration or termination, hasalready accrued to such Party or which is attributable to a period prior to such expiration ortermination, nor will any expiration or termination of this Agreement preclude either Party frompursuing all rights and remedies it may have under this Agreement, at law or in equity, withrespect to breach of this Agreement, except as specifically set forth in Section 13.1(b)(i) below.Notwithstanding the foregoing, in the event this Agreement is terminated for any reason after theachievement of a particular milestone event, then BLS shall have the obligation to make themilestone payment corresponding to such milestone event to Alexza, regardless of whether 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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due date of such milestone payment occurs prior to, on or after the effective date of suchtermination.          **(a) **The remedies set forth in Section 13.3(a)(iii), together with Section 10.5(a) of theSupply Agreement, shall, as the case may be: (i) be Alexza’s sole and exclusive remedy for damageswith respect to a breach of this Agreement if the effective date of such termination occurs priorto the [ * ]; or (ii) not prejudice Alexza’s right to any other remedies available to it under lawor equity if the effective date of such termination for breach of this Agreement occurs after the [* ]. For clarity, any payments made by BLS to Alexza under Section 10.5(a) of the Supply Agreementshall in any event not be counted twice in the calculation of any monetary damages of Alexza (e.g.,pursuant to Section 13.3(a)) as a result of such termination.     **13.2 Effects of Section 4.****2(c)****Termination, Termination by BLS for Safety Reasons, Withdrawalof Marketing Approval, Termination of Supply Agreement or Product Recalls.**In the event thisAgreement is terminated by BLS pursuant to Section 12.3(b), 12.3(c), 12.3(d), 12.3(e) or 12.3(f):          **(a) Winding-Down of Development Activities**. In the event there are any on-going clinicaltrials of the applicable Product in the Field in the Territory,               **(i) **The Parties shall negotiate in good faith and adopt a plan to wind-down the developmentactivities in an orderly fashion, with due regard for patient safety and the rights of any subjectsthat are participants in any clinical trials of the applicable Product and take any actions itdeems reasonably necessary or appropriate to avoid any human health or safety problems and incompliance with all Applicable Laws;               **(ii) **Each Party shall perform its outstanding non-cancellable obligations under theDevelopment Plan that existed or accrued prior to the notice date of termination; and               **(iii) **All Costs and Expenses incurred in winding-down the development activities with respectto the applicable Product for the applicable Indication shall be allocated in accordance withSection 4.2(a), 4.2(b), 4.2(c) and/or 4.2(d), as the case may be, unless the Parties agreeotherwise in writing; *provided, however,*that in no case shall BLS be obligated to pursue orsupport such activities for a period exceeding [ * ] ([ * ]) months after the date of notice ofsuch termination.          **(b) BLS Regulatory Filings (including Marketing Approvals).**Upon Alexza’s request and to theextent permitted by Applicable Laws, BLS shall transfer to Alexza or its designee any and allRegulatory Filings (including Marketing Approvals) that are owned by BLS for the applicable Productand the applicable Indication [ * ]**.**          **(c) License Grant by BLS to Alexza.**BLS hereby grants Alexza, effective upon the effectivedate of such termination, a fully paid, royalty free, non-exclusive license, with[ * ] = 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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the right to grant sublicenses, under (i) BLS Patents; and (ii) BLS Know-How to the extentincorporated into the Product and/or the method of making or using the Product (but in any eventexcluding BLS Know-How regarding the trade, marketing, commercial, financial or businessinformation with respect to the Product except to the extent such Know-How relates specifically tothe Product), in each case for Alexza to make, have made, use, sell, offer for sale and import theProduct in the Field in the Territory.          **(d) Clinical Supply.**BLS shall have the right to cancel its order of the applicable Productunder the Supply Agreement and Alexza may purchase back from BLS any remaining clinical supply ofthe applicable Product at the same purchase price paid by BLS**.**     **13.3 Effects of Termination for Cause by Alexza or Termination by BLS Voluntarily**. Upon theearly termination of this Agreement by BLS under Section 12.3(a) or termination by Alexza underSection 12.2(b), the following shall apply:          **(a) Winding Down of Development Activities.