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Exhibit 4.3    
    

NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION
MAY BE AFFECTED EXCEPT IN COMPLIANCE WITH RULE 144 UNDER SAID ACT OR WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.

WARRANT TO PURCHASE 200,000 SHARES OF SERIES A PREFERRED STOCK  

March 5,
2007 

THIS CERTIFIES THAT, for value received, General Electric Capital Corporation ("Holder") is entitled to
subscribe for and purchase Two Hundred Thousand (200,000) shares of fully paid and nonassessable Series A Preferred Stock of  Zogenix, Inc., a Delaware corporation (the "Company"), at the
Warrant Price (as hereinafter defined), subject to the provisions and upon the
terms and conditions hereinafter set forth. As used herein, the term "Preferred Stock" shall mean Company's presently authorized Series A Preferred Stock and any stock into which such Preferred
Stock may hereafter be converted or exchanged and the term "Warrant Shares" shall mean the shares of Preferred Stock which Holder may acquire pursuant to this Warrant and any other shares of stock
into which such shares of Preferred Stock may hereafter be converted or exchanged. 

1.    Warrant Price.    The "Warrant Price" shall initially be One and no/100 dollars ($1.00) per share, subject to adjustment as
provided in Section 7 below. 

2.    Conditions to Exercise.    The purchase right represented by this Warrant may be exercised at any time, or from time to time,
in whole or in part during the term commencing on the date hereof and ending at 5:00 P.M. Pacific time on the seventh anniversary of the date of this Warrant (the "Expiration Date"). 

3.    Method of Exercise or Conversion; Payment; Issuance of Shares; Issuance of New Warrant.

(a)    Cash Exercise.    Subject to Section 2 hereof, the purchase right represented by this Warrant may be exercised by
Holder hereof, in whole or in part, by the surrender of this Warrant (with a duly executed Notice of Exercise in the form attached hereto) at the principal office of Company (as set forth in
Section 18 below) and by payment to Company, by check or wire transfer (to an account designated by the Company), of an amount equal to the then applicable Warrant Price per share multiplied by
the number of shares then being purchased. In the event of any exercise of the rights represented by this Warrant, certificates for the shares of stock so purchased shall be in the name of, and
delivered to, Holder hereof, or as such Holder may direct (subject to the terms of transfer contained herein and upon payment by such Holder hereof of any applicable transfer taxes). Such delivery
shall be made within 30 days after exercise of this Warrant and at Company's expense and, unless this Warrant has been fully exercised or expired, a new Warrant having terms and conditions
substantially identical to this Warrant and representing the portion of the Shares, if any, with respect to which this Warrant shall not have been exercised, shall also be issued to Holder hereof
within 30 days after exercise and surrender for cancellation of this Warrant. 

(b)    Conversion.    In lieu of exercising this Warrant as specified in Section 3(a), Holder may from time to time convert
this Warrant, in whole or in part, into Warrant Shares by surrender of this Warrant (with a duly executed Notice of Exercise in the form attached hereto) at the principal office of Company, in which
event Company shall issue to Holder the number of Warrant Shares computed using the following formula: 

	 	 	X	 	=	 	Y (A-B)
 A	 	 

Where:

X =
the number of Warrant Shares to be issued to Holder. 

Y =
the number of Warrant Shares purchasable under this Warrant (at the date of such calculation). 

A =
the Fair Market Value of one share of Company's Preferred Stock (at the date of such calculation). 

B =
Warrant Price (as adjusted to the date of such calculation). 

(c)    Fair Market Value.    For purposes of this Section 3, Fair Market Value of one share of Company's Preferred Stock
shall mean: 

(i)    In
the event of an exercise in connection with an Initial Public Offering, the per share Fair Market Value for the Preferred Stock shall be the offering price at which the
underwriters initially sell common stock of the Company ("Common Stock") to the public multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible;
or 

(ii)    The
average of the closing bid and asked prices of Common Stock quoted in the Over-The-Counter Market Summary, the last reported sale price quoted on the
Nasdaq Global Market or on any exchange on which the Common Stock is listed, whichever is applicable, as published in the Western Edition of the Wall Street
Journal for the three (3) trading days prior to the date of determination of Fair Market Value, multiplied by the number of shares of Common Stock into which each share
of Preferred Stock is then convertible; or 

(iii)    In
the event of an exercise in connection with a merger, acquisition or other consolidation in which Company is not the surviving entity, the per share Fair Market Value for the
Preferred Stock shall be the value to be received per share of Preferred Stock by all holders of the Preferred Stock in such transaction as determined by the Board of Directors; or 

(iv)    In
any other instance, the per share Fair Market Value for the Preferred Stock shall be as determined in the reasonable good faith judgment of Company's Board of Directors. 

In
the event of 3(c)(iii) or 3(c)(iv), above, Company's Board of Directors shall prepare a certificate, to be signed by an authorized officer of Company, setting forth in reasonable detail the basis
for and method of determination of the per share Fair Market Value of the Preferred Stock. The Board of Directors will also certify to Holder that this per share Fair Market Value will be applicable
to all holders of Company's Preferred Stock. Such certification must be made to Holder at least thirty (30) business days prior to the proposed effective date of the merger, consolidation,
sale, or other triggering event as defined in 3(c)(iii) or 3(c)(iv). 

(d)    Automatic Exercise.    To the extent (a) this Warrant is not previously exercised and (b) the Fair Market Value
of one share of Preferred Stock exceeds the Warrant Price, this Warrant shall be automatically exercised in accordance with Sections 3(b) and 3(c) hereof (even if not surrendered) immediately
before its expiration, involuntary termination or cancellation unless Holder notifies Company in writing to the contrary prior to such automatic exercise. 

(e)    Treatment of Warrant Upon Acquisition of Company.

(i)    Certain Definitions.    For the purpose of this Warrant, "Acquisition" means any sale, license, or other disposition of all
or substantially all of the assets of Company, or any reorganization, consolidation, or merger of Company, or sale of Company securities, where the holders of Company's securities before the
transaction beneficially own less than 50% of the outstanding voting securities of the surviving entity after the transaction, and "Affiliate" shall mean any person or entity that owns or controls
directly or indirectly ten (10) percent or more of the stock of Company, any person or entity that controls or is controlled by or is under common control with such persons or entities, and
each of such person's or entity's officers, directors, joint venturers or partners, as applicable. 

(ii)    Cash Acquisition.    In the event of an Acquisition in which the sole consideration is cash, (a) Holder may exercise
its conversion or purchase right under this Warrant and such exercise will be deemed
effective immediately prior to the consummation of such Acquisition or (b) subject to Section 3(d) above, this Warrant shall expire upon
the consummation of such Acquisition. Company shall provide Holder with written notice of any proposed Acquisition together with such reasonable information as Holder may request in connection with
such contemplated Acquisition giving rise to such notice, which is to be delivered to Holder not less than ten (10) business days prior to the closing of the proposed Acquisition. 

(iii)    Asset Sale.    In the event of an Acquisition that is an arms length sale of all or substantially all of Company's assets
(and only its assets) to a third party that is not an Affiliate of Company (a "True Asset Sale"), Holder may either (a) exercise its conversion or purchase right under this Warrant and such
exercise will be deemed effective immediately prior to the consummation of such Acquisition or (b) permit the Warrant to continue until the Expiration Date if Company continues as a going
concern following the closing of any such True Asset Sale. Company shall provide Holder with written notice of any proposed asset sale together with such reasonable information as Holder may request
in connection with such asset sale giving rise to such notice, which is to be delivered to Holder not less than ten (10) business days prior to the closing of the proposed asset sale. 

(iv)    Assumption of Warrant.    Upon the closing of any Acquisition other than those particularly described in
subsections (ii) and (iii) above, the successor entity shall assume the obligations of this Warrant, and this Warrant shall be exercisable for the same securities, cash, and property as
would be payable for the Warrant Shares issuable upon exercise of the unexercised portion of this Warrant as if such Warrant Shares were outstanding on the record date for the Acquisition and
subsequent closing. The Warrant Price and/or number of Warrant Shares shall be adjusted accordingly. 

4.    Representations and Warranties of Holder and Company.

(a)    Representations and Warranties by Holder.    The Holder represents and warrants to Company with respect to this purchase as
follows: 

(i)    Evaluation.    The Holder has substantial experience in evaluating and investing in private placement transactions of
securities of companies similar to Company so that Holder is capable of evaluating the merits and risks of its investment in Company and has the capacity to protect its interests. 

(ii)    Resale.    Except for transfers to an affiliate of Holder, Holder is acquiring this Warrant and the Warrant Shares issuable
upon exercise of this Warrant (collectively the "Securities") for investment for its own account and not with a view to, or for resale in connection with, any distribution thereof. The Holder
understands that the Securities have not been registered under the Securities Act of 1933, as amended (the "Act") by reason of a specific exemption from the registration provisions of the Act which
depends upon, among other things, the bona fide nature of the investment intent as expressed herein. 

(iii)    Rule 144.    The Holder acknowledges that the Securities must be held indefinitely unless subsequently registered
under the Act or an exemption from such registration is available. The Holder is aware of the provisions of Rule 144 promulgated under the Act. 

(iv)    Accredited Investor.    The Holder is an "accredited investor" within the meaning of Regulation D promulgated under
the Act. 

(v)    Opportunity To Discuss.    The Holder has had an opportunity to discuss Company's business, management and financial affairs
with its management and an opportunity to review Company's facilities. The Holder understands that such discussions, as well as the written information issued by Company, were intended to describe the
aspects of Company's business and prospects which Company believes to be material but were not necessarily a thorough or exhaustive description. 

(b)    Representations and Warranties by Company.    Company hereby represents and warrants to Holder that the statements in the
following paragraphs of this Section 4(b) are true and correct (a) as of the date hereof and (b) except where any such representation and warranty relates specifically to an
earlier date, as of the date of any exercise of this Warrant. 

(i)    Corporate Organization and Authority.    Company (a) is a corporation duly organized, validly existing, and in good
standing in its jurisdiction of incorporation, (b) has the corporate power and authority to own and operate its properties and to carry on its business as now conducted and as proposed to be
conducted; and (c) is qualified as a foreign corporation in all jurisdictions where such qualification is required. 

(ii)    Corporate Power.    Company has all requisite legal and corporate power and authority to execute, issue and deliver this
Warrant, to issue the Warrant Shares issuable upon exercise or conversion of this Warrant, and to carry out and perform its obligations under this Warrant and any related agreements. 

(iii)    Authorization; Enforceability.    All corporate action on the part of Company, its officers, directors and shareholders
necessary for the authorization, execution, delivery and performance of its obligations under this Warrant and for the authorization, issuance and delivery of this Warrant and the Warrant Shares
issuable upon exercise of this Warrant has been taken and this Warrant constitutes the legally binding and valid obligation of Company enforceable in accordance with its terms. 

(iv)    Valid Issuance of Warrant and Warrant Shares.    This Warrant has been validly issued and is free of restrictions on
transfer other than restrictions on transfer set forth herein and under applicable state and federal securities laws. The Warrant Shares issuable upon conversion of this Warrant, when issued, sold and
delivered in accordance with the terms of this Warrant for the consideration expressed herein, will be duly and validly issued, fully paid and nonassessable, and will be free of restrictions on
transfer other than restrictions on transfer under this Warrant and under applicable state and federal securities laws. Subject to applicable restrictions on transfer, the issuance and delivery of
this Warrant and the Warrant Shares issuable upon exercise or conversion of this Warrant are not subject to any preemptive or other similar rights or any liens or encumbrances except as specifically
set forth in Company's Certificate of Incorporation or this Warrant. The offer, sale and issuance of the Warrant Shares, as contemplated by this Warrant, are exempt from the prospectus and
registration requirements of applicable United States federal and state security laws, and neither Company nor any authorized agent acting on its behalf has or will take any action hereafter that
would cause the loss of such exemption. 

(v)    No Conflict.    The execution, delivery, and performance of this Warrant will not result in (a) any violation of, be
in conflict with, or constitute a default under, with or without the passage of time or the giving of notice (1) any provision of Company's Certificate of Incorporation or by-laws;
(2) any provision of any judgment, decree, or order to which Company is a party, by which it is bound, or to which any of its material assets are subject; 

(3) any
contract, obligation, or commitment to which Company is a party or by which it is bound; or (4) any statute, rule, or governmental regulation applicable to Company, or
(b) the creation of any lien, charge or encumbrance upon any assets of Company. 

(vi)    Capitalization.    The capitalization table of Company delivered to Holder is complete and accurate as of the date hereof
and reflects (a) all outstanding capital stock of Company and (b) all outstanding warrants, options, conversion privileges, preemptive rights or other rights or agreements to purchase or
otherwise acquire or issue any equity securities or convertible securities of Company (other than the right of first refusal set forth in  Section 4 of the Company's Investor Rights Agreement dated
August 25, 2006 (the "Rights Agreement")). Company has reserved 200,000 shares
of Common Stock for issuance upon conversion of the Preferred Stock. 

(vii)    Warrant Price.    The Warrant Price is no greater than the lowest price at which Company has issued Series A
Convertible Preferred Stock to an unrelated third party in an arm's length transaction. 

5.    Legends.

(a)    Legend.    Each certificate representing the Warrant Shares shall be endorsed with the following legend: 

THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED UNLESS COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT, A "NO ACTION" LETTER
FROM THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO SUCH TRANSFER, A TRANSFER MEETING THE REQUIREMENTS OF RULE 144 OF THE SECURITIES AND EXCHANGE COMMISSION, OR (IF REASONABLY REQUIRED BY THE
COMPANY) AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY SUCH TRANSFER IS EXEMPT FROM SUCH REGISTRATION. 

The
Company need not enter into its stock records a transfer of Warrant Shares unless the conditions specified in the foregoing legend are satisfied. The Company may also instruct its transfer agent
not to allow the transfer of any of the Warrant Shares unless the conditions specified in the foregoing legend are satisfied. 

