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Pursuant to Item 601(b)(10)(iv) of Regulation S-K, confidential information (indicated by [***]) has been omitted from Exhibit 10.1 because it (i) is not material and (ii) would likely cause competitive harm to the Registrant if publicly disclosed.
EX-10.1
LICENSE AGREEMENT
This License Agreement (this "Agreement") effective as of the 25th day of April, 2008 ("Effective Date"), is between PARI Pharma GmbH, a German corporation with a principal place of business at Moosstrasse 3, D-82319 Starnberg, Germany ("PARI") and Transave, Inc., a Delaware corporation with registered offices at 11 Deer Park Drive, Suite 117, Monmouth Jct., NJ 08852, United States of America (“Transave”). Each of PARI and Transave shall be referred to as a “Party,” and collectively the “Parties.”
RECITALS
WHEREAS, Transave has acquired, developed and produced certain technology and formulation rights commonly referred to as ArikaceTM, a proprietary amikacin antibiotic based on Transave’s proprietary sustained release liposomal technology for inhalation, for the treatment and prevention of Pseudomonas aeruginosa infection in patients with cystic fibrosis and bronchiectasis;
WHEREAS, PARI is in the business of developing and commercializing drug nebulizer devices and drug formulation methodologies, and PARI has developed a drug nebulizer device;
WHEREAS, PARI and Transave have entered into a Clinical Supply Agreement effective the 4th day of April 2007 (the “Clinical Supply Agreement”);
WHEREAS, Pari GmbH and Transave entered into a Feasibility Study Agreement dated the 10th day of January 2007, which was assigned and transferred to PARI on the 27th of March 2007 (“Feasibility Agreement”);
WHEREAS, PARI and Transave executed a Statement of Work No. 3 for the Feasibility Agreement on the 26th day of October 2007 (“Feasibility Statement of Work No. 3”);
WHEREAS, Transave desires to use a PARI drug nebulizer device for aerosolizing Arikace for pulmonary delivery, and PARI desires to optimize its drug nebulizer device for aerosolizing Transave’s Arikace for pulmonary delivery; and
WHEREAS, PARI desires to perform evaluation, research and development activities with Transave related to PARI’s nebulizer device technology, and Transave desires to pay PARI for such activities and to obtain a license to certain PARI intellectual property rights in connection with the development and commercialization of Arikace with an optimized PARI nebulizer device, all on the terms and conditions set forth herein.

AGREEMENT
In consideration of the recitals set forth above, the mutual covenants, terms and conditions set forth below, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, PARI and Transave agree as follows:

Article 1 - Definitions
As used in this Agreement, the following terms shall have the following meanings while other terms may be defined parenthetically throughout this Agreement:
1.1 “Affiliate(s)” of a Party means any person or entity that directly or indirectly owns or controls, is owned or controlled by or is under common control with such Party, in each case, only for so long as such control exists. As used in this definition only, "control" of an entity means beneficial ownership, directly or indirectly, of fifty percent (50%) or more of the outstanding voting shares or securities or the ability otherwise to elect or appoint a majority of the board of directors or other managing authority of such entity.
1.2 [***]
1.3 “Applicable Laws and Standards” means (a) all laws, ordinances, rules, directives and regulations applicable to the Products, the Project or this Agreement, including without limitation applicable local laws and regulations in each country in the Transave Territory, (b) applicable regulations and guidelines of the FDA and other Regulatory Authorities and the ICH guidelines; (c) as applicable to the particular activities performed, Good Manufacturing Practices, Good Laboratory Practices and Good Clinical Practices promulgated by the FDA 

and other Regulatory Authorities or the ICH; and (d) all applicable industry and trade standards, including the applicable standards of the International Organization for Standardization (ISO).
1.4 “Arikace” means Transave’s proprietary amikacin antibiotic (including the 70 mg/ml formulation) based on Transave’s proprietary sustained release liposomal technology for inhalation.
1.5 “Billable-hour” means an hour of activities performed by or on behalf of PARI, but excluding: non-work time and time spent on traveling, training, information technology support or laboratory technical support, administrative or facilities support, time entry, finance, legal, human resources or purely clerical activities, or other support functions not directly requested by Transave.
1.6 “Commercially Reasonable Efforts” means those commercially reasonable efforts customarily used by companies in the biopharmaceutical industry (with respect to Transave) and the biomedical device industry (with respect to PARI) for carrying out in a sustained manner a particular task or obligation, and at least equivalent to those level of efforts applied by a Party for its other priority products.
1.7 “Competing Nebulizer” shall mean any Nebulizer which has the performance specification feature set forth below for a single treatment, including any Device or eFlow but excluding the [***], [***] and the [***] devices:

[***]
[***]
1.8 “Confidential Information” shall have the meaning given to it in Section 11.1.
1.9 “Control” means, with respect to an item of information or intellectual property rights, possession by such Party of the power and authority, whether arising by ownership, license, or other authorization, to disclose such item as required by this Agreement, and/or to grant and authorize licenses or sublicenses under such items that are within the scope granted to the other Party under this Agreement.
1.10 “Covered” means with respect to a product that (a) such product or its manufacture, use, sale, offer for sale, importation or exportation would infringe a Valid Claim of a Patent Right within the Intellectual Property, in the country of such manufacture, use, sale, offer for sale, importation or exportation, or (b) such product incorporates or is made using material Know-how within such Intellectual Property.
1.11 “Data” means all data, data sets, test data, pre-clinical and clinical trial data, analyses, reports, regulatory filings and approvals and the information therein or associated therewith (including drug master files and device master files, supporting data, regulatory correspondence and meeting minutes) and rights to reference the same, in each case:
(a) that are generated by either Party in the course of performance pursuant to a Work Plan or under this Agreement (“Project Data”);
(b) that are owned or controlled by PARI prior to the Effective Date, or generated by PARI during the term of this Agreement outside of performing the Work Plans, and are necessary or useful for the efforts of Transave, its Affiliates or Sublicensees in obtaining Marketing Approval for the Device (“Existing PARI Data”); or
(c) that are owned or controlled by Transave prior to the Effective Date, or generated by Transave during the term of this Agreement, and are necessary or useful for the efforts of PARI in performing the Work Plan(s) or in obtaining Marketing Approval for the Device but excluding any Data related to the Project Intellectual Property (“Existing Transave Data”).
1.12 “Device” means the eFlow (including the following components: control unit with screen, nebulizer handset with aerosol head, nebulizer connection cord and power supply) that is based on the Present Device, that is to be optimized or developed for use with the Drug Product, and that otherwise at least meets the Specifications, as defined below and recited in Exhibit 1.38 for a single treatment, but specifically excluded from the foregoing are the [***], [***] and [***] devices. The Parties acknowledge and agree that until the Device is finalized in accordance with this Agreement, the Present Device shall be used by the Parties hereunder for research, development and testing efforts related to this Agreement.
1.13 “Device Accessories” means those types of accessories sold by PARI as of the Effective Date or during the term of this Agreement for use with Devices, which are not specific to the drug substance being delivered by such Devices, including e.g. power adapters, carrying cases, face masks, and any replacement parts associated with the foregoing.

1.14 “Drug Product” means an Arikace pharmaceutical preparation that is formulated for delivery via pulmonary administration exclusively for use with the Device in the Transave Field.
1.15 “eFlow” shall mean the Nebulizer proprietary to PARI or its Affiliates that is based on perforated vibrating membrane technology and includes the mixing chamber and valve system associated with the device that is currently sold under the tradename EFLOW®.
1.16 [***]
1.17 “Expired”, “Expiration” or “Expiry” means expired, lapsed, been canceled or become abandoned and has not been finally found to be invalid (or not valid) or unenforceable by an unreversable or unappealable (or for which no appeal has been timely filed) final decision or judgment of a court or other authority or agency of competent jurisdiction.
1.18 “Exploit” or “Exploitation” means to formulate, research, test, develop, seek regulatory approval for, make, have made, use, sell, have sold, offer for sale, market, promote, import, export, display, distribute or otherwise commercialize or dispose of.
1.19 “FDA” means the United States Food and Drug Administration or any successor to that agency.
1.20 “First Commercial Sale” means the first commercial sale of a Drug Product subject to royalties under Article 6, by or under authority of Transave, its Affiliates and/or their Sublicensees in a country in the Transave Territory, after Marketing Approval in such country has been obtained.
1.21 “GAAP” means generally accepted accounting principles in the United States or Germany, or the International Accounting Standard, consistently applied by a Party throughout its enterprise.
1.22 “Good Manufacturing Practices,” or “GMP” means all good manufacturing practices as promulgated by the Regulatory Authority of the country where the Device is being sold, in the form of laws or regulations or guidance documents, for the manufacturing of pharmaceutical products, including in the United States as promulgated by the FDA 21 CFR §§ 210-211, and medical devices, including 21 CFR § 820 - Quality System Regulation.
1.23 “GMP Manufacturing” means all processes and activities typically engaged in by a person or entity in the pharmaceutical or medical device industry for the GMP manufacture of a product or component thereof, including procuring raw materials, manufacturing, quality control and assurance testing, GMP record keeping, packaging and labeling.
1.24 “Improvement” means any improvements, modifications, discoveries, inventions, developments, enhancements, derivative works, including the technology, Know-how and other intellectual property rights associated therewith, whether or not patentable or registrable or otherwise protectable, in each case with respect to the Device or any other eFlow.
1.25 “Initiation” of a clinical trial means the first dosing of the first human patient in such trial.

1.26 “Intellectual Property” means (a) any of the following, whether existing now or in the future anywhere in the world: patents, inventor’s certificates, registrations and applications therefor, including any provisionals, additions, divisionals, continuations, substitutions, continuations-in-part, together with re-examinations, reissues, renewals or extensions thereof and all foreign counterparts of any of the foregoing (collectively, “Patent Rights”), and (b) all Data, ideas, pharmaceutical, chemical and biological materials, products and compositions, tests, assays, techniques, methods, procedures, technical and non-technical data and other information relating to any of the foregoing, drawings, plans, designs, diagrams, sketches, specifications or other documents containing such information or materials, and business processes, price data and information, marketing data and information, sales data and information, marketing plans and market research (collectively, “Know-how”). It is understood, however, that Know-how does not include information that falls within exceptions of the definition of “Confidential Information” set forth in Section 11.1 of this Agreement. Intellectual Property includes all enforcement rights.
1.27 “MAA” means a fully completed marketing authorization application (filed with the FDA, if in the United States or to the counterpart of the FDA if outside the United States), including all supporting documentation and data required for such application to be accepted for substantive review, filed with a Regulatory Authority to 

seek Marketing Approval for a particular indication in a particular country. It is understood that MAA does not include applications for pricing or reimbursement approval.
1.28 “Major EU Countries” means Germany, France, UK, Italy and Spain.
1.29 “Marketing Approval” means all approvals, registrations or authorizations of any governmental entity that are necessary for the manufacturing, use, storage, import, transport and sale of products in a regulatory jurisdiction.
1.30 “Most Recent Qualified Financing” means, as of any given date, the most recent preferred stock financing of Transave which establishes an arms-length valuation for the shares of preferred stock issued in such financing and pursuant to which purchasers have purchased, or have committed to purchase, preferred stock of Transave with an aggregate purchase price of at least [***]. As of the date of this Agreement, the Most Recent Qualified Financing is the sale of Series D Convertible Preferred Stock of Transave pursuant to that certain Series D Convertible Preferred Stock Purchase Agreement, dated as of December 14, 2007 (as amended), by and among Transave and the Purchasers named therein.
1.31 “Nebulizer” shall mean any nebulizer or other device that delivers a formulation in the form of droplets to the airways, including the Device, any Competing Nebulizer and eFlow. For the avoidance of doubt, the term “Nebulizer” shall not include any device that delivers a formulation solely or primarily via a nasal route of administration.
1.32 “Net Sales” means the gross amounts received by Transave, its Affiliates and its permitted Sublicensees for their sales of Drug Product for use with a Device to third parties less the following deductions: (a) trade, wholesale, quantity, cash or other discounts, refunds, returns, rebates, credits and allowances to the extent actually taken; (b) import, export, excise, sales or use taxes, value added taxes, and other taxes, tariffs and duties imposed on such sales and actually paid by Transave, its Affiliates or permitted Sublicensees, as applicable; (c) out-bound packaging, handling, transportation, freight and freight insurance to the extent actually paid; (d) rebates, allowances or credits mandated by any government; (e) reimbursements, credits or chargebacks actually granted, allowed or incurred in the ordinary course of business (including any credits, volume rebates, charge-back and prime vendor rebates, reimbursements or similar payments granted or given to wholesalers and other distributors, buying groups, health care insurance carriers, pharmacy benefit management companies, health maintenance organizations or other institutions or health care organizations); and (f) payments or rebates paid in connection with sales to any governmental authority in respect of any state or federal Medicare, Medicaid or similar programs. All calculations shall be made in accordance with GAAP.

1.33 “Optimization” means certain technical revisions of the Present Device.
1.34 “Optimization Project” means the project currently being performed according to the Feasibility Statement of Work No. 3, a copy of which is attached to Exhibit 2.2.
1.35 “PARI Intellectual Property” means all Intellectual Property owned or Controlled by PARI and its Affiliates, as of the Effective Date or during the term of this Agreement, including that which (a) relates to its formulation technology, including PARI’s liposomal technology (but excluding with respect to Arikace), the Device or the manufacture or use of the Device, or (b) are necessary or useful for either Party to perform the Project, or (c) are necessary or useful for Transave, its Affiliates or Sublicensees to commercialize the Device with the Drug Product in the Transave Field. For clarity, PARI Intellectual Property includes without limitation all Existing PARI Data, existing PARI Know-how, Project Intellectual Property, all Patent Rights listed on Exhibit 1.35 and all Improvements (subject to Section 2.5.2).
1.36 “Phase II Trial” means a clinical trial of a drug product in human patients, the primary endpoints of which are to define the optimal dose and clinical end points that will be used during a Phase III Trial.
1.37 “Phase III Trial” means a clinical trial of a drug product conducted in an expanded patient population at multiple sites, which is statistically powered and designed to definitively establish safety and efficacy with respect to a particular indication of one or more particular doses in the patients being studied and to provide the statistical and clinical basis for Regulatory Approval of such drug product.
1.38 “Present Device” means the present configuration no. 40L of eFlow, having the performance characteristics ascribed to such configuration in Exhibit 1.38.
1.39 “Products” means the individual Drug Product and/or the Device for use with the Drug Product.

1.40 “Project” means all activities to be performed by PARI, individually or jointly with Transave or third parties, that are set forth in a specific Work Plan.
1.41 “Project Director” means a development executive appointed by each Party to serve as such Party’s principal coordinator and liaison for the Project. Except in the case of an emergency, each Party agrees to provide thirty (30) days written notice to the other Party prior to replacing its Project Director. The initial Project Directors shall be: [***] for PARI and [***] for Transave.
1.42 “Project Intellectual Property” means all Intellectual Property that is invented or created in the course of performance of a Work Plan under this Agreement, including without limitation any Intellectual Property directed to the Nebulizer apparatus, components or methods of manufacture thereof, regardless of who develops it. For clarity, the Project Intellectual Property excludes the Project Data, the Existing PARI Data, Existing Transave Data, and any Know-how owned or Controlled by PARI or Transave prior to the Effective Date and any Intellectual Property solely relating to Arikace.

1.43 “Project Rate” with respect to activities under a Work Plan means [***].
1.44 “Qualified Stock” means the series of preferred stock issued by Transave in the Most Recent Qualified Financing. As of the date of this Agreement, the Qualified Stock is Transave’s Series D Convertible Preferred Stock.
1.45 “Qualified Stock Price” means the price per share paid by the purchasers of Qualified Stock in the Most Recent Qualified Financing (as equitably adjusted for any stock dividend, stock split, combination, reorganization, recapitalization, reclassification or similar event with respect to such Qualified Stock). As of the date of this Agreement, the Qualified Stock Price is $0.2001 per share.
1.46 “Recall” means a recall, withdrawal, or field correction of any product for any reason, or a dissemination of information regarding such product due to a change in the labeling of such product.
1.47 “Regulatory Authority” means any national (e.g., the FDA), supra-national (e.g., the European Commission, the Council of the European Union, or the EMEA), or other governmental entity in the Territory involved in regulation of or the granting of Marketing Approval for the Products or the development, manufacture, use or commercialization thereof.
1.48 “Royalty Term” means, on a country-by-country basis, the period commencing on the date of First Commercial Sale of Drug Product and continuing until the later of (a) Expiration of the last Valid Claim covering the particular Device in the particular country in which such Product is sold or (b) [***] after First Commercial Sale of the Drug Product in such country in the Transave Territory.
1.49 “Sale of Business Transaction” means the sale or transfer by Transave, directly or indirectly, of all of its rights in the Drug Product to a third party, excluding Affiliates of Transave, during the term of this Agreement. A change of “control” in Transave shall be deemed a Sale of Business Transaction. For the purpose of this definition, an individual corporation or other entity shall be deemed to “control” another corporation if it owns, directly or indirectly, more than fifty percent (50%) of the voting shares, or has the power to elect more than half the directors, of such corporation.
1.50 “Secondary Indication(s)” means the pulmonary administration of Drug Product for the treatment or prophylaxis of one or more of the following: [***] or [***], provided, however, that [***], and the treatment of such indications with [***], [***] and/or the [***] devices shall be excluded from the definition of Secondary Indications.
1.51 “Specifications” means the specifications, performance characteristics, parameters and requirements for the Device or other deliverables set forth in a Work Plan or user requirement specifications agreed to in writing between the Parties. The initial Specifications for the Present Device and the currently anticipated target Device are set forth in Exhibit 1.38. Transave shall amend Exhibit 1.38 to (i) amend existing parameters or add additional parameters to, the original Specifications for the Device as necessary or desirable based on results of the clinical data, or (ii) add an additional set of Specifications for a Device for a Secondary Indication. Amendments shall be made by Transave and submitted in writing to PARI for approval, which shall not be unreasonably withheld. After approval by PARI, each amendment shall become part of this Agreement and incorporated herein. Each amendment shall be substantially in the format of Exhibit 1.38 and sequentially labeled (Exhibit 1.38A, Exhibit 1.38B, etc.), and shall indicate if it supersedes any of the previous Exhibits 1.38.

1.52 “Sublicensee” means any person or entity who receives a sublicense from Transave under Section 4.1 of this Agreement to Exploit the Device with the Drug Product to a non-Affiliate Third Party.
1.53 “Third Party License Agreement” [***].
1.54 “Transave Field” means the pulmonary administration of Drug Product for the treatment or prophylaxis of cystic fibrosis (CF) and/or bronchiectasis. In addition, upon request or election by Transave, the “Transave Field” shall further include one or more of the Secondary Indications, subject to and in accordance with the provisions of Section 2.6.
1.55 “Transave Intellectual Property” means all Intellectual Property owned or Controlled by Transave and its Affiliates, as of the Effective Date or during the term of this Agreement, including that which (a) relates to its liposomal formulation technology, (b) is reasonably necessary or useful for either Party to perform the Project but excluding all Improvements, or (c) that solely relates to the Drug Product and is invented or created in the course of performance of a Work Plan or under this Agreement. For clarity, Transave Intellectual Property includes without limitation all Existing Transave Data, existing Transave Know-How and the Project Data (subject to the restrictions set forth in Section 3.2(b)).
1.56 “Transave Territory” means the entire world.
1.57 “Valid Claim” means a claim in an issued patent within the PARI Intellectual Property, including the Project Intellectual Property, which has not Expired.
1.58 “Work Plan” means the activities, deliverables, timelines, Specifications and budget for the Project, established by the Parties pursuant to Section 2.2.

Article 2 - Development Project
2.1 Scope of the Project. Subject to the terms and conditions of this Agreement, the Parties shall collaborate, in accordance with one or more Work Plan(s), for Optimization of the Device for use with the Drug Product.
2.2 Work Plans. The initial Work Plan is set forth in Exhibit 2.2, which may be amended by Transave based on the results of the Optimization Project with the consent of PARI, such consent not to be unreasonably withheld. Additional Work Plans may be added, sequentially numbered as Exhibit 2.2A, 2.2B, etc., and attached to this Agreement. Transave may request additional services to be performed by PARI or request changes to any existing Work Plan(s), all in accordance with this Section 2.2.
(a) Upon any such request by Transave which shall specify deliverables and Specifications, PARI shall promptly prepare and submit to Transave a draft Work Plan or an amendment based on such request, setting forth in reasonable detail the services to be performed, the time and FTEs required for such services, timelines for the performance and completion of such services, and a budget for any out-of-pocket costs required to be expended. It is understood that PARI may also propose additional Work Plans or amendments on its initiative, and shall submit a draft thereof to Transave in the same form for approval by Transave.

(b) The Parties shall negotiate in good faith the final version of any additional Work Plan or amendment to a Work Plan, any of which shall be effective only after mutual agreement by the Parties thereon in writing. In the event of any conflict between a Work Plan and the terms and conditions of this Agreement, this Agreement shall control.
(c) PARI shall use Arikace or Drug Product provided to PARI solely for the purpose of Optimization of the Device pursuant to a Work Plan and shall not use Arikace or Drug Product for any other purpose. PARI shall not formulate, modify or reverse engineer the Drug Product or Arikace.
(d) Transave and its permitted Sublicensees shall use the Device solely with the Drug Product in accordance with the terms of this Agreement and shall not modify or reverse engineer the Device.
2.3 Management.
2.3.1 Joint Steering Committee. Promptly after the Effective Date, Transave and PARI shall establish a joint steering committee (the “Joint Steering Committee” or “JSC”), comprising three members chosen by each Party, to oversee, review and coordinate the activities of the Parties under this Agreement, including the performance of the Project and the development, manufacture and commercialization of the Product. The JSC shall be responsible for: (a) overseeing the activities of the Parties under this Agreement; (b) resolving 

disputes and disagreements under this Agreement; and (c) undertaking or approving such other matters as are specifically provided for the JSC under this Agreement. JSC will be responsible for developing a full charter for the Joint Steering Committee, and obtain written approvals from the CEO (as defined below) of the Parties. JSC meetings that must take place in person shall alternate between the place of business of each Party, unless otherwise agreed to by the Parties. Written minutes of all meetings will be provided within ten (10) business days of the meeting/teleconference to the members of the JSC.
2.3.2 Decision Making. Decisions of the Joint Steering Committee shall be made by unanimous vote of the members present in person or by other means (e.g., teleconference) at any meeting, with at least one representative from each Party participating in such vote. In the event that the JSC is unable to reach unanimity with respect to a particular matter, then either Party may, by written notice to the other, have such matter referred to the President or Chief Executive Officer (“CEO”) of each of the Parties, who shall discuss and attempt to resolve such matters to the Parties’ mutual satisfaction within thirty (30) days thereafter. If the Parties are unable to resolve such dispute in accordance with this Section 2.3.2, Article 14 of this Agreement shall apply.
2.3.3 Reserved Rights. Notwithstanding the foregoing, however, in the event either Party reasonably determines that a final decision of the JSC pursuant to Section 2.3 will result in a hazardous or unsafe Device or Drug Product, or infringement of a third party’s patent rights, then that first Party shall provide the JSC with information supporting its belief. Upon delivery of such information, and discussion with the second Party at the JSC, the first Party shall have the right to refrain from implementing such decision in its performance of this Agreement, provided that if the second Party in good faith disagrees with the basis of such determination, the Parties shall resolve the disagreement in accordance with Section 2.3.2. Notwithstanding the foregoing, nothing in this Article 2 shall be deemed to require either Party to take any action that it believes is unlawful.

2.3.4 Limited Authority. The decisions of the JSC, whether under this Section 2.3 or under any other section of this Agreement, shall not have the power to amend or contradict the terms of this Agreement or the agreed upon Work Plans, nor substitute for either Party’s ability to exercise any right, nor excuse the performance of any obligation, set forth in this Agreement.
2.4 Conduct of the Project. Subject to the terms and conditions of this Agreement, each Party shall use Commercially Reasonable Efforts to perform the activities assigned to it under a Work Plan in accordance with the Specifications, timelines and budgets set forth therein, under the supervision of the JSC. Each Party shall keep the JSC informed as to its progress under a Work Plan.
2.5 Improvements. Notwithstanding anything to the contrary in this Agreement, if PARI develops an incremental Improvement, then PARI shall incorporate such Improvement into the Device, without further consideration, if (i) it is not contractually prohibited from doing so by the agreement under which such Improvement was developed, (ii) PARI generally incorporates such Improvement into an eFlow for use in CF, Bronchiectasis or such Secondary Indication (but in this instance only, without reference to the Drug Product contained in the definition of Secondary Indication in Section 1.50) that has been included in the Transave Field pursuant to Section 2.6, and (iii) it is consistent with the Specifications and the applicable regulatory requirements. If an Improvement is not an incremental Improvement (e.g., a major Improvement or a new 510(k) is or will be filed), then PARI shall, to the extent it has the right to do so, offer Transave an opportunity to review such Improvement for a period of sixty (60) days from receipt of a description of such Improvement and a plan for development of such Improvement and possible incorporation into the Device in order for Transave to determine whether it wishes to have such Improvement incorporated into the Device and thereby be incorporated into the license granted pursuant to Section 4.1. If Transave determines (by giving written notice to PARI) within such sixty (60) day period that it desires to benefit from the Improvement and include the Improvement in the Device, such Improvement shall be automatically included in PARI Intellectual Property. If Transave does not give written notice to PARI within the sixty (60) day period of its desire to benefit from the Improvement, Transave shall be deemed to have rejected the Improvement and PARI shall have no obligation to include the Improvement in the Device. Notwithstanding anything to the contrary in this Agreement, if PARI develops an Improvement and desires to obtain patent protection for such Improvement, PARI shall be free to obtain such protection and may take all steps necessary, appropriate or advisable thereto, provided that Transave's rights under this Agreement shall not be restricted or limited in any way.
2.6 Designation of Secondary Indication. During the Term, if Transave desires to add one or more Secondary Indications to the Transave Field it will notify PARI thereof in writing. Also, if at any time during the Term of this Agreement, PARI negotiates with a third party to license PARI Intellectual Property in one or more Secondary Indications, PARI agrees that, prior to entering into a binding definitive licensing agreement, whether 

oral or written, whether in the form of an agreement, term sheet, letter of intent or other format, with such third party, PARI shall provide notice to Transave of such negotiations and shall offer to Transave the option to add such Secondary Indication(s) to the Transave Field; provided, however, that PARI shall not be obligated to offer such Secondary Indication to Transave if Transave has already entered into a binding definitive licensing agreement, whether oral or written, whether in the form of an agreement, term sheet, letter of intent or other format, for another Nebulizer with a third party for such Secondary Indication. Transave shall have thirty (30) days from the date of receipt of notice to exercise this option by sending a written notice thereof to PARI.

Notwithstanding the foregoing, PARI shall be permitted to conduct development activities on its own or with a third party with respect to the Secondary Indications, including feasibility studies and the notice obligation and right of first refusal of Transave shall not apply thereto. If Transave desires to add a Secondary Indication either pursuant to the first sentence of this paragraph or by exercising its option, the Parties shall negotiate in good faith commercially reasonable and mutually acceptable diligence requirements, non-compete provisions, termination rights and such other terms and conditions as the Parties may identify for the applicable Secondary Indication(s), [***]
2.7 [***]. At any time, the Parties may agree to discuss a potential license agreement related to [***] for use with Arikace.
2.8 Project Fees. Transave shall compensate PARI for its performance of the Work Plans at the Project Rate [***] (“Project Fees”). The Project Fees shall be invoiced to and paid by Transave in accordance with Section 9.1 below. Except for the compensation and reimbursement set forth in this Section 2.8, each Party shall perform all of its activities under the Work Plans at its own cost.
2.9 Reports. PARI’s obligations to provide reports will be as specified in individual Work Plans. In addition to any meetings, working groups or reviews required under the Work Plan, PARI shall provide Transave with reasonable access to the Project Director, from time to time throughout the term of the applicable Work Plan. Such access shall be at Transave's reasonable request, during regular business hours and mutually convenient times, and may include (without limitation) teleconferences, email, face-to-face meetings or other visits to PARI's facility.
2.10 Subcontractors. PARI shall not subcontract its performance of the Project to another entity without Transave’s prior written approval, which approval shall not be unreasonably withheld, delayed or conditioned. In any case, PARI shall remain completely responsible for all acts and omissions of its subcontractors for any Project activities that are subcontracted.

Article 3 - Intellectual Property
3.1 Existing Intellectual Property Ownership and Limited License Grant.
(a) Transave shall exclusively own the Transave Intellectual Property and any improvements, enhancements or modifications in and to the foregoing conceived or developed by either Party pursuant to this Agreement. Except for the license expressly granted in 3.1(b), no other license in the Transave Intellectual Property is granted to PARI by implication, estoppel or otherwise. PARI shall exclusively own the PARI Intellectual Property and any improvements, enhancements or modifications in and to any of the foregoing conceived or developed by either Party pursuant to this Agreement, including all Improvements. Except for the licenses expressly granted in this Agreement, no other license in the PARI Intellectual Property is granted to TRANSAVE by implication, estoppel or otherwise.

(b) Subject to the terms and conditions of this Agreement, Transave hereby grants PARI a royalty-free, non-exclusive, non-transferable (except to its Affiliates and as expressly provided herein) license under the Transave Intellectual Property solely to perform PARI’s obligations and responsibilities under the Work Plans and this Agreement. PARI hereby grants to Transave, until initiation of the Royalty Term, a royalty-free, non-exclusive license under the PARI Intellectual Property and PARI Project Intellectual Property solely to perform Transave’s activities, under this Agreement including the development of Drug Products, provided, however that all Improvements shall be exclusively owned by PARI and Transave shall not file any patent application that incorporates the PARI Intellectual Property and/or the Project Intellectual Property.
3.2 Project Intellectual Property Ownership and Project Data Ownership.
(a) PARI shall exclusively own the Project Intellectual Property. Transave agrees to assign and hereby assigns to PARI all right, title and interest in and to Project Intellectual Property.

(b) Subject to Section 3.3 below, Transave shall exclusively own all Project Data; provided, however, that Transave (i) shall not use any Project Data with, or share, transfer or license to PARI Competitor pursuant to Section 4.1.3 below and (ii) Transave shall not file any patent application or amendment that incorporates the PARI Intellectual Property and/or the Project Intellectual Property in the claims thereof. Transave shall give PARI reasonably sufficient advance notice and opportunity to review any patent applications, prior to filing, that first incorporate any particular PARI Intellectual Property or Project Intellectual Property. If, within fifteen (15) days after receipt, PARI notifies TRANSAVE in writing that TRANSAVE's patent application contains PARI Intellectual Property or Project Intellectual Property that is patentable but for which PARI has not previously filed for patent protection, then TRANSAVE agrees to delay filing of its application for an additional thirty (30) days, to permit PARI to prepare and file a patent application to protect such PARI Intellectual Property or Project Intellectual Property. In the event Transave nevertheless files a patent application that claims the PARI Intellectual Property or any Project Intellectual Property, then PARI shall receive a non-exclusive, perpetual, world-wide, fully paid-up, sublicensable, unrestricted, irrevocable right and license to research, formulate, develop, seek regulatory approval for, make, have made, use, sell, have sold, offer for sale, market, promote, import, export, display, make derivative works of, copy, distribute, perform, license, sublicense or otherwise commercialize, exploit or dispose of the PARI Intellectual Property or any Project Intellectual Property to the extent claimed in such patent application and/or patent. In the event that Transave uses Project Data (that have been generated based on the utilization of the Device) to file a patent application, then PARI shall have a non-exclusive, perpetual, world-wide, fully paid-up, licensable, unrestricted right and license (outside of the Transave Field) (1) to practice under any apparatus claim that claims a Device, Nebulizer that is proprietary to PARI, or component thereof, and any method of manufacture claim that claims a method of manufacturing a Device, Nebulizer that is proprietary to PARI, or component thereof, in any such patent that is based on such Project Data , and (2) to practice under any method of use claim that is a method of using a Device, Nebulizer that is proprietary to PARI, or component thereof, in any such patent that is based on such Project Data to the extent necessary to avoid any liability on PARI’s part for infringement of such method of use claims. Notwithstanding anything to the contrary in the foregoing, PARI shall not obtain any rights under this Section 3.2(b) to Exploit any Transave proprietary drug product or formulation thereof.

