Document:

ESI 2000 Long-Term Incentive Plan

    Exhibit
      4.3

    

    EXPRESS
      SCRIPTS, INC.

    2000
      LONG-TERM INCENTIVE PLAN

    

    Adopted
      August 9, 2000

    Amended
      February 6, 2001

    Approved
      by Stockholders May 23, 2001

    Also
      Amended December 19, 2001 (See Attachment A)

    Also
      Amended February 22, 2006 (See Attachment B)

    Approved
      by Stockholders May 24, 2006

    

    

    1. Purpose.
      The
      purpose of this 2000 Long-Term Incentive Plan (the “Plan”) is to motivate key
      personnel to produce a superior return to the stockholders of the Company and
      its Affiliates by offering such individuals an opportunity to realize stock
      appreciation, by facilitating stock ownership, and by rewarding them for
      achieving a high level of corporate performance. This Plan is also intended
      to
      facilitate recruiting and retaining key personnel of outstanding
      ability.

    

    2. Definitions.
      The
      capitalized terms used in this Plan have the meanings set forth
      below.

    

    (a)     “Affiliate”
      means any corporation that is a Subsidiary of the Company and, for purposes
      other than the grant of Incentive Stock Options, any limited liability company,
      partnership, corporation, joint venture, or any other entity in which the
      Company or any such Subsidiary owns an equity interest.

    

    (b)     “Agreement”
      means a written contract entered into between the Company or an Affiliate and
      a
      Participant or, in the discretion of the Committee, a written certificate issued
      by the Company or an Affiliate to a Participant, in either case, containing
      or
      incorporating the terms and conditions of an Award in such form (not
      inconsistent with this Plan) as the Committee approves from time to time,
      together with all amendments thereof, which amendments may be made unilaterally
      by the Company (with the approval of the Committee) unless such amendments
      are
      deemed by the Committee to be materially adverse to the Participant and are
      not
      required as a matter of law.

    

    (c)     “Associate”
      means any full-time or part-time employee (including an officer or director
      who
      is also an employee) of the Company or an Affiliate. Except with respect to
      grants of Incentive Stock Options, “Associate” shall also include any
      Non-Employee Director serving on the Company’s Board of Directors. References in
      this Plan to “employment” and related terms (except for references to “employee”
in this definition of “Associate” or in Section 7(a)(i)) shall include the
      providing of services as a Non-Employee Director.

    

    (d)     “Award”
means
      a grant made under this Plan in the form of Options, Stock Appreciation Rights,
      Restricted Stock, Performance Shares or any Other Stock-Based Award, whether
      singly, in combination or in tandem.

    

    (e)    “Board”
      means the Board of Directors of the Company.

    

    (f)     “Cause”
shall
      mean the willful failure by a Participant to perform his duties with the
      Company, a Parent or a Subsidiary or the willful engaging in conduct which
      is
      injurious to the Company, a Parent or any Subsidiary, monetarily or otherwise,
      as determined by the Committee in its sole discretion.

    

    (g)     “Change
      in Control” shall mean any of the following:

    

    (i)     Individuals
      who constitute the Incumbent Board cease for any reason to constitute at least
      a
      majority of the Board;

    

    (ii)    More
      than
      25% of the (x) combined voting power of the then outstanding voting securities
      of the Company entitled to vote generally in the election of directors
      (“Outstanding Company Voting Securities”) or (y) the then outstanding Shares of
      Stock (“Outstanding Company Common Stock”) is directly or indirectly acquired or
      beneficially owned (as defined in Rule 13d-3 under the Exchange Act, or any
      successor rule thereto) by any individual, entity or group (within the meaning
      of Section 13(d)(3) or 14(d)(2) of the Exchange Act), provided,
      however,
      that
      the following acquisitions and beneficial ownership shall not constitute Changes
      in Control pursuant to this paragraph 2(f)(ii);

    

    (A)     any
      acquisition or beneficial ownership by the Company or a Subsidiary,
      or

    

    (B)     any
      acquisition or beneficial ownership by any employee benefit plan (or related
      trust) sponsored or maintained by the Company or one of more of its
      Subsidiaries.

    

    (iii)     Consummation
      of a reorganization, merger, share exchange or consolidation (a “Business
      Combination”), unless in each case following such Business
      Combination,

    

    (A)     all
      or
      substantially all of the individuals and entities who were the beneficial
      owners, respectively, of the Outstanding Company Common Stock and Outstanding
      Company Voting Securities immediately prior to such Business Combination
      beneficially own, directly or indirectly, more than 50% of, respectively, the
      then outstanding shares of common stock and the combined voting power of the
      then outstanding voting securities entitled to vote generally in the election
      of
      directors or other governing body, as the case may be, of the entity resulting
      from such Business Combination (including, without limitation, an entity that
      as
      a result of such transaction owns the Company through one or more
      subsidiaries);

    

    (B)     no
      individual, entity or group (excluding any employee benefit plan (or related
      trust) of the Company or such corporation resulting from such Business
      Combination) beneficially owns, directly or indirectly, more than 25% of,
      respectively, the then outstanding shares of common stock of the corporation
      resulting from such Business Combination or the combined voting power of the
      then outstanding voting securities of such corporation entitled to vote
      generally in the election of directors or other governing body of the entity
      resulting from such Business Combination, except to the extent that such
      individual, entity or group owned more than 25% of the Outstanding Company
      Common Stock or Outstanding Company Voting Securities prior to the Business
      Combination; and

    

    (C)     at
      least a
      majority of the members of the board of directors or other governing body of
      the
      entity resulting from such Business Combination were members of the Incumbent
      Board at the time of the execution of the initial agreement, or of the action
      of
      the Board, approving such Business Combination.

    

    (iv)     The
      Company
      shall sell or otherwise dispose of all or substantially all of the assets of
      the
      Company (in one transaction or a series of transactions).

    

    (v)     The
      stockholders of the Company shall approve a plan liquidate or dissolve the
      Company and the Company shall commence such liquidation or
      dissolution.

    

    (h)     “Change
      in
      Control Date” shall mean, in the case of a Change in Control defined in clauses
      (i) through (iv) of the definition thereof, the date on which the event occurs,
      and in the case of a Change in Control defined in clause (v) of the definition
      thereof, the date on which the Company shall commence such liquidation or
      dissolution.

    

    (i)     “Change
      in
      Control Price” shall mean the value, expressed in dollars, as of the date of
      receipt of the per share consideration received by the Company’s stockholders
      whose stock is acquired in a transaction constituting a Change in
      Control.

    

    (j)     “Code”
      means the Internal Revenue Code of 1986, as amended and in effect from time
      to
      time, or any successor statute.

    

    (k)     “Committee”
      means the committee of directors appointed by the Board to administer this
      Plan.
      In the absence of a specific appointment, “Committee” shall mean the
      Compensation Committee of the Board.

    

    (l)     “Company”
      means Express Scripts, Inc., a Delaware corporation, or any successor to all
      or
      substantially all of its businesses by merger, consolidation, purchase of assets
      or otherwise.

    

    (m)     “Comparable
      Employment” shall mean employment with the Company or any successor to the
      Company’s business following a Change in Control pursuant to which:

    

    (i)     the
      responsibilities and duties of the Participant are substantially the same as
      before the Change in Control (such changes as are a necessary consequence of
      the
      fact that the securities of the Company are no longer publicly traded if the
      Company’s securities cease to be publicly traded as a consequence of the Change
      in Control shall not be considered a change in responsibilities or duties),
      and
      the other terms and conditions of employment following the Change in Control
      do
      not impose on the Participant obligations materially more burdensome than those
      to which the Participant was subject prior to the Change in
      Control;

    

    (ii)     the
      aggregate
      compensation (including salary, bonus and other benefit plans, including option
      plans) of such Participant is substantially economically equivalent to or
      greater than such Participant’s aggregate compensation immediately prior to the
      Change in Control Date. In making such determination (A) there shall be taken
      into account all contingent or unvested compensation, under performance-based
      compensation plans or otherwise, with appropriate adjustment for rights of
      forfeiture, vesting rules and other contingencies to payment, and (B) any
      compensation payable by reason of the Change in Control shall be disregarded;
      and

    

    (iii)     the
      Participant remains employed in the metropolitan area in which he was employed
      immediately preceding the Change in Control.

    

    (n)     “Disability”
      means that the Participant has suffered physical or mental incapacity of such
      nature as to prevent him from engaging in or performing the principal duties
      of
      his customary employment or occupation on a continuing or sustained basis,
      provided that, if a Participant has entered into an employment agreement with
      the Company, the Committee, in its sole discretion, may determine to substitute
      the definition set forth in such agreement. All determinations as to the date
      and extent of disability of any Participant shall be made by the Committee
      upon
      the basis of such evidence as it deems necessary or desirable.

    

    (o)     “Exchange
      Act” means the Securities Exchange Act of 1934, as amended; “Exchange Act Rule
      16b-3” means Rule 16b-3 promulgated by the Securities and Exchange Commission
      under the Exchange Act or any successor regulation.

    

    (p)     “Fair
      Market Value” as of any date means, unless otherwise expressly provided in this
      Plan:

    

    (i)     (A)
      the
      closing sales price of a Share on the composite tape for New York Stock Exchange
      (“NYSE”) listed shares, or if Shares are not quoted on the composite tape for
      NYSE listed shares, on the Nasdaq National Market or any similar system then
      in
      use or, (B) if clause (i)(A) is not applicable, the mean between the closing
      “bid” and the closing “asked” quotation of a Share on the Nasdaq National Market
      or any similar system then in use, or (C) if the Shares are not quoted on the
      NYSE composite tape or the Nasdaq National Market or any similar system then
      in
      use, the closing sale price of a Share on the principal United States securities
      exchange registered under the Exchange Act on which the Shares are listed,
      in
      any case on the specified date, or, if no sale of Shares shall have occurred
      on
      that date, on the next preceding day on which a sale of Shares occurred,
      or

    

    (ii)     if
      clause
      (i) is not applicable, what the Committee determines in good faith to be 100%
      of
      the fair market value of a Share on that date.

    

    However,
      if the applicable securities exchange or system has closed for the day at the
      time the event occurs that triggers a determination of Fair Market Value, all
      references in this paragraph to the “date immediately preceding that date” shall
      be deemed to be references to “that date.” In the case of an Incentive Stock
      Option, if such determination of Fair Market Value is not consistent with the
      then current regulations of the Secretary of the Treasury, Fair Market Value
      shall be determined in accordance with said regulations. The determination
      of
      Fair Market Value shall be subject to adjustment as provided in Section 12(f)
      hereof.

    

    (q)     “Fundamental
      Change” means a dissolution or liquidation of the Company, a sale of
      substantially all of the assets of the Company, a merger or consolidation of
      the
      Company with or into any other corporation, regardless of whether the Company
      is
      the surviving corporation, or a statutory share exchange involving capital
      stock
      of the Company.

    

    (r)     “Incentive
      Stock Option” means any Option designated as such and granted in accordance with
      the requirements of Section 422 of the Code or any successor to such
      section.

    

    (s)     “Incumbent
      Board” means the group of directors consisting of (i) those individuals who, as
      of the effective date of the Plan, constituted the Board; and (ii) any
      individuals who become directors subsequent to such effective date whose
      appointment, election or nomination for election by the stockholders of the
      Company was approved by a vote of at least a majority of the directors then
      comprising the Incumbent Board. The Incumbent Board shall exclude any individual
      whose initial assumption of office occurred (i) as a result of an actual or
      threatened election contest with respect to the election or removal of directors
      or other actual or threatened solicitation of proxies or consents by or on
      behalf of a Person (other than a solicitation of proxies by the Incumbent Board)
      or (ii) with the approval of the Incumbent Board but by reason of any agreement
      intended to avoid or settle a proxy contest.

    

    (t)     "Non-Employee
      Director" means a director of the Company who is not an employee of the Company,
      a Parent or a Subsidiary.

    

    (u)     “Non-Qualified
      Stock
      Option” means an Option other than an Incentive Stock Option.

    

    (v)     “Other
      Stock-Based Award” means an Award of Stock or an Award based on Stock other than
      Options, Stock Appreciation Rights, Restricted Stock or Performance Shares.
      (See
      Attachment B for certain amendments to this section.)

    

    (w)     “Option”
      means a right to purchase Stock (or, if the Committee so provides in an
      applicable Agreement, Restricted Stock), including both Non-Qualified Stock
      Options and Incentive Stock Options.

    

    (x)     “Parent”
      means a “parent corporation,” as that term is defined in Section 424(e) of the
      Code, or any successor provision.

    

    (y)     “Participant”
      means an Associate to whom an Award is made.

    

    (z)     “Performance
      Period” means the period of time as specified in an Agreement over which
      Performance Shares are to be earned.
      (See
      Attachment B for certain amendments to this section.)

    

    (aa)     “Performance
      Shares” means a contingent award of a specified number of Performance Shares,
      with each Performance Share equivalent to one or more Shares or a fractional
      Share or a Unit expressed in terms of one or more Shares or a fractional Share,
      as specified in the applicable Agreement, a variable percentage of which may
      vest depending upon the extent of achievement of specified performance
      objectives during the applicable Performance Period.

    

    (bb)     “Plan”
means
      this 2000 Long-Term Incentive Plan, as amended and in effect from time to
      time.

    

    (cc)     “Related
      Entity” shall mean a Parent, a Subsidiary, or any employee benefit plan
      (including a trust forming a part of such plan) maintained by the Company,
      a
      Parent or a Subsidiary.

    

    (dd)     “Restricted
      Stock” means Stock granted under Section 10 hereof so long as such Stock remains
      subject to one or more restrictions.

    

    (ee)     “Retirement”
      shall mean, except as otherwise provided in an Agreement, termination of
      employment after either (i) attainment of age 65, or (ii) the normal retirement
      age specified in the provisions of a retirement plan maintained by the Company
      for its employees generally.

    

    (ff)     “Senior
      Executive” means any Associate who is an employee of the Company and whose base
      salary is determined by reference to Salary Grades M3 through and including
      M5
      (as such salary grades are in effect on the effective date of this Plan), or,
      if
      the Company modifies its salary grades after such effective date, in the most
      nearly comparable salary grades for senior executives of the Company under
      such
      modified system as determined by the Committee in its sole
      discretion.

    

    (gg)     “Share”
means
      a share of Stock.

    

    (hh)     “Stock”
means
      the Company’s Class A common stock, $0.01 par value per share (as such par value
      may be adjusted from time to time) or any securities issued in respect thereof
      by the Company or any successor to the Company as a result of an event described
      in Section 12(f).

    

    (ii)     “Stock
      Appreciation Right” means a right, the value of which is determined relative to
      appreciation in value of Shares pursuant to an Award granted under Section
      8
      hereof.

    

    (jj)     “Subsidiary”
      means a “subsidiary corporation,” as that term is defined in Section 424(f) of
      the Code, or any successor provision.

    

    (kk)    “Successor”
with
      respect to a Participant means the legal representative of an incompetent
      Participant and, if the Participant is deceased, the legal representative of
      the
      estate of the Participant or the person or persons who may, by bequest or
      inheritance, or under the terms of an Award or of forms submitted by the
      Participant to the Committee under Section 12(h) hereof, acquire the right
      to
      exercise an Option or Stock Appreciation Right or receive cash and/or Shares
      issuable in satisfaction of an Award in the event of a Participant’s
      death.

    

    (ll)     “Term”
means
      the period during which an Option or Stock Appreciation Right may be exercised
      or the period during which the restrictions placed on Restricted Stock or any
      other Award are in effect.

    

    (mm)   “Unit”
      means a bookkeeping entry that may be used by the Company to record and account
      for the grant of Stock, Stock Appreciation Rights and Performance Shares
      expressed in terms of Units of Stock until such time as the Award is paid,
      canceled, forfeited or terminated.

    

    (nn)   “Vice
      President” means any Associate who is an employee of the Company and whose base
      salary is determined by reference to Salary Grades M1 through and including
      M2
      (as such salary grades are in effect on the effective date of this Plan), or,
      if
      the Company modifies its salary grades after such effective date, in the most
      nearly comparable salary grades for vice presidents of the Company under such
      modified system as determined by the Committee in its sole
      discretion.

    

    Except
      when otherwise indicated by the context, reference to the masculine gender
      shall
      include, when used, the feminine gender and any term used in the singular shall
      also include the plural.

    

    3.     Administration.

    

    (a)     Authority
      of
      Committee.  The
      Committee shall administer this Plan or delegate its authority to do so as
      provided in Section 3(b) hereof. The Committee shall have exclusive power
      (acting alone or, to the extent the Committee deems appropriate for purposes
      of
      Exchange Act Rule 16b-3, in conjunction with the full Board), subject to the
      limitations contained in this Plan, to make Awards and to determine when and
      to
      whom Awards will be granted, and the form, amount and other terms and conditions
      of each Award, subject to the provisions of this Plan. The Committee, subject
      to
      the limitations contained in this Plan, may determine whether, to what extent
      and under what circumstances Awards may be settled, paid or exercised in cash,
      Shares or other Awards or other property, or canceled, forfeited or suspended.
      The Committee shall have the authority to interpret this Plan and any Award
      or
      Agreement made under this Plan, to establish, amend, waive and rescind any
      rules
      and regulations relating to the administration of this Plan, to determine the
      terms and provisions of any Agreement entered into hereunder (not inconsistent
      with this Plan), and to make all other determinations necessary or advisable
      for
      the administration of this Plan. The Committee may correct any defect, supply
      any omission or reconcile any inconsistency in this Plan or in any Award in
      the
      manner and to the extent it shall deem desirable. All determinations of the
      Committee in the administration of this Plan, as described herein, shall be
      final, binding and conclusive, including, without limitation, as to any
      adjustments pursuant to Section 12(f). A majority of the members of the
      Committee shall constitute a quorum for any meeting of the Committee.
      Notwithstanding the foregoing, in administering this Plan with respect to Awards
      for Non-Employee Directors, the Board shall exercise the powers of the
      Committee.