(b)    Removal of Legend and Transfer Restrictions.    The legend relating to the Act endorsed on a certificate pursuant to
paragraph 5(a) of this Warrant shall be removed and Company shall issue a certificate without such legend to Holder if (i) the Securities are registered under the Act and a prospectus
meeting the requirements of Section 10 of the Act is available or (ii) Holder provides to Company an opinion of counsel for Holder reasonably satisfactory to Company, a
no-action letter or interpretive opinion of the staff of the Securities and Exchange Commission reasonably satisfactory to Company, or other evidence reasonably satisfactory to Company, to
the effect that public sale, transfer or assignment of the Securities may be made without registration and without compliance with any restriction such as Rule 144. 

6.    Condition of Transfer or Exercise of Warrant.    It shall be a condition to any transfer or exercise of this Warrant that at
the time of such transfer or exercise, Holder shall provide Company with a representation in writing that Holder or transferee is acquiring this Warrant and the shares of Preferred Stock to be issued
upon exercise for investment purposes only and not with a view to any sale or distribution, or will provide Company with a statement of pertinent facts covering any proposed distribution. As a further
condition to any transfer of this Warrant or any or all of the shares of Preferred Stock issuable upon exercise of this Warrant, other than a transfer registered under the Act, Company may request a
legal opinion, in form and substance satisfactory to Company and its counsel, reciting the pertinent circumstances surrounding the proposed transfer and stating that such transfer is exempt from the
registration and prospectus delivery requirements of the Act. The Company shall not require Holder to provide an opinion of counsel if the transfer is to an affiliate of Holder. Each 

certificate
evidencing the Warrant Shares issued upon exercise of this Warrant or upon any transfer of the Warrant Shares (other than a transfer registered under the Act or any subsequent transfer of
shares so registered) shall, at Company's option, if the Warrant Shares are not freely saleable under Rule 144(k) under the Act, contain a legend in form and substance satisfactory to Company
and its counsel, restricting the transfer of the Warrant Shares to sales or other dispositions exempt from the requirements of the Act. As further condition to each transfer, at the request of
Company, Holder shall surrender this Warrant to Company and the transferee shall receive and accept a Warrant, of like tenor and date, executed by Company. 

7.    Adjustment for Certain Events.    The number and kind of securities purchasable upon the exercise of this Warrant and the
Warrant Price shall be subject to adjustment from time to time upon the occurrence of certain events, as follows: 

(a)    Reclassification or Merger.    In case of (i) any reclassification or change of securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), (ii) any
merger of Company with or into another corporation (other than a merger with another corporation in which Company is the acquiring and the surviving corporation and which does not result in any
reclassification or change of outstanding securities issuable upon exercise of this Warrant), or (iii) any sale of all or substantially all of the assets of Company, Company, or such successor
or purchasing corporation, as the case may be, shall duly execute and deliver to Holder a new Warrant (in form and substance satisfactory to Holder of this Warrant), or Company shall make appropriate
provision without the issuance of a new Warrant, so that Holder shall have the right to receive, at a total purchase price not to exceed that payable upon the exercise of the unexercised portion of
this Warrant, and in lieu of the Warrant Shares theretofore issuable upon exercise or conversion of this Warrant, the kind and amount of shares of stock, other securities, money and property
receivable upon such reclassification, change, merger or sale by a holder of the number of shares of Preferred Stock then purchasable under this Warrant, or in the case of such a merger or sale in
which the consideration paid consists all or in part of assets other than securities of the successor or purchasing corporation, at the option of Holder, the securities of the successor or purchasing
corporation having a value at the time of the transaction equivalent to the value of the Warrant Shares purchasable upon exercise of this Warrant at the time of the transaction. Any new Warrant shall
provide for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 7. The provisions of this subparagraph (a) shall
similarly apply to successive reclassifications, changes, mergers and transfers. 

(b)    Subdivision or Combination of Shares.    If Company at any time while this Warrant remains outstanding and unexpired shall
subdivide or combine its outstanding shares of Preferred Stock, the Warrant Price shall be proportionately decreased and the number of Warrant Shares issuable hereunder shall be proportionately
increased in the case of a subdivision and the Warrant Price shall be proportionately increased and the number of Warrant Shares issuable hereunder shall be proportionately decreased in the case of a
combination. 

(c)    Stock Dividends and Other Distributions.    If Company at any time while this Warrant is outstanding and unexpired shall
(i) pay a dividend with respect to Preferred Stock payable in Preferred Stock, then the Warrant Price shall be adjusted, from and after the date of determination of shareholders entitled to
receive such dividend or distribution, to that price determined by multiplying the Warrant Price in effect immediately prior to such date of determination by a fraction (A) the numerator of
which shall be the total number of shares of Preferred Stock outstanding immediately prior to such dividend or distribution, and (B) the denominator of which shall be the total number of shares
of Preferred Stock outstanding immediately after such dividend or distribution; or (ii) make any other distribution with respect to Preferred Stock (except any distribution specifically
provided for in Sections 7(a) and 7(b)), then, in each such case, provision shall be made by Company such that Holder shall receive upon exercise of this Warrant a proportionate share of any
such dividend or distribution as though it 

were
Holder of the Warrant Shares as of the record date fixed for the determination of the shareholders of Company entitled to receive such dividend or distribution. 

(d)    Adjustment of Number of Shares.    Upon each adjustment in the Warrant Price, the number of Warrant Shares purchasable
hereunder shall be adjusted, to the nearest whole share, to the product obtained by multiplying the number of Warrant Shares purchasable immediately prior to such adjustment in the Warrant Price by a
fraction, the numerator of which shall be the Warrant Price immediately prior to such adjustment and the denominator of which shall be the Warrant Price immediately thereafter. 

(e)    Adjustment for Dilutive Issuance.    The Warrant Price and the number of Warrant Shares issuable upon exercise of this
Warrant or, if the Warrant Shares are Preferred Stock, the number of shares of Common Stock issuable upon conversion of the Warrant Shares, shall be subject to adjustment, from time to time in the
manner set forth in Company's Certificate of Incorporation as if the Warrant Shares were issued and outstanding on and as of the date of any such required adjustment. The provisions set forth for the
Warrant Shares in Company's Certificate of Incorporation relating to the above in effect as of the date hereof may not be amended, modified or waived, without the prior written consent of Holder
unless such amendment, modification or waiver affects the rights associated with the Warrant Shares in the same manner as such amendment, modification or waiver affects the rights associated with all
other shares of the same series and class as the Warrant Shares. 

8.    Notice of Adjustments.    Whenever any Warrant Price or the kind or number of securities issuable under this Warrant shall be
adjusted pursuant to Section 7 hereof, Company shall prepare a certificate signed by an officer of Company setting forth, in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated, and the Warrant Price and number or kind of shares issuable upon exercise of this Warrant after giving effect to such adjustment,
and shall cause copies of such certificate to be mailed (by certified or registered mail, return receipt required, postage prepaid) within thirty (30) days of such adjustment to Holder as set
forth in Section 18 hereof. 

9.    Transferability of Warrant.    This Warrant is transferable on the books of Company at its principal office by the registered
Holder hereof upon surrender of this Warrant properly endorsed, subject to
compliance with Section 6 and applicable federal and state securities laws. The Company shall issue and deliver to the transferee a new Warrant representing the Warrant so transferred. Upon any
partial transfer, Company will issue and deliver to Holder a new Warrant with respect to the Warrant not so transferred. Holder shall not have any right to transfer any portion of this Warrant to any
direct competitor of Company. 

10.    Registration Rights.    The Company agrees to use commercially reasonable efforts to (i) cause the Warrant Shares to
have certain incidental, or "Piggyback" and "Form S-3," registration rights and other rights and obligations pursuant to and as set forth in Sections 2.2, 2.4, 2.5, 2.6, 2.7,
2.10, 2.11, 2.12 and 5 of the Rights Agreement (the "Designated Sections of the Rights Agreement") and (ii) as soon as reasonably practicable after execution and delivery of the this Warrant,
have Holder become a party to the Rights Agreement. The provisions set forth in the Designated Sections of the Rights Agreement in effect as of the date of this Warrant may not be amended, modified or
waived without the prior written consent of Holder unless such amendment, modification or waiver affects the rights associated with the Warrant Shares in the same manner as such amendment,
modification, or waiver affects the rights associated with all other shares of the same series and class as the Warrant Shares subject to this Warrant. 

Holder
hereby agrees that it shall not sell or otherwise transfer, make any short sale or, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic
effect as a sale, of any Common Stock (or other securities) of the Company held by Holder (other than those included in the registration) during the one hundred eighty (180) day period
following the effective date of the Company's initial public offering filed under the Act (or such other shorter period as may be requested by an underwriter to accommodate regulatory restrictions on
(i) the publication or 

other
distribution of research reports and (ii) analyst recommendations and opinions, including, but not limited to, the restrictions contained in NASD Rule 2711(f)(4) or NYSE
Rule 472 (f)(4), or any successor provisions or amendments thereto). Each Holder agrees to execute a market standoff agreement with said underwriters in customary form consistent with the
provisions of this Section 10. The market standoff provisions of Section 2.10 of the Rights Agreement shall supersede this paragraph at such time as Holder becomes party to the Rights
Agreement. Notwithstanding anything to the foregoing herein, the duration of any market standoff requirement applicable to Holder shall not exceed the duration of the shortest market standoff
requirements applicable to any holder of at least the number of shares which may be acquired to this Warrant. 

11.    No Fractional Shares.    No fractional share of Preferred Stock will be issued in connection with any exercise or conversion
hereunder, but in lieu of such fractional share Company shall make a cash payment therefor upon the basis of the Warrant Price then in effect. 

12.    Charges, Taxes and Expenses.    Issuance of certificates for shares of Preferred Stock upon the exercise or conversion of
this Warrant shall be made without charge to Holder for any United States or state of the United States documentary stamp tax or other incidental expense with respect to the issuance of
such certificate, all of which taxes and expenses shall be paid by Company, and such certificates shall be issued in the name of Holder. 

13.    No Shareholder Rights Until Exercise.    Except as expressly provided herein, this Warrant does not entitle Holder to any
voting rights or other rights as a shareholder of Company prior to the exercise hereof. 

14.    Registry of Warrant.    Company shall maintain a registry showing the name and address of the registered Holder of this
Warrant. This Warrant may be surrendered for exchange or exercise, in accordance with its terms, at such office or agency of Company, and Company and Holder shall be entitled to rely in all respects,
prior to written notice to the contrary, upon such registry. 

15.    Loss, Theft, Destruction or Mutilation of Warrant.    Upon receipt by Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft, or destruction, of indemnity reasonably satisfactory to it, and, if mutilated, upon surrender and
cancellation of this Warrant, Company will execute and deliver a new Warrant, having terms and conditions substantially identical to this Warrant, in lieu hereof. 

16.    Miscellaneous.

(a)    Issue Date.    The provisions of this Warrant shall be construed and shall be given effect in all respect as if it had been
issued and delivered by Company on the date hereof. 

(b)    Successors.    This Warrant shall be binding upon any successors or assigns of Company. 

(c)    Headings.    The headings used in this Warrant are used for convenience only and are not to be considered in construing or
interpreting this Warrant. 

(d)    Saturdays, Sundays, Holidays.    If the last or appointed day for the taking of any action or the expiration of any right
required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday in the State of Connecticut, then such action may be taken or such right may be exercised on the next succeeding
day not a legal holiday. 

(e)    Attorney's Fees.    In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the
party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorney's fees. 

17.    No Impairment.    Company will not, by amendment of its Certificate of Incorporation or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action
as may be necessary or appropriate in order to protect the rights of Holder hereof against impairment. Without limiting the breadth of the foregoing, Company will not cause the Series A
Convertible Preferred Stock into which this Warrant is exercisable or convertible to be 

converted
into Common Stock unless such conversion is effected as part of the conversion of all Company's outstanding series of preferred stock and other senior securities into Common Stock. 

18.    Addresses.    Any notice required or permitted hereunder shall be in writing and shall be mailed by overnight courier,
registered or certified mail, return receipt requested, and postage prepaid, or otherwise delivered by hand or by messenger, addressed as set forth below, or at such other address as Company or Holder
hereof shall have furnished to the other party in accordance with the delivery instructions set forth in this Section 18. 

	If to Company:	 	Zogenix, Inc.

12760 High Bluff Drive, Suite 130

San Diego, CA 92130

Attn: Chief Financial Officer
	

If to Holder:	
 	

General Electric Capital Corporation

83 Wooster Heights Road

Danbury, CT 06810

Attn: Credit Manager-Life Science Finance
	

With a copy to:	
 	

General Electric Capital Corporation

Two Bethesda Metro Center

Bethesda, Maryland 20814

Attn: General Counsel

If
mailed by registered or certified mail, return receipt requested, and postage prepaid, notice shall be deemed to be given five (5) days after being sent, and if sent by overnight courier, by
hand or by messenger, notice shall be deemed to be given when delivered (if on a business day, and if not, on the next business day). 

19.    WAIVER OF JURY TRIAL.    EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS WARRANT OR THE WARRANT SHARES. 

20.    GOVERNING LAW.    THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 

        IN
WITNESS WHEREOF, Company has caused this Warrant to be executed by its officer thereunto duly authorized. 

	ZOGENIX, INC.	 	 
	

By:	
 	

Roger L. Hawley
	
 	

 
	 	 	Name:	 	Roger L. Hawley
	 	 
	 	 	Title:	 	CEO
	 	 

Dated
as of March 5, 2007. 

NOTICE OF EXERCISE  

	To:	 	 	 	 
	[Name of Company]	 	 	 	 
	 	 	 	 	 
	
	 	 	 	 
	 	 	 	 	 
	
	 	 	 	 
	 	 	 	 	 
	
	 	 	 	 

	1.
	The
undersigned Warrantholder ("Holder") elects to acquire shares of the Series            Convertible Preferred Stock (the "Preferred Stock")
of                                    (the "Company"),
pursuant to the terms of the Stock Purchase Warrant
dated                                         
                   , 200            (the "Warrant").