3.3 Default on Project Fees. Subject to Article 14, in the event of a default in the payment of any undisputed Project Fees under this Agreement, which default is not cured within thirty (30) days after Transave receives written notice thereof by PARI referencing this Section 3.3, specifying in detail the amount of Project Fees alleged to be unpaid and a calculation thereof, and providing all relevant supporting documentation evidencing such calculation, then Transave shall not have the right to use such specific Project Intellectual Property and Project Data that was conceived or developed by PARI that was not paid for in accordance with the Work Plan by Transave. In such event, however, it is understood that Transave shall retain the right to use and Exploit other Project Intellectual Property and Project Data that Transave has fully paid for in accordance with the Work Plan and this Article 3.
3.4 Scientific Records. PARI shall maintain laboratory notebooks and all technical, scientific, accounting and other records in sufficient detail and which shall reflect work done, results achieved, intellectual property developed, including all data in the form required by Applicable Laws and Standards, which shall be kept for three (3) years after completion or termination of the respective Work Plan or any longer period mandated by Applicable Laws and Standards. However, records supporting the relevant PARI Patent Rights and the Project Intellectual Property shall be kept for the longer of a period of fifteen (15) years after First Commercial Sale of Drug Product in any country in the Transave Territory or 20 years from the date of filing of any intellectual property related to this project or a longer period mandated by Applicable Laws and Standards.
3.5 Patent Protection. Except as set forth in Section 3.6 with respect to the Joint Patents, PARI has the sole discretion and responsibility, at its expense, to prepare, file, prosecute, maintain, defend, and enforce any patent applications and patents, as applicable, to PARI Intellectual Property and Project Intellectual Property. TRANSAVE has the sole discretion and responsibility at its expense, to prepare, file, prosecute, maintain, defend, and enforce any patent applications and patents, as applicable, to TRANSAVE Intellectual Property. In any case and pursuant to this Section 3.5, TRANSAVE shall not, without PARI’s prior written consent, to be withheld in its sole discretion, prepare, file, prosecute, maintain, defend, or enforce any patent applications and patents, as applicable, relating to the Device or any other eFlow or otherwise incorporate PARI Intellectual Property and/or the Project Intellectual Property, including but not limited to eFlow, or PARI’s proprietary TouchSpray® Technology. In any case and pursuant to this Section 3.5, PARI shall not, without Transave’s prior written consent, to be withheld in its sole 

discretion, prepare, file, prosecute, maintain, defend, or enforce any patent applications and patents, as applicable, relating to the Drug Product.
3.6 Joint Patents. PARI and Transave are currently discussing the potential of filing a joint patent application (the “Joint Patent”). The Parties hereby agree that no Joint Patent application shall be filed without (i) the consent of the other Party and (ii) the Parties having entered into an Addendum to this Agreement outlining the respective rights and obligations, including provisions regarding ownership, rights of use, restrictions of use, prosecution, enforcement and defense, with respect to the Joint Patent.
Article 4 - Commercial License
4.1 Commercial License
4.1.1 Exclusive Grant in Transave Field. During the Royalty Term, PARI hereby grants Transave a royalty-bearing exclusive right and license in the Transave Territory, (with the right to grant and authorize sublicenses, except with respect to [***] which PARI shall sublicense at Transave’s request according to Section 4.1.4, provided (x) such Sublicensees agree to be bound by the terms of this Agreement, (y) Transave shall nonetheless remain liable to PARI for any breach by a Sublicensee of this Agreement and (z) such Sublicensee is not a PARI Competitor pursuant to Section 4.1.3 below), under PARI Intellectual Property and Project Intellectual Property to Exploit (subject to Section 4.1.1 below) the Device for use with the Drug Product in the Transave Field; provided, however, that Improvements are governed by Section 2.5.2. For clarity, the license of this Section 4.1.1 shall be exclusive, except with respect to the [***], in the Transave Field even as to PARI, and PARI shall not practice itself, nor grant to a third party, any rights with respect to PARI Intellectual Property or Project Intellectual Property for use in the Transave Field in the Transave Territory, except with respect to the [***]. Upon expiration of the Royalty Term, the foregoing license shall be rendered non-exclusive, fully paid-up and royalty-free, on a country-by-country basis; provided, however, that upon Transave’s written request, such license shall remain exclusive, on a country-by-country basis, subject to Transave’s continued payment of royalties for such country as set forth in Section 6.1 of this Agreement.

4.1.2 Manufacturing Rights. Transave covenants that it shall not, and it shall cause its Affiliates and permitted Sublicensees not to, exercise rights to manufacture the Device for use with the Drug Product, the Device, the Device Accessories or any components of any of the foregoing under the license of this Section 4.1 except pursuant to a fully executed Commercial Supply Agreement as set forth in Section 8.9 of this Agreement.
4.1.3 Restriction of Certain Sublicenses. Transave shall not grant to a PARI Competitor a sublicense under the PARI Intellectual Property without PARI’s prior written consent. For such purposes a “PARI Competitor” shall mean an entity identified in Exhibit 4.1 hereto.
4.1.4 Sublicense of [***]. Transave acknowledges that a portion of the PARI Intellectual Property includes PARI's rights under the Third Party License Agreement. In the event Transave transfers or sublicenses the license granted in this Section to a third party, such rights shall be excluded from such transfer or sub-license. However, in the event that Transave transfers or sublicenses to a third party any of the license rights granted in this Section 4.1, upon Transave’s request, PARI shall directly grant to such third party a sublicense of PARI’s rights under the Third Party License Agreement for no additional consideration, other than that already due to PARI under this Agreement with respect to any transfer or sublicense of rights granted to Transave in this Section 4.1. Such transfer or sublicense shall be subject to the terms and conditions of this Agreement.
4.2 Exclusivity of Efforts. The Parties acknowledge and agree that nothing contained in this Section 4.2 shall limit PARI from researching, developing, manufacturing, or commercializing medical devices (including existing devices) as stand alone devices outside of the Transave Field other than the Device (subject to PARI’s obligations under Section 2.6).
(a) Non-Compete. Subject to Section 4.2(b) below and the AKITA Rights, during the Term of this Agreement, PARI agrees that it and its Affiliates shall not compete with Transave (x) in CF and/or Bronchiectasis with a Competing Nebulizer in the Transave Field, within the Transave Territory, or (y) otherwise engage in the research, development, manufacture and/or commercialization of amikacin for pulmonary administration using a Competing Nebulizer. In addition, during the term of this Agreement, PARI agrees that it and its Affiliates shall not compete with Transave or otherwise engage in the research, development, manufacture and/or commercialization of any liposomal formulation of tobramycin, ciprofloxacin and levofloxacin for pulmonary 

administration, provided, however, that the foregoing restrictions in this sentence shall not apply with respect to (i) the right of any third party licensee (but only to the extent such right is existing and in effect as of the Effective Date) to research, develop, manufacture and/or commercialize any liposomal formulation of tobramycin, ciprofloxacin and levofloxacin for pulmonary administration pursuant to any licensing agreements entered into by PARI or its Affiliates prior to the date of this Agreement, and (ii) the right of PARI and its Affiliates to enter into additional agreements that would be necessary or useful to exploit, but do not expand, existing rights under such licensing agreements referred to in (i), such as testing agreements, and clinical and commercial supply agreements, with any such third party licensee related to the research, development and manufacture and/or commercialization of products generated pursuant to those respective licensing agreements,; except the foregoing restrictions in this sentence shall apply, notwithstanding (i) or (ii), with respect to any research, development, manufacture and/or commercialization of any such liposomal formulations for pulmonary administration using a Nebulizer that includes any developments or optimizations generated under Feasibility Statement of Work No. 3. Notwithstanding the foregoing, the Parties acknowledge and agree that PARI is able to supply medical device product information to customers and sell medical devices other than Competing Nebulizers to customers and patients indicated to deliver amikacin for any indication (including clinical development and clinical research), including CF and Bronchiectasis, and that such uses shall not conflict with the prohibitions of this Section 4.2(a).

(b) Transave Diligence. PARI’s obligations under Section 4.2(a) shall be conditioned upon Transave complying with its diligence obligations as set forth in Sections 7.1 and 7.2.
(c) During the term of this Agreement, Transave agrees that it and its Affiliates shall not compete with PARI or otherwise engage in the research, development manufacture and/or commercialization of any liposomal formulation of cyclosporin.
4.3 Rights in Bankruptcy. All rights and licenses granted under or pursuant to any section of this Agreement are, and shall be deemed to be, for purposes of Section 365(n) of the Bankruptcy Code, 11 U.S.C. § 101 et seq., licenses of rights to “intellectual property” as defined under Section 101(35A) of the Bankruptcy Code. The parties shall retain and may fully exercise all of their respective rights and elections under the Bankruptcy Code.
Article 5 - Upfront License Fee and Milestones
5.1 Upfront License Fee. After execution of this Agreement and within thirty (30) days after receipt of written notice of PARI’s election under Section 5.3(a), Transave shall pay PARI (a) [***] either in cash, or the equivalent in Qualified Stock, or a
combination of cash and Qualified Stock, at PARI’s option as provided in section 5.3(a) below, plus (b) the equivalent of [***] in Qualified Stock, as an upfront license fee.
5.2 Milestones. In further consideration of the rights and license granted by PARI under this Agreement, Transave agrees to make the following milestone payments to PARI, upon the first achievement of the corresponding events set forth below by or under authority of Transave, within thirty (30) days after Transave’s receipt of written notice of PARI’s election under Section 5.3(b) below. For avoidance of doubt, each Milestone Payment is payable only once.

									
	MILESTONE EVENT
		MILESTONE
PAYMENT

	1. Receipt of any positive trial report from the first Phase IIb Trial that are sufficient to support the advancement of Drug Product development with the Device into the first Phase III Trial
		[***] either in cash, Qualified Stock or a combination of cash and Qualified Stock; plus
[***] in Qualified Stock

			
	2. Initiation of the first Phase III Trial of Drug Product with the Device
		[***] either in cash, Qualified Stock or a combination of cash and Qualified Stock

			
	3. First Acceptance of MAA (or equivalent) submission in the US for such Drug Product with the Device
		[***] either in cash, Qualified Stock or a combination of cash and Qualified Stock

			
	4. First receipt of Marketing Approvals in the United States for both (i) such Drug Product and (ii) the Device
		[***] either in cash, Qualified Stock or a combination of cash and Qualified Stock

			
	5. First receipt of Marketing Approvals in the first of the Major EU Countries for both (i) such Drug Product and (ii) the Device, in the same Major EU Country
		[***] either in cash, Qualified Stock or a combination of cash and Qualified Stock

			
	Total
		[***]

5.3 Equity Issuances. Subject to the limitations set forth in Sections 5.3(d) and 5.3(e) below, PARI may elect, as set forth below, to receive any or all of the payments set forth in Sections 5.1 and 5.2 above in the form of Qualified Stock in lieu of cash, as set forth below in this Section 5.3.
(a) Upfront License Fee. Within thirty (30) days of the execution of this Agreement and provided PARI has received the information set forth in paragraphs (b)(iii) and (iv) below, PARI shall notify Transave in writing whether or not it elects to receive Qualified Stock in lieu of the upfront license fee payment of [***] set forth in Section 5.1(a) above. If PARI fails to make its election within such thirty (30) days and provided PARI has received the information set forth in paragraphs (b)(iii) and (iv) below, then Transave may, in its sole discretion, make such payment in cash, Qualified Stock or a combination of cash and Qualified Stock, in the manner set forth in Section 5.3(c) below.

(b) Milestone Payments. Promptly following the occurrence of each of the Milestone Events specified in Section 5.2 above, Transave shall provide to PARI (i) written notification that such milestone event has occurred; (ii) to the extent not previously provided, a summary of the terms of the Qualified Stock that PARI may elect to receive in connection therewith; (iii) to the extent not previously provided, copies of any voting agreement or co-sale agreement to which other holders of such Qualified Stock are parties, as well as any other document restricting the transferability of such shares of Qualified Stock; and (iv) such financial or other information reasonably requested by PARI. For the avoidance of doubt, all materials and other information provided to PARI pursuant to this Section 5.3 shall be deemed to be Confidential Information subject to Article 11 of this Agreement. PARI shall, within thirty (30) days after Transave’s delivery of the foregoing information, notify Transave in writing whether or not it elects to receive Qualified Stock in lieu of the cash milestone payment applicable to such milestone event. If PARI fails to make its election within such thirty (30) days, then Transave may, in its sole discretion, make such payment in cash or Qualified Stock, in the manner set forth in Section 5.3(c) below.

(c) Calculation of Number of Shares of Qualified Stock. [***]
(d) Conditions to Issuance of Equity. In the event that Transave issues Qualified Stock to PARI hereunder, the share certificate(s) evidencing such Qualified Stock shall be endorsed with customary securities legends, and the issuance of such Qualified Stock shall be subject to applicable federal and state securities laws and the restrictions and other terms of Transave’s bylaws and other organizational documents. In addition, PARI must as a condition precedent to the receipt of such Qualified Stock: (i) if requested by Transave, agree to become bound by any voting agreement, co-sale agreement or other transfer restrictions applicable to the other holders of such Qualified Stock and (ii) make such additional representations and warranties at the time of the issuance of such Qualified Stock as may be reasonably requested by Transave to ensure compliance with applicable federal and state securities laws. In the event Transave has completed an initial public offering of its capital stock prior to the occurrence of a Milestone Event for which PARI would be entitled to elect to receive Qualified Stock in lieu of a cash milestone payment, or Transave otherwise reasonably concludes that it is unable to comply with applicable federal and state securities laws in connection with any particular issuance of Qualified Stock to PARI pursuant to this Section 5.3, Transave shall have no obligation to issue such Qualified Stock, but if such Qualified Stock is not issued, Transave shall pay PARI the amount of [***] (for the upfront license fee set forth in Section 5.1), [***] (for Milestone Event 1 set forth in Section 5.2), [***] (for Milestone Events 2 and 5 set forth in Section 5.2), [***] (for Milestone Event 3 set forth in Section 5.2) or [***] (for Milestone Event 4 set forth in Section 5.2), as applicable, upon the occurrence of the obligation to pay the upfront license fee or milestone payment specified in Section 5.1or in Subsections 1 through 5 of Section 5.2 above, as applicable, within thirty (30) days of Transave reasonably concluding that it is unable to issue such Qualified Stock. For the avoidance of doubt, Transave’s obligation to issue Qualified Stock under this Section 5.3 shall not apply to an initial public offering of Transave’s capital stock, and shall only apply with respect to the Qualified Stock issued in the Most Recent Qualified Financing but not to any warrants, promissory notes or other securities which may be issued concurrently to the investors in such Most Recent Qualified Financing.

(e) Effect of Sale of Business Transaction. In connection with any Sale of Business Transaction which closes prior to any particular issuance to PARI of Qualified Stock, the successor in interest to Transave shall have the option (but not the obligation) to assume Transave’s obligation to issue Qualified Stock pursuant to this Section 5.3 by issuing capital stock of the successor in interest at the applicable conversion ratio for the Qualified Stock in such Sale of Business Transaction, subject to PARI having (x) received documents and information with respect to the capital stock of such successor in interest substantially similar to the documents and information set forth in Sections 5.3(b)(ii), 5.3(b)(iii) and 5.3(b)(iv) above and (y) agreed in writing within thirty (30) days of receipt of all such documents and information that it elects to receive capital stock of the successor in interest as the method of payment. If such successor in interest does not elect to assume such obligation or PARI has not elected to receive capital stock of such successor in interest, then such successor in interest shall immediately pay PARI the amount of [***] (for the upfront license fee set forth in Section 5.1), [***] (for Milestone Event 1 set forth in Section 5.2), [***] (for Milestone Events 2 and 5 set forth in Section 5.2), [***] (for Milestone Event 3 set forth in Section 5.2) or [***] (for Milestone Event 4 set forth in Section 5.2), as applicable, upon the occurrence of the obligation to pay the upfront license fee or milestone payment specified in Section 5.1 or in Subsections 1 through 5 of Section 5.2 above, as applicable, and PARI shall have no right to capital stock or equity of Transave or such successor in interest thereafter.
Article 6 - Royalties
6.1 Royalties for Drug Products. In further consideration of the rights and license granted by PARI under this Agreement, during the Royalty Term, subject to the terms and conditions of this Agreement, Transave agrees to pay PARI a royalty equal to [***] of the Net Sales of Drug
Product sold by Transave, its Affiliates or Sublicensees. Such royalties shall be paid in accordance with Section 9.2 below.
6.2 Combination Products. In the event (i) a Drug Product is sold in combination with the Device or other components for a single price, or (ii) a Drug Product is sold in combination with services or other products, amounts invoiced for such combination sales for purposes of calculating Net Sales of the Drug Product in such combination shall be reasonably allocated between such amounts attributable to the Drug Product and amounts attributable to the Device, other components, services or other products (“Non-Royalty Components”), by or 

under authority of Transave. Such allocation shall be based on the relative value(s) of the Drug Product and of the Non-Royalty Components, and if the Parties are unable to agree on such allocation, the allocation shall be determined in accordance with Article 14.
6.3 Annual Minimum Royalties. During the Royalty Term, Transave shall pay to PARI an Annual Minimum Royalty in US dollars in accordance with Section 9.3 below; provided, however, that, in the event Transave has permanently discontinued to Exploit the Drug Product for CF in accordance with Section 7.1(a), then the Annual Minimum Royalty shall no longer be applicable for the Drug Product for CF but the obligation to pay Annual Minimum Royalties for the Drug Product for Bronchiectasis shall remain in effect.

(a) Determining the Annual Minimum Royalty.
(i) The “Annual Minimum Royalty” shall be determined by the following table.
						
	Year of Sales
	Annual Minimum Royalty

	[***]
	[***]

	[***]
	[***]

	[***]
	[***]

	[***]
	[***]

	[***]
	[***]

	[***]
	[***]

(b) Failure to pay Annual Minimum Royalty. In the event Transave does not pay the Minimum Royalty Payment due under Section 6.3(a) above when due, PARI shall have the right to (i) render non-exclusive the license set forth in Section 4.1.1 upon written notice to Transave and failure to cure within sixty (60) days, and the non-compete obligations set forth in Section 4.2(a) shall immediately cease and (ii) terminate immediately the license set forth in section 4.1.1 for CF or Bronchiectasis, as applicable, if the Minimum Royalty Payment (plus all interest due pursuant to Section 9.5) plus an amount equal to [***] of the then applicable Minimum Royalty Payment has not been paid within six (6) months of the initial due date of the Minimum Royalty Payment; provided, however, that if all such payments have been made by Transave to PARI within such six (6) months period, then the license shall become exclusive again and the non-compete obligations set forth in Section 4.2(a) shall be reinstated immediately, as of the date of payment. The royalty rates set forth in this Article 6 shall remain unchanged due to the license of Section 4.1.1 becoming non-exclusive.
6.4 Infringement or Misappropriation of Third Party Rights. In the event of an actual or threatened infringement action pertaining to the Device, which causes, or could reasonably be expected to cause, Transave’s use of the Device to be disrupted, PARI shall, at its option and on a country by country basis, (i) provide Transave with access to components or entire nebulizers which are functionally equivalent to the infringing elements of the Device while still meeting the Specifications, without additional charge (“Option 1”); (ii) modify the infringing portions of the Device to avoid the infringement while still meeting the Specifications (“Option 2”); or (iii) obtain a license for Transave to continue use of the Device for the Term of this Agreement, and pay for any additional fee required for a license with the Third Party Controlling the Intellectual Property which is infringed or misappropriated by the Device (“Option 3”). In the event PARI reasonably believes it to be Necessary (defined below) to proceed with obtaining a license for Transave as described above in Option 3, then PARI shall contribute up to a maximum amount of [***] in the aggregate of all Royalties paid by Transave to PARI pursuant to this Agreement towards the cost of such license. If at any time the anticipated costs for PARI to comply with Option 3 exceeds [***] in the aggregate of all Royalties paid by Transave to PARI pursuant to this Agreement, then PARI shall so notify Transave and Transave shall pay such additional amounts in order for PARI to secure such Necessary license. “Necessary” shall mean a determination by PARI after good faith consultation with Transave that a license would be prudent given the potential to resolve any claims or potential claims of Intellectual Property infringement or misappropriation.

Article 7 - Development, Regulatory and Commercialization Roles and Responsibilities

7.1 Transave Development and Commercialization Diligence for CF.
(a) Transave agrees to use Commercially Reasonable Efforts to pursue the clinical development of and to obtain Marketing Approval for CF for the Drug Product intended for use with the Device in one (1) or more countries (and at least in the United States), and after obtaining such Marketing Approval, to use Commercially Reasonable Efforts to market and sell the Drug Product with the Device in all countries in which it has been approved, except that Transave may, in its sole discretion, permanently discontinue: development, seeking regulatory approval, or commercialization based on: safety issues, negative and/or unfavorable clinical trial results, lack of commercial viability, strength of competitors prohibiting an effective marketing of the Drug Product in the marketplace, or weak financial forecasts; provided, however, that in such event Transave shall immediately notify PARI in writing of such decision and in such case CF shall no longer be included in the Transave Field and PARI’s obligations under Section 4.2(a) shall no longer apply as to CF. Until such first Marketing Approval, provided that the license of Section 4.1.1 remains exclusive hereunder, Transave shall provide PARI, at least semi-annually through the JSC, with detailed reports of the progress of its development of Drug Products for use with the Device and plans for its development and commercialization thereof in the upcoming year. The JSC shall discuss such reports and plans and Transave shall duly consider any comments thereon provided by PARI, provided that the Parties agree that Transave shall retain sole control of its development efforts hereunder and its plans therefor. For clarity, it is understood that the obligation to use Commercially Reasonable Efforts as set forth in this Section 7.1 shall apply to any Affiliates and/or permitted Sublicensees who are responsible for development of Drug Products for use with the Device, and Transave shall share reports and plans from such Affiliates and/or permitted Sublicensees with PARI at least annually through the JSC in the same manner as for reports and plans of its own development. This Section 7.1 shall also apply to any permitted successors and assigns of Transave under this Agreement. Transave’s breach of this Section 7.1(a) shall be deemed a material breach of this Agreement.
(b) The Parties agree that Transave will use Commercially Reasonable Efforts to meet the following milestones with respect to CF:
						
	Milestone
Activity
	Milestone
Deadline

	1. Diligence Milestone 1:first Phase III Trial for CF begins
	[***]

		
	2. Diligence Milestone 2: first submission of an MAA application for CF in the Transave Territory
	[***]

To the extent Transave does not meet a milestone listed above within the stated time period or the dates listed below, other than any failure resulting directly from a breach of this Agreement by PARI, then, subject to the provisions of Section 7.3, PARI shall have the option, in its sole discretion, to take the applicable action set forth below. Such option must be exercised by written notice to Transave (the "Diligence Termination Notice"), and shall become effective on the thirtieth (30th) day following the date of the Diligence Termination Notice. PARI shall have the option to:
(i) with respect to Diligence Milestone 1 above, terminate its obligation not to compete with Transave in CF as set forth in Section 4.2 of this Agreement only. In the event Transave has still not achieved Diligence Milestone 1 by [***], then the license granted by PARI to Transave under this Agreement shall be rendered non-exclusive with regard to CF only. In the event Transave still has not achieved Diligence Milestone 1 by [***], then PARI shall have the option to terminate the licenses granted by PARI to Transave under this Agreement with regard to CF only by providing written notice to Transave thereof;

(ii) with respect to Diligence Milestone 2 above, terminate its obligation not to compete with Transave in CF as set forth in Section 4.2 of this Agreement only. In the event Transave has still not achieved Diligence Milestone 2 by [***], then the licenses granted by PARI to Transave hereunder shall be rendered non-exclusive with regard to CF only. In the event Transave still has not achieved Diligence Milestone 2 by [***], then 

PARI shall have the option to terminate the license granted by PARI to Transave under this Agreement with regard to CF only by providing written notice to Transave thereof;
7.2 Transave Development and Commercialization Diligence for Bronchiectasis.
(a) The Parties agree that Transave will use Commercially Reasonable Efforts to meet the following milestone with respect to Bronchiectasis:
						
	Milestone
Activity
	Milestone
Deadline

	1. Diligence Milestone 1: Last patient to complete the Phase II Trial for Bronchiectasis
	[***]

	2. Other Diligence Milestones: see below
	

Within one hundred eighty (180) days following the final results of the Phase II Trial for Bronchiectasis, the Parties, acting in good faith, will negotiate additional milestones that meet reasonable industry standards. If no additional milestones are agreed to within such time period, and the lack of milestones is not mutually agreed by both parties, then at PARI’s option, PARI may by providing prompt written notice to Transave, (i) make the license granted to Transave under this Agreement non-exclusive and PARI’s non-compete obligations set forth in Section 4.2 shall terminate or (ii) terminate the license granted to Transave under this Agreement, in each case solely with respect to Bronchiectasis.
If Transave fails to meet a milestone within the applicable time period, other than any failure resulting from a breach of this Agreement by PARI, then, subject to the provisions of Section 7.3, PARI shall have the option to render Transave's license hereunder non-exclusive solely with respect to Bronchiectasis and to terminate its obligation not to compete with Transave in Bronchiectasis as set forth in Section 4.2 of this Agreement. Such option must be exercised by sending the Diligence Termination Notice to Transave, and shall become effective on the thirtieth (30th) day following the date of the Diligence Termination Notice. If such milestone is still not met within twelve (12) months of the applicable time period, other than any failure resulting from a breach of this Agreement by PARI, then, subject to the provisions of Section 7.3, PARI shall have the option to terminate the license granted to Transave under this Agreement with respect to Bronchiectasis only by providing written notice thereof to Transave.
(b) For the avoidance of doubt, subject to the provisions of Section 7.2(a), nothing in this Agreement shall impart any obligation on Transave to pursue the indication of Bronchiectasis, and Transave’s activity or lack of activity with respect to Bronchiectasis shall not affect in any way Transave’s rights in and to CF or any Secondary Indication.

7.3 Updated Milestones. In the event Transave is unable to achieve the milestones set forth in Sections 7.1(b) and/or 7.2(a), as applicable, because of a breach of PARI of this Agreement, or in the case the Phase II or the Phase III Trial has to be repeated or there are documented clinical holds or delays caused by requests of the Regulatory Authorities preventing Transave from proceeding, then the due dates set forth above for such Milestones shall be reasonably adjusted to account for such factors pursuant to mutual agreement of the Parties.
7.4 Manufacture of Drug Product and Device. As between the Parties, (i) Transave shall have the exclusive right to manufacture (or have manufactured) Drug Product for any and all purposes (including without limitation, for use with the Device, for clinical and for commercial use); and (ii) PARI shall have the exclusive right to manufacture Devices for use with the Drug Product, for clinical and for commercial use, except as otherwise may be provided in the Commercial Supply Agreement.
7.5 Supply of Devices for Clinical Trials. PARI shall supply Transave or its designee with all Devices, and Device Accessories, to the extent applicable, required for the conduct of clinical trials. Devices shall meet the Specifications. The manufacturing and supply of such Devices by PARI shall comply with Article 8 below.
(a) Price. The price charged by PARI for such Devices and related parts shall be equal to the prices set forth on Exhibit 7.5(a) for clinical supply of the Devices.
(b) Initial Forecast. An initial forecast of the Devices, including delivery dates, anticipated to be required by Transave for clinical trials is set forth in Exhibit 7.5(b). Such forecast shall not be binding on either 

Party, unless and until such quantities and dates are confirmed in written purchase orders issued by Transave and accepted by PARI or set forth in a Work Plan executed by the Parties. Transave agrees to provide PARI a lead time of at least two (2) months.
(c) Accessories. The provisions of this Section 7.5 apply equally to Device Accessories.
7.6 Regulatory Matters.
(a) General. As between the Parties, (i) Transave shall be responsible for, and shall control all filings and interactions with Regulatory Authorities with respect to the Drug Products, and Transave shall control all clinical and regulatory strategy for the Drug Products; and (ii) PARI shall be responsible for, and shall control all filings and interactions with Regulatory Authorities with respect to the Device, and PARI shall control all clinical and regulatory strategy for the Device. Any MAAs, Marketing Approvals, INDs, or other regulatory submissions, filings, approvals and documentation (collectively, “Regulatory Filings”) shall be submitted solely in the name of, and exclusively owned by, (x) Transave or its designee with respect to the Drug Product and (y) PARI or its designee with respect to the Device. Each Party agrees to cooperate with, and provide reasonable assistance to the other Party, in the preparation of such Regulatory Filings, at the other Party’s expense.
(b) Approvals for Device for Clinical Trials. PARI represents, warrants and covenants that, with respect to the Present Device, it has been granted a 510(k) marketing clearance in the US and a CE mark in the European Union. Attached hereto as Exhibit 7.6(b) is a list of all countries in which PARI has obtained or is seeking Marketing Approval for the Present Device and PARI shall keep Transave informed of any change in status. Transave shall give reasonable weight to this list when choosing countries in which to conduct future clinical trials. If Transave chooses to conduct a clinical trial in a country in which the current status of approval is not adequate to allow Transave to conduct a clinical trial, then PARI hereby agrees to reasonably cooperate with Transave, at Transave’s expense, in order to obtain the applicable regulatory approvals in such country to allow Transave to use the Device for clinical trials in such country.

(c) Regulatory Inspections and Requests. Transave and PARI shall cooperate in good faith with respect to the conduct of any inspections required by any Regulatory Authority of a Party’s site and facilities related to Transave’s clinical trials regarding Devices. Each Party shall promptly provide to the other Party a summary of any inspectional observations, inspection reports issued by a Regulatory Authority, or responses to a Regulatory Authority’s inspectional observations or report related to such clinical trial. PARI agrees to promptly and timely respond to all requests from Regulatory Authorities and to promptly notify Transave about such requests.
7.7 Adverse Event Reporting. Unexpected serious adverse events that are made known to either party and that are considered to be related to the Drug Product or the Device, shall be reported to the other Party on an expedited basis, and at least within forty-eight (48) hours from the notification of an institutional review board (IRB), Regulatory Authority or participating investigators and in any case not longer than five (5) business days after the event was made known. An unexpected adverse experience is defined as any adverse drug experience, the specificity or severity of which is not consistent with the current Investigator Brochure for a clinical trial, or, if an Investigator Brochure is not required or available, the specificity or severity of which is not consistent with the risk information described in the general investigational plan or elsewhere in the current application, as amended. Unexpected, as used in this definition, refers to an adverse drug experience that has not been previously observed (e.g., included in the Investigator Brochure) rather than from the perspective of such experience not being anticipated from the pharmacological properties of the pharmaceutical product. In the case of a clinical trial, an unexpected serious adverse event would, for example, be as assessed by the investigator and or the sponsor or authorized person without breaking the blind and would qualify for expedited reporting. An unexpected serious adverse event shall be reported by Transave to the appropriate institutional review board, Regulatory Authority, investigator and PARI.
7.8 Recalls.
(a) Each Party shall promptly notify the other Party in writing if any Regulatory Authority or other governmental agency having jurisdiction requests or orders it to conduct a Recall of any Device, or if PARI determines to undertake a Recall of any Device voluntarily. Prior to the beginning of any such Recall, the Parties agree to discuss the Recall process. Promptly after being notified of such Recall, but in no event later than may be required to permit PARI to meet applicable Regulatory Requirements, Transave shall provide PARI with reasonable assistance in connection with such Recall as requested by PARI.

(b) If PARI is required or determines to effect any such Recall, then PARI shall solely manage such Recall and be responsible for (i) the cost of notifying end users; (ii) costs associated with the collection and shipment from end users of the Devices subject to such recall; and (iii) costs of replacing such Devices including the cost of shipping the replacement Devices to the affected end users.
(c) Transave shall promptly notify PARI in writing if any Regulatory Authority or other governmental agency having jurisdiction requests or orders it to conduct a Recall of the Drug Product, or if it determines to undertake a Recall of the Drug Product voluntarily. Prior to the beginning of any such Recall, the Parties agree to discuss the Recall process. Transave shall solely manage such Recall and be responsible for (i) the cost of notifying end users; (ii) costs associated with the collection and shipment from end users of the Drug product subject to such Recall; and (iii) costs of replacing the Drug Product, including the cost of shipping the replacement Drug Product to the affected end users.