**In the event there are any on-going clinicaltrials of the applicable Product in the Field in the Territory,               **(i) **The Parties shall work together in good faith to adopt, and Alexza shall have the finaldecisional power with respect to, a plan to wind down the development activities in an orderlyfashion, with due regard for patient safety and the rights of any subjects that are participants inany clinical trials of the Product and take any actions it deems reasonably necessary orappropriate to avoid any human health or safety problems and in compliance with all ApplicableLaws;               **(ii) **Each Party shall perform its outstanding non-cancellable obligations under theDevelopment Plan that existed or accrued prior to the notice date of termination; and               **(iii) **[ * ] for documented expenses for all Expenses of winding down, or to the extentapplicable, completing ongoing clinical or pre-clinical trials for use in the Field in theTerritory from and after the date of notice of termination and prior to the end of [ * ] ([ * ])months after the date of notice of such termination, including [ * ] in such winding down orcompletion of ongoing clinical or pre-clinical trials.          **(b) Inventory.**BLS, its Affiliates, Distributors and Sublicensees shall continue, to theextent that BLS, its Affiliates, Distributors and Sublicensees continue to have stocks of usableProduct, to fulfill orders received from customers for the Product in the Field in the Territoryfor more than [ * ] ([ * ]) months after the date of notice of termination. For Product sold byBLS after the effective date of a termination (i.e., after the expiration of the applicabletermination notice period), BLS shall continue to pay royalties on the amount of Net Sales pursuantto Section 6.3.          **(c) Assignment of Regulatory Filings (including Marketing Approvals).**At Alexza’s option,which shall be exercised by written notice to BLS, to the extent permitted[ * ] = 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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under Applicable Laws, at [ * ] expense, BLS shall assign or cause to be assigned to Alexza orits designee (or to the extent not so assignable, BLS shall take all reasonable actions to makeavailable to Alexza or its designee the benefits of) all Regulatory Filings (including INDs, NDAsand Marketing Approvals) for the Product in the Territory, including any such Regulatory Filingsmade or owned by its Affiliates or Sublicensees (in the event the Sublicensee elects not to enterinto a direct contractual relationship with Alexza). Alexza shall notify BLS before the effectivedate of termination, whether the Regulatory Filings should be assigned to Alexza or its designee,and if the latter, identify the designee, and provide BLS with all necessary details to enable BLSto effect the assignment (or availability). If Alexza fails to provide such notification prior tothe effective date of termination, BLS shall have no obligation to assign the Regulatory Filings toAlexza.          **(d) License Grant by BLS to Alexza.**BLS hereby grants Alexza, effective upon the effectivedate of such termination, a fully paid, royalty free, non-exclusive license, with the right togrant sublicenses, under (i) BLS Patents; and (ii) BLS Know-How to the extent incorporated into theProduct and/or the method of making or using the Product (but in any event excluding BLS Know-Howregarding the trade, marketing, commercial, financial or business information with respect to theProduct except to the extent such Know-How relates specifically to the Product), in each case forAlexza to make, have made, use, sell, offer for sale and import the Product in the Field in theTerritory. BLS shall promptly transfer the foregoing BLS Patents and BLS Know-How to Alexza at [ *] expense.          **(e) Supply.**In addition, the Supply Agreement shall terminate upon termination of thisAgreement.          **(f) Transition.**BLS shall use Commercially Reasonable Efforts to cooperate with Alexza and/orits designee to effect a smooth and orderly transition in the development, sale and marketing,promotion and commercialization of the Product in the Territory during the notice and the Wind-downPeriods. Alexza shall use, identify and finalize an agreement or other arrangement with a ThirdParty in relation to the Product and/or, to the extent Alexza is able to take over such activitiesunder Applicable Laws, take over, directly or through an Affiliate, all activities related to theProduct, and in particular development activities on-going at the time of the effective date of thetermination and the transfer of the Regulatory Filings (including INDs, NDAs and MarketingApprovals) into the name of Alexza or Alexza’s designee so that the Wind-down Period will be aslimited as possible.     **13.4 Effects of Termination for Cause by BLS.**Upon the early termination of this Agreement byBLS under Section 12.2(b) or 12.2(c) the following shall apply (in addition to any other rights andobligations under this Agreement with respect to such termination):          **(a) Winding Down of Development Activities.**In the event there are any on-going clinicaltrials of the applicable Product in the Field in the Territory,[ * ] = 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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               **(i) **The Parties shall work together in good faith to adopt, and BLS shall have the finaldecisional power with respect to, a plan to wind down the development activities in an orderlyfashion, with due regard for patient safety and the rights of any subjects that are participants inany clinical trials of the Product and take any actions it deems reasonably necessary orappropriate to avoid any human health or safety problems and in compliance with all ApplicableLaws;               **(ii) **Each Party shall perform its outstanding non-cancellable obligations under theDevelopment Plan that existed or accrued prior to the notice date of termination; and               **(iii) **All Costs and Expenses incurred from the effective date of the termination notice inwinding down the development activities with respect to the applicable Product shall be [ * ],notwithstanding Section 4.2(a), 4.2(b), 4.2(c) and/or 4.2(d) provides otherwise; *provided, however,*that in no case shall [ * ] be obligated to pursue or support such activities for a periodexceeding [ * ] ([ * ]) months after the date of notice of such termination.          **(b) License under BLS Technology.**Any and all licenses granted by BLS to Alexza under thisAgreement other than the license granted pursuant to Section 2.2(a) shall terminate.          **(c) License under Alexza Technology.**BLS may elect to have all or any portion of the licensesgranted to BLS pursuant to Section 2.1, in which case BLS’ obligations to Alexza under Article 6 ofthis Agreement and Alexza’s rights under Article 6 shall continue to the extent that BLS elects toretain such licenses with respect to the applicable Product in the applicable country(ies);provided that BLS may offset the amount of BLS’ Losses resulting from Alexza’s breach of thisAgreement against any amounts owed to Alexza pursuant to Article 6 of this Agreement.          **(d) Assignment of Alexza Regulatory Filings (including Marketing Approvals).**If BLS elects tocontinue the license under Section 2.1, at BLS’ option, which shall be exercised by written noticeto Alexza, to the extent permitted under Applicable Laws, Alexza shall assign or cause to beassigned to BLS or its designee (or to the extent not so assignable, Alexza shall take allreasonable actions to make available to BLS or its designee the benefits of) all Regulatory Filings(including INDs, NDAs and Marketing Approvals) for the Product in the Territory, including any suchRegulatory Filings made or owned by its Affiliates and/or Distributors or licensees. BLS shallnotify Alexza before the effective date of termination, whether the Regulatory Filings should beassigned to BLS or its designee and, if the latter, identify the designee, and provide Alexza withall necessary details to enable Alexza to effect the assignment (or availability). If BLS fails toprovide such notification prior to the effective date of termination, Alexza shall have noobligation to assign the Regulatory Filings to BLS.          **(e) Transition Assistance**. Alexza shall provide such assistance, [ * ], as may be [ * ] forBLS to commence or continue developing or commercializing the applicable[ * ] = 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 in the applicable countries of the Territory, to the extent Alexza is then performingor having performed such activities, including without limitation transferring or amending asappropriate, upon request of BLS, any agreements or arrangements with Third Party suppliers orvendors to supply or sell the Device, applicable Product and/or components thereof.          **(f) BLS Regulatory Filings (including Marketing Approvals)**In the event BLS elects not topursue the development or commercialization of the applicable Product in the applicablecountry(ies), upon [ * ] request and to the extent permitted by Applicable Laws, [ * ] shall [ * ]all Regulatory Filings (including Marketing Approvals) that are owned by BLS for the applicableProduct for the applicable countries [ * ].     **13.5 Product Supply and Technology Transfer.**Prior to the expiration of this Agreement oreffective date of any termination or partial termination of this Agreement by BLS under Section12.2(b) or 12.2(c), the Parties shall negotiate in good faith a new supply agreement. In the eventthe Parties cannot 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 theresearch, development, importation, manufacture, having manufactured, use, sale, having sold andoffering for sale of the Product. The transition plan shall include a mutually agreed-uponschedule for transition activities, under which the transfer of manufacturing-related AlexzaKnow-How shall occur [ * ]. BLS shall cooperate with such transfer, shall promptly undertake tocomplete the transfer and shall be responsible for [ * ] to affect transfer in the agreedtransition plan for transfer. The Parties shall conduct transition activities pursuant to thetransition plan and the Supply Agreement. In addition, Alexza shall continue to supply BLS and itsSublicensees with their requirements of the Product, pursuant to the Supply Agreement then ineffect between the Parties, which Supply Agreement shall remain in effect until the earlier of (i)the [ * ] anniversary of the effective date of termination, and (ii) such time as BLS or a ThirdParty manufacturer engaged by BLS is capable of supplying the Product.     **13.6 Rights Upon Bankruptcy.