	2.
	The
Holder exercises its rights under the Warrant as set forth below: 

	o
	Holder
elects to purchase                                    shares of
Preferred Stock as provided in Section 3(a) and tenders herewith a check in the
amount of $                                    as payment of the
purchase price. 

	o
	Holder
elects to convert the purchase rights into shares of Preferred Stock as provided in Section 3(b) of the Warrant.

	3.
	Holder
surrenders the Warrant with this Notice of Exercise. 

Holder represents that it is acquiring the aforesaid shares of Preferred Stock for investment and not with a view to or for resale in connection with distribution and that
Holder has no present intention of distributing or reselling the shares. 

Please
issue a certificate representing the shares of the Preferred Stock in the name of Holder or in such other name as is specified below: 

	Name:	 	 	 	 
	 	 	
	 	 
	

Address:	
 	

 	
 	

 
	 	 	
	 	 
	

Taxpayer I.D.:	
 	

 	
 	

 
	 	 	
	 	 
	 	 	 	 	 

	 	 	[NAME OF HOLDER]
	

 	
 	

By:	
 	

 	
 	

 
	 	 	 	 	

	 	 	 	 	Name:	 	 
	 	 	 	 	 	 	

	 	 	 	 	Title:	 	 
	 	 	 	 	 	 	

	

 	
 	

Date:	
 	

                , 200
	 	 	 	 	

QuickLinks

Exhibit 4.3Exhibit 10.7

 

CERTAIN MATERIAL (INDICATED
BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

ASSET PURCHASE AGREEMENT

 

BY AND BETWEEN

 

ARADIGM CORPORATION.

 

AND

 

SJ2 THERAPEUTICS, INC.

 

Dated as of August 25, 2006

 

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINITIONS
  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.01

  	
  Certain
  Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  	
  1

  
	
  Section 1.02

  	
  Additional
  Definitions . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  ASSIGNMENT TRANSFER AND
  LICENSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . .

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.01

  	
  Assignment
  of Assigned Assets to Purchaser . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . .

  	
  6

  
	
  Section 2.02

  	
  Asset
  Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  	
  6

  
	
  Section 2.03

  	
  Coordination
  Leads . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . .

  	
  6

  
	
  Section 2.04

  	
  Transitional
  Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . .

  	
  7

  
	
  Section 2.05

  	
  Assumption
  of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  	
  7

  
	
  Section 2.06

  	
  Consideration . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . .

  	
  7

  
	
  Section 2.07

  	
  Closing,
  Closing Place, Time and Date . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  	
  9

  
	
  Section 2.08

  	
  Nontransferable
  Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . .

  	
  10

  
	
  Section 2.09

  	
  FTO
  Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  	
  11

  
	
  Section 2.10

  	
  Taking of
  Necessary Action; Further Action . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . .

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  REPRESENTATIONS AND
  WARRANTIES OF ARADIGM . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . 

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.01

  	
  Organization,
  Qualification, and Corporate Power . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . .

  	
  12

  
	
  Section 3.02

  	
  Authorization . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . .

  	
  12

  
	
  Section 3.03

  	
  Assets . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . .

  	
  12

  
	
  Section 3.04

  	
  Transferred
  Books and Records . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . .

  	
  12

  
	
  Section 3.05

  	
  Transferred
  Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . .

  	
  12

  
	
  Section 3.06

  	
  Transferred
  Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . .

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  REPRESENTATIONS AND
  WARRANTIES OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . .

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.01

  	
  Organization,
  Qualification, and Corporate Power . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . .

  	
  15

  
	
  Section 4.02

  	
  Authorization . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . .

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  OTHER
  AGREEMENTS AND COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . .

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.01

  	
  Additional
  Documents and Further Assurances . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . .

  	
  15

  
	
  Section 5.02

  	
  Reasonable
  Cooperation of Purchaser . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . .

  	
  15

  
	
  Section 5.03

  	
  Reasonable
  Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . .

  	
  15

  
	
  Section 5.04

  	
  Indemnification . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . .

  	
  15

  
	
  Section 5.05

  	
  Covenant
  Not to Compete . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  MISCELLANEOUS . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . .

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.01

  	
  Press
  Releases and Public Announcements . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . .

  	
  17

  
	
  Section 6.02

  	
  No
  Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  	
  17

  
					

 

 

	
  Section 6.03

  	
  Force
  Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . 

  	
  17

  
	
  Section 6.04

  	
  Limitation
  of Liability . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  	
  17

  
	
  Section 6.05

  	
  Entire
  Agreement and Modification . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . .

  	
  18

  
	
  Section 6.06

  	
  Amendment . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . .

  	
  18

  
	
  Section 6.07

  	
  Waivers . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . .

  	
  18

  
	
  Section 6.08

  	
  Successors
  and Assigns . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  	
  18

  
	
  Section 6.09

  	
  Counterparts . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . 

  	
  18

  
	
  Section 6.10

  	
  Interpretation . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . .

  	
  18

  
	
  Section 6.11

  	
  Notices . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . 

  	
  19

  
	
  Section 6.12

  	
  Governing
  Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . 

  	
  20

  
	
  Section 6.13

  	
  Severability . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . 

  	
  20

  
	
  Section 6.14

  	
  Construction . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . .

  	
  20

  
	
  Section 6.15

  	
  Attorneys’
  Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . 

  	
  20

  
	
  Section 6.16

  	
  Further
  Assurances . . . . . . . . . . . . . . . . . . . . . . . . .
  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

  	
  20

  

 

 

EXHIBITS

 

	
   

  	
  EXHIBIT
  A

  	
  Transferred
  Assets (including Transferred Technology)

  
	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT
  B

  	
  Transferred
  Books and Records

  
	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT
  C

  	
  Transferred
  Contracts

  
	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT
  D

  	
  Transferred
  Intellectual Property

  
	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT
  E

  	
  General
  Assignment and Bill of Sale

  
	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT
  F

  	
  Assumed
  Liabilities

  
	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT
  G

  	
  Transfer
  Plan

  
	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT
  H

  	
  Transitional
  Services Agreement

  
	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT
  I

  	
  Intraject
  Delivery System

  
	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT
  J

  	
  Nontransferable
  Assets

  

 

 

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of August 25,
2006 by and between Aradigm Corporation, a California corporation (“Aradigm”), and SJ2 Therapeutics, Inc., a Delaware
corporation (“Purchaser”). Aradigm and Purchaser
are sometimes referred to herein individually as a “Party”
and collectively as the “Parties.”

 

RECITALS

 

A.            Aradigm desires to assign and transfer to
Purchaser, and Purchaser desires to accept assignment and transfer from
Aradigm, on the terms and subject to the conditions set forth herein, those
certain assets of Aradigm related to the Intraject Delivery System.

 

B.            Furthermore, Aradigm and Purchaser desire
to make certain representations, warranties, covenants and other agreements in
connection with the transactions contemplated hereby.

 

NOW, THEREFORE, in consideration of the
covenants and representations set forth herein, and for other good and valuable
consideration, the parties agree as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.01           Certain Definitions.  As used in this Agreement, the following terms
have the following meanings (terms defined in the singular to have a
correlative meaning when used in the plural and vice versa). Certain other
terms are defined in the text of this Agreement.

 

(a)           “Affiliate”
means a corporation or any other entity that directly, or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with, the designated Party, but only for so long as such control
exists. As used in this definition only, “control” shall mean ownership of
shares of stock having at least 50% of the voting power entitled to vote for
the election of directors in the case of a corporation (or, in the case of an
entity that is not a corporation, in the election of the corresponding managing
authority), or otherwise having the power to directly or indirectly control the
management of such entity.

 

(b)           “Assigned Assets”
shall mean any and all of Aradigm’s right, title and interest in and to the
following:

 

(i)            any
and all tangible assets owned or otherwise transferable by Aradigm as of the
Closing Date, in each case to the extent exclusively used or held for use in
the Business, including those assets listed on Exhibit A
(collectively, “Transferred Assets”);

 

(ii)           the
Books and Records listed on Exhibit B (collectively, “Transferred Books and Records”);

 

1

 

(iii)          all
agreements listed on Exhibit C (collectively, “Transferred
Contracts”);

 

(iv)          all
Patents (including in each case all rights to Prosecute and Enforce the same)
listed on Exhibit D (collectively, “Transferred
Patents”);

 

(v)           all
Trademarks (including in each case all rights to Prosecute and Enforce the
same) listed on Exhibit D (collectively, “Transferred
Trademarks”);

 

(vi)          any
and all Technology owned or otherwise transferable by Aradigm as of the Closing
Date, other than the Transferred Patents and Transferred Trademarks, in each
case to the extent exclusively used or held for use in the Business, including
that Technology listed on Exhibit A (collectively, “Transferred Technology”); and

 

(vii)         any and all
right to recover past, present and future damages for the breach, infringement
or misappropriation, as the case may be, of any of the foregoing.

 

(c)           “Books and Records”
shall mean all papers and records (in any format including paper or electronic)
kept or maintained including any and all laboratory notebooks, invention
disclosures, purchasing and sales records, all data and communications relating
to ongoing business development activities, preclinical and clinical data, all
Regulatory Documents, vendor lists, accounting and financial records, product
documentation, product specifications, marketing documents and the like, in
each case pertaining to the Business or the Assigned Assets.

 

(d)           “Business” shall
mean the research, development, commercialization, manufacture, marketing,
distribution, sale, support and other use and commercial exploitation of the
Intraject Delivery System.

 

(e)           “Business Intellectual
Property” shall mean any and all Technology and any and all
Intellectual Property Rights, including Registered Intellectual Property
Rights, that is or are owned (in whole or in part) by or exclusively licensed
to Aradigm, as of the Closing Date, in each case that are used in or necessary
to the Business.

 

(f)            “Dollars” shall
refer to United States currency unless expressly specified otherwise.

 

(g)           “Governmental Body”
shall mean any: (i) nation, province, state, county, city, town, village,
district, or other jurisdiction of any nature; (ii) federal, provincial,
state, local, municipal, foreign, or other government; (iii) governmental
or quasi-governmental authority of any nature (including any governmental
agency, branch, department, official, or entity and any court or other
tribunal); (iv) multi-national organization or body; or (v) body
exercising, or entitled to exercise, any administrative, executive, judicial,
legislative, police, regulatory, or taxing authority or power of any nature.

 

(h)           “Intraject Delivery System”
shall mean Aradigm’s Intraject® needle-free injection delivery system as more
fully described in Exhibit I (the “Existing Delivery System”) 

 

2

 

or any
modified, improved or derivative version thereof, in each case that includes
one or more material elements of the Existing Delivery System.

 

(i)            “Intellectual Property
Rights” shall mean any or all of the following and all rights in,
arising out of, or associated therewith: (i) all United States and foreign
patents and utility models and applications therefor and all reissues,
divisionals, re examinations, renewals, extensions, provisionals, supplementary
protection certificates, continuations and continuations in-part thereof, and
equivalent or similar registered rights anywhere in the world (“Patents”); (ii) all trade secrets and other rights in
know-how and confidential or proprietary information, inventions and
discoveries, including without limitation invention disclosures; (iii) all
copyrights, works of authorship, copyright registrations and applications
therefor and all other rights corresponding thereto throughout the world (“Copyrights”); (iv) all rights in Uniform Resource
Locators, World Wide Web addresses and domain names and applications and
registrations therefor (“Internet Property Rights”);
(v) all trade names, logos, common law trademarks and service marks,
trademark and service mark registrations and applications therefor and all
goodwill associated therewith throughout the world (“Trademarks”);
and (vi) any similar, corresponding or equivalent rights to any of the
foregoing anywhere in the world, including, without limitation, moral rights.

 

(j)            “Licensee” shall
mean a Person other than an Affiliate to whom Purchaser or its Affiliate has
granted the right, or to whom such a Person has sublicensed the right, to (i) make
and sell any Product or (ii) sell any Product, provided that distributors,
wholesalers and resellers as to which Purchaser does not receive compensation
on resales of Products by such entity shall not be considered Licensees.

 

(k)           “Lien” shall
mean any mortgage, pledge, lien, charge, claim, security interest, adverse
claims of ownership or use, restrictions on transfer, defect of title or other
encumbrance of any sort, other than (i) mechanic’s, materialmen’s, and
similar liens with respect to any amounts not yet due and payable, and (ii) liens
for taxes not yet due and payable.

 

(l)            “Net Sales” shall
mean the amounts actually received by Purchaser, its Affiliates, or Licensees,
in consideration of their sales of Product to Third Party customers, less: (i) normal
and customary trade, cash and other discounts; (ii) credits or allowances
for damaged goods, returns, rejections or recalls of Product; (iii) sales
taxes, value added taxes, withholding, import/export taxes or other similar
taxes (excluding taxes on the income of the selling entity) actually paid; (iv) normal
and customary charge back payments or rebates; and (v) packaging, handling
fees, prepaid freight, insurance and the like to the extent separately
identified on the invoice. Sales between or among Purchaser, its Affiliates or
Licensees for resale shall be excluded from the computation of Net Sales, but
the subsequent re sale of such Products by Purchaser, its Affiliates or
Licensees to an end user shall be included within the computation of Net Sales.
Net Sales shall not include amounts in respect of Product sold or used for
development applications (including for clinical trials) or commercial samples
(i.e., items provided for free or at or below cost plus a nominal profit for
promotional purposes).

 

(m)          “Nontransferable Asset”
shall have the meaning ascribed to the term in Section 9.

 

3

 

(n)           “Non-Sumatriptan Product”
shall mean any Product comprising the Intraject Delivery System combined with
an applicable drug formulation, other than Sumatriptan.

 

(o)           “Person” shall
mean any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, Governmental Body or
other entity.

 

(p)           “Product” shall
mean any pharmaceutical product comprising the Intraject Delivery System
combined with Sumatriptan or other applicable drug formulation.