    

    (b)     Delegation
      of Authority.  The
      Committee may delegate all or any part of its authority under this Plan to
      the
      Chief Executive Officer of the Company for purposes of determining Awards of
      Options solely to Associates who are employees who are not Vice Presidents
      or
      Senior Executives and who are not then subject to the reporting requirements
      of
      Section 16 of the Exchange Act. In delegating such authority the Committee
      shall
      specify the maximum number of shares that may be awarded to any single employee.
      The authority so delegated to the Chief Executive Officer may not be
      subdelegated.

    

    4.     Shares
      Available; Maximum Payouts.

    

    (a)     Shares
      Available.  The
      number of Shares initially available for distribution under this Plan shall
      be
      1,350,000 Shares. Such number of Shares shall increase annually, effective
      as of
      each January 1, commencing January 1, 2002 and ending on January 1, 2004, by
      700,000 Shares. Such number of Shares shall also be increased by the number
      of
      Shares made available as a result of forfeitures under the Express Scripts,
      Inc.
      Amended and Restated 1992 and 1994 Stock Option Plans and the Express Scripts,
      Inc. Amended and Restated 1992 Stock Option Plan for Outside Directors (the
      “1992 and 1994 Plans”) (all of which Shares shall be subject to adjustment under
      Section 12(f) hereof). On and after the effective date of this Plan, no further
      awards may be made under the 1992 and 1994 Plans. Shares issued under this
      Plan
      may be authorized and unissued shares or issued shares held as treasury
      shares.

    

    (b)     Shares
      Again
      Available.  Any
      Shares subject to an Award under this Plan which are not used because the Award
      expires without all Shares subject to such Award having been issued or because
      the terms and conditions of the Award are not met may again be used for an
      Award
      under this Plan. Any Shares that are the subject of Awards which are
      subsequently forfeited to the Company pursuant to the restrictions applicable
      to
      such Award may again be used for an Award under this Plan. If a Participant
      exercises a Stock Appreciation Right, any Shares covered by the Stock
      Appreciation Right in excess of the number of Shares issued (or, in the case
      of
      a settlement in cash or any other form of property, in excess of the number
      of
      Shares equal in value to the amount of such settlement, based on the Fair Market
      Value of such Shares on the date of such exercise) may again be used for an
      Award under this Plan. If, in accordance with the Plan, a Participant uses
      Shares to (i) pay a purchase or exercise price, including an Option exercise
      price, or (ii) satisfy tax withholdings, such Shares may again be used for
      an
      Award under this Plan.

    

    (c)     Unexercised
      Awards.  Any
      unexercised or undistributed portion of any terminated, expired, exchanged,
      or
      forfeited Award or any Award settled in cash in lieu of Shares (except as
      provided in Section 4(b) hereof) shall be available for further
      Awards.

    

    (d)     No
      Fractional
      Shares.  No
      fractional Shares may be issued under this Plan; fractional Shares will be
      rounded down to the nearest whole Share.

    

    5.     Eligibility. 
      Awards
      may be granted under this Plan to any Associate at the discretion of the
      Committee.

    

    6.     General
      Terms of Awards.

    

    (a)     Awards. 
      Awards under this Plan may consist of Options (either Incentive Stock Options
      or
      Non-Qualified Stock Options), Stock Appreciation Rights, Performance Shares,
      Restricted Stock or Other Stock-Based Awards. Awards of Restricted Stock may,
      in
      the discretion of the Committee, provide the Participant with dividends or
      dividend equivalents and voting rights prior to vesting (whether vesting is
      based on a period of time, the attainment of specified performance conditions
      or
      otherwise).

    

    (b)     Amount
      of
      Awards. 
      Each Agreement shall set forth the number of Shares of Restricted Stock, Stock
      or Performance Shares subject to such Agreement, or the number of Shares to
      which the Option applies or with respect to which payment upon the exercise
      of
      the Stock Appreciation Right is to be determined, as the case may be, together
      with such other terms and conditions applicable to the Award (not inconsistent
      with this Plan) as determined by the Committee in its sole
      discretion.

    

    (c)     Term. 
      Each Agreement, other than those relating solely to Awards of Stock without
      restrictions, shall set forth the Term of the Award and any applicable
      Performance Period for Performance Shares, as the case may be, but in no event
      shall the Term of an Award or the Performance Period be longer than ten years
      after the date of grant. An Agreement with a Participant may permit acceleration
      of vesting requirements and of the expiration of the applicable Term upon such
      terms and conditions as shall be set forth in the Agreement, which may, but,
      unless otherwise specifically provided in this Plan, need not, include, without
      limitation, acceleration resulting from the occurrence of the Participant’s
      death or Disability. Acceleration of the Performance Period of Performance
      Shares shall be subject to Section 9(b) hereof.

    

    (d)     Agreements. 
      Each Award under this Plan shall be evidenced by an Agreement setting forth
      the
      terms and conditions, as determined by the Committee, that shall apply to such
      Award, in addition to the terms and conditions specified in this
      Plan.

    

    (e)     Transferability. 
      Except
      as
      otherwise permitted by the Committee, during the lifetime of a Participant
      to
      whom an Award is granted, only such Participant (or such Participant’s legal
      representative) may exercise an Option or Stock Appreciation Right or receive
      payment with respect to Performance Shares or any other Award. Except as
      otherwise permitted by the Committee, no Award of Restricted Stock (prior to
      the
      expiration of the restrictions), Options, Stock Appreciation Rights, Performance
      Shares or other Award (other than an award of Stock without restrictions) may
      be
      sold, assigned, transferred, exchanged, or otherwise encumbered, and any attempt
      to do so (including pursuant to a decree of divorce or any judicial declaration
      of property division) shall be of no effect. Notwithstanding the immediately
      preceding sentence, an Agreement may provide that an Award shall be transferable
      to a Successor in the event of a Participant’s death.

    

    (f)     Termination
      of Employment Generally. 
      Except as otherwise determined by the Committee or provided by the Committee
      in
      an applicable Agreement (which may, without limitation, in the sole discretion
      of the Committee, provide for an extension of the exercisability of Options
      and
      Stock Appreciation Rights beyond the periods set forth in paragraphs (i)(A)
      through (E) below, subject in all events to paragraph (i)(F) below), in the
      case
      of a Participant’s termination of employment, the following provisions shall
      apply:

    

    (i)     Options
      and
      Stock Appreciation Rights.

    

    (A)     Death. 
If
      a Participant’s employment terminates because of his or her death, then any
      Option or Stock Appreciation Right that has not expired or been terminated
      shall
      become exercisable in full, and may be exercised by the Participant’s Successor
      at any time, or from time to time, within one year after the date of the
      Participant’s death.

    

    (B)     Disability.
       If
      a Participant’s employment terminates because of Disability, then any Option or
      Stock Appreciation Right that has not expired or been terminated shall become
      exercisable in full, and the Participant or the Participant’s Successor may
      exercise such Option or Stock Appreciation Right at any time, or from time
      to
      time, within one year after the date of the Participant’s
      Disability.

    

    (C)     Retirement. 
      Upon a Participant’s Retirement, any Option or Stock Appreciation Right that has
      not expired or been terminated shall become exercisable in full, and the
      Participant may exercise such Option or Stock Appreciation Right at any time,
      or
      from time to time, within one year after the date of the Participant’s
      retirement.

    

    (D)     Termination
      for Cause. 
      Upon termination of a Participant’s employment by the Company for Cause, all
      Awards, to the extent not previously exercised, shall immediately
      terminate.

    

    Sections
      6(f)(1)(E and F) for Options or Stock Appreciation Rights granted before
      December 19, 2001(see Attachment A):

    (E)     Reasons
      other than Termination for Cause, Death, Retirement or
      Disability. 
      Except as provided in Sections 6(g) or (h), if a Participant’s employment
      terminates for any reason other than death, Disability, Retirement or by the
      Company for Cause, then any Option or Stock Appreciation Right that has not
      expired or been terminated shall remain exercisable for one month after
      termination of the Participant’s employment, but only to the extent that such
      Option or Stock Appreciation Right was exercisable immediately prior to such
      Participant’s termination of employment.

    

    (F)     Expiration
      of Term.
      Notwithstanding any provision of this Plan to the contrary, in no event shall
      an
      Option or a Stock Appreciation Right be exercisable after expiration of the
      Term
      of such Award. Any Option or Stock Appreciation Right that is not exercised
      within the periods set forth in the foregoing paragraphs (A)-(E), except as
      otherwise provided by the Company in the applicable Agreement, shall terminate
      as of the end of the periods described in such paragraphs.

    Sections
      6(f)(1)(E and F) for Options or Stock Appreciation Rights on or after December
      19, 2001(see Attachment A):

    

    (E)     Reasons
      other
      than Termination for Cause, Death, Retirement or
      Disability. 
If
      a Participant’s employment terminates for any reason other than death,
      Disability, Retirement or by the Company for Cause, then any Non-Qualified
      Stock
      Option or Stock Appreciation Right that has not expired or been terminated
      shall
      remain exercisable for one year after termination of the Participant’s
      employment (and any Incentive Stock Option that has not expired or been
      terminated shall remain exercisable for three months after termination of the
      Participant’s employment), but only to the extent that such Option or Stock
      Appreciation Right was exercisable immediately prior to such Participant’s
      termination of employment.

    

    (F)     Expiration
      of
      Term. 
      Any portion of an Option or Stock Appreciation Right that remains unexercisable
      upon termination of employment (after taking into account the foregoing
      paragraphs (A)-(E)) shall terminate immediately upon such termination of
      employment. Any portion of an Option or Stock Appreciation Right that is, or
      becomes, exercisable upon termination of employment which is not exercised
      within the applicable period set forth in the foregoing paragraphs (A)-(E),
      except as otherwise provided by the Company in the applicable Agreement, shall
      terminate as of the end of the applicable period described in such paragraphs.
      Notwithstanding the foregoing, or any other provision of this Plan to the
      contrary, in no event shall an Option or a Stock Appreciation Right be
      exercisable after expiration of the Term of such Award.

    

    (ii)     Performance
      Shares. 
If
      a Participant’s employment with the Company or any of its Affiliates terminates
      during a Performance Period because of death, Disability or Retirement, or
      under
      other circumstances provided by the Committee in its discretion in the
      applicable Agreement or otherwise, the Participant, unless the Committee shall
      otherwise provide in the applicable Agreement, shall be entitled to receive
      a
      number of Performance Shares (or payment therefor) at the end of the Performance
      Period based upon the extent to which achievement of performance targets was
      satisfied at the end of such period (as determined at the end of the Performance
      Period) and prorated for the portion of the Performance Period during which
      the
      Participant was employed by the Company or any Affiliate. Except as provided
      in
      this Section 6(f)(ii) or in the applicable Agreement, if a Participant’s
      employment terminates with the Company or any of its Affiliates during a
      Performance Period, then such Participant shall not be entitled to any payment
      with respect to that Performance Period.

    

    (iii)   Restricted
      Stock. 
      Unless otherwise provided in the applicable Agreement, in case of a
      Participant’s death, Disability or Retirement, the Participant shall be entitled
      to receive a number of shares of Restricted Stock under outstanding Awards
      that
      has been pro-rated for the portion of the Term of the Awards during which the
      Participant was employed by the Company or any Affiliate, and with respect
      to
      such Shares all restrictions shall lapse. Any shares of Restricted Stock as
      to
      which restrictions do not lapse under the preceding sentence shall terminate
      at
      the date of the Participant’s termination of employment for any other reason and
      such shares of Restricted Stock shall be forfeited to the Company.

    

    (g)     Acceleration
      of Vesting Upon Change in Control After Which No Public Market for Company
      or
      Exchange Stock Exists

    

    (i)     Acceleration
      of Vesting; Lapse of Restrictions.
       Except as may be otherwise specified in the terms of any Award, upon the
      occurrence of a Change in Control after which there will be no generally
      recognized U.S. public market for the Company’s Class A Common Stock or any
      common stock for which the Company’s Class A Common Stock is
      exchanged,

    

    (A)     any
      Option or
      Stock Appreciation Right that has not expired or been terminated shall, to
      the
      extent not yet exercisable, become exercisable in full; and 

    

    (B)     the
      lapse of
      restrictions on, or the forfeiture of, any Award of Restricted Stock,
      Performance Shares, or Other Stock-Based Award shall be determined in accordance
      with Section 6(h)(ii); subject, however, to the provisions of Section 6(g)(ii)
      and (iii).

    

    (ii)     Company
      Repurchase.
       (See
      Attachment B for certain amendments to this section.) Upon
      the
      occurrence of a Change in Control Transaction described in clause (g)(i) above,
      on the Change in Control Date the Company will repurchase, and each Participant
      shall sell to the Company, any Option, Stock Appreciation Right, Restricted
      Stock, Performance Shares, or Other Stock-Based Award then held by such
      Participant as follows:

    

    (A)     Any
      Option or Stock Appreciation Right will be repurchased at a per share price
      equal to the excess (if any) of the Change in Control Price over the exercise
      price of the Option or the specified price of the Stock Appreciation Right,
      as
      the case may be;

    

    (B)     Any
      Restricted Stock or Performance Shares will be repurchased at a per share price
      equal to the Change in Control Price; and

    

    (C)     Any
      Other
      Stock-Based Award will be repurchased at a price determined by the Committee
      in
      its sole discretion to be consistent with the treatment of Options, Stock
      Appreciation Rights, Restricted Stock or Performance Shares.

    

    (iii)     Purchase
      Price Escrow.  (See
      Attachment B for certain amendments to this section.) Any
      amount of the purchase price that may become payable to Participants with
      respect to Restricted Stock, Performance Shares or Other Stock-Based Awards
      as
      to which restrictions have not lapsed on the Change in Control Date shall be
      deposited on the Change in Control Date in escrow with one of the ten largest
      U.S. commercial banks (measured in terms of amount of assets), or if no such
      bank will consent to serve as escrow agent, then another U.S. commercial bank
      of
      recognized standing chosen by the Company. Such funds shall be invested in
      securities issued or fully guaranteed as to both principal and interest by
      the
      U.S. Government, or in debt obligations of U.S. corporations with a remaining
      term to maturity not exceeding one year and rated AA or better by Standard
&
Poors Corporation. Interest earned on such funds shall be allocated ratably
      among the Participants receiving payment of such funds or, if any amounts are
      forfeited by a Participant, to the Company, and shall be disbursed when such
      payments are made. Disbursements from the escrow shall be made as
      follows:

    

    (A)     Disbursement
      on Lapse of Restrictions. 
      With the initial escrow deposit the Company shall deliver to the escrow agent
      a
      schedule for making disbursements to the Participants based on the dates when
      the remaining restrictions on Restricted Stock or Other Stock-Based Awards
      will
      lapse based solely on the lapse of time. Unless the escrow agent receives a
      notice described in the following clauses (B) or (C) the escrow agent will
      disburse the funds in accordance with such schedule. With respect to Performance
      Shares, and where applicable with respect to Restricted Stock or Other
      Stock-Based Awards, the Company will from time to time deliver to the escrow
      agent a notice when the restrictions on any such Awards shall lapse (if sooner
      than the dates stated in the initial schedule), and the escrow agent shall
      disburse funds in accordance with such notice.

    

    (B)     Forfeiture. 
      If a Participant forfeits his rights to any payments from the escrow, the
      Company shall give written notice thereof contemporaneously to the escrow agent
      and the Participant by certified or registered mail (in the case of the
      Participant, to the last known address of the Participant on the records of
      the
      Company), stating the reason for such forfeiture and the amount thereof. The
      escrow agent shall disburse the amount stated in such notice to the Company
      sixty (60) days after receipt thereof unless prior to such time the escrow
      agent
      receives written notice from the Participant that the Participant has commenced
      litigation against the Company with respect to the validity of such forfeiture.
      If such a notice is received, the escrow agent shall disburse such funds only
      upon order of a court of competent jurisdiction or upon written instructions
      signed by both the Company and the Participant.

    

    (C)     Acceleration
      of Payments.
       If a Participant or his successor in interest becomes entitled to a
      payment from the escrow prior to the time stated in the schedule, the
      Participant or such successor shall give written notice thereof
      contemporaneously to the escrow agent and the Company by certified or registered
      mail, stating the reason for such accelerated payment and the amount thereof.
      The escrow agent shall disburse the amount stated in such notice to the Optionee
      or such successor sixty (60) days after receipt thereof unless prior to such
      time the escrow agent receives written notice from the Company that the Company
      has commenced litigation against the Participant or such successor challenging
      the right to such acceleration of payment. If such a notice is received, the
      escrow agent shall disburse such funds only upon order of a court of competent
      jurisdiction or upon written instructions signed by both the Company and the
      Participant.

    

    (h)     Acceleration
      of Vesting Upon Other Change in Control Transactions. 
Except
      as
      may be otherwise specified in the terms of any Award, upon the occurrence of
      a
      Change in Control after which there remains a generally recognized U.S. public
      market for the Company’s Class A Common Stock or for any common stock for which
      the Company’s Class A Common Stock is exchanged, outstanding Awards shall be
      treated as follows:

    

    (i)     Stock
      Options
      and Stock Appreciation Rights. 
      Any Option or Stock Appreciation Right that has not expired or been terminated
      shall, to the extent not yet exercisable, become exercisable in full and shall
      remain exercisable for the remainder of the Term (except as otherwise provided
      in Section 6(g)(iii)).

