Document:

Exhibit 10.2

Exhibit 10.2

INCREMENTAL AMENDMENT AND JOINDER AGREEMENT

INCREMENTAL AMENDMENT AND JOINDER AGREEMENT (this “Agreement”) dated as of July 30, 2010
relating to the Credit Agreement dated as of May 25, 2007 (as heretofore amended or modified, the
“Credit Agreement”) among VERINT SYSTEMS INC. (the “Borrower”), the LENDERS from time to time party
thereto and CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH (formerly known as Credit Suisse, Cayman
Islands Branch), as Administrative Agent (the “Administrative Agent”).

RECITALS:

WHEREAS, the Borrower has, by notice to the Administrative Agent dated July 29, 2010 delivered
pursuant to Section 2.24 of the Credit Agreement (the “Notice”) (a copy of which notice is attached
as Exhibit A hereto), requested an increase in the amount of the Revolving Credit Commitments from
$15,000,000 to $75,000,000 (the “Revolving Credit Commitment Increase”).

WHEREAS, each financial institution identified on the signature pages hereto as an “Additional
Lender” (each, an “Additional Lender”) has agreed severally, on the terms and conditions set forth
herein and in the Credit Agreement, to provide a portion of the Revolving Credit Commitment
Increase and to become, if not already, a Revolving Credit Lender for all purposes under the Credit
Agreement.

WHEREAS, after giving effect to the Revolving Credit Commitment Increase, the Revolving Credit
Lenders and the Revolving Credit Commitments shall be as set forth on Annex A hereto.

The parties hereto therefore agree as follows:

SECTION 1. Defined Terms; References. Unless otherwise specifically
defined herein, each term used herein that is defined in the Credit Agreement has the meaning
assigned to such term in the Credit Agreement. Each reference to “hereof”, “hereunder”, “herein”
and “hereby” and each other similar reference and each reference to “this Agreement” and each other
similar reference contained in the Credit Agreement shall, after this Agreement becomes effective,
refer to the Credit Agreement as amended hereby.

SECTION 2. Revolving Credit Commitment Increase. (a) Each Additional Lender shall, with
effect from the Incremental Facility Closing Date (as defined below), become, if not already, a
party to the Credit Agreement as a Revolving Credit Lender with a Revolving Credit Commitment set
forth opposite such Additional Lender’s name on Annex A hereto (as such Revolving Credit Commitment
may thereafter be changed from time to time pursuant to the terms of the Credit Agreement). Each
Additional Lender shall, with effect from the Incremental Facility Closing Date, have the rights
and obligations of a Revolving Credit Lender under the Credit Agreement and the other Loan
Documents.

(b) The last sentence of the definition of “Revolving Credit Commitment” is amended and
restated in its entirety to read as follows:

The aggregate amount of the Revolving Credit Commitments as of July 29, 2010
is $75,000,000.

 

 

 

(c) Annex A hereto sets forth each Revolving Credit Lender, and the Revolving Credit
Commitment of each Revolving Credit Lender, after giving effect to the Revolving Credit
Commitment Increase. The Revolving Credit Commitments of each Revolving Credit Lender are
several and not joint.

(d) Annex A attached to the Credit Agreement is deleted and replaced with Annex A
hereto.

SECTION 3. Representations of the Borrower. The Borrower represents and warrants
that:

(a) each of the representations and warranties made by any Loan Party in or pursuant to
the Loan Documents is true and correct in all material respects on and as of the date of the
Notice and on and as of the Incremental Facility Closing Date after giving effect hereto as
if made on and as of such date (except to the extent such representations and warranties are
specifically made as of a particular date, in which case such representations and warranties
are true and correct as of such date);

(b) no Default or Event of Default was continuing on the date of the Notice and no
Default or Event of Default has occurred and is continuing on and as of the Incremental
Facility Closing Date after giving effect hereto and to any extension of credit requested to
be made on the Incremental Facility Closing Date;

(c) the Borrower is in compliance with the covenant set forth in Section 7.1 of the
Credit Agreement determined on a pro forma basis as of the date hereof and
the last day of the most recent fiscal quarter for which financial statements have been
delivered under the Credit Agreement, in each case, as if the Revolving Credit Commitment
Increase had been outstanding on the last day of such fiscal quarter for testing compliance
therewith;

(d) each Loan Party has the corporate power and authority, and the legal right, to
make, deliver and perform this Agreement and the other Loan Documents as modified hereby.
Each Loan Party has taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement. No consent or authorization of, filing with,
notice to or other act by or in respect of, any Governmental Authority or any other Person
is required in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except for such as have been obtained or made and are in
full force and effect and filings in respect hereof required under the Exchange Act. This
Agreement has been duly executed and delivered on behalf of each Loan Party. This Agreement
constitutes, and each other Loan Document as modified hereby constitutes, a legal, valid and
binding obligation of each Loan Party that is a party hereto or thereto, enforceable against
each such Loan Party in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors’ rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law);

 

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(e) the execution, delivery and performance of this Agreement and the other Loan
Documents as modified hereby will not violate any Requirement of Law or any material
Contractual Obligation of the Borrower or any of its Subsidiaries and will not result in, or
require, the creation or imposition of any Lien on any of their respective properties or
revenues pursuant to any Requirement of Law or any such material Contractual Obligation
(other than the Liens created by the Security Documents);

(f) after giving effect to the Revolving Credit Commitment Increase, the aggregate
amount of the Incremental Term Loans and the Revolving Credit Commitment Increases (as
defined in the Credit Agreement) does not exceed $200,000,000; and

(g) there are no outstanding L/C Obligations as of the Incremental Facility Closing
Date.

SECTION 4. Conditions. 
This Agreement shall become effective as of the first date (the
“Incremental Facility Closing Date”) when each of the following conditions shall have been
satisfied:

(a) the
 Administrative Agent shall have received from the Borrower, each Subsidiary
Guarantor, each Additional Lender and the Administrative Agent an executed counterpart
hereof or other written confirmation (in form satisfactory to the Administrative Agent) that
such party has signed a counterpart hereof;

(b) the representations and warranties set forth in clauses (a) and (b) of Section 3
above shall be true and correct as of the date hereof;

(c) the Administrative Agent shall have received a certificate, dated the Incremental
Facility Closing Date and signed by a Responsible Officer, confirming the accuracy of the
representations and warranties set forth in  Section 3 above;

(d) the Borrower shall have paid to each Additional Lender, for its own account, a fee
as separately agreed in writing between the Borrower and such Additional Lender;

(e) any fees and expenses owing by the Borrower to the Administrative Agent (or its
affiliates) in connection herewith and invoiced to the Borrower in reasonable detail prior
to the date hereof shall have been paid in full;

(f) the Administrative Agent shall have received such certificates, resolutions or
other documents of the Loan Parties as the Administrative Agent may reasonably require in
connection herewith, including all documents and certificates it may reasonably request
relating to (i) the organization, existence and good standing of each Loan Party, (ii) the
corporate or other authority for and validity of this Agreement and (iii) the incumbency of
the officers of each Loan Party executing this Agreement, and other matters relevant hereto,
all in form and substance reasonably satisfactory to the Administrative Agent and the
Additional Lenders;

 

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(g) the Administrative Agent shall have received a written opinion of Jones Day,
counsel to the Borrower and its Subsidiaries, dated as of the date hereof, in form and
substance reasonably satisfactory to the Administrative Agent and the Additional Lenders;
and

(h) the Additional Lenders shall have received, sufficiently in advance of the
Incremental Facility Closing Date, all documentation and other information required by bank
regulatory authorities under applicable “know your customer” and anti-money laundering rules
and regulations, including without limitation the United States PATRIOT Act.

SECTION 5. Acknowledgment of Additional Lenders. Each Additional Lender
expressly acknowledges that neither any of the Agents nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any representations or
warranties to it and that no act by any Agent hereafter taken, including any review of the affairs
of a Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any representation
or warranty by any Agent to any Additional Lender. Each Additional Lender represents to the Agents
that it has, independently and without reliance upon any Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their affiliates and made its own decision to provide its
Revolving Credit Commitment hereunder and enter into this Agreement. Each Additional Lender also
represents that it will, independently and without reliance upon any Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the time, continue to make
its own credit analysis, appraisals and decisions in taking or not taking action under the Credit
Agreement and the other Loan Documents, and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their affiliates. Each Additional Lender hereby (i)
confirms that it has received a copy of the Credit Agreement and each other Loan Document
(including Amendment No. 3 to Credit Agreement dated as of July 27, 2010) and such other documents
and information as it deems appropriate to make its decision to enter into this Agreement, (ii)
agrees that it shall be bound by the terms of the Credit Agreement as a Revolving Credit Lender
thereunder and that it will perform in accordance with their terms all of the obligations which by
the terms of the Loan Documents are required to be performed by it as a Revolving Credit Lender,
(iii) irrevocably designates and appoints the Agents as the agents of such Additional Lender under
the Credit Agreement and the other Loan Documents, and each Additional Lender irrevocably
authorizes each Agent, in such capacity, to take such action on its behalf under the provisions of
the Credit Agreement and the other Loan Documents and to exercise such powers and perform such
duties as are delegated to such Agent by the terms of the Credit Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto and (iv) specifies
as its lending office and address for notices the offices set forth on the Administrative
Questionnaire provided by it to the Administrative Agent.

SECTION 6. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.

 

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SECTION 7. Confirmation of Guaranties and Security Interests. By signing this Agreement,
each Loan Party hereby confirms that (i) the obligations of the Loan
Parties under the Credit Agreement as modified hereby (including with respect to the Revolving
Credit Commitment Increase and any Loans or other extensions of credit made thereunder) and the
other Loan Documents (x) are entitled to the benefits of the guarantees and the security interests
set forth or created in the Guarantee and Collateral Agreement and the other Loan Documents and (y)
constitute Obligations and (ii) notwithstanding the effectiveness of the terms hereof, the
Guarantee and Collateral Agreement and the other Loan Documents are, and shall continue to be, in
full force and effect and are hereby ratified and confirmed in all respects. Each Loan Party
ratifies and confirms that all Liens granted, conveyed, or assigned to any Agent by such Person
pursuant to each Loan Document to which it is a party remain in full force and effect, are not
released or reduced, and continue to secure full payment and performance of the Obligations as
increased hereby.

SECTION 8. Counterparts. 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.

SECTION 9. Miscellaneous. This Agreement shall constitute a Loan Document for all purposes
of the Credit Agreement. The Borrower shall pay all reasonable fees, costs and expenses of the
Administrative Agent incurred in connection with the negotiation, preparation and execution of this
Agreement and the transactions contemplated hereby.

 

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

	 	 	 	 	 
	 	VERINT SYSTEMS INC., as Borrower

 	 
	 	By:  	/s/ Douglas Robinson
 	 
	 	 	Name:  	Douglas Robinson 	 
	 	 	Title:  	Chief Financial Officer 	 

	 	 	 	 	 
	 	SUBSIDIARY GUARANTORS

VERINT VIDEO SOLUTIONS INC.

VERINT AMERICAS INC.

(f/k/a Witness Systems, Inc.)

