Document:

Unassociated Document

    
      	
              Exhibit
                10.4

            
	 
	
              Confidential
                Treatment Requested

            
	 
	
              Execution
                Version

            

    

    

    AMENDED
      AND RESTATED

    

    LICENSE
      AGREEMENT

     

    by
      and between

    

    DISCOVERY
      LABORATORIES, INC.

    (a
      Delaware corporation)

    

    and

    

    PHILIP
      MORRIS USA INC., d/b/a CHRYSALIS TECHNOLOGIES

    (a
      Virginia corporation)

     

     

    March
      28, 2008

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
Table
      of Contents

     

    
      
        
          	 	 	
                  Page

                
	
                  ARTICLE
                    1 DEFINITIONS

                	
                  1

                
	
                  ARTICLE
                    2 TECHNOLOGY TRANSFER

                	
                  9

                
	
                  2.1

                	
                  Technology
                    Transfer

                	
                  9

                
	
                  2.2

                	
                  Transfer
                    of Regulatory Files, Data and Filings

                	
                  9

                
	 	 
	
                  ARTICLE
                    3 LICENSE

                	
                  10

                
	
                  3.1

                	
                  License

                	
                  10

                
	
                  3.2

                	
                  Limitations

                	
                  10

                
	
                  3.3

                	
                  Sublicensing
                    Rights

                	
                  10

                
	
                  3.4

                	
                  Retained
                    Rights

                	
                  10

                
	 	 
	
                  ARTICLE
                    4 PRODUCT DEVELOPMENT

                	
                  10

                
	
                  4.1

                	
                  Licensed
                    Product Development

                	
                  10

                
	
                  4.2

                	
                  Notice
                    of Development of Licensed Products

                	
                  11

                
	
                  4.3

                	
                  Development
                    Effort

                	
                  11

                
	
                  4.4

                	
                  Costs

                	
                  11

                
	
                  4.5

                	
                  Development
                    Support by Chrysalis

                	
                  11

                
	
                  4.6

                	
                  Design
                    Configurations

                	
                  11

                
	
                  4.7

                	
                  Status
                    Updates

                	
                  11

                
	 	 
	
                  ARTICLE
                    5 COMMERCIALIZATION

                	
                  12

                
	
                  5.1

                	
                  Exclusive
                    Right to Sell the Licensed Products

                	
                  12

                
	
                  5.2

                	
                  Responsibility
                    For Commercialization Matters

                	
                  12

                
	
                  5.3

                	
                  Commercialization

                	
                  12

                
	
                  5.4

                	
                  Status
                    Updates

                	
                  12

                
	 	 
	
                  ARTICLE
                    6 REGULATORY MATTERS

                	
                  12

                
	
                  6.1

                	
                  Responsibility
                    and Consultation

                	
                  12

                
	
                  6.2

                	
                  Regulatory
                    Updates and Communications

                	
                  13

                
	
                  6.3

                	
                  Records

                	
                  13

                
	
                  6.4

                	
                  Product
                    Liability Litigation

                	
                  13

                
	 	 
	
                  ARTICLE
                    7 FINANCIAL PROVISIONS

                	
                  13

                
	
                  7.1

                	
                  Transition
                    Assistance Fees

                	
                  13

                
	
                  7.2

                	
                  Royalties
                    with Respect to Licensed Products and Substitute Products

                	
                  13

                
	
                  7.3

                	
                  Minimum
                    Royalties

                	
                  14

                
	
                  7.4

                	
                  Prohibition
                    on Bundling

                	
                  14

                
	
                  7.5

                	
                  Fixed
                    Consideration

                	
                  14

                
	
                  7.6

                	
                  Treatment
                    of Partial Product Sales

                	
                  15

                
	
                  7.7

                	
                  Royalty
                    Reports

                	
                  15

                
	
                  7.8

                	
                  Payment
                    of Estimated and Actual Amounts

                	
                  15

                
	
                  7.9

                	
                  Pass-Through
                    Royalties

                	
                  16

                
	
                  7.10

                	
                  Records
                    and Audits

                	
                  16

                
	
                  7.11

                	
                  Foreign
                    Exchange

                	
                  16

                
	
                  7.12

                	
                  Manner
                    of Payments

                	
                  17

                
	
                  7.13

                	
                  Late
                    Payments

                	
                  17

                
	
                  7.14

                	
                  Tax
                    Withholding

                	
                  17

                

        

         

        
          
            
            

          

          
            i

            
              

            

          

          
            
            

          

        

         

        
          	
                  ARTICLE
                    8 INTELLECTUAL PROPERTY

                	
                  17

                
	
                  8.1

                	
                  Ownership

                	
                  17

                
	
                  8.2

                	
                  Disclosure,
                    Assignment, License and Exploitation

                	
                  18

                
	
                  8.3

                	
                  Agreement
                    with Personnel

                	
                  19

                
	
                  8.4

                	
                  Prosecution
                    of Patents

                	
                  19

                
	
                  8.5

                	
                  Patent
                    Term Extensions

                	
                  19

                
	
                  8.6

                	
                  Third
                    Party Infringement

                	
                  19

                
	