    

    (ii)     Restricted
      Stock, Performance Shares and Other Stock-Based Awards.

    

    (A)     Comparable
      Employment Not Offered. 
      If a Participant who is a Vice President or Senior Executive is not offered
      Comparable Employment with the Company or any successor to the Company’s
      business on or before the Change in Control Date, then any restrictions still
      applicable to any Award of Restricted Shares, Performance Shares, or Other
      Stock-Based Award shall lapse; provided,
      however,
      that in
      the case of Performance Shares the Participant shall be entitled to receive
      a
      number of Performance Shares (or payment therefor) on the Change in Control
      Date
      based upon the extent to which achievement of performance targets was satisfied
      as of such date, as determined by the Committee in its sole
      discretion.

    

    (B)     Comparable
      Employment Offered and Accepted.  If
      a
      Participant who is a Vice President or Senior Executive is offered and accepts
      Comparable Employment with the Company or any successor to the Company’s
      business on or before the Change in Control Date, then to the extent that
      restrictions remain in effect with respect to each Award of Restricted Shares,
      Performance Shares, or Other Stock-Based Award held by a Senior Executive or
      a
      Vice President, such restrictions shall lapse with respect to one-half of such
      shares. If an Award provides for lapse of restrictions in two or more
      increments, then the portion of such Award that will vest on an accelerated
      basis due to the Change in Control will be one-half of each such vesting
      increment.

    

    (C)     Comparable
      Employment Not Accepted. 
      If a Participant (other than a Non-Employee Director) is offered Comparable
      Employment with the Company or any successor to the Company’s business on or
      before the Change in Control Date and declines such employment, then the
      provisions of subsection 6(f) shall apply to any Restricted Stock, Performance
      Shares or Other Stock-Based Awards held by the Participant at the Change in
      Control Date.

    

    (D)     Termination
      of Employment After Change in Control Date.
       If the employment of any Participant on the Change in Control Date is
      involuntarily terminated without Cause after the Change in Control Date, or
      is
      voluntarily terminated after the Change in Control Date by a Participant who
      is
      a Senior Executive or a Vice President due to a change in employment conditions
      that results in such Participant not continuing to have Comparable Employment
      relative to such Participant’s employment immediately preceding the Change in
      Control Date, then, notwithstanding the provisions of this subsection (h),
      any
      restrictions still applicable to any Award of Restricted Shares, Performance
      Shares, or Other Stock-Based Award held by such Participant that was granted
      prior to the Change in Control Date shall lapse; provided,
      however,
      that in
      the case of Performance Shares the Participant shall be entitled to receive
      a
      number of Performance Shares (or payment therefor) based upon the extent to
      which achievement of performance targets was satisfied as of the date of
      termination of employment, as determined by the Committee in its sole
      discretion. If no public market for the Company’s Class A Common Stock (or any
      stock for which the Company’s Class A Common Stock has been exchanged) exists at
      the time of termination of employment, then the Company shall repurchase, and
      the Participant shall sell, all or a ratable portion (as the case may be) of
      any
      such Restricted Stock, Performance Shares, or Other Stock-Based Award held
      by
      such Participant at the price provided for in the preceding subsection 6(g)(ii).
      This subsection 6(h)(ii)(D) shall not apply to Awards made after the Change
      in
      Control Date unless otherwise provided in such Award.

    

    (iii)     Non-Employee
      Directors. 
      Any restrictions still applicable to any Award of Restricted Shares, Performance
      Shares, or Other Stock-Based Award held by a Non-Employee Director shall
      lapse.

    

    (i)     Rights
      as Stockholder. 
A
      Participant shall have no right as a stockholder with respect to any securities
      covered by an Award until the date the Participant becomes the holder of
      record.

    

    (j)     Maximum
      Annual Awards Per Participant. 
No
      Participant may receive any combination of Awards relating to more than 250,000
      Shares in the aggregate in any fiscal year of the Company under this Plan
      (subject to adjustment under Section 12(f) hereof).

    

    7.     Stock
      Options.

    

    (a)     Terms
      of All Options.

    

    (i)     Grants. 
      Each Option shall be granted pursuant to an Agreement as either an Incentive
      Stock Option or a Non-Qualified Stock Option. Only Non-Qualified Stock Options
      may be granted to Associates who are not employees of the Company or an
      Affiliate.

    

    (ii)     Purchase
      Price. 
      The purchase price of each Share subject to an Option shall be determined by
      the
      Committee and set forth in the applicable Agreement, but shall not be less
      than
      100% of the Fair Market Value of a Share as of the date the Option is granted.
      The purchase price of the Shares with respect to which an Option is exercised
      shall be payable in full at the time of exercise, provided that, to the extent
      permitted by law and in accordance with rules adopted by the Committee,
      Participants may simultaneously exercise Options and sell the Shares thereby
      acquired pursuant to a brokerage or similar relationship and use the proceeds
      from such sale to pay the purchase price of such Shares. The purchase price
      may
      be paid in cash or, if the Committee so permits, through delivery or tender
      to
      the Company of Shares held, either actually or by attestation, by such
      Participant for at least six months (in each case, such Shares having a Fair
      Market Value as of the date the Option is exercised equal to the purchase price
      of the Shares being purchased pursuant to the Option), or, if the Committee
      so
      permits, a combination thereof, unless otherwise provided in the Agreement;
      provided that, no Shares may be tendered in exercise of an Incentive Stock
      Option if such shares were acquired by the optionee through the exercise of
      an
      Incentive Stock Option unless (i) such shares have been held by the
      optionee for at least one year and (ii) at least two years have elapsed
      since such Incentive Stock Option was granted. Further, the Committee, in its
      discretion, may approve other methods or forms of payment of the purchase price,
      and establish rules and procedures therefor. 

    

    (iii)     No
      Repricing of Options Without Shareholder Approval.  Options,
      once issued, may not be repriced without first obtaining the approval of the
      shareholders of the Company.

    

    (iv)     Exercisability. 
      Each Option shall be exercisable in whole or in part on the terms provided
      in
      the Agreement. In no event shall any Option be exercisable at any time after
      its
      Term. When an Option is no longer exercisable, it shall be deemed to have lapsed
      or terminated.

    

    (b)     Incentive
      Stock Options. 
In
      addition to the other terms and conditions applicable to all
      Options:

    

    (i)     the
      aggregate Fair Market Value (determined as of the date the Option is granted)
      of
      the Shares with respect to which Incentive Stock Options held by an individual
      first become exercisable in any calendar year (under this Plan and all other
      incentive stock options plans of the Company and its Affiliates) shall not
      exceed $100,000 (or such other limit as may be required by the Code), if such
      limitation is necessary to qualify the Option as an Incentive Stock Option,
      and
      to the extent an Option or Options granted to a Participant exceed such limit
      such Option or Options shall be treated as Non-Qualified Stock
      Options;

    

    (ii)     an
      Incentive Stock Option shall not be exercisable and the Term of the Award shall
      not be more than ten years after the date of grant (or such other limit as
      may
      be required by the Code) if such limitation is necessary to qualify the Option
      as an Incentive Stock Option;

    

    (iii)     the
      Agreement covering an Incentive Stock Option shall contain such other terms
      and
      provisions which the Committee determines necessary to qualify such Option
      as an
      Incentive Stock Option; and

    

    (iv)     notwithstanding
      any other provision of this Plan if, at the time an Incentive Stock Option
      is
      granted, the Participant owns (after application of the rules contained in
      Section 424(d) of the Code, or its successor provision) Shares possessing more
      than ten percent of the total combined voting power of all classes of stock
      of
      the Company or its subsidiaries, (A) the option price for such Incentive Stock
      Option shall be at least 110% of the Fair Market Value of the Shares subject
      to
      such Incentive Stock Option on the date of grant and (B) such Option shall
      not
      be exercisable after the date five years from the date such Incentive Stock
      Option is granted.

    

    (c)     Option
      Grant for Non-Employee Directors. 
      The Board (which may delegate the determination to a Committee of the Board)
      may
      from time to time determine that each individual who is elected or appointed
      to
      the office of director as a Non-Employee Director receive an Award as
      compensation, in whole or in part, for such individual’s services as a director.
      In determining the level of Awards for Non-Employee Directors, the Board may
      consider such factors as compensation practices of comparable companies with
      respect to directors, consultants’ recommendations, and such other information
      as the Board may deem appropriate. In the absence of action by the Board each
      individual who is first elected or appointed to the office of director as a
      Non-Employee Director after adoption of this Plan shall receive (i) an Option
      to
      acquire three thousand (3,000) Shares on the date of the first meeting of the
      Board after such director’s election or appointment, and a like grant on each
      anniversary of such date, and (ii) an Option to acquire four thousand (4,000)
      Shares on the date of the first meeting of the Board after such director’s
      election or appointment, and a like grant each third year thereafter. These
      Options shall have the following terms and conditions:

    

    (i)     Price. 
      The purchase price for the Shares subject to such Option shall be one hundred
      percent (100%) of the Fair Market Value of a Share as of the date the Option
      is
      granted.

    

    (ii)    Term. 
      The term of such Option shall be seven (7) years from the date that it is
      granted.

    

    (iii)    Vesting. 
      Subject to the provisions of subsections 6(g), 6(h) and the following clause
      (iv), such Option shall become exercisable in installments on a cumulative
      basis
      at a rate of one-third (1/3) each year, beginning on the first anniversary
      of
      the date of grant and on each successive anniversary thereafter, until the
      date
      such Option expires or is terminated.

    

    (iv)     Termination
      of Service as Non-Employee Director. 
      Except as provided in Sections 6(g), 6(h) or this subsection (iv), all
      outstanding Options held by a Non-Employee Director terminate immediately if
      such individual ceases to be a Non-Employee Director for any reason other than
      death or Disability, provided
      that, if
      the Optionee has attained age sixty-five (65) at the time of such cessation,
      the
      portion of his outstanding Options that have not become exercisable as of such
      date shall terminate immediately, and the remaining portion, if any, shall
      remain exercisable for a period of three months following such cessation, and
      shall thereafter terminate. If an Optionee ceases to be a Non-Employee Director
      due to his death or Disability, all outstanding Options held by such Optionee
      shall immediately become fully exercisable to the extent not so exercisable,
      shall remain exercisable for a period of three months following such cessation,
      and shall thereafter terminate. Notwithstanding the foregoing, no provision
      in
      this subsection (iv) shall extend the exercise period of an Option beyond its
      original term.

    

    The
      Board, in its discretion, may make other Awards from time to time to
      Non-Employee Directors, upon such terms and conditions, consistent with the
      provisions of this Plan, as the Board may determine.

    

    8.   
Stock
      Appreciation Rights.  An
      Award of a Stock Appreciation Right shall entitle the Participant, subject
      to
      terms and conditions determined by the Committee, to receive upon exercise
      of
      the Stock Appreciation Right all or a portion of the excess of (i) the Fair
      Market Value of a specified number of Shares as of the date of exercise of
      the
      Stock Appreciation Right over (ii) a specified price which shall not be less
      than 100% of the Fair Market Value of such Shares as of the date of grant of
      the
      Stock Appreciation Right (referred to in Section 12(f) as the “purchase
      price”). A Stock Appreciation Right may be granted in connection with a
      previously or contemporaneously granted Option, or independent of any Option.
      If
      issued in connection with an Option, the Committee may impose a condition that
      exercise of a Stock Appreciation Right cancels the Option with which it is
      connected and exercise of the connected Option cancels the Stock Appreciation
      Right. Each Stock Appreciation Right may be exercisable in whole or in part
      on
      the terms provided in the applicable Agreement. No Stock Appreciation Right
      shall be exercisable at any time after its Term. When a Stock Appreciation
      Right
      is no longer exercisable, it shall be deemed to have lapsed or terminated.
      Except as otherwise provided in the applicable Agreement, upon exercise of
      a
      Stock Appreciation Right, payment to the Participant (or to his or her
      Successor) shall be made in the form of cash, Stock or a combination of cash
      and
      Stock (as determined by the Committee if not otherwise specified in the Award)
      as promptly as practicable after such exercise. The Agreement may provide for
      a
      limitation upon the amount or percentage of the total appreciation on which
      payment (whether in cash and/or Stock) may be made in the event of the exercise
      of a Stock Appreciation Right.

    

    9.     Performance
      Shares.

    

    (a)     Initial
      Award. 
      (See
      Attachment B for certain amendments to this section.) An
      Award
      of Performance Shares shall entitle a Participant (or a Successor) to future
      payments based upon the achievement of performance targets established in
      writing by the Committee. Payment shall be made in Stock, or a combination
      of
      cash and Stock, as determined by the Committee. Such performance targets shall
      be determined by the Committee in its sole discretion and shall consist of
      one
      or any combination of two or more of earnings or earnings per share before
      income tax (profit before taxes), net earnings or net earnings per share (profit
      after tax), inventory, total or net operating asset turnover, operating income,
      total stockholder return, return on equity, pre-tax and pre-interest expense
      return on average invested capital, which may be expressed on a current value
      basis, or sales growth, successful transition of the Company’s clients to new
      claim adjudication platforms, achievement of post-merger integration, marketing,
      operating or workplan goals, and any such targets may relate to one or any
      combination of two or more of corporate, group, unit, division, Affiliate or
      individual performance. The Agreement may establish that a portion of the
      maximum amount of a Participant’s Award will be paid for performance which
      exceeds the minimum target but falls below the maximum target applicable to
      such
      Award. The Agreement shall also provide for the timing of such payment.
      Following the conclusion or acceleration of each Performance Period, the
      Committee shall determine the extent to which (i) performance targets have
      been
      attained, (ii) any other terms and conditions with respect to an Award relating
      to such Performance Period have been satisfied, and (iii) payment is due with
      respect to a Performance Share Award.

    

    (b)     Acceleration
      and Adjustment. 
      The applicable Agreement may permit an acceleration of the Performance Period
      and an adjustment of performance targets and payments with respect to some
      or
      all of the Performance Shares awarded to a Participant, upon such terms and
      conditions as shall be set forth in the Agreement, upon the occurrence of
      certain events, which may, but need not, include without limitation a
      Fundamental Change, the Participant’s death or Disability, a change in
      accounting practices of the Company or its Affiliates, or, with respect to
      payments in Stock for Performance Share Awards, a reclassification, stock
      dividend, stock split or stock combination as provided in Section 12(f)
      hereof.

    

    (c)     Valuation. 
To
      the extent that payment of a Performance Share is made in cash, a Performance
      Share earned after conclusion of a Performance Period shall have a value equal
      to the Fair Market Value of a Share on the last day of such Performance
      Period.

    

    10.     Restricted
      Stock. 
      Restricted Stock may be granted in the form of Shares registered in the name
      of
      the Participant but held by the Company until the restrictions on the Restricted
      Stock Award lapse, subject to forfeiture, as provided in the applicable
      Agreement. Any employment conditions, performance conditions, restrictions
      on
      transferability and the Term of the Award shall be established by the Committee
      in its discretion and included in the applicable Agreement. The Committee may
      provide in the applicable Agreement for the lapse or waiver of any such
      restriction or condition based on such factors or criteria as the Committee,
      in
      its sole discretion, may determine, which may, but need not, include without
      limitation the Participant’s death or Disability. The Committee, in the
      applicable Agreement, may, in its sole discretion, award all or any of the
      rights of a stockholder with respect to the Shares of Restricted Stock during
      the period that they remain subject to restrictions, including, without
      limitation, the right to vote the Shares and receive dividends. Any performance
      conditions to the lapse of restrictions on restricted stock shall be determined
      by the Committee in its sole discretion and shall be based on performance
      targets that consist of one or any combination of two or more of earnings or
      earnings per share before income tax (profit before taxes), net earnings or
      net
      earnings per share (profit after tax), inventory, total or net operating asset
      turnover, operating income, total stockholder return, return on equity, pre-tax
      and pre-interest expense return on average invested capital, which may be
      expressed on a current value basis, sales growth, successful transition of
      the
      Company’s clients to new claim adjudication platforms, or achievement of
      post-merger integration, marketing, operating or workplan goals, and any such
      targets may relate to one or any combination of two or more of corporate, group,
      unit, division, Affiliate or individual performance.

    

    11.     Other
      Stock-Based Awards. 
      (See
      Attachment B for certain amendments to this section.) The
      Committee may from time to time grant Awards of Stock, and other Awards under
      this Plan (collectively herein defined as “Other Stock-Based Awards”), including
      without limitation those Awards pursuant to which Shares may be acquired in
      the
      future, such as Awards denominated in Stock, Stock Units, securities convertible
      into Stock and phantom securities. The Committee, in its sole discretion, shall
      determine, and provide in the applicable Agreement for, the terms and conditions
      of such Awards provided that such Awards shall not be inconsistent with the
      terms and purposes of this Plan. The Committee may, in its sole discretion,
      direct the Company to issue Shares subject to restrictive legends and/or stop
      transfer instructions which are consistent with the terms and conditions of
      the
      Award to which such Shares relate.

    

    12.     General
      Provisions.

    

    (a)     Effective
      Date of this Plan. 
      This Plan shall become effective as of August 9, 2000, provided
      that
      this Plan is approved and ratified by the holders of the Company’s common stock
      in accordance with the Company’s Certificate of Incorporation at a meeting of
      the stockholders of the Company held no later than August 8, 2001. If this
      Plan
      is not so approved, any Award granted under this Plan subject to such approval
      shall be cancelled and be null and void.