VERINT WITNESS SYSTEMS LLC

(f/k/a Witness Systems, LLC)

VERINT BLUE PUMPKIN SOFTWARE
 LLC (f/k/a Blue
Pumpkin Software, LLC)

 	 
	 	By:  	/s/ Douglas Robinson
 	 
	 	 	Name:  	Douglas Robinson 	 
	 	 	Title:  	Treasurer 	 

	 	 	 	 	 
	 	ADMINISTRATIVE AGENT

CREDIT SUISSE AG, CAYMAN ISLANDS
 BRANCH, as
Administrative Agent

 	 
	 	By:  	/s/ Jay Chall
 	 
	 	 	Name:  	Jay Chall 	 
	 	 	Title:  	Director 	 
	 	 	 
	 	By:  	/s/ Christopher Reo Day
 	 
	 	 	Name:  	Christopher Reo Day 	 
	 	 	Title:  	Associate 	 
	 

 

 

 

	 	 	 	 	 
	 	ADDITIONAL LENDER

CREDIT SUISSE AG, CAYMAN ISLANDS
 BRANCH, as
Additional Lender

 	 
	 	By:  	/s/ Karl Studer
 	 
	 	 	Name:  	Karl Studer 	 
	 	 	Title:  	Director 	 
	 	 	 
	 	By:  	/s/ Christopher Reo Day
 	 
	 	 	Name:  	Christopher Reo Day 	 
	 	 	Title:  	Associate 	 

 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	ADDITIONAL LENDER

ROYAL BANK OF CANADA, as an
 Additional
Lender

 	 
	 	By:  	/s/ Mark Gronich
 	 
	 	 	Name:  	Mark Gronich 	 
	 	 	Title:  	Authorized Signatory 	 

 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	ADDITIONAL LENDER

MORGAN STANLEY SENIOR FUNDING, INC.,

as an Additional Lender

 	 
	 	By:  	/s/ Michael Monk
 	 
	 	 	Name:  	Michael Monk 	 
	 	 	Title:  	Vice President 	 

 

 

 

	 	 	 	 	 

ANNEX A

Revolving Credit Commitments

	 	 	 	 	 
	Revolving Credit Lender	 	Revolving Credit Commitment	 
	Credit Suisse AG, Cayman Islands Branch
	 	$	25,000,000	 
	Royal Bank of Canada
	 	$	25,000,000	 
	Morgan Stanley Senior Funding, Inc.
	 	$	15,000,000	 
	Deutsche Bank Trust Company Americas
	 	$	10,000,000	 

 

 

 

EXHIBIT A

Notice Requesting Revolving Credit Commitment Increase

Credit Suisse

as Administrative Agent

One Madison Avenue

New York, New York 10010

Attention: Agency Manager

Telecopy: 212-322-2291

July 30, 2010

Ladies and Gentlemen:

Reference is made to the Credit Agreement, dated as of May 25, 2007 (as heretofore amended or
modified, the “Credit Agreement”) among Verint Systems Inc., a Delaware corporation (the
“Borrower”), the Lenders from time to time party thereto, and Credit Suisse AG, Cayman
Islands Branch as Administrative Agent (the “Administrative Agent”). Terms defined in the
Credit Agreement and not otherwise defined herein have the meaning given such terms in the Credit
Agreement.

Pursuant to Section 2.24 of the Credit Agreement, the Borrower hereby requests an increase in
the amount of the Revolving Credit Commitments to $75,000,000 on the terms applicable to Revolving
Credit Commitments set forth in the Credit Agreement.

	 	 	 	 	 
	 	VERINT SYSTEMS INC.

 	 
	 	By:  	/s/ Douglas Robinson
 	 
	 	 	Name:  	Douglas Robinson 	 
	 	 	Title:  	Chief Financial Officerexv10w1

Exhibit 10.1

STOCK PURCHASE AGREEMENT

     This STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of July 30, 2010, is by and among
Aradigm Corporation, a California corporation (the “Company”), and Novo Nordisk A/S, a company
organized and existing under the laws of Denmark (the “Purchaser”).

RECITALS

     A. The Company and the Purchaser are executing and delivering this Agreement in reliance upon
the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933,
as amended (the “1933 Act”).

     B. The Purchaser and the Company previously entered into a Promissory Note and Security
Agreement dated July 3, 2006 (the “Note Agreement”), pursuant to which the Purchaser made a loan to
the Company in the principal amount of US$7.5 million.

     C. In consideration for the termination of all of the Company’s obligations under the Note
Agreement, the Purchaser wishes to purchase, and the Company wishes to issue to the Purchaser, upon
the terms and conditions stated in this Agreement, 26,000,000 shares of common stock, no par value
(“Common Stock”), of the Company (the “New Securities”).

     D. Following the execution of this Agreement, the parties hereto shall execute and deliver a
Registration Rights Agreement, in the form attached hereto as Exhibit A (the “Registration
Rights Agreement”), pursuant to which the Company has agreed to provide certain registration rights
with respect to the Registrable Securities (as defined in the Registration Rights Agreement), under
the 1933 Act and the rules and regulations promulgated thereunder, and applicable state securities
laws.

AGREEMENT

     NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Purchaser hereby agree as follows:

     1. PURCHASE OF THE NEW SECURITIES.

     (a) New Securities. Subject to the satisfaction (or waiver) of the conditions
set forth in Sections 6 and 7 below, the Company shall issue to the Purchaser, and the
Purchaser shall purchase from the Company on the Closing Date (as defined below), the New
Securities.

     (b) Closing. The closing (the “Closing”) of the purchase of the New Securities
by the Purchaser shall occur at the offices of Morrison & Foerster LLP, 425 Market Street,
San Francisco, CA 94105. The date and time of the Closing (the “Closing Date”) shall be
10:00 a.m., New York time, on the first (1st) Business Day on which the
conditions to the Closing set forth in Sections 6 and 7 below are satisfied or waived (or
such later date as is mutually agreed to by the Company and the Purchaser). As used herein
“Business Day” means any day other than a Saturday, Sunday or other day on which commercial
banks in New York, New York or Denmark are required by law to remain closed.

     (c) Consideration. The consideration for the New Securities to be purchased by
the Purchaser shall be the termination of the Note Agreement (including all of the Company’s
obligations thereunder) (the “Consideration”).

 

 

     2. PURCHASER’S REPRESENTATIONS AND WARRANTIES.

     The Purchaser represents and warrants to the Company as of the date hereof and as of the
Closing Date:

     (a) Organization; Authority. The Purchaser is an entity duly organized and
validly existing under the laws of the jurisdiction of its organization with the requisite
power and authority to enter into and to consummate the transactions contemplated by the
Transaction Documents (defined below) to which it is a party and otherwise to carry out its
obligations hereunder and thereunder.

     (b) No Public Sale or Distribution. The Purchaser is purchasing the New
Securities for its own account and not with a view towards, or for resale in connection
with, the public sale or distribution thereof in violation of applicable securities laws,
except pursuant to sales registered or exempted under the 1933 Act; provided, however, by
making the representations herein, the Purchaser does not agree, or make any representation
or warranty, to hold any of the New Securities for any minimum or other specific term and
reserves the right to dispose of the New Securities at any time in accordance with or
pursuant to a registration statement or an exemption under the 1933 Act. The Purchaser is
purchasing the New Securities hereunder in the ordinary course of its business. The
Purchaser does not presently have any agreement or understanding, directly or indirectly,
with any Person to distribute the New Securities in violation of applicable securities laws.
For purposes of this agreement, “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated organization, any
other entity and a government or any department or agency thereof.

     (c) Status. The Purchaser is not a registered broker-dealer under Section 15
of the Securities Exchange Act of 1934, as amended (the “1934 Act”). The Purchaser has such
knowledge, sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of such investment. The Purchaser has determined
that the Consideration represents fair consideration for the purchase of the New Securities.
The Purchaser is able to bear the economic risk of an investment in the New Securities.

     (d) Reliance on Exemptions. The Purchaser understands that the New Securities
are being offered and issued to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the Company is
relying in part upon the truth and accuracy of, and the Purchaser’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings of the Purchaser
set forth herein in order to determine the availability of such exemptions and the
eligibility of the Purchaser to purchase the New Securities.

     (e) Information. The Purchaser and its advisors have been furnished with all
materials relating to the business, finances and operations of the Company and materials
relating to the issuance and purchase of the New Securities which have been requested by the
Purchaser. The Purchaser and its advisors, if any, have been afforded the opportunity to ask
questions of the Company. Neither such inquiries nor any other due diligence investigations
conducted by the Purchaser or its advisors, if any, or its representatives shall modify,
amend or affect the Purchaser’s right to rely on the Company’s representations and
warranties contained herein or any representations and warranties contained in any other
Transaction Document (defined below) or any other document or instrument executed and/or
delivered in connection with this Agreement or the consummation of the transaction
contemplated hereby. The Purchaser understands that its investment in the New Securities
involves a high degree of risk. The Purchaser has sought such accounting, legal and tax
advice as it has considered necessary to make an informed investment decision with respect
to its acquisition of the New Securities.

     (f) No Governmental Review. The Purchaser understands that no United States
federal or state agency or any other government or governmental agency has passed on or made
any recommendation or endorsement of the New Securities or the fairness or suitability of
the investment in the New Securities nor have such authorities passed upon or endorsed the
merits of the offering of the New Securities.

     (g) Transfer or Resale. The Purchaser understands that except as provided in
the Registration Rights Agreement and Section 4(g) hereof: (i) the New Securities have not
been and are not being registered under the 1933 Act or any state securities laws, and may
not be offered for sale, sold, assigned or transferred unless (A) subsequently registered
thereunder, (B) the Purchaser shall have delivered to the

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Company (if requested by the Company) an opinion of counsel to the Purchaser, in a form
reasonably acceptable to the Company, to the effect that such New Securities to be sold,
assigned or transferred may be sold, assigned or transferred pursuant to an exemption from
such registration or (C) the Purchaser provides the Company with reasonable assurance that
such New Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A
promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”);
(ii) any sale of the New Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any
resale of the New Securities under circumstances in which the seller (or the Person through
whom the sale is made) may be deemed to be an underwriter (as that term is defined in the
1933 Act) may require compliance with some other exemption under the 1933 Act or the rules
and regulations of the U.S. Securities and Exchange Commission (the “SEC”) promulgated
thereunder; and (iii) neither the Company nor any other Person is under any obligation to
register the New Securities under the 1933 Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder.

     (h) Validity; Enforcement. This Agreement has been, and the other Transaction
Documents will be prior to the Closing, duly and validly authorized, executed and delivered
on behalf of the Purchaser and constitute the legal, valid and binding obligations of the
Purchaser enforceable against the Purchaser in accordance with their respective terms,
except as such enforceability may be limited by general principles of equity or to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar
laws relating to, or affecting generally, the enforcement of applicable creditors’ rights
and remedies. “Transaction Documents” mean, collectively, this Agreement, the Registration
Rights Agreement, the Payoff and Termination Letter, in the form attached hereto as
Exhibit B and each of the other agreements and instruments entered into or delivered
by any of the parties hereto in connection with the transactions contemplated hereby and
thereby, as may be amended from time to time.

     (i) No Conflicts. The execution, delivery and performance by the Purchaser of
this Agreement and the other Transaction Documents and the consummation by the Purchaser of
the transactions contemplated herein and therein will not (i) result in a violation of the
organizational documents of the Purchaser or (ii) conflict with, or constitute a default (or
an event which with notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Purchaser is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including federal and
state securities laws) applicable to the Purchaser, except in the case of clauses (ii) and
(iii) above, for such conflicts, defaults, rights or violations which would not,
individually or in the aggregate, reasonably be expected to have a material adverse effect
on the ability of the Purchaser to perform its obligations hereunder.

     (j) Certain Trading Activities. The Purchaser has not directly or indirectly,
nor has any Person acting on behalf of or pursuant to any understanding with the Purchaser,
engaged in any transactions in the securities of the Company (including, without limitation,
Short Sales involving the Company’s securities) since the time that the Purchaser was first
contacted by the Company regarding the investment in the Company contemplated herein. “Short
Sales” include, without limitation, all “short sales” as defined in Rule 200 promulgated
under Regulation SHO (“Regulation SHO”) under the 1934 Act and all types of direct and
indirect stock pledges, forward sales contracts, options, puts, calls, swaps and similar
arrangements (including on a total return basis), and sales and other transactions through
non-U.S. broker dealers or foreign regulated brokers (but shall not be deemed to include the
location and/or reservation of borrowable shares of Common Stock).