Article 8 - Supply of Devices by PARI for Clinical Use
8.1 Delivery. PARI agrees to deliver those quantities of Devices and Device Accessories thereof ordered by Transave for clinical trials, FCA (Incoterms 2000) PARI’s facilities in Germany, by the delivery dates set forth in a purchase order in accordance with reasonable shipping instructions provided by Transave. The purchase order shall specify the quantity of Device to be supplied, the supply schedule and the study sites, distributors or other site(s) to which delivery shall be made. PARI shall arrange for shipping and insurance, to be paid by Transave, and carry out all customs formalities necessary to export the shipment. The Devices shall be shipped, at Transave’s expense, packaged in containers in accordance with the Specifications or as otherwise agreed by the Parties in writing, to Transave or its local country designee, or study site(s) as specified by Transave at the time of ordering the Devices, provided, however, that it will not be required to deliver Devices to more than one (1) centralized location in any given country (except for the United States), unless otherwise agreed by PARI. PARI shall cooperate with Transave, and provide Transave with all necessary documentation and assistance (to the extent PARI has experience as to the importation of Devices into such country), at Transave’s expense, with respect to importation of the Devices into any country of the Transave Territory.
8.2 Payment. PARI shall submit an invoice to Transave upon shipment of Devices ordered hereunder, reflecting the price therefor as set forth in Exhibit 7.5(a). All invoices shall state the aggregate and unit price for such Devices in a given shipment, plus any insurance, taxes or other costs incident to the purchase or shipment initially paid by PARI but to be borne by Transave hereunder. Other than amounts disputed in good faith, Transave shall pay PARI such invoiced amounts that are due hereunder within (30) days from the date of shipment.
8.3 Acceptance.
(a) At the same time it delivers Devices to Transave under Section 8.1, PARI shall deliver to Transave the following documentation: (a) the order number of the delivered Devices and Device Accessories; (b) with respect to the United States only, a Certificate of Conformance, and with respect to the European Union only, a Quality Certificate; and (c) any documentation that PARI customarily includes in shipments of such Device and/or Device Accessories. Transave may, but shall not be obligated to, inspect and test Devices delivered by PARI hereunder. If on such inspection Transave discovers that any Device shipped hereunder fails to conform with the Specifications or otherwise fails to conform to the requirements of this Agreement, Transave may provide written notice to PARI specifying in reasonable detail the manner in which such Device fails to meet the foregoing requirements, and shall promptly send to PARI a representative sample of the nonconforming Device. Transave or its designee shall retain the rejected Devices pending PARI’s analysis thereof and the resolution of any disagreement regarding the nonconformance of such Devices.
(b) At its sole cost and expense, PARI shall replace Devices appropriately rejected in accordance with this Section 8.3 by Transave or its designees.

(c) Subject to this Section 8.3 above and 8.4, Devices shall be deemed accepted if no notice to the contrary is received by PARI within thirty (30) days of receipt of such Devices by Transave. It is understood that the warranties given by PARI in Section 8.5 shall survive any failure to reject under this Section 8.3.
8.4 Latent Defects. As soon as either Party becomes aware of any defect in Devices delivered by PARI that are not discoverable upon a reasonable inspection or incoming quality assurance testing as set forth in the Specifications, it shall immediately notify the other Party in writing, and the applicable provisions of Section 8.5 

shall apply. Notwithstanding the foregoing, in the event that Transave fails to reject a Device within thirty (30) days after it actually becomes aware of any latent defect therein (including, without limitation, by way of written notice from PARI), Transave shall be deemed to have accepted such Device and Section 8.5 shall not apply to such Product with respect to that latent defect only.
8.5 Replacement. If any Device fails to work in the patient’s possession, Transave shall provide a replacement directly to patient, and PARI shall provide a replacement to Transave within thirty (30) days of notice by Transave, and all replacements covered by PARI's warranty shall be provided at PARI's sole cost and expense subject to PARI’s right to dispute such replacement as set forth hereafter. In the event that PARI in good faith does not agree with Transave that any Devices returned by Transave are in fact nonconforming, then within ten (10) business days after receipt of such Devices, PARI shall notify Transave in writing of such disagreement. The Parties shall thereafter attempt in good faith to settle such disagreement by negotiation and consultation between themselves. If the Parties are unable to resolve such disagreement within thirty (30) days of Transave’s receipt of PARI’s notification thereof, then either Party may within thirty (30) days thereafter (the “Final Dispute Resolution Period”) submit the question of nonconformance to an independent third party consultant reasonably acceptable to both Parties. The resolution of the question of nonconformance by such consultant shall be final and binding on both Parties. If such consultant determines that the disputed Devices are nonconforming, PARI shall be responsible for all costs associated with the consultant’s services and Transave shall have no payment obligations with respect to such Devices. If such consultant determines that the disputed Devices conform with the applicable requirements therefor, Transave shall be responsible for all costs associated with the consultant’s services and for payment for such Devices.
8.6 Warranties. PARI represents and warrants that the Devices supplied for clinical trials hereunder (a) shall comply with the Specifications as of the time of first use; (b) shall have no material defects in workmanship upon delivery; and (c) shall, upon shipment to Transave, be free and clear of all security interests, liens and other encumbrances of any kind or character. These warranties, and PARI's obligations hereunder, will survive inspection, test, acceptance and use of the Device.
8.7 Conflicting Terms and Conditions. The supply of Devices by PARI to Transave for clinical trial purposes shall be solely in accordance with the terms and conditions of this Agreement. ANY TERMS OR CONDITIONS OF ANY PURCHASE ORDER OR ACKNOWLEDGMENT OR INVOICE GIVEN OR RECEIVED, WHICH ARE ADDITIONAL TO OR INCONSISTENT WITH THIS AGREEMENT SHALL HAVE NO EFFECT, AND SUCH TERMS AND CONDITIONS ARE HEREBY EXCLUDED AND REJECTED BY EACH PARTY.
8.8 Restrictions of Use.
(a) Transave will use the Device in compliance with all Applicable Laws and Standards valid in the country Transave intends to conduct clinical trials utilizing the Device, including, for example, those relating to research involving the use of humans or animals and will not engage in any such clinical trials without first obtaining necessary approval from its relevant ethics committee(s) such as, but not limited to, the Institutional Review Board. The Device shall not be used by Transave directly or indirectly for: (i) any purpose other than the clinical trials, or (ii) any profit-making or commercial purpose.

(b) Transave shall retain control of the Device and shall not distribute or release the Device to any person or entity other than Transave’s or the clinical trial site’s employees, consultants or contractors (“Transave Representatives”) and individuals who will be participating in the clinical trials who have a need to access the Device in connection with use of the Device for the clinical trials and who have been advised of Transave’s obligations with respect to such Device. Transave shall not allow Transave Representatives to take or send the Device to any other location other than that specified below, unless Transave first obtains PARI’s written permission. Transave shall be liable for the use of the Device by Transaction Representatives in violation of this Section 8.8(b).
(c) The Device is to be used in accordance with the terms and conditions of this agreement only by Transave’s clinical trial sites as listed in the applicable Work Order by Transave and by Transave Representatives or patients participating in the clinical trials under Transave’s control.
(d) Transave shall conduct the clinical trials pursuant to a written protocol (the “Study Protocol”). Transave shall provide a synopsis of the Study Protocol to PARI at least thirty (30) days prior to the start of the clinical trial. Following the completion of the clinical trials studies, Transave shall make Commercially 

Reasonable efforts to retrieve the Devices at Transave’s expense and the Devices shall be stored for a limited time as determined by Transave at the clinical trial site and/or Transave’s contractors’ site. Upon Transave’s notice to PARI that the Devices have been retrieved, PARI may arrange for return of the Devices directly with the contractors and/or clinical trial site. PARI shall be solely responsible for the return and/or shipments of the Devices provided that Transave shall pay the reasonable direct shipping costs incurred by PARI in connection therewith.
(e) Transave shall not subject to analysis or have subjected to analysis Devices and/or components constituting Devices received from PARI for the purpose of reverse engineering or in a manner that would reveal material composition or internal design or operation of such sample and/or component or its method of manufacture. Device shall at all times remain the sole and exclusive property of PARI.
8.9 Commercial Supply. PARI agrees to deliver, either directly to customers or through a distributor, or to Transave, at Transave’s option, on a country by country basis, those quantities of Devices and Device Accessories for commercial use in accordance with the terms set forth in Exhibit 8.9. The Parties shall negotiate in good faith and enter into, in a timely manner, a Commercial Supply Agreement incorporating those terms.
Article 9 - Payment Procedures
9.1 Invoicing. PARI shall submit invoices to Transave for the Project Fees owed by Transave for activities under a Work Plan performed by PARI as set forth in the applicable Work Plan. Transave shall pay the undisputed invoiced amounts that are due under this Agreement within thirty (30) calendar days of the date of shipment.

9.2 Royalties. Beginning with the First Commercial Sale of a Drug Product and thereafter during the Royalty Term, Transave shall provide PARI with quarterly written royalty reports applicable to royalty payments due to PARI under this Agreement, within sixty (60) days after the last day of each calendar quarter. Each report shall include a summary of the Net Sales, on a country-by-country basis, of the Drug Product that are subject to royalties hereunder during such calendar quarter and a calculation of the royalties due thereon. Simultaneously with the delivery of each such report, Transave shall pay to PARI the total royalties, if any, due to PARI under Article 6 for the period of such report.
9.3 Annual Minimum Royalty. For the first four (4) calendar quarter period (“Year of Sales”) beginning 180 days after the First Commercial Sale of a Drug Product for use with the Device by Transave, its Affiliates and/or Sublicensees, and for each successive Year of Sales thereafter during the Royalty Term, at the time of its last payment of royalties for the last calendar quarter in such Year of Sales under Section 9.2 above, Transave shall pay PARI the difference, if any, between the royalties actually paid in such Year of Sales and the Annual Minimum Royalty (the “Minimum Royalty Payment”). [***]
9.4 Method of Payment to PARI. All payments due to PARI under this Agreement shall be made by wire transfer to the bank account designated by PARI. Payments shall be made in US dollars for: Royalties on Net Sales within the US and on Annual Minimum Royalties. Payments shall be made in Euros for: Royalties on Net Sales outside of the US, Milestones and Project Fees. If any currency conversion shall be required in connection with the payment of royalties under Article 6, such conversion shall be made by using the averaged buying and selling exchange rate for such conversion, quoted for current transactions reported in The Wall Street Journal, on the last business day of the calendar quarter immediately prior to such payment.
9.5 Late Payment. [***]
9.6 Transave Books and Records. Transave shall keep full, true and accurate books and records in accordance with GAAP, which account for the Net Sales of the Drug Product for use with the Device and the royalties due thereon to PARI. PARI, at its own expense, shall have the right during normal business hours on thirty (30) calendar days' prior written notice to Transave and not more than twice in any calendar year to have a nationally recognized independent public accounting firm selected by PARI (and reasonably acceptable to Transave) examine such books and records for the purpose of verifying the royalty payments due to PARI under this Agreement. Such accounting firm shall execute and deliver to Transave a standard confidentiality agreement and shall not disclose to PARI any information relating to Transave's business, except whether Transave's royalty payments are correct or incorrect, and if incorrect, the specific details concerning any discrepancies and the amounts of the royalties due hereunder pursuant to Section 6.1 of this Agreement. If such examination reveals a discrepancy, Transave shall promptly pay to PARI any additional royalty owed to PARI. In addition, if the discrepancy is greater than [***] in PARI’s favor, Transave shall also promptly reimburse PARI for the fees and costs of the independent public accounting firm.

9.7 PARI Books and Records. PARI shall keep full, true and accurate books and records in accordance with GAAP, which account for the activities under a Work Plan performed by PARI and the Project Fees due to PARI thereon. Transave, at its own expense, shall have the right during normal business hours on thirty (30) calendar days' prior written notice to PARI and not more than twice in any calendar year to have a nationally recognized independent public accounting firm selected by Transave (and reasonably acceptable to PARI) examine such books and records of PARI for the purpose of verifying the Project Fees invoiced to Transave over the preceding twelve (12) month period. Such accounting firm shall execute and deliver to PARI a standard confidentiality agreement and shall not disclose to Transave any information relating to PARI's business, except whether PARI's invoices are correct or incorrect, and if incorrect, the specific details concerning any discrepancies and the amounts of the Project Fees due hereunder. If such examination reveals a discrepancy, PARI shall promptly pay to Transave any additional amount owed to Transave. In addition, if the discrepancy is greater than [***] in Transave’s favor, PARI shall also promptly reimburse Transave for the fees and costs of the independent public accounting firm.
Article 10 - Prosecution, Marking, Enforcement and Defense
10.1 Patent Prosecution. During the term of this Agreement, PARI shall promptly notify Transave in writing of the filing or issuance of any patent applications or patents within the PARI Intellectual Property licensed to Transave pursuant to this Agreement that include subject matter related to the Project, or the Device.
10.2 Patent Marking. Each Party agrees to mark all Products in accordance with the applicable statutes or regulations in the country or countries of manufacture and sale thereof. For such purposes, each Party shall provide the other Party with written notice of all of its patent numbers applicable to the Products.
10.3 Patent Enforcement.
(a) Enforcement. Subject to the provisions of Section 3.6 and this Section 10.3, in the event that Transave or PARI reasonably believes that any Patent Rights within the PARI Intellectual Property are being infringed or misappropriated in the Transave Field by a third party, such Party shall promptly notify the other Party. Transave shall have the initial right (but not the obligation) to bring and/or control any enforcement action directed to the Drug Product, and PARI shall have the initial right (but not the obligation) to bring and/or control any enforcement action directed to the Device, including specific design elements of the hardware apparatus or the software of the Device.
(b) Backup Right to Enforce. In the event PARI does not initiate such an enforcement action within one hundred and eighty (180) days after a request by Transave to initiate an enforcement action against an alleged infringement, or notifies Transave at any time that it does not desire to enforce or defend such Patent Rights with respect to such alleged infringement, then Transave shall have the right (but not the obligation) to enforce or defend against such alleged infringement, provided that any settlement of such infringement shall be subject to the approval of both Parties.

(c) Cooperation. The Party controlling the enforcement action shall keep the other Party reasonably informed of the progress thereof, and the other Party shall have the right to participate with counsel of its own choice at its own expense, and shall reasonably cooperate with the Party initiating the enforcement action (including joining as a party plaintiff to the extent necessary and requested by the other Party) at the expense of the Party requesting such cooperation.
(d) Allocation of Recoveries. Unless otherwise agreed, all amounts recovered in an enforcement action, after reimbursing each Party for its costs and expenses incurred therein, shall be shared between the Parties by the proportion and up to the extent of any damages established in such enforcement action, including but not limited to lost profits or royalties. The balance, if any, shall be retained by the Party that initiated the enforcement action.
10.4 Defense of Third Party Infringement Claims. If the development, manufacture, sale, offer for sale, importation, exportation or use of the Drug Product or the Device results in a claim alleging patent infringement against either Party (or its respective Affiliates or permitted Sublicensees), such Party shall promptly notify the other Party hereto in writing. Subject to Sections 3.5, 13.1 and 13.2, (i) Transave shall have the exclusive right to defend and control the defense of any infringement claim pertaining to primarily the Drug Product, and (ii) 

PARI shall have the exclusive right to defend and control the defense of any infringement claim pertaining to primarily the Devices and/or any component of the foregoing, each Party using counsel of its own choice as applicable; provided, however, that the other Party shall be kept informed of all material developments in connection with any such claim.
Article 11 - Confidentiality
11.1 Non-use and Non-disclosure Obligations. Each of PARI and Transave shall use any Confidential Information received by it from the other Party solely in connection with performance of their respective obligations, rights and other permitted activities under, and other purposes of, this Agreement and shall not disclose such Confidential Information to any Third Party, without the prior written consent of the other Party. Notwithstanding the foregoing and anything to the contrary in this Agreement, Transave shall not share with or provide to any PARI Competitor any of the PARI Confidential Information. These obligations shall survive the termination of this Agreement for a period of ten (10) years. For purposes of this Agreement, “Confidential Information” means the confidential or proprietary scientific, regulatory, clinical, technical or business information, materials and technologies of a Party disclosed or learned under this Agreement, including the Work Plans and any information exchanged prior to the Effective Date, whether in written, oral, electronic, photographic, magnetic or other form. For clarity, the Data and Intellectual Property owned by a Party pursuant to this Agreement shall be deemed the Confidential Information of such Party. Confidential Information shall exclude any information that:
									
		11.1.1
	is known by the receiving Party without restriction at the time of receipt and not through a prior disclosure by the disclosing Party;

									
		11.1.2
	is at the time of disclosure or thereafter becomes published or otherwise part of the public domain through no breach of this Agreement by the receiving Party;

									
		11.1.3
	is subsequently disclosed to the receiving Party without restriction by a third party having the right to make such a disclosure; or

									
		11.1.4
	is developed by the receiving Party independently of Confidential Information received by it from the disclosing Party hereunder.

11.2 Required Disclosure. In order to provide the disclosing Party an opportunity to seek a protective order or the like with respect to certain Confidential Information, the receiving Party may disclose Confidential Information to the extent that it is required by law or order of any governmental authority or agency, including the Securities and Exchange Commission, to be disclosed by a Party; provided that the receiving Party, using good faith efforts, shall apply for confidential treatment of such Confidential Information, shall provide the other Party a copy of the confidential treatment request far enough in advance, if possible, of its filing to give the other Party a meaningful opportunity to comment thereon, and shall incorporate in such confidential treatment request any reasonable comments of the other Party, in each case to the fullest extent permitted under applicable laws, rules or regulations.
11.3 Permitted Disclosure. Notwithstanding Section 11.1, Confidential Information provided under this Agreement may be disclosed to employees, agents, consultants, or suppliers of the receiving Party or professional advisors (or permitted Sublicensees, in the case of Transave), but only to the extent permitted or required to accomplish the purposes of, or to perform its obligations, rights and other permitted activities under, this Agreement; provided that such employees, agents, consultants, professional advisors, permitted Sublicensees or suppliers shall also agree to appropriate and comparable confidentiality and non-use provisions. Notwithstanding the foregoing and anything to the contrary in this Agreement, Transave shall not share with or provide to any PARI Competitor any of the PARI Confidential Information. The receiving Party shall be responsible for any breaches of this Agreement by its employees, agents, consultants, or suppliers. In addition, a Party may disclose Confidential Information provided under this Agreement by the other Party to any governmental authority in order to prosecute or maintain any Intellectual Property or any Regulatory Authority to obtain approval to market a Product, but such disclosure may be made only to the extent necessary to pursue such prosecution or maintenance or to obtain such approval, all to the extent permitted or required to accomplish the purposes of this Agreement.
11.4 Return. Upon the termination of this Agreement, all Confidential Information of the disclosing Party in the receiving Party’s possession will be returned to the disclosing Party (or destroyed by the receiving Party, with written confirmation of such destruction), and the receiving Party will make no further use thereof. Notwithstanding 

the foregoing, the receiving Party may retain one copy of the Confidential Information of the disclosing Party solely for archival purposes to ensure compliance with the provisions of this Article 11 or with the requirements of Regulatory Authorities.
11.5 Publicity
(a) Press Releases. Neither Party shall use the other Party’s name in any press release, publicity, advertising nor other official form of public disclosure without such other Party’s prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned. Notwithstanding the foregoing, Transave shall have the right to issue a press release or make other public disclosures announcing milestones or other significant progress pertaining to its development and/or commercialization of Drug Products and the Device, provided that if issued without the prior written consent of PARI, such press releases shall not disclose any Confidential Information of PARI hereunder and shall at all times be consistent with the last two sentences of this Section 11.5(a). In addition, once any subject matter has been publicly disclosed in accordance with this Section 11.5, no further consent from either Party will be needed for further disclosures of such subject matter. Notwithstanding the above, in all press releases, public statements, publicity, advertising or other public disclosure pertaining to the development of the Drug Product and the Device, Transave shall always give appropriate attribution to PARI’s role(s) in the Project contemplated herein. Notwithstanding the foregoing, all press releases and similar disclosures issued by Transave shall always contain the language set forth on Exhibit 11.5 attached hereto, as such Exhibit may be amended from time to time by PARI. 

(b) Terms of this Agreement. Neither Party shall disclose the terms of this Agreement to any third party, without the prior written consent of the other Party, which consent shall not be unreasonably withheld, except as required by any law or regulation or in connection with any financing transaction, or bona fide (good faith) due diligence inquiry, subject to such parties agreeing to comparable confidentiality and non-use provisions as set forth in this Article 11 and Transave being responsible for any breaches by such third party(ies). Notwithstanding the foregoing, the disclosure of any terms of this Agreement to a PARI Competitor shall require the prior written consent of PARI, to be granted in its sole discretion.
(c) Publications. Transave shall consult with PARI prior to submission of any manuscript for publication or making any public presentation, including speeches and conference posters, pertaining to the activities conducted under a Work Plan. Such consultation shall include providing a copy of the proposed manuscript or presentation reasonably in advance of the proposed date of submission of such manuscript to a publisher or the proposed date of presentation, giving due consideration to PARI’s comments as to such publication or presentation, and as requested by PARI removing any Confidential Information of PARI therefrom. Notwithstanding the above, in all press releases, public statements, publicity, advertising or other public disclosure pertaining to the development of the Drug Product and/or the Device, Transave shall always give appropriate attribution to PARI’s role(s) in the Project contemplated herein. PARI shall not publish or make any presentations regarding any Drug Product, Transave Intellectual Property, Transave Confidential Information or the activities conducted under a Work Plan except with the prior written consent of Transave. Transave shall not publish or make any presentations that incorporate PARI Intellectual Property, Project Intellectual Property, PARI Confidential Information or the activities conducted under a Work Plan except with the prior written consent of PARI.
(d) Required Disclosures. Notwithstanding Section 11.5(a) through (c) above, either Party may make such disclosures relating to this Agreement, the terms and conditions hereof or the activities hereunder, as such Party deems to be required by law or in any filings with governmental entities or national securities exchanges, provided that such Party shall use good faith efforts to apply for confidential treatment of this Agreement and redact such portions of this Agreement as reasonably requested by the non-disclosing Party, in each case to the fullest extent permitted under applicable laws, rules or regulations.
Article 12 - Representations and Warranties
12.1 PARI Representations and Warranties. PARI represents, warrants and covenants that, other than as set forth on Exhibit 12.1 attached hereto:
(a) PARI is a corporation duly organized, existing and in good standing under the laws of Germany, with full right, power and authority to enter into and perform this Agreement;
(b) the execution, delivery and performance of this Agreement does not conflict with, violate or breach any agreement to which PARI is a party, any court order to which PARI is a party or subject to or PARI's organizational documents;

(c) this Agreement has been duly executed and delivered by PARI and is a legal, valid and binding obligation enforceable against PARI in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, arrangement, moratorium and other laws relating to or affecting creditors' rights generally and equitable principles;
(d) as of the Effective Date: (i) PARI owns or has the right to license to Transave all of the PARI Intellectual Property, and the PARI Intellectual Property includes all Patent Rights and Know-How in which PARI has a right or license that may be applicable to the Device in the Transave Field; (ii) PARI has the right to grant the licenses and rights set forth in this Agreement; and (iii) to the best of PARI's knowledge, patents within the PARI Intellectual Property are valid and enforceable, and are not known to be infringed by any third party in the Transave Territory;
(e) as of the Effective Date, to the best knowledge of PARI, PARI has not intentionally withheld from Transave any material information related to the Device; to the best knowledge of PARI, the information relating to the Device provided by PARI to Transave does not contain any misstatement of a material fact nor omit to state any material fact required to make such information as of the date of submission to Transave not materially misleading;
(f) PARI shall perform its activities under a Work Plan in a competent and professional manner, in accordance with a Work Plan, Applicable Laws and Standards and any reasonable instructions provided by Transave to PARI; and
(g) to PARI’s knowledge as of the Effective Date, the Device does not infringe, misappropriate or otherwise violate any patent or other Intellectual Property Rights of any Third Party.
12.2 Transave Representations and Warranties. Transave represents, warrants and covenants that:
(a) Transave is a corporation duly organized, existing and in good standing under the laws of the State of Delaware, with full right, power and authority to enter into and perform this Agreement;
(b) the execution, delivery and performance of this Agreement does not conflict with, violate or breach any agreement to which Transave is a party, any court order to which Transave is a party or subject to, or Transave' certificate of incorporation or bylaws;
(c) this Agreement has been duly executed and delivered by Transave and is a binding obligation enforceable against Transave in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, arrangement, moratorium and other laws relating to or affecting creditors' rights generally and equitable principles;
(d) as of the Effective Date, to the best knowledge of Transave, Transave has not intentionally withheld from PARI any material information related to the Drug Product; to the best knowledge of Transave, the information relating to the Drug Product provided by Transave to PARI does not contain any misstatement of a material fact nor omit to state any material fact required to make such information as of the date of submission to PARI not materially misleading;
(e) as of the Effective Date: (i) Transave owns or has the right to license to PARI all of the Transave Intellectual Property, and the Transave Intellectual Property includes all Patent Rights and Know-How in which Transave has a right or license that may be required for PARI to perform its obligations under this Agreement; (ii) Transave has the right to grant the licenses and rights set forth in this Agreement; and (iii) to the best of Transave's knowledge, patents within the Transave Intellectual Property are valid and enforceable, and are not known to be infringed by any third party in the Transave Territory; and

(f) to Transave’s knowledge as of the Effective Date, the pulmonary administration of Drug Product through a Nebulizer does not infringe any patent or other intellectual property rights of any third party.
12.3 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS ARTICLE 12 OR IN SECTION 8.6 ABOVE, NEITHER PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES TO THE OTHER PARTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, REGARDING PATENT RIGHTS, KNOW-HOW OR DATA INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, NOR VALIDITY.
12.4 Limitation of Liability. NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY UNDER ANY CIRCUMSTANCES OR ANY LEGAL OR EQUITABLE THEORY, WHETHER IN CONTRACT, 

STRICT LIABILITY OR OTHERWISE, FOR ANY INDIRECT, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES OR DAMAGES FOR LOST PROFITS ARISING OUT OF OR RELATED TO THIS AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OR ANY LIMITED REMEDY.
Article 13 - Indemnification; Insurance
13.1 [***]
13.2 Indemnification of PARI. Transave shall at all times be responsible for, and shall defend, indemnify and hold PARI, its Affiliates, directors, officers, employees, agents and representatives harmless from and against any and all losses, claims, lawsuits, proceedings, expenses, recoveries and damages, including reasonable legal expenses, costs and attorneys fees, arising out of: (i) any product liability claim or lawsuit by a third party directly arising from the Drug Product; (ii) any claim of infringement of any patent rights, trade secrets rights or other intellectual property rights of a third party arising from the Drug Product or the manufacture thereof; (iii) Transave’s material breach of any representation, warranty or covenant given in this Agreement by Transave; and (iv) any negligent conduct or willful misconduct by Transave in performance under this Agreement; provided however, that: (a) PARI gives Transave prompt notice of any such claim or lawsuit; (b) Transave has the right to compromise, settle or defend such claim or lawsuit; and (c) PARI, at the expense of Transave, cooperates with Transave in the defense of such claim or lawsuit. PARI, at its expense, may participate in the defense of any such claim or lawsuit.

13.3 Insurance. During the term of this Agreement and for a reasonable period of time thereafter, each Party or its Affiliates, shall maintain appropriate product liability insurance with respect to any clinical trials, manufacturing, development, sales, marketing, distribution and promotion activities performed by it hereunder. Each party shall, upon request of the other party, provide the requesting party with a certificate of insurance evidencing coverage under the foregoing policies of insurance, along with any amendments and revisions thereto. PARI shall be (i) named as an additional insured on any such policies maintained hereunder by Transave, and (ii) also added by endorsement on such policies. With respect to the U.S., Transave shall be (i) named as an additional insured on any such policies maintained hereunder by PARI's Affiliate, PRE Holding, Inc., and (ii) also added by endorsement on such policies of PRE Holding, Inc.
Article 14 - Dispute Resolution
PARI and Transave shall endeavor to resolve any claim or controversy arising out of the threatened breach, breach, enforcement, interpretation, termination or validity of this Agreement informally by good faith negotiation between the senior executives, officers or management of PARI and Transave. Either Party may give the other Party written notice of any claim or controversy not resolved in the normal course of business (the “Disputing Party Notice”). Within thirty (30) calendar days after the delivery of the Disputing Party Notice, the receiving Party shall submit to the other Party a written response (the “Response”). The Disputing Party Notice and Response shall include a statement of each Party's position and a summary of the arguments supporting that position. Within sixty (60) days after the Disputing Party Notice, such designated senior executives, officers or management of PARI and Transave shall meet at a mutually acceptable time and place and thereafter as often as they reasonably deem necessary to attempt to resolve the claim or controversy. All negotiations pursuant to this Section 14 are confidential and without prejudice and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence. Any claim or controversy unresolved after application of this Article 14 shall be subject to Section 16.3 of this Agreement.
Article 15 - Term and Termination
15.1 Term. The term of this Agreement is effective as of the Effective Date as first written above, and except as otherwise terminated in accordance with this Article 15, shall continue in full force and effect until the expiration of the final Royalty Term in the last country in which Drug Product is sold.
15.2 Termination by Either Party. Subject to force majeure provisions set forth in Section 16.10 of this Agreement, each Party shall have the right to terminate this Agreement upon written notice, (i) in the event the other Party is in material breach of this Agreement, and does not cure such breach within ninety (90) days after written notice thereof, specifying in reasonable detail the breach; provided, however, that for payments due pursuant to this Agreement, the cure period shall be thirty (30) days after receipt of written notice of such past due payment; provided, however, that immediately in the event the other Party initiates a voluntary proceeding under the U.S. 

Bankruptcy Code, or any equivalent proceeding under the laws of any other jurisdiction; or in the event such Party becomes the subject of an involuntary proceeding under the U.S. Bankruptcy Code, or any equivalent proceeding under the laws of any other jurisdiction, and such proceeding is not dismissed or stayed within ninety (90) days of its commencement.

15.3 Termination by Transave. Transave shall have the right to terminate this Agreement upon written notice in the event that (i) Transave receives a negative review or negative comments from the FDA, EMEA or another Regulatory Authority which indicates that Transave will be unable to obtain regulatory approval of an MAA for the Drug Product for use with the Device solely due to the Device not substantially meeting the Specifications, (ii) PARI is unable (subject to the force majeure provisions set forth in Section 16.10 of this Agreement) or unwilling to supply Devices to Transave in connection with clinical trials in accordance with the provisions of Article 8 that would prevent Transave from timely completing its Phase II and Phase III Trials, [***]
15.4 Termination by PARI. PARI shall have the right to terminate this Agreement upon written notice in the event that (i) Transave assigns or otherwise transfers this Agreement to a third party that does not execute a written undertaking agreeing to assume all of Transave’s rights and obligations set forth in this Agreement and otherwise abide by the terms and conditions of this Agreement, [***] (v) the licenses granted to Transave under this Agreement have been terminated pursuant to: (x) Section 6.3(b) for both CF and Bronchiectasis; or (y) Sections 7.1(b) and 7.2(a) and the Parties have not entered into an additional agreement for a Secondary Indication in accordance with the provisions of Section 2.6.
15.5 Effects of Expiration or Termination
(a) Accrued Obligations. Expiration or sooner termination of this Agreement shall not release either Party hereto from any liability which at the time of such expiration or termination has already accrued to such Party, nor preclude either Party from pursuing any rights and remedies it may have hereunder or at law or in equity.
(b) Sublicenses. Upon the termination of this Agreement for any reason, any sublicenses granted by Transave hereunder shall survive (unless specified otherwise in the applicable sublicense agreement), provided that, upon request by PARI, each Sublicensee promptly agrees in writing to be bound by the applicable terms of this Agreement, and agrees to pay directly to PARI the same amounts that would have been due to PARI from Transave under this Agreement with respect to such sublicense, had the Agreement not terminated.
(c) Return of Rights. Except as reasonably necessary for surviving rights or obligations under this Article 15, (i) all of PARI’s and Transave’s license rights under Articles 3.1 and 4 shall terminate, and (ii) each of Transave and PARI shall promptly return all Confidential Information then in possession in accordance with Section 11.4 of this Agreement.