    

    (b)     Duration
      of this Plan; Date of Grant. 
      This Plan shall remain in effect until all Stock subject to it shall be
      distributed or all Awards have expired or lapsed, whichever is latest to occur,
      or this Plan is terminated pursuant to Section 12(e) hereof. No Award of an
      Incentive Stock Option shall be made more than ten years after the effective
      date provided in Section 12(a) hereof (or such other limit as may be required
      by
      the Code) if such limitation is necessary to qualify the Option as an Incentive
      Stock Option. The date and time of approval by the Committee of the granting
      of
      an Award shall be considered the date and time at which such Award is made
      or
      granted, notwithstanding the date of any Agreement with respect to such Award;
      provided, however, that the Committee may grant Awards other than Incentive
      Stock Options to Associates or to persons who are about to become Associates,
      to
      be effective and deemed to be granted on the occurrence of certain specified
      contingencies, provided that if the Award is granted to a non-Associate who
      is
      about to become an Associate, such specified contingencies shall include,
      without limitation, that such person becomes an Associate.

    

    (c)     Right
      to
      Terminate Employment. 
      Nothing in this Plan or in any Agreement shall confer upon any Participant
      who
      is an employee of the Company the right to continue in the employment of the
      Company or any Affiliate or affect any right which the Company or any Affiliate
      may have to terminate or modify the employment of the Participant with or
      without cause.

    

    (d)     Tax
      Withholding. 
      The Company shall withhold from any payment of cash or Stock to a Participant
      or
      other person under this Plan an amount sufficient to cover any required
      withholding taxes, including the Participant’s social security and Medicare
      taxes (FICA) and federal, state and local income tax with respect to income
      arising from payment of the Award. The Company shall have the right to require
      the payment of any such taxes before issuing any Stock pursuant to the Award.
      In
      lieu of all or any part of a cash payment from a person receiving Stock under
      this Plan, the Committee may, in the applicable Agreement or otherwise, permit
      a
      person to cover all or any part of the required withholdings, and to cover
      any
      additional withholdings up to the amount needed to cover the person’s full FICA
      and federal, state and local income tax with respect to income arising from
      payment of the Award, through a reduction of the numbers of Shares delivered
      to
      such person or a delivery or tender to the Company of Shares held by such
      person, in each case valued in the same manner as used in computing the
      withholding taxes under applicable laws.

    

    (e)     Amendment,
      Modification and Termination of this Plan. 
      Except as provided in this Section 12(e), the Board may at any time amend,
      modify, terminate or suspend this Plan. Except as provided in this Section
      12(e), the Committee may at any time alter or amend any or all Agreements under
      this Plan to the extent permitted by law and subject to the requirements of
      Section 2(b), in which event, as provided in Section 2(b), the term
“Agreement” shall mean the Agreement as so amended. Amendments are subject to
      approval of the stockholders of the Company only as required by applicable
      law
      or regulation, or if the amendment increases the total number of shares
      available under this Plan. No termination, suspension or modification of this
      Plan may materially and adversely affect any right acquired by any Participant
      (or a Participant’s legal representative) or any Successor or permitted
      transferee under an Award granted before the date of termination, suspension
      or
      modification, unless otherwise provided in an Agreement or otherwise or required
      as a matter of law. It is conclusively presumed that any adjustment for changes
      in capitalization provided for in Section 9(b) or 12(f) hereof does not
      adversely affect any right of a Participant or other person under an
      Award.

    

    (f)     Adjustment
      for Changes in Capitalization. 
      Appropriate adjustments in the aggregate number and type of securities available
      for Awards under this Plan, in the limitations on the number and type of
      securities that may be issued to an individual Participant, in the number and
      type of securities and amount of cash subject to Awards then outstanding, in
      the
      Option purchase price as to any outstanding Options, in the purchase price
      as to
      any outstanding Stock Appreciation Rights, and, subject to Section 9(b)
      hereof, in outstanding Performance Shares and payments with respect to
      outstanding Performance Shares, and comparable adjustments, if applicable,
      to
      any outstanding Other Stock-Based Award, shall be made by the Committee to
      give
      effect to adjustments made in the number or type of Shares through a Fundamental
      Change, reorganization, recapitalization, reclassification, stock dividend,
      stock split, reverse stock split, stock combination, rights offering, spin-off
      or other relevant change, provided that fractional Shares shall be rounded
      to
      the nearest whole Share, for which purpose one-half share shall be rounded
      down
      to the nearest whole Share.

    

    (g)     Other
      Benefit and Compensation Programs. 
      Payments and other benefits received by a participant under an Award shall
      not
      be deemed a part of a Participant’s regular, recurring compensation for purposes
      of any termination, indemnity or severance pay laws and shall not be included
      in, nor have any effect on, the determination of benefits under any other
      employee benefit plan, contract or similar arrangement provided by the Company
      or an Affiliate, unless expressly so provided by such other plan, contract
      or
      arrangement or the Committee determines that an Award or portion of an Award
      should be included to reflect competitive compensation practices or to recognize
      that an Award has been made in lieu of a portion of competitive cash
      compensation.

    

    (h)     Beneficiary
      Upon Participant’s Death. 
To
      the extent that the transfer of a participant’s Award at death is permitted by
      this Plan or under an Agreement, (i) a Participant’s Award shall be transferable
      to the beneficiary, if any, designated on forms prescribed by and filed with
      the
      Committee and (ii) upon the death of the Participant, such beneficiary shall
      succeed to the rights of the Participant to the extent permitted by law and
      this
      Plan. If no such designation of a beneficiary has been made, the Participant’s
      legal representative shall succeed to the Awards, which shall be transferable
      by
      will or pursuant to laws of descent and distribution to the extent permitted
      by
      this Plan or under an Agreement.

    

    (i)     Unfunded
      Plan. 
      This Plan shall be unfunded and the Company shall not be required to segregate
      any assets that may at any time be represented by Awards under this Plan.
      Neither the Company, its Affiliates, the Committee, nor the Board shall be
      deemed to be a trustee of any amounts to be paid under this Plan nor shall
      anything contained in this Plan or any action taken pursuant to its provisions
      create or be construed to create a fiduciary relationship between the Company
      and/or its Affiliates, and a Participant or Successor. To the extent any person
      acquires a right to receive an Award under this Plan, such right shall be no
      greater than the right of an unsecured general creditor of the
      Company.

    

    (j)     Limits
      of
      Liability.

    

    (i)     Any
      liability
      of the Company to any Participant with respect to an Award shall be based solely
      upon contractual obligations created by this Plan and the
      Agreement.

    

    (ii)     Except
      as may
      be required by law, neither the Company nor any member or former member of
      the
      Board or the Committee, nor any other person participating (including
      participation pursuant to a delegation of authority under Section 3(b) hereof)
      in any determination of any question under this Plan, or in the interpretation,
      administration or application of this Plan, shall have any liability to any
      party for any action taken, or not taken, in good faith under this
      Plan.

    

    (iii)     To
      the full
      extent permitted by law, each member and former member of the Committee and
      each
      person to whom the Committee delegates or has delegated authority under this
      Plan shall be entitled to indemnification by the Company against any loss,
      liability, judgment, damage, cost and reasonable expense incurred by such
      member, former member or other person by reason of any action taken, failure
      to
      act or determination made in good faith under or with respect to this
      Plan.

    

    (k)     Compliance
      with Applicable Legal Requirements. 
      The Company shall not be required to issue or deliver a certificate for Shares
      distributable pursuant to this Plan unless the issuance of such certificate
      complies with all applicable legal requirements including, without limitation,
      compliance with the provisions of applicable state securities laws, the
      Securities Act of 1933, as amended and in effect from time to time or any
      successor statute, the Exchange Act and the requirements of the exchanges,
      if
      any, on which the Company’s Shares may, at the time, be listed.

    

    (l)     Deferrals
      and Settlements. 
      The Committee may require or permit Participants to elect to defer the issuance
      of Shares or the settlement of Awards in cash under such rules and procedures
      as
      it may establish under this Plan. It may also provide that deferred settlements
      include the payment or crediting of interest on the deferral
      amounts.

    

    13.     Substitute
      Awards.
       Awards may be granted under this Plan from time to time in substitution
      for Awards held by employees of other corporations who are about to become
      Associates, or whose employer is about to become a Subsidiary of the Company,
      as
      the result of a merger or consolidation of the Company or a Subsidiary of the
      Company with another corporation, the acquisition by the Company or a Subsidiary
      of the Company of all or substantially all the assets of another corporation
      or
      the acquisition by the Company or a Subsidiary of the Company of at least 50%
      of
      the issued and outstanding stock of another corporation. The terms and
      conditions of the substitute Awards so granted may vary from the terms and
      conditions set forth in this Plan to such extent as the Board at the time of
      the
      grant may deem appropriate to conform, in whole or in part, to the provisions
      of
      the Awards in substitution for which they are granted, but with respect to
      Awards which are Incentive Stock Options, no such variation shall be permitted
      which affects the status of any such substitute option as an Incentive Stock
      Option.

    

    14.     Governing
      Law. 
To
      the extent that federal laws do not otherwise control, this Plan and all
      determinations made and actions taken pursuant to this Plan shall be governed
      by
      the laws of Delaware, without giving effect to principles of conflicts of laws,
      and construed accordingly.

    

    15.     Severability. 
In
      the event any provision of this Plan shall be held illegal or invalid for any
      reason, the illegality or invalidity shall not affect the remaining parts of
      this Plan, and this Plan shall be construed and enforced as if the illegal
      or
      invalid provision had not been included.

    

    16.     Prior
      Plans.  Notwithstanding
      the adoption of this Plan by the Board and approval of this Plan by the
      Company’s stockholders as provided by Section 12(a) hereof, the Company’s 1992
      and 1994 Plans, as the same may have been amended from time to time, shall
      remain in effect, but grants of stock options pursuant to the 1992 and 1994
      Plans shall not be made after the effective date of this Plan. All grants and
      awards heretofore made under the 1992 and 1994 Plans shall be governed by the
      terms of the 1992 and 1994 Plans, respectively.

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

      Attachment
        A

      

      SECOND
        AMENDMENT TO 

      EXPRESS
        SCRIPTS, INC. 2000 LONG-TERM INCENTIVE PLAN

      

      RECITALS

      

      A.   Express
        Scripts, Inc. (the “Company”) currently has a 2000 Long-Term Incentive Plan,
        which was adopted August 9, 2000, amended February 6, 2001, and approved
        by
        stockholders on May 23, 2001 (the “2000 Plan”).

      

      B.   On
        December 19, 2001 (the
“Board Approval Date”), the Board of Directors of the Company approved this
        Second Amendment to the 2000 Plan as set forth herein.

      

      AMENDMENT

      

      1.   Amendment
        to Subsection 6(f)(i)(E), Reasons other than Termination for Cause, Death,
        Retirement or Disability.
         With respect to Options and Stock Appreciation Rights granted on or after
        the Board Approval Date, Subsection 6(f)(i)(E) of the 2000 Plan is hereby
        amended as follows:

      

      (E)   Reasons
        other than Termination for Cause, Death, Retirement or Disability.
 If
        a Participant’s employment terminates for any reason other than death,
        Disability, Retirement or by the Company for Cause, then any Non-Qualified
        Stock
        Option or Stock Appreciation Right that has not expired or been terminated
        shall
        remain exercisable for one year after termination of the Participant’s
        employment (and any Incentive Stock Option that has not expired or been
        terminated shall remain exercisable for three months after termination of
        the
        Participant’s employment), but only to the extent that such Option or Stock
        Appreciation Right was exercisable immediately prior to such Participant’s
        termination of employment.

      

      2.   Amendment
        to
        Subsection 6(f)(i)(F), Expiration of Term. 
        With respect to Options and Stock Appreciation Rights granted on or after
        the
        Board Approval Date, Subsection 6(f)(i)(F) of the 2000 Plan is hereby amended
        as
        follows:

      

      (F)   Expiration
        of
        Term. 
        Any portion of an Option or Stock Appreciation Right that remains unexercisable
        upon termination of employment (after taking into account the foregoing
        paragraphs (A)-(E)) shall terminate immediately upon such termination of
        employment. Any portion of an Option or Stock Appreciation Right that is,
        or
        becomes, exercisable upon termination of employment which is not exercised
        within the applicable period set forth in the foregoing paragraphs (A)-(E),
        except as otherwise provided by the Company in the applicable Agreement,
        shall
        terminate as of the end of the applicable period described in such paragraphs.
        Notwithstanding the foregoing, or any other provision of this Plan to the
        contrary, in no event shall an Option or a Stock Appreciation Right be
        exercisable after expiration of the Term of such Award.

      

      3.   Options
        and Stock
        Appreciation Rights Granted Prior to Board Approval Date. 
        This Second Amendment shall not apply to Options and Stock Appreciation Rights
        granted under the 2000 Plan before the Board Approval Date, and such Options
        and
        Stock Appreciation Rights granted under the 2000 Plan before the Board Approval
        Date shall continue to be subject to the provisions of Subsections 6(f)(i)(E)
        and 6(f)(i)(F) as in effect immediately prior to the Board Approval
        Date.

      

      4.   Effective
        Date of the Second Amendment. 
        The effective date of this Second Amendment shall be the Board Approval Date.
        Except as otherwise provided in this Second Amendment, the terms and conditions
        of the 2000 Plan shall remain in full force and effect. 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Attachment
        B

      

      THIRD
        AMENDMENT TO 

      EXPRESS
        SCRIPTS, INC. 2000 LONG TERM INCENTIVE PLAN

      

      RECITALS

      

      A.   Express
        Scripts, Inc. (the “Company”) currently has a 2000 Long-Term Incentive Plan,
        which was adopted August 9, 2000, which was amended on February 6, 2001 and
        December 19, 2001 (the “2000 Plan”).

      

      B.   On
        February 22, 2006 (the “Board Approval Date”), the Board of Directors of the
        Company approved this Third Amendment to the 2000 Plan as set forth
        herein.

      

      AMENDMENT

      

      1.   Amendment
        to
        Subsection 2(v).
        With
        respect to Awards granted on or after the Board Approval Date, Subsection
        2(v)
        of the 2000 Plan is hereby amended to read as follows: 

      

      (v)   “Other
        Award” means an Award of Stock, an Award based on Stock other than Options,
        Stock Appreciation Rights, Restricted Stock or Performance Shares, or a cash
        Award. 

      

      2.   Amendment
        to Subsection 2(z).
         With respect to Awards granted on or after the Board Approval Date,
        Subsection 2(z) of the 2000 Plan is hereby amended to read as
        follows:

      

      (z)   “Performance
        Period” means the period of time as specified in an Agreement over which
        Performance Shares or Other Performance Awards (as defined in Section 9)
        are to
        be earned.

      

      

      3.   Amendment
        to Subsections 6(g)(ii) and (iii). 
        With respect to Awards granted on or after the Board Approval Date, Subsections
        6(g)(ii) and (iii) of the 2000 Plan are hereby amended to add the following
        sentence to the beginning thereof: 

       

          Except
        as may
        be otherwise specified in the terms of any Award, the following provisions
        of
        this subsection shall apply. 

      

      4.   Amendment
        to Subsection 9(a). 
        With respect to Awards granted on or after the Board Approval Date, Subsection
        9(a) of the 2000 Plan is amended to add compound annual growth in earnings
        per
        share, compound stockholder return and average return on invested capital
        as
        performance targets and to otherwise read as follows: 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      9.   Performance
        Shares and
        Other Performance Awards.

      

      (a)   Initial
        Award. 
An
        Award of Performance Shares or Other Performance Award (which shall mean
        an
        Other Award as described in Section 11 subject to the terms of this Section
        9)
        shall entitle a Participant (or a Successor) to future payments based upon
        the
        achievement of performance targets established in writing by the Committee.
        Payment shall be made in cash or Stock, or a combination of cash and Stock,
        as
        determined by the Committee. Such performance targets shall be determined
        by the
        Committee in its sole discretion and shall consist of one or any combination
        of
        two or more of earnings or earnings per share before income tax (profit before
        taxes), net earnings or net earnings per share (profit after tax), compound
        annual growth in earnings per share, inventory, total or net operating asset
        turnover, operating income, total stockholder return, compound stockholder
        return, return on equity, average return on invested capital, pre-tax and
        pre-interest expense return on average invested capital, which may be expressed
        on a current value basis, or sales growth, successful transition of the
        Company’s clients to new claim adjudication platforms, achievement of
        post-merger integration, marketing, operating or workplan goals, and any
        such
        targets may relate to one or any combination of two or more of corporate,
        group,
        unit, division, Affiliate or individual performance.  The Agreement may
        establish that a portion of the maximum amount of a Participant’s Award will be
        paid for performance which exceeds the minimum target but falls below the
        maximum target applicable to such Award.  The Agreement shall also provide
        for the timing of such payment. Following the conclusion or acceleration
        of each
        Performance Period, the Committee shall determine the extent to which (i)
        performance targets have been attained, (ii) any other terms and conditions
        with
        respect to an Award relating to such Performance Period have been satisfied,
        and
        (iii) payment is due with respect to a Performance Share Award or Other
        Performance Award.  In addition to the limitations set forth in Section
        6(j), no Participant may receive any combination of Other Performance Awards
        that do not relate to Shares exceeding Six Million Dollars ($6,000,000) in
        the
        aggregate in any fiscal year of the Company under this Plan. 