 

(q)           “Prosecution and
Enforcement” shall mean (i) the preparation, filing for,
prosecution, maintenance of registrations thereof and applications for any such
registration (ii) the conduct of interferences, re examinations, reissues,
oppositions or requests for term extensions with respect thereto and (iii) the
conduct of any enforcement proceeding with respect thereto (whether
infringement, misuse, misappropriation or otherwise) or any declaratory
judgment proceeding with respect thereto; and “Prosecute
and Enforce” shall have the correlative meaning.

 

(r)            “Pulmonary Field”
shall mean the delivery of one or more aerosolized active pharmaceutical ingredients
directly into the bronchia or lungs.

 

(s)           “Registered Intellectual
Property Rights” shall mean all United States, international and
foreign: (i) Patents, including applications therefor (each a “Registered Patent”); (ii) registered Trademarks, applications
to register Trademarks, including intent-to use applications, or other
registrations or applications related to Trademarks; (iii) Copyright
registrations and applications to register Copyrights; and (iv) any other
Technology or Intellectual Property Rights that is the subject of an
application, certificate, filing, registration or other document issued by,
filed with, or recorded by, any state, government or other public or private
legal authority at any time.

 

(t)            “Regulatory Documents”
shall mean any and all regulatory submissions (whether completed or in process)
to any Governmental Body anywhere in the world submitted by or on behalf of
Aradigm relating to the Business (including any product developed in connection
therewith), including all annual reports, adverse event reports, and other
adverse event submission tracking information, and amendments and supplements
to any of the foregoing. For purposes of clarity, “Regulatory Documents” shall
not include any filing or other submission made to the United States Securities
and Exchange Commission, the National Association of Securities Dealers, the
Nasdaq Stock Exchange or any similar entity.

 

(u)           “Representatives”
shall mean, with respect to a Person, that Person’s officers, directors,
employees, accountants, counsel, investment bankers, financial advisors, agents
and other representatives.

 

(v)           “Royalty  Revenue” shall
mean running royalties actually received by
Purchaser from a Licensee for sales of Non-Sumatriptan Products by or under
authority of such Licensee, plus any license fees or milestone or other
payments receive by Purchaser from a Licensee to the extent not allocable to
recovery of development or other costs incurred by Purchaser specific to 

 

4

 

the applicable Product. For clarity, Royalty Revenue shall exclude: (i) payments in consideration of goods (including Products) or
services at Purchaser’s fully-burdened cost therefor (any amounts in excess of
the fully-burdened cost shall be included in Royalty Revenue), (ii) payments
in consideration for equity at the fair market value therefor (any amounts in
excess of the fair market value shall be included in Royalty Revenue) and (iii) amounts
received by Purchaser in consideration for a sale of all, or substantially all,
of the business or assets of Purchaser (whether by way of merger, sale of
stock, sale of assets or otherwise), if the successor to such business or
assets has assumed the obligations under Section 2.06(a) of this
Agreement.

 

(w)          “Royalty Term”
shall mean, for a given Product, the period commencing on the Closing Date and
continuing until the later of (i) the ten-year anniversary of the first
commercial sale of such Product in the United States, but no more than twenty
years after the Closing Date cand (ii) the later of expiration or
abandonment of the last Valid Claim of the Transferred Patents covering the
manufacture, use or sale of such Product.

 

(x)            “Sumatriptan Product”
shall mean any Product comprising the Intraject Delivery System combined with
Sumatriptan.

 

(y)           “Technology”
shall mean any or all of the following: (i) works of authorship including,
without limitation, computer programs, source code and executable code, whether
embodied in software, firmware or otherwise, documentation, designs, files, net
lists, records, data and mask works; (ii) inventions (whether or not
patentable), improvements, and technology; (iii) proprietary and
confidential information, including technical data and customer and supplier
lists, trade secrets and know how; (iv) databases, data compilations and
collections and technical data; (v) logos, trade names, trade dress,
trademarks, service marks; (vi) World Wide Web addresses, domain names and
sites; (vii) protocols, methods and processes; and (viii) all
instantiations of the foregoing in any form and embodied in any media.

 

(z)            “Territory”
shall mean the entire world.

 

(aa)         “Third Party”
shall mean any Person other than Purchaser or Aradigm, or their respective
Affiliates.

 

(bb)         “Transfer Plan”
shall mean the plan for the transfer of the Assigned Assets attached hereto as Exhibit G.

 

(cc)         “Valid Claim”
shall mean (i) a claim of an issued and unexpired patent, which has not
been held unenforceable, unpatentable or invalid by a court or other governmental
agency of competent jurisdiction, and which has not been admitted to be invalid
or unenforceable through reissue, disclaimer or otherwise, or (ii) a claim
in a pending patent application being prosecuted in good faith that has not
been abandoned or finally rejected and that has been pending for fewer than
five years after the earliest priority date to which it is entitled.

 

Section 1.02           Additional
Definitions.  Each of the following definitions shall have
the meanings defined in the corresponding sections of this Agreement indicated
below:

 

5

 

	
  Definition

  	
  Section

  
	
  Agreement

  	
  Preamble

  
	
  Aradigm Indemnities

  	
  Section 6.04(b)

  
	
  Assumed Liabilities

  	
  Section 2.05(b)

  
	
  Claim

  	
  Section 6.04(a)

  
	
  Closing Date

  	
  Section 2.07

  
	
  Coordination Lead

  	
  Section 2.03

  
	
  Excluded Liabilities

  	
  Section 2.05(c)

  
	
  Indemnitee

  	
  Section 6.04(c)

  
	
  Indemnitor

  	
  Section 6.04(c)

  
	
  Party

  	
  Preamble

  
	
  PTO

  	
  Section 4.06(a)

  
	
  Purchaser Indemnities

  	
  Section 6.04(a)

  

 

ARTICLE II

ASSIGNMENT, TRANSFER AND LICENSE

 

Section 2.01           Assignment of
Assigned Assets to Purchaser.  Upon
the terms and subject to the conditions set forth herein, Aradigm hereby
assigns, conveys and transfers to Purchaser, at the Closing, all of Aradigm’s
right, title and interest in and to the Assigned Assets, subject to the
reservation on behalf of Aradigm of a perpetual, worldwide, royalty-free,
non-exclusive license, under the Transferred Patents and Transferred Technology
solely for purposes of the Pulmonary Field, which retained license shall include
the right to grant sublicenses to Persons solely within the scope of such
retained license in connection with the grant to such Persons of licenses under
other Patents owned or controlled by Aradigm.

 

Section 2.02           Asset Transfer.  Subject to the terms and conditions set forth
in this Agreement, on the Closing Date, Aradigm shall transfer all Assigned
Assets, in the shape, manner and form of their existence as of the date such
Assigned Assets are transferred to Purchaser, in accordance with the Transfer Plan.
Without limiting the specifics of the Transfer Plan, Aradigm shall promptly
transfer those assets (to the extent not previously transferred to the
Transferee hereunder) to Purchaser as required in the Transfer Plan and this Section 2.02.
Unless otherwise specified in the Transfer Plan, the mode of such transfer
shall be determined by the Coordination Leads with the goal of efficiency and
cost-effectiveness. Without limiting the foregoing and in connection with such
transfers of assets pursuant to this Section 2.02, Aradigm shall make
available such personnel reasonably familiar with the Assigned Assets to
consult with and assist Purchaser in implementing such assets at mutually
agreeable times.

 

Section 2.03           Coordination Leads.
 In order to facilitate the transfer of
assets pursuant to Section 2.02, each Party shall appoint, from time to
time, by written notice to the other Party, one of its personnel as its
coordination lead (each, a “Coordination Lead”).
The Coordination Leads shall be responsible for oversight and coordination of
the transfer of assets in accordance with Section 2.02 and the Transfer
Plan. The Coordination Leads shall carry out their responsibilities by any
reasonable means or practices as the Parties may mutually agree.

 

6

 

Section 2.04           Transitional Services.  Aradigm shall provide all reasonable
transitional services to Purchaser, including facilities, furnishings, access
to systems, document control, quality systems, IT support, accounting, payroll,
administration and other such services as the Parties may mutually agree, until
December 31, 2006 or until such later date as mutually agreed to by the
Parties, as more fully described in Exhibit H, and Purchaser shall
pay the fees therefor set forth in Exhibit H in accordance with the
schedule set forth therein.

 

Section 2.05           Assumption
of Liabilities.

 

(a)           Assumption.  Upon the terms and subject to the conditions
set forth herein, at the Closing, Purchaser shall assume from Aradigm, and
Aradigm shall irrevocably convey, transfer and assign to Purchaser, all of the
Assumed Liabilities (as defined in Section 2.05(b) hereof).  Purchaser shall not assume any liabilities of
Aradigm pursuant hereto, other than the Assumed Liabilities.

 

(b)           Definition of Assumed Liabilities.  For all purposes of and under this Agreement,
the term “Assumed Liabilities” shall mean, refer
to and include only those liabilities listed on Exhibit F.

 

(c)           Definition of Excluded Liabilities.  Except for the Assumed Liabilities, Purchaser
does not assume and is not assuming any debt, liability, duty or other
obligation (of any kind) of Aradigm, whether known or unknown, fixed or
contingent, and regardless of when such liabilities or obligations may arise or
may have arisen or when asserted, including any liabilities, or obligations
related to the Assigned Assets which are outstanding or unpaid as of the
Closing (the “Excluded Liabilities”), and
Aradigm shall remain responsible for the Excluded Liabilities.

 

Section 2.06           Consideration.  On the terms and subject to the conditions
set forth in this Agreement, in addition to the payments contemplated by Section 2.07(a),
the consideration for the Assigned Assets shall be the following:

 

(a)           Royalties.

 

(i)            In
consideration for the assignment and transfer of the Assigned Assets, with
respect to Net Sales Purchaser shall pay to Aradigm, during the Royalty Term:

 

(1)           For each
Non-Sumatriptan Product, [***] percent ([***]%) of Net Sales of such
Non-Sumatriptan Product, provided that in the event and to the extent such
Non-Sumatriptan Product is commercialized by a Licensee Purchaser may at its
election pay to Aradigm either [***] percent ([***]%) of such Licensee’s Net
Sales of such Non-Sumatriptan Product or [***] percent ([***]%) of Purchaser’s
Royalty Revenues from such Licensee in respect of such Non-Sumatriptan
Product.  Purchaser shall make its
election with respect to each such Non-Sumatriptan Product by written notice to
Aradigm of its election on or before the date its first payment would be due
under Section 2.06(a)(vi) in respect of such Non-Sumatriptan Product
under either of the foregoing alternatives.

 

(2)           For
Sumatriptan Products, [***] percent ([***]%) of Net Sales of Sumatriptan
Products.

 

*** Certain information on this page
has been omitted and filed separately with the Commission.  Confidential treatment has been requested
with respect to the omitted portions.

 

7

 

(ii)           Combination
Products.  In the event that a
Product is sold in the form of a combination product (a “Combination
Product”) containing both (1) such Product and (2) another
product or service for which no royalty would be due hereunder if sold
separately, the Net Sales from such combination sales for purposes of
calculating the amounts due under this Section 2.06(a) shall be
calculated by multiplying Net Sales of the Combination Product by a fraction
that reasonably reflects the fair value of the contribution of the Product in
the Combination Product to the total market value of such Combination Product,
which fraction shall be established by the Purchaser and Aradigm through good
faith negotiations and mutual agreement, on a Combination
Product-by-Combination Product basis.

 

(iii)          Single
Royalty.  Only one royalty shall be
paid with respect to each unit of Product that is subject to royalties under
this Section 2.06(a), without regard to the number of transfers or
otherwise.  In no event shall more than
one royalty be due under this Section 2.06(a) with respect to any
Product unit.

 

(iv)          Milestone
Payment.  Purchaser shall pay Aradigm
$[***] within 30 days of the first U.S. commercial sale of the Sumatriptan
Product.

 

(v)           Records.  During the term of this Agreement and for a
period of three years thereafter, Purchaser and its Affiliates shall keep, and
shall cause its licensees and sublicensees to keep, complete and accurate
records of their Net Sales in sufficient detail to enable the amounts payable
under this Section 2.06(a) to be determined.  Upon Aradigm’s written request, but not more
frequently than once per calendar year, Purchaser shall permit representatives
or agents of Aradigm, at Aradigm’s expense, to examine such records during
Purchaser’s regular business hours for the purpose of and to the extent
necessary to verify any report required under this Agreement with respect to
Net Sales received not more than three years prior to the date of Aradigm’s
request.  In the event that the amounts
due to Aradigm are determined to have been underpaid, Purchaser shall promptly
pay to Aradigm any amount due and unpaid. 
In the event that it is determined, as a result of such examination,
that the amount underpaid with respect to a given payment is in excess of 5% of
the total amount of such payment, then Purchaser shall reimburse Aradigm for
all costs incurred by Aradigm in conducting such examination.

 

(vi)          Reports.  Beginning with the first accrual of royalties
or other payments due hereunder, Purchaser shall provide to Aradigm a quarterly
royalty report as follows: Within 60 days after the end of each quarterly
period, Purchaser shall deliver to Aradigm a true and accurate report, giving
such particulars of the business conducted by Purchaser, its Affiliates and
Licensees, during such quarterly period as are pertinent to account for
payments due under this Section 2.06(a). 
Such report shall include, as applicable, at least (A) the total of
Net Sales during such quarterly period; (B) the calculation of royalties; (C) the
calculation of Royalty Revenue for each applicable Non-Sumatriptan Product and (D) the
total royalties and other payments due Aradigm. 
Simultaneously with the delivery of each such report, Purchaser shall
pay to Aradigm the total amount, if any, due to Aradigm for the period of such
report.  If no payment is due, Purchaser
shall so report.  Aradigm shall not
provide to Third Parties any information contained

 

*** Certain information on this page
has been omitted and filed separately with the Commission.  Confidential treatment has been requested
with respect to the omitted portions.

 

8

 

in reports provided to Aradigm
under this Section 2.06(a)(v), or learned by Aradigm under Section 2.06(a)(iii) above.