     (k) General Solicitation. The Purchaser is not purchasing the New Securities as
a result of any advertisement, article, notice or other communication regarding the New
Securities published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar.

     (l) Manipulation of Price. Since the time that the Purchaser was first
contacted by the Company or its agent regarding the investment in the Company contemplated
herein, the Purchaser has not, and, to the knowledge of the Purchaser, no Person acting on
its behalf has, directly or indirectly, (i) taken any action designed to cause or to result
in the stabilization or manipulation of the price of any security of

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the Company to facilitate the sale or resale of any of the New Securities, (ii) sold,
bid for, purchased, or paid any compensation for soliciting purchases of, any of the New
Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting
another to purchase any other securities of the Company.

     3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

     The Company represents and warrants to the Purchaser that, as of the date hereof and as of the
Closing Date and except as set forth in the Disclosure Schedules prepared by the Company and
attached hereto:

     (a) Organization and Qualification; Subsidiary. Each of the Company and the
Subsidiary (as defined below) is an entity duly organized and validly existing and in good
standing under the laws of the jurisdiction in which they are formed, and has the requisite
power and authorization to own their properties and to carry on their business as now being
conducted and as presently proposed to be conducted. Each of the Company and the Subsidiary
is duly qualified as a foreign entity to do business and is in good standing in every
jurisdiction in which its ownership of property or the nature of the business conducted by
it makes such qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect. As used in this
Agreement, “Material Adverse Effect” means any material adverse effect on (i) the business,
properties, assets, liabilities, operations (including results thereof), condition
(financial or otherwise) or prospects of the Company and the Subsidiary, taken as a whole,
(ii) the transactions contemplated hereby or in any of the other Transaction Documents or
(iii) the authority or ability of the Company to perform any of its respective obligations
under any of the Transaction Documents. The Company has only one Subsidiary, Aradigm
Limited, which is domiciled in the United Kingdom (the “Subsidiary”). “Subsidiary” means any
Person in which the Company, directly or indirectly, (I) owns at least fifty percent (50% of
the outstanding capital stock or holds at least fifty percent (50%) of the equity or similar
interest of such Person or (II) controls or operates all or any part of the business,
operations or administration of such Person.

     (b) Authorization; Enforcement; Validity. The Company has the requisite power
and authority to enter into and perform its obligations under this Agreement and the other
Transaction Documents and to issue the New Securities in accordance with the terms hereof
and thereof. Each Subsidiary has the requisite power and authority to enter into and perform
its obligations under the Transaction Documents to which it is a party. The execution and
delivery of this Agreement and the other Transaction Documents by the Company, and the
consummation by the Company of the transactions contemplated hereby and thereby (including,
without limitation, the issuance of the New Securities) have been duly authorized by the
Company’s board of directors and (other than the filing with the SEC of one or more
Registration Statements in accordance with the requirements of the Registration Rights
Agreement and the Shareholder Approval (as defined below)) no further filing, consent or
authorization is required by the Company or its board of directors or its shareholders or
other governing body. This Agreement has been, and the other Transaction Documents will be
prior to the Closing, duly executed and delivered by the Company or its agent, and each
constitutes or will constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with its respective terms, except as such
enforceability may be limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and remedies and except
as rights to indemnification and to contribution may be limited by federal or state
securities law.

     (c) Issuance of the New Securities. The New Securities, when issued, will be
validly issued, fully paid and nonassessable and free from all preemptive or similar rights,
taxes, liens, charges and other encumbrances with respect to the issue thereof, with the
Purchaser being entitled to all rights accorded to a holder of Common Stock. Subject to the
accuracy of the representations and warranties of the Purchaser in this Agreement, the offer
and issuance by the Company of the New Securities is exempt from registration under the 1933
Act.

     (d) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the issuance of the New
Securities) will not (i) result in a violation of the

4

 

Articles of Incorporation (as defined below) or the Bylaws (as defined below), (ii)
conflict with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which the Company
or the Subsidiary is a party, or (iii) result in a violation of any law, rule, regulation,
order, judgment or decree (including foreign, federal and state securities laws and
regulations and the rules and regulations of the OTC Bulletin Board (the “Principal Market”)
and including all applicable federal laws, rules and regulations) applicable to the Company
or the Subsidiary or by which any property or asset of the Company or the Subsidiary is
bound or affected except, in the case of clause (ii) or (iii) above, to the extent such
violations that could not reasonably be expected to have a Material Adverse Effect.

     (e) Consents. Other than the Shareholder Approval (as defined below), neither
the Company nor the Subsidiary is required to obtain any consent from, authorization or
order of, or make any filing or registration with (other than the filing with the SEC of one
or more Registration Statements in accordance with the requirements of the Registration
Rights Agreement), any court, governmental agency or any regulatory or self-regulatory
agency or any other Person in order for it to execute, deliver or perform any of its
respective obligations under or contemplated by the Transaction Documents, in each case, in
accordance with the terms hereof or thereof. Other than the Shareholder Approval (as defined
below), all consents, authorizations, orders, filings and registrations which the Company or
the Subsidiary is required to obtain pursuant to the preceding sentence have been obtained
or effected on or prior to the Closing Date, and neither the Company nor the Subsidiary is
aware of any facts or circumstances which might prevent the Company or the Subsidiary from
obtaining or effecting any of the registration, application or filings contemplated by the
Transaction Documents. The Company is not in violation of the requirements of the Principal
Market and has no knowledge of any facts or circumstances which could reasonably lead to
delisting or suspension of the Common Stock in the foreseeable future.

     (f) Acknowledgment Regarding the Purchaser’s Purchase of the New Securities.
The Company acknowledges and agrees that, to its actual knowledge, the Purchaser is acting
solely in the capacity of an arm’s length purchaser with respect to the Transaction
Documents and the transactions contemplated hereby and thereby. The Company further
acknowledges that the Purchaser is not acting as a financial advisor or fiduciary of the
Company or the Subsidiary (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated hereby and thereby, and any advice given by the
Purchaser or any of its representatives or agents in connection with the Transaction
Documents and the transactions contemplated hereby and thereby is merely incidental to the
Purchaser’s purchase of the New Securities. The Company further represents to the Purchaser
that the Company’s decision to enter into the Transaction Documents to which it is a party
has been based solely on the independent evaluation by the Company and its representatives.

     (g) No General Solicitation; Placement Agent’s Fees. Neither the Company, nor
the Subsidiary or affiliates, nor any Person acting on its or their behalf, has engaged in
any form of general solicitation or general advertising (within the meaning of Regulation D)
in connection with the offer or sale of the New Securities. The Company shall be responsible
for the payment of any placement agent’s fees, financial advisory fees, or brokers’
commissions (other than for Persons engaged by the Purchaser or its investment advisor)
relating to or arising out of the transactions contemplated hereby. Neither the Company nor
the Subsidiary has engaged any placement agent or other agent in connection with the sale of
the New Securities.

     (h) No Integrated Offering. None of the Company, the Subsidiary or any of their
affiliates, nor any Person acting on their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security, under
circumstances that would require registration of the issuance of any of the New Securities
under the 1933 Act, whether through integration with prior offerings or otherwise, or cause
this offering of the New Securities to require approval of shareholders of the Company under
any applicable shareholder approval provisions, including, without limitation, under the
rules and regulations of any exchange or automated quotation system on which any of the
securities of the Company are listed or designated. None of the Company, the Subsidiary,
their affiliates nor any Person acting on their behalf will take any action or steps that
would require registration of the issuance of any of the New

5

 

Securities under the 1933 Act or cause the offering of any of the New Securities
hereunder to be integrated with other offerings.

     (i) Application of Takeover Protections; Rights Agreement. The Company and its
board of directors have taken all necessary action, if any, in order to render inapplicable
any control share acquisition, interested shareholder, business combination, poison pill
(including any distribution under a rights agreement) or other similar anti-takeover
provision under the Articles of Incorporation, Bylaws or other organizational documents or
the laws of the jurisdiction of its incorporation or otherwise which is or could become
applicable to the Purchaser solely as a result of the transactions contemplated by the
Transaction Documents, including, without limitation, the Company’s issuance of the New
Securities and the Purchaser’s ownership of the New Securities. The Company and its board of
directors have taken all necessary action, if any, in order to render inapplicable any
shareholder rights plan or similar arrangement relating to accumulations of beneficial
ownership of the New Securities or a change in control of the Company or the Subsidiary, in
each case, solely as a result of the transactions contemplated by the Transaction Documents.

     (j) SEC Documents; Financial Statements. During the two (2) years prior to the
date hereof, the Company has timely filed all reports, schedules, forms, statements and
other documents required to be filed by it with the SEC pursuant to the reporting
requirements of the 1934 Act (all of the foregoing filed prior to the date hereof and all
exhibits included therein and financial statements, notes and schedules thereto and
documents incorporated by reference therein being hereinafter referred to as the “SEC
Documents”). As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at
the time they were filed with the SEC, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial statements of the Company included
in the SEC Documents complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect thereto as in
effect as of the time of filing. Such financial statements have been prepared in accordance
with generally accepted accounting principles, consistently applied, during the periods
involved (except (i) as may be otherwise indicated in such financial statements or the notes
thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all material
respects the financial position of the Company as of the dates thereof and the results of
its operations and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments which will not be material, either
individually or in the aggregate). No other information provided by or on behalf of the
Company to the Purchaser which is not included in the SEC Documents (including, without
limitation, information referred to in Section 2(e) of this Agreement) contains any untrue
statement of a material fact or omits to state any material fact necessary in order to make
the statements therein not misleading, in the light of the circumstance under which they are
or were made.

     (k) Absence of Certain Changes. Except as set forth in the SEC Documents, there
has been no material adverse change and no material adverse development in the business,
assets, liabilities, properties, operations (including results thereof), condition
(financial or otherwise) or prospects of the Company and the Subsidiary, taken as a whole.
Since the date of the Company’s most recent audited financial statements contained in a Form
10-K, neither the Company nor the Subsidiary has (i) declared or paid any dividends, (ii)
sold any assets, individually or in the aggregate, outside of the ordinary course of
business or (iii) made any material capital expenditures, individually or in the aggregate.
Neither the Company nor the Subsidiary has taken any steps to seek protection pursuant to
any law or statute relating to bankruptcy, insolvency, reorganization, receivership,
liquidation or winding up, nor does the Company or the Subsidiary have any knowledge or
reason to believe that any of their respective creditors intend to initiate involuntary
bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a
creditor to do so. The Company is not as of the date hereof, and after giving effect to the
transactions contemplated hereby to occur at the Closing, will not be Insolvent (as defined
below). For purposes of this Section 3(k), “Insolvent” means (I) with respect to the Company
and the Subsidiary, on a consolidated

6

 

basis, (i) the present fair saleable value of the Company’s and the Subsidiary’s assets
is less than the amount required to pay the Company’s and the Subsidiary’s total
Indebtedness (as defined below), (ii) the Company and the Subsidiary are unable to pay their
debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities
become absolute and matured or (iii) the Company and the Subsidiary intend to incur or
believe that they will incur debts that would be beyond their ability to pay as such debts
mature; and (II) with respect to the Company and the Subsidiary, individually, (i) the
present fair saleable value of the Company’s assets is less than the amount required to pay
the Company’s total Indebtedness (as defined below), (ii) the Company is unable to pay its
debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities
become absolute and matured or (iii) the Company intends to incur or believes that it will
incur debts that would be beyond its ability to pay as such debts mature. Neither the
Company nor the Subsidiary has engaged in any business or in any transaction, and is not
about to engage in any business or in any transaction, for which the Company’s or the
Subsidiary’s remaining assets constitute unreasonably small capital.