**All rights and licenses granted under or pursuant to thisAgreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of Title 11 ofthe United States Code and other similar laws in any jurisdiction in the Territory or where a Partyis situated (collectively, the ***“Bankruptcy Laws"***), licenses of rights to “intellectual property” asdefined under the Bankruptcy Laws. If a case is commenced during the Term by or against a Partyunder the Bankruptcy Laws then, unless and until this Agreement is rejected as provided in suchBankruptcy Laws, such Party (in any capacity, including debtor-in-possession) and its successorsand assigns (including, without limitation, a trustee) shall perform all of the obligationsprovided in this Agreement to be performed by such Party. If a case is commenced during the Termby or against a Party under the Bankruptcy Laws, this Agreement is rejected as provided in theBankruptcy Laws and the other Party elects to retain its rights hereunder as provided in theBankruptcy Laws, then the Party subject to such case under the Bankruptcy Laws (in any capacity,including debtor-in-possession) and its successors and assigns (including, without limitation, aTitle 11 trustee), shall provide to the other Party copies of all information necessary for suchother Party to prosecute, maintain and enjoy its rights under the terms of this[ * ] = 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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Agreement promptly upon such other Party’s written request therefor. All rights, powers andremedies of the non-bankrupt Party as provided herein are in addition to and not in substitutionfor any and all other rights, powers and remedies now or hereafter existing at law or in equity(including, without limitation, the Bankruptcy Laws) in the event of the commencement of a case byor against a Party under the Bankruptcy Laws. Additionally, in the event of any insolvency of BLSor the entry by it into any formal insolvency administration under Canadian law, it is theintention of the Parties that this Agreement shall not terminate and shall continue pursuant to theprinciples governing insolvency proceedings under Canadian law. In particular, it is the intentionand understanding of the Parties to this Agreement that the rights granted to the Parties underthis Section 13.6 are essential to the Parties’ respective businesses and the Parties acknowledgethat damages are not an adequate remedy.     **13.7 Return of Confidential Information**. Upon termination or expiration of this Agreement,except to the extent necessary or reasonably useful for a Party to exercise its rights under anylicense surviving such termination or expiration, each Party shall promptly return to the otherParty, or delete or destroy, all relevant records and materials in such Party’s possession orcontrol containing Confidential Information of the other Party; provided that such Party may keepone copy of such materials for archival purposes only.     **13.8 Survival.**Expiration or termination of this Agreement shall not relieve the Parties ofany rights or obligation accruing prior to such expiration or termination. In addition, uponexpiration or termination of this Agreement, all rights and obligations of the Parties under thisAgreement shall terminate, except those described in Sections [ * ] and [ * ] and Article [ * ](other than Section [ * ]), Article [ * ], Article [ * ], Article [ * ] and Article [ * ].**ARTICLE 14****DISPUTE RESOLUTION AND GOVERNING LAW**     **14.1 Dispute Resolution Process.**The Parties recognize that disputes as to certain mattersmay from time to time arise during the Term that relate to interpretation of a Party’s rightsand/or obligations hereunder or any alleged breach of this Agreement. If the Parties cannotresolve any such dispute within [ * ] ([ * ]) days after written notice of a dispute from one Partyto another, either Party may, by written notice to the other Party, have such dispute referred tothe Chief Executive Officer of Alexza and the President, and if designated, the Chief OperatingOfficer of BLS (collectively, the “***Senior Executives***”). The Senior Executives shall negotiate ingood faith to resolve the dispute within [ * ] ([ * ]) days. During such period of negotiations,any applicable time periods under this Agreement shall be tolled. If the Senior Executives areunable to resolve the dispute within such time period, either Party may pursue any remedy availableto such Party at law or in equity, subject to the terms and conditions of this Agreement and theother agreements expressly contemplated hereunder. Notwithstanding anything in this Article 14 tothe contrary, Alexza and BLS shall each have the right to apply to any court of competentjurisdiction for appropriate interim or provisional relief, as necessary to protect the rights orproperty of that Party.[ * ] = 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) 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 [ * ]. If any dispute cannot be resolved bythe Parties, subject to the exhaustion of the procedure set out in Section 14.1 above, any disputeshall be finally settled by litigation brought solely in a United States federal court of competentjurisdiction (or state court if no federal court has jurisdiction) located in the State of [ * ],United States, and the Parties hereby submit to the exclusive jurisdiction of such court.**ARTICLE 15****GENERAL PROVISIONS**     **15.1 Intervening Events.