(d) Survival. Articles 1, 9, 11, 13, 14, 15 and 16, Sections 2.6, 3.2, 3.4, 3.6, 8.2, 8.8, 10.3 for cases initiated before termination, 10.4 (except for the proviso at the end of the paragraph, which shall not survive), 12.4 and 15.5 shall survive any expiration or termination of this Agreement and Sections 8.4 and 8.6 shall survive the termination of this Agreement for a period of twelve (12) months. Except as set forth in this Section 15.5, all other Articles and Sections of this Agreement shall terminate upon termination of this Agreement.
Article 16 - Miscellaneous
16.1 Entire Agreement. This Agreement, which includes the Exhibits attached hereto, contains the entire agreement between PARI and Transave with respect to the transactions contemplated by this Agreement and supersedes all prior agreements, arrangements or understandings with respect thereto.
16.2 Notices. Every notice, election, demand, consent, request, approval, report, offer, acceptance, certificate, or other communication required or permitted under this Agreement or by applicable law shall be in writing and shall be deemed to have been delivered and received (a) when personally delivered, (b) on the seventh (7th) business day after which sent by registered or certified mail, postage prepaid, return receipt requested, (c) on the date on which transmitted by facsimile or other electronic means generating a receipt evidencing a successful transmission (provided that, on that same date, a copy of such notice is sent by registered or certified mail, postage prepaid, return receipt requested), or (d) on the third (3rd) business day after the business day on which deposited with a regulated public carrier (e.g., Federal Express) for overnight delivery (receipt verified), freight prepaid, 

addressed to the Party for whom intended at the mailing address or facsimile number set forth below, or such other mailing address or facsimile number, notice of which is given in a manner permitted by this Section 16.2:
									
		If to Transave:
	Transave, Inc

11 Deer Park Drive, Suite 117
Monmouth Jct., New Jersey 08852
United States of America
Phone: [***]
Attn: [***]
Fax: [***]
									
		with a copy to:
	Gunderson Dettmer Stough, Villeneuve

Franklin & Hachigian, LLP
610 Lincoln Street
Waltham, MA 02451
Phone: [***]
Attn: [***]
Fax: [***]
									
		If to PARI:
	PARI Pharma GmbH

Moosstrasse 3, D-82319
Starnberg, Germany
Phone: [***]
Fax: [***]
Attn: [***]
Title: [***]

									
		with a copy to:
	McGuireWoods LLP

One James Center
901 East Cary Street
Richmond, Virginia 23219-403
Attn: [***]
Fax: [***]
Any Party may by such notice change the address to which notice or other communications to it are to be delivered or mailed.
16.3 Choice of Law. This Agreement is construed in accordance with, and its performance is governed by, the laws of State of New York, excluding its or any other jurisdiction’s choice of law principles. Any dispute arising hereunder shall be brought exclusively in the state or federal courts located in the State of New York in the division of Manhattan. The Parties hereby consent to the exclusive jurisdiction and venue of such courts and waive any objections to the jurisdiction and venue thereof. In the event of any conflict between US and foreign laws, regulations and rules, US laws, regulations and rules shall govern. The UN Convention on contracts for the International Sale of Goods shall not apply to this Agreement.
16.4 Assignment. This Agreement shall not be assignable by either Party without the prior written consent of the other Party, which consent shall not be unreasonably withheld, delayed or conditioned, except that without consent either Party may assign or transfer the rights and obligations of this Agreement to any Affiliate or to any successor to its business that related to the subject matter of this Agreement (whether by sale of assets or equity, merger, consolidation or otherwise) provided, however, that such assignment or transfer by Transave to a PARI Competitor shall require the prior written consent of PARI, to be granted in its sole discretion. This Agreement shall inure to the benefit of and be binding upon the Parties hereto and their respective successors and permitted assigns. Any assignment in contravention of the foregoing shall be null and void.
16.5 Waivers and Amendments. Any waiver of any term or condition of this Agreement, or any amendment or supplementation of this Agreement, shall be effective only if in writing signed by the Parties. A waiver of any breach or failure to enforce any of the terms or conditions of this Agreement shall not in any way affect, limit or waive a Party's rights hereunder at any time to enforce strict compliance thereafter with every term or condition of this Agreement.

16.6 Severability. Both Parties hereby expressly state that it is the intention of neither Party to violate any law. If any of the provisions of this Agreement are held to be void or unenforceable, then such void or unenforceable provisions shall be replaced by valid and enforceable provisions which will achieve as far as possible the economic business intentions of the Parties.
16.7 Construction. The article and section headings contained in this Agreement are for the purpose of convenience and are not intended to define or limit the contents of such sections. Unless the context of this Agreement clearly requires otherwise, (a) references to the plural include the singular, the singular the plural, the part the whole, (b) references to any gender include all genders, (c) “or” has the inclusive meaning frequently identified with the phrase “and/or,” (d) “including” has the inclusive meaning frequently identified with the phrase “including but not limited to” or “including without limitation”, and (e) references to “hereunder” or “herein” relate to this Agreement.
16.8 Counterparts. This Agreement may be signed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may be executed in one or more counterparts, each of which shall be an original, but taken together constituting one and the same instrument. Execution of a facsimile copy shall have the same force and effect as execution of an original, and a facsimile signature shall be deemed an original and valid signature.

16.9 Further Assurances. Upon the reasonable request of either Party, the other Party shall execute any additional certificates or other documents that may be reasonably necessary to fully implement this Agreement.
16.10 Force Majeure. No failure or omission by either Party in the performance of any obligation of this Agreement shall be deemed a breach of this Agreement or create any liability if the same shall arise from any cause or causes beyond the reasonable control of such Party including, but not limited to the following which, for the purposes of this Agreement, shall be regarded as beyond the control of the Party in question: (a) any act or omission of any government; (b) any future rule, regulation or order issued by any governmental authority or by any officer, department, agency, or instrumentality thereof which makes such performance impossible or commercially unreasonable; or (c) any Act of God; fire; storm; flood; earthquake; accident; war; terrorism; rebellion; insurrection; riot; invasion; strike; and lockout.
16.11 Compliance with Applicable Laws and Standards. In conducting any activity under this Agreement or in connection with the development, manufacture, use, sale, offer for sale, importation and exportation of the Products, PARI and Transave shall comply with all Applicable Laws and Standards including, but not limited to, all import and export regulations of the applicable authorities in the Transave Territory.
16.12 Relationship of the Parties. In making and performing this Agreement, the Parties are acting, and intend to be treated, as independent entities and nothing contained in this Agreement shall be construed or implied to create an agency, partnership, joint venture, or employer and employee relationship between or among any of the Parties. Except as otherwise provided herein, no Party may make any representation, warranty or commitment, whether express or implied, on behalf of or incur any charges or expenses for or in the name of any other Party. No Party shall be liable for the act of any other party unless such act is expressly authorized in writing by such Party.
16.13 Choice of Language. This Agreement, originally written in the English language, shall be governed by the English language. In the event any dispute arises with respect to this Agreement, the meanings of all terms and provisions of this Agreement shall be interpreted in their original English form. The governing language of all correspondence related to reporting, negotiation, disputes, arbitration and notice requirements shall be the English language. The Parties shall bear their own expenses for having text or other communications translated into the English language.
16.14 Injunctive Relief. Each Party hereto understands and agrees that the unauthorized use and the threatened use or disclosure of the other Party’s Intellectual Property, Project Intellectual Property or Confidential Information may cause irreparable, competitive harm and significant injury. Therefore, in the event of such unauthorized use or disclosure, in addition to all rights and remedies available to it at law and in equity, including the collection of damages, each Party hereto shall be entitled to seek immediate injunctive relief as is necessary to restrain any continuing or further breach of this Agreement without sharing or proving any actual damages sustained by such Party and without requirement of bond.

IN WITNESS WHEREOF, the Parties hereby have executed this Agreement, as of the Effective Date.
												
	Transave:
		PARI:
	
				
	TRANSAVE, INC.
		PARI PHARMA GMBH
	

															
	By:
	/s/ Tim Whitten
		By:
	/s/Martin Knoch

					
	Name:
	Tim Whitten
		Name:
	Martin Knoch

					
	Title:
	CEO/President
		Title:
	President

					
	Date:
	4/25/08
		Date:
	4/30/08

EXHIBIT 1.35
[***]

EXHIBIT 1.38
[***]

EXHIBIT 1.38A
[***]

EXHIBIT 2.2
[***]

EXHIBIT 4.1
[***]

EXHIBIT 7.5(a)
[***]

EXHIBIT 7.5(b)
[***]

EXHIBIT 7.6(a)
[***]

EXHIBIT 8.9
[***]

EXHIBIT 11.5
[***]

EXHIBIT 12.1
[***]

AMENDMENT NO. 1
TO LICENSE AGREEMENT BETWEEN
TRANSAVE, INC. AND PARI PHARMA GMBH
This first amendment (“Amendment No. 1”) effective the 24th day of June, 2009
(“Effective Date”) is made to the License Agreement dated and effective the 25th of April 2008 (“Agreement”) between PARI Pharma GmbH, a German corporation with a principal place of business at Moosstrasse 3, D-82319 Starnberg, Germany (“PARI”) and Transave, Inc., a Delaware corporation with registered Offices at 11 Deer Park Drive, Suite 117, Monmouth Junction, NJ 08852, United States of America (“Transave”). PARI and Transave shall be referred to collectively as the “Parties.”
WHEREAS Transave and PARI desire to add to the Transave Field a Secondary Indication, Non-tuberculosis Mycobacteria infections, pursuant to Sections 1.50 and 2.6 of the Agreement; and
WHEREAS Transave and PARI desire to amend the Agreement to provide terms for the added indication.
NOW, THEREFORE, in consideration of the recitals set forth above, the mutual covenants, terms and conditions set forth below, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree to amend the Agreement as follows:
									
		1.
	Section 1,54, line 2, delete “cystic fibrosis (CF) and/or bronchiectasis” and insert --cystic fibrosis (CF), bronchiectasis and/or Non-tuberculosis Mycobacteria infections--.

									
		2.
	Section 2.5, line 5, delete “CF, Bronchiectasis or such Secondary Indication” and insert -- CF, Bronchiectasis, Non-tuberculosis Mycobacteria infections or any other Secondary Indication,

									
		3.
	Section 4.1, line 9, change “2.5.2” to -2.5--.

									
		4.
	Section 4.2(a),

line 3, delete “CF and/or Bronchiectasis” and insert --CF, Bronchiectasis and/or Non-tuberculosis Mycobacteria infections--; and
line 26 (last line), delete “CF and Bronchiectasis” and insert --CF, Bronchiectasis and Non-tuberculosis Mycobacteria infections--.
									
		5.
	Section 4.2(b), delete “PARI’s obligations under Section 4.2(a) shall be conditioned upon Transave complying with its diligence obligations as set forth in Sections 7.1 and 7.2.” and insert ---PARI’s obligations under Section 4.2(a) with respect to CF, bronchiectasis and Non-tuberculosis Mycobacteria infections, respectively, shall be conditioned upon Transave complying with its diligence obligations as set forth in Sections 7.1, 7.2 and 7.2A, respectively.--.

									
		6.
	Section 6.3, first paragraph,

line 3, before “in the event Transave” insert --(a)--; and
line 6, after “in effect” insert --, and (b) in the event Transave has permanent!), discontinued to Exploit the Drug Product for CF in accordance with Section 7.1(a) and discontinued to Exploit the Drug Product for Bronchiectasis, then the Annual Minimum Royalty shall no longer be applicable for the Drug Product for CF or Bronchiectasis but the obligation to pay Annual Minimum Royalties for the Drug Product shall apply to Non-tuberculosis Mycobacteria infections--.
									
		7.
	Section 6.3(b), lines 5-6, delete “CF or Bronchiectasis” and insert --CF, Bronchiectasis or Non-tuberculosis Mycobacteria infections--.

									
		8.
	Section 7.2(b), line 4, delete “CF or any Secondary Indication” insert --CF, Non- tuberculosis Mycobacteria infections or any other Secondary Indication--.

									
		9.
	Before Section 7.3, insert a new section 7.2A as follows:

									
		“ 7.2A
	Transave Development and Commercialization Diligence for Non-tuberculosis Mycobacteria Infections.

(a) The Parties agree that Transave will use Commercially Reasonable Efforts to meet the following milestone with respect to Non-tuberculosis Mycobacteria infections:
						
	Milestone
Activity
	Milestone
Deadline

	1. Diligence Milestone 1: Last patient to complete the Phase II Trial for Non-tuberculosis Mycobacteria infections
	[***]

	2. Other Diligence Milestones: see below
	

Within one hundred eighty (180) days following the final results of the Phase II Trial for Non-tuberculosis Mycobacteria infections, the Parties, acting in good faith, will negotiate additional milestones that meet reasonable industry standards. If no additional milestones are agreed to within such time period, and the lack of milestones is not mutually agreed by both parties, then at PARI’s option, PARI may by providing prompt written notice to Transave, (1) make the license granted to Transave under this Agreement non-exclusive and PARI’s non- compete obligations set forth in Section 4.2 shall terminate or (ii) terminate the license granted to Transave under this Agreement, in each case solely with respect to Non-tuberculosis Mycobacteria infections.

If Transave fails to meet a milestone within the applicable time period, other than any failure resulting from a breach of this Agreement by PARI, then, subject to the provisions of Section 7.3, PARI shall have the option to render Transave’s license hereunder non-exclusive solely with respect to Non-tuberculosis Mycobacteria infections and to terminate its obligation not to compete with Transave in Non-tuberculosis Mycobacteria infections as set forth in Section 4.2 of this Agreement. Such option must be exercised by sending the Diligence Termination Notice to Transave, and shall become effective on the thirtieth (30th) day following the date of the Diligence Termination Notice. If such milestone is still not met within twelve (12) months of the applicable time period, other than any failure resulting from a breach of this Agreement by PARI, then, subject to the provisions of Section 7.3, PARI shall have the option to terminate the license granted to Transave under this Agreement with respect to Non-tuberculosis Mycobacteria infections only by providing written notice thereof to Transave.
(b) For the avoidance of doubt, subject to the provisions of Section 7.2A(a), nothing in this Agreement shall impart any obligation on Transave to pursue the indication of Non-tuberculosis Mycobacteria infections, and Transave’s activity or lack of activity with respect to Non-tuberculosis Mycobacteria infections shall not affect in any way Transave’s rights in and to CF, Bronchiectasis or any other Secondary Indication.
									
		10.
	Section 7.3, line 2,: delete “Section 7.1(b) and/or 7.2(a)” and insert --Section 7.1(b), 7.2(a) and/or 7.2A(a)--.

									
		11.
	Section 15.4,

line 10, delete “Section 6.3(b) for both CF and Bronchiectasis” and insert -- Section 6.3(b) for CF, Bronchiectasis and Non-tuberculosis Mycobacteria infections--; and
line 11, after “7.1(b) and 7.2(a)” insert --and 7.2A(a)--.

IN WITNESS WHEREOF, the Parties have executed this Amendment No.1 as of the Effective
Date indicated above.
																		
	TRANSAVE, INC.
		PARI PHARMA GMBH
	
						
	By:
	/s/ Tim Whitten
		By:
	/s/ Martin Knoch
	
		Tim Whitten
			Martin Knoch
	
		President and CEO
			President
	
						
	Date:
	July 14, 2009
		Date:
	July 6, 2009
	

ASSIGNMENT AND AMENDMENT NO. 2
TO LICENSE AGREEMENT BETWEEN
TRANSAVE, INC. AND PARI PHARMA GMBH
This assignment and second amendment (“Amendment No, 2”) effective the 22nd day of December, 2010 (“Effective Date”) to the License Agreement dated and effective the 25th of April 2008, between PARI Pharma GmbH, a German corporation with a principal place of business at Moosstrasse 3, D-82319 Starnberg, Germany (“PARI”) and Transave, Inc., a Delaware corporation (“Transave Inc.”), as amended by Amendment No. 1 the 24th day of June 2009 (collectively, the “Agreement”), is entered into between PARI, Transave, LLC, a Delaware limited liability company and successor to Transave, Inc. (“Transave LLC”) and Insmed Incorporated, a Virginia corporation with registered Offices at 8720 Stony Point Parkway, Suite 200, Richmond, VA 23235 (“Insmed”). PARI, Transave, LLC and Insmed shall be referred to collectively as the “Parties.”
WHEREAS, pursuant to that certain Agreement and Plan of Merger (the “Merger Agreement”), dated as of December 1, 2010, by and among Insmed, River Acquisition Co., a Delaware corporation and wholly owned subsidiary of Insmed, Transave, LLC, a wholly owned subsidiary of Insmed, Transave, Inc. and the Stockholders’ Agent named therein, Transave, Inc. was merged with and into Transave, LLC (the “Merger”);
WHEREAS, upon effectiveness of the Merger, the separate corporate existence of Transave, Inc. ceased and, by virtue of the Merger, Transave, LLC, as the surviving company, succeeded to all of the rights, Privileges, powers, franchises, liabilities and obligations of Transave, Inc.;
WHEREAS, the Merger constitutes a Sale of Business Transaction under the Agreement and Transave, LLC and Insmed are successors in interest to Transave, Inc., including for the purposes of Section 5.3(e) of the Agreement;
WHEREAS, the Parties desire that all rights and obligations of Transave, Inc. and Transave, LLC under the License Agreement be assigned to and assumed by Insmed, pursuant to Section 16.4 of the License Agreement; and
WHEREAS the Parties desire to modify the milestones for CF, Bronchiectasis and Non-tuberculosis Mycobacteria infections under the Agreement, all as set forth herein.
NOW, THEREFORE, in consideration of the recitals set forth above, the mutual covenants, terms and conditions set forth below, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:
									
		1.
	Capitalized terms used but not defined in this Amendment No. 2 will have the meanings ascribed to them in the Agreement.

									
		2.
	The CF Milestone Activity and Milestone Deadline chart set forth in Section 7.1(b) of the Agreement is hereby amended as follows (deletions shown as strikethrough and insertions shown in underlining):

						
	Milestone
Activity
	Milestone
Deadline

	1. Diligence Milestone 1: first Phase III Trial for CF begins
	[***]

	2. Diligence Milestone 2: first submission of an MAA application for CF in the Transave Territory
	[***]

									
		3.
	Section 7.1(b)(i) of the Agreement is hereby amended by replacing the date of [***] with [***] and the date of [***] with [***]

									
		4.
	Section 7.1(b)(ii) of the Agreement is hereby amended by replacing the date of [***] with [***] and the date of [***] with [***]

									
		5.
	The Bronchiectasis Milestone Activity and Milestone Deadline chart set forth in Section 7.2(a) of the Agreement is hereby amended as follows (deletions shown as strikethrough and insertions shown in underlining):

						
	Milestone
Activity
	Milestone
Deadline

	1. Diligence Milestone 1: Last patient to complete the Phase II Trial for Bronchiectasis
	[***]

	2. Other Diligence Milestones: see below
2. Diligence Milestone 2: First Phase III Trial for Bronchiectasis begins
	[***]

	3. Diligence Milestone 3: First submission of an MAA application for Bronchiectasis in the Transave Territory
	[***]

									
		6.
	The Non-tuberculosis Mycobacteria Infections Milestone Activity and Milestone Deadline chart set forth in Section 7.2(a) is hereby amended as follows (deletions shown as strikethrough and insertions shown in underlining):

						
	Milestone
Activity
	Milestone
Deadline

	1. Diligence Milestone 1: Last patient to complete the Phase II or III Trial for Non-tuberculosis Mycobacteria infections begin
	[***]

	2. Other Diligence Milestones: see below
	

									
		7.
	Pursuant to Section 16.4 of the Agreement, all rights of Transave, Inc. and Transave, LLC into and under the Agreement, and all obligations and liabilities of Transave, Inc. and Transave, LLC thereunder, are hereby assigned to Insmed, and Insmed hereby accepts such assignment of rights and assumes such obligations and liabilities, and from and alter the date hereof Insmed shall be substituted for Transave Inc. as a party to the License Agreement.

									
		8.
	The second milestone event and second milestone payment set forth in Section 5.2 of the Agreement is hereby amended as follows (deletions shown as strikethrough and insertions shown in underlining):

						
	2. Initiation of the first Phase III Trial of Drug Product with the Device
	[***]
[***]
either in cash,
Qualified Stock
or a
combination of
cash and
Qualified Stock

									
		9.
	As partial consideration for this Amendment No. 2, Insmed agrees to pay PARI a fee of [***] immediately upon execution hereof.

									
		10.
	Upon execution, this Amendment No. 2 shall be made a part of the Agreement and shall be incorporated therein by reference. Except as provided herein, all other terms and conditions of the Agreement shall remain in full force and effect.

[Signatures an Following Page]

IN WITNESS WHEREOF, the Parties have executed this Amendment No. 2 as of the Effective Date indicated above.
																					
		INSMED INCORPORATION
		PARI PHARMA GMBH
	
							
		By:
	/s/ Timothy Whitten
		By:
	/s/ Martin Knoch
	
		Timothy Whitten
			Martin Knoch
	
		President and CEO
			President
	
							
		Date:
	12/22/10
		Date:
	01/03/11
	

																					
		TRANSAVE, LLC
			
					
		By: Insmed Incorporated, Managing Member
			
							
		By:
	/s/ Timothy Whitten
				
		Timothy Whitten
				
		President and CEO
				
							
		Date:
	12/22/10
				

AMENDMENT NO. 3
TO LICENSE AGREEMENT BETWEEN
TRANSAVE, INC. AND PARI PHARMA GMBH
This third amendment (“Amendment No. 3”) effective the 6th day of March, 2012 (“Effective Date”) to the License Agreement dated and effective the 25thof April 2008, between PARI Pharma GmbH, a German corporation with a principal place of business at Moosstrasse 3, D-82319 Starnberg, Germany (“PARI”) and Transave, Inc., a Delaware corporation, as amended by Amendment No. 1 the 24th day of June 2009 and Assignment and Amendment No. 2 the 22nd day of December 2010 (collectively, the “Agreement”), is entered into between PARI and Insmed Incorporated (successor in interest to Transave, Inc), with registered offices at 9 Deer Park Drive, Suite C, Monmouth Junction, NJ 08852 (“Insmed”). PARI and Insmed shall be referred to collectively as the “Parties.”
WHEREAS the Parties desire to modify the milestones for CF, Bronchiectasis and Non-tuberculosis Mycobacteria infections under the Agreement.
NOW, THEREFORE, in consideration of the recitals set forth above, the mutual covenants, terms and conditions set forth below, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:
									
		1.
	Capitalized terms used but not defined in this Amendment No. 3 will have the meaningsascribed to them in the Agreement. Where revisions are made, the revisions are to be made to the most recent agreed upon language in effect as of the implementation of the Assignment and Amendment No. 2.

									
		2.
	The CF Milestone Activity and Milestone Deadline chart set forth in Section 7.1(b) of the Agreement is hereby amended as follows:

						
	Milestone
Activity
	Milestone
Deadline

	1. Diligence Milestone 1: first Phase III Trial for CF begins
	[***]

	2. Diligence Milestone 2: first submission of an MAA application for CF in the Transave Territory
	[***]

									
		3.
	Section 7.1(b)(i) of the Agreement is hereby amended by replacing the date of [***] with [***] and the date of [***] with [***]

									
		4.
	Section 7.1(b)(ii) of the Agreement is hereby amended by replacing the date of [***] with the date of [***] and the date of [***] with the date of [***]

									
		5.
	The Bronchiectasis Milestone Activity and Milestone Deadline chart set forth in Section 7.2(a) of the Agreement is hereby amended as:

						
	Milestone
Activity
	Milestone
Deadline

	1. Diligence Milestone 1: Last patient to complete the Phase II Trial for Bronchiectasis
	[***]

	2. Diligence Milestone 2: First Phase III Trial for Bronchiectasis begins
	[***]

	3. Diligence Milestone 3: First submission of an MAA application for Bronchiectasis in the Transave Territory
	[***]

									
		6.
	The Non-tuberculosis Mycobacteria Infections Milestone Activity and Milestone Deadline chart set forth in Section 7.2(a) is hereby amended as follows:

						
	Milestone
Activity
	Milestone
Deadline

	1. Diligence Milestone 1: Phase II or III Trial for Non-tuberculosis Mycobacteria infections begins
	[***]

	2. Other Diligence Milestones: see below
	

									
		7.
	In consideration of PARI’s agreement to the extensions of the various Milestone Deadlines as set forth above and PARI's continued upholding of exclusivity in the field of Bronchiectasis, Insmed has the option to pay PARI [***]

									
		8.
	Upon execution, this Amendment No. 3 shall be made a part of the Agreement and shall be incorporated therein by reference. Except as provided herein, all other terms and conditions of the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the Parties have executed this Amendment No. 3 as of the Effective Date indicated above.
																					
		INSMED INCORPORATED
		PARI PHARMA GMBH
	
							
		By:
	/s/ Tim Whitten
		By:
	/s/ Martin Knoch
	
			Tim Whitten
			Martin Knoch
	
			President and CEO
			President
	
							
		Date:
	March 8, 2012
		Date:
	March 6, 2012
	

AMENDMENT NO. 4
TO LICENSE AGREEMENT BETWEEN
TRANSAVE, INC. AND PARI PHARMA GMBH
This fourth amendment (“Amendment No. 4”) effective May 21, 2012 (“Amendment No. 4 Effective Date”) to the License Agreement dated and effective the 25th of April 2008 between PARI Pharma GmbH, a German corporation with a principal place of business at Moosstrasse 3, D-82319 Starnberg, Germany (“PARI”) and Transave, Inc., a Delaware corporation, as amended by Amendment No. 1 the 24th day of June 2009, Assignment and Amendment No. 2 the 22nd day of December 2010, and Amendment No. 3 the 6th day of March 2012 (collectively, the “Agreement”), is entered into between PARI and Insmed Incorporated (successor in interest to Transave, Inc.), with registered offices at 9 Deer Park Drive, Suite C, Monmouth Junction, NJ 08852 (“Insmed”). PARI and Insmed shall be referred to collectively as the “Parties”.
WHEREAS, during the performance of the Agreement, the Parties have made an invention that is directed, in part, to methods of delivering aminoglycosides with a certain nebulization rate, which nebulization rate may be achieved by using the Device of PARI; and
WHEREAS, the Parties now desire to amend the terms and conditions of the Agreement to assign such invention to Insmed such that Insmed will have the sole ownership of such invention.
NOW, THEREFORE, in consideration of the recitals set forth above, the mutual covenants, terms and conditions set forth below, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:
1. Definitions. Capitalized terms used but not defined in this Amendment No. 4 will have the meanings ascribed to them in the Agreement. A new definition is hereby added to the Agreement:
“Assigned Invention” means solely the invention described in the invention disclosure attached to Amendment No. 4 as Exhibit A, [***]
2. Assignment of Invention. Notwithstanding anything to the contrary in the Agreement, Insmed shall solely own all right, title and interest in and to the Assigned Invention, which shall be deemed Transave Intellectual Property for purposes of the Agreement and shall be excluded from the definition of Project Intellectual Property. PARI hereby assigns and transfers to Insmed all of its right, title and interest in and to the Assigned Invention free and clear of any encumbrance throughout the world. Upon Insmed’s request and at Insmed’s cost and expense, PARI shall take, and shall cause its employees and agents to take, all further acts reasonably required to evidence and effect such assignment and transfer to Insmed. For clarity, as the sole owner of Project Data, Insmed shall have the rights, subject to the restrictions set forth in Section 3.2(b) of the Agreement and this Amendment No. 4, to use Project Data in connection with the practice of the Assigned Invention and in support of the filing, prosecution and maintenance of the Assigned Invention Patents (as defined in Paragraph 3 below).

3. Patent Prosecution. As the sole owner of the Assigned Invention, Insmed shall have the sole right and discretion, at its cost and expense, to prepare, file, prosecute and maintain patent applications and patents, including provisionals, additions, divisionals, continuations, substitutions, continuations-in-part, together with re-examinations, reissues, renewals or extensions thereof and all foreign counterparts of the forgoing claiming the Assigned Invention anywhere in the world (the “Assigned Invention Patent(s)”), and shall solely own all Assigned Invention Patents. Insmed shall not file or amend any claims in Assigned Invention Patents that [***]. In addition, to the extent that any changes are made that impact or affect PARI Intellectual Property, the Project Intellectual Property or otherwise expand coverage beyond the Transave Field or Non-Compete in Section 4.2 of the Agreement, Insmed shall not file any divisional, continuation, or continuation-in-part of any Assigned Invention Patent without PARI’s prior written approval. Upon Insmed’s request and at Insmed’s cost and expense, PARI shall provide Insmed all reasonable assistance and cooperation in connection with the prosecution and maintenance of the Assigned Invention Patents. Insmed shall keep PARI reasonably informed on the status of Assigned Invention Patents.
4. Joint Ownership of Assigned Invention Patents. Notwithstanding anything to the contrary contained in the Agreement or this Amendment No. 4, if any Assigned Invention Patent contains or is amended to contain any claim that claims, in addition to the Assigned Invention, any embodiment of (i) the Device, (ii) any part of the Device, (iii) any method to manufacture the Device, or (iv) any method of using the Device, then Insmed shall 

and hereby does transfer and assign to PARI one undivided half interest in such Assigned Invention Patents that include such a claim, so that such Assigned Invention Patents are jointly owned by Insmed and PARI. This Paragraph 4 survives any termination or expiration of the Agreement.
5. PARI Sole Ownership of Assigned Invention Patent(s). Notwithstanding anything to the contrary contained in the Agreement or this Amendment No. 4, if any Assigned Invention Patent contains or is amended to contain any independent claim that claims any embodiment of (i) the Device, (ii) any part of the Device, (iii) any method to manufacture the Device, or (iv) any method of using the Device, but which does not claim the Assigned Invention, then Insmed shall and hereby does transfer and assign to PARI all right, title and interest in and to the Assigned Invention Patent that contains said independent claim. This Paragraph 5 survives any termination or expiration of the Agreement.

6. License to PARI. Insmed hereby grants to PARI a non-exclusive, perpetual, world-wide, transferable, irrevocable, royalty-free, fully paid-up, sublicenseable license to practice the Assigned Invention and Assigned Invention Patents (the “Assigned Invention Licenses”) (i) during the Royalty Term and thereafter outside the Transave Field; and, in addition, (ii) upon early termination of the Agreement by PARI due to Section 15.2 or 15.4, inside the Transave Field to include liposomal aminoglycoside formulations other than Arikace. PARI shall not, and shall not permit any of its Affiliates to, and shall use commercially reasonable efforts to prohibit any of its sublicensees to, (A) practice the Assigned Invention inside the Transave Field, during the Royalty Term, or (B) practice the Assigned Invention in connection with Arikace after earlier termination by PARI under Section 15.2 or 15.4. This Paragraph 5 survives any termination or expiration of the Agreement.
7. Section 1.48 shall hereby be replaced in its entirety as follows:
“Royalty Term” means, on a country-by-country basis, the period commencing on the date of First Commercial Sale of Drug Product and continuing until the later of (a) Expiration of the (i) last Valid Claim covering the particular Device or (ii) the Assigned Invention Patents, in each case in the particular country in which any Product is sold or [***] after the First Commercial Sale of the Drug Product in such country in the Transave Territory.
6. Termination by PARI. Section 15.4 (ii) of the Agreement shall hereby be replaced in its entirety as follows:
[***]
7. Miscellaneous. Upon execution, this Amendment No. 4 shall be made part of the Agreement and shall be incorporated therein by reference. Except as provided herein, all other terms and conditions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the Parties have executed this Amendment No. 4 as of the Amendment No. 4 Effective Date indicated above.
																					
		Insmed Incorporated
		PARI Pharma GmbH
	
							
		By:
	/s/ Tim Whitten
		By:
	/s/ Dr. Martin Knoch
	
							
		Name:
	Tim Whitten
		Name:
	Dr. Martin Knoch
	
							
		Title:
	President and CEO
		Title:
	President
	
							
		Date:
	May 12, 2012
		Date:
	May 12, 2012
	

INSMED -- Confidential Invention Disclosure
[***]Document

Exhibit 10.2.1

Pursuant to Item 601(b)(10)(iv) of Regulation S-K, confidential information (indicated by [***]) has been omitted from Exhibit 10.2.1 because it (i) is not material and (ii) would likely cause competitive harm to the Registrant if publicly disclosed.