      

      5.   Amendment
        to Section
        11. 
        With respect to Awards granted on or after the Board Approval Date, Section
        11
        of the 2000 Plan is amended to read as follows: 

      

      11.   Other
        Awards.  
        The Committee may from time to time grant Awards of Stock and other Awards
        under
        this Plan (collectively herein defined as “Other Awards”), including without
        limitation those Awards pursuant to which a cash bonus award may be made
        or
        pursuant to which Shares may be acquired in the future, such as Awards
        denominated in Stock, Stock Units, securities convertible into Stock and
        phantom
        securities.  The Committee, in its sole discretion, shall determine, and
        provide in the applicable Agreement for, the terms and conditions of such
        Awards
        provided that such Awards shall not be inconsistent with the terms and purposes
        of this Plan.  The Committee may, in its sole discretion, direct the
        Company to issue Shares subject to restrictive legends and/or stop transfer
        instructions which are consistent with the terms and conditions of the Award
        to
        which such Shares relate.  In addition, the Committee may, in its sole
        discretion, issue such Other Awards subject to the performance criteria under
        Section 9 hereof. 

      

      6.   Amendment
        to the Term
“Other Stock-Based Award.” 
        The term “Other Stock-Based Award” in the 2000 Plan shall be replaced with
“Other Award” each place it appears in the 2000 Plan, and any references to
        shares or stock in connection with such term shall be deemed to include cash
        to
        the extent any such Other Award is payable in cash. 

      

      7.   New
        Section Regarding Code Section 409A.
        The
        2000 Plan is amended to add a new Section 17 to the end thereof to read as
        follows: 

      

      17.   Deferred
        Compensation.
If
        any
        Award would be considered deferred compensation as defined under Code Section
        409A and would fail to meet the requirements of Code Section 409A, then such
        Award shall be null and void.exv10w27

 

Exhibit 10.27

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

SECOND AMENDED AND RESTATED

LICENSE AGREEMENT

dated as of

July 3, 2006

between

ARADIGM CORPORATION

and

NOVO NORDISK A/S

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	ARTICLE 1	 	 	 	 
	 
	 	   Definitions	 	 	 	 
	 
	 	 	 	 	 	 
	Section 1.01.
	 	Definitions	 	 	2	 
	Section 1.02.
	 	Other Defined Terms	 	 	9	 
	Section 1.03.
	 	Other Definitional and Interpretative Provisions	 	 	9	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 2	 	 	 	 
	 
	 	Rights and Obligations of the Parties	 	 	 	 
	 
	 	 	 	 	 	 
	Section 2.01.
	 	Development Program	 	 	10	 
	Section 2.02.
	 	Review Committee	 	 	10	 
	Section 2.03.
	 	Obligations of the Parties in Respect of the Review Committee	 	 	11	 
	Section 2.04.
	 	Responsibilities of the Review Committee	 	 	12	 
	Section 2.05.
	 	Diligent Efforts	 	 	12	 
	Section 2.06.
	 	Use Restrictions	 	 	13	 
	Section 2.07.
	 	Alternative Technology	 	 	13	 
	Section 2.08.
	 	Noncompetition	 	 	15	 
	Section 2.09.
	 	Product Liability	 	 	16	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 3	 	 	 	 
	 
	 	   Grant of License	 	 	 	 
	 
	 	 	 	 	 	 
	Section 3.01.
	 	License	 	 	16	 
	Section 3.02.
	 	Sublicense	 	 	16	 
	Section 3.03.
	 	Additional Licenses	 	 	16	 
	Section 3.04.
	 	Publicly Available Information	 	 	17	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 4	 	 	 	 
	 
	 	   Supply	 	 	 	 
	 
	 	 	 	 	 	 
	Section 4.01.
	 	Novo Nordisk Supply Obligations	 	 	18	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 5	 	 	 	 
	 
	 	   Royalty Payments	 	 	 	 
	 
	 	 	 	 	 	 
	Section 5.01.
	 	Royalty Payment	 	 	18	 
	Section 5.02.
	 	Royalty Payments Schedule	 	 	19	 
	Section 5.03.
	 	Additional Royalty Provisions	 	 	20	 
	Section 5.04.
	 	Record Keeping	 	 	20	 
	Section 5.05.
	 	Audit Right	 	 	21	 
	Section 5.06.
	 	Withholding Taxes	 	 	21	 
	Section 5.07.
	 	Currency	 	 	21	 

i 

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	ARTICLE 6	 	 	 	 
	 
	 	   Intellectual Property	 	 	 	 
	 
	 	 	 	 	 	 
	Section 6.01.
	 	Aradigm Intellectual Property Rights	 	 	22	 
	Section 6.02.
	 	Novo Nordisk Intellectual Property Rights	 	 	22	 
	Section 6.03.
	 	Notice by Aradigm	 	 	23	 
	Section 6.04.
	 	Notice by Novo Nordisk	 	 	24	 
	Section 6.05.
	 	Pursuit of Patents	 	 	25	 
	Section 6.06.
	 	License Option in Lieu of Ownership	 	 	26	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 7	 	 	 	 
	 
	 	   Patent Cooperation	 	 	 	 
	 
	 	 	 	 	 	 
	Section 7.01.
	 	Enforcement of Patent Rights	 	 	27	 
	Section 7.02.
	 	Initiation of Action Relating to Patents	 	 	27	 
	Section 7.03.
	 	Interferences	 	 	32	 
	Section 7.04.
	 	Defense and Settlement of Third Party Patent Claims	 	 	33	 
	Section 7.05.
	 	Sharing Of License Revenue	 	 	34	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 8	 	 	 	 
	 
	 	   Secrecy	 	 	 	 
	 
	 	 	 	 	 	 
	Section 8.01.
	 	Confidentiality	 	 	34	 
	Section 8.02.
	 	Publication Planning	 	 	36	 
	Section 8.03.
	 	Term of Confidentiality Provisions	 	 	36	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 9	 	 	 	 
	 
	 	   Notice	 	 	 	 
	 
	 	 	 	 	 	 
	Section 9.01.
	 	Notice	 	 	36	 
	Section 9.02.
	 	Deemed Receipt of Notice	 	 	37	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 10	 	 	 	 
	 
	 	   Term and Termination	 	 	 	 
	 
	 	 	 	 	 	 
	Section 10.01.
	 	Term	 	 	37	 
	Section 10.02.
	 	Termination by Novo Nordisk	 	 	37	 
	Section 10.03.
	 	Termination by Aradigm	 	 	38	 
	Section 10.04.
	 	Termination By Either Party	 	 	38	 
	Section 10.05.
	 	Rights and Obligations of the Parties after Termination	 	 	38	 
	Section 10.06.
	 	Additional Effects of Termination or Expiration	 	 	45	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 11	 	 	 	 
	 
	 	   Dispute Resolution and Governing Law	 	 	 	 
	 
	 	 	 	 	 	 
	Section 11.01.
	 	Dispute Resolution	 	 	45	 
	Section 11.02.
	 	Governing Law	 	 	46	 

ii 

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	ARTICLE 12	 	 	 	 
	 
	 	   Miscellaneous	 	 	 	 
	 
	 	 	 	 	 	 
	Section 12.01.
	 	Bankruptcy Code Considerations	 	 	46	 
	Section 12.02.
	 	Binding Agreement	 	 	47	 
	Section 12.03.
	 	Severability	 	 	47	 
	Section 12.04.
	 	Amendments and Waivers	 	 	47	 
	Section 12.05.
	 	Expenses	 	 	47	 
	Section 12.06.
	 	Successors and Assigns	 	 	47	 
	Section 12.07.
	 	Counterparts; Third Party Beneficiaries	 	 	47	 
	Section 12.08.
	 	Entire Agreement	 	 	48	 
	 
	 	 	 	 	 	 
	Appendix A
   –
	 	Transferred Patents	 	 	 	 
	Appendix B
	 	Transferred Selected Pulmonary Delivery Patents	 	 	 	 

iii 

 

SECOND AMENDED AND RESTATED AND LICENSE AGREEMENT

     This SECOND AMENDED AND RESTATED LICENSE AGREEMENT (the “Agreement”) is entered into as of
July 3, 2006 by and between Aradigm Corporation, a corporation duly organized and existing under
the laws of the State of California (“Aradigm”) and Novo Nordisk A/S, a company duly organized and
existing under the laws of Denmark (“Novo Nordisk”).

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

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

     WHEREAS, Novo Nordisk and Aradigm entered into an Amended and Restated License Agreement dated
as of January 26, 2005 (the “First Amended License Agreement”) as a precondition to performance on
the part of Aradigm, Novo Nordisk and Novo Nordisk Delivery Technologies, Inc. of their respective
obligations under the Restructuring Agreement;

     WHEREAS, Novo Nordisk and Aradigm have entered into an Assignment of Letters Patent and
Applications for Letters Patent dated as of the date hereof relating to certain U.S. patents and
patent applications (the “U.S. Patent Assignment”) and an Assignment of Non-U.S. Letters Patent and
Applications for Non-U.S. Letters Patent dated as of the date hereof relating to certain foreign
patents and patent applications (the “Non-U.S. Patent Assignment” and, together with the U.S.
Patent Assignment, the “Patent Assignment”) pursuant to which Aradigm has assigned to Novo Nordisk
all right, title and interest in and to the Transferred Patents (as defined herein) and the
Transferred Selected Pulmonary Delivery Patents (as defined herein);

     WHEREAS, Novo Nordisk and Aradigm have entered into a Promissory Note and Security Agreement
dated as of the date hereof (the “Loan and Security Agreement”) pursuant to which Novo Nordisk has
lent U.S. $7.5 million to Aradigm on the terms and conditions set forth therein;

 

 

     WHEREAS, Novo Nordisk and Aradigm have agreed to amend and restate the First Amended License
Agreement concurrent with the assignment to Novo Nordisk of the Transferred Patents and the
Transferred Selected Pulmonary Delivery Patents; and

     WHEREAS, Novo Nordisk has paid U.S. $8.0 million to Aradigm in consideration of Aradigm’s
agreement to a reduction in the royalty rates set forth in the First Amended License Agreement and
such reduced royalty rates are set forth in this Agreement.

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

ARTICLE 1

Definitions

     Section 1.01. Definitions.

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

     “Affiliates” shall have the meaning set forth in the Restructuring Agreement.

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

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

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

     “Aradigm Background IPR” shall mean any and all knowledge, information, expertise, results,
improvements or inventions (whether patentable or not), and all related intellectual property
rights, Made Jointly by the Parties or individually by one (1) of the Parties as a part of the
Development Program under the Development and License Agreement prior to the Original Effective
Date and

2

 

which relate to the Packaged Product (except as specified with respect to the Program
Compounds, formulations thereof or the interactions between materials and such formulations) and
the Device; provided that Aradigm Background IPR shall not include any Transferred
Patents or Transferred Selected Pulmonary Delivery Patents or knowledge, information, expertise,
results, improvements or inventions, or related intellectual property with respect to the
Transferred Patents or Transferred Selected Pulmonary Delivery Patents. The Aradigm Background IPR
shall be included within the Aradigm Patent Rights or Aradigm Know-How, as applicable.

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

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

     “Aradigm Patent Rights” shall mean any and all of Aradigm’s patents and patent applications
possessed by Aradigm prior to the Original Effective Date (other than the Transferred Patents and
Transferred Selected Pulmonary Delivery Patents) related to the Device, the Packaged Product and
the Program Compounds introduced into the Development Program prior to the Original Effective Date,
including (a) the patents and patent applications listed on Schedule 3.13(a)(i) to the
Restructuring Agreement (other than the Transferred Patents and Transferred Selected Pulmonary
Delivery Patents), (b) patents and patent applications relating to the development, production and
use of the Device, the Packaged Product, and the Program Compounds introduced into the Development
Program prior to the Original Effective Date (other than the Transferred Patents and Transferred

3

 

Selected Pulmonary Delivery Patents), and (c) all continuations, continuations-in-part,
divisionals or re-issues of such patents and patent applications and any patents issuing thereon or
extensions thereof or any foreign counterparts thereof. Extensions of patents shall include: (i)
extensions under the U.S. Patent Term Restoration Act, (ii) extensions of patents under the
Japanese Patent Law, (iii) Supplementary Protection Certificates for members of the European Patent
Convention and other countries in the European Economic Area and (iv) similar extensions under any
applicable law in the Territory.

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

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

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

     “Co-Existence Agreement” shall have the meaning set forth in the Restructuring Agreement.

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

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

     “Diligent Efforts” shall mean, with respect to efforts of any Party hereto, no less than the
efforts that such Party applies to: (a) development, manufacture or

4

 

commercialization of its own compounds or products with similar regulatory requirements and
market potential; and (b) prosecution, maintenance and/or defense of intellectual property rights
of similar importance.

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

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

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

     “First Marketing Commencement Date” shall mean the date on which the applicable First
Marketing shall have commenced.

     [****]

     “Insulin Compound” shall mean recombinant human insulin.

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

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

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

 

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

5

 

     “Know-How” shall mean the Aradigm Know-How and Novo Nordisk Know-How, collectively.

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

     “Net Sales” shall mean the invoiced gross revenue from sales of the applicable product, when
invoiced to any third party in an arm’s-length transaction less: (a) Trade, cash and/or quantity
discounts or rebates, if any; (b) Credits or allowances given for rejection or return of such
products previously sold as well as the cost of replacement products, including shipping and other
incidental charges related thereto; (c) Any tax or governmental charge other than income tax levied
on the sale thereof or customs duties associated therewith; and (d) Freight, insurance and other
similar expenses billed separately to the customer. Upon a request by Aradigm or Novo Nordisk, as
the case may be, supported by suitable documentation reflecting actual operating experience, the
Parties will agree on a fixed percentage of Net Sales of the applicable product to represent item
(d).

     “Novo Nordisk Affiliate Group” shall mean Novo Nordisk and its Affiliates, collectively.

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

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

     “Novo Nordisk New IPR” shall mean (a) any and all knowledge, information, expertise, results,
improvements or inventions, whether patentable or not, and all related intellectual property
rights, made or developed by Novo Nordisk alone as a part of the Development Program after the
Original Effective Date and prior to the termination of this Agreement that relate solely to any
Device (including without limitation the manufacturing thereof) and/or Packaged

6

 

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

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

     “Original Effective Date” shall mean January 26, 2005.

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

     “Parties” shall mean the parties hereto and “Party” shall mean any one of the parties hereto.

     “Patent Rights” shall mean the Aradigm Patent Rights, patent rights under the Aradigm New IPR,
Novo Nordisk Patent Rights and patent rights under the Novo Nordisk New IPR, collectively.

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

7

 

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

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

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

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

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

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

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

     “Territory” shall include any and all countries of the world.

     “Transaction Agreements” shall have the meaning set forth in the Restructuring Agreement.

     “Transferred Patents” shall mean the Patents (as defined in the U.S. Patent Assignment) and
the Patents (as defined in the Non-U.S. Patent

8

 

Assignment), each assigned by Aradigm to Novo Nordisk under the Patent Assignment and listed
in Appendix A.

     “Transferred Selected Pulmonary Delivery Patents” shall mean the Patents (as defined in the
U.S. Patent Assignment) assigned by Aradigm to Novo Nordisk under the U.S. Patent Assignment and
listed in Appendix B.

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

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

     Section 1.03. Other Definitional and Interpretative Provisions. Unless specified otherwise,
in this Agreement the obligations of any Party consisting of

9

 

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

ARTICLE 2

Rights and Obligations of the Parties

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

     Section 2.02. Review Committee. The Parties have established a Review Committee (“Review
Committee”). The Review Committee shall

     (a) consist of up to three (3) representatives of each Party, as notified by such Party to the
other Party from time to time in writing. Other non-voting representatives of a Party may attend
each meeting upon the approval of the Review Committee;

     (b) be chaired by a representative of Aradigm from the date hereof until December 31, 2006;
provided that, after such date a representative from Novo Nordisk will chair the
Review Committee from January 1, 2007 until December 31, 2007, and thereafter the Parties will
alternate chairing the Review Committee on a calendar year basis;

     (c) meet periodically (at least once every six (6) months). Meetings shall be convened by the
chairperson with at least thirty (30) calendar days prior

10

 

written notice and such notice shall include an agenda. Either Party may request the
chairperson to call a meeting, but in no event shall any Party request the chairperson to call more
than four (4) meetings per calendar year; and

     (d) have minutes drafted of each meeting by the chairperson and signed by one representative
of each Party.

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

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

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

11

 

     Section 2.04. Responsibilities of the Review Committee. The Review Committee shall be
responsible for the following matters:

     (a) ensuring optimal cooperation between the Parties;

     (b) conducting semi-annual technology reviews within the field of pulmonary administration of
drugs;

     (c) identifying and recommending, subject to the Parties’ agreement, consulting and other
assignments to be performed by Aradigm under the Development Program or as contemplated by Section
2.03(b) at Novo Nordisk’s expense;

     (d) reviewing the status, process and strategy for prosecution and maintenance of patents in
accordance with Article 6 and addressing any issues or developments arising therefrom;

     (e) overseeing ongoing implementation of the technology transfer process contemplated in the
Restructuring Agreement;

     (f) reviewing any Status Report on the Development Program presented by Novo Nordisk; and

     (g) discussing any other matters as mutually agreed between the Parties.

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

     (a) Novo Nordisk must use Diligent Efforts to clinically develop and register the Insulin
Compound Packaged Product and the Device until it has obtained Broad Regulatory Approval of such
Insulin Compound Packaged Product and the Device in the United States and the European Union;

     (b) Novo Nordisk must fund the Development Program for the Insulin Compound Packaged Product
and the Device with [****] until a Regulatory Submission for Broad Regulatory Approval of such
Insulin Compound Packaged Product and the Device has been made in the United States and the
European Union;

     (c) until receipt of Broad Regulatory Approval by Novo Nordisk in the United States and the
European Union, Novo Nordisk must expend [****]; and

     (d) within the three-year period following Novo Nordisk’s receipt of Broad Regulatory Approval
in the United States in respect of the Insulin Compound Packaged Product and the Device, a member
of the Novo Nordisk Affiliate Group or any permitted sublicensees thereof must accomplish First

 

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

12

 

Marketing of the Insulin Compound Packaged Product and the Device in the United States.