     (l) No Undisclosed Events, Liabilities, Developments or Circumstances. Except
as set forth in the SEC Documents, no event, liability, development or circumstance has
occurred or exists, or is reasonably expected to exist or occur with respect to the Company,
the Subsidiary or their respective business, properties, liabilities, prospects, operations
(including results thereof) or condition (financial or otherwise), that (i) would be
required to be disclosed by the Company under applicable securities laws on a registration
statement on Form S-3 filed with the SEC relating to an issuance and sale by the Company of
its Common Stock and which has not been publicly announced, (ii) would reasonably be
expected to have a Material Adverse Effect or (iii) would reasonably be expected to have a
material adverse effect on the Purchaser’s investment hereunder.

     (m) Conduct of Business; Regulatory Permits. Neither the Company nor the
Subsidiary is in violation of any term of or in default under its Articles of Incorporation,
Bylaws, any certificate of designation, preferences or rights of any other outstanding
series of preferred stock of the Company or the Subsidiary or their organizational charter,
certificate of formation or certificate of incorporation or bylaws, respectively. Neither
the Company nor the Subsidiary is in violation of any judgment, decree or order or any
statute, ordinance, rule or regulation applicable to the Company or the Subsidiary, and
neither the Company nor the Subsidiary will conduct its business in violation of any of the
foregoing, except in all cases for possible violations which could not, individually or in
the aggregate, have a Material Adverse Effect. Without limiting the generality of the
foregoing, the Company is not in violation of any of the rules, regulations or requirements
of the Principal Market and has no knowledge of any facts or circumstances that could
reasonably lead to delisting or suspension of the Common Stock by the Principal Market in
the foreseeable future. Since January 1, 2008, other than as set forth in the SEC Documents,
(i) the Common Stock has been listed or designated for quotation on the Principal Market,
(ii) trading in the Common Stock has not been suspended by the SEC or the Principal Market
and (iii) the Company has received no communication, written or oral, from the SEC or the
Principal Market regarding the suspension or delisting of the Common Stock from the
Principal Market. The Company and the Subsidiary possess all certificates, authorizations
and permits issued by the appropriate regulatory authorities necessary to conduct their
respective businesses, except where the failure to possess such certificates, authorizations
or permits would not have, individually or in the aggregate, a Material Adverse Effect, and
neither the Company nor the Subsidiary has received any notice of proceedings relating to
the revocation or modification of any such certificate, authorization or permit.

     (n) Foreign Corrupt Practices. Neither the Company nor the Subsidiary nor, to
the Company’s knowledge, any director, officer, agent, employee or other Person acting on
behalf of the Company or the Subsidiary has, in the course of its actions for, or on behalf
of, the Company or the Subsidiary (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to political activity;
(ii) made any direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; (iii) violated, or committed any act or made any
payment in violation of, or that requires disclosure under, any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.

7

 

     (o) Sarbanes-Oxley Act. Other than as disclosed in the SEC Documents, the
Company and each Subsidiary is in compliance with all applicable requirements of the
Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and all applicable
rules and regulations promulgated by the SEC thereunder that are effective as of the date
hereof.

     (p) Transactions With Affiliates. Other than as disclosed in the SEC Documents,
none of the officers, directors or employees of the Company or the Subsidiary is presently a
party to any transaction with the Company or the Subsidiary (other than for ordinary course
services as employees, officers or directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any such
officer, director or employee or, to the knowledge of the Company or the Subsidiary, any
corporation, partnership, trust or other Person in which any such officer, director, or
employee has a substantial interest or is an employee, officer, director, trustee or
partner.

     (q) Equity Capitalization. As of the date hereof, the authorized capital stock
of the Company consists of (i) 150,000,000 shares of Common Stock, of which 137,778,964 are
issued and outstanding and 12,221,036 shares are reserved for issuance pursuant to
securities exercisable or exchangeable for, or convertible into, shares of Common Stock and
(ii) 2,950,000 shares of Preferred Stock, no par value, of which none are outstanding. No shares of Common Stock are held in treasury. All of such outstanding shares are duly
authorized and have been, or upon issuance will be, validly issued and are fully paid and
nonassessable. None of the Company’s or the Subsidiary’s capital stock is subject to
preemptive rights or any other similar rights or any liens or encumbrances suffered or
permitted by the Company or the Subsidiary. Except as disclosed in the SEC Documents, there
are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights convertible into, or
exercisable or exchangeable for, any capital stock of the Company or the Subsidiary, or
contracts, commitments, understandings or arrangements by which the Company or the
Subsidiary is or may become bound to issue additional capital stock of the Company or the
Subsidiary or options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, or exercisable
or exchangeable for, any capital stock of the Company or the Subsidiary. Except as disclosed
in the SEC Documents, there are no outstanding debt securities, notes, credit agreements,
credit facilities or other agreements, documents or instruments evidencing Indebtedness of
the Company or the Subsidiary or by which the Company or the Subsidiary is or may become
bound. There are no financing statements securing obligations in any amounts filed in
connection with the Company or the Subsidiary. There are no agreements or arrangements under
which the Company or the Subsidiary is obligated to register the sale of any of their
securities under the 1933 Act (except pursuant to the Registration Rights Agreement and the
registration rights agreement dated June 21, 2010, by and among Aradigm Corporation and the
buyers identified therein, as amended (the “June 2010 Registration Rights Agreement”)).
Except as disclosed in the SEC Documents, there are no outstanding securities or instruments
of the Company or the Subsidiary which contain any redemption or similar provisions, and
there are no contracts, commitments, understandings or arrangements by which the Company or
the Subsidiary is or may become bound to redeem a security of the Company or the Subsidiary.
There are no securities or instruments containing anti-dilution or similar provisions that
will be triggered by the issuance of the New Securities. Neither the Company nor the
Subsidiary has any stock appreciation rights or “phantom stock” plans or agreements or any
similar plan or agreement. Neither the Company nor the Subsidiary has any liabilities or
obligations required to be disclosed in the SEC Documents which are not so disclosed in the
SEC Documents, other than those incurred in the ordinary course of the Company’s or the
Subsidiary’s respective businesses and which, individually or in the aggregate, do not or
could not have a Material Adverse Effect. Copies of the Company’s Articles of Incorporation,
as amended and as in effect on the date hereof (the “Articles of Incorporation”), and the
Company’s bylaws, as amended and as in effect on the date hereof (the “Bylaws”), have been
filed as exhibits with the SEC and are available on the SEC’s website at www.sec.gov.

     (r) Indebtedness and Other Contracts. Except as disclosed in the SEC Documents,
neither the Company nor the Subsidiary (i) has any outstanding Indebtedness (as defined
below), (ii) is a party to any contract, agreement or instrument, the violation of which, or
default under which, by the other party(ies) to such contract, agreement or instrument could
reasonably be expected to result in a Material Adverse Effect,

8

 

(iii) is in violation of any term of, or in default under, any contract, agreement or
instrument relating to any Indebtedness, except where such violations and defaults would not
result, individually or in the aggregate, in a Material Adverse Effect, or (iv) is a party
to any contract, agreement or instrument relating to any Indebtedness, the performance of
which, in the judgment of the Company’s officers, has or is expected to have a Material
Adverse Effect. For purposes of this Agreement: (x) “Indebtedness” of any Person means,
without duplication (A) all indebtedness for borrowed money, (B) all obligations issued,
undertaken or assumed as the deferred purchase price of property or services (including,
without limitation, “capital leases” in accordance with generally accepted accounting
principles) (other than trade payables entered into in the ordinary course of business),
(C) all reimbursement or payment obligations with respect to letters of credit, surety bonds
and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection with the
acquisition of property, assets or businesses, (E) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as financing, in either
case with respect to any property or assets acquired with the proceeds of such indebtedness
(even though the rights and remedies of the seller or bank under such agreement in the event
of default are limited to repossession or sale of such property), (F) all monetary
obligations under any leasing or similar arrangement which, in connection with generally
accepted accounting principles, consistently applied for the periods covered thereby, is
classified as a capital lease, (G) all indebtedness referred to in clauses (A) through
(F) above secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including accounts and
contract rights) owned by any Person, even though the Person which owns such assets or
property has not assumed or become liable for the payment of such indebtedness, and (H) all
Contingent Obligations in respect of indebtedness or obligations of others of the kinds
referred to in clauses (A) through (G) above and (y) “Contingent Obligation” means, as to
any Person, any direct or indirect liability, contingent or otherwise, of that Person with
respect to any indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary effect
thereof, is to provide assurance to the obligee of such liability that such liability will
be paid or discharged, or that any agreements relating thereto will be complied with, or
that the holders of such liability will be protected (in whole or in part) against loss with
respect thereto.

     (s) Absence of Litigation. Except as disclosed in the SEC Documents, there is
no action, suit, proceeding, inquiry or investigation before or by the Principal Market, any
court, public board, government agency, self-regulatory organization or body pending or, to
the knowledge of the Company, threatened against or affecting the Company or the Subsidiary,
the Common Stock or any of the Company’s or the Subsidiary’s officers or directors which is
outside of the ordinary course of business or individually or in the aggregate material to
the Company or the Subsidiary. There has not been, and to the knowledge of the Company,
there is not pending or contemplated, any investigation by the SEC involving the Company,
the Subsidiary or any current or former director or officer of the Company or the
Subsidiary. The SEC has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company under the 1933 Act or the
1934 Act.

     (t) Insurance. The Company and the Subsidiary are insured by insurers of
recognized financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses in which
the Company and the Subsidiary are engaged. Neither the Company nor the Subsidiary has been
refused any insurance coverage sought or applied for, and neither the Company nor the
Subsidiary has any reason to believe that it will be unable to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would not have a
Material Adverse Effect.

     (u) Employee Relations. Neither the Company nor the Subsidiary is a party to
any collective bargaining agreement or employs any member of a union. The Company believes
that its and the Subsidiary’s relations with their respective employees are good. No
executive officer (as defined in Rule 501(f) promulgated under the 1933 Act) or other key
employee of the Company or the Subsidiary has notified the Company or the Subsidiary that
such officer intends to leave the Company or the Subsidiary or otherwise terminate such
officer’s employment with the Company or the Subsidiary. To the Company’s

9

 

knowledge, no executive officer or other key employee of the Company or the Subsidiary
is, or is now expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement, non-competition agreement,
or any other contract or agreement or any restrictive covenant, and the continued employment
of each such executive officer or other key employee (as the case may be), to the Company’s
knowledge, does not subject the Company or the Subsidiary to any liability with respect to
any of the foregoing matters. The Company and the Subsidiary are in compliance with all
federal, state, local and foreign laws and regulations respecting labor, employment and
employment practices and benefits, terms and conditions of employment and wages and hours,
except where failure to be in compliance would not, either individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.

     (v) Title. The Company and the Subsidiary have good and marketable title in fee
simple to all real property, and have good and marketable title to all personal property
(exclusive of intellectual property), owned by them which is material to the business of the
Company and the Subsidiary, in each case, free and clear of all liens, encumbrances and
defects except such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the Company and the
Subsidiary. Any real property and facilities held under lease by the Company or the
Subsidiary are held by them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company or the Subsidiary.