CONTRACT MANUFACTURING AGREEMENT
This Contract Manufacturing Agreement (this “Agreement”) is entered into and effective this 7th day of February, 2014 (the “Effective Date”), by and between Therapure Biopharma Inc. (“Therapure”), a Canadian corporation with its principal place of business in Mississauga, Ontario and Insmed Incorporated (“Insmed”), a Virginia corporation, having its principal office at 9 Deer Park Drive, Suite C, Monmouth Junction, New Jersey. Each of Therapure and Insmed is referred to herein as a “party” and collectively as the “parties”.

RECITALS
WHEREAS, Therapure maintains certain registrations and licenses with certain Governmental or Regulatory Authorities (as defined below) as are necessary and appropriate to Manufacture ARIKACE (as defined below) for use in or as finished drug products for sale in the Territory (as defined below);
AND WHEREAS, Insmed shall obtain the NDA and all other ARIKACE Permits (as defined below) necessary or required for the sale, marketing, distribution and reimbursement of ARIKACE in the Territory;
AND WHEREAS, the parties shall perform certain development work in connection with developing ARIKACE for scale production, as further described in this Agreement;
AND WHEREAS, in furtherance of the foregoing, Therapure and Insmed wish to enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties agree as follows:

ARTICLE 1 DEFINITIONS
1.1. Definitions. As used in this Agreement, the following words and phrases shall have the respective meanings ascribed below.
1.1.1. “Acceptance Criteria” shall have the meaning set out in Section 13.2.3(i).
1.1.2. “Affiliate” of any person or entity means another person or entity that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person or entity. For the purposes of this definition, “control” means, as to any person or entity, the power to direct or cause the direction of the management and policies of such person or entity, whether through the ownership of voting securities, by contract or otherwise.
1.1.3. “Agreement” shall have the meaning set out in the Preamble.
1.1.4. “Amikacin” shall mean the active pharmaceutical ingredient Amikacin in unfinished form, which is to be included in ARIKACE.
1.1.5. “Annual Minimum Batch Processing Fee Amount” shall have the meaning set out in Schedule C.
1.1.6. “Anti-Corruption Laws” means all applicable laws, regulations, orders, judicial decisions, conventions and international financial institution rules regarding corruption, bribery, ethical business conduct, money laundering, political contributions, gifts and gratuities, or lawful expenses to public officials and private persons, agency relationships, commissions, lobbying, books and records, and financial controls.
1.1.7. “ARIKACE” shall mean ARIKACETM (liposomal amikacin for inhalation), as Manufactured according to the ARIKACE Specifications.
1.1.8. “ARIKACE Delivery Deadline” shall have the meaning set out in Section 12.3.1.
1.1.9. “ARIKACE Permit” shall have the meaning set out in Section 8.1.2.
1.1.10. “ARIKACE SOPs” shall mean the Standard Operating Procedures applicable to the Manufacture of ARIKACE.
1.1.11. “ARIKACE Specifications” shall have the meaning set out in Section 4.6.
1.1.12. “Allocated Minimum Batch Labour” shall mean the labour allocated by Therapure to Manufacture that amount of ARIKACE equivalent to the Annual Minimum Batch Processing Fee Amount in any Manufacturing Year.

1.1.13. “Basis of Design” shall mean the engineering specifications for ARIKACE, as are described in Schedule F.
1.1.14. “Batch” shall mean [***] kilograms of ARIKACE that is intended to have uniform character and quality as set out in ARIKACE Specifications, and is produced according to a single manufacturing order during the same cycle of Manufacture.
1.1.15. “Batch Processing Fee” shall mean the processing fee for ARIKACE to be paid by Insmed.
1.1.16. “Batch Production Records” shall mean the batch production records of ARIKACE, which document the Manufacture of the Batch according to the ARIKACE Specifications.
1.1.17. “Batch Release Date” shall mean the date on which Therapure submits to Insmed a report which documents that a Batch meets all of the release specifications according to the analytical release testing being performed by Therapure.
1.1.18. “Batch Release Documentation” shall mean the executed Batch Production Records as well as the analytical release testing to be performed by Therapure.
1.1.19. “Binding Portion” shall have the meaning set out in Section 11.3.5.
1.1.20. “Breach Date” shall have the meaning set out in Section 22.1.1(ii).
1.1.21. “Business Day” shall mean any day other than a Saturday, a Sunday or a day on which banks in Toronto, Ontario or New York, New York are authorized or obligated by Law to not open or remain closed.
1.1.22. “Certificate of Analysis” shall mean a certificate relating to a Batch of ARIKACE or Amikacin that sets forth a list of items tested by Therapure, the applicable specifications, and the test results.
1.1.23. “cGMP Process Validation Performance Run Fee” shall have the meaning set out in Section 12.1.1.
1.1.24. “Change Fee” shall have the meaning set out in Section 7.1.3.
1.1.25. “Change Notice” shall have the meaning set out in Section 7.1.2.
1.1.26. “Change of Control” shall occur, with respect to any specified person, if:
(i) any Group, who prior to such time beneficially owned less than 50 percent of the voting shares or other equity interests of such specified person (measured by voting power rather than the number of shares or other equity interests), shall acquire (including by merger, consolidation or otherwise) voting shares or other equity interests of such specified person, in one or more transactions or series of transactions, and after such transaction or transactions such Group beneficially owns 50 percent or more of voting shares or other equity interests of such specified person (measured by voting power rather than the number of shares or other equity interests); or
(ii) such specified person shall sell all or substantially all of its assets relating to this Agreement to any Group which, prior to the time of such transaction, beneficially, directly or indirectly, owned less than 50 percent of the voting shares or other equity interests of such specified person (measured by voting power rather than the number of shares or other equity interests).
1.1.27. “Clean Room Consumables” shall mean the clean room consumable items used by operators in the Workshop during Manufacturing, including, without limitation, wipes, shoe covers, gloves, face masks, sterile coveralls, hairnets, goggles, aprons and lab coats.
1.1.28. “Commercial Manufacturing Date” shall have the meaning set out in Section 11.3.1.
1.1.29. “Commercialization Permits” shall have the meaning set out in Section 8.1.2.
1.1.30. “Commodity Taxes” shall mean all Taxes levied on or measured by, or referred to as goods and services, harmonized sales, Québec sales, value-added, consumption, sales, provincial sales, use, transfer, land transfer, registration charges, gross receipt, turnover, excise or stamp, all customs duties, countervail, anti-dumping and special import measures and all import and export taxes.
1.1.31. “Confidentiality Agreement” shall mean the Mutual Confidential Disclosure Agreement between Insmed and Therapure dated March 1, 2012.
1.1.32. “Confidential Information” shall mean any non-public information or other material, whether written, oral, electronic, or in any other form, received or obtained at any time in connection with this Agreement whether before, on or after the date of this Agreement, that is confidential or proprietary. Confidential Information includes, but is not limited to, proprietary and non-public know-how, plans, flow charts, technical documentation, formulas, ingredients, concepts, and information concerning the design, specifications and methods for the development, manufacture, packaging and supply of ARIKACE or Amikacin produced by Therapure or Insmed in addition to the terms and conditions of this Agreement. Moreover, Confidential Information includes notes, analyses, compilations, summaries, data, studies, interpretations, forecasts, records, memoranda or other documents or information prepared by the parties and their respective Affiliates and representatives which contain, reflect or are based on, in whole or in part, Confidential Information. Confidential Information shall not include any 

information to the extent which, either before or after disclosure to the party receiving the Confidential Information (the “Receiving Party”):
(i) was or becomes published or lawfully known to the public through no fault or omission on the part of the Receiving Party;
(ii) was known or used by the Receiving Party prior to its disclosure by the party disclosing the Confidential Information (the “Disclosing Party”) to the Receiving Party and the Receiving Party is able to substantiate that such information was derived by it from a source (independent from the Disclosing Party) without any obligation of confidentiality; or
(iii) is provided to the Receiving Party without restriction by a third party having the legal right to do so.
1.1.33. “CPI - Canada” shall mean the Consumer Price Index for Canada as calculated by Statistics Canada or, in the event Statistics Canada ceases to be responsible for calculation of CPI - Canada, by the agency or entity that assumes such responsibility.
1.1.34. “Corrective Action” shall have the meaning set out in Section 17.2.
1.1.35. “Corrective Action Date” shall have the meaning set out in Section 17.3.2(i).
1.1.36. “Correction Costs” shall have the meaning set out in Section 17.3.2(i).
1.1.37. “Cost of Amikacin” shall mean $[***] per kilogram (the cost of Amikacin as of the Effective Date) or the then-current cost of Amikacin procured by Insmed, as supported in both cases by reasonable documentation provided by Insmed to Therapure.
1.1.38. “Cost of Excipients” shall mean (i) $[***] per kilogram (the cost of dipalmitoylphosphatidylcholine (DPPC) as of the Effective Date); and (ii) $[***] per kilogram (the cost of cholesterol as of the Effective Date) or the then-current cost of such materials procured by Insmed, as supported in both cases by reasonable documentation provided by Insmed to Therapure.
1.1.39. “Current Good Manufacturing Practices” or “cGMPs” shall mean the good manufacturing practices required by the FDA (and set out in the FD&C Act or FDA regulations, as they may be amended from time to time (including, without limitation, 21 CFR 210 and 211), and other applicable Governmental or Regulatory Authorities as mutually agreed by the parties in writing, laws, policies, guidelines or guidance in effect at any time during the Term, for the manufacture and testing of biopharmaceutical materials as applied solely to ARIKACE.
1.1.40. “Demand Forecast” shall have the meaning set out in Section 11.3.3.
1.1.41. “Dollars” (represented as “$”) shall mean U.S. Dollars.
1.1.42. “Effective Date” shall have the meaning set out in the Preamble.
1.1.43. “EMA” shall mean the European Medicines Agency, or any one or more successor agency thereto performing similar functions.
1.1.44. “Equipment” shall have the meaning set out in Section 3.1.2.1.
1.1.45. “Equipment Costs” shall have the meaning set out in Section 3.1.3.2.
1.1.46. “Equipment Invoices” shall have the meaning set out in Section 3.1.3.2.
1.1.47. “Equipment Replacement Costs” shall have the meaning set out in Section 3.1.2.6.
1.1.48. “European Economic Area” shall mean the members states of the European Union (except Croatia), as of the Effective Date, plus Iceland and Norway.
1.1.49. “Excipients” shall mean dipalmitoylphosphatidylcholine (DPPC) and cholesterol, but excluding ethanol, NaCL and NAOH.
1.1.50. “Extension Term” shall have the meaning set out in Section 14.1(ii).
1.1.51. “Facility” shall mean Therapure’s manufacturing facilities in Mississauga, Canada, used, among other things, for the Manufacture of ARIKACE.
1.1.52. “Facility Permit” shall have the meaning set out in Section 8.1.1.
1.1.53. “FCPA” shall mean the U.S. Foreign Corrupt Practices Act (15 U.S.C. Section 78dd-1, et -seq.), as amended.
1.1.54. “FDA” shall mean the United States Food and Drug Administration, or any successor agency thereto performing similar functions.
1.1.55. “FD&C Act” shall mean the United States Federal Food, Drug and Cosmetic Act, as may be amended from time to time.
1.1.56. “Firm Portion” shall have the meaning set out in Section 11.3.6.
1.1.57. “Force Majeure” shall have the meaning set out in Section 23.1.
1.1.58. “G&A Cost” shall mean:

(i) an amount equal to Therapure’s out-of-pocket third party costs actually incurred for the construction, retrofit and associated validation of the Workshop and the procurement and validation of Equipment;
(ii) an amount equal to Therapure’s out-of-pocket third party costs actually incurred in connection with the Technology Transfer Program plus [***] percent; and
(iii) for the period following the completion of the Technology Transfer Program, an amount equal to Therapure’s out-of-pocket third party costs actually incurred plus [***] percent.
1.1.59. “Governmental or Regulatory Authority” shall mean any domestic or foreign entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including, FDA, EMA and Health Canada as well as any other agency, department, board, commission, court, tribunal, judicial body or instrumentality of any union of nations, federation, nation, state, municipality, county, locality or other political subdivision thereof.
1.1.60. “Group” shall mean any person, or any two or more persons acting as a group, and all Affiliates of such person or persons.
1.1.61. “Heads of Agreement” shall mean the Heads of Agreement Summary entered into by Insmed and Therapure dated August 14, 2013.
1.1.62. “Health Canada” shall mean Health Canada, the regulatory body of the Government of Canada governing health products under the Food and Drugs Act (Canada) and regulations.
1.1.63. “Indemnified Party” shall mean the person seeking indemnification.
1.1.64. “Indemnifying Party” shall mean the person from whom indemnification is sought.
1.1.65. “Indication” shall mean an approved use of ARIKACE by a Governmental or Regulatory Authority for the treatment, prevention, or diagnosis of a medical condition.
1.1.66. “Inflation Period” shall mean the period commencing on the Effective Date and ending on the first day of Manufacturing Year 1.
1.1.67. “Initial Delivery Date” shall mean the first date on which Therapure delivers ARIKACE to Insmed after Insmed obtains Permits related to the Manufacture of ARIKACE.
1.1.68. “Initial Term” shall have the meaning set out in Section 14.1(i).
1.1.69. “Insmed” shall have the meaning set out in the Recitals.
1.1.70. “Insmed Intellectual Property” shall have the meaning set out in Section 16.1.2.
1.1.71. “Insmed Representatives” shall have the meaning set out in Section 21.2.
1.1.72. “Intellectual Property Rights” shall mean United States, Canadian, and worldwide intellectual property rights including, without limitation, trademarks, service marks, trade dress, logos, copyrights, rights of authorship, inventions, patents, rights of inventorship, moral rights, rights of publicity and privacy, trade secrets, industrial design rights, rights under unfair competition and unfair trade practices laws, know how, show how and all other intellectual and industrial property rights related thereto, or otherwise, whether registered, unregistered, statutory, common law, or pending, throughout the world.
1.1.73. “Inventory” shall mean the amount of ARIKACE specified in the Demand Forecast.
1.1.74. “Joint Project Team” shall have the meaning set out in Section 2.1.1.
1.1.75. “Latent Defect” shall mean a defect in ARIKACE to the extent attributable to Therapure, which results in ARIKACE not conforming to the Acceptance Criteria and that is not discoverable by a commercially reasonable examination of such ARIKACE in accordance with Insmed’s quality assurance program.
1.1.76. “Latent Defect Notice” shall have the meaning set out in Section 13.2.3(ii).
1.1.77. “Laws” shall mean all constitutions, laws, statutes, ordinances, treaties, rules, common law, rulings, regulations, orders, charges, directives, determinations, executive orders, writs, judgments, injunctions, decrees, restrictions or similar pronouncements of any applicable Governmental or Regulatory Authority.
1.1.78. “Litigation Conditions” shall have the meaning set out in Section 21.3.2.
1.1.79. “Losses” shall have the meaning set out in Section 21.1.
1.1.80. “Manufacture” or “Manufacturing” shall mean the formulation, filling, packaging, inspecting, validating and testing of ARIKACE, and does not include authority over commercialization activities, including, without limitation, pricing and price-reporting, sales, marketing, and/or distribution.
1.1.81. “Manufacturing Defect” means a deviation from the ARIKACE Specifications, Master Batch Record and ARIKACE SOPs resulting in an inability to issue a Certificate of Analysis.
1.1.82. “Manufacturing Materials” shall mean the formulation and packaging materials, filling components such as product containers, vials, filters, stoppers, hoses, packaging, standard labels or supplies required for the Manufacture of ARIKACE (other than Amikacin and Excipients) in accordance with ARIKACE Specifications and the external testing required for such materials and for Amikacin and Excipients.

1.1.83. “Manufacturing Period” shall mean the period commencing on the date on which Insmed delivers to Therapure the first shipment of Amikacin and Excipients intended for Manufacture into ARIKACE for commercial distribution.
1.1.84. “Manufacturing Permit” shall have the meaning set out in Section 8.1.1.
1.1.85. “Manufacturing Site Registration Filing Date” shall mean the date on which Insmed files the Therapure manufacturing site registration.
1.1.86. “Manufacturing Suppliers and Vendors” shall mean suppliers of all Manufacturing Materials, including all raw materials and primary and secondary packaging components used in the Manufacture of ARIKACE, as well as any providers of services used by Therapure in connection with Manufacture of ARIKACE.
1.1.87. “Manufacturing Technology Transfer” means the transfer by Therapure to Insmed (or its third-party designee) at Insmed’s expense of all know-how, documents, records, technology, materials and information necessary or useful in the manufacture of ARIKACE, and shall include, without limitation, consultation time with Therapure’s employees, as reasonably requested by Insmed.
1.1.88. “Manufacturing Year” shall mean any 12-month period, the first of which shall commence on the date Therapure receives its first shipment of Amikacin and Excipients intended for Manufacture into ARIKACE for commercial distribution.
1.1.89. “Master Batch Record” shall mean the formal set of instructions for the Manufacture of ARIKACE at a 200 kilogram scale.
1.1.90. “NDA” shall mean the FDA-required New Drug Application or a corresponding license or application required by a Governmental or Regulatory Authority.
1.1.91. “Negotiated Cap” shall have the meaning set out in Section 6.1(iii)(A).
1.1.92. “Notice of Non-Conformity” shall have the meaning set out in Section 13.2.3(i).
1.1.93. “Permits” shall mean franchises, approvals, permits, authorizations, applications, licenses, pharmacy licenses, orders, registrations, certificates, variances, drug master files and other similar permits or rights obtained from any applicable Governmental or Regulatory Authority.
1.1.94. “Persistent Failure” shall mean either that (i) at least [***] percent of the number of Batches Manufactured under this Agreement in any [***] rolling period fail to conform with Therapure’s Manufacturing Requirements; or (ii) [***] successive Batches Manufactured under this Agreement fail to conform with Therapure’s Manufacturing Requirements. For clarity, once a Batch is determined to be non-conforming in accordance with the procedure described in Section 13.2.3, such Batch shall count as a non-conforming Batch for the purposes of this Persistent Failure definition.
1.1.95. “Persistent Failure Cure Period” shall have the meaning set out in Section 6.3.1.
1.1.96. “Persistent Failure Cure Plan” shall have the meaning set out in Section 6.3.1.
1.1.97. “Product Documentation” shall mean all documentation related to ARIKACE required to ensure compliance with any and all existing product filings in any jurisdiction for Therapure’s Manufacture of ARIKACE.
1.1.98. “Product Information” shall mean all information and data relating to Amikacin and ARIKACE necessary for Therapure to Manufacture ARIKACE, including formulae, methods of manufacture, product descriptions, test methods, validation of test methods, Batch Production Records, and all other supporting documentation, data and reports acquired by Insmed or its Affiliates during the Term in connection with the manufacture and supply of ARIKACE, and all applications, submissions, filings and correspondence of Insmed or its Affiliates with or to any Governmental or Regulatory Authority with respect to Amikacin and ARIKACE.
1.1.99. “Purchase Order” shall have the meaning set out in Section 11.2.1.
1.1.100. “Quality Agreement” shall have the meaning set out in Section 13.1.
1.1.101. “Reallocated Minimum Batch Labour” shall have the meaning set out in 6.1(i)(B).
1.1.102. “Registration Batch shall have the meaning set out in Section 12.1.1.
1.1.103. “Release Testing Fee” shall mean the release testing fee for Manufacturing Materials, Amikacin and Excipients to be paid by Insmed.
1.1.104. “Request Order” shall mean a notice to ship Amikacin and/or Excipients issued by Therapure and derived from the Demand Forecast.
1.1.105. “Response to Notice of Non-Conformity” shall have the meaning set out in Section 13.2.3(iii).
1.1.106. “Review Period” shall have the meaning set out in Section 7.1.4.
1.1.107. “SOPs” shall mean all Standard Operating Procedures other than the ARIKACE SOPs applicable to the Workshop.
1.1.108. “Stage Deposit” shall mean the non-refundable amount of $[***].

1.1.109. “Standby Fees” shall have the meaning set out in Section 6.1(iii)(B).
1.1.110. “Storage Period” shall have the meaning set out in Section 12.4.
1.1.111. “Substances” shall have the meaning set out in Section 9.2.
1.1.112. “Target Technology Transfer Completion Date” shall have the meaning set out in Section 4.7.
1.1.113. “Tax” shall mean all taxes, duties, fees, premiums, assessments, imposts, levies, rates, withholdings, dues, government contributions and other charges of any kind whatsoever, whether direct or indirect, together with all interest, penalties, fines, additions to tax or other additional amounts, imposed by any Governmental or Regulatory Authority.
1.1.114. “Technology Transfer” shall mean the scale production of ARIKACE as described in Schedule A.
1.1.115. “Technology Transfer Invoices” shall have the meaning set out in Section 4.4.
1.1.116. “Technology Transfer Period” shall mean the period commencing on the Effective Date and ending on the Manufacturing Site Registration Filing Date.
1.1.117. “Technology Transfer Program” shall mean all activities with respect to the completion of the Technology Transfer.
1.1.118. “Technology Transfer Program Managers” shall have the meaning set out in Section 4.5.
1.1.119. “Term” shall mean the Initial Term and any Extension Terms.
1.1.120. “Termination Payment Section” shall have the meaning set out in Section 14.5.1.
1.1.121. “Territory” shall mean Canada, the European Economic Area, the United States of America and its territories, commonwealths, possessions, including, without limitation, Puerto Rico, plus any other territories as mutually agreed by the parties in writing from time to time.
1.1.122. “Therapure” shall have the meaning set out in the Preamble.
1.1.123. “Therapure Intellectual Property” shall have the meaning set out in Section 16.2.1.
1.1.124. “Therapure’s Manufacturing Requirements” shall have the meaning set out in Section 13.2.1.
1.1.125. “Therapure Representatives” shall have the meaning set out in Section 21.1.
1.1.126. “Third Party Claims” shall have the meaning set out in Section 21.1.
1.1.127. “True-Up Payment” shall have the meaning set out in 6.1(i).
1.1.128. “US Export Control Laws” shall mean all applicable U.S. laws and regulations relating to the export or re-export of commodities, technologies, or services, including, but not limited to, the Export Administration Act of 1979, 24 U.S.C. §§ 2401-2420, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-1706, the Trading with the Enemy Act, 50 U.S.C. §§ 1 et. seq., the Arms Export Control Act, 22 U.S.C. §§ 2778 and 2779, and the International Boycott Provisions of Section 999 of the U.S. Internal Revenue Code of 1986.
1.1.129. “Workshop” shall mean a production and control area and related utilities located in the Facility, in which Therapure Manufactures ARIKACE.
1.1.130. “Workshop Construction Costs” shall have the meaning set out in Section 3.1.3.1.
1.1.131. “Workshop Construction Invoices” shall have the meaning set out in Section 3.1.3.1.
1.1.132. “Workshop Construction Period” shall mean the period commencing on the Effective Date and ending upon completion of the construction of the Workshop.
1.1.133. “Workshop Construction Plan” shall mean the plan as set out in Schedule E for the construction of the Workshop, including the budget for the Workshop Construction Costs and the Equipment Costs.
1.1.134. “Workshop Deposit” shall mean the non-refundable amount of $[***].
1.1.135. “Year” shall mean any 12-month period, the first of which shall commence on the Effective Date.
1.2. Schedules. The following Schedules shall form part of this Agreement:

									
	Schedule A	-	Technology Transfer Activities Quote
			
	Schedule B	-	Process Flow Diagram
			
	Schedule C	-	Minimum Commitments
			
	Schedule D	-	Demand Forecasting Examples
			
	Schedule E		Workshop Construction Plan
			
	Schedule F		Basis of Design

ARTICLE 2 JOINT PROJECT TEAM
2.1. Joint Project Team.
2.1.1. Formation, Membership and Purpose. Within [***] days following the Effective Date, the parties shall establish a joint project team which shall include each party’s project manager, as well as at least one technical representative from each party (the “Joint Project Team”). The Joint Project Team will meet to discuss questions or issues regarding the project and the relationship between the parties. The Joint Project Team will have no formal voting authority, but shall be expected to work towards consensus decisions on matters of concern to the parties regarding the project and the relationship between the parties. In the event the Joint Project Team is unable to reach a consensus decision, the question(s) or issue(s) in dispute shall be resolved in accordance with Article 37.
2.1.2. Limitation of Authority. The Joint Project Team shall have only such powers as are specifically delegated to it hereunder and shall not be a substitute for the rights of the parties.
2.1.3. Quarterly Manufacturing Meetings. The Joint Project Team shall meet once each calendar quarter at a mutually agreeable location to review all aspects of this Agreement, including each Demand Forecast. The Joint Project Team representatives from each party with an appropriate level of expertise in manufacturing, quality assurance and regulatory affairs and other matters mutually identified as relevant shall attend such meetings to facilitate the highest level of performance under this Agreement. Each party shall designate one Joint Project Team representative who shall have reasonable access to such party’s information, of the type set out in this Section 2.1.3(i)-(vii) related to ARIKACE and the authority to discuss and address issues related to the Manufacture of ARIKACE and this Agreement, including: (i) Manufacturing operations; (ii) regulatory, quality and compliance activities; (iii) FDA, Health Canada or EMA correspondence, (iv) ARIKACE planning and scheduling; (v) the Workshop; (vi) all critical systems data associated with the Manufacturing operations; and (vii) technical issues related to qualification and shipment of Amikacin.
2.1.4. Additional Meetings of the Joint Project Team. In addition to the quarterly meetings under Section 2.1.3, the Joint Project Team shall hold meetings at such times as it elects to do so; provided, however that the Joint Project Team shall hold meetings no less frequently than bi-weekly, subject to additional meetings as needed or by mutual agreement. The location of meetings shall be established by the Joint Project Team, provided that such meetings may be held in person, teleconference or video conference, as mutually agreed by the parties. For purposes of clarity, no meeting of the Joint Project Team shall be held or be valid without at least one member of each party being present at such meeting. To the extent practicable, each party shall provide proposed agenda items to the Joint Project Team members in advance of each Joint Project Team meeting date. Each member of the Joint Project Team may propose additional agenda items at least [***] Business Days in advance of each meeting. The costs incurred by each party in connection with its participation at any meetings of the Joint Project Team shall be borne solely by such party. Unless the members of the Joint Project Team agree upon a person to act as secretary of a meeting of the Joint Project Team, a Joint Project Team member of Therapure shall serve as secretary of that meeting. The secretary of each meeting shall prepare, and by e-mail distribute to all members of the Joint Project Team, minutes of the meeting within [***] days following the meeting to allow adequate review and comment.

ARTICLE 3 WORKSHOP CONSTRUCTION PERIOD

3.1. Workshop Construction Period. During the Workshop Construction Period, the parties agree as follows:
3.1.1. Workshop Construction. Without limiting the obligations of Therapure under this Agreement, Therapure shall:
(i) procure the necessary assets required to be used or held for use in the construction of the Workshop in accordance with the Workshop Construction Plan;
(ii) construct, configure, retrofit and validate the Workshop, as approved by Insmed and in accordance with the Workshop Construction Plan, to allow for the Manufacture of ARIKACE; and
(iii) undertake such activities as are required to secure and maintain all approvals from the FDA, Health Canada or EMA necessary for use of the Workshop for the Manufacture of ARIKACE.
3.1.2. Equipment.
3.1.2.1. Therapure shall procure the necessary assets specifically required for the Manufacture or testing of ARIKACE (the “Equipment”).
3.1.2.2. Therapure shall own, possess and have good and marketable title to all of the Equipment.
3.1.2.3. Therapure shall not be permitted to use the Equipment for any purpose, other than the Manufacture of ARIKACE, at any time during the Term without the prior written consent of Insmed, which consent shall not be unreasonably withheld, conditioned or delayed.
3.1.2.4. If Therapure identifies another customer that could utilize the Equipment during the Term, and Insmed provides its prior written consent for such use, Therapure and Insmed shall negotiate in good faith a compensatory payment to Insmed.
3.1.2.5. Therapure shall take reasonable precautions to protect the Equipment from damage (except for normal wear and tear).
3.1.2.6. The costs associated with the replacement of the Equipment (the “Equipment Replacement Costs”) due to ordinary wear and tear shall be borne [***] percent by Insmed and [***] percent by Therapure; provided, however, that Therapure shall be responsible for paying all other reasonable Equipment Replacement Costs.
3.1.2.7. Therapure shall have established (i) procedures that require routine calibration, inspection, checking and maintenance of the Equipment; and (ii) calibration and maintenance processes for the Equipment, as supported by calibration and maintenance records available to Insmed.
3.1.2.8. Therapure shall obtain and maintain, during the Term, commercially reasonable levels of insurance on the Equipment.
3.1.3. Payment and Invoicing.
3.1.3.1. Without limiting the obligations of Insmed under this Agreement, Insmed shall pay all reasonable (and for costs exceeding $[***]) third party and internal Therapure costs of the construction, retrofit and associated validation of the Workshop in accordance with the Workshop Construction Plan (the “Workshop Construction Costs”). Therapure shall invoice Insmed on a monthly basis based on commitments made in accordance with the Workshop Construction Plan (the “Workshop Construction Invoices”); provided, however, that no Workshop Construction Invoices shall be rendered by Therapure to Insmed for Workshop Construction Costs in excess of the applicable amounts set forth in the Workshop Construction Plan, without the prior written consent of Insmed. Each Workshop Construction Invoice shall be payable by Insmed within [***] days of invoice by Therapure and any failure to pay within that period shall be subject to the late payment fee set out in Section 12.2.2.
3.1.3.2. The cost of Equipment (the “Equipment Costs”) shall be borne [***] percent by Insmed and [***] percent by Therapure. Therapure shall invoice Insmed on a monthly basis based on commitments made in accordance with the Workshop Construction Plan (the “Equipment Invoices”); provided, however, that no Equipment Invoices shall be rendered by Therapure to Insmed for Equipment Costs in excess of the applicable amounts set forth in the Workshop Construction Plan, without the prior written consent of Insmed. Each Equipment Invoice shall be payable by Insmed within [***] days of invoice by Therapure and any failure to pay within that period shall be subject to the late payment fee set out in Section 12.2.2.
3.1.4. Workshop Deposit.
3.1.4.1. Insmed shall pay to Therapure the Workshop Deposit as follows, receipt of which shall be acknowledged by Therapure in writing in the manner provided in Section 24.1:

(i) concurrently upon execution of this Agreement, in an amount equal to $1.5 million; and
(ii) within [***] days of the issuance of the first purchase order for Equipment, in an amount equal to $[***] million.
3.1.4.2. The Workshop Deposit shall be credited as follows:
(i) $[***] of the Workshop Deposit shall be credited in equal instalments of $[***] per calendar month against each Workshop Construction Invoice or Equipment Invoice under this Agreement (starting with the first Workshop Construction Invoice or Equipment Invoice such that the full $[***] amount is credited in [***] months); provided, that if a Workshop Construction Invoice or Equipment Invoice is not issued in a calendar month during such [***] month period, then the excess credit shall be carried forward and applied against the next issued Workshop Construction Invoice or Equipment Invoice; and
(ii) $[***] of the Workshop Deposit shall be credited against the last of the Workshop Construction Invoices or Equipment Invoices under this Agreement.