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

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

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

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

     (c) Aradigm hereby acknowledges that: (i) subject to the terms of this Agreement, Novo Nordisk
may be simultaneously conducting research and development alone or in collaboration with third
parties on products using an Alternative Technology to deliver insulin and insulin analogs; and
(ii) Novo Nordisk may supply insulin and insulin analogs to third parties free of charge for use in
such third parties’ clinical studies using such third parties’ pulmonary delivery technology in
exchange for rights in such technology in the Field; provided that, notwithstanding
the foregoing, in the event that Novo Nordisk is conducting research on and developing any products
using any Alternative Technology to deliver a specific insulin or insulin analog class, Novo
Nordisk shall provide an Alternative Technology Notice to Aradigm of its intention to commence
commercialization of such product at least three (3) years prior to First Marketing of such
product. The Alternative Technology Notice may be withdrawn by Novo Nordisk, without penalty, for a
specific insulin or insulin

13

 

analog class at any time during the twelve (12) months following delivery of the Alternative
Technology Notice.

     (d) From receipt of the Alternative Technology Notice until, if applicable, such notice is
withdrawn as permitted under Section 2.07(c), the license described in Section 3.01 shall become
non-exclusive to the extent necessary to permit Aradigm to discuss the product opportunity with
potential marketing partners, prepare for potential development activities, and/or engage in
exploratory trials, for the delivery of the specific insulin or insulin analog class that is the
subject of such Alternative Technology Notice. In the event that Novo Nordisk has not withdrawn
such Alternative Technology Notice within twelve (12) months as permitted under Section 2.07(c),
the license described in Section 3.01 shall become non-exclusive, and the licenses described in
Section 3.03(b) and Section 3.03(c) shall include the Field, to the extent necessary to enable
Aradigm, alone or in collaboration with one (1) marketing partner, to develop and, from and after
the Alternative Technology Effective Date, to commercialize devices and/or dose packages for the
delivery of the specific insulin or insulin analog class that is the subject of such Alternative
Technology Notice. Thereafter, for each Alternative Technology Notice delivered by Novo Nordisk,
Aradigm may engage one (1) additional marketing partner in accordance with the procedures, for the
purposes, on the timetables and subject to the limitations, set forth in this Section 2.07.
Notwithstanding anything else contained herein, if Novo Nordisk withdraws the Alternative
Technology Notice for a specific insulin or insulin analog class at any time during the twelve (12)
months following delivery of the Alternative Technology Notice, then (i) the license granted under
Section 3.01 shall become exclusive again with respect to the specific insulin or insulin analog
class that is the subject of such withdrawn Alternative Technology Notice and (ii) the licenses
described in Section 3.03(b) and Section 3.03(c) shall exclude the Field again.

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

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

14

 

shall be entitled to a royalty (in accordance with Section 5.01) on the Net Sales by
any member of the Novo Nordisk Affiliate Group, or any permitted sublicensees thereof, of
the product described in the applicable Alternative Technology Notice (whether or not such
product is covered by any Transferred Patent or any Transferred Selected Pulmonary
Delivery Patent); and (B) following the sixth (6th) anniversary of the earlier of (I) and
(II) above, Aradigm shall be entitled to a royalty (in accordance with Section 5.01) on
the Net Sales by any member of the Novo Nordisk Affiliate Group, or any permitted
sublicensees thereof, of (1) any Packaged Product and the Device and (2) any product based
on an Alternative Technology that has been described in the applicable Alternative
Technology Notice to the extent that, and for so long as, such product is covered by any
Transferred Patent or any Transferred Selected Pulmonary Delivery Patents.

     (ii) In the event that Aradigm delivers written notice to Novo Nordisk that Aradigm
will market, either alone or in collaboration with one (1) marketing partner, any insulin
or insulin analog class similar to the insulin or insulin analog class specified in the
applicable Alternative Technology Notice, then Aradigm shall be entitled to a royalty only
on Net Sales of any Packaged Product and the Device in accordance with Section 5.01 and
shall not be entitled to a royalty on any product based on an Alternative Technology that
has been described in such Alternative Technology Notice.

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

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

15

 

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

ARTICLE 3

Grant of License

     Section 3.01. License. Subject to the terms of this Agreement, Aradigm hereby grants Novo
Nordisk a world-wide, exclusive, royalty-bearing license under the Aradigm Patent Rights (including
applicable Aradigm Background IPR), Aradigm New IPR and Aradigm Know-How (including applicable
Aradigm Background IPR) to (a) develop, manufacture, use, market, distribute, sell, offer for sale,
have made, import and/or export any Packaged Product and the Device in and from the Territory for
use within the Field, with the right to sublicense its customers and Joint Marketing Partners
pursuant to Section 3.02, and (b) otherwise exercise and perform its rights and obligations under
this Agreement.

     Section 3.02. Sublicense. Subject to the terms of this Agreement, Aradigm hereby grants Novo
Nordisk the right to sublicense its customers and Joint Marketing Partners, under Novo Nordisk’s
licenses under the Aradigm Patent Rights (including applicable Aradigm Background IPR), Aradigm New
IPR and Aradigm Know-How (including applicable Aradigm Background IPR) in this Agreement (as
applicable) to: (a) use any Packaged Product and the Device and (b) market, distribute, sell, offer
to sell, import and/or export any Packaged Product and the Device, so long as said items were
bought from any member of the Novo Nordisk Affiliate Group or from a Joint Marketing Partner.

     Section 3.03. Additional Licenses. (a) Subject to the terms of this Agreement, Aradigm shall
and hereby does grant Novo Nordisk a perpetual, world-wide, non-exclusive, royalty-free license
under any Aradigm New IPR

16

 

Made Jointly by Novo Nordisk and Aradigm to develop, manufacture, use, market, distribute,
sell, offer for sale, have made, import and/or export any product outside the Field, with the right
to sublicense its customers and Joint Marketing Partners pursuant to Section 3.02.

     (b) Subject to the terms of this Agreement, Novo Nordisk shall and hereby does grant Aradigm a
perpetual, world-wide, non-exclusive, royalty-free license under any Novo Nordisk New IPR that
relate solely to any Device (or manufacturing thereof) and/or Packaged Product (or manufacturing
thereof, except the Program Compounds, formulations thereof and the interactions between materials
and such formulations) to develop, manufacture, use, market, distribute, sell, offer for sale, have
made, import and/or export any product outside the Field, with a right to sublicense. Such right to
sublicense shall be royalty-bearing (such royalty to be determined in accordance with the
provisions set forth in Section 5.03(a)) to the extent that (i) Aradigm receives from the
sublicensee thereof a royalty or other compensation and (ii) without such sublicense, the
applicable product would otherwise infringe the patents included within Novo Nordisk New IPR.

     (c) Subject to the terms of this Agreement, Novo Nordisk shall and hereby does grant Aradigm a
perpetual, world-wide, exclusive, royalty-free license under the Transferred Patents and
Transferred Selected Pulmonary Delivery Patents to develop, manufacture, use, market, distribute,
sell, offer for sale, have made, import and/or export any product outside the Field, with a right
to sublicense.

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

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

     Section 3.04. Publicly Available Information. For the avoidance of doubt, nothing contained
in this Agreement shall preclude any member of the Novo Nordisk Affiliate Group from using any
publicly-available knowledge, information and expertise related to or disclosed in the Patent
Rights or that is otherwise publicly-available.

17

 

ARTICLE 4

Supply

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

ARTICLE 5

Royalty Payments

     Section 5.01. Royalty Payment. (a) In consideration of the rights which Novo Nordisk has
obtained in Aradigm Patent Rights, Aradigm Background IPR, Aradigm Know-How, Aradigm New IPR,
Transferred Patents and Transferred Selected Pulmonary Delivery Patents, Novo Nordisk shall pay to
Aradigm:

     (i) in the event that the First Marketed Product and Device is the Insulin Compound
Packaged Product and the Device, (A) three and one-quarter percent (3.25%) of Net Sales
thereof (if any) by any member of the Novo Nordisk Affiliate Group or any permitted
sublicensees thereof during any year during the Stage 1 Commercialization Period up to and
including the applicable Baseline for such year plus three and fifty-five hundredths
percent (3.55%) of Net Sales thereof (if any) by any member of the Novo Nordisk Affiliate
Group or any permitted sublicensees thereof in excess of the applicable Baseline for such
year; (B) four percent (4.00%) of Net Sales thereof (if any) by any member of the Novo
Nordisk Affiliate Group or any permitted sublicensees thereof during the Stage 2
Commercialization Period up to and including the applicable Baseline for such period plus
four and three-tenths percent (4.30%) of Net Sales thereof (if any) by any member of the
Novo Nordisk Affiliate Group or any permitted sublicensees thereof in excess of the
applicable Baseline for such period; and (C) five percent (5.00%) of Net Sales thereof (if
any) by any member of the Novo Nordisk Affiliate Group or any permitted sublicensees
thereof during any year during the Stage 3 Commercialization Period up to and including
the applicable Baseline in such year plus five and three-tenths percent (5.30%) of Net
Sales thereof (if any) by any member of the Novo Nordisk Affiliate Group or any permitted
sublicensees thereof in excess of the applicable Baseline for such year; or

18

 

     (ii) in the event that the First Marketed Product and Device is any Packaged Product
(relating to Program Compounds other than the Insulin Compound) and the Device or any
product using an Alternative Technology to deliver a specific insulin or insulin analog
class (in such case, only to the extent that royalties are payable under Section
2.07(e)(i)), (A) three and four-tenths percent (3.40%) of Net Sales thereof (if any) by
any member of the Novo Nordisk Affiliate Group or any permitted sublicensees thereof
during the Stage 1 Commercialization Period; (B) four and fifteen-hundredths percent
(4.15%) of Net Sales thereof (if any) by any member of the Novo Nordisk Affiliate Group or
any permitted sublicensees thereof during the Stage 2 Commercialization Period; and (C)
five and fifteen-hundredths percent (5.15%) of Net Sales thereof (if any) by any member of
the Novo Nordisk Affiliate Group or any permitted sublicensees thereof during the Stage 3
Commercialization Period.

     (b) In consideration of the rights which Novo Nordisk has obtained in Aradigm Patent Rights,
Aradigm Background IPR, Aradigm Know-How, Aradigm New IPR, Transferred Patents and Transferred
Selected Pulmonary Delivery Patents, Novo Nordisk shall also pay to Aradigm (i) four and
one-quarter percent (4.25%) of Net Sales of any Later Marketed Product and Device by any member of
the Novo Nordisk Affiliate Group or any permitted sublicensees thereof during the Stage 1
Commercialization Period; and (ii) five percent (5.00%) of Net Sales of any Later Marketed Product
and Device by any member of the Novo Nordisk Affiliate Group or any permitted sublicensees thereof
during the Stage 2 Commercialization Period and the Stage 3 Commercialization Period; provided
that: in the event that such Later Marketed Product and Device is the Insulin Compound Packaged
Product and the Device and that Net Sales thereof exceed the Baseline in any year during the Stage
2 Commercialization Period and the Stage 3 Commercialization Period, Novo Nordisk shall pay to
Aradigm five percent (5.00%) of such Net Sales of such Insulin Compound Packaged Product and the
Device up to and including the applicable Baseline in such year plus five and three-tenths percent
(5.30%) of Net Sales (if any) of such Insulin Compound Packaged Product and the Device in excess of
the applicable Baseline in such year.

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

19

 

pay to the Royalty Receiving Party the difference between the amount otherwise due hereunder
and the amount such Royalty Paying Party shall have paid in accordance with the first sentence of
this Section 5.02, as the case may be.

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

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

     (c) Following the expiration of the last to expire of the Aradigm Patent Rights, the
Transferred Patents, the Transferred Selected Pulmonary Delivery Patents and patents included in
the Aradigm New IPR, if: (i) Novo Nordisk experiences a material reduction in the gross margins of
products bearing royalties under this Agreement in the United States, any member state of the
European Union and/or Japan as a result of pricing actions by competitors who, had such patents not
expired, would be infringing one (1) or more of the Aradigm Patent Rights, the Transferred Patents,
the Transferred Selected Pulmonary Delivery Patents or patents included in the Aradigm New IPR; and
(ii) Novo Nordisk is in compliance with all of its material obligations under this Agreement at the
time of such material reduction in gross margins, then Novo Nordisk may request a reduction in the
applicable royalty rates hereunder for the specific geographic area (whether the United States, any
member state of the European Union and/or Japan). Within sixty (60) days of such request, the
Parties will meet to review Novo Nordisk’s financial and marketing information pertinent to such
request and to negotiate and agree on a reduction in the royalty rates hereunder that is
proportionate to the reduction in gross margins experienced by Novo Nordisk or that otherwise
fairly reflects the diminished value of the applicable products to Novo Nordisk.

     Section 5.04. Record Keeping. Each Party shall maintain, for a period of three (3) years
following the last day of the year to which such records and other financial information relate,
complete and correct records of Net Sales and other financial information that it deems necessary
to determine such Net Sales and

20

 

shall report such information as it deems relevant along with each royalty payment made to the
other Party in accordance with this Article 5.

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

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

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

     Section 5.07. Currency. Payments under this Agreement in respect of Net Sales made, and
amounts expended, in currencies other than U.S. dollars shall be calculated on the average daily
exchange rate for the applicable year-to-date

21

 

period (i.e., from January 1 of each year to the last Business Day of the financial quarter in
which such payment is made) for exchanging such currency into U.S. dollars at the rate for buying
U.S. dollars published in the Wall Street Journal.

ARTICLE 6

Intellectual Property

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

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

     Section 6.02. Novo Nordisk Intellectual Property Rights. (a) Except as provided in this
Article 6, Novo Nordisk shall remain the sole owner of all Novo Nordisk Background IPR, Novo
Nordisk Patent Rights, Novo Nordisk Know-How, Novo Nordisk New IPR, the Transferred Patents and the
Transferred Selected Pulmonary Delivery Patents and shall use Diligent Efforts to maintain and
defend the Transferred Patents and Transferred Selected Pulmonary Delivery Patents.

     (b) Novo Nordisk shall be responsible for filing, maintaining and defending any patents filed
based on Novo Nordisk Background IPR and will timely inform Aradigm of its intentions, activities
and filings in this respect. Novo

22

 

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

     (c) Novo Nordisk shall be responsible for filing, maintaining and defending any patents filed
based on Transferred Patents and Transferred Selected Pulmonary Delivery Patents and will timely
inform Aradigm of its intentions, activities and filings in this respect and provide Aradigm with
copies of all substantive communications between Novo Nordisk and the United States Patent and
Trademark Office (or any other relevant patent authority). Furthermore, Novo Nordisk shall provide
Aradigm with a reasonable opportunity to comment on proposed strategies and responses relating to
such prosecution. Should Novo Nordisk decide not to patent an invention included in the
Transferred Patents or the Transferred Selected Pulmonary Delivery Patents in the European Union,
the United States, Japan or Australia, or should Novo Nordisk decide to abandon any such patent or
patent application in the European Union, the United States, Japan or Australia, then Aradigm shall
in its sole discretion have the option of becoming the owner thereof or, in the alternative, an
exclusive licensee thereof pursuant to Section 6.06. If Aradigm elects to become the owner of any
such patent or patent application, Aradigm shall grant Novo Nordisk a royalty-bearing license
thereunder to develop, manufacture, use, market, distribute, sell, offer for sale, have made,
import and/or export any product within the Field, with the right to sublicense.

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

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

23

 

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

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

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

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

24

 

     (c) Novo Nordisk shall provide reasonable access to its employees, contractors and suppliers
who are (or have been within one (1) year of the time at which such access is requested by Aradigm)
working on the Development Program to enable Aradigm to perform intellectual property audits once
per calendar year to ensure that adequate protection is sought and maintained for intellectual
property developed by Novo Nordisk relevant to the Development Program (other than any results,
improvements or inventions relating to formulation of compounds or to the interactions between
materials and formulation of compounds). In the event that Aradigm determines, as a result of its
intellectual property audit or otherwise, that patent applications should be filed in any country,
Aradigm shall request Novo Nordisk to pursue such patent applications; provided
that, to the extent that Novo Nordisk reasonably refuses such request, and solely with
respect to any Novo Nordisk New IPR licensed under Section 3.03(b) and (d), Aradigm shall have the
right to file any such patent applications. In such case, Aradigm shall in its sole discretion have
the option of becoming the owner thereof or, in the alternative, an exclusive licensee thereof
pursuant to Section 6.06. If Aradigm elects to become the owner of any such patent application,
Aradigm shall grant Novo Nordisk a world-wide, nonexclusive, royalty-free license thereunder to
develop, manufacture, use, market, distribute, sell, offer for sale, have made, import and/or
export any product within the Field, with the right to sublicense. Novo Nordisk shall use its
Diligent Efforts to cause its employees and contractors to assist in prosecuting any patent
applications requested by Aradigm in accordance with this Section 6.04(c).