 

(vii)         Payments.  All amounts payable hereunder by Purchaser
shall be payable in Dollars to Aradigm. 
If any currency conversion shall be required in connection with the
payment of royalties hereunder, such conversion shall be made by using the
exchange rates reported in the Wall Street Journal on the last business day of
the quarter in respect of which such payment is made.

 

(viii)        Taxes.  Any withholding or other tax that is required
by law to be withheld on behalf of Aradigm with respect to payments owed by
Purchaser pursuant to this Agreement shall be deducted by Purchaser from such
payment prior to remittance.  Purchaser
shall promptly furnish Aradigm evidence of any such taxes withheld.

 

(ix)           Without
limiting Section 2.06(a)(v) above, Purchaser shall take reasonable
measures to keep Aradigm informed as to the progress of the development and commercialization
of the Intraject Delivery System and Products arising therefrom until such time
as Purchaser has fulfilled its royalty obligations to Aradigm pursuant to Section 2.06(a).

 

Section 2.07           Closing, Closing Place, Time and
Date.  The closing of the
transactions contemplated by this Agreement (the “Closing”) shall be held at
the offices of Cooley Godward llp, 3175 Hanover Street, Palo Alto, California,
at 10:00 a.m. on the date of the Agreement (the actual date on which the
Closing shall occur being referred to herein as the “Closing Date”).

 

(a)           Closing Deliveries.

 

(i)            At the
Closing, Purchaser shall deliver, or cause to be delivered, to Aradigm the
following, dated as of the date of this Agreement and, where relevant, executed
for and on behalf of Purchaser by a duly authorized officer thereof:

 

(1)           any and
all instruments, certificates and agreements as Aradigm may reasonably request
in order to effectively make Purchaser responsible for all Assumed Liabilities
pursuant hereto to the fullest extent permitted by applicable law;

 

(2)           Purchaser
shall have provided Aradigm with evidence demonstrating that Purchaser has
obtained at least $15 million in equity financing;

 

(3)           Purchaser
shall have paid to Aradigm, by wire transfer, $4,000,000 in cash;

 

(4)           Purchaser
shall have reimbursed Aradigm for all documented expenses actually incurred by
Aradigm from July 1, 2006 through the Closing Date, that were pre-approved
in writing by Purchaser, up to $515,036;

 

(5)           Each of
Steve Farr and John Turanin shall have provided Aradigm with a release of all
claims over or rights to any severance payments relating to their cessation of
services to Aradigm, in a form that is reasonably acceptable to Aradigm and
including mutually agreed consideration for such releases; and

 

9

 

(6)           the
Transitional Services Agreement.

 

(ii)           At the
Closing, Aradigm shall deliver, or cause to be delivered, to Purchaser the
following, dated as of the date of this Agreement and executed for and on
behalf of Aradigm by a duly authorized officer thereof:

 

(1)           a general
assignment and bill of sale with respect to the Assigned Assets in the form
attached hereto as Exhibit F;

 

(2)           one or
more instruments of assignment and assumption, in customary form and substance
reasonably satisfactory to Purchaser and Aradigm and their respective counsel;

 

(3)           an
instrument of assignment of the Transferred Patents, the Transferred
Trademarks, and any other Registered Intellectual Property Rights included in
the Assigned Assets, in customary form and substance reasonably satisfactory to
Purchaser and Aradigm and their respective counsel;

 

(4)           any and
all required third party consents including those consents necessary for the
valid assignment and transfer of the Transferred Contracts;

 

(5)           any and
all other instruments, certificates and agreements as Purchaser may reasonably
request in order to effectively transfer to Purchaser all of the Assigned
Assets pursuant hereto and to the Transfer Plan to the fullest extent permitted
by applicable law; and

 

(6)           the
Transitional Services Agreement.

 

(b)           Closing.  From and after the Closing, the Assigned
Assets shall be held for the account and benefit, and at the risk, of
Purchaser.

 

Section 2.08           Nontransferable Assets.  To the extent that any Assigned Asset or
Assumed Liability to be sold, conveyed, assigned, transferred, delivered or
assumed to or by Purchaser pursuant hereto, or any claim, right or benefit
arising thereunder or resulting therefrom, is not capable of being sold,
conveyed, assigned, transferred or delivered without the approval, consent or
waiver of the issuer thereof or the other Party thereto, or any third Person
(including a Governmental Body), or if such sale, conveyance, assignment,
transfer or delivery or attempted sale, conveyance, assignment, transfer or
delivery would constitute a breach (or give rise to a termination right)
thereof or a violation of any law, decree, order, regulation or other
governmental edict (collectively, with respect to such Assigned Assets, as set
forth on Exhibit J, the “Nontransferable Assets”),
except as expressly otherwise provided herein, this Agreement shall not
constitute a sale, conveyance, assignment, transfer or delivery thereof, or an
attempted sale, conveyance, assignment, transfer or delivery thereof absent
such approvals, consents or waivers.  If
any such approval, consent or waiver shall not be obtained, or if an attempted
assignment of any such Assigned Asset or the assumption of any Assumed
Liability by Purchaser would be ineffective so that Purchaser would not in fact
receive all the Nontransferable Assets or assume all such Assumed Liabilities
pursuant hereto, Aradigm and 

 

10

 

Purchaser shall cooperate in
a mutually agreeable arrangement under which Purchaser would obtain the
benefits and assume the obligations of such Assigned Assets and Assumed
Liabilities, respectively, in accordance with this Agreement, including
subcontracting, sub-licensing, or sub-leasing to Purchaser, or under which
Aradigm, at Purchaser’s expense, would enforce for the benefit of Purchaser,
with Purchaser assuming all of Aradigm’s obligations thereunder, any and all
rights of Aradigm against a Third Party thereto.

 

Section 2.09           FTO
Licenses.

 

(a)           To Purchaser. Aradigm hereby
grants to Purchaser a non-exclusive, fully-paid, world-wide, perpetual,
irrevocable, transferable, sublicensable license to fully exercise any
Intellectual Property Rights that are (i) owned, controlled or employed by
Aradigm at any time prior to the Closing (or that arises thereafter to the
extent covering Technology created, owned, controlled or employed by Aradigm
prior to the Closing), (ii) necessary or useful for the operation of the
Business and (iii) not included in the Assigned Assets that are actually
assigned to Purchaser.

 

(b)           To Aradigm. Purchaser hereby
grants to Aradigm a non-exclusive, fully-paid, world-wide, perpetual,
irrevocable, transferable, sublicensable license to fully exercise any
Intellectual Property Rights that are (i) owned, controlled or employed by
Purchaser as of the Closing (or that arises thereafter to the extent covering
Technology created, owned, controlled or employed by Aradigm as of the Closing)
and (ii) solely for use in the Pulmonary Field.

 

Section 2.10           Taking of Necessary Action;
Further Action.  From time to time
after the Closing, at the request of either Party, the Parties hereto shall
execute and deliver such other instruments of sale, transfer, conveyance,
assignment and confirmation and take such action as the Parties may reasonably
determine is necessary to transfer, convey and assign to Purchaser, and to
confirm Purchaser’s title to or interest in the Assigned Assets, to put
Purchaser in actual possession and operating control thereof and to assist
Purchaser in exercising all rights with respect thereto.  Aradigm hereby constitutes and appoints
Purchaser and its successors and assigns as its true and lawful attorney in
fact in connection with the transactions contemplated by this Agreement, with
full power of substitution, in the name and stead of Aradigm but on behalf of
and for the benefit of Purchaser and its successors and assigns, to demand and
receive any and all of the Assigned Assets and to give receipt and releases for
and in respect of the same and any part thereof, and from time to time to
institute and prosecute, in the name of Aradigm or otherwise, for the benefit
of Purchaser or its successors and assigns, proceedings at law, in equity, or
otherwise, which Purchaser or its successors or assigns reasonably deem proper
in order to collect or reduce to possession or endorse any of the Assigned
Assets and to do all acts and things in relation to the Assigned Assets which
Purchaser or its successors or assigns reasonably deem desirable.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF ARADIGM

 

Aradigm
hereby represents and warrants to Purchaser as follows:

 

11

 

Section 3.01           Organization, Qualification, and
Corporate Power.  Aradigm (a) is
a corporation duly organized, validly existing, and in good standing under the
laws of the State of California, (b) has obtained all necessary corporate
approvals to enter into and execute this Agreement and (c) has the full
right, power and authority to enter into this Agreement.

 

Section 3.02           Authorization.  Aradigm has full power and authority to
execute and deliver this Agreement, and to consummate the transactions
contemplated hereunder and to perform its obligations hereunder, and no other proceedings
on the part of Aradigm are necessary to authorize the execution, delivery and
performance of this Agreement.  This
Agreement constitutes the valid and legally binding obligations of Aradigm,
enforceable against Aradigm in accordance with its terms and conditions, except
as such enforceability may be limited by principles of public policy and
subject to the laws of general application relating to bankruptcy, insolvency
and the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies.

 

Section 3.03           Assets.  The Assigned Assets include all assets of
Aradigm and its Affiliates that are used or held for use by Aradigm and its
Affiliates primarily in the operation or conduct of the Business.

 

(a)           The Assigned Assets include all
assets of Aradigm and its Affiliates that are used or held for use by Aradigm
and its Affiliates primarily in the operation or conduct of the Business.

 

(b)           Following the consummation of the
transactions contemplated by this Agreement and the related agreements, and the
execution of the instruments of transfer contemplated hereby and thereby,
Purchaser will own, with good, valid and marketable title, or lease, under
valid and subsisting leases, or otherwise acquire the interests of Aradigm in
the Assigned Assets, free and clear of any Liens, and without incurring any
penalty or similar transfer fee.

 

Section 3.04           Transferred Books and Records.  The Transferred Books and Records listed on Exhibit B
are all of the Books and Records maintained by Aradigm that pertain to the
Business and the Assigned Assets.

 

Section 3.05           Transferred Contracts.  The Transferred Contracts listed on Exhibit C
are all of the contracts between Aradigm and any Third Party currently
necessary for or primarily related to, the operation of the Business, and true
and complete copies of all such Transferred Contracts have been delivered or
made available to Purchaser or its representatives.  Each Transferred Contract is in full force
and effect and, to Aradigm’s knowledge, Aradigm is not subject to any default
thereunder, nor, to Aradigm’s knowledge, is any party obligated to Aradigm
pursuant to any such Transferred Contract subject to any default
thereunder.  Aradigm has neither
breached, violated or defaulted under, nor received notice that Aradigm has
breached, violated or defaulted under, any of the terms or conditions of any
Transferred Contract.  Aradigm has
obtained, or will obtain prior to the Closing, all necessary consents, waivers
and approvals of parties to any Transferred Contract as are required thereunder
in connection with the Closing, or for any such Transferred Contract to be
transferred to Purchaser, and to remain in full force and effect without
limitation, modification or alteration after the Closing.  Following the Closing, Purchaser will be
permitted to exercise all of the rights Aradigm had under the Transferred 

 

12

 

Contracts without the
payment of any additional amounts or consideration other than ongoing fees,
royalties or payments which Aradigm would otherwise be required to pay pursuant
to the terms of such Transferred Contracts had the transactions contemplated by
this Agreement not occurred.

 

Section 3.06           Transferred
Intellectual Property.

 

(a)           The Exhibits listing the Transferred
Patents and the Transferred Trademarks are, to Aradigm’s knowledge, complete
and accurate.  With respect to
Transferred Patents, those Transferred Patents that are Registered Patents are
currently in compliance with formal legal requirements (including payment of
filing, examination and maintenance fees and proofs of use),  and are not subject to any unpaid maintenance
fees or taxes falling due within 90 days after the Closing Date.  There are no proceedings or actions known to
Aradigm before any court, tribunal (including the United States Patent and
Trademark Office (the “PTO”) or
equivalent authority anywhere in the world) related to any such Registered
Patent.

 

(b)           To Aradigm’s knowledge, each
Registered Patent that is a Transferred Patent is properly filed and is
currently pending or issued, and all necessary registration, maintenance and
renewal fees in connection with such Registered Patent that is a Transferred
Patent have been paid and all necessary documents and certificates in
connection with such Registered Patent have been filed with the relevant patent
authorities in the United States or foreign jurisdictions in which Aradigm has
elected to pursue such Registered Patent, as the case may be, for the purposes
of maintaining such Registered Patent. 
There are, to Aradigm’s knowledge, no actions that must be taken by
Aradigm within 90 days after the Closing Date, including the payment of any
registration, maintenance or renewal fees or the filing of any responses to PTO
office actions, documents, applications or certificates for the purposes of
obtaining, maintaining, perfecting or preserving or renewing any such
Registered Patent.  To the extent Aradigm
has acquired from any Person any Technology or Intellectual Property Right, in
each case that are included in the Assigned Assets, Aradigm has obtained a
valid and enforceable assignment sufficient to irrevocably transfer all rights
in such Technology and Intellectual Property Rights (including the right to seek
past and future damages with respect thereto) to Aradigm.  To the maximum extent provided for by, and in
accordance with, applicable laws and regulations, Aradigm has recorded each
such assignment of a Registered Intellectual Property Right assigned to Aradigm
with the relevant Governmental Body, including the PTO, the U.S. Copyright
Office, or their respective equivalents in any relevant foreign jurisdiction,
as the case may be.  Aradigm has not
claimed a particular status, including “Small Entity Status,” in the
application for any Registered Patent that is a Transferred Patent, which claim
of status was not at the time made, or which has since become, inaccurate or
false or that will no longer be true and accurate as of the Closing Date.

 

(c)           Aradigm has no knowledge of any
misrepresentation regarding, or failure to disclose, any fact or circumstances
in any application for any Registered Patent that is a Transferred Patent that
would materially and adversely affect the validity or enforceability of such
Registered Patent that is a Transferred Patent.

 

13

 

(d)           All Registered Intellectual Property
Rights included in the Assigned Assets are free and clear of any Liens.  Immediately prior to the Closing, Aradigm is
the exclusive owner or exclusive licensee of all Business Intellectual
Property.