ARTICLE 4 TECHNOLOGY TRANSFER PERIOD
4.1. Objective. During the Technology Transfer Period, Insmed and Therapure shall reasonably cooperate with each other to complete the Technology Transfer Program as set out under Schedule A. The provisions of this Article 4 apply solely during the Technology Transfer Period.
4.2. Diligence and Resources.
4.2.1. Without limiting the obligations of Insmed under this Agreement, Insmed shall, at its own expense, in respect of the Technology Transfer Program:
(i) work diligently in a professional manner and with all reasonable commercial efforts in fulfilling any and all of its obligations, including under this Section 4.2.1;
(ii) subject to Article 18, provide to Therapure all Product Documentation and Product Information;
(iii) pursuant to and in accordance with a Request Order, deliver Amikacin to Therapure DDP (Incoterms 2010) Therapure’s facilities in Mississauga, Ontario;
(iv) assist Therapure in process implementation and validation;
(v) approve or object to engineering and process designs within [***] Business Days of receipt thereof by Insmed from Therapure (or be deemed to approve the same within [***] Business Days of receipt by Insmed from Therapure of a second notice thereof);
(vi) in Insmed’s sole discretion, file, seek, prosecute and maintain all ARIKACE Permits, including the NDA and all other approvals from any applicable Governmental or Regulatory Authority;
(vii) provide reasonable technical advice and resources to Therapure to the extent necessary for Therapure to undertake the Technology Transfer;
(viii) provide to Therapure SOPs and manufacturing bill of materials;
(ix) pay Therapure’s fees and charges relating to Technology Transfer and engineering and production of regulatory compliance batches required for licensing of the Manufacturing operations, as set out in Schedule A; and
(x) promptly report to Therapure (and in no event later than [***] Business Days after the occurrence of) any development which may materially and adversely affect Therapure’s performance under this Agreement.
4.2.2. Without limiting the obligations of Therapure under this Agreement, Therapure shall, in respect of the Technology Transfer Program:
(i) work diligently in a professional manner and with all reasonable commercial efforts in fulfilling any and all of its obligations, including under this Section 4.2.2;
(ii) employ specialized technical resources reasonably necessary to execute the Technology Transfer;
(iii) following completion of the Workshop Construction Period, operate the Workshop to allow for the Manufacture of ARIKACE;
(iv) retain suitably qualified personnel and maintain appropriate quality systems and other infrastructure to support Manufacture of ARIKACE and the continued operation and maintenance of the Workshop;
(v) promptly report to Insmed (and in no event later than [***] Business Days after the occurrence of) any development which may materially and adversely affect Insmed’s performance under this Agreement;

(vi) reasonably assist Insmed, at a cost to Insmed of $[***] per hour, with filing, seeking, prosecuting and maintaining all ARIKACE Permits, including the NDA and all other approvals from any applicable Governmental or Regulatory Authority; and
(vii) use reasonable commercial efforts to carry out the activities set out in Schedule A.
4.3. Stage Deposit. Insmed shall pay to Therapure the Stage Deposit as follows, receipt of which shall be acknowledged by Therapure in writing in the manner provided in Section 24.1:
(i) prior to commencement of Stage 1A activities as described in Schedule A, in an amount equal to $[***] to be offset against the last of the Technology Transfer Invoices for Stage 1 activities as described in Schedule A;
(ii) prior to commencement of Stage 2A activities as described in Schedule A, in an amount equal to $[***] to be offset against the last of the Technology Transfer Invoices for Stage 2 activities as described in Schedule A; and
(iii) prior to commencement of Stage 3A activities as described in Schedule A, in an amount equal to $[***] to be offset against the last of the Technology Transfer Invoices for Stage 3 activities as described in Schedule A.
4.4. Payment and Invoicing. Therapure shall invoice Insmed (i) on a monthly basis, (A) the amounts set out in Schedule A based on percentage of the work completed by Therapure and (B) the reasonable (and for costs exceeding $[***], documented) costs as pre-approved by Insmed due to third parties in connection with the Technology Transfer Program for goods and services provided at the G&A Cost; and (ii) the Manufacturing Materials as they are procured at the G&A Cost (the “Technology Transfer Invoices”). Each Technology Transfer Invoice shall be payable by Insmed within [***] days of invoice by Therapure and any failure to pay within that period shall be subject to the late payment fee set out in Section 12.2.2.
4.5. Technology Transfer Program Managers. Each party shall appoint one project manager to act as that party’s representative (the “Technology Transfer Program Manager”) with responsibility for being the primary point of contact between the parties with respect to the Technology Transfer Program. Technology Transfer Program Managers shall have regular (no less frequently than once per week, unless otherwise agreed between the parties, provided that such communications may be held in person, teleconference or video conference, as mutually agreed by the parties) communications in connection with the Technology Transfer Program. Each party may also appoint a substitute or successor representative by providing written notice thereof to the other party.
4.6. ARIKACE Specifications. Prior to commencement of Stage 3A activities as described in Schedule A, Insmed shall approve both the Master Batch Record and ARIKACE SOPs delivered to it by Therapure during the Technology Transfer Period. The Master Batch Record and ARIKACE SOPs approved by Insmed shall collectively constitute the “ARIKACE Specifications” (as such term is used in this Agreement).
4.7. Technology Transfer Delays. The parties acknowledge and agree that the parties will use reasonable commercial efforts to complete the Technology Transfer by the target technology transfer completion date, which the parties agree shall be [***] from the Effective Date (the “Target Technology Transfer Completion Date”). To the extent a delay in the Target Technology Transfer Completion Date is attributable to an act or omission of Therapure that is not otherwise caused by an event or circumstance beyond Therapure’s control, then Therapure shall compensate Insmed at a rate equal to $[***] per week that the Target Technology Transfer Completion Date is so delayed.

ARTICLE 5 MANUFACTURING PERIOD
5.1. Manufacturing Period. During the Manufacturing Period, the parties agree as follows:
5.1.1. Diligence and Resources.
5.1.1.1. Without limiting the obligations of Insmed under this Agreement, Insmed shall, at its own expense, in respect of the Manufacturing Period:
(i) work diligently in a professional manner and with all reasonable commercial efforts in fulfilling any and all of its obligations, including under this Section 5.1.1.1;
(ii) subject to Article 18, provide to Therapure all Product Documentation and Product Information;

(iii) if requested by Therapure, provide reasonable technical support to Therapure to the extent necessary for Therapure to Manufacture ARIKACE; and
(iv) pursuant to and in accordance with a Request Order, deliver to Therapure DDP (Incoterms 2010) Therapure’s facilities in Mississauga, Ontario:
(A) the Amikacin for the applicable calendar quarter (or such longer period of time to the extent required to release Batches for commercial Manufacturing), for further processing into ARIKACE; and
(B) the Excipients,
provided, however, that the Amikacin and Excipients so delivered:
(A) shall be stored in a secure and appropriately segregated area within the Facility;
(B) shall not be transferred to any third party (except as may be required by applicable Law) without the prior written consent of Insmed; and
(C) shall only be used by Therapure for the Manufacture of ARIKACE.
5.1.1.2. Without limiting the obligations of Therapure under this Agreement, Therapure shall, in respect of the Manufacturing Period:
(i) work diligently in a professional manner and with all reasonable commercial efforts in fulfilling any and all of its obligations, including under this Section 5.1.1.2;
(ii) prepare executed Batch Production Records;
(iii) manufacture and package Batches pursuant to Therapure’s Manufacturing Requirements;
(iv) within [***] days prior to commencement of a calendar quarter send Request Orders to Insmed for quantities of Amikacin and Excipients derived from the quantity of ARIKACE forecasted in the Demand Forecast for such calendar quarter (or such longer period of time to the extent required to release Batches for commercial Manufacturing);
(v) store all Amikacin and Excipients in a secure and appropriately segregated area within the Facility;
(vi) take reasonable precautions to protect Amikacin and Excipients from damage; provided, that in the event of damage to the Amikacin or Excipients, to the extent attributable to the negligence or intentional act or omission of Therapure, Insmed’s exclusive remedy shall be the payment by Therapure of the costs associated with the replacement of such Amikacin or Excipients, which the parties agree shall be no greater than the Cost of Amikacin or the Cost of Excipients, as applicable;
(vii) not transfer any Amikacin or Excipients to any third party (except as may be required by applicable Law) without the prior written consent of Insmed;
(viii) only use Amikacin and Excipients for the Manufacture of ARIKACE; and
(ix) maintain commercially reasonable levels of insurance for all Amikacin and Excipients stored within the Facility.
5.1.2. Subcontracting. Therapure will [***]. Each permitted subcontractor shall be bound by the terms of this Agreement that are reasonably applicable to the work being performed by such subcontractor as consented to by Insmed. Therapure will be responsible for the actions of such subcontractors, including any breach of the applicable terms of this Agreement by such subcontractors. Therapure shall be responsible for the direction and coordination of the performance of each permitted subcontractor. No contractual relationship shall be created between Insmed and subcontractors.
5.1.3. Notification of Certain Events. In addition to other notices required pursuant to this Agreement, and without limiting the rights and obligations of each party under Section 13.2, each party shall use its reasonable commercial efforts to give notice to the other party within [***] Business Days of becoming aware of the following:
(i) any defective or adulterated ARIKACE or any information which may suggest that Amikacin, Excipients or ARIKACE is or may be defective, adulterated or misbranded, or fails to meet the Batch Production Records or to maintain the stability as indicated; or
(ii) any material safety or toxicity problem regarding ARIKACE.

ARTICLE 6 MINIMUM COMMITMENTS; PERSISTENT FAILURE

6.1. True-Up Payment. The payments in Section 6.1 shall be calculated within [***] days after the end of any Year, and Insmed shall pay any amounts owing within [***] days of invoice by Therapure, with any late payment subject to the late payment fee set out in Section 12.2.2:
(i) Subject to Section 6.1(ii) and 6.1(iii), beginning on [***], if in that Year or in any subsequent Year, Insmed fails to order that amount of ARIKACE equivalent to the Annual Minimum Batch Processing Fee Amount, then Insmed shall pay to Therapure for such Year an amount (the “True-Up Payment”) equal to ( (x) — (y) ), where “(x)” equals the Annual Minimum Batch Processing Fee Amount as set out in Schedule C and “(y)” equals the actual aggregate Batch Processing Fees paid by Insmed for such Year; provided, that the True-Up Payment shall be reduced by
(A) [***] percent of the cost of the Clean Room Consumables for such Year;
(B) if Therapure is able to reasonably reallocate the Allocated Minimum Batch Labour for such Year (the “Reallocated Minimum Batch Labour”) in the manner provided under this Section 6.1(i)(B) (to the extent applicable), [***] percent of the cost of the Reallocated Minimum Batch Labour. Therapure shall use reasonable commercial efforts to reallocate the excess Allocated Minimum Batch Labour for any Year in which the Binding Portion of the Demand Forecast for such Year plus the Firm Portion of the Demand Forecast for such Year do not exceed the amount of ARIKACE equivalent to the Annual Minimum Batch Processing Fee Amount for such Year; and
(C) any Standby Fees paid pursuant to Section 6.1(iii)(B) for such Year.
For clarity, no payment shall be due by Insmed if the reductions in clauses (A), (B) and (C) above exceed the True-Up Payment for such Year.
(ii) If, in any Year, an additional Indication is approved, then the Annual Minimum Batch Processing Fee Amount for any subsequent Year shall be increased automatically by an amount equal to the lesser of (x) [***]; or (y) $[***].
(iii) Insmed shall promptly report to Therapure if Insmed expects, acting reasonably, that approval by Governmental or Regulatory Authority for an Indication shall not be obtained prior to [***], in which case:
(A) the parties shall negotiate in good faith an amendment to Schedule C to update the Annual Minimum Batch Processing Fee Amounts based on the anticipated approval date for an Indication; provided, that the new Annual Minimum Batch Processing Fee Amount for a Year negotiated by the parties cannot be greater than [***] (the “Negotiated Cap”). By way of example, the new Annual Minimum Batch Processing Fee Amount for [***] negotiated by the parties cannot be greater than $[***];
(B) effective [***] and continuing until the earlier of (x) an amendment to Schedule C agreed to by the parties or (y) termination of this Agreement pursuant to Section 6.1(iii)(D), Insmed shall, on a monthly basis, pay to Therapure a monthly standby fee at a rate of [***] (collectively, the “Standby Fees”);
(C) notwithstanding anything to the contrary in this Agreement, Insmed shall not be required to make any True-Up Payment until Schedule C is amended in accordance with Section 6.1(iii)(A) (for clarity, Insmed shall not be required to make any True-Up Payment if this Agreement is terminated pursuant to Section 6.1(iii)(D)); and
(D) if the parties are unable to agree on an amendment to Schedule C within [***] days, then Insmed may terminate this Agreement by giving notice to Therapure in the manner provided in Section 24.1; provided, however, that if Insmed does not elect to terminate this Agreement, the dispute shall be resolved in accordance with Article 37 and the Negotiated Cap shall apply in any such dispute resolution proceeding.
(iv) For clarity, following an amendment to Schedule C in accordance with the terms of Section 6.1(iii), the Annual Minimum Batch Processing Fee Amount used in the calculation of the True-Up Payment for that Year and any subsequent Year shall equal the new Annual Minimum Batch Processing Fee Amount for such Year(s) in such amended Schedule C.
6.2. Safety Stock. Therapure must maintain at all times at least enough inventory of Manufacturing Materials to meet the greater of (x) [***] percent of Insmed’s forecasted amount for the applicable calendar quarter; or (y) [***].
6.3. Persistent Failure.
6.3.1. In the event of a Persistent Failure, Insmed shall provide Therapure with written notice of such Persistent Failure in the manner provided in Section 24.1. Subject to Section 6.3.2, following Therapure’s receipt of such notice, Therapure shall for a period of [***] days (the “Persistent Failure Cure Period”) use reasonable commercial efforts to cure such Persistent Failure; provided, that after the Persistent Failure Cure Period, 

or any time prior thereto if in Therapure’s sole discretion a cure for such Persistent Failure cannot be reasonably effected within the Persistent Failure Cure Period, Therapure shall deliver to Insmed Therapure’s good faith plan for curing such Persistent Failure (the “Persistent Failure Cure Plan”). If Insmed does not accept the Persistent Failure Cure Plan in its sole discretion, acting reasonably, or following acceptance by Insmed of the Persistent Failure Cure Plan, Therapure fails to cure the failure as agreed in the Persistent Failure Cure Plan:
(i) the parties shall cooperate to promptly conduct Manufacturing Technology Transfer, whereby Insmed may satisfy any requirement for ARIKACE by its own manufacture or other self-supply;
(ii) subject to the terms and conditions of this Agreement, Therapure shall grant to Insmed a non-exclusive, perpetual, irrevocable, transferable, fully paid, worldwide license (with a right to sublicense through multiple tiers) to use the Intellectual Property Rights developed or used by, or on behalf of, Therapure in the Manufacture of ARIKACE solely to make, have made, use, offer for sale, sell, export or import ARIKACE; and
(iii) Therapure shall use reasonable commercial efforts to assist Insmed (at Therapure’s cost and expense) with Insmed’s efforts to qualify an alternate site for manufacturing ARIKACE. For clarity, nothing in this Agreement shall prohibit Insmed from qualifying an alternate site for the manufacture of ARIKACE at any time during the Term.
6.3.2. If, and to the extent that, the reason Therapure is prevented from reasonably effecting a cure for the Persistent Failure within the Persistent Failure Cure Period is directly attributable to the unavailability of necessary Amikacin, Excipients or Manufacturing Materials, the Persistent Failure Cure Period shall be extended for the period that Therapure is prevented from performance by such unavailability, subject to Therapure demonstrating to Insmed’s satisfaction, acting reasonably, that it has diligently pursued and, to the extent reasonably possible, continues to diligently pursue a cure for the Persistent Failure.

ARTICLE 7 CHANGES AND DEVIATIONS
7.1. Change Notice.
7.1.1. The parties hereby acknowledge and agree that in the event that:
(i) during the Technology Transfer Period, changes are proposed or required, including, without limitation, changes to any activities and/or deliverables set out in Schedule A, changes to Schedule F and/or process changes;
(ii) beginning in Manufacturing Year 1, at the end of each Manufacturing Year the actual Batch size varies from Schedule B for that Manufacturing Year; or
(iii) there is a change in, or proposed change to, the Amikacin, ARIKACE Specifications, Master Batch Records, ARIKACE SOPs, the Manufacturing of ARIKACE and/or the Commercial Manufacturing Date, then this Agreement and the applicable Schedule shall be amended in accordance with the procedure described below.
7.1.2. Either party shall present a written notice to the other party outlining in sufficient detail the proposed changes to the relevant Schedule (the “Change Notice”).
7.1.3. Within [***] Business Days after submission of the Change Notice, Therapure shall present in writing to Insmed a quote for work to be undertaken and/or proposed revisions to the Batch Processing Fee (the “Change Fee”), required as a result of the Change Notice, such Change Fee to reflect solely the incremental costs and Therapure’s reasonable profits associated with the Change Notice, as supported by reasonable documentation provided by Therapure to Insmed.
7.1.4. The parties shall have [***] Business Days (the “Review Period”) after presentation of the Change Fee to discuss the Change Fee. On or before the expiry of the Review Period, the parties shall:
(i) accept the Change Fee by executing the Change Fee and related Change Notice (in accordance with Section 7.1.6) and returning a copy to each other;
(ii) discuss proposed amendments to the Change Fee and/or related Change Notice; or
(iii) reject the Change Fee in writing (in which case the Change Fee and related Change Notice shall not be effective).
7.1.5. Any amended Change Fee and/or related Change Notice mutually agreed and executed by the parties shall be incorporated as part of the relevant Schedule and such Schedule shall be deemed to have been amended to include the Change Fee and/or related Change Notice, as amended.
7.1.6. All Change Fees and related Change Notices will be executed (i) on behalf of Therapure by its Vice President, Operations and (ii) on behalf of Insmed by its Vice-President, Technical Operations before they will be deemed to be effective. In addition, Change Fees and related Change Notices that include changes in the Batch Processing Fees will also be executed (i) on behalf of Therapure by its Chief Executive Officer; and (ii) on behalf of Insmed by its Vice-President, Technical Operations before they will be deemed to be effective.

7.1.7. The parties acknowledge and agree that changes in Schedule A, Schedule B, or Schedule F may result in changes to the pricing set out in this Agreement. If any Change Notice may result in documented changes to the pricing set out in this Agreement, the parties shall negotiate an appropriate amendment to this Agreement to reflect such changes, applied retroactively to the effective date of such changes.

7.2. Acknowledgments. Insmed hereby acknowledges that Schedule B sets out the criteria on which Schedule A is based.
7.3. Changes to Workshop. Therapure, at its own expense, may make commercially reasonable changes to the Workshop without the prior consent of Insmed, provided that such changes (i) do not adversely affect Therapure’s ability to Manufacture or release ARIKACE; (ii) do not negatively affect the condition or maintenance of the Equipment; and (iii) comply with all applicable Laws relating to the Manufacture or release of ARIKACE.
7.4. Changes to ARIKACE Specifications, Master Batch Records and/or the ARIKACE SOPs. The parties acknowledge and agree that in the event of any changes that impact ARIKACE Specifications, Master Batch Records and/or the ARIKACE SOPs, any resulting increase in Batch Processing Fees shall be borne by Insmed; provided, however, that to extent that (i) changes in the Master Batch Records or ARIKACE Specifications, as the case may be, result in a reduction in the cost of Manufacturing; and (ii) such changes were proposed by Therapure and adopted by Insmed, then the Batch Processing Fee shall be reduced to reflect [***] of the total cost reduction.

ARTICLE 8 REGULATORY MATTERS
8.1. Permits.
8.1.1. Insmed shall have sole right, at its own expense, to file, seek, prosecute and maintain all Permits, including the NDA and all other approvals from any applicable Governmental or Regulatory Authority, related to the Manufacture of ARIKACE (collectively, the “Manufacturing Permits”). The parties acknowledge and agree that the Manufacturing Permits specifically exclude all Permits necessary or required under applicable Laws to keep the Workshop and Facility operational for purposes of carrying out Therapure’s Manufacturing obligations hereunder (the “Facility Permits”), the obtaining and maintaining of which shall be the sole responsibility of Therapure. Therapure shall also have sole responsibility for maintaining the Workshop in a state of GMP compliance and preparedness for inspection by the FDA, Health Canada, EMA or, to the extent reasonably requested by Insmed, any other applicable Governmental or Regulatory Authority.
8.1.2. Insmed shall have sole right, at Insmed’s expense, to file, seek, prosecute and maintain all Permits related to the commercialization and distribution of ARIKACE anywhere in the Territory, including, but not limited to, all Permits necessary or required for the sale, marketing, distribution and reimbursement of ARIKACE in the Territory (collectively, the “Commercialization Permits”, and together with the Manufacturing Permits, the “ARIKACE Permits”). Therapure shall provide Insmed with such information related to Manufacturing as may be reasonably requested by Insmed in order to obtain and maintain any such ARIKACE Permits.
8.1.3. Insmed shall keep Therapure informed of:
(i) the progress made towards obtaining Manufacturing Permits and promptly notify Therapure, in writing, of any expected delay greater than one month in obtaining any such Manufacturing Permits;
(ii) the receipt of any Manufacturing Permits, in writing, promptly after such Manufacturing Permits are obtained; and
(iii) any new submitted application for Manufacturing Permits and inform Therapure promptly after such Manufacturing Permits are obtained.
8.1.4. In addition to the procedure described under Article 7, in the event that Insmed initiates any reasonable change to the NDA or any other ARIKACE Permit, Therapure shall, at Insmed’s expense (such expense to only include Therapure’s personnel and other direct costs and third party costs attributable to effecting such change), assist Insmed in supporting and implementing such change.
8.1.5. Each party shall promptly notify the other of new regulatory requirements and other applicable Laws of which it becomes aware which are necessary for the Manufacture or distribution of ARIKACE. The parties shall confer with each other and use reasonable commercial efforts to implement the best means to comply with such applicable Laws.

ARTICLE 9 SUPPLIERS; MATERIAL TRANSFERS
9.1. Vendor and Supplier Audit and Certification. Insmed shall have the right to approve all suppliers of all Manufacturing Materials, including all raw materials and primary and secondary packaging components used in the Manufacture of ARIKACE and the terms under which such components shall be provided. Insmed shall also have the right to approve any providers of services used by Therapure in connection with Manufacture of ARIKACE, 

which approval shall not be unreasonably withheld, conditioned or delayed. Each party shall notify the other as far in advance as reasonably practicable of any changes in Manufacturing Suppliers and Vendors or the costs of goods or services to be provided by any such Manufacturing Suppliers and Vendors.
9.2. Material Transfers. Each of the parties may from time to time provide to the other materials owned by or licensed to a party (“Substances”). In such instances the parties shall enter into a material transfer agreement (it being noted that upon one party’s request, the parties shall have good faith discussions regarding any necessary or appropriate amendments to the material transfer agreement).

ARTICLE 10 AUDITS
10.1. Audits. Insmed shall have the right, subject to Article 19 hereof, to a compliance audit of the Workshop and any relevant documentation, including, but not limited to, production records relevant to: (i) assessing ARIKACE’s safety, purity and potency; and (ii) determining compliance with ARIKACE Specifications, cGMPs, this Agreement, and applicable Laws. Such audits may be conducted upon reasonable advance written notice to Therapure no more than once per calendar year (except for any for cause audit or in the event the audit results in any adverse findings, in which case a reasonable number of additional audits shall be permitted), and shall be at Insmed’s expense. In connection with performing such audits, Insmed shall take reasonable steps to avoid disruption of operations at the Workshop and to comply with reasonable rules and regulations generated by Therapure. If Insmed’s audit results in any adverse findings, Insmed shall notify Therapure of such findings in writing and Therapure shall prepare a corrective action reasonably acceptable to Insmed within [***] days following delivery to Therapure of such findings. Therapure shall use reasonable commercial efforts to correct any such adverse finding. Any Insmed Representatives who conduct the audits shall have appropriate and relevant qualifications, as determined by Insmed, in its reasonable judgement, shall comply with all Workshop rules regarding safety and security, and shall execute written agreements to maintain in confidence all Confidential Information obtained during the course of any audit except for disclosure to Therapure under the terms of this Agreement.

ARTICLE 11 DEMAND FORECAST
11.1. Agreement to Supply and to Purchase.
11.1.1. During the Term, and subject to the terms and conditions of this Agreement, Therapure shall be a non-exclusive manufacturer and supplier of ARIKACE for Insmed.
11.2. Purchase Orders.
11.2.1. Insmed may from time to time submit to Therapure a purchase order (a “Purchase Order”) under which supply of ARIKACE shall be implemented in accordance with the terms of Section 11.3.
11.2.2. Purchase Orders shall be submitted no later than [***] days prior to the required delivery date, specifying the quantity of ARIKACE and the required delivery date.
11.2.3. If a Purchase Order is in compliance with this Article 11, Therapure shall acknowledge and accept such Purchase Order in writing to Insmed within [***] Business Days of receipt of same. If Therapure fails to provide Insmed with such written acknowledgement and acceptance within the [***] Business Day period, Therapure shall be deemed to have accepted the applicable Purchase Order. Within [***] Business Days of Therapure’s acceptance of a Purchase Order, Insmed shall pay to Therapure as a deposit a non-refundable amount equal to [***] percent of the value of such Purchase Order. Notwithstanding this Section 11.2, if any Purchase Order is outside the binding portion of the Demand Forecast, Therapure reserves the right to decline such Purchase Order.
11.2.4. Notwithstanding any other provision of this Agreement, a failure of Therapure to meet a purchase quantity specified on a Purchase Order in excess of the applicable forecasted amount by the requested delivery date(s) (despite using reasonable commercial efforts to do so) shall not constitute a breach of this Agreement by Therapure.
11.3. Demand Forecast.
11.3.1. As soon as reasonably practicable, Insmed shall provide written notice to Therapure of the date on which Insmed intends to request the first delivery of ARIKACE for commercial distribution (the “Commercial Manufacturing Date”).
11.3.2. Prior to delivery of the Demand Forecast under Section 11.3.3(i), Insmed and Therapure shall reasonably discuss in good faith Insmed’s anticipated supply requirements for ARIKACE. All such discussions shall be non-binding on both parties.
11.3.3. Insmed shall provide to Therapure:
(i) [***] months before the Commercial Manufacturing Date, an initial forecast covering the [***] month period following the Commercial Manufacturing Date; and

(ii) prior to the first day of each calendar quarter during the Term, commencing with the calendar quarter which includes the Commercial Manufacturing Date, a forecast covering a rolling [***] month period,
setting out in each case Insmed’s requirements for ARIKACE for each month during the applicable [***] month period. The forecasts under clauses (i) and (ii) above are “Demand Forecasts”.
11.3.4. Therapure shall accept or reject each Demand Forecast in writing to Insmed within [***] Business Days. Any rejection of a Demand Forecast by Therapure shall be accompanied by a written reason for such rejection. If Therapure fails to provide Insmed with such written acceptance or rejection within the [***] Business Day period, Therapure shall be deemed to have accepted the Demand Forecast. Therapure may only reject a Demand Forecast submitted in accordance with Section 11.3.3 if Therapure is limited by capacity restraints; provided, that the cost of any portion of the ARIKACE under a Demand Forecast rejected by Therapure shall be removed from the applicable Annual Minimum Batch Processing Fee Amount for the applicable Year. Notwithstanding the foregoing, Therapure may not reject (i) any portion of a Demand Forecast containing a previously accepted Binding Portion; or (ii) any portion of a Demand Forecast pursuant to which a Firm Portion becomes a Binding Portion so long as the applicable portion of the Demand Forecast complies with Section 11.3.6.
11.3.5. The first [***] of each Demand Forecast accepted by Therapure shall be binding on Insmed and Therapure and shall obligate Therapure to Manufacture, sell and deliver to Insmed the specified quantity of ARIKACE, all in accordance with the terms and conditions of this Agreement (such first 6 month period, the “Binding Portion”).
11.3.6. The [***] of each Demand Forecast accepted by Therapure shall be semi-binding on Insmed and Therapure in accordance with this Section 11.3.6 (such second [***] period, the “Firm Portion”). The forecasted quantity of ARIKACE for [***] of each Demand Forecast (i) shall not vary (either up or down) by more than the greater of (x) [***] percent or (y) [***], for any such month in any subsequent Demand Forecast and (ii) may not be changed in Demand Forecasts more than [***] times while in such firm period.
11.3.7. The [***] of each Demand Forecast are non-binding on both Parties and not subject to any forecasting restrictions but should represent good faith estimates on the part of Insmed.
11.3.8. An example of the Demand Forecast described in Section 11.3 is set out in Schedule D and is provided by way of example only.
11.4. Production and Inventory Report. Therapure shall provide Insmed with monthly reports documenting year-to-date production and Inventory promptly following the date which it becomes generally available to Therapure, which shall include, to the extent available, the following information: (i) lot number; (ii) planned release month; (iii) FDA, Health Canada or EMA submission or planned submission date; (iv) release date; (v) expiration dates of ARIKACE; and (vi) vials available.
11.5. Right to Observe. Insmed shall be entitled to have a representative present at any time to observe, but not to participate in, production, testing, quality control and assurance or other activities associated with the Manufacture and release of ARIKACE, provided such representative not interfere with the operations of Therapure. Insmed shall provide as much advance notice as possible to Therapure of any such visit.
11.6. Problems with Supply. At any time during the Term, as soon as it becomes reasonably apparent to Therapure that circumstances will result in any failure or delay in delivery of any ARIKACE to continue for more than [***], Therapure shall notify Insmed as soon as possible, and Therapure shall meet with Insmed to discuss the best practical method of assuring Insmed a source of supply of such ARIKACE, as applicable, during the continuance of such circumstances; provided, however, that during such circumstances, Therapure shall continue to use reasonable commercial efforts to prioritize and/or allocate space and capacity within the Facility to manufacture ARIKACE for Insmed.

ARTICLE 12 PRICE; INVOICING; DELIVERY
12.1. Price.
12.1.1. Subject to this Agreement, Insmed shall pay a fee (the “cGMP Process Validation Performance Run Fee”) per Batch for the three [***] kilogram cGMP validation batches (each, a “Registration Batch”) as set out in Schedule A for the processing of each Registration Batch and its associated analytical testing. The Batch Processing Fee to be paid by Insmed will be determined by Therapure [***] days following completion of the third Registration Batch; provided, however, that if the Batch Processing Fee so determined is outside the margin of plus or minus [***] percent of the cGMP Process Validation Performance Run Fee other than as a result of a change made at the request of Insmed to the scope of work to be performed by Therapure, then Insmed may 

terminate this Agreement without any additional payment by giving notice to Therapure in the manner provided in Section 24.1.
12.1.2. The Release Testing Fee to be paid by Insmed will be determined by the parties [***] days following completion of the third Registration Batch.
12.1.3. The Batch Processing Fee to be paid by Insmed shall not include the cost of the Amikacin or the Excipients. Insmed shall supply the Amikacin and the Excipients to Therapure at no cost.
12.1.4. The Batch Processing Fees, the Release Testing Fees and the Annual Minimum Batch Processing Fee Amount shall be adjusted annually beginning on the anniversary of the Effective Date, by an amount equal to the [***].
12.2. Invoicing and Payment.
12.2.1. Therapure shall invoice Insmed for:
(i) ARIKACE, on the Batch Release Date, and, subject to Section 12.2.3, Insmed shall pay Therapure within [***] days of each Batch Release Date, with any late payment subject to the late payment fee set out in Section 12.2.2;
(ii) amounts due to third parties in connection with goods and services provided, on a monthly basis at the G&A Cost, and Insmed shall pay Therapure within [***] days of invoice by Therapure, with any late payment subject to the late payment fee set out in Section 12.2.2; and
(iii) Manufacturing Materials, as they are procured at the G&A Cost, and Insmed shall pay Therapure within [***] days of invoice by Therapure, with any late payment subject to the late payment fee set out in Section 12.2.2.