**If the performance of any part of this Agreement by either Party(other than making payment when due) is prevented, restricted, interfered with or delayed by anyreason or cause beyond the reasonable control of such Party (including fire, flood, embargo, powershortage or failure, acts of war, insurrection, riot, terrorism, strike, lockout or other labordisturbance, shortage of raw materials, epidemic, failure or default of public utilities or commoncarriers, destruction of production facilities or materials by fire, earthquake, or storm or likecatastrophe, acts of God or any acts, omissions or delays in acting of the other Party) (an"***Intervening Event***”), the Party so affected shall, upon giving written notice to the other Party,be excused from such performance to the extent of such Intervening Event, provided that theaffected Party shall use its substantial efforts to avoid or remove such causes of non-performanceand shall continue performance with the utmost dispatch whenever such causes are removed.          **(a) Notification.**If either Party becomes aware that such an Intervening Event has occurredor is imminent or likely, it shall immediately notify the other.          **(b) Efforts to Overcome.**The Party which is subject to such Intervening Event shall exert allreasonable efforts to overcome it.          **(c) Keeping the Other Informed.**Such Party shall keep the other informed as to the progressof overcoming such Intervening Event.     **15.2 Waiver of Breach.**No delay or waiver by either Party of any condition or term in any oneor more instances shall be construed as a further or continuing waiver of such condition or term orof another condition or term.     **15.3 Further Actions.**Each Party agrees to execute, acknowledge and deliver such furtherinstruments, and to perform all such other acts, as may be necessary or appropriate in order tocarry out the purposes and intent of this Agreement.     **15.4 Performance by Affiliates.**Each Party shall have the right to assign, sublicense,subcontract or delegate this Agreement or any or all of its obligations or rights hereunder to an[ * ] = 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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Affiliate upon written notice to the other Party; *provided*, however, the assigning,sublicensing, subcontracting or delegating Party hereby guarantees and shall remain fully andunconditionally obligated and responsible for the full and complete performance of this Agreementby such Affiliate and in no event shall such assignment, sublicensing, subcontracting or delegationbe deemed to relieve such Party’s liabilities or obligations to the other Party under thisAgreement. The other Party shall, at the request of the assigning, sublicensing, subcontracting ordelegating Party, enter into such supplemental agreements with the applicable Affiliate as may benecessary or advisable to permit such Affiliate to avail itself of any rights or perform anyobligations of the assigning, sublicensing, subcontracting or delegating Party hereunder.     **15.5 Modification.**No amendment or modification of any provision of this Agreement shall beeffective unless in a prior writing signed by both Parties hereto. No provision of this Agreementshall be varied, contradicted or explained by any oral agreement, course of dealing or performanceor any other matter not set forth in an agreement in writing and signed by both Parties hereto.     **15.6 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.     **15.7 Entire Agreement.**This Agreement (including the Supply Agreement and other Exhibitsattached hereto and any letter delivering information referenced herein) constitutes the entireagreement between the Parties relating to the subject matter hereof and supersedes and cancels allprevious express or implied agreements and understandings, negotiations, writings and commitments,either oral or written, in respect of the subject matter hereof. Each of the Parties acknowledgesand agrees that in entering into this Agreement, and the documents referred to in it, it does notrely on, and shall have no remedy in respect of, any statement, representation, warranty orunderstanding (whether negligently or innocently made) of any person (whether party to thisAgreement or not) other than as expressly set out in this Agreement. Nothing in this Section 15.7clause shall, however, operate to limit or exclude any liability for fraud.     **15.8 Language.**The language of this Agreement and all activities to be pursued under thisAgreement is English. Any and all documents proffered by one Party to the other in fulfillment ofany provision of this Agreement shall only be in compliance if in English. Any translation of thisAgreement in another language shall be deemed for convenience only and shall never prevail over theoriginal English version. This Agreement is established in the English language.     **15.9 Notices.**Any notice or communication required or permitted under this Agreement shallbe in writing in the English language, delivered personally, sent by facsimile[ * ] = 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 promptly confirmed by personal delivery, registered or certified mail or overnightcourier), sent by internationally-recognized courier or sent by registered or certified mail,postage prepaid to the following addresses of the Parties (or such other address for a Party as maybe at any time thereafter specified by like notice):       **To Alexza:** **To BLS:**  Alexza Pharmaceuticals, Inc. Biovail Laboratories International SRL  2091 Stierlin Court Welches, Christ Church  Mountain View, CA 94043 Barbados WI, BB17154  Telephone: + 1-650-944-7000 Telephone: +1-246-418-6411  Facsimile: + 1-650-944-7988 Facsimile: +1-246-437-7085  Attention: Chief Executive Officer Attention: Chief Operating Officer       **with a copy to:** **with a copy to:**  Cooley Godward Kronish LLP Biovail Corporation  3175 Hanover St. 7150 Mississauga Road, Mississauga,  Palo Alto, CA 94306 Ontario, Canada, L5N 8M5  Telephone: +1-650-843-5000 Telephone: + (905) 286-3186  Facsimile: +1-650-843-4000 Facsimile: + (905) 286-3370  Attention: 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. Notices hereunderwill not be deemed sufficient if provided only between or among each Party’s representatives on theCollaboration Committee.     **15.10 Assignment.**Subject to Section 2.3(a) and Section 15.4 of this Agreement, thisAgreement shall not be assignable or otherwise transferred, nor may any rights or obligationshereunder be assigned or transferred, by either Party to any Third Party without the prior writtenconsent of the other Party; except that either Party may assign or otherwise transfer thisAgreement without the consent of the other Party to an entity that acquires all or substantiallyall of the business or assets of the assigning Party relating to the subject matter of thisAgreement, whether by merger, acquisition or otherwise, provided that the acquiring Person assumesthis Agreement in writing or by operation of law; *provided*that such acquiring person shall not 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 an Affiliate of the acquired Party and intellectual property rights that are owned orheld by the acquiring Person to such transaction (if other than one of the Parties to thisAgreement) shall not be included in the technology licensed hereunder. Subject to the foregoing,this Agreement shall inure to the benefit of each Party, its successors and permitted assigns. Anyassignment of this Agreement in contravention of this Section 15.10 shall be null and void.     **15.11 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.     **15.12 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 deemed to befollowed by the phrase “without limitation” or like expression; (b) the singular shall include theplural and vice versa; and (c) masculine, feminine and neuter pronouns and expressions shall beinterchangeable. Each accounting term used herein that is not specifically defined herein shallhave the meaning given to it under GAAP consistently applied, but only to the extent consistentwith its usage and the other definitions in this Agreement.     **15.13 Counterparts.**This Agreement may be executed in any number of counterparts each ofwhich shall be deemed an original, and all of which together shall constitute one and the sameinstrument.     **15.14 Limitation of Liability.**EXCEPT FOR LIABILITY FOR BREACH OF ARTICLE 8 ANDINDEMNIFICATION OBLIGATIONS UNDER ARTICLE 11, NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THEOTHER PARTY ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THISAGREEMENT OR ANY LICENSE GRANTED HEREUNDER.**ARTICLE 16****COMPLIANCE WITH LAWS**     **16.1 Export Laws.**Notwithstanding anything to the contrary contained herein, all obligationsof Alexza and BLS are subject to prior compliance with export and import regulations and such otherlaws and regulations in effect in such jurisdictions or any other relevant country as may beapplicable, and to obtaining all necessary approvals required by the applicable agencies of thegovernments of any relevant countries. Alexza and BLS shall cooperate with each other and shallprovide assistance to the other as reasonably necessary to obtain any required approvals.[ * ] = 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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     **16.2 Securities Laws.**Each of the Parties acknowledges that it is aware that the securitieslaws of the United States, Canada and other countries prohibit any person who has materialnon-public information about a publicly listed company from purchasing or selling securities ofsuch company or from communicating such information to any person under circumstances in which itis reasonably foreseeable that such person is likely to purchase or sell such securities. EachParty agrees to comply with such securities laws and make its Affiliates, licensees, Distributors,Sublicensees, employees, Contractors and agents aware of the existence of such securities laws andtheir need to comply with such laws.     **16.3 Certain Payments.**Each of the Parties acknowledges that it is aware that the UnitedStates and other countries have stringent laws which prohibit persons directly or indirectly frommaking unlawful payments to, and for the benefit of, government officials and related parties tosecure approvals or permission for their activities. Each Party agrees that it will make no suchprohibited payments, it will not indirectly make or have made such payments and it will make itsAffiliates, employees and agents aware of the existence of such laws and their need to comply withsuch laws.     **16.4 Foreign Corrupt Practices Act.**Alexza hereby acknowledges that it has received andreviewed the Standards of Business Conduct of the Biovail group of companies and agrees to complywith all Applicable Laws as they relate to this Agreement, including but not limited to the ForeignCorrupt Practices Act.{Signature Page Follows}[ * ] = 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, the Parties have executed this Collaboration and License Agreement as ofthe Effective Date.     **ALEXZA PHARMACEUTICALS, INC.**