     (w) Intellectual Property Rights. The Company and the Subsidiary own or possess
adequate rights or licenses to use all trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights, original works,
inventions, licenses, approvals, governmental authorizations, trade secrets and other
intellectual property rights and all applications and registrations therefor (“Intellectual
Property Rights”) necessary to conduct their respective businesses as now conducted and as
presently proposed to be conducted. None of the Company’s or the Subsidiary’s Intellectual
Property Rights necessary to conduct their respective businesses as now conducted and as
presently proposed to be conducted have expired, terminated or been abandoned, or are
expected to expire, terminate or be abandoned, within three years from the date of this
Agreement. The Company has no knowledge of any infringement by the Company or the Subsidiary
of Intellectual Property Rights of others. There is no claim, action or proceeding being
made or brought, or to the knowledge of the Company or the Subsidiary, being threatened,
against the Company or the Subsidiary regarding their Intellectual Property Rights except as
disclosed in the SEC Documents. The Company is not aware of any facts or circumstances which
might give rise to any of the foregoing infringements or claims, actions or proceedings. The
Company and the Subsidiary have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their Intellectual Property Rights.

     (x) Environmental Laws. The Company and the Subsidiary (i) are in compliance
with all Environmental Laws (as defined below), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and conditions of any such
permit, license or approval where, in each of the foregoing clauses (i), (ii) and (iii), the
failure to so comply could be reasonably expected to have, individually or in the aggregate,
a Material Adverse Effect. The term “Environmental Laws” means all federal, state, local or
foreign laws relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata), including, without limitation, laws relating to emissions, discharges,
releases or threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment,
or otherwise relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all authorizations,
codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or
notice letters, orders, permits, plans or regulations issued, entered, promulgated or
approved thereunder.

     (y) Subsidiary Rights. The Company has the unrestricted right to vote, and
(subject to limitations imposed by applicable law) to receive dividends and distributions
on, all capital securities of the Subsidiary as owned by the Company.

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     (z) Tax Status. The Company and the Subsidiary (i) has timely made or filed all
foreign, federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject, (ii) has timely paid all taxes and
other governmental assessments and charges that are material in amount, shown or determined
to be due on such returns, reports and declarations, except those being contested in good
faith and (iii) has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports or
declarations apply except in each case where the failure to file, pay or set aside would not
have a Material Adverse Effect. There are no unpaid taxes in any material amount claimed to
be due by the taxing authority of any jurisdiction, and the officers of the Company and the
Subsidiary know of no basis for any such claim. The Company is not operated in such a manner
as to qualify as a passive foreign investment company, as defined in Section 1297 of the
U.S. Internal Revenue Code of 1986, as amended.

     (aa) Internal Accounting and Disclosure Controls. The Company and the
Subsidiary maintains internal control over financial reporting (as such term is defined in
Rule 13a-15(f) under the 1934 Act) that is effective to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles, including
that (i) transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting principles and to
maintain asset and liability accountability, (iii) access to assets or incurrence of
liabilities is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets and liabilities is compared
with the existing assets and liabilities at reasonable intervals and appropriate action is
taken with respect to any difference. The Company maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) under the 1934 Act) that are effective
in ensuring that information required to be disclosed by the Company in the reports that it
files or submits under the 1934 Act is recorded, processed, summarized and reported, within
the time periods specified in the rules and forms of the SEC, including, without limitation,
controls and procedures designed to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the 1934 Act is accumulated and
communicated to the Company’s management, including its principal executive officer or
officers and its principal financial officer or officers, as appropriate, to allow timely
decisions regarding required disclosure. Since January 1, 2008, neither the Company nor the
Subsidiary has received any notice or correspondence from any accountant relating to any
potential material weakness in any part of the internal controls over financial reporting of
the Company or the Subsidiary.

     (bb) Off Balance Sheet Arrangements. There is no transaction, arrangement, or
other relationship between the Company or the Subsidiary and an unconsolidated or other off
balance sheet entity that is required to be disclosed by the Company in its 1934 Act filings
and is not so disclosed or that otherwise could be reasonably likely to have a Material
Adverse Effect.

     (cc) Investment Company Status. The Company is not, and upon consummation of
the issuance of the New Securities will not be, required to register as an “investment
company,” an affiliate of an “investment company,” a company controlled by an “investment
company” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an
“investment company” as such terms are defined in the Investment Company Act of 1940, as
amended.

     (dd) Acknowledgement Regarding Purchaser’s Trading Activity. It is understood
and acknowledged by the Company that: (i) the Purchaser has not been asked by the Company or
the Subsidiary to agree, nor has the Purchaser agreed with the Company or the Subsidiary, to
desist from effecting any transactions in or with respect to (including, without limitation,
purchasing or selling, long and/or short) any securities of the Company, or “derivative”
securities based on securities issued by the Company or to hold the New Securities for any
specified term; (ii) the Purchaser, and counterparties in “derivative” transactions to which
the Purchaser is a party, directly or indirectly, presently may have a “short” position in
the Common Stock which was established prior to the Purchaser’s knowledge of the
transactions contemplated by the Transaction Documents; and (iii) the Purchaser shall not be
deemed to have any affiliation with or control over any arm’s length counterparty in any
“derivative” transaction. The Company further understands and acknowledges that following
the public disclosure of the transactions

11

 

contemplated by the Transaction Documents pursuant to the Press Release (as defined
below) the Purchaser may engage in hedging and/or trading activities at various times during
the period that the New Securities are outstanding and such hedging and/or trading
activities, if any, can reduce the value of the existing stockholders’ equity interest in
the Company both at and after the time the hedging and/or trading activities are being
conducted. The Company acknowledges that such aforementioned hedging and/or trading
activities do not constitute a breach of this Agreement or any other Transaction Document or
any of the documents executed in connection herewith or therewith.

     (ee) Manipulation of Price. Neither the Company nor the Subsidiary has, and, to
the knowledge of the Company, no Person acting on their behalf has, directly or indirectly,
(i) taken any action designed to cause or to result in the stabilization or manipulation of
the price of any security of the Company or the Subsidiary to facilitate the sale or resale
of any of the New Securities, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the New Securities, or (iii) paid or agreed to pay to any
Person any compensation for soliciting another to purchase any other securities of the
Company or the Subsidiary.

     (ff) U.S. Real Property Holding Corporation. Neither the Company nor the
Subsidiary is, or has ever been, and so long as any of the New Securities are held by the
Purchaser, shall become, a U.S. real property holding corporation within the meaning of
Section 897 of the Internal Revenue Code of 1986, as amended, and the Company and each
Subsidiary shall so certify upon the Purchaser’s request.

     (gg) Registration Eligibility. The Company is eligible to register the
Registrable Securities for resale by the Purchaser using Form S-1 promulgated under the 1933
Act.

     (hh) Transfer Taxes. On the Closing Date, all stock transfer or other taxes
(other than income or similar taxes) which are required to be paid in connection with the
issuance and transfer of the New Securities to be issued to the Purchaser hereunder will be,
or will have been, fully paid or provided for by the Company, and all laws imposing such
taxes will be or will have been complied with.

     (ii) Bank Holding Company Act. Neither the Company nor the Subsidiary is
subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation
by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Neither the
Company nor the Subsidiary or affiliates owns or controls, directly or indirectly, five
percent (5%) or more of the outstanding shares of any class of voting securities or
twenty-five percent (25%) or more of the total equity of a bank or any equity that is
subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor the
Subsidiary or affiliates exercises a controlling influence over the management or policies
of a bank or any entity that is subject to the BHCA and to regulation by the Federal
Reserve.

     (jj) Public Utility Holding Act. None of the Company nor the Subsidiary is a
“holding company,” or an “affiliate” of a “holding company,” as such terms are defined in
the Public Utility Holding Act of 2005.

     (kk) Federal Power Act. None of the Company nor the Subsidiary is subject to
regulation as a “public utility” under the Federal Power Act, as amended.

     (ll) No Additional Agreements. The Company does not have any agreement or
understanding with the Purchaser with respect to the transactions contemplated by the
Transaction Documents other than as specified in the Transaction Documents.

     (mm) Disclosure. The Company confirms that neither it nor any other Person
acting on its behalf has provided the Purchaser or its agents or counsel with any
information that constitutes or could reasonably be expected to constitute material,
non-public information concerning the Company or the Subsidiary, other than the existence of
the transactions contemplated by this Agreement and the other Transaction Documents. The
Company understands and confirms that the Purchaser will rely on the foregoing
representations in effecting transactions in securities of the Company. All disclosure
provided to

12

 

the Purchaser regarding the Company and the Subsidiary, their businesses and the
transactions contemplated hereby, including the schedules to this Agreement, furnished by or
on behalf of the Company or the Subsidiary is true and correct and does not contain any
untrue statement of a material fact or omit to state any material fact necessary in order to
make the statements made therein, in the light of the circumstances under which they were
made, not misleading. No event or circumstance has occurred or information exists with
respect to the Company or the Subsidiary or its or their business, properties, liabilities,
prospects, operations (including results thereof) or conditions (financial or otherwise),
which, under applicable law, rule or regulation, requires public disclosure at or before the
date hereof or announcement by the Company but which has not been so publicly disclosed. The
Company acknowledges and agrees that the Purchaser does not make and has not made any
representations or warranties with respect to the transactions contemplated hereby other
than those specifically set forth in Section 2.

     (nn) Shell Company Status. The Company is not, and has never been, an issuer
identified in, or subject to, Rule 144(i) of the 1933 Act.

     (oo) No Other Registration Rights. There are no agreements or arrangements
under which the Company or the Subsidiary is obligated to register the sale of any of their
securities under the 1933 Act (except pursuant to the Registration Rights Agreement and the
registration rights agreement dated June 21, 2010, by and among Aradigm Corporation and the
other parties identified therein).

     (pp) FDA Matters. As to each product subject to the jurisdiction of the U.S.
Food and Drug Administration (“FDA”) under the Federal Food, Drug and Cosmetic Act, as
amended, and the regulations thereunder (“FDCA”) that is manufactured, packaged, labeled,
tested, distributed, sold, and/or marketed by the Company or any of its Subsidiaries (each
such product, a “Pharmaceutical Product”), such Pharmaceutical Product is being
manufactured, packaged, labeled, tested, distributed, sold and/or marketed by the Company in
compliance with all applicable requirements under FDCA and similar laws, rules and
regulations relating to registration, investigational use, premarket clearance, licensure,
or application approval, good manufacturing practices, good laboratory practices, good
clinical practices, product listing, quotas, labeling, advertising, record keeping and
filing of reports, except where the failure to be in compliance would not have or reasonably
be expected to result in a Material Adverse Effect. There is no pending, completed or, to
the Company’s knowledge, threatened, action (including any lawsuit, arbitration, or legal or
administrative or regulatory proceeding, charge, complaint, or investigation) against the
Company or any of its Subsidiaries, and none of the Company or any of its Subsidiaries has
received any notice, warning letter or other communication from the FDA or any other
governmental entity, which (i) contests the premarket clearance, licensure, registration, or
approval of, the uses of, the distribution of, the manufacturing or packaging of, the
testing of, the sale of, or the labeling and promotion of any Pharmaceutical Product, (ii)
withdraws its approval of, requests the recall, suspension, or seizure of, or withdraws or
orders the withdrawal of advertising or sales promotional materials relating to, any
Pharmaceutical Product, (iii) imposes a clinical hold on any clinical investigation by the
Company or any of its Subsidiaries, (iv) enjoins production at any facility of the Company
or any of its Subsidiaries, (v) enters or proposes to enter into a consent decree of
permanent injunction with the Company or any of its Subsidiaries, or (vi) otherwise alleges
any violation of any laws, rules or regulations by the Company or any of its Subsidiaries,
and which, either individually or in the aggregate, would have or reasonably be expected to
result in a Material Adverse Effect. The properties, business and operations of the Company
have been and are being conducted in all material respects in accordance with all applicable
laws, rules and regulations of the FDA. The Company has not been informed by the FDA that
the FDA will prohibit the marketing, sale, license or use in the United States of any
product proposed to be developed, produced or marketed by the Company nor has the FDA
expressed any concern as to approving or clearing for marketing any product being developed
or proposed to be developed by the Company.