 

(e)           Schedule 3.06(e) sets forth a
list of all Regulatory Documents.

 

(f)            All Assigned Assets will be fully
transferable, alienable or licensable by Purchaser without restriction and
without payment of any kind to any Third Party, including royalty obligations,
other than those restrictions and payments Aradigm would be subject to as of
the Closing Date with respect to such Assigned Assets had the transactions
contemplated by this Agreement not occurred.

 

(g)           Each material item of Technology used
in the conduct of the Business by Aradigm was (i) written and created by
then-current employees of Aradigm acting within the scope of their employment
or (ii) acquired or licensed by Aradigm from Third Parties who have
validly and irrevocably assigned such item to Aradigm, or granted Aradigm a
license to use such item of a sufficient scope to cover Aradigm’s use or prior
use of thereof in the Business.

 

(h)           To Aradigm’s knowledge, the conduct
of the Business by Aradigm as it was previously conducted does not, infringe or
misappropriate any Intellectual Property Right of any person, or constitute
unfair competition or trade practices under the laws of any jurisdiction, and
Aradigm has not received notice from any person claiming that such conduct by
Aradigm infringes or misappropriates any Intellectual Property Right of any
person or constitutes unfair competition or trade practices under the laws of
any jurisdiction.

 

(i)            Each employee and consultant of
Aradigm that provides services to Aradigm in connection with the Business has
entered into a valid and binding written agreement with Aradigm sufficient to
vest title in Aradigm of all Technology and Intellectual Property Rights included
in the Assigned Assets and created by such employee or consultant in the scope
of his or her services or employment for Aradigm.

 

(j)            Aradigm has not transferred
ownership of, nor granted any exclusive license of or exclusive right to use,
or authorized the retention of any exclusive rights to use or joint ownership
of, any Technology or Intellectual Property Right that is or was used in
connection with the Business, to any other person.

 

(k)           To Aradigm’s knowledge, no person is
infringing or misappropriating any Intellectual Property Right included in the
Assigned Assets.

 

(l)            No Business Intellectual Property is
subject to any proceeding or outstanding decree, order, judgment or settlement
agreement or stipulation against Aradigm or, to Aradigm’s knowledge, against
any Third Parties from whom Aradigm acquired or licensed Business Intellectual
Property that restricts in any material way the use, transfer or licensing of
such Business Intellectual Property by Aradigm or is reasonably likely to
affect the validity, use or enforceability of such Business Intellectual
Property.

 

14

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

Purchaser
hereby represents and warrants to Aradigm as follows:

 

Section 4.01           Organization,
Qualification, and Corporate Power.  Purchaser (a) is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of [Delaware], (b) has obtained all necessary corporate approvals to enter
into and execute this Agreement and (c) has the full right, power and
authority to enter into this Agreement.

 

Section 4.02           Authorization.  Purchaser has full power and authority to
execute and deliver this Agreement, and to consummate the transactions
contemplated hereunder and to perform its obligations hereunder, and no other
proceedings on the part of Purchaser are necessary to authorize the execution,
delivery and performance of this Agreement. 
This Agreement constitutes the valid and legally binding obligations of
Purchaser, enforceable against Purchaser in accordance with its terms and
conditions, except as such enforceability may be limited by principles of
public policy and subject to the laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies.

 

ARTICLE V

OTHER AGREEMENTS AND COVENANTS

 

Section 5.01           Additional
Documents and Further Assurances.  Each Party hereto, at the request of another
Party hereto, shall execute and deliver such other instruments and do and
perform such other acts and things as may be reasonably requested for effecting
completely the consummation of the transactions contemplated hereby.

 

Section 5.02           Reasonable
Cooperation of Purchaser. 
Purchaser shall cooperate, to the extent reasonable, with Aradigm’s
efforts to obtain any Third Party consents; provided, however, that this Section 6.02
shall not obligate Purchaser to incur any additional expense or liability.

 

Section 5.03           Reasonable
Efforts.  Each of the Parties will use
their reasonable efforts to take all action and to do all things necessary,
proper, or advisable in order to consummate and make effective the transactions
contemplated by this Agreement.

 

Section 5.04           Indemnification.

 

(a)           Indemnification
of Purchaser.

 

(i)             Aradigm shall indemnify and hold harmless each of Purchaser
and its Affiliates, and the directors, officers, and employees of Purchaser and
of such Affiliates, and the successors and assigns of any of the foregoing
(collectively, the “Purchaser Indemnitees”),
from and against any and all liabilities, damages, settlements, claims,
actions, suits, penalties, fines, costs and expenses (including, without
limitation, reasonable attorneys’ fees and other expenses of settlement) (any
of the foregoing, a “Claim”)
incurred by any Purchaser Indemnitee, based upon a Claim of a Third Party, to
the extent resulting from the breach of any of Aradigm’s 

 

15

 

express
representations and warranties set forth in Article III of this
Agreement.  Aradigm’s obligations to the
Purchaser Indemnitees pursuant to this Section 5.04(a)(i) shall be
limited, in the aggregate, to amounts actually received by Aradigm by operation
of Section 2.06(a)(i). 
Notwithstanding the foregoing, Aradigm shall not have any obligation to
the Purchaser Indemnitees in respect of any breach of representations and
warranties as to which Purchaser has actual knowledge (including for this
purpose the actual knowledge of Steve Farr, John Turanin or Jonathan Rigby)
prior to the Closing.

 

(b)           Aradigm shall indemnify and hold
harmless the Purchaser Indemnitees from and against all Claims arising from the
Excluded Liabilities.

 

(c)           Indemnification of Aradigm.  Purchaser shall indemnify and hold harmless
each of Aradigm and its Affiliates, and the directors, officers, and employees
of Aradigm and of such Affiliates, and the successors and assigns of any of the
foregoing (collectively, the “Aradigm Indemnitees”),
from and against any and all liabilities, damages, settlements, claims,
actions, suits, penalties, fines, costs and expenses (including, without
limitation, reasonable attorneys’ fees and other expenses of settlement)
incurred by any Aradigm Indemnitee, based upon (i) a Claim of a Third
Party, to the extent resulting from the breach of any of Purchaser’s express
representations and warranties set forth in Article IV of this Agreement, (ii) a
Claim relating to product liability concerning any of the Assigned Assets or (iii) a
Claim relating to the Assumed Liabilities.

 

(d)           Procedure.  A Party that intends to claim indemnification
under this Section 5.04 (the “Indemnitee”)
shall promptly notify the other Party (the “Indemnitor”)
in writing of any Claim in respect of which the Indemnitee intends to require
such indemnification, and the Indemnitor shall have sole control of the defense
and/or settlement thereof; provided that the Indemnitee shall have the right to
participate, at its own expense, with counsel of its own choosing in the
defense and/or settlement of such Claim. 
The indemnification obligations of the Parties in this Section 5.04
shall not apply to amounts paid in settlement of any Claim if such settlement
is effected without the consent of the Indemnitor, which consent shall not be
unreasonably withheld or delayed.  The
failure to deliver written notice to the Indemnitor within a reasonable time
after the commencement of any such Claim, if prejudicial to Indemnitor’s
ability to defend such action, shall relieve such Indemnitor of any liability
to the Indemnitee under this Section 5.04, but the omission to so deliver
written notice to the Indemnitor shall not relieve the Indemnitor of any
liability to any Indemnitee otherwise than under this Section 5.04.  The Indemnitee under this Section 5.04
and its directors, officers and employees shall cooperate fully with the Indemnitor
and its legal representatives and provide full information in the investigation
of any Claim covered by this indemnification.

 

(e)           Sole Remedy.  The indemnification rights provided for in
this Article V shall constitute the sole and exclusive remedy and the sole
basis and means of recourse among the Aradigm Indemnities and the Purchaser
Indemnities with respect to Claims arising out of or in connection with any
breach of or inaccuracy in any representation, warranty, covenant or agreement
contained in this Agreement.

 

Section 5.05           Covenant Not to Compete.  Aradigm and its Affiliates agree for a period
of four (4) years after the Closing Date (the “Initial
Period”) not to (i) conduct, participate in or 

 

16

 

sponsor, directly or
indirectly, any activities directed toward the research, development of
technologies or products for the delivery of one or more active pharmaceutical
ingredients via needle free injection or the manufacture, marketing or distribution
of such products (each, a “Competing Activity”)
or (ii) appoint, license or otherwise authorize any Third Party, whether
pursuant to such license, appointment, or authorization or otherwise to perform
any Competing Activities; provided that during the Initial Period, Purchaser
(itself or through one or more Third Parties) is diligently pursuing the
development (including preclinical development) or commercialization of one or
more Products.  Thereafter during the
Royalty Term, Aradigm and its Affiliates agree not to develop or commercialize
any product for needle free injection of any active pharmaceutical ingredient
for which Purchaser (itself or through one or more Third Parties) is then
actively developing or commercializing a Product incorporating such active
pharmaceutical ingredient (or any prodrug, metabolite, degradant, intermediate,
salt form, hydrate, ester, isomer thereof).

 

ARTICLE VI

MISCELLANEOUS

 

Section 6.01           Press Releases and Public
Announcements.  No Party shall issue
any press release or make any public announcement relating to the subject
matter of this Agreement prior to the Closing without the prior written
approval of the other Party; provided, however, that (a) either Party may
make any public disclosure it believes in good faith is required by applicable
law and (b) Aradigm may correspond with Third Parties in writings in form
and substance reasonably satisfactory to Purchaser with respect to obtaining
consents from such Third Parties.  In
furtherance of the foregoing sentence, the Parties agree and acknowledge that
either party may issue a press release regarding this Agreement and the
transactions contemplated herein at a time to be mutually agreed after the
Closing Date, which press release shall not provide the financial terms of the
Agreement.  The Parties will provide to
each other a copy of such press release at least five business days prior to
its release and such press release shall be subject to written approval of the
receiving Party, which approval shall not be unreasonably withheld or delayed.

 

Section 6.02           No Third-Party Beneficiaries.  This Agreement shall not confer any rights or
remedies upon any Person other than the Parties, and their respective
successors and permitted assigns.

 

Section 6.03           Force Majeure.  Except with respect to the payment of money,
in the event either Party hereto is prevented from or delayed in the
performance of any of its obligations hereunder by reason of acts of God,
terrorism, war, invasion, strikes, riots, earthquakes, storms, fires, energy
shortage, acts of government or governmental agencies, or any other cause
whatsoever beyond the reasonable control of the Party, the Party so prevented
or delayed shall be excused from the performance of any such obligation to the
extent and during the period of such prevention or delay.

 

Section 6.04           Limitation of Liability.  NEITHER PARTY SHALL BE LIABLE TO THE OTHER
PARTY OR ANY THIRD PARTY FOR ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR
INCIDENTAL DAMAGES (INCLUDING LOST OR ANTICIPATED REVENUES OR PROFITS RELATING
TO THE SAME), ARISING FROM ANY CLAIM RELATING TO THIS AGREEMENT, WHETHER SUCH
CLAIM IS BASED ON 

 

17

 

CONTRACT, TORT (INCLUDING
NEGLIGENCE) OR OTHERWISE, EVEN IF AN AUTHORIZED REPRESENTATIVE OF SUCH PARTY IS
ADVISED OF THE POSSIBILITY OR LIKELIHOOD OF SAME.

 

Section 6.05           Entire
Agreement and Modification.  This Agreement (including the exhibits
hereto) constitutes the entire agreement among the Parties with respect to the
subject matter hereof and supersedes any prior understandings, agreements, or
representations by or among the Parties, written or oral, to the extent they
related in any way to the subject matter hereof.  This Agreement may not be amended except by a
written agreement executed by all Parties.

 

Section 6.06           Amendment.  This Agreement may be amended by Purchaser
and Aradigm or any successor thereto by execution by each Party (or their
successors) of an instrument in writing.

 

Section 6.07           Waivers.  The rights and remedies of the Parties to
this Agreement are cumulative and not alternative.  Neither the failure nor any delay by any
Party in exercising any right, power or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power or privilege, and no single or partial exercise of such right, power, or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege.  To the maximum extent permitted by applicable
law, (a) no claim or right arising out of this Agreement or the documents
referred to in this Agreement can be discharged by one Party, in whole or in
part, by a waiver or renunciation of the claim or right unless in writing
signed by the other Party, (b) no waiver that may be given by a Party will
be applicable except in the specific instance for which it is given and (c) no
notice to or demand on one Party will be deemed to be a waiver of any
obligation of such Party or of the right of the Party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.

 

Section 6.08           Successors and
Assigns.  This Agreement shall be
binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. 
This Agreement shall not be assigned by either Party without the prior
written consent of the other Party, except that either Party may assign this
Agreement, in whole or in part, to an Affiliate of such Party or to the
successor (including the surviving company in any consolidation, reorganization
or merger) or assignee of all or substantially all of its business pertaining
hereto.  This Agreement will be binding
upon any permitted assignee of either Party. 
No assignment shall have the effect of relieving any Party to this
Agreement of any of its obligations hereunder.

 

Section 6.09           Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.

 

Section 6.10           Interpretation.  The captions and headings to this Agreement
are for convenience only, and are to be of no force or effect in construing or
interpreting any of the provisions of this Agreement.  Unless specified to the contrary, references
to Articles, Sections or Exhibits mean the particular Articles, Sections and
Exhibits to this Agreement and references to this Agreement include all such
subparts.  Unless context otherwise
clearly requires, whenever 

 

18

 

used in this Agreement:  (a) the words “include” or “including”
shall be construed as incorporating, also, “but not limited to” or “without
limitation”; (b) the word “day” or “year” means a calendar day or year
unless otherwise specified; (c) the word “notice” means notice in writing
(whether or not specifically stated) and shall include notices, consents,
approvals and other written communications contemplated under this Agreement; (d) the
words “hereof,” “herein,” “hereby” and derivative or similar words refer to
this Agreement (including any and all subparts); (e) the word “or” shall
be construed as the inclusive meaning identified with the phrase “and/or”; (f) provisions
that require that a Party, the Parties or any committee hereunder “agree,” “consent”
or “approve” or the like shall require that such agreement, consent or approval
be specific and in writing, whether by written agreement, letter, approved
minutes or otherwise; (g) words of any gender include the other gender; (h) words
using the singular or plural number also include the plural or singular number,
respectively; and (i) references to any specific Law or article, section
or other division thereof shall be deemed to include the then-current
amendments thereto or any replacement Law thereof.