12.2.2. Payments shall be made in United States Dollars by electronic fund transfer to an account specified by Therapure or by other means agreed to by Therapure and Insmed. Each invoice shall be payable by Insmed in accordance with the terms noted above. If payment in full in respect of any invoice is not made on the required invoice payment date, Insmed shall pay a late fee in an amount equal to 1.5 percent per month calculated for the period during which payment is late, multiplied by the invoice balance remaining unpaid on the required invoice payment date. The amount of the late fee shall cumulate until paid in full.
12.2.3. Insmed shall have no obligation to pay for non-conforming ARIKACE that is subject to an unresolved Notice of Non-Conformity under Section 13.2.3, and such ARIKACE shall be excluded in determining whether Therapure has satisfied its obligations hereunder, including without limitation its obligation to timely deliver ARIKACE under Section 12.3.1.
12.3. Delivery.
12.3.1. Therapure shall deliver ARIKACE to Insmed Ex-Works (Therapure’s facilities in Mississauga, Ontario) pursuant to Incoterms 2010 within [***] of the required delivery date (the “ARIKACE Delivery Deadline”); provided, however, that Therapure shall not deliver ARIKACE, in whole or in part, prior to Insmed’s acceptance (or deemed acceptance) of the Batch of ARIKACE in accordance with the procedure described in Section 13.2.3.
12.3.2. If, following acceptance (or deemed acceptance) by Insmed of the Batch of ARIKACE in accordance with the procedure described in Section 13.2.3, Therapure fails to deliver ARIKACE in accordance with Section 12.3.1, and such failure is attributable to an act or omission of Therapure, for every [***] past the ARIKACE Delivery Deadline that ARIKACE has not been so delivered by Therapure, Insmed shall receive a credit equal to [***] percent of the Batch Processing Fee payable for such ARIKACE. By way of example only, Insmed shall receive:
(i) if Therapure delivers a Batch of ARIKACE, in whole or in part, within [***] of the ARIKACE Delivery Deadline, no credit;
(ii) if Therapure delivers a Batch of ARIKACE, in whole or in part, within [***] to [***] of the ARIKACE Delivery Deadline, a credit equal to [***] percent of the Batch Processing Fee payable for such ARIKACE; and
(iii) if Therapure delivers a Batch of ARIKACE, in whole or in part, within [***] to [***] of the ARIKACE Delivery Deadline, a credit equal to [***] percent of the Batch Processing Fee payable for such ARIKACE.
The applicable Annual Minimum Batch Processing Fee Amount shall also be reduced by any credit Insmed receives in the applicable Year pursuant to this Section 12.3.2.

12.3.3. Insmed agrees to take delivery of, and pay for, in accordance with this Agreement, all quantities of ARIKACE Manufactured by Therapure, according to Purchase Orders, provided that Insmed accepts (or is deemed to accept) the Batches of ARIKACE in accordance with the procedure described in Section 13.2.3.
12.3.4. All liability for ARIKACE shall pass to Insmed upon delivery by Therapure.
12.3.5. Therapure shall provide Insmed with any reasonably requested production documentation related to any delivered ARIKACE.
12.4. Storage.
12.4.1. Therapure agrees to store in its inventory (at Therapure’s expense) any ARIKACE for a period not to exceed the first calendar month anniversary of the Batch Release Date (the “Storage Period”). By way of example, if a Batch Release Date is May 15, the first calendar month anniversary would be June 15. If ARIKACE remains at Therapure’s warehouse after the end of the Storage Period, Therapure shall notify Insmed in writing and charge Insmed for further storage at a cost of $[***] per skid for each subsequent calendar month, or part thereof.
12.4.2. Therapure agrees to store in its inventory any Manufacturing Materials at a cost to Insmed of $[***] per skid per calendar month, or part thereof.

ARTICLE 13 QUALITY CONTROL
13.1. Quality Agreement. Insmed and Therapure agree to negotiate in good faith a quality agreement (the “Quality Agreement”) to be executed and delivered no later than six months from the Effective Date that will address matters relating to, without limitation, product quality and safety.
13.2. Batch Release.
13.2.1. Therapure shall Manufacture ARIKACE in accordance with (i) cGMPs or any other applicable Laws; (ii) the applicable ARIKACE Permit (including the NDA) and Facility Permit; (iii) the ARIKACE Specifications; and (iv) the requirements set out in the Quality Agreement (clauses (i) through (iv) collectively, “Therapure’s Manufacturing Requirements”).
13.2.2. On the Batch Release Date, Therapure shall deliver to Insmed the Batch Release Documentation for each Batch.
13.2.3. Insmed shall examine the Batch Release Documentation upon receipt in accordance with Insmed’s quality assurance program then in effect and the following shall apply:
(i) If Insmed believes any Batch or part thereof does not conform to Therapure’s Manufacturing Requirements (the “Acceptance Criteria”) or otherwise breaches Section 20.1(i), it shall notify Therapure in writing as soon as reasonably practicable, but in no event later than [***] of its receipt of the Batch Release Documentation, and instruct Therapure not to deliver ARIKACE. Insmed shall provide Therapure with a detailed explanation of the non-conformity. Each notice given by Insmed to Therapure under this Section 13.2.3 is referred to as a “Notice of Non-Conformity”. If Insmed fails to provide to Therapure a Notice of Non-Conformity within the [***] period, then Insmed shall be deemed to have accepted the Batch is conforming and waived its right to object to such conclusion.
(ii) Notwithstanding Section 13.2.3(i), Insmed shall provide notice in writing to Therapure of a Latent Defect (a “Latent Defect Notice”) within [***] Business Days of Insmed become aware of such Latent Defect.
(iii) Upon receipt of a Notice of Non-Conformity or a Latent Defect Notice, Therapure shall promptly investigate the Batch of any ARIKACE identified in the notice and provide written notice back to Insmed as to whether Therapure agrees with Insmed’s determination of non-conformity or Latent Defect (the “Response to Notice of Non-Conformity”). If Therapure fails to provide to Insmed a Response to Notice of Non-Conformity within [***] of receipt of the Notice of Non-Conformity or Latent Defect Notice, then Therapure shall be deemed to have accepted Insmed’s conclusion that the Batch of any ARIKACE is non-conforming or contains a Latent Defect, as applicable, and waived its right to object to such conclusion.
(iv) If Therapure disagrees with Insmed’s conclusion regarding non-conformity or Latent Defect, Insmed shall have the right to investigate the origin of the non-conformity or Latent Defect, as applicable, and Therapure shall give access to Insmed to any necessary documentation.
(v) If Insmed disagrees with Therapure’s conclusion regarding non-conformity or Latent Defect after an investigation pursuant to Section 13.2.3(iv), then the Batch Release Documentation shall be supplied to a mutually acceptable independent laboratory or consultant for resolution, whose determination of conformity or non-conformity or Latent Defect, and determination of the party responsible for causing such non-conformity or Latent Defect, shall be binding. The cost of the independent laboratory or consultant shall be allocated between the parties in proportion with their relative fault for the non-conforming ARIKACE; provided, however, that (i) if the 

independent laboratory or consultant determines that Therapure is not responsible for causing such non-conformity or Latent Defect, Insmed shall reimburse Therapure for any reasonable expenses incurred by Therapure in connection with the procedures set out in this Section 13.2.3; and (ii) if the independent laboratory or consultant determines that Therapure is responsible for causing such non-conformity or Latent Defect, Therapure shall reimburse Insmed for any reasonable expenses incurred by Insmed in connection with the procedures set out in this Section 13.2.3.
(vi) If Insmed agrees with Therapure’s conclusion regarding non-conformity or Latent Defect, or if the independent laboratory or consultant determines in accordance with Section 13.2.3(v) that Therapure is not responsible (in whole or in part) for causing such non-conformity or Latent Defect, Insmed shall be deemed to accept, and shall be obligated to pay for the Batch of ARIKACE (in which case such amounts of ARIKACE shall be included for purposes of determining whether Therapure has satisfied its obligations hereunder, including without limitation its obligation to timely deliver ARIKACE under Section 12.3.1).
(vii) If Therapure accepts Insmed’s conclusion regarding such non-conformity or Latent Defect, or if the independent laboratory or consultant determines in accordance with Section 13.2.3(v) that Therapure is responsible (in whole or in part) for causing such non-conformity or Latent Defect, then, in either case, Insmed’s exclusive remedy (including for any breach by Therapure of Section 20.1(i), but subject to Therapure’s indemnification obligations with respect to Third Party Claims under Section 21.2) shall be, at its election, either: (i) the prompt replacement by Therapure of the non-conforming or defective ARIKACE with conforming ARIKACE at no cost to Insmed (where such replacement shall [***]), or (ii) the repayment by Therapure of the full amount of any payments, including shipping and handling costs made by Insmed for such non-conforming or defective ARIKACE; provided, however, that if the independent laboratory or consultant determines in accordance with Section 13.2.3(v) that Insmed is also responsible for causing such non-conformity or Latent Defect, the [***] shall be [***].

ARTICLE 14 TERM, TERMINATION AND SURVIVAL
14.1. Term. Unless extended or terminated early pursuant to this Article 14, the term of this Agreement shall commence on the Effective Date and, unless terminated earlier in accordance with the terms and conditions of this Agreement, shall continue:
(i) for an initial term of 5 years from the Initial Delivery Date (“Initial Term”); and
(ii) for successive periods of two years each (each, an “Extension Term”) following the expiration of the Initial Term, unless terminated by either party by not less than two years prior written notice to the other party.
14.2. Termination.
14.2.1. In addition to the termination rights set out in Sections 6.1(iii)(D) and 12.1.1, Insmed shall have the option to terminate this Agreement by giving notice to Therapure in the manner provided in Section 24.1 upon the occurrence of any of the following:
(i) Therapure’s material breach of a provision of this Agreement;
(ii) Therapure’s default under the terms of the Quality Agreement, and such default remains uncured for [***] after notice thereof by Insmed; or
(iii) in the event of insolvency of Therapure; or in the event that an involuntary or voluntary petition in bankruptcy is filed by, against, or on behalf of Therapure, and such petition shall not be dismissed within 90 days after the filing thereof; or in the event Therapure makes a general assignment for the benefit of its creditors, or a receiver or trustee is appointed for its business or property; or
(iv) for any other reason, on no fewer than 180 days notice.
14.2.2. Therapure shall have the option to terminate this Agreement by giving notice to Insmed in the manner provided in Section 24.1 upon the occurrence of any of the following:
(i) Insmed’s material breach of a provision of this Agreement;
(ii) Insmed’s default under the terms of the Quality Agreement, and such default remains uncured for [***] after notice thereof by Therapure; or
(iii) in the event of insolvency of Insmed or in the event that an involuntary or voluntary petition in bankruptcy is filed by, against, or on behalf of Insmed, and such petition shall not be dismissed within 90 days after the

filing thereof; or in the event Insmed makes a general assignment for the benefit of its creditors, or a receiver or trustee is appointed for its business or property.
14.2.3. Notwithstanding any other provision of this Agreement:
(i) in the event of a default by Therapure under Section 14.2.1(i), Therapure will have [***] after written notice thereof by Insmed to cure such default; and
(ii) in the event of a default by Insmed under Section 14.2.2(i), Insmed will have [***] after written notice thereof by Therapure to cure such default.
14.3. Failure of Technology Transfer Program Not a Breach by Therapure. The parties acknowledge and agree that Therapure does not make any guarantee nor provides any assurance that the Technology Transfer Program shall lead to any particular result or outcome. Notwithstanding any other provision of this Agreement, a failure of the Technology Transfer Program to lead to any particular result or outcome in and of itself (absent negligence or wilful misconduct on the part of Therapure) shall not constitute a breach of this Agreement by Therapure.
14.4. Effect of Termination.
14.4.1. Upon termination or expiration of this Agreement, Therapure shall:
(i) immediately cease the Manufacture of ARIKACE;
(ii) immediately deliver to Insmed any remaining ARIKACE, Amikacin, Excipients and Manufacturing Materials purchased by Insmed, subject to the provisions of Article 13;
(iii) subject to the terms and conditions of this Agreement, grant to Insmed a non-exclusive, perpetual, irrevocable, worldwide, transferable, license (with a right to sublicense through multiple tiers) to use the Intellectual Property Rights owned by or licensed to Therapure and used by Therapure in the Manufacture of ARIKACE solely to make, have made, use, offer for sale, sell, export or import ARIKACE; provided, that if this Agreement is terminated pursuant to Section 14.2.1(iv) such license shall be royalty-bearing for any patent owned by or licensed to Therapure (other than any Therapure Intellectual Property) and carry a commercially reasonable royalty rate on the net sales of ARIKACE where the Manufacture of ARIKACE would infringe such patent, and, in all other cases, shall be fully paid; provided, further that in the event of any failure to agree on the terms of such royalty, the license shall be granted on a royalty free basis until final resolution of such dispute pursuant to Article 37 (with the royalty applied retroactively on ARIKACE Manufactured and sold following the grant of such license);
(iv) use reasonable commercial efforts to assist Insmed (at Therapure’s cost) with Insmed’s efforts to qualify an alternate site for manufacturing ARIKACE; provided, that such assistance shall be at Insmed’s cost if this Agreement is terminated pursuant to Section 14.2.1(iv), 14.2.2(i) or 14.2.2(ii);
(v) cease using the Confidential Information of Insmed and return to Insmed or destroy all copies of the Confidential Information of Insmed, except that Therapure may maintain 1 archival copy in its legal files for the sole purpose of determining its continuing obligations under this Agreement; and
(vi) transfer-back to Insmed any document relative to the Intellectual Property Rights of Insmed or any Affiliate of Insmed, provided that Insmed shall reimburse Therapure for any expenses incurred in effecting such transfer where the termination is a result of any reason other than by default by Therapure provided in section 14.2.1.
14.4.2. Upon termination or expiration of this Agreement, Insmed shall:
(i) be permitted to file an amendment under its ARIKACE regulatory applications/filings to provide for manufacturing of ARIKACE by another party at another manufacturing facility, and Therapure shall upon request use reasonable commercial efforts to assist Insmed in such efforts (including signing and delivering any documents as necessary with applicable regulatory authorities);
(ii) have the right to conduct the Manufacturing Technology Transfer pursuant to the terms of Section 6.3.1(i), provided, however that Insmed shall be responsible for all reasonable costs associated with such Manufacturing Technology Transfer if this Agreement is terminated by Therapure pursuant to Section 14.2.2;
(iii) accept for delivery any ARIKACE delivered by Therapure, subject to the provisions of Article 13;
(iv) pay all amounts owed to Therapure (including unbilled work in process) within [***] days of expiration or termination of this Agreement; and
(v) cease using the Confidential Information of Therapure and return to Therapure all copies of the Confidential Information of Therapure, except that Insmed may maintain 1 archival copy in its legal files for the sole purpose of determining its continuing obligations under this Agreement.
14.4.3. Upon termination or expiration of this Agreement, this Agreement shall automatically and without any further action by or on behalf of either of the parties terminate and be of no further force or effect except as set out in Section 14.6. All licenses granted to Therapure shall automatically terminate upon the expiration or termination of this Agreement. No termination of this Agreement shall release or discharge the parties from any debt 

or liability which shall have been incurred or accrued prior to the date of such termination or which is attributable to a period prior to such termination. Upon termination of this Agreement, any payments then-owing under this Agreement shall be deemed immediately due and payable, except as may otherwise be provided herein.
14.5. Termination Payment.
14.5.1. If this Agreement is terminated pursuant to Section 6.1(iii)(D) or 14.2.1(iv) (each, a “Termination Payment Section”) on or after January 1, 2016, Insmed shall pay to Therapure, in immediately available funds, within [***] days of such termination, a fee equal to (x) less (y), where:
“(x)” equals the sum of (A) [***]; and (B) [***],
“(y)” equals any unused portion of the Workshop Deposit held by Therapure on the termination date.
By way of example, if this Agreement is terminated pursuant to a Termination Payment Section in [***], Insmed shall pay to Therapure a fee of [***] in immediately available funds within [***] days of such termination.
14.5.2. If this Agreement is terminated pursuant to a Termination Payment Section prior to [***], Insmed shall pay to Therapure, in immediately available funds, within [***] days of such termination, a fee equal to [***] less any unused portion of the Workshop Deposit held by Therapure on the termination date.
14.6. Survival. Termination, expiration, cancellation or abandonment of this Agreement through any means or for any reason, shall be without prejudice to the rights and remedies (which shall be cumulative) of either party with respect to any antecedent breach of any of the provisions of this Agreement. The provisions of Sections 14.3, 14.4, 14.5 and 14.6, Article 18, Article 21, Article 22 and Article 37 and any other clause which is stated to survive the termination or expiration of this Agreement shall survive expiration or termination of this Agreement. Subject to Section 14.4.2, Insmed’s obligation to purchase any ARIKACE shall terminate immediately upon the effective date of termination of this Agreement.

ARTICLE 15 INSURANCE
15.1. Therapure Insurance. Therapure shall procure and maintain, during each Manufacturing Year and for a period of at least 3 years following the expiration date of the last Batch Manufactured by Therapure, (i) Product/Completed Operations Liability Insurance in an amount not less than $5 million per claim and in the aggregate; (ii) Commercial General Liability Insurance in an amount not less than $5 million per occurrence and in the aggregate, which insurance may cover any operation of Therapure; (iii) Workers Compensation Insurance, statutory through WSIB covering work-related injuries to Therapure’s employees; (iv) Professional Liability/Errors & Omissions Liability Insurance in an amount not less than $5 million per claim and in the aggregate covering claims for losses incurred as a result of the acts, errors, or omissions of Therapure in the performance of Therapure’s obligations under this Agreement; and (v) Property Insurance coverage for Therapure’s property at the manufacturing facility required for Therapure to perform its obligations under this Agreement for such property’s full replacement cost. Therapure shall furnish Insmed a certificate evidencing its ARIKACE and Commercial General Liability Insurance. The requirements of this Section 15.1 shall be re-evaluated annually, based on Therapure’s financial condition; provided, however that the obligation of Therapure with respect to the insurance coverage set out in this Section 15.1 shall not be amended except by the mutual agreement of the parties.
15.2. Insmed Insurance. Insmed shall procure and maintain, during the Term and for a period of 3 years beyond the expiration date of ARIKACE, (i) Product/Completed Operations Liability Insurance in an amount not less than $5 million per claim and in the aggregate: (ii) Commercial General Liability Insurance in an amount not less than $5 million per occurrence and in the aggregate, which insurance may cover any or all operations of Insmed and its Affiliates: and (iii) Property Insurance covering the full replacement cost of the Amikacin and Excipients Insmed shall furnish Therapure a certificate evidencing its insurance upon written request. The requirements of this Section 15.2 shall be re-evaluated annually, based on Insmed’s financial condition; provided, however that the obligation of Insmed with respect to the insurance coverage set out in this Section 15.2 shall not be amended except by the mutual agreement of the parties.

ARTICLE 16 INTELLECTUAL PROPERTY
16.1. Insmed Intellectual Property.
16.1.1. Insmed shall solely own and retain exclusive worldwide right, title and interest in and to all proprietary or Confidential Information and all Intellectual Property Rights which it owned on and prior to the 

Effective Date, and it shall also own any and all Confidential Information and Intellectual Property Rights and proprietary information that are (i) improvements, derivatives or modifications to any of the foregoing and (ii) developed during the Term related to Insmed’s process.
16.1.2. Therapure hereby assigns, transfers and conveys to Insmed or its designee, all of Therapure’s worldwide right, title and interest in and to any and all inventions, works of authorship and information, including software, data, drawings, specifications, photographs and sketches, to the extent covering, claiming or relating to ARIKACE (including manufacturing process, quality control, testing or compliance procedures relating solely to ARIKACE), whether or not patentable or registrable under patent, copyright or similar laws, which Therapure (through its employees or permitted subcontractors) may solely or jointly conceive, develop or reduce to practice, or cause to be conceived, developed or reduced to practice, solely in the Manufacture of ARIKACE or which result, to any extent, from use of Insmed’s property or Insmed Materials, including its Confidential Information (collectively, the “Insmed Intellectual Property”), including any and all moral rights and Intellectual Property Rights inherent therein and appurtenant thereto, including, but not limited to, all patent rights, copyrights, trademarks, know-how and trade secrets. Therapure further acknowledges and agrees that all original works of authorship that are made by Therapure in the Manufacture of ARIKACE and which are protectable by copyright (and are required to be assigned above) are “works made for hire,” as that term is defined in the United States Copyright Act. Upon the request and at the reasonable expense of Insmed, Therapure shall execute and deliver to Insmed any and all documents and instruments, and do such other acts, that may be necessary or desirable to evidence the foregoing assignment and transfer and otherwise to vest in Insmed possession and control of all Insmed Intellectual Property and Intellectual Property Rights of Insmed.
16.1.3. Insmed shall grant to Therapure during the Term a non-exclusive, non-transferable, non-assignable, royalty-free limited license (with a right to sublicense only to permitted third-party subcontractors) to use the Insmed Intellectual Property and Intellectual Property Rights of Insmed solely to the extent necessary for Therapure to meet its obligations hereunder.
16.1.4. Therapure acknowledges and agrees that title to Insmed Intellectual Property shall always remain with Insmed, and that Therapure shall not acquire any interest therein except to the extent such Insmed Intellectual Property is included in the license granted to Therapure hereunder. Therapure shall not challenge, contest or otherwise impair Insmed’s ownership of Insmed Intellectual Property or the validity or enforceability of Intellectual Property Rights of Insmed therein.
16.2. Therapure Intellectual Property.
16.2.1. Notwithstanding anything to the contrary contained herein, any Confidential Information and Intellectual Property Rights and proprietary information which is developed by, or on behalf of, Therapure related to Therapure’s general business processes and the manufacturing process, quality control, testing and compliance procedures and is not Insmed Intellectual Property (collectively, the “Therapure Intellectual Property”) shall be solely and exclusively owned by Therapure. In no event shall Insmed challenge, contest or otherwise impair Therapure’s ownership of any of Therapure Intellectual Property or the validity of any of Therapure Intellectual Property.
16.2.2. Notwithstanding anything to the contrary contained herein and in addition to any rights granted to Insmed, Therapure shall grant to Insmed a non-exclusive, perpetual, irrevocable, transferable, fully paid, worldwide license (with a right to sublicense through multiple tiers) to use the Therapure Intellectual Property used by Therapure in the Manufacture of ARIKACE solely to make, have made, use, offer for sale, sell, export or import ARIKACE.
16.2.3. Insmed acknowledges and agrees that title to Therapure Intellectual Property shall always remain with Therapure, and that Insmed shall not acquire any interest therein except to the extent such Therapure Intellectual Property is included in the licenses granted to Insmed hereunder.
16.2.4. Insmed shall immediately give Notice to Therapure upon becoming aware of any Intellectual Property Rights infringement or imitation of any Intellectual Property Rights of Therapure or of any facts that Insmed believes might constitute infringement or imitation.

ARTICLE 17 PHARMACOVIGILENCE AND FIELD CORRECTIVE ACTIONS
17.1. Pharmacovigilence. Insmed shall deliver written notice to Therapure of any complaints it receives, directly or through an Affiliate or third party, regarding or relating to ARIKACE promptly upon receipt of such complaints by Insmed’s complaint handling unit. Therapure shall cooperate with Insmed in any necessary and appropriate investigation of any such complaint. Upon request by Insmed and at Insmed’s expense, Therapure shall conduct any necessary batch record reviews or other analysis of its Manufacturing operations for ARIKACE. Unless otherwise agreed, Therapure shall complete and deliver its written analysis to Insmed as soon as reasonably 

practicable, giving due consideration to any potential reporting requirements imposed by Governmental or Regulatory Authorities. Insmed shall be responsible for reporting any and all complaints relating to ARIKACE to any applicable Governmental or Regulatory Authorities requiring the filing of such reports. Such reporting shall be made in compliance with all applicable Laws. Therapure shall give prompt (and in any event within [***]) written notice to Insmed of complaints it receives regarding or relating to ARIKACE and provide such information and documentation to Insmed as is necessary for Insmed to evaluate such complaints with respect to Insmed’s existing inventory and previously distributed ARIKACE. Insmed shall reimburse Therapure for the direct costs it incurs in connection with any investigation or review pursuant to this Section 17.1, unless the circumstances giving rise to the such investigation or review are attributable to the acts or omissions of Therapure.
17.2. Field Corrective Actions.
17.2.1. The parties hereby acknowledge and agree that field corrective actions, market withdrawals and/or recalls may be initiated by a Governmental or Regulatory Authority or by Insmed. Each party shall promptly notify (and in any event, within [***]) the other party of all facts or circumstances which could precipitate the need for implementing a field corrective action, market withdrawal and/or recall (“Corrective Action”) with respect to ARIKACE. Such facts or circumstances may include product complaints received by a party or other information regarding ARIKACE which comes to the attention of a party, including information regarding the Manufacturing process or its output. Reported information shall include, but not be limited to:
(i) the date the information was received;
(ii) lot number(s); and
(iii) the reported terms(s) seriousness, and any other relevant outcome information.
17.2.2. Therapure shall make available any necessary batch records or other analysis of its Manufacturing operations for ARIKACE which may be necessary in order for Insmed to fully investigate the matter. Neither party shall unreasonably withhold any information from the other party involving patient safety, efficacy of ARIKACE or efficacy of a Corrective Action. Insmed shall develop and issue any statements to be made to any third parties (including, without limitation, Governmental or Regulatory Authorities or the general public) relating to a Corrective Action in compliance with all applicable Laws and shall provide Therapure with reasonable opportunity for review prior to the publication or release of such statements.
17.3. Correction Costs.
17.3.1. In the event that a Corrective Action or like procedures are necessary, each party shall cooperate fully with the other to ensure expeditious completion of such Corrective Action in compliance with all applicable Laws.
17.3.2. Subject to Section 17.3.3:
(i) if a Corrective Action relates to a Manufacturing Defect caused by Therapure (including any failure to follow any ARIKACE SOP or Master Batch Record), Therapure shall be responsible for complying with Section 13.2.3(vii) and paying reasonable costs and expenses directly related to the Corrective Action (the “Correction Costs”), which the parties agree shall be no greater than the greater of (x) the [***]; and (y) the [***];
(ii) if a Corrective Action relates to design, marketing, distribution, production or handling by Insmed of ARIKACE or any Manufacturing Defect primarily caused by an act or omission of Insmed, including defects in the Amikacin, the Excipients or the Manufacturing Materials, Insmed shall be responsible for and pay all Correction Costs; and 
(iii) if a Corrective Action relates to a failure by Therapure to maintain the Workshop in a state of GMP compliance, Therapure shall be responsible for and pay all costs and expenses related to bringing the Workshop into a state of GMP compliance.
17.3.3. In the event that a Corrective Action has been caused by or contributed to by the fault of both Therapure and Insmed, the responsibility for and payment of the Correction Costs shall be apportioned among the parties in proportion to the degree of fault by Therapure and Insmed in causing the Corrective Action.
17.3.4. In the event that Correction Costs are incurred by a party that are paid by the other party, the responsible party shall reimburse the incurring party for any such reasonable Correction Costs within [***] days of receipt of a bill from the incurring party for such Correction Costs.
17.4. Compliance. The obligations of Therapure and Insmed set out in this Article 17 are intended to comply with the applicable Laws relating to Manufacture, release and distribution of ARIKACE. The requirements of this Article 17 shall therefore be construed and interpreted to comply with all such Laws. To the extent provisions of this Article 17 do not adequately reflect any such Law such provisions shall be revised to the extent reasonably necessary to make such provisions legal and valid in accordance with such Laws.

ARTICLE 18 CONFIDENTIAL INFORMATION, NONDISCLOSURE, PUBLICITY AND NON-SOLICITATION OF EMPLOYEES
18.1. Confidentiality.
18.1.1. Each of Therapure and Insmed shall (and shall use its best efforts to cause each of its respective Affiliates and representatives to) keep confidential and not disclose to any other person or entity or use for its own benefit, or the benefit of any other person or entity, any Confidential Information. Each of Insmed or Therapure shall be responsible for any breach of this Article 18 by any of the Insmed Representatives or any of the Therapure Representatives, as applicable.
18.1.2. The parties may disclose Confidential Information solely to the extent required by any Governmental or Regulatory Authority having jurisdiction over that party asserting a right to obtain such information, including, without limitation, where disclosure is required to be made for the purpose of obtaining regulatory approvals in any jurisdiction; provided, however, that prior to any disclosure pursuant to this Section 18.1.2 (except where such disclosure is required to be made to a Governmental or Regulatory Authority in order for such Disclosing Party to obtain regulatory approvals in any jurisdiction), the Disclosing Party shall promptly advise the other party in the event of any request by a Governmental or Regulatory Authority or other Governmental or Regulatory Authority for the Confidential Information and shall cooperate with the other party to assert any right of objection to such request or to seek a protective order or to take other appropriate action to protect the Confidential Information, except as otherwise prohibited by Law.
18.1.3. Notwithstanding anything in this Agreement to the contrary, each of the parties shall not disclose the other party’s or any of its respective Affiliates’ Confidential Information of the type set out in the Demand Forecast to the other party or its respective Representatives other than those production personnel or Representatives who need to know such Confidential Information.
18.2. Limitation of Disclosure. The parties agree that, except as otherwise may be required to be disclosed by law, order or regulation of a court or tribunal or Governmental or Regulatory Authority, no information concerning this Agreement and the transactions contemplated herein shall be made public by either party without the prior written consent of the other.
18.3. Public Announcements. Therapure and Insmed shall consult with each other before issuing, and give each other the opportunity to review and comment upon, any press release or other public statements with respect to the announcement of the transactions contemplated by this Agreement, and shall not and shall cause their respective Therapure Representatives or Insmed Representatives not to issue any such press release or make any such public statement prior to such consultation, except as such party may reasonably conclude may be required by applicable Law, court process or by obligations pursuant to any listing agreement with any national securities exchange or national securities quotation system.
18.4. Non-Solicitation of Employees. During the Term: (i) Insmed agrees that, without the prior written consent of Therapure, neither Insmed nor any Insmed Representative shall (or shall assist or encourage others to), directly or indirectly, solicit to hire or cause or seek to cause to leave the employ of Therapure or any of its Affiliates any person who is then employed by Therapure or any of its Affiliates; (ii) Therapure agrees that, without the prior written consent of Insmed, neither Therapure nor any Therapure Representative (which, for the purposes of this Section 18.4, does not include Affiliates of Therapure) shall (or shall assist or encourage others to), directly or indirectly, solicit to hire or cause or seek to cause to leave the employ of Insmed or any of its Affiliates any person who is then employed by Insmed or any of its Affiliates; provided that general solicitations in electronic or written media or hiring as a result thereof, shall not constitute a breach of this Section 18.4.

ARTICLE 19 GOVERNMENTAL OR REGULATORY AUTHORITY INSPECTIONS AND NOTICES
19.1. Governmental or Regulatory Authority Inspections. Each party shall promptly (within [***] Business Days) notify the other party of any notices of inspection, request for records or other documentation received from a Governmental or Regulatory Authority which are related to the Manufacture of ARIKACE and shall have final authority and responsibility for submitting responses to the observations; provided, that Therapure shall, to the extent reasonably practicable, (i) provide Insmed with the ability to review and comment on any draft responses
and (ii) incorporate any comments from Insmed. Responses to the observations shall be made in accordance with all applicable Laws and requirements of the Governmental or Regulatory Authority. The responding party shall inform the other of the results of any such inspection and provide a copy of any report or other written communication received or submitted in connection with such inspection. Therapure will allow the EMA, FDA, Health Canada or other applicable Governmental or Regulatory Authority to perform reasonable inspections and audits of the Facility to ensure compliance with applicable Laws.

19.2. Governmental or Regulatory Authority Notices. To the extent allowed or consented to by Law, Therapure shall promptly (within [***] Business Days) notify Insmed of any subpoena, civil investigative demand, or similar request for records or other documentation received from a Governmental or Regulatory Authority regarding ARIKACE and allow Insmed the opportunity to seek a protective order at the discretion and cost of Insmed.

ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS
20.1. Therapure’s Representation and Warranty. Therapure represents, warrants and covenants as follows:
(i) that at the time of Manufacture, ARIKACE shall conform to ARIKACE Specifications and shall be Manufactured in accordance with Therapure’s Manufacturing Requirements;
(ii) during the Term, Therapure shall comply with and shall take no action that would cause it to be in violation of applicable Laws, including but not limited to the FCPA, US Export Control Laws and Anti-Corruption Laws in the Territory; further, it shall immediately notify Insmed if Therapure has any information or suspicion that there may be a violation of the FCPA or any other Anti-Corruption Law in connection with the performance of this Agreement, and shall reasonably cooperate with Insmed with respect to any investigation or audit related thereto;
(iii) it has not been debarred pursuant to the FD&C Act, excluded from a federal health care program, or debarred from federal contracting by any Governmental or Regulatory Authority in the Territory, and have not been convicted of or pled nolo contendere, to a crime that could lead to such debarment or exclusion;
(iv) it will not directly or indirectly employ, contract with or retain any person or entity, including but not limited to Manufacturing Suppliers and Vendors, to perform services under this Agreement if such person or entity is debarred pursuant to the FD&C Act, excluded from a federal health care program, or debarred from federal contracting by any Governmental or Regulatory Authority in the Territory, or has been convicted or pled nolo contendere to a crime that could lead to such exclusion or debarment. In the event that Therapure becomes aware of or receives notice of the debarment or exclusion of any person or entity providing services to under this Agreement, then Therapure agrees to notify Insmed immediately and address the issue as directed by Insmed;
(v) that it has obtained, and shall remain in compliance during the Term with all applicable Facility Permits which are required under applicable Laws of Governmental or Regulatory Authorities applicable to the operation of the Workshop for Manufacture of ARIKACE as set out in this Agreement;
(vi) subject to the terms and conditions of this Agreement, it shall deliver ARIKACE within [***] from the Batch Release Date;
(vii) ARIKACE delivered to Insmed shall (A) be free from any and all encumbrances, liens, security interest or other third-party claims; and (B) not be misbranded, contaminated or adulterated in violation of applicable Laws;
(viii) during the Term, Therapure shall promptly report to Insmed any development coming to its attention which may, in any way, reasonably be expected to materially affect the performance of this Agreement;
(ix) that it is duly organized and validly existing under the Laws of the Province of Ontario, and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof, and its entering into this Agreement has been duly authorized by all requisite corporate action;
(x) the execution, delivery and performance of this Agreement by Therapure does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any material applicable Law; and
(xi) this Agreement is legally binding upon it and enforceable in accordance with its terms.
20.2. Disclaimer of Warranties. EXCEPT FOR THOSE WARRANTIES EXPRESSLY SET OUT IN THIS AGREEMENT, NEITHER PARTY MAKES ANY OTHER WARRANTIES OR REPRESENTATIONS OF ANY KIND WHATSOEVER, WRITTEN OR ORAL, EXPRESS OR IMPLIED, STATUTORY, BY OPERATION OF LAW OR OTHERWISE, WITH RESPECT TO ARIKACE, MATERIALS PROVIDED UNDER THIS AGREEMENT OR THE MANUFACTURE OF ARIKACE AND EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT, AND SUITABILITY OF ARIKACE.
20.3. Insmed’s Representation and Warranty. Insmed represents, warrants and covenants as follows:

(i) the Insmed Intellectual Property and the technical advice and resources provided by Insmed to Therapure in respect of the Technology Transfer Program are sufficient to enable Therapure to fulfill any and all of its obligations under this Agreement, including the obligations of the Therapure in respect of the Technology Transfer Program and to Manufacture ARIKACE as contemplated by this Agreement;
(ii) Insmed has provided to Therapure all Product Information and Product Documentation necessary for Therapure to Manufacture ARIKACE and to enable Therapure to comply with any and all applicable ARIKACE Permits which are required under applicable Laws of Governmental or Regulatory Authorities;
(iii) Insmed has not received written notice alleging that the Insmed Intellectual Property directly relating to the Manufacture of ARIKACE violates, misappropriates or infringes the intellectual property rights (including patents) of a third party within the 3-year period prior to the Effective Date; and to Insmed’s knowledge there is no basis for such an allegation or litigation;
(iv) during the Term, it has the right to give Therapure any information or materials provided hereunder, and that Therapure has the right to use such information or materials for the Manufacture of ARIKACE;
(v) in connection with the performance of its obligations under this Agreement, it shall comply with all applicable Laws and, if obtained, shall remain in compliance during the Term with all applicable ARIKACE Permits which are required under applicable Laws of Governmental or Regulatory Authorities;
(vi) the Amikacin, the Excipients and the Manufacturing Materials delivered to Therapure by Insmed are, to Insmed’s knowledge (but except as disclosed to Therapure regarding the toxicity of ARIKACE pursuant to Section 5.1.3(ii)), free of hazardous or toxic components, or, if hazardous or toxic components are present, that all such risks, hazards and testing or certification of such materials, and any specific handling instructions required to handle such materials, shall have been fully disclosed by providing notice to Therapure in advance of delivery of such Amikacin, Excipients and Manufacturing Materials;
(vii) there are no actual or pending, and to Insmed’s knowledge, no alleged or threatened, adverse actions, suits, claims, or formal governmental investigations, or settlements or judgments, involving ARIKACE by or against Insmed or any of its Affiliates in or before any Governmental or Regulatory Authority. In particular, to Insmed’s knowledge, there is no pending or threatened product liability action involving the use or administration of any ARIKACE;
(viii) there is no litigation pending against Insmed that alleges that the Manufacture of ARIKACE infringes, misappropriates or otherwise violates the intellectual property rights (including patents) of a third party; Insmed has not received written notice alleging such infringement, misappropriation or violation within the 3-year period prior to the Effective Date; and to Insmed’s knowledge there is no basis for such an allegation or litigation;
(ix) during the Term, the Amikacin comply with all testing requirements under the relevant Governmental or Regulatory Authority and, when applicable, are produced in compliance with the process approved by the Governmental or Regulatory Authority under all Permits (including the NDA), and shall be delivered to Therapure in accordance with all Request Orders;
(x) during the Term, Insmed shall promptly report to Therapure any development coming to its attention which may, in any way, reasonably be expected to materially affect the performance of this Agreement;
(xi) that it is duly organized and validly existing under the Laws of the State of Virginia, and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof, and its entering into this Agreement has been duly authorized by all requisite corporate action;
(xii) the execution, delivery and performance of this Agreement by it does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any material applicable Law; and
(xiii) this Agreement is legally binding upon it and enforceable in accordance with its terms.

ARTICLE 21 THIRD PARTY INDEMNIFICATION
21.1. Insmed Third Party Indemnification. Insmed shall indemnify, defend and hold harmless Therapure, its Affiliates and their respective directors, officers, employees,

subcontractors, delegates, agents and Affiliates (collectively, the “Therapure Representatives”) from and against any and all liabilities, charges, obligations, penalties, judgments, demands, disbursements of any kind and nature, losses, damages, fines, costs and expenses (including, without limitation, reasonable attorneys’ fees), including, without limitation, property damage or personal injury (including, without limitation, death) of third parties (collectively, “Losses”) arising out of or resulting from any third party claims, judgments, demands, actions or suits (collectively, “Third Party Claims”) to the extent arising or resulting from:
(i) Insmed’s storage, promotion, labeling claim, marketing, distribution, pricing, use or sale (including resale) of ARIKACE;
(ii) any claim that the use, sale, Manufacture, marketing, packaging design, handling or distribution or use of ARIKACE by Insmed violates the Intellectual Property Rights of any third party, except to the extent such violation results from any Manufacturing Materials supplied by Therapure or Therapure Intellectual Property;
(iii) any product liability or similar claim for injury to person or property in connection with the sale, marketing, handling, or distribution of ARIKACE, except with respect to any Manufacturing Defect caused by Therapure;
(iv) any negligence or wilful misconduct by an Insmed Representative;
(v) any breach by Insmed of its representations, warranties or covenants in this Agreement; or
(vi) any failure of the Amikacin, the Excipients or the Manufacturing Materials supplied by Insmed to meet their applicable specifications,
in each case, except to the extent any of the foregoing arises out of or results from the negligence or wilful misconduct of any Therapure Representative or Therapure’s breach of its obligations under this Agreement.
21.2. Therapure Third Party Indemnification. Therapure shall indemnify Insmed, its Affiliates and their respective employees, directors, officers, subcontractors, delegates, agents and Affiliates (collectively, the “Insmed Representatives”) from and against any and all Losses arising out of or resulting from any Third Party Claims to the extent arising or resulting from:
(i) any product liability or similar claim for injury to person or property, solely in connection with a Manufacturing Defect caused by Therapure, in each case, except to the extent such Third Party Claims are: (A) attributable to the Amikacin or the Manufacturing Materials; (B) caused by an act or omission of a Insmed Representative; or (C) or attributable to Insmed’s instructions or specifications;
(ii) any breach by Therapure of its representations, warranties or covenants in this Agreement; or
(iii) any negligence or wilful misconduct by a Therapure Representative,
in each case, except to the extent any of the foregoing arises out of or results from the negligence or wilful misconduct of any Insmed Representative or Insmed’s breach of its obligations under this Agreement.
21.3. Procedure.
21.3.1. In the event of a Third Party Claim, then the Indemnified Party shall promptly notify the Indemnifying Party thereof in writing after becoming aware of such Third Party Claim; provided, however, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then only to the extent that) the Indemnifying Party is actually and materially prejudiced thereby. Such notice shall set out in reasonable detail the basis of the claim (including, if applicable, the representation, warranty or covenant alleged to have been breached), and, if estimable, the amount of such claim.
21.3.2. The Indemnifying Party shall have the right, exercisable by written notice to the Indemnified Party within [***] of receipt of notice from the Indemnified Party of the commencement of or assertion of any Third Party Claim, to assume the defense of such Third Party Claim to the extent that it involves (and continues to involve) monetary damages; provided, however, that:
(i) the Indemnifying Party expressly agrees in such notice that, as between the Indemnifying Party and the Indemnified Party, the Indemnifying Party shall be solely obligated to satisfy and discharge the Third Party Claim;
(ii) the defense of such Third Party Claim by the counsel representing the Indemnifying Party does not, in the reasonable judgment of the Indemnified Party, constitute a conflict of interest under the applicable canons or rules of legal professional ethics; and

(iii) the Indemnifying Party makes reasonably adequate provision to ensure the Indemnified Party of the ability of the Indemnifying Party to satisfy the full amount of any adverse monetary judgment that would reasonably be expected to result therefrom.
(the conditions set out in clauses (i), (ii) and (iii) above are collectively referred to as the “Litigation Conditions”).
21.3.3. In no event shall the Indemnifying Party have the right to control any Third Party Claim to the extent such Third Party Claim covers injunctive, criminal or other equitable relief that, if granted, would adversely affect the Indemnified Party.
21.3.4. Within [***] after the Indemnifying Party has given notice to the Indemnified Party of its intended exercise of its right to defend a Third Party Claim, the Indemnified Party shall give notice to the Indemnifying Party of any objection thereto based upon the Litigation Conditions. If the Indemnified Party so objects, the Indemnified Party shall continue to defend the Third Party Claim at the expense of the Indemnifying Party until such time as such objection is withdrawn. If no such notice is given, or if any such objection is withdrawn, the Indemnifying Party shall be entitled, at its sole cost and expense, to assume and conduct such defense, with counsel selected by the Indemnifying Party and reasonably acceptable to the Indemnified Party, until such time as the Indemnified Party shall give notice that any of the Litigation Conditions, in its reasonable judgment, are no longer satisfied.
21.3.5. During such time as the Indemnifying Party is controlling the defense of such Third Party Claim, the Indemnified Party shall cooperate, and cause its Affiliates and agents to cooperate, to the extent commercially reasonable, upon request of the Indemnifying Party in the defense or prosecution of the Third Party Claim, including by furnishing such records, information and testimony and attending such conferences, discovery proceedings, hearings, trials or appeals as may reasonably be requested by the Indemnifying Party.
21.3.6. In the event that the Indemnifying Party fails to satisfy the Litigation Conditions or does not notify the Indemnified Party in writing of the Indemnifying Party’s intent to defend any Third Party Claim within [***] days after notice thereof, the Indemnified Party may (without further notice to the Indemnifying Party) undertake the defense thereof with counsel of its choice and at the Indemnifying Party’s expense (including attorneys’ fees and costs and expenses of enforcement or defense).
21.3.7. The Indemnifying Party or the Indemnified Party, as the case may be, shall have the right to join in (including the right to conduct discovery, interview and examine witnesses and participate in all settlement conferences), but not control, at its own cost and expense, the defense of any Third Party Claim that the other party is defending as provided in this Agreement.
21.3.8. The Indemnifying Party, if it shall have assumed the defense of any Third Party Claim as provided in this Agreement, shall not consent to a settlement of, or the entry of any judgment arising from, any such Third Party Claim without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld or delayed), provided, however, that the Indemnifying Party may settle claims involving solely monetary damages without the consent of the Indemnified Party if a full release of the Indemnifying Party is obtained with respect to such claims. The Indemnifying Party shall not, without the prior written consent of the Indemnified Party, not to be unreasonably withheld, enter into any compromise or settlement which commits the Indemnified Party to take, or to forbear to take, any action. The Indemnified Party shall have the right to settle any Third Party Claim, on such terms and conditions as it deems reasonably appropriate, to the extent such Third Party Claim involves equitable or other non-monetary relief; provided, however, the Indemnified Party shall not, without the prior written consent of the Indemnifying Party (which consent shall not to be unreasonably withheld, conditioned or delayed) enter into any compromise or settlement that would adversely affect the Indemnifying Party. The Indemnifying Party’s indemnity obligation shall be reduced by the any amounts the Indemnified Party receives or shall receive from any third party, including an insurance carrier, for the Losses.

ARTICLE 22 LIMITATION OF LIABILITY
22.1. Limitation of Liability.
22.1.1. Subject to Section 22.1.2 and to Sections 5.1.1.2(vi) and 13.2.3(vii) (which shall be Insmed’s exclusive remedy with respect to claims related thereto), the maximum aggregate liability of Therapure for all claims, judgments, demands, actions or suits arising under, out of or related to this Agreement, including the services contemplated hereby and any claims whether in contract, tort, strict liability, in equity or otherwise, shall be strictly limited to:
(i) for [***], the [***];
(ii) for [***], the [***]; and
(iii) for [***], the [***].

22.1.2. Notwithstanding anything to the contrary, the exclusive remedies set forth in Section 5.1.1.2(vi) and Section 13.2.3(vii) and the limitations and exclusions set forth in Section 22.1.1 shall not apply:
(i) in the case of, (A) gross negligence, wilful misconduct or fraud by Therapure, or (B) any material breach by Therapure of its confidentiality or non-use obligations under Section 18.1 and 18.2; or
(ii) to Therapure’s third party indemnification obligations under Section 21.2.
22.1.3. EXCEPT FOR:

(i) TERMINATION PAYMENTS UNDER SECTION 14.5;
(ii) DAMAGES AVAILABLE FOR A PARTY’S BREACH OF ITS CONFIDENTIALITY OBLIGATIONS UNDER ARTICLE 18; OR
(iii) AMOUNTS ACTUALLY PAID TO A THIRD PARTY AND A PARTY’S ACTUAL COSTS INCURRED IN CONNECTION WITH DEFENDING A THIRD PARTY CLAIM TO THE EXTENT, IN EITHER CASE, THAT A PARTY IS OBLIGATED TO INDEMNIFY THE OTHER UNDER ARTICLE 21,
IN NO EVENT SHALL EITHER PARTY BE LIABLE UNDER ANY LEGAL THEORY, WHETHER IN CONTRACT OR TORT OR PRODUCTS LIABILITY OR OTHERWISE, FOR ANY INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES, INCLUDING DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS LOSSES, BUSINESS INTERRUPTION, WORK STOPPAGE, LOSS OF DATA, LOSS OF GOODWILL, AND ANY OF THE LIKE), WHETHER FORESEEABLE OR NOT, THAT ARE IN ANY WAY RELATED TO THIS AGREEMENT.

ARTICLE 23 FORCE MAJEURE
23.1. Force Majeure. Neither party shall be held liable or responsible to the other party for failure to perform or for delays in performing any obligation under this Agreement if such failure or delay is caused by acts of God, fires, strike, epidemics, lockout or other industrial dispute, embargoes, war (whether or not declared), riot, rebellion, insurrections, or other similar events, or other causes beyond the reasonable control and without the fault or negligence of the party so affected to the extent it disproportionately affects the industry in which Insmed or Therapure operates or the processes hereunder (a “Force Majeure”); provided that such affected party promptly notifies the other party of the nature of the Force Majeure and provides an estimate of its expected duration and impact on the performance of such party’s obligations under this Agreement. The party affected by such Force Majeure shall exercise reasonable commercial efforts to (i) overcome the Force Majeure and (ii) mitigate or limit damages to the non-affected party. For clarification, any action by a Governmental or Regulatory Authority or FDA, Health Canada or EMA, including the shutdown of a Therapure’s Facility or the Workshop by the FDA or other Governmental or Regulatory Authority (other than any shutdown due primarily to the fault or negligence of Therapure) shall constitute a Force Majeure, provided such action also limits the production, sales or commercialization ability of a significant number of similarly situated participants in the industry in which Therapure or Insmed operates. If any Force Majeure continues for a period of [***] or more, the party that is not subject to the Force Majeure event shall have the right to terminate this Agreement upon [***] days prior notice to the other.

ARTICLE 24 NOTICES
24.1. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed given if (i) delivered personally, (ii) by telecopy (which transmission is confirmed electronically), or (iii) sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

									
	If to Therapure:		Copy to (which copy shall not constitute notice to Therapure):
			
	Therapure Biopharma Inc. 2585 Meadowpine Blvd., Mississauga, Ontario, Canada L5N 8H9		Gowling Lafleur Henderson LLP 1 First Canadian Place 100 King Street West Suite 1600 Toronto, Ontario, M5X 1G5
			
	Attention: Brian Fielding, Chief Financial Officer and Elaine dos Santos, Law Clerk Telephone: [***] Email: [***] Email: [***]		Attention: Vanessa Grant Telephone: [***] Email: [***]
			
	If to Insmed:		Copy to (which copy shall not constitute notice to Insmed):
			
	Insmed Incorporated 9 Deer Park Drive, Suite C Monmouth Junction, NJ 08852		Insmed Incorporated 9 Deer Park Drive, Suite C Monmouth Junction, NJ 08852
			
	Attention: Christine Pellizzari, Corporate Counsel
Telephone: [***] Email: [***]		Attention: Peter Clarke, PhD, Vice President, Technical Operations
Telephone: [***] Email: [***]

Notices shall be effective upon receipt if personally delivered, on the day following the date of transmission if sent by facsimile, and on the second business day following the date of delivery to the overnight delivery service if sent by overnight delivery. A party may change its address listed above by notice to the other party.

ARTICLE 25 APPLICABLE LAW
25.1. Applicable Law. This Agreement shall be deemed to be made in and in all respects shall be construed and interpreted and the rights granted herein governed in accordance with the laws of the State of New York, regardless of any laws or principles of conflicts of laws or rules that would cause the application of the laws of any jurisdiction other than the State of New York. Subject to Section 37.1.2, the parties hereby irrevocably submit exclusively to the jurisdiction of the U.S. District Court for the Southern District of New York, unless such court declines the exercise of jurisdiction, in which case the courts of the State of New York located in the County, City and State of New York (and, in each case, any appellate court therefrom), solely in respect of the interpretation and enforcement of the provisions of this Agreement and of the documents referred to in this Agreement, and in respect of the transactions contemplated hereby, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement or any such document may not be enforced in or by such courts, and the parties irrevocably agree that all claims with respect to such action or proceeding shall be heard and determined in said courts. Subject to Section 37.1.2, the parties hereby consent to and grant any such court jurisdiction over the person of such parties and over the subject matter of such dispute and agree that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 24.1 or in such other manner as may be permitted by law shall be valid and sufficient service thereof. Any process or other papers hereunder may be served by registered or certified mail, return receipt requested, or by personal service, provided that a reasonable time for appearance or response is allowed.

EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT:
(i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER;
(ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER;
(iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY; AND
(iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATES IN THIS Article 25.
25.2. Vienna Convention. The United Nations Convention on Contracts for the International Sale of Goods (also called the Vienna Convention, and which is cited in the statutes of Canada as the International Sale of Goods Contracts Convention Act) will not apply to this Agreement or the transactions contemplated by this Agreement.

ARTICLE 26 DOCUMENTS INCORPORATED BY REFERENCE
26.1. Documents Incorporated by Reference. The following documents shall be specifically incorporated herein by reference and made a part hereof:
(i) the Schedules identified in this Agreement;
(ii) the ARIKACE Specifications; and
(iii) the Quality Agreement.

ARTICLE 27 ASSIGNMENT
27.1. Assignment.
27.1.1. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, transferred, delegated or otherwise disposed of (whether voluntarily or involuntarily, directly or indirectly, by operation of law, merger, sale of stock, sale of assets or otherwise), by either party without the prior written consent of the other party, which consent shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, either party may, without the prior consent of the other party, assign, transfer, delegate or otherwise dispose of, this Agreement, or any of its rights, interests or obligations hereunder to:
(i) any Affiliate of such party, provided, that no such assignment shall relieve the assigning party from any of its obligations hereunder; or
(ii) any successor in connection with a Change of Control of such party, provided that (A) the successor assumes this Agreement in writing or by operation of law, and (B) if such assignment is in writing, such party delivers prompt written notice of such assignment to the other party.
27.1.2. Any purported assignment of this Agreement in violation of Section 27.1.1 shall be null and void.
27.1.3. The terms and conditions of this Agreement shall be binding on and inure to the benefit of the permitted assigns and successors of the parties.

ARTICLE 28 FURTHER ASSURANCES
28.1. Further Assurances. Each party agrees to execute and deliver any and all such other and additional instruments and documents to do any and all such other acts and things as may be necessary or expedient to effectuate more fully this Agreement and to carry out the business contemplated by this Agreement.

ARTICLE 29 TAXES
29.1. Taxes.
29.1.1. All amounts payable by Insmed to Therapure under this Agreement are exclusive of applicable Commodity Taxes, if any. Insmed and Therapure agree to provide a valid exemption certificate to claim 

exemption from applicable Commodity Taxes under where required under applicable Law. Insmed shall pay all Commodity Taxes payable in respect of the export or import of the Amikacin or purchase of ARIKACE pursuant to this Agreement, and in respect of the subsequent export, import, sale or distribution of ARIKACE by Insmed (or at Insmed’s Expense, defend against the imposition of such taxes and expenses). Insmed shall act as exporter and importer of record of the Amikacin. Therapure shall notify Insmed of any such taxes that any Governmental or Regulatory Authority requires Therapure to collect from Insmed, and Insmed may assume the defense thereof in Therapure’s name, and Therapure agrees to fully cooperate in such defense to the extent of the capacity of Therapure, at Insmed’s Expense. Therapure shall pay all Canadian federal income, provincial, municipal or other taxes imposed on Therapure’s net income resulting from the Manufacture by Therapure of ARIKACE for Insmed under this Agreement.
29.1.2. All amounts payable by Insmed to Therapure under this Agreement shall be made free and clear of, and without deduction or withholding for, any present or future Taxes. If any Taxes are so levied or imposed, Insmed agrees to pay the full amount of such Taxes, and such additional amounts as may be necessary so that every payment of all amounts due under this Agreement, after withholding or deduction for or on account of any Taxes, shall not be less than the amount otherwise required to be paid.

ARTICLE 30 ENTIRE AGREEMENT
30.1. Entire Agreement. This Agreement (along with the Quality Agreement and all documents specifically incorporated herein by reference and made a part hereof) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements or understandings, both written and oral (including the Confidentiality

Agreement and the Heads of Agreement), with respect to such subject matter (including any letter of intent or term sheet). No party hereto has made any representation or warranty or given any covenant to another party hereto except as set out in this Agreement.

ARTICLE 31 SEVERABILITY
31.1. Severability. It is the intention of the parties hereto that the provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions of this Agreement. It is the intention of the parties hereto that if any provision of this Agreement, or the application thereof to any person, entity or circumstance, is invalid or unenforceable, (i) a suitable and equitable provision shall be substituted herefor in order to carry out, so far as the may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (ii) the remainder of this Agreement and the application of such provision to other persons, entities or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

ARTICLE 32 AMENDMENT AND WAIVER OF AGREEMENT
32.1. Amendment and Waiver of Agreement. This Agreement may not be amended, supplemented or otherwise modified, except upon the execution and delivery of a written agreement by the parties hereto. By an instrument in writing, the parties may waive compliance by the other party hereto with any provision of this Agreement; provided, however, that any such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure or with respect to a party hereto that has not executed and delivered any such waiver. No failure to exercise and no delay in exercising any right, remedy, or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, or power hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy or power provided herein or by law or at equity.

ARTICLE 33 INDEPENDENT CONTRACTOR
33.1. Independent Contractor. From and after the Effective Date, Therapure shall act as an independent contractor for Insmed or any of its Affiliates, as the case may be, in providing the services required hereunder and shall not be considered an agent, partner or joint venturer with Insmed or any of its Affiliates.

ARTICLE 34 COUNTERPARTS

34.1. Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original and all of which together shall constitute one and the same instrument. This Agreement may be executed by fax or other electronic transmission with the same binding effect as original ink signatures.

ARTICLE 35 INTERPRETATION
35.1. Interpretation. When a reference is made in this Agreement to sections, such reference shall be to a Section of this Agreement unless otherwise indicated. Headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the word “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”. This Agreement shall not be construed for or against any party hereto by reason of the authorship or alleged authorship of any provision hereof or by reason of the status of the respective parties hereto. For all purposes of this Agreement, words stated in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include each other gender, as the context may require or allow. The terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (and not to any particular provision of this Agreement). The word “or” shall not be exclusive.
ARTICLE 36 NO THIRD PARTY BENEFICIARIES
36.1. No Third Party Beneficiaries. Other than as contemplated in Article 21, this Agreement is not intended to and does not confer upon any person or entity other than the parties hereto any legal or equitable rights or remedies.

ARTICLE 37 DISPUTE RESOLUTION
37.1. Dispute Resolution.
37.1.1. Prior to initiating any arbitration proceeding relating to any disputes arising from or in connection with this Agreement or any transaction contemplated hereby, including any question regarding its existence, validity, or termination (any such dispute, a “Controversy”), the parties shall attempt in good faith to resolve such Controversy promptly by negotiations between executives who have authority to settle the Controversy and who are at a higher level of management than the persons with direct responsibility for the issues in Controversy; provided, however, that notwithstanding this Section 37.1.1, any Controversy regarding non-conforming ARIKACE or Latent Defects shall be finally resolved in accordance with Section 13.2.3. All such negotiations shall take place in New York, New York, or such

other location as may be agreed upon by the parties. Either party may give the other party written notice of any such Controversy at any time. Within [***] after delivery of this notice, the receiving party shall submit to the other a written response. The notice and the response shall include: (i) a statement of the party’s position; and (ii) the name and title of the executive who shall represent that party and of any other person (who shall, unless otherwise agreed to by the parties, not be serving in their capacity as inside or outside counsel to the parties) who shall accompany the executive. Within [***] after delivery of the notifying party’s notice, the executives of both parties shall meet and thereafter meet as often as they both reasonably deem necessary, to attempt to resolve the Controversy. All negotiations pursuant to this clause are confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence. In the event that such Controversy is not resolved within a [***] period after delivery of the initial notice or such longer period to which the parties agree in writing, either party shall be free to proceed to arbitrate such Controversy in accordance with Section 37.1.2.

37.1.2. Subject to Section 37.1.1, all Controversies, including any question as to whether a particular Controversy is arbitrable hereunder, shall be referred to and finally resolved by binding arbitration under the Commercial Arbitration Rules of the American Arbitration Association by three arbitrators appointed in accordance with said Rules, with the two co-arbitrators having [***] days from the appointment of the second arbitrator to nominate the chair. The place of arbitration shall be New York, New York, and the language to be used in the arbitral proceedings shall be English. Judgment upon the award may be entered by any court having jurisdiction as set out in Section 25.1. Except to the extent necessary to confirm an award or as may be required by law, neither party nor any arbitrator may disclose the existence, content, or results of an arbitration without the prior written consent of both parties. The arbitration tribunal shall determine the legal costs. This Section 37.1.2 applies equally to requests for temporary, preliminary or permanent injunctive relief, except that in the case of temporary or 

preliminary injunctive relief, any party may proceed in court without prior arbitration for the limited purpose of avoiding immediate and irreparable harm. The provisions of this Section 37.1.2 shall be enforceable in any court of competent jurisdiction. Following all permitted discovery and in accordance with procedures otherwise determined by the arbitrator, each party shall prepare a written report setting forth its final position with respect to the substance of the Controversy. The parties agree that they will use reasonable commercial efforts to complete the arbitration as expeditiously as possible. Judgment upon the award rendered by such arbitrator shall be binding on the parties and may be entered by any court having jurisdiction thereof.

ARTICLE 38 EXPENSES
38.1. Expenses. Except as otherwise provided in this Agreement, each party shall pay its own expenses and costs incidental to the preparation of this Agreement and to the consummation of the transactions contemplated hereby.

ARTICLE 39 USE OF NAME
39.1. Use of Name. Neither party may use the name of the other party for any advertisement, publicity or any other reason unless such use has been approved in writing or by email by legal counsel of such party (or such other person that the Chief Executive Officer of such party may designate in writing) prior to use or publication.

ARTICLE 40 AUTHORITY
40.1. Authority. The parties executing this Agreement on behalf of Insmed and Therapure represent and warrant that they have the authority to enter into this Agreement and to bind their respective companies to all the terms and conditions of this Agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE TO FOLLOW]

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed by their duly authorized representatives as of the date first written above.
									
		THERAPURE BIOPHARMA INC.
		
		By:	/s/ Nicholas Green
			Name: Nicholas Green
			Title: President & CEO
			
		By:	/s/ Brian Fielding
			Name: Brian Fielding
			Title: VP Finance & CFO
			
		INSMED INCORPORATED
		
		By:	/s/ Matthew Pauls
			Name: Matthew Pauls
			Title: Chief Commercial Officer

SCHEDULE A
TECHNOLOGY TRANSFER ACTIVITIES QUOTE
[See attached.]

[***]

SCHEDULE B
PROCESS FLOW DIAGRAM
[See attached.]
[***]

SCHEDULE C
MINIMUM COMMITMENTS
																																										
	Year		[***]		[***]		[***]		[***] and Beyond	
	Annual Minimum Batch Processing Fee Amount (Dollars)		$	[***]		$	[***]		$	[***]		$	[***]	

Per Section 6.1, by way of example only, and using hypothetical assumptions:
If in [***]: (i) Annual Minimum Batch Processing Fee Amount was $[***] and (ii) actual aggregate Batch Processing Fee paid by Insmed was $[***] for such Year, then the True-Up Payment payable by Insmed to Therapure for such Year shall be equal to $[***]; provided, however, that [***] percent of the cost of the Clean Room Consumables (or $[***], assuming the cost of the Clean Room Consumables was $[***]) and, if Therapure is able to its sole satisfaction to reallocate the Allocated Minimum Batch Labour, [***] percent of the cost of the Reallocated Minimum Batch Labour (or $[***], assuming the cost of the Reallocated Minimum Batch Labour was $[***]) shall be credited against the True-Up Payment, such that the True-Up Payment would be reduced to $[***].
Additional Indication Approved in [***]
If in [***] an additional Indication is approved, the Annual Minimum Batch Processing Fee Amount for [***] would automatically be increased to $[***]. Consequently, if the actual aggregate Batch Processing Fee paid by Insmed is $[***] for [***], then the True-Up Payment would be $[***]; provided, however, that [***] percent of the cost of the Clean Room Consumables (or $[***], assuming the cost of the Clean Room Consumables was $[***]) and, if Therapure is able to its sole satisfaction to reallocate the Allocated Minimum Batch Labour, [***] percent of the cost of the Reallocated Minimum Batch Labour (or $[***], assuming the cost of the Reallocated Minimum Batch Labour was $[***]) shall be credited against the True-Up Payment, such that the True-Up Payment would be reduced to $[***].
Additional Indication Approved in [***]
If in [***] an additional Indication is approved, the Annual Minimum Batch Processing Fee Amount for [***] would automatically be increased to $[***]. Consequently, if the actual aggregate Batch Processing Fee paid by Insmed is $[***] for [***], then the True-Up Payment would be $[***] provided, however, that [***] percent of the cost of the Clean Room Consumables (or $[***], assuming the cost of the Clean Room Consumables was $[***]) and, if Therapure is able to its sole satisfaction to reallocate the Allocated Minimum Batch Labour, [***] percent of the cost of the Reallocated Minimum Batch Labour (or $[***], assuming the cost of the Reallocated Minimum Batch Labour

was $[***]) shall be credited against the True-Up Payment, such that the True-Up Payment would be reduced to $[***].

SCHEDULE D

DEMAND FORECASTING EXAMPLES
[***]  

SCHEDULE E
WORKSHOP CONSTRUCTION PLAN
[See attached.]
[***]

SCHEDULE F
BASIS OF DESIGN
[See attached.]
[***]

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