     4. COVENANTS.

     (a) Efforts. The Purchaser shall use its reasonable best efforts to timely
satisfy each of the conditions to be satisfied by it as provided in Section 6 of this
Agreement. The Company shall use its reasonable best efforts to timely satisfy each of the
conditions to be satisfied by it as provided in Section 7 of this Agreement.

13

 

     (b) Financial Information. The Company agrees to send the following to each
Investor (as defined in the Registration Rights Agreement) during the reporting period,
unless the following are filed with or furnished to the SEC through EDGAR and are available
to the public through the EDGAR system, within one (1) Business Day after the filing thereof
with the SEC, a copy of its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q,
any interim reports or any consolidated balance sheets, income statements, stockholders’
equity statements and/or cash flow statements for any period other than annual that are made
publicly available, any Current Reports on Form 8-K and any registration statements (other
than on Form S-8) or amendments filed pursuant to the 1933 Act.

     (c) Listing. The Company shall use its reasonable best efforts to promptly
secure the listing or designation for quotation (as the case may be) of all of the
Registrable Securities upon each national securities exchange and automated quotation
system, if any, upon which the Common Stock is then listed or designated for quotation (as
the case may be) (subject to official notice of issuance) and shall maintain such listing or
designation for quotation (as the case may be) of all Registrable Securities from time to
time issuable under the terms of the Transaction Documents on such national securities
exchange or automated quotation system. The Company shall use its reasonable best efforts to
maintain the Common Stock’s listing or authorization for quotation (as the case may be) on
the Principal Market, the NYSE Amex, The New York Stock Exchange, the Nasdaq Global Market,
the Nasdaq Global Select Market or the Nasdaq Capital Market (each, an “Eligible Market”).
The Company shall not take any action which could be reasonably expected to result in the
delisting or suspension of the Common Stock on an Eligible Market. The Company shall pay all
fees and expenses in connection with satisfying its obligations under this Section 4(c).

     (d) Fees. The Company shall be responsible for the payment of any placement
agent’s fees, financial advisory fees, transfer agent fees, DTC (as defined below) fees or
broker’s commissions (other than for Persons engaged by the Purchaser) relating to or
arising out of the transactions contemplated hereby. The Company shall pay, and hold the
Purchaser harmless against, any liability, loss or expense (including, without limitation,
reasonable attorneys’ fees and out-of-pocket expenses) arising in connection with any claim
relating to any such payment. Except as otherwise set forth in the Transaction Documents,
each party to this Agreement shall bear its own expenses in connection with the issuance of
the New Securities to the Purchaser and the purchase of the New Securities by the Purchaser.

     (e) Pledge of New Securities. Notwithstanding anything to the contrary
contained in Section 2(g), the Company acknowledges and agrees that the New Securities may
be pledged by the Purchaser in connection with a bona fide margin agreement or other bona
fide loan or financing arrangement that is secured by the New Securities. The pledge of New
Securities shall not be deemed to be a transfer, sale or assignment of the New Securities
hereunder except as may otherwise be required under applicable securities laws, and the
Purchaser, when effecting a pledge of New Securities, shall not be required to provide the
Company with any notice thereof or otherwise make any delivery to the Company pursuant to
this Agreement or any other Transaction Document. The Company hereby agrees to execute and
deliver such documentation as a pledgee of the New Securities may reasonably request in
connection with a pledge of the New Securities to such pledgee by the Purchaser.

     (f) Disclosure of Transactions and Other Material Information. The Company
shall, on or before 9:30 a.m., New York time, on the first (1st) Business Day
after the date of this Agreement, issue a press release (the “Press Release”) reasonably
acceptable to the Purchaser disclosing all the material terms of the transactions
contemplated by the Transaction Documents. On or before 5:30 p.m., New York time, on the
first (1st) Business Day following the date of this Agreement, the Company shall
file a Current Report on Form 8-K describing all the material terms of the transactions
contemplated by the Transaction Documents in the form required by the 1934 Act and attaching
all the material Transaction Documents (including, without limitation, this Agreement and
the Registration Rights Agreement) (including all attachments, the “8-K Filing”). From and
after the issuance of the 8-K Filing, the Company shall have disclosed all material,
non-public information (if any) delivered to the Purchaser by the Company or any of its
Subsidiaries, or any of their respective officers, directors, employees or agents in
connection with the transactions contemplated by the Transaction Documents. The Company
shall not, and the Company shall cause each of its officers, directors, employees and agents
not to, provide the Purchaser with any material,

14

 

non-public information regarding the Company or the Subsidiary from and after the
issuance of the Press Release without the express prior written consent of the Purchaser.
Subject to the foregoing, neither the Company, the Subsidiary nor the Purchaser shall issue
any press releases or any other public statements with respect to the transactions
contemplated hereby; provided, however, (i) the Company shall be entitled,
without the prior approval of the Purchaser, to make any press release or other public
disclosure with respect to such transactions (A) in substantial conformity with the 8-K
Filing and contemporaneously therewith and (B) as is required by applicable law and
regulations (provided that in the case of clause (A) the Purchaser shall receive an advanced
draft of any such press release or other public disclosure prior to its release) and (ii)
the Purchaser may make such filings as may be required by applicable law and regulation or
under Section 13 and Section 16 of the 1934 Act. Without the prior written consent of the
Purchaser, the Company shall not (and shall cause the Subsidiary and affiliates to not)
disclose the name of the Purchaser in any filing, announcement, release or otherwise, except
as otherwise required by any law, rule or regulation applicable to the Company after
consultation with the Purchaser.

     (g) Additional Registration Statements. Until the Applicable Date (as defined
below) and at any time thereafter while any Registration Statement is not effective or the
prospectus contained therein is not available for use, except as may be required or
contemplated under the June 2010 Registration Rights Agreement, the Company shall not file a
registration statement under the 1933 Act (other than any registration statement on Form
S-8) unless such registration statement relates to the Registrable Securities (other than
any registration statement on Form S-8); provided, however that this Section
4(g) shall not in any way prohibit the Company from filing amendments to registration
statements filed prior to the date of this Agreement so long as any such amendment does not
increase the number of securities covered thereby or effect the issuance of any securities
thereunder (other than pursuant to any registration statement on Form S-8). “Applicable
Date” means the earlier of (i) the first date on which the resale by the Purchaser of all
Registrable Securities is covered by one or more effective Registration Statements (as
defined in the Registration Rights Agreement) (and each prospectus contained therein is
available for use on such date) and (ii) the date on which the Purchaser of all Registrable
Securities can freely sell such Registrable Securities under Rule 144.

     (h) Conduct of Business. The business of the Company and the Subsidiary shall
not be conducted in violation of any law, ordinance or regulation of any governmental
entity, except where such violations would not result, either individually or in the
aggregate, in a Material Adverse Effect.

     (i) Passive Foreign Investment Company. The Company shall conduct its business
in such a manner as will ensure that the Company will not be deemed to constitute a passive
foreign investment company within the meaning of Section 1297 of the U.S. Internal Revenue
Code of 1986, as amended.

     (j) Shareholder Approval; Voting of Shares. As soon as reasonably practicable
after the date of this Agreement, the Company shall cause a special meeting of shareholders
of the Company (the “Shareholder Meeting”) to be called and held to vote on a proposal (the
“Shareholder Proposal”) to approve an amendment to the Company’s Articles of Incorporation
to increase the authorized number of shares of Common Stock by 26 million shares to cover
the New Securities (the “Charter Amendment”);provided, however, that the
Shareholder Proposal shall be presented to the Company’s shareholders as a proposal that is
separate from the proposal that is contemplated by Section 4(o) of that certain Securities
Purchase Agreement, dated as of June 18, 2010, by and among the Company and the investors
party thereto (the “Other Shareholder Proposal”). In connection with the Shareholder
Meeting, the Company shall, as soon as reasonably practicable after the date of this
Agreement, prepare and file with the SEC a preliminary proxy statement that shall include
the Shareholder Proposal and a recommendation by the Company’s board of directors for a vote
in favor of the Shareholder Proposal. The Company shall use its reasonable best efforts (i)
to respond to any comments of the SEC or its staff to such preliminary proxy statement, (ii)
to cause the definitive proxy statement related to the Shareholder Meeting to be mailed to
the Company’s stockholders and (iii) to solicit shareholders to vote in favor of the
Shareholder Proposal (the requisite shareholder approval of the Shareholder Proposal being
referred to herein as the “Shareholder Approval”, and the date such Shareholder Approval is
obtained, the “Shareholder Approval Date”). Notwithstanding anything to the contrary in
this Agreement, the Company shall be permitted: (i) to have the Shareholder Proposal and the
Other Shareholder Proposal be voted on at the same special meeting and (ii) to include the

15

 

Shareholder Proposal and the Other Shareholder Proposal in the same proxy statement.
If the Shareholder Approval shall have been obtained, the Company shall as soon as
reasonably practicable file the Charter Amendment with the Secretary of State of the State
of California.

     5. TRANSFER AGENT INSTRUCTIONS; LEGEND.

     (a) Transfer Agent Instructions. The Company represents and warrants that no
instruction other than the stop transfer instructions to give effect to Section 2(g) hereof,
will be given by the Company to its transfer agent with respect to the New Securities, and
that the New Securities shall otherwise be freely transferable on the books and records of
the Company, as applicable, to the extent provided in this Agreement and the other
Transaction Documents. If the Purchaser effects a sale, assignment or transfer of the New
Securities in accordance with Section 2(g), the Company shall permit the transfer and shall
promptly instruct its transfer agent to issue one or more certificates or credit shares to
the applicable balance accounts at The Depositary Trust Company (“DTC”) in such name and in
such denominations as specified by the Purchaser to effect such sale, transfer or
assignment. The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Purchaser. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 5(a) will be inadequate and
agrees, in the event of a breach or threatened breach by the Company of the provisions of
this Section 5(a), that the Purchaser shall be entitled, in addition to all other available
remedies, to seek an order and/or injunction restraining any breach and requiring immediate
issuance and transfer, without the necessity of showing economic loss and without any bond
or other security being required. Any fees (with respect to the transfer agent, counsel to
the Company or otherwise) associated with the issuance of such opinion or the removal of any
legends on any of the New Securities shall be borne by the Company.

     (b) Legends. The Purchaser understands that the New Securities have been issued
pursuant to an exemption from registration or qualification under the 1933 Act and
applicable state securities laws, and except as set forth below, the New Securities shall
bear a restrictive legend in substantially the following form (and a stop-transfer order may
be placed against transfer of such stock certificates):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
(B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY
ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

     (c) Removal of Legends. Certificates evidencing the New Securities shall not be
required to contain the legend set forth in Section 5(b) above or any other legend (i) while
a registration statement (including a Registration Statement) covering the resale of such
New Securities is effective under the 1933 Act, (ii) following any sale of such New
Securities pursuant to Rule 144 (assuming the transferor is not an affiliate of the
Company), (iii) if such New Securities are eligible to be sold, assigned or transferred
under Rule 144 (provided that the Purchaser provides the Company with reasonable assurances
that such New Securities are eligible for sale, assignment or transfer under Rule 144 which
shall not include an opinion of counsel), (iv) in connection with a sale, assignment or
other transfer (other than under Rule 144), provided that the Purchaser provides the Company
with an opinion of counsel to the Purchaser, in a generally acceptable form, to the effect
that such sale, assignment or transfer of the New Securities may be made without
registration under the applicable requirements of the 1933 Act or (v) if such legend is not
required under applicable requirements of the 1933 Act (including, without limitation,
controlling judicial interpretations and pronouncements issued by the SEC). If a legend is
not required pursuant to the foregoing, the Company shall no later than three (3) Business
Days following the delivery by the Purchaser to the Company or the transfer agent (with
notice to the Company) of a legended certificate representing

16

 

such New Securities (endorsed or with stock powers attached, signatures guaranteed, and
otherwise in form necessary to affect the reissuance and/or transfer, if applicable),
together with any other deliveries from the Purchaser as may be required above in this
Section 5(c), as directed by the Purchaser either: (A) provided that the Company’s transfer
agent is participating in the DTC Fast Automated Securities Transfer Program, credit the
aggregate number of shares of Common Stock to which the Purchaser shall be entitled to the
Purchaser’s or its designee’s balance account with DTC through its Deposit/Withdrawal at
Custodian system or (B) if the Company’s transfer agent is not participating in the DTC Fast
Automated Securities Transfer Program, issue and deliver (via reputable overnight courier)
to the Purchaser, a certificate representing such New Securities that is free from all
restrictive and other legends, registered in the name of the Purchaser or its designee (the
date by which such credit is so required to be made to the balance account of the
Purchaser’s or the Purchaser’s nominee with DTC or such certificate is required to be
delivered to the Purchaser pursuant to the foregoing is referred to herein as the “Required
Delivery Date”).