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

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

     (b) Aradigm’s costs for preparing, filing and prosecuting additional patent applications in
respect of patents included within Aradigm Background IPR pursuant to Section 6.05(a), and the
costs of maintaining any patents that may issue from such applications, shall be shared equally
(i.e., 50/50) between Novo

25

 

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

     (c) In the event that Novo Nordisk does not agree that a particular patent application should
be prepared, filed or prosecuted pursuant to Section 6.05(a), Aradigm’s costs for preparing and
prosecuting such application, and the costs of maintaining any patents that may issue from such
application, shall be the sole responsibility of Aradigm; and any amounts received by Aradigm
resulting from the granting of licenses and/or recovery of damages or other monetary awards shall
belong to Aradigm. Should Aradigm decide to abandon any patent application or patent that is filed,
prosecuted or maintained pursuant to this Section 6.05, Novo Nordisk shall in its sole discretion
have the option of becoming the owner thereof or, in the alternative, an exclusive licensee thereof
pursuant to Section 6.06. If Novo Nordisk elects to become the owner of any patent or patent
application, Novo Nordisk shall grant Aradigm a royalty-free license thereunder to develop,
manufacture, use, market, distribute, sell, offer for sale, have made, import and/or export any
product for the life of the patent (provided that, such license shall be limited to products
outside the Field for so long as Novo Nordisk’s license under Section 3.01 remains exclusive as to
any Aradigm Patent Right and thereafter, outside and inside the Field), with the right to
sublicense.

     Section 6.06. License Option in Lieu of Ownership. In each case in which a Party has the
right pursuant to this Article 6 of becoming the owner of a patent or patent application that the
other Party has refused to file or otherwise decided to abandon, the Party having such right may
elect (in its sole discretion and by notifying the other Party in writing) to become the exclusive
licensee thereof rather than becoming the owner. If this election is made, then: (a) the electing
Party will prepare, file, prosecute and/or maintain (as applicable) such patent application or
patent at the electing Party’s direction and sole expense; (b) the

26

 

non-electing Party shall, and hereby does, grant the electing Party a worldwide, exclusive,
royalty-free license under such patent application or patent, where the scope and duration of such
license will be equivalent to the scope and duration of rights such electing Party would have had
if it became the owner of such patent application or patent under the applicable section of this
Article 6; and (c) the non-electing Party shall continue to own such patent application or patent
and shall retain for itself the same rights to the extent it would have been granted in the form of
a non-exclusive license, with a right to sublicense, had the electing Party become the owner of
such patent or patent application under the applicable section of this Article 6.

ARTICLE 7

Patent Cooperation

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

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

     Section 7.02. Initiation of Action Relating to Patents. (a) With respect to (i) Aradigm
Patent Rights or Aradigm New IPR that are licensed exclusively to Novo Nordisk hereunder, except
for those which Novo Nordisk has the option of exclusively licensing under Section 6.06 in lieu of
ownership, when action is deemed necessary or advisable by Novo Nordisk and Aradigm to prevent
infringement of such Aradigm Patent Rights or Aradigm New IPR by a third party

27

 

practicing or making preparations to practice within the Field, to enforce such Aradigm Patent
Rights or Aradigm New IPR against such third party, and/or to defend against an action by such
third party challenging the enforceability or the validity or asserting the noninfringement of such
Aradigm Patent Rights or Aradigm New IPR, then Novo Nordisk shall have the right (but not the
obligation) to initiate any action or conduct any such suit. Aradigm shall have the right to join,
at its own expense, such action and/or suit and to be represented in such action and/or suit by its
own counsel. Furthermore, if Aradigm is required under applicable law to join any such suit,
action, or proceeding, or if the failure of Aradigm to be a party to such suit, action, or
proceeding would in the opinion of counsel to Novo Nordisk prejudice Novo Nordisk’s ability to
enforce the Aradigm Patent Rights or Aradigm New IPR, Aradigm shall execute all papers and perform
such other acts as may be reasonably required to permit the litigation to be conducted, and Novo
Nordisk shall reimburse Aradigm for its expenses relating to its joining and participation thereto.
If Aradigm is required to be joined as a party in any such action by a third party practicing
within the Field challenging the enforceability or validity or asserting the non-infringement of
Aradigm Patent Rights or Aradigm New IPR, then upon the request of Novo Nordisk, Aradigm shall
waive any objection to such joinder on the grounds of personal jurisdiction, venue or forum non
conveniens.

     (b) With respect to Transferred Patents and Transferred Selected Pulmonary Delivery Patents
that are licensed exclusively to Aradigm outside the Field, when action is deemed necessary or
advisable by Aradigm and Novo Nordisk to prevent infringement of the Transferred Patents or
Transferred Selected Pulmonary Delivery Patents by a third party practicing or making preparations
to practice outside the Field, to enforce such Transferred Patents or Transferred Selected
Pulmonary Delivery Patents against such third party and/or to defend against an action by such
third party challenging the enforceability or the validity or asserting the noninfringement of such
Transferred Patents or Transferred Selected Pulmonary Delivery Patents, then Aradigm shall have the
right (but not the obligation) to initiate any action or conduct any such suit. In its
determination as to whether or not any action as contemplated in the preceding sentence is
necessary or advisable, Novo Nordisk shall consider in good faith Aradigm’s interests outside the
Field and shall not withhold its consent to an action deemed necessary or advisable by Aradigm
unless Novo Nordisk reasonably believes taking such action would have a material adverse impact on
Novo Nordisk’s interests inside the Field. Novo Nordisk shall have the right to join, at its own
expense, such action and/or suit and to be represented in such action and/or suit by its own
counsel. Furthermore, if Novo Nordisk is required under applicable law to join any such suit,
action, or proceeding, or if the failure of Novo Nordisk to be a party to such suit, action, or
proceeding would in the opinion of counsel to Aradigm prejudice Aradigm’s ability to enforce the
Transferred Patents or Transferred Selected Pulmonary Delivery Patents, Novo Nordisk shall execute
all papers and perform such other acts as may be reasonably required to permit the litigation to be
conducted, and Aradigm shall reimburse Novo Nordisk for its expenses relating to its joining and
participation thereto as

28

 

such expenses are incurred. If Novo Nordisk is required to be joined as a party in any such
action by a third party practicing outside the Field challenging the enforceability or validity or
asserting the non-infringement of the Transferred Patents or Transferred Selected Pulmonary
Delivery Patents, then upon the request of Aradigm, Novo Nordisk shall waive any objection to such
joinder on the grounds of personal jurisdiction, venue or forum non conveniens.

     (c) With respect to the Transferred Patents and Transferred Selected Pulmonary Delivery
Patents, when action is deemed necessary or advisable by Novo Nordisk to prevent infringement of
the Transferred Patents or Transferred Selected Pulmonary Delivery Patents by a third party
practicing or making preparations to practice within the Field, to enforce such Transferred Patents
or Transferred Selected Pulmonary Delivery Patents against such third party and/or to defend
against an action by such third party challenging the enforceability or the validity or asserting
the noninfringement of such Transferred Patents or Transferred Selected Pulmonary Delivery Patents,
then Novo Nordisk shall have the right (but not the obligation) to initiate any action or conduct
any such suit. If Aradigm is required under applicable law to join any such suit, action, or
proceeding, or if the failure of Aradigm to be a party to such suit, action, or proceeding would in
the opinion of counsel to Novo Nordisk prejudice Novo Nordisk’s ability to enforce the Transferred
Patents or Transferred Selected Pulmonary Delivery Patents, Aradigm shall execute all papers and
perform such other acts as may be reasonably required to permit the litigation to be conducted, and
Novo Nordisk shall reimburse Aradigm for its expenses relating to its joining and participation
thereto as such expenses are incurred. If Aradigm is required to be joined as a party in any such
action by a third party practicing within the Field challenging the enforceability or validity or
asserting the non-infringement of the Transferred Patents or Transferred Selected Pulmonary
Delivery Patents, then upon the request of Novo Nordisk, Aradigm shall waive any objection to such
joinder on the grounds of personal jurisdiction, venue or forum non conveniens.

     (d) If either (x) Novo Nordisk and Aradigm agree in accordance with the provisions set forth
in Section 7.02(a) above that action is necessary, but Novo Nordisk does not commence such action
within sixty (60) days of such agreement, or (y) in respect of an Aradigm Patent Right that is not
a Field Claim (as defined below), Aradigm believes that action is necessary as to such Patent
Right, but Novo Nordisk does not agree in the discussions above that action is necessary, then in
either case Aradigm shall have the right to initiate and conduct, at its expense, an independent
action against the third party infringer of the Aradigm Patent Rights or Aradigm New IPR in the
Field. If Aradigm subsequently ceases to continue (other than by settlement) an action initiated
or conducted under this Section 7.02(d), or such action is dismissed voluntarily or involuntarily,
then Novo Nordisk shall have the right, but not the obligation to initiate, continue, and/or
conduct, at its expense and subject to all other applicable provisions of this Section 7.02, an
action as permitted by law against the third party within sixty (60) days of Aradigm’s ceasing to
continue its action against such third party or of such dismissal. For purposes of this Section
7.02(d), a “Field Claim” is a claim in

29

 

the Aradigm Patent Rights or patent rights under the Aradigm New IPR that expressly and
directly is limited to activities in the Field. For purposes of Sections 7.02(a) and (d), Novo
Nordisk shall not disagree, based primarily on any contractual obligations Novo Nordisk may have to
a third party, with Aradigm’s belief that action is deemed necessary to prevent infringement of
such Patent Rights by a third party practicing within the Field. For purposes of Sections 7.02(b)
and (d), Aradigm shall not disagree, based principally on any contractual obligations Aradigm may
have to a third party, with Novo Nordisk’s belief that action is deemed necessary to prevent
infringement of Transferred Patents or Transferred Selected Pulmonary Delivery Patents by a third
party practicing outside the Field.

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

     (f) In a suit initiated or conducted by Novo Nordisk pursuant to Sections 7.02(a), (c), (d) or
(e), in the initiation, conduct and settlement of the suit Novo Nordisk shall consider in good
faith the interests of Aradigm, both inside and outside the Field. Novo Nordisk shall keep Aradigm
reasonably informed of the progress of the suit, action, or proceeding, and shall provide Aradigm
in a manner reasonably designed to preserve attorney-client privilege with copies of all
substantive communications relating to the suit, action, or proceeding , subject to confidentiality
obligations to third parties. To the extent that Aradigm believes that a particular strategy for
conduct and/or settlement of the suit proposed by Novo Nordisk would have a material adverse impact
on Aradigm’s activities

30

 

outside the Field and/or Aradigm’s interests outside the Development Program, the Parties
agree to meet and discuss in good faith an alternative strategy to address Aradigm’s concerns, and
Novo Nordisk shall not proceed with any strategy without Aradigm’s approval, which shall not be
unreasonably withheld or delayed. Aradigm shall fully cooperate with and supply all assistance
reasonably requested by Novo Nordisk in an action conducted by Novo Nordisk under Sections 7.02(a),
(c), (d) or (e) above, and Novo Nordisk shall reimburse Aradigm for its costs and expenses relating
thereto.

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

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

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

31

 

the Parties, then the fair value of such non-monetary benefits or awards shall be established
by arbitration conducted as provided for in Section 11.01. Any damages or other monetary or
non-monetary awards recovered in such a suit initiated and conducted by Aradigm pursuant to Section
7.02(b) shall be retained entirely by Aradigm.

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

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

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

     Section 7.03. Interferences. (a) With respect to Aradigm Patent Rights and Aradigm New IPR
that are licensed to Novo Nordisk under Article 3, in the event that any of such Aradigm Patent
Rights or Aradigm New IPR are subject to

32

 

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

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

     (b) If during the term of this Agreement, a third party makes or attempts to enforce a claim,
files suit, or initiates a proceeding or any action that has the potential to affect
enforceability, validity, or exclusivity of any Patent Rights or Transferred Patents or Transferred
Selected Pulmonary Delivery Patents that would materially affect rights within the Field, then the
Party having notice shall notify the other Party in writing within fifteen (15) days. Any notice
to be provided pursuant to this Section 7.04(b) shall set forth the facts (to the extent known by
the Party having notice) in reasonable detail.

     (c) Within fifteen (15) days of notification under Section 7.04(a) or Section 7.04(b), if
applicable and upon agreement of the Parties, a senior officer of each Party shall meet to discuss
in good faith and agree upon a strategy for responding to such third party suit, action, or
proceeding, which strategy shall accommodate both Parties’ commercial interests and investment in
the Development Program. To the extent that the Parties cannot agree to such a strategy for conduct
and/or settlement of the proceeding or suit, then the Party that

33

 

is the subject of such proceeding or suit may conduct or settle such suit in its sole
discretion, unless the other Party agrees in writing to assume the defense of such action and bear
the cost of such defense and settlement or any final judgment at its own expense; provided
that, the Party assuming the defense of such proceeding or suit shall bear only the excess
of the cost of any final settlement or judgment over the cost to which the Party that is the
subject of the proceeding or suit was to have paid in any proposed final settlement that such Party
had agreed to pay prior to the assumption of the defense by the other Party.

     Section 7.05. Sharing Of License Revenue. In the event Novo Nordisk grants any license under
any or all of the Transferred Patents and Transferred Selected Pulmonary Delivery Patents in the
Field (other than a license of the Transferred Patents and Transferred Selected Pulmonary Delivery
Patents by Novo Nordisk to its customers or Joint Marketing Partners, which shall not be subject to
the revenue share described in the following clause), any revenue received in respect of such
license shall be shared by Aradigm and Novo Nordisk according to the following formula: [2:1] Novo
Nordisk: Aradigm. Notwithstanding the foregoing, if such license is granted by Novo Nordisk in
connection with the settlement of a suit initiated or conducted by Novo Nordisk pursuant to Section
7.02 (a), (c), (d) or (e) or by Aradigm pursuant to Section 7.02(d), and the Parties’ expenses of
suit have not otherwise been fully reimbursed pursuant to Section 7.02(i), then license revenue
shall first be applied to reimbursement of such expenses until they are fully reimbursed. License
revenue shall include license fees, milestones, royalties and other amounts received in respect of
such license. If any non-monetary compensation is received by Novo Nordisk, then Novo Nordisk will
pay Aradigm for its share in cash based on the fair value of such non-monetary compensation, as
established by mutual agreement of the Parties. If an agreement cannot be reached between the
Parties, then the fair value of such non-monetary consideration shall be established by arbitration
conducted as provided in Section 11.01.

ARTICLE 8

Secrecy

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

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

34

 

     (i) to such Party s Representatives (as defined below) in the normal course of the
performance of their duties or to any financial institution providing credit to such
Party,

     (ii) to the extent required by applicable law, rule or regulation (including
complying with any oral or written questions, interrogatories, requests for information or
documents, subpoena, civil investigative demand or similar process to which a Party is
subject; provided that, such Party shall give the other Party prompt
notice of such request(s), to the extent practicable, so that such other Party may seek an
appropriate protective order or similar relief (and the Party shall cooperate with such
efforts by such other Party, and shall in any event make only the minimum disclosure
required by such law, rule or regulation)),

     (iii) to any governmental or regulatory authority or agency in order to obtain from
such authority or agency any authorization required or contemplated by this Agreement or
any of the other Transaction Agreements as long as such authority or agency is advised of
the confidential nature of such information, or

     (iv) as mutually agreed between the Parties.

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

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

35

 

     Section 8.02. Publication Planning. Novo Nordisk shall be solely responsible for all
publication planning, it being understood that Novo Nordisk will endeavor to present to the Review
Committee its overall publication planning strategy relating to the Development Program in good
time prior to implementation and will in such event in good faith consider any reasonable
suggestion made by Aradigm for amendments to such strategy, it being at all times understood that
Novo Nordisk shall not be entitled to publish or present any information covered by Section 8.01
without the prior written consent of Aradigm. For other publications or public presentations not
covered by Novo Nordisk’s publication planning hereunder, Novo Nordisk shall be solely responsible
for any publication in any technical or scientific article or other presentation of any of the
results of the Development Program; provided that, Novo Nordisk shall not publish
or publicly present any conclusions regarding the safety and efficacy of the Device and Packaged
Product and/or pulmonary delivery of drugs without first: (a) providing Aradigm a draft of such
publication or public presentation; and (b) obtaining the prior written consent of Aradigm for the
release of such publication or public presentation, such consent not to be unreasonably withheld or
delayed. For purposes of this Section 8.02, Aradigm shall be deemed to have consented to the
release of such draft publication or public presentation if it shall not have provided comments to
such draft publication or public presentation to Novo Nordisk in writing within ten (10) days of
its receipt thereof.

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

ARTICLE 9

Notice

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

     if to Aradigm, to:

Aradigm Corporation

3929 Point Eden Way

Hayward, California 94545

Attention: Chief Financial Officer

Telephone: +1 510-265-9000

Telefax: +1 510-265-0277

36

 

     with a copy to:

Cooley Godward LLP

Five Palo Alto Square

3000 El Camino Real

Palo Alto, California 94306

Attention: James C. Kitch

Telephone: +1 650-843-5027

Telefax: +1 650-849-7400

     if to Novo Nordisk, to:

Novo Nordisk A/S

Novo Alle

DK-2880 Bagsvaerd

Denmark

Attention: General Counsel

Telephone: +45 44 44 88 88

Telefax: +45 44 42 41 35

     and

Attention: Vice President, Business Development

Telephone: + 45 44 42 39 00

Telefax: + 45 44 42 16 98

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

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

ARTICLE 10

Term and Termination

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

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

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

37

 

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

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

     (a) become insolvent or bankrupt;

     (b) make an assignment for the benefit of its creditors;

     (c) appoint a trustee or receiver for itself for all or a substantial part of its property,
seek reorganization, liquidation, dissolution, a winding arrangement, composition or readjustment
of its debts;

     (d) have its controlling interests acquired by a third party manufacturer of an approved
insulin product or an insulin product under clinical development at any time unless such
manufacturer promptly and expressly assumes and agrees in writing to be directly bound by the terms
of this Agreement; or

     (e) have its controlling interest acquired by any company reasonably deemed to be a competitor
by Novo Nordisk or Aradigm, as applicable, unless such company promptly and expressly assumes and
agrees in writing to be directly bound by the terms of this Agreement.