 

Section 6.11           Notices.  All notices and other communications required
or permitted hereunder shall be in writing, shall be effective when given, and
shall in any event be deemed to be given upon receipt or, if earlier, (a) five
days after deposit with the U.S. Postal Service or other applicable postal
service, if delivered by certified or registered first class mail, postage
prepaid, return receipt requested, (b) upon delivery, if delivered by
hand, (c) one (1) business day after the business day of deposit with
Federal Express or similar overnight courier, freight prepaid or (d) one
business day after the business day of facsimile transmission, if delivered by
facsimile transmission with copy by certified or registered first class mail,
postage prepaid, return receipt requested and shall be addressed to the
intended recipient as set forth below:

 

	
  If to Purchaser:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Addressed
  to:

  	
   

  	
  SJ2
  Therapeutics, Inc.

  
	
   

  	
   

  	
  3929
  Point Eden Way

  
	
   

  	
   

  	
  Hayward,
  California 94545

  
	
   

  	
   

  	
  Attention:
  President

  
	
   

  	
   

  	
  Facsimile:
  (510) 265 0277

  
	
   

  	
   

  	
   

  
	
  With
  a copy to:

  	
   

  	
  Wilson,
  Sonsini, Goodrich & Rosati

  
	
   

  	
   

  	
  650
  Page Mill Rd

  
	
   

  	
   

  	
  Palo
  Alto, California 94304-1050

  
	
   

  	
   

  	
  Attn:
  J. Casey McGlynn, Esq.

  
	
   

  	
   

  	
  Facsimile:
  (650) 493-6811

  
	
   

  	
   

  	
   

  
	
  If
  to Aradigm:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Addressed
  to:

  	
   

  	
  Aradigm
  Corporation.

  
	
   

  	
   

  	
  3929
  Point Eden Way

  
	
   

  	
   

  	
  Hayward,
  California 94545

  
	
   

  	
   

  	
  Attention:
  Chief Financial Officer

  
	
   

  	
   

  	
  Facsimile:
  (510) 265 0277

  
	
   

  	
   

  	
   

  
	
  With
  a copy to:

  	
   

  	
  Cooley
  Godward LLP

  

 

19

 

	
   

  	
   

  	
  3175
  Hanover Street

  
	
   

  	
   

  	
  Palo
  Alto, CA 94304-1130

  
	
   

  	
   

  	
  Attn:
  James Kitch, Esq.

  
	
   

  	
   

  	
  Facsimile:
  (650) 843-5027

  

 

Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
ten days’ advance written notice to the other Party pursuant to the provisions
above.

 

Section 6.12           Governing Law.  This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of California
without giving effect to any choice or conflict of law provision or rule (whether
of the State of California or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of California.

 

Section 6.13           Severability.  Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.

 

Section 6.14           Construction.  The Parties have participated jointly in the
negotiation and drafting of this Agreement. 
In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or disfavoring any
Party by virtue of the authorship of any of the provisions of this
Agreement.  Any reference to any federal,
state, local, or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.

 

Section 6.15           Attorneys’ Fees.  If any legal proceeding or other action
relating to this Agreement is brought or otherwise initiated, the prevailing
Party shall be entitled to recover reasonable attorney’s fees, costs and
disbursements (in addition to any other relief to which the prevailing Party
may be entitled).

 

Section 6.16           Further Assurances.  The Parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver
to each other such other documents and (c) to do such other acts and
things, all as the other Party may reasonably request for the purpose of
carrying out the intent of this Agreement and the documents referred to in this
Agreement.

 

[The remainder of this page left intentionally blank; signature page follows]

 

20

 

IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement on of the date
first above written.

 

	
   

  	
  ARADIGM
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Tom Chesterman

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:  Tom Chesterman

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:  Senior Vice President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SJ2
  THERAPEUTICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Steven J. Farr

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:  Steven J. Farr

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:  President

  
				

 

 

Schedule 3.06(e)

 

Regulatory Documents

 

[***]

 

***
Certain information on this page has been omitted and filed separately with the
Commission.  Confidential treatment has
been requested with respect to the omitted portions.

 

 

EXHIBIT A

 

Transferred Assets (including Transferred Technology)

 

 

[***]

 

***
Certain information on this page has been omitted and filed separately with the
Commission.  Confidential treatment has
been requested with respect to the omitted portions.

 

 

EXHIBIT B

 

Transferred Books and Records

 

[***]

 

***
Certain information on this page has been omitted and filed separately with the
Commission.  Confidential treatment has
been requested with respect to the omitted portions.

 

 

EXHIBIT C

 

Transferred Contracts

 

[***]

 

***
Certain information on this page has been omitted and filed separately with the
Commission.  Confidential treatment has
been requested with respect to the omitted portions.

 

 

EXHIBIT D

 

Transferred Intellectual Property

 

[***]

 

***
Certain information on this page has been omitted and filed separately with the
Commission.  Confidential treatment has
been requested with respect to the omitted portions.

 

EXHIBIT E

 

General Assignment and Bill of Sale

 

[Attached]

 

 

FORM OF BILL OF SALE AND ASSIGNMENT AGREEMENT

 

This Bill of Sale and Assignment Agreement is
made effective as of August 25, 2006, by and between SJ2 Therapeutics, Inc.,
a Delaware corporation (“Purchaser”),
and Aradigm Corporation, a California corporation (“Aradigm”).  All capitalized words and terms used in this
Agreement and not defined herein shall have the respective meanings ascribed to
them in the Asset Purchase Agreement dated August 25, 2006 between Aradigm
and the Purchaser (the “Asset Purchase Agreement”).

 

BACKGROUND

 

WHEREAS,
Aradigm and Purchaser have entered into the Asset Purchase Agreement, under
which Aradigm has agreed to sell, convey, assign, transfer and deliver the
Assigned Assets to Purchaser or its assigns.

 

AGREEMENT

 

1.             Sale.  Aradigm does hereby sell, convey, assign,
transfer and deliver to Purchaser, and Purchaser does hereby purchase, acquire
and accept from Aradigm, all of Aradigm’s right, title and interest in and to
the Assigned Assets, subject to the licensed reserved on behalf of Aradigm
pursuant to Section 2.01 of the Asset Purchase Agreement.

 

2.             Representations.  All representations, warranties, agreements
and indemnities of Aradigm with respect to the Assigned Assets set forth in the
Asset Purchase Agreement will continue in effect as provided therein and will
not be deemed to be amended, modified, terminated or superseded by or merged
with this Bill of Sale and Assignment Agreement.

 

3.             Miscellaneous
Provisions.

 

3.1.         Amendments; Waiver.  The terms, provisions and conditions of this
Bill of Sale and Assignment Agreement may be amended only by agreement in
writing of all parties.  No waiver of any
provision nor consent to any exception to the terms of this Bill of Sale and
Assignment Agreement or any agreement contemplated hereby will be effective
unless in writing and signed by the party to be bound and then only to the
specific purpose, extent and instance so provided.

 

3.2.         Further Assurances.  Each party will execute and deliver, both
before and after the Closing Date, such further certificates, agreements and
other documents and take such other actions as the other party may reasonably
request or as may be necessary or appropriate to consummate or implement the
Transactions, including to more effectively transfer the Assigned Assets, or to
evidence such events or matters.

 

3.3.         Assignment.  Neither this Bill of Sale and Assignment
Agreement nor any rights or obligations under it are assignable by one party
without the prior written consent of the other party.

 

 

3.4.         Descriptive Headings.  The descriptive headings of the sections and
subsections of this Bill of Sale and Assignment Agreement are for convenience
only and do not constitute a part of this Bill of Sale and Assignment
Agreement.

 

3.5.         Counterparts.  This Bill of Sale and Assignment Agreement
and any amendment hereto or any other agreement delivered pursuant hereto may
be executed in one or more counterparts and by different parties in separate
counterparts.  All counterparts will
constitute one and the same agreement and will become effective when one or
more counterparts have been signed by each party and delivered to the other
party.  A facsimile signature page will
be deemed an original.

 

3.6.         Governing Laws.  This Bill of Sale and Assignment Agreement
and the legal relations between the parties will be governed by and construed
in accordance with the laws of the State of California applicable to contracts
made and performed in such State and without regard to conflicts of law
doctrines unless certain matters are preempted by federal law.

 

3.7.         Waiver.  No failure on the part of any party to
exercise or delay in exercising any right hereunder will be deemed a waiver
thereof, nor will any single or partial exercise preclude any further or other
exercise of such or any other right.

 

3.8.         Representation By
Counsel; Interpretation.  The
parties each acknowledge that each has been represented by counsel in
connection with this Bill of Sale and Assignment Agreement and the transactions
contemplated by the Asset Purchase Agreement. 
Accordingly, any rule of law or any legal decision that would
require interpretation of any claimed ambiguities in this Bill of Sale and
Assignment Agreement against the party that drafted it has no application and
is expressly waived.  The provisions of
this Agreement will be interpreted in a reasonable manner to effect the intent
of the parties hereto.

 

3.9.         Severability.  If any provision of this Bill of Sale and
Assignment Agreement is held to be unenforceable for any reason, it will be
adjusted rather than voided, if possible, to achieve the intent of the parties.  All other provisions of this Bill of Sale and
Assignment Agreement will be deemed valid and enforceable to the extent
possible.

 

[signature page to follow]

 

2

 

IN WITNESS WHEREOF,
Aradigm and Purchaser have caused this Bill of Sale and Assignment Agreement to
be duly executed as of the day and year first above written.

 

	
  PURCHASER:

  	
   

  	
  ARADIGM:

  
	
   

  	
   

  	
   

  
	
  SJ2 THERAPEUTICS, INC.

  	
   

  	
  ARADIGM CORPORATION

  
	
   

  	
   

  	
   

  
	
  By:

  	
   /s/

  	
   

  	
  By:

  	
   /s/ 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   Stephen J. Farr

  	
   

  	
  Name:

  	
    T.C. Chesterman

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   President

  	
   

  	
  Title:

  	
    SVP & CFO

  
									

 

 

IN WITNESS WHEREOF,
Aradigm and Purchaser have caused this Bill of Sale and Assignment Agreement to
be duly executed as of the day and year first above written.

 

	
  PURCHASER:

  	
   

  	
  ARADIGM:

  
	
   

  	
   

  	
   

  
	
  SJ2
  THERAPEUTICS, INC.

  	
   

  	
  ARADIGM
  CORPORATION

  
	
   

  	
   

  	
   

  
	
  By:

  	
   /s/

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   Stephen J. Farr

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   President

  	
   

  	
  Title:

  	
   

  
									

 

 

EXHIBIT F

 

Assumed
Liabilities

 

1.             All
obligations under Assumed Contracts, other than obligations due and owing as of
the date of the Agreement to Third Parties that are parties to such Assumed
Contracts.

 

2.             Liabilities
(other than Excluded Liabilities) incurred in the use of the Assigned Assets
following the Closing Date.

 

3.             See
attached list for additional items.

 

[***]

 

*** Certain information on this page has been omitted
and filed separately with the Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

 

EXHIBIT G

 

Transfer
Plan

 

[***]

 

*** Certain information on this page has been omitted
and filed separately with the Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

 

EXHIBIT H

 

Transitional
Services Agreement

 

[Attached]

 

 

[ARADIGM
LETTERHEAD]

 

August 25, 
2006

 

SJ2 Therapeutics, Inc.

 

 

Re:          Transition
Services

 

Ladies and Gentlemen:

 

SJ2
Therapeutics, Inc. (“SJ2”) and Aradigm Corporation (“Aradigm”) are
entering into an Asset Purchase Agreement (the “APA”) dated as of the date of
this letter (the “Effective Date”), which, among other things, provides for the
sale to SJ2 of certain Aradigm assets related to the development, manufacture,
and commercialization of Aradigm’s Intraject Delivery System.

 

1.             Services.  On the terms and subject to the conditions
contained herein, Aradigm shall provide, or shall cause third parties
designated or hired by it (such designated third parties, together with
Aradigm, the “Service Providers”) to provide to SJ2 the following services
(collectively, the “Services”) for the time period through December 31,
2006 (“Expiration Date”):

 

(a)           General
information technology services and support (e.g., e-mail access, computer equipment
and software support, network access and support to SJ2’s server only, and
other general computer technologies support) within Aradigm’s current systems
and procedures until SJ2 vacates Aradigm’s facilities or the Expiration date,
which ever is earlier,

 

(b)           Telephone
and fax services and support,

 

(c)           Aradigm
will provide SJ2 with document control support for the activities documented in
Aradigm’s current document control processes, using Aradigm’s Document Control
System (DCS) database.  Aradigm has
assumed that SJ2 will purchase the DCS on or shortly after the Effective Date.  It is Aradigm’s intention to hire a temporary
senior level Document Control Specialist, on or shortly after the Effective
Date, who will be fully funded by SJ2, to allow Aradigm’s current document
control personnel to provide document control support to SJ2 consistent with
Aradigm’s current Document Control processes.  If Aradigm is unable to hire a temporary
senior level Document Control Specialist, or should the temporary employee
hired leave Aradigm for any reason, Aradigm will not be able to provide the
services described in this section 1(c).

 

(d)           Human
resources services and support for Aradigm consultants transferring to SJ2,

 

(e)           Payment
for individual Aradigm consultants transferring to SJ2,

 

1

 

(f)                                    Technical
consulting as available and approved in writing by both parties,

 

(g)                                 Office
facilities, furnishings, and services (e.g., utilities, maintenance, mail,
etc.), and

 

(h)                                 Such
other services as Aradigm and SJ2 may agree to as set forth in paragraph 4.