     (d) Buy-In. If the Company fails to so properly deliver such unlegended
certificates or so properly credit the balance account of the Purchaser’s or the Purchaser’s
nominee with DTC by the Required Delivery Date, and if on or after the Required Delivery
Date the Purchaser purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Purchaser of shares of Common Stock that
the Purchaser anticipated receiving from the Company without any restrictive legend, then,
in addition to all other remedies available to the Purchaser, the Company shall, within
three (3) Business Days after the Purchaser’s request and in the Purchaser’s sole
discretion, either (i) pay cash to the Purchaser in an amount equal to the Purchaser’s total
consideration (including brokerage commissions, if any) for the shares of Common Stock so
purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such
certificate or credit the Purchaser’s balance account shall terminate and such shares shall
be cancelled, or (ii) promptly honor its obligation to deliver to the Purchaser a
certificate or certificates or credit the Purchaser’s DTC account representing such number
of shares of Common Stock that would have been issued if the Company timely complied with
its obligations hereunder and pay cash to the Purchaser in an amount equal to the excess (if
any) of the Buy-In Price over the product of (A) such number of New Securities that the
Company was required to deliver to the Purchaser by the Required Delivery Date times (B) the
Closing Sale Price of the Common Stock on the Trading Day immediately preceding the Required
Delivery Date.

     6. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

     (a) The obligation of the Company hereunder to issue and sell the New Securities to the
Purchaser at the Closing is subject to the satisfaction, at or before the Closing Date, of
each of the following conditions, provided that these conditions are for the Company’s sole
benefit and may be waived by the Company at any time in its sole discretion by providing the
Purchaser with prior written notice thereof:

     (i) The Purchaser and its affiliates, as applicable, shall have executed each
of the other Transaction Documents to which it (and/or its affiliate) is a party
and delivered the same to the Company.

     (ii) The representations and warranties of the Purchaser shall be true and
correct in all material respects as of the date when made and as of the Closing
Date as though originally made at that time (except for representations and
warranties that speak as of a specific date, which shall be true and correct as of
such date), and the Purchaser shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Purchaser at or prior
to the Closing Date.

     (iii) The approval of the Shareholder Proposal by the shareholders of the
Company required by the Company’s Articles of Incorporation and the California
Corporations Code shall have been obtained and the Charter Amendment shall have
been filed with (and the filing shall have been accepted by) the Secretary of State
of the State of California.

17

 

     7. CONDITIONS TO THE PURCHASER’S OBLIGATION TO PURCHASE.

     (a) The obligation of the Purchaser hereunder to purchase the New Securities at the
Closing is subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for the Purchaser’s sole benefit
and may be waived by the Purchaser at any time in its sole discretion by providing the
Company with prior written notice thereof:

     (i) The Company shall have duly executed and delivered to the Purchaser each
of the Transaction Documents to which it is a party and the Company shall have
delivered to the Purchaser the New Securities being purchased by the Purchaser at
the Closing pursuant to this Agreement.

     (ii) The Purchaser shall have received the opinion of Morrison & Foerster LLP,
the Company’s counsel, dated as of the Closing Date, addressing the matters set
forth in Exhibit C.

     (iii) The Company shall have delivered to the Purchaser a certificate
evidencing the good standing of the Company issued by the Secretary of State of the
State of California as of a date within ten (10) days of the Closing Date.

     (iv) The Company shall have delivered to the Purchaser a certified copy of the
Articles of Incorporation as certified by the California Secretary of State within
ten (10) days of the Closing Date.

     (v) The Company shall have delivered to the Purchaser a certificate, in the
form reasonably acceptable to the Purchaser, duly executed by the Secretary of the
Company and dated as of the Closing Date, as to (A) the resolutions consistent with
Section 3(b) as adopted by the Company’s board of directors, in a form reasonably
acceptable to the Purchaser, (B) the Articles of Incorporation of the Company and
(C) the Bylaws of the Company, each as in effect at the Closing.

     (vi) Each and every representation and warranty of the Company shall be true
and correct in all material respects as of the date when made and as of the Closing
Date as though originally made at that time (except for representations and
warranties that speak as of a specific date, which shall be true and correct as of
such date) and the Company shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required to be
performed, satisfied or complied with by the Company at or prior to the Closing
Date. The Purchaser shall have received a certificate, duly executed by either the
Chief Executive Officer or the Chief Financial Officer of the Company, dated as of
the Closing Date, to the foregoing effect and as to such other matters as may be
reasonably requested by the Purchaser in the form reasonably acceptable to the
Purchaser.

     (vii) The Company shall have delivered to the Purchaser a letter or an e-mail
from the Company’s transfer agent confirming the number of shares of Common Stock
outstanding on the Closing Date immediately prior to the Closing.

     (viii) The Common Stock (I) shall be designated for quotation or listed on the
Principal Market and (II) shall not have been suspended, as of the Closing Date, by
the SEC or the Principal Market from trading on the Principal Market nor shall
suspension by the SEC or the Principal Market have been threatened, as of the
Closing Date, either (A) in writing by the SEC or the Principal Market or (B) by
falling below the minimum maintenance requirements of the Principal Market.

18

 

     (ix) The Company shall have obtained all governmental, regulatory or third
party consents and approvals, if any, necessary for the issuance of the New
Securities, including without limitation, those required by the Principal Market.

     (x) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any court
or governmental authority of competent jurisdiction that prohibits the consummation
of any of the transactions contemplated by the Transaction Documents.

     (xi) Since the date of execution of this Agreement, no event or series of
events shall have occurred that reasonably would have or result in a Material
Adverse Effect.

     (xii) The Company shall have delivered to the Purchaser such other documents
relating to the transactions contemplated by this Agreement as the Purchaser or its
counsel may reasonably request.

     (xiii) The Purchaser’s purchase of the New Securities hereunder would not
result in the Purchaser having beneficial ownership of more than 20.0% of the
Common Stock.

     (xiv) The approval of the Shareholder Proposal by the shareholders of the
Company required by the Company’s Articles of Incorporation and the California
Corporations Code shall have been obtained and the Charter Amendment shall have
been filed with (and the filing shall have been accepted by) the Secretary of State
of the State of California.

     8. TERMINATION.

     In the event that the Closing shall not have occurred on or before 90 Business Days from the
date hereof (i) due to the Company’s failure to satisfy the conditions set forth in Section 7 above
(and the Purchaser shall have not waived such unsatisfied condition(s)), the Purchaser shall have
the right to terminate this Agreement at any time on or after the close of business on such date
without liability of the Purchaser to the Company and/or (ii) due to the Purchaser’s failure to
satisfy the conditions set forth in Section 6 (and the Company shall have not waived such
unsatisfied condition(s)), the Company shall have the right to terminate this Agreement at any time
on or after the close of business on such date without liability of the Company to the Purchaser;
provided, however, that no such termination shall affect any obligation of any
party under this Agreement to reimburse any other party for the expenses described in Section 4(d)
above. Nothing contained in this Section 8 shall be deemed to release any party from any liability
for any breach by such party of the terms and provisions of this Agreement or the other Transaction
Documents or to impair the right of any party to compel specific performance by any other party of
its obligations under this Agreement or the other Transaction Documents.

     9. MISCELLANEOUS.

     (a) Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall be governed
by the internal laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any jurisdictions other than
the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in The City of New York, Borough of Manhattan, for
the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is improper. Each
party hereby irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any

19

 

way any right to serve process in any manner permitted by law. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT
OR ANY TRANSACTION CONTEMPLATED HEREBY.

     (b) Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the other party.
In the event that any signature is delivered by facsimile transmission or by an e-mail which
contains a portable document format (.pdf) file of an executed signature page, such
signature page shall create a valid and binding obligation of the party executing (or on
whose behalf such signature is executed) with the same force and effect as if such signature
page were an original thereof.

     (c) Headings; Gender. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this Agreement.
Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to
include the masculine, feminine, neuter, singular and plural forms thereof. The terms
“including,” “includes,” “include” and words of like import shall be construed broadly as if
followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and
words of like import refer to this entire Agreement instead of just the provision in which
they are found.

     (d) Severability. If any provision of this Agreement is prohibited by law or
otherwise determined to be invalid or unenforceable by a court of competent jurisdiction,
the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable, and the
invalidity or unenforceability of such provision shall not affect the validity of the
remaining provisions of this Agreement so long as this Agreement as so modified continues to
express, without material change, the original intentions of the parties as to the subject
matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s)
in question does not substantially impair the respective expectations or reciprocal
obligations of the parties or the practical realization of the benefits that would otherwise
be conferred upon the parties. The parties will endeavor in good faith negotiations to
replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the
effect of which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).

     (e) Entire Agreement; Amendments. This Agreement, the other Transaction
Documents and exhibits attached hereto and thereto and the instruments referenced herein and
therein supersede all other prior oral or written agreements between the Purchaser, the
Company, their affiliates and Persons acting on their behalf solely with respect to the
matters contained herein and therein, and this Agreement, the other Transaction Documents,
and exhibits attached hereto and thereto and the instruments referenced herein and therein
contain the entire understanding of the parties solely with respect to the matters covered
herein and therein. Except as specifically set forth herein or therein, neither the Company
nor the Purchaser makes any representation, warranty, covenant or undertaking with respect
to such matters. For clarification purposes, the Recitals are part of this Agreement. No
provision of this Agreement may be amended or waived other than by an instrument in writing
signed by the Company and the Purchaser. Without limiting the foregoing, the Company
confirms that, except as set forth in this Agreement, the Purchaser has not made any
commitment or promise or has any other obligation to provide any financing to the Company,
the Subsidiary or otherwise.

     (f) Notices. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and will be
deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or (iii) one (1) Business
Day after deposit with an overnight courier service with next day delivery specified, in
each case, properly addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be:

20

 

If to the Company:

Aradigm Corporation

3929 Point Eden Way

Hayward, CA 94545

Telephone: (510) 265-9000

Facsimile: 510-265-0277

Attention: Chief Executive Officer

With a copy (for informational purposes only) to:

Morrison & Foerster LLP

425 Market Street

San Francisco, CA 94105

Attention: John W. Campbell, Esq.