     Section 10.05. Rights and Obligations of the Parties after Termination. (a) In the event
that either Party terminates this Agreement, (i) Aradigm shall retain its perpetual licenses under
Section 3.03 and (ii) both Parties shall retain perpetual, world-wide, non-exclusive, royalty-free,
licenses, to Aradigm New IPR and Novo Nordisk New IPR Made Jointly by Aradigm and Novo Nordisk, to
the extent not already owned by such Party, to develop, manufacture, use, market, distribute, sell,
offer for sale, have made, import and/or export any product within and outside the Field;
provided that, in the event of termination by Novo Nordisk in accordance with the
provisions set forth in Section 10.02(b) or Section 10.04, and in the event that Novo Nordisk
elects to continue the Development Program pursuant to Section 10.05(b)(i), the license retained by
Novo Nordisk hereunder shall be exclusive within the Field and non-exclusive outside the Field.

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

38

 

     (i) in the event that Novo Nordisk, in its notice of termination, informs Aradigm of
Novo Nordisk’s intent to continue the Development Program: (1) Novo Nordisk shall retain
its licenses under Section 3.01 and shall pay royalties under Section 5.01 until the later
of (A) the date that is ten (10) years from First Marketing of any Packaged Product and
the Device and (B) the expiration date of the last patent (including any Transferred
Patent and any Transferred Selected Pulmonary Delivery Patent) that covers the Packaged
Product and the Device and the development, manufacturing, use, marketing, distribution,
sale, offer for sale, importation and/or exportation thereof in and from the Territory,
and (2) all rights and obligations of the Parties under Sections 2.02, 2.03, 2.04, 2.08,
4.01, 6.03 and 6.04 will terminate. For the avoidance of doubt, the remaining provisions
of this Agreement will survive, including Novo Nordisk’s license rights and payment
obligations (as set forth in (1) above) and Novo Nordisk’s obligation to expend Diligent
Efforts to clinically develop and register the Insulin Compound Packaged Product and the
Device for Broad Regulatory Approval in the United States and the European Union.

     (ii) in the event that Novo Nordisk fails to provide Aradigm with written notice of
its intent to continue the Development Program pursuant to Section 10.05(b)(i), (A) the
license granted to Novo Nordisk under Section 3.01, and to its permitted sublicensees
thereunder, shall immediately terminate, (B) Aradigm shall be, and hereby is, granted a
perpetual, world-wide, non-exclusive, royalty-free license under the Transferred Patents
and Transferred Selected Pulmonary Delivery Patents to develop, manufacture, use, market,
distribute, sell, offer for sale, have made, import and/or export any product within the
Field, with a right to sublicense and (C) Novo Nordisk shall be, and hereby is, granted a
perpetual, world-wide, non-exclusive, royalty-bearing, license, with the right to
sublicense its customers and Joint Marketing Partners in accordance with Section 3.02,
under the Aradigm Patent Rights, Aradigm Know-How and Aradigm New IPR to develop,
manufacture, use, market, distribute, sell, offer for sale, have made, import and/or
export pulmonary products (other than Packaged Products, Devices or products that are
substantially the same as such Packaged Products or Devices) in the Field. In such case,
in consideration of the rights which Novo Nordisk has obtained in Aradigm Patent Rights,
Aradigm Background IPR, Aradigm Know-How, Aradigm New IPR, Transferred Patents and
Transferred Selected Pulmonary Delivery Patents, Novo Nordisk shall pay to Aradigm a
royalty on Net Sales within the Field (by any member of the Novo Nordisk Affiliate Group
or any permitted sublicensee thereof), if any, of pulmonary products that use, or are
covered by, any Aradigm Know-How or any know-how included in the Aradigm New IPR, or that
are covered by any Transferred Patents, Transferred Selected Pulmonary Delivery Patents,
Aradigm Patent Rights or any patents included in the Aradigm New IPR. Such royalty shall
be payable until the later of: (A) the date that

39

 

is ten (10) years from First Marketing of such pulmonary product; and (B) the
expiration date of the last patent (including any Transferred Patent or any Transferred
Selected Pulmonary Delivery Patent) that covers such pulmonary product and the
development, manufacturing, use, marketing, distribution, sale, offer for sale,
importation and/or exportation thereof in and from the Territory. The rate for such
royalty shall be determined in accordance with the provisions set forth in Section 5.03(a)
in respect of the applicable patents and know-how, but in no event shall such royalty
exceed: (X) in the case of any pulmonary products using an Alternative Technology to
deliver a specific insulin or insulin analog class, (1) for a First Marketed Product and
Device, three and one quarter percent (3.25%) of Net Sales thereof during the applicable
Stage 1 Commercialization Period, four percent (4.00%) of Net Sales thereof during the
applicable Stage 2 Commercialization Period, and five percent (5.00%) of Net Sales thereof
during the applicable Stage 3 Commercialization Period or (2) for any Later Marketed
Product and Device, four and one-quarter percent (4.25%) of Net Sales thereof during the
applicable Stage 1 Commercialization Period and five percent (6.00%) of Net Sales thereof
during the applicable Stage 2 Commercialization Period and the applicable Stage 3
Commercialization Period; and (Y) for any other pulmonary products, four and one-quarter
percent (4.25%) of Net Sales thereof during the applicable Stage 1 Commercialization
Period and five percent (5.00%) of Net Sales thereof during the applicable Stage 2
Commercialization Period and the applicable Stage 3 Commercialization Period.

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

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

40

 

know-how included in the Aradigm New IPR, or that are covered by any Transferred
Patents, Transferred Selected Pulmonary Delivery Patents, Aradigm Patent Rights or any
patents included in the Aradigm New IPR. Such royalty shall be payable until the later
of: (A) the date that is ten (10) years from First Marketing of such pulmonary product;
and (B) the expiration date of the last patent (including any Transferred Patent or any
Transferred Selected Pulmonary Delivery Patent) that covers such pulmonary product and the
development, manufacturing, use, marketing, distribution, sale, offer for sale,
importation and/or exportation thereof in and from the Territory. The rate for such
royalty shall be determined in accordance with the provisions set forth in Section 5.03(a)
in respect of the applicable patents and know-how, but in no event shall such royalty
exceed: (X) in the case of any pulmonary products using an Alternative Technology to
deliver a specific insulin or insulin analog class, (1) for a First Marketed Product and
Device, three and one quarter percent (3.25%) of Net Sales thereof during the applicable
Stage 1 Commercialization Period, four percent (4.00%) of Net Sales thereof during the
applicable Stage 2 Commercialization Period, and five percent (5.00%) of Net Sales thereof
during the applicable Stage 3 Commercialization Period; or (2) for any Later Marketed
Product and Device, four and one-quarter percent (4.25%) of Net Sales thereof during the
applicable Stage 1 Commercialization Period and five percent (5.00%) of Net Sales during
the applicable Stage 2 Commercialization Period and the applicable Stage 3
Commercialization Period; and (Y) for any other pulmonary products, four and one-quarter
percent (4.25%) of Net Sales thereof during the applicable Stage 1 Commercialization
Period and five percent (5.00%) of Net Sales thereof during the applicable Stage 2
Commercialization Period and the applicable Stage 3 Commercialization Period;

     (ii) Aradigm shall be, and hereby is, granted a perpetual, world-wide, non-exclusive,
royalty-bearing (as described below in this Section 10.05(c)(ii)) license, with the right
to sublicense, under the Novo Nordisk Know-How and know-how included within Novo Nordisk
New IPR and certain claims under the Novo Nordisk Patent Rights and the patents included
within Novo Nordisk New IPR, which are necessary to develop, manufacture, use, market,
distribute, sell, offer for sale, import and/or export: (1) the Insulin Compound Packaged
Product containing the Insulin Compound formulation as it exists on the date of
termination and the Device and/or later generation pulmonary products in the Field derived
from such Insulin Compound Packaged Product containing the Insulin Compound formulation as
it exists on the date of termination and the Device; and (2) any pulmonary drug delivery
product outside the Field. Novo Nordisk shall in good faith specify in writing to Aradigm
promptly following termination the patent claims that describe such Insulin Compound
formulation to enable Aradigm to practice its rights under the foregoing license, as
further described below; provided that, if Aradigm notifies Novo Nordisk
in writing of any additional claims that Aradigm

41

 

believes are necessary to practice such license, then the Parties shall meet and
discuss in good faith whether to specify such additional claims. For the avoidance of
doubt, Aradigm’s license with respect to the Insulin Compound Packaged Product under the
Novo Nordisk Know-How and the know-how included within the Novo Nordisk New IPR and the
specific claims under the Novo Nordisk Patent Rights and the patents included in the Novo
Nordisk New IPR permit Aradigm to make only (a) the exact formulation of the Insulin
Compound as it exists at the time of termination; (b) a formulation of such Insulin
Compound with a lower (but not higher) concentration of insulin, in each case falling
within the concentration ranges in the specified claims; (c) subject to (b) above, a
formulation of such Insulin Compound that increases or decreases the range of excipients
or other non-Insulin Compound components included within such existing formulation,
provided such excipients or other non-Insulin Compound components remain within a range of
two (2) times the quality specification for such component; and/or (d) a formulation of
such Insulin Compound to which excipients or other components may be added or deleted
provided such additional excipients or other compounds do not infringe any intellectual
property rights of Novo Nordisk or any of its Affiliates, other than such intellectual
property rights licensed to Aradigm under this Section 10.05(c)(i). Within the Field,
such license shall be royalty-free prior to First Marketing of any Packaged Product and/or
Device by Aradigm or its sublicensees; after such First Marketing, such license shall bear
a royalty of (A) two and seven-tenths percent (2.70%) of Net Sales (by Aradigm, any of its
Affiliates or permitted sublicensees) of Device and Packaged Products falling within
(a)-(d) above for the first four (4) years following First Marketing and thereafter four
percent (4.00%) of such Net Sales of the Packaged Product and the Device; and (B) four
percent (4.00%) of Net Sales (by Aradigm, any of its Affiliates or sublicensees) of later
generation pulmonary products derived from such Device and/or Packaged Products. Outside
the Field, such royalty shall bear a royalty determined in accordance with the provisions
set forth in Section 5.03(a). Additionally, Aradigm shall retain its licenses under
Sections 3.03(b) and (c), which licenses shall be expanded to include the ability to
develop, manufacture, use, market, distribute, sell, offer for sale, have made, import
and/or export any product inside the Field (provided, however, that the license in Section
3.03(c) shall be non-exclusive inside the Field); and

     (iii) Novo Nordisk shall supply insulin to Aradigm in accordance with the provisions
set forth in Section 10.05(f) until the date of the first Regulatory Submission if, and
only if, Novo Nordisk shall have terminated this Agreement prior to First Marketing of the
Insulin Compound Packaged Product and the Device.

     (d) In the event that Aradigm terminates this Agreement in accordance with the provisions set
forth in Section 10.03 or Section 10.04, Aradigm shall be,

42

 

and hereby is, granted a perpetual, world-wide, non-exclusive license, with the right to
sublicense, under the Novo Nordisk Know-How and know-how included within Novo Nordisk New IPR and
certain claims under the Novo Nordisk Patent Rights and the patents included within Novo Nordisk
New IPR, which are necessary to develop, manufacture, use, market, distribute, sell, offer for
sale, import and/or export: (1) the Insulin Compound Packaged Product containing the Insulin
Compound formulation as it exists on the date of termination and the Device and/or later generation
pulmonary products in the Field derived from such Insulin Compound Packaged Product containing the
Insulin Compound formulation as it exists on the date of termination and the Device; and (2) any
product outside the Field. Such royalty shall be royalty-free in the Field and royalty-bearing (as
determined in accordance with the provisions set forth in Section 5.03(a)) outside the Field. Novo
Nordisk shall in good faith specify in writing to Aradigm promptly following termination the patent
claims that describe such Insulin Compound formulation to enable Aradigm to practice its rights
under the foregoing license, as further described below; provided that, if Aradigm
notifies Novo Nordisk in writing of any additional claims that Aradigm believes are necessary to
practice such license, then the Parties shall meet and discuss in good faith whether to specify
such additional claims. For the avoidance of doubt, Aradigm’s license with respect to the Insulin
Compound Packaged Product under the Novo Nordisk Know-How and the know-how included within the Novo
Nordisk New IPR and the specific claims under the Novo Nordisk Patent Rights and the patents
included in the Novo Nordisk New IPR permit Aradigm to make only (a) the exact formulation of the
Insulin Compound as it exists at the time of termination; (b) a formulation of such Insulin
Compound with a lower (but not higher) concentration of insulin, in each case falling within the
concentration ranges in the specified claims; (c) subject to (b) above, a formulation of such
Insulin Compound that increases or decreases the range of excipients or other non-Insulin Compound
components included within such existing formulation, provided such excipients or other non-Insulin
Compound components remain within a range of two (2) times the quality specification for such
component; and/or (d) a formulation of such Insulin Compound to which excipients or other
components may be added or deleted provided such additional excipients or other compounds do not
infringe any intellectual property rights of Novo Nordisk or any of its Affiliates, other than such
intellectual property rights licensed to Aradigm under this Section 10.05(d). Additionally,
Aradigm shall retain its licenses under Sections 3.03(b) and (c), which licenses shall be expanded
to include the ability to develop, manufacture, use, market, distribute, sell, offer for sale, have
made, import and/or export any product inside the Field (provided, however, that the license in
Section 3.03(c) shall be non-exclusive inside the Field). In the event that Aradigm terminates
this Agreement prior to the first Regulatory Submission of the Insulin Compound Packaged Product
and the Device, Novo Nordisk shall supply insulin to Aradigm in accordance with the provisions set
forth in Section 10.05(f).

     (e) In the event that either Party terminates this Agreement in accordance with the provisions
set forth herein, other than in accordance with the

43

 

provisions set forth in Section 10.02(b) or Section 10.04 as and to the extent requested in writing
by Aradigm, Novo Nordisk will cooperate with Aradigm to transfer the technology and any related
development or production equipment (as specified by Aradigm) back to Aradigm, and Aradigm will pay
Novo Nordisk: (i) for its transfer activities (on terms and conditions substantially similar to
those set forth in the Transition Services Agreement and the Restructuring Agreement); and (ii) the
replacement value for any custom-made equipment and the fair market value for any equipment that is
not custom-made to Novo Nordisk for any such equipment; provided that, Novo Nordisk
shall be entitled to payment of fair market value for any custom-made equipment in respect of which
Novo Nordisk does not provide Aradigm with reasonably satisfactory evidence of its intention to
replace such equipment. Additionally, Aradigm shall be entitled to use the data generated under
the Development Program to work with a third party and shall have reasonable access to the relevant
sections of applicable regulatory filings by any member of the Novo Nordisk Affiliate Group;
provided that, it is expressly understood that neither Aradigm nor any marketing
partner of Aradigm shall have access to any Regulatory Approval in respect of Novo Nordisk bulk
insulin or Novo Nordisk Know-How, production process details or other information relating to the
production of bulk insulin by Novo Nordisk or any of its Affiliates.

     (f) In the event that either Party terminates this Agreement in accordance with the provisions
set forth herein, other than in accordance with the provisions set forth in Section 10.02(b) or
Section 10.04 and if, and only if, such termination occurs prior to First Marketing of the Insulin
Compound Packaged Product and the Device, Novo Nordisk shall supply insulin [****] to Aradigm until
the earliest of (i) notice to Novo Nordisk by Aradigm that it no longer needs such supply, (ii) the
first Regulatory Submission for the Insulin Compound Packaged Product and the Device in the United
States or the European Union and (iii) the tenth (10th) anniversary of the date of termination of
this Agreement.

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

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

 

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

44

 

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

ARTICLE 11

Dispute Resolution and Governing Law

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

     (b) The arbitration tribunal shall be composed of three disinterested arbitrators, appointed
pursuant to the following procedure: the Party invoking arbitration shall notify the other Party
stating the substance of its claim and the name and address of the arbitrator it has chosen, who
may be a citizen of any country. Within thirty (30) days of receipt of such notification, the other
Party shall notify the first party of its answer to the claim made, any counterclaim that it wishes
to assert in the arbitration, and the name and address of its arbitrator, who may be a citizen of
any country. If this is not done within the 30-day period, appointment of the second arbitrator
shall be made in accordance with the Arbitration Rules of the American Arbitration Association upon
request of the initiating Party.

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

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

45

 

therewith or the allocation of the expenses between the Parties at the discretion of the
tribunal.

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

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

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

ARTICLE 12

Miscellaneous

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

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

46

 

U.S.C. § 365(f) of the Bankruptcy Code, affirmatively agrees to assume all of such Party’s
obligations under this Agreement, and that provides adequate assurance of future performance.

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

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

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

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

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

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

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

47

 

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

[SIGNATURE PAGE FOLLOWS]

48

 

	 	 	 	 	 	 	 
	 	 	ARADIGM CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	NOVO NORDISK A/S	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

 

 

Appendix A

Transferred Patents

	 	 	 	 	 
	 

	 	Terminal	 	 
	Patent

	 	Disclaimer
	 	Patents/Applications
	No./Application

	 	Filed As of 
	 	Related by Terminal
	Serial No.

	 	June 30, 2006
	 	Disclaimer
	 

	 	 
	 	 

[****]

	 	 	 	 	 
	Patent No./

	 	 	 	Corresponding or Related
	Serial No.

	 	Foreign Filed
	 	Patents/Applications Filed
	 

	 	 
	 	 

[****]

 

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

 

 

Appendix B

Transferred Selected Pulmonary Delivery Patents

Patent No.

[****]

 

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

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