 

2.             Current
Invoices.  Exhibit A to this
letter contains an invoice for transitional services provided by Aradigm to SJ2
through the months of July and August 2006.  The parties acknowledge that a secondary
invoice will be provided to SJ2 relating to transitional service provided at
the time of closing Aradigm’s August accounting records.  As Aradigm’s August accounting records
have not been closed as of the Effective Date,

 

3.             Term of
Agreement.  Except for the services
performed prior to the Effective Date as referenced in paragraph 2, all
services to be provided under this Agreement shall begin as of the Effective
Date and shall terminate on the Expiration Date.  Aradigm and SJ2 will negotiate in good faith
if SJ2 needs to extend the term of this letter and/or any provision of any
Service beyond the Expiration Date (and the parties hereby acknowledge that the
negotiation of any such extension may involve a renegotiation of the charges with
respect to any such Services).  This
letter may be extended upon the mutual agreement of the parties hereto in
writing, either in whole or with respect to one or more of the Services;
provided that, such extension shall only apply to the specific Services for
which this letter was extended.  Services
shall be provided up to and including the applicable Expiration Date, subject
to earlier termination as provided in this letter.

 

4.             Additional
Services.  From time to time after
the Effective Date, Aradigm and SJ2 may identify and mutually agree upon
additional services to be provided to SJ2 in accordance with the terms of this
letter (the “Additional Services”).  At
such times, the parties shall execute an addendum to this Agreement setting
forth a description of any Additional Service, the time period during which
such Additional Service will be provided, the charge for such Additional
Service and any other terms applicable.  Aradigm
and SJ2 acknowledge that charges for Additional Services will include a profit
margin consistent with industry standards for the provision of similar services.  Additional Services may include, but shall
not be limited to, regulatory consulting for the Intraject Sumatriptan NDA,
clinical training of the CRO selected to conduct the Intraject bioequivalence
study, submission of the Intraject Sumatriptan IND on behalf of SJ2 and
assistance with R&D efforts.

 

5.             Provision
of Services.  Aradigm will use
commercially reasonable efforts to ensure that employees and Service Providers
are available to perform its obligations hereunder.  Aradigm shall provide the Services in
accordance with the policies, procedures and practices in effect as of
immediately prior to the Effective Date. 
Aradigm and SJ2 will use their commercially reasonable efforts to
promote a smooth and efficient transition of operations.

 

2

 

6.             No
Warranties.  ARADIGM WILL USE
COMMERCIALLY REASONABLE EFFORTS TO CAUSE THE SERVICES TO BE PERFORMED IN A
PROFESSIONAL AND COMPETENT MANNER; HOWEVER, ARADIGM DOES NOT MAKE ANY
WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED TO THE
IMPLIED WARRANTIES OF MERCHANTABILITY, BUSINESS CONTINUITY OR FITNESS FOR A
PARTICULAR PURPOSE, WITH RESPECT TO THE SERVICES, MATERIALS OR OTHER
DELIVERABLES PROVIDED, OR CAUSED TO BE PROVIDED, BY IT UNDER THIS LETTER.

 

7.             Transition
to SJ2 Systems and Personnel.  During
the term of this letter, Aradigm will use reasonable efforts to provide to SJ2,
at SJ2’s expense, consultation, assistance and information as reasonably
requested by SJ2, and will otherwise perform the Services, so as to effect a
smooth transition from SJ2’s utilization of Aradigm’s systems and personnel to
SJ2’s utilization of its own systems and personnel in connection with the
development of the Intraject Delivery System prior to the termination or
expiration of this letter.

 

8.             Payments.  SJ2 shall pay Aradigm on a monthly basis for
documented actual charges for the performance of the Services.  Aradigm will invoice SJ2 for its
representatives’ activities using an hourly rate based on salary, benefits and
overhead of the Aradigm representatives performing the Services.  Aradigm will not apply a profit to its
representatives’ hourly rates through the Expiration Date.

 

9.             Discontinuation
of Services.  If SJ2 chooses to
discontinue any Service prior to the Expiration Date, SJ2 shall give at least
30 days prior written notice, of its intent to terminate this letter as to that
particular Service, which termination as to that particular service shall be
effective on the last day of the month on which the 30 days prior written
notice lapses.  SJ2 will pay Aradigm
hereto the fees and costs of any terminated Service up until the effective date
of termination of such Service.

 

10.          Termination.  Notwithstanding anything to the contrary
contained in this letter, this letter may be terminated, in whole or in part,
at any time:  (a) by the mutual
consent of SJ2 and Aradigm; or (b) by either SJ2 or Aradigm in the event
of any material breach or default by the other party of any of its obligations
under this letter and the failure of such defaulting party to cure, or to take
substantial steps towards the curing of, such breach or default within 14 days
after receipt of written notice from the non-defaulting party requesting such
breach or default to be cured.

 

11.          No Implied
Responsibilities or Obligations.  NO
PARTY HERETO ASSUMES ANY RESPONSIBILITY OR OBLIGATIONS WHATSOEVER, OTHER THAN
THE RESPONSIBILITIES AND OBLIGATIONS EXPRESSLY SET FORTH IN THIS LETTER OR A
SEPARATE WRITTEN AGREEMENT BETWEEN THE PARTIES. 
NOTWITHSTANDING ANYTHING CONTAINED IN THIS LETTER TO THE CONTRARY, IN NO
EVENT SHALL ANY PARTY BE LIABLE TO ANY OTHER PARTY FOR ANY LOST PROFITS, LOSS
OF DATA, LOSS OF USE,

 

3

 

BUSINESS
INTERRUPTION OR OTHER SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES.

 

12.          Independent
Contractors.  The relationship
between SJ2 and Aradigm established under this letter is that of independent
contractors and no party shall be deemed an employee, agent, partner, or joint
venturer of or with the other.  Each
Service Provider will be solely responsible for any employment-related taxes,
insurance premiums or other employment benefits respecting its personnel’s
performance of any Services.  SJ2 agrees
to grant to any applicable Service Provider’s personnel reasonable access to
sites, systems and information as necessary for the Service Provider to perform
its obligations under this letter.  The
personnel of SJ2 and Aradigm shall agree to obey any and all security
regulations and other published policies of the other party relevant to the
provision or receipt of any Services.

 

13.          Confidentiality.  Any information from time to time
communicated or delivered by SJ2 or Aradigm to the other party, including
without limitation trade secrets, business methods, and cost, supplier,
manufacturing and customer information, shall be treated by SJ2 and Aradigm,
respectively, as confidential information of the other party, and shall not be
disclosed or revealed to any third party whatsoever or used in any manner
except as expressly provided for in this letter; provided, however that such
confidential information shall not be subject to the restrictions and
prohibitions set forth in this paragraph 13 to the extent that such
confidential information:  (a) is
available to the public in public literature or otherwise, or after disclosure
by one party to the other becomes public knowledge through no default of the
party receiving such confidential information; or (b) was known to the
party (as demonstrated by the written records of such party) receiving such
confidential information with no obligation to maintain confidentiality prior
to the receipt of such confidential information by such party, whether received
before or after the date of this letter; or (c) is obtained by the party
receiving such confidential information from a third party not subject to a
requirement of confidentiality with respect to such confidential information.  For the avoidance of doubt, information will
not be considered to be available to the public, in the public literature, or
in the prior possession of the receiving party merely because individual
elements thereof are available to the public, in the public literature, or in
the prior possession of the receiving party, unless the combination of such
elements is available to the public, in the public literature, or in the prior
possession of the receiving party.  SJ2
and Aradigm shall take all such precautions as it normally takes with its own
confidential information to prevent any improper disclosure of such
confidential information to any third party; provided that, such
confidential information may be disclosed: 
(x) pursuant to any order of a court or government entity having
jurisdiction and power to order such information to be released or made public;
(y) within the limits required to obtain any authorization from any
governmental or regulatory agency; or (z) with the prior written consent
of the other party, which shall not be unreasonably withheld, as may otherwise
be required in connection with the purposes of this letter.

 

14.          Access to
Aradigm Computer Systems.  If SJ2 is
given access to any computer equipment, computer, software, network, electronic
files, or electronic data storage system owned or controlled by Aradigm (“Aradigm
Computer Systems”), then

 

4

 

SJ2 shall limit
access and use of such Aradigm Computer Systems solely to receive Services
under this letter and shall not access, attempt to access or use any Aradigm
Computer Systems, other than those specifically required to receive the
Services.  All user identification
numbers and passwords disclosed to SJ2 and any of Aradigm’s confidential
information obtained by SJ2 as a result of its access to and use of any such
Aradigm Computer Systems shall be deemed to be, and shall be treated as,
Aradigm’s confidential information under applicable provisions of this letter.  SJ2 agrees to cooperate with Aradigm in the
investigation of any apparent unauthorized access by SJ2 or its representatives
to any Aradigm Computer Systems, or any apparent unauthorized release of
Aradigm’s confidential information by the employees, contractors or advisers of
SJ2.

 

15.          Indemnification.  SJ2 indemnifies Aradigm and its affiliates
against, and agrees to hold each of them harmless from, any and all damage,
loss, liability and expense (including reasonable expenses of investigation and
reasonable attorneys’ fees and any incidental, indirect or consequential
damages, losses, liabilities or expenses) (“Damages”) incurred or suffered by
Aradigm or any of its affiliates (other than Damages incurred or suffered by
Aradigm or any of its affiliates arising from any claims made by employees of
Aradigm) that arise from any third-party claim for personal injury or damage to
property based upon the performance of the Services by any of Aradigm’s
employees, except to the extent such third-party claim arises out of such
employee’s negligence, willful misconduct or breach of obligations under this
letter.  Aradigm indemnifies SJ2 and its
affiliates against, and agrees to hold each of them harmless from, any and all
Damages incurred or suffered by SJ2 or any of its affiliates (other than
Damages incurred or suffered by SJ2 or any of its affiliates arising from any
claims made by employees of SJ2) that arise from any third-party claim for
personal injury or damage to property based upon actions by any of SJ2’s
employees under the terms of this letter, except to the extent such third-party
claim arises out of such employee’s negligence, willful misconduct or breach of
obligations under this letter.

 

16.          Existing
Ownership Rights Unaffected.  Neither
SJ2 nor Aradigm will gain, by virtue of this letter, any rights or ownership of
copyrights, patents, know-how, trade secrets, trademarks or any other
intellectual property rights owned by the other party.

 

17.          Dispute
Resolution.  All disputes arising out
of this letter shall be settled as far as possible by negotiations between SJ2
and Aradigm.  If SJ2 and Aradigm cannot
agree on an amicable settlement within 30 days from written submission of the
matter by one party to the other, the matter shall be shall be settled by
binding arbitration in the County of Hayward in the State of California in
accordance with the Commercial Arbitration Rules then in effect of
JAMS/Endispute.  Arbitration will be
conducted by one arbitrator, mutually selected by SJ2 and Aradigm.  If Aradigm and SJ2 fail to mutually select an
arbitrator within 15 days following the submission of the matter to
JAMS/Endispute, then arbitration will be conducted by three arbitrators:  one selected by Aradigm; one selected by SJ2;
and the third selected by the first two arbitrators.  If SJ2 or Aradigm fails to select an
arbitrator within ten days following the expiration of the initial 15 day
period, then the other shall be entitled to select the second arbitrator.  SJ2 and 

 

5

 

Aradigm agree to
use all reasonable efforts to cause the arbitration hearing to be conducted
within 75 days after the appointment of the mutually selected arbitrator or the
last of the three arbitrators, as the case may be, and to use all reasonable
efforts to cause the decision of the arbitrators to be furnished within 95 days
after the appointment of the mutually selected arbitrator or the last of the
three arbitrators, as the case may be.  SJ2
and Aradigm further agree that discovery shall be completed at least 10 days
prior to the date of the arbitration hearing. 
The final decision of the arbitrators shall be furnished to SJ2 and
Aradigm in writing and shall constitute a conclusive determination of the
issues in question, binding upon SJ2 and Aradigm and shall not be contested by
any of them.  The non-prevailing party in
any arbitration shall pay the reasonable expenses (including attorneys’ fees)
of the prevailing party and the fees and expenses associated with the
arbitration (including the arbitrators’ fees and expenses).  For purposes of this paragraph 17, the
non-prevailing party shall be determined solely by the arbitrators.

 

18.          No Third
Party Beneficiaries.  This letter
shall not confer any rights or remedies upon any person or entity other than
SJ2 or Aradigm and their respective successors and permitted assigns.

 

19.          Counterparts
and Facsimile Signature.  This letter
may be executed in counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same instrument.  This letter may be executed by facsimile
signature.

 

20.          Notices.  All notices and other communications under
this letter will be in writing and deemed to have been duly given if given in
accordance with Section 6.11 of the APA.

 

21.          Successors
and Assigns.  The provisions of this
letter shall be binding upon and inure to the benefit of SJ2 and Aradigm and
their respective successors and assigns; provided, however, that except as
expressly provided in this letter, no party may assign, delegate or otherwise
transfer any of its rights or obligations under this letter without the consent
of each other party.

 

[The remainder of this page is
left intentionally blank; signature page follows]

 

6

 

If you are in agreement with the terms of this letter, please execute
this letter where indicated below and return a copy of the signed letter to Aradigm.

 

 

	
   

  	
  ARADIGM CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
    /s/

  
	
   

  	
  Name:

  	
  T.C. Chesterman

  
	
   

  	
  Title:

  	
  SVP & CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ACCEPTED AND AGREED TO:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SJ2 THERAPEUTICS, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Stephen J. Farr

  	
   

  	
   

  
	
  Title:

  	
  President

  	
   

  	
   

  
							

 

7

 

EXHIBIT I

 

Intraject
Delivery System

 

[***]

 

*** Certain information on this page has been omitted
and filed separately with the Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

 

EXHIBIT J

 

Nontransferable
Assets

 

None.

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