Telephone: (415) 268-7197

Facsimile: (415) 268-7522

If to the Purchaser:

Novo Nordisk A/S

Novo Alle

DK-2880 Bagsvaerd

Denmark

Attention: General Counsel

Telephone: +45 44 44 88 88

Facsimile: +45 44 42 18 30

With a copy (for informational purposes only) to:

Davis Polk & Wardwell LLP|

99 Gresham Street

London

EC2V 7NG

Attention: Jeffrey R. O’Brien

Telephone: +44 207 418 1376

Facsimile: +44 207 710 4893

or to such other address and/or facsimile number and/or to the attention of such other
Person as the recipient party has specified by written notice given to each other party five
(5) days prior to the effectiveness of such change. Written confirmation of receipt
(A) given by the recipient of such notice, consent, waiver or other communication,
(B) mechanically or electronically generated by the sender’s facsimile machine containing
the time, date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by an overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from an overnight courier service in
accordance with clause (i), (ii) or (iii) above, respectively.

     (g) Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns, including any
purchasers of any of the New Securities. The Company shall not assign this Agreement or any
rights or obligations hereunder without the prior written consent of the Purchaser. The
Purchaser shall not assign this Agreement or any rights or obligations hereunder except to
(i) an affiliate of the Purchaser or (ii) such other person upon the prior written consent
of the Company, such consent not be unreasonably withheld, delayed or conditioned. For
purposes of this Agreement, an “affiliate” means an entity controlling, controlled by, or
under common control with the Purchaser, and control means the power to control more than
half of the voting power.

21

 

     (h) No Third Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person, other than the
Indemnitees referred to in Section 9(k).

     (i) Survival. The representations, warranties, agreements and covenants shall
survive the Closing. The Purchaser shall be responsible only for its own representations,
warranties, agreements and covenants hereunder.

     (j) Further Assurances. Each party shall do and perform, or cause to be done
and performed, all such further acts and things, and shall execute and deliver all such
other agreements, certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this Agreement and
the consummation of the transactions contemplated hereby.

     (k) Indemnification. In consideration of the Purchaser’s execution and delivery
of the Transaction Documents and purchasing the New Securities hereunder and in addition to
all of the Company’s other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless the Purchaser and each holder of any New
Securities and all of their stockholders, partners, members, officers, directors, employees
and direct or indirect investors and any of the foregoing Persons’ agents or other
representatives (including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and
against any and all actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and expenses in connection therewith (irrespective of whether
any such Indemnitee is a party to the action for which indemnification hereunder is sought),
and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the Company in any of
the Transaction Documents, (b) any breach of any covenant, agreement or obligation of the
Company contained in any of the Transaction Documents or (c) any cause of action, suit or
claim brought or made against such Indemnitee by a third party (including for these purposes
a derivative action brought on behalf of the Company or the Subsidiary) and arising out of
or resulting from (i) the execution, delivery, performance or enforcement of any of the
Transaction Documents, (ii) any disclosure properly made pursuant to Section 4(f) or (iii)
the status of the Purchaser or holder of the New Securities as an investor in the Company
pursuant to the transactions contemplated by the Transaction Documents; provided, however,
that, for the avoidance of doubt, the Purchaser acknowledges that it has determined that the
Consideration represents fair consideration for the purchase of the New Securities and that
any difference in value between the Company’s obligations under the Note Agreement and the
New Securities shall not by itself constitute an Indemnified Liability hereunder. To the
extent that the foregoing undertaking by the Company may be unenforceable for any reason,
the Company shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law. Except as otherwise
set forth herein, the mechanics and procedures with respect to the rights and obligations
under this Section 9(k) shall be the same as those set forth in Section 5 of the
Registration Rights Agreement.

     (l) Construction. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.

     (m) Remedies. The Purchaser shall have all rights and remedies set forth in the
Transaction Documents and all rights and remedies which the Purchaser has been granted at
any time under any other agreement or contract and all of the rights which the Purchaser has
under any law. Any Person having any rights under any provision of this Agreement shall be
entitled to enforce such rights specifically (without posting a bond or other security), to
recover damages by reason of any breach of any provision of this Agreement and to exercise
all other rights granted by law. Furthermore, the Company recognizes that in the event that
it fails to perform, observe, or discharge any or all of its obligations under the
Transaction Documents, any remedy at law may prove to be inadequate relief to the Purchaser.
The Company therefore agrees that the Purchaser shall be entitled to seek specific
performance and/or temporary, preliminary and

22

 

permanent injunctive or other equitable relief from any court of competent jurisdiction
in any such case without the necessity of proving actual damages and without posting a bond
or other security.

     (n) Withdrawal Right. Notwithstanding anything to the contrary contained in
(and without limiting any similar provisions of) the Transaction Documents, whenever the
Purchaser exercises a right, election, demand or option under a Transaction Document and the
Company does not timely perform its related obligations within the periods therein provided,
then the Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole or in part
without prejudice to its future actions and rights.

     (o) Payment Set Aside; Currency. To the extent that the Company makes a payment
or payments to the Purchaser hereunder or pursuant to any of the other Transaction Documents
or the Purchaser enforces or exercises its rights hereunder or thereunder, and such payment
or payments or the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored to the
Company, a trustee, receiver or any other Person under any law (including, without
limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause
of action), then to the extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such enforcement or setoff had not occurred. Unless
otherwise expressly indicated, all dollar amounts referred to in this Agreement and the
other Transaction Documents are in United States Dollars (“U.S. Dollars”), and all amounts
owing under this Agreement and all other Transaction Documents shall be paid in U.S.
Dollars. All amounts denominated in other currencies (if any) shall be converted in the U.S.
Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation.
“Exchange Rate” means, in relation to any amount of currency to be converted into U.S.
Dollars pursuant to this Agreement, the U.S. Dollar exchange rate as published in the Wall
Street Journal on the relevant date of calculation.

     (p) Judgment Currency.

     (i) If for the purpose of obtaining or enforcing judgment against the Company
in any court in any jurisdiction it becomes necessary to convert into any other
currency (such other currency being hereinafter in this Section 9(p) referred to as
the “Judgment Currency”) an amount due in U.S. Dollars under this Agreement or any
other Transaction Document, the conversion shall be made at the Exchange Rate
prevailing on the Trading Day immediately preceding: (1) the date of actual payment
of the amount due, in the case of any proceeding in the courts of New York or in
the courts of any other jurisdiction that will give effect to such conversion being
made on such date or (2) the date on which the foreign court determines, in the
case of any proceeding in the courts of any other jurisdiction (the date as of
which such conversion is made pursuant to this Section 9(p)(i) being hereinafter
referred to as the “Judgment Conversion Date”).

     (ii) If in the case of any proceeding in the court of any jurisdiction
referred to in Section 9(p)(i) above, there is a change in the Exchange Rate
prevailing between the Judgment Conversion Date and the date of actual payment of
the amount due, the applicable party shall pay such adjusted amount as may be
necessary to ensure that the amount paid in the Judgment Currency, when converted
at the Exchange Rate prevailing on the date of payment, will produce the amount of
U.S. Dollars which could have been purchased with the amount of Judgment Currency
stipulated in the judgment or judicial order at the Exchange Rate prevailing on the
Judgment Conversion Date.

     (iii) Any amount due from the Company under this provision shall be due as a
separate debt and shall not be affected by judgment being obtained for any other
amounts due under or in respect of this Agreement or any other Transaction
Document.

[signature pages follow]

23

 

     IN WITNESS WHEREOF, the Purchaser and the Company have caused their respective signature page
to this Agreement to be duly executed as of the date first written above.

	 	 	 	 	 
	 	ARADIGM CORPORATION

 	 
	 	By:  	/s/
Nancy Pecota	 
	 	 	Name:  	Nancy Pecota	 
	 	 	Title:  	Vice President, Finance and Chief Financial
Officer	 

 

 

	 	 	 	 	 

     IN WITNESS WHEREOF, the Purchaser and the Company have caused their respective signature page
to this Agreement to be duly executed as of the date first written above.

	 	 	 	 	 
	 	NOVO NORDISK A/S

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

EXHIBIT B

PAYOFF AND TERMINATION LETTER

July 30, 2010

Aradigm Corporation

3929 Point Eden Way

Hayward, CA 94545

United States

Novo Nordisk A/S

Novo Alle

DK-2880 Bagsvaerd

Denmark

Novo Nordisk, Inc.

100 College Road West

Princeton, New Jersey 08549

United States

Re: Payoff and Termination

Ladies and Gentlemen:

     Reference is made to that certain Promissory Note and Security Agreement dated July 3, 2006
(the “Note Agreement”), pursuant to which Novo Nordisk A/S, a company organized and existing under
the laws of Denmark (the “Lender”), made a loan to Aradigm Corporation, a California corporation
(the “Company”), in the principal amount of US$7.5 million.

     As you are aware, on July 30, 2010, the Company and the Lender entered into a Stock Purchase
Agreement (the “Stock Purchase Agreement”), pursuant to which the Company has agreed to issue to
the Lender, 26,000,000 shares of common stock, no par value, of the Company in consideration of the
termination of all of the Company’s obligations under the Note Agreement. Any capitalized terms
used herein but not otherwise defined shall have the meaning ascribed to such term in the Stock
Purchase Agreement.

     Payoff and Termination. This Payoff and Termination Letter (this “Letter”) confirms that,
upon delivery of the New Securities to the Lender contemplated by the Stock Purchase Agreement:

3

 

     1. all indebtedness for borrowed money and any other obligations of the Company under
the Note Agreement, including without limitation, the principal, interest and any other
amounts whatsoever due under the Note Agreement, shall be fully paid, satisfied,
discharged and released, and the Note Agreement shall be automatically terminated in its
entirety and be of no further force or effect, and no rights, duties, obligations or
liabilities of any nature whatsoever, whether express or implied, arising under, in
connection with, or related to the Note Agreement shall survive such termination;

     2. all of the Collateral (as defined in the Note Agreement) and all other security
interests granted to or held by the Lender in connection with the Note Agreement shall be
discharged and released and shall be automatically terminated in its entirety and be of no
further force or effect, and the Lender hereby authorizes the Company and/or its agents to
file one or more UCC termination statements and such other discharges, releases and
similar documents, and the Lender agrees to execute such further documentation prepared
thereby, at the Company’s expense, as is reasonably necessary or reasonably requested (a)
to evidence such discharge, release and termination and (b) to release, as of record, any
notices of security interests and liens previously filed, recorded or registered by the
Lender with respect to the Note Agreement; and

     3. the Amended and Restated Stock Purchase Agreement dated as of January 26, 2005
(the “2005 Stock Purchase Agreement”) by and among the Company, the Lender and Novo
Nordisk Pharmaceuticals, Inc., a corporation duly organized and existing under the law of
the State of Delaware shall be automatically terminated in its entirety and be of no
further force or effect and no rights, duties, obligations or liabilities of any nature
whatsoever, whether express or implied, arising under, in connection with, or related to
the 2005 Stock Purchase Agreement shall survive such termination.

     Entire Agreement. The Stock Purchase Agreement, this Letter and the other Transaction
Documents reflect the entire agreement and understanding of the parties with respect to the subject
matter hereof and supersedes all prior agreements or understandings (whether written or oral) with
respect to the subject matter hereof. No change or modification to this Letter, in whole or in
part, shall be effective unless made in writing and executed and delivered by all the parties
hereto.

     Governing Law. This Letter shall be governed by, construed and enforced in accordance with
the laws of the State of New York (without regard to conflict of law rules of such state).

4

 

     Counterparts. This Letter may be executed (including by facsimile transmission) with
counterpart signature pages or in one or more counterparts, each of which shall be deemed to be an
original and all of which taken together constitute one and the same agreement.

[signature pages follow]

5

 

     If the foregoing properly reflects our understanding, please countersign this Letter in the
space provided below in duplicate and return one executed copy for our records.

	 	 	 	 	 
	 	ARADIGM CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	NOVO NORDISK A/S

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	NOVO NORDISK, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[Signature page to the Payoff and Termination Letter]

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