                  8.7

                	
                  Infringement
                    of Third Party Rights

                	
                  21

                
	 	 
	
                  ARTICLE
                    9 CONFIDENTIAL INFORMATION

                	
                  22

                
	
                  9.1

                	
                  Use
                    of Confidential Information

                	
                  22

                
	
                  9.2

                	
                  Permitted
                    Disclosure and Use

                	
                  22

                
	
                  9.3

                	
                  Disclosure
                    for SEC Filings

                	
                  23

                
	
                  9.4

                	
                  Publications

                	
                  23

                
	
                  9.5

                	
                  Public
                    Announcements

                	
                  24

                
	
                  9.6

                	
                  Survival

                	
                  24

                
	
                   

                	 
	
                  ARTICLE
                    10 REPRESENTATIONS, WARRANTIES AND COVENANTS

                	
                  24

                
	
                  10.1

                	
                  Mutual
                    Representations and Warranties

                	
                  24

                
	
                  10.2

                	
                  Intellectual
                    Property

                	
                  25

                
	
                  10.3

                	
                  No
                    Adverse Effects

                	
                  26

                
	 	 
	
                  ARTICLE
                    11 ADDITIONAL COVENANTS

                	
                  26

                
	
                  11.1

                	
                  Compliance
                    with Laws

                	
                  26

                
	
                  11.2

                	
                  Cooperation

                	
                  27

                
	
                  11.3

                	
                  Sharing
                    of Information

                	
                  27

                
	 	 
	
                  ARTICLE
                    12 DISCLAIMERS AND LIMITATION OF LIABILITY

                	
                  27

                
	
                  12.1

                	
                  Disclaimer
                    of Warranties

                	
                  27

                
	
                  12.2

                	
                  Limitation
                    of Liability

                	
                  27

                
	 	 
	
                  ARTICLE
                    13 INDEMNIFICATION; INSURANCE

                	
                  28

                
	
                  13.1

                	
                  Indemnification

                	
                  28

                
	
                  13.2

                	
                  Indemnification
                    Procedures

                	
                  29

                
	
                  13.3

                	
                  Insurance

                	
                  30

                
	 	 
	
                  ARTICLE
                    14 TERM

                	
                  30

                
	 	 
	
                  ARTICLE
                    15 TERMINATION

                	
                  31

                
	
                  15.1

                	
                  Termination
                    by Discovery On or Before the First Anniversary

                	
                  31

                
	
                  15.2

                	
                  Termination
                    by Discovery After the First Anniversary

                	
                  31

                
	
                  15.3

                	
                  Termination
                    Due to Failure to Meet Minimum Royalties

                	
                  31

                
	
                  15.4

                	
                  Termination
                    for Material Breach

                	
                  31

                
	
                  15.5

                	
                  Termination
                    Due to Certain Events

                	
                  32

                
	
                  15.6

                	
                  Effects
                    of Termination Generally

                	
                  32

                
	 	 
	
                  ARTICLE
                    16 STANDSTILL AGREEMENT

                	
                  32

                
	
                  16.1

                	
                  General
                    Standstill

                	
                  32

                
	
                  16.2

                	
                  Certain
                    Exceptions

                	
                  33

                
	
                  16.3

                	
                  Exception
                    for an Acquisition Transaction

                	
                  33

                
	
                   

                	 
	
                  ARTICLE
                    17 DISPUTE RESOLUTION

                	
                  33

                
	
                  17.1

                	
                  Dispute
                    Resolution

                	
                  33

                
	
                  17.2

                	
                  Executive
                    Negotiation

                	
                  34

                

        

        

        
          
            
            

          

          
            ii

            
              

            

          

          
            
            

          

        

        
        

         

        
          	
                  17.3

                	
                  Mediation

                	
                  34

                
	
                  17.4

                	
                  Arbitration

                	
                  34

                
	
                  17.5

                	
                  Right
                    to Injunctive and Other Relief

                	
                  35

                
	 	
                   

                
	
                  ARTICLE
                    18 MISCELLANEOUS

                	
                  35

                
	
                  18.1

                	
                  Original
                    Agreement

                	
                  35

                
	
                  18.2

                	
                  Choice
                    of Law

                	
                  35

                
	
                  18.3

                	
                  Severability

                	
                  36

                
	
                  18.4

                	
                  Relationship
                    of the Parties

                	
                  36

                
	
                  18.5

                	
                  Parties
                    in Interest

                	
                  36

                
	
                  18.6

                	
                  Enforcement
                    of Certain Agreements

                	
                  36

                
	
                  18.7

                	
                  Use
                    of Affiliates, Subcontractors, Sublicensees and
                    Distributors

                	
                  36

                
	
                  18.8

                	
                  Assignment

                	
                  37

                
	
                  18.9

                	
                  Further
                    Assurances and Actions

                	
                  37

                
	
                  18.10

                	
                  Waiver

                	
                  37

                
	
                  18.11

                	
                  Section
                    365(n) of the Bankruptcy Code

                	
                  37

                
	
                  18.12

                	
                  Notices

                	
                  38

                
	
                  18.13

                	
                  Construction

                	
                  38

                
	
                  18.14

                	
                  Registration
                    and Filing of this Agreement

                	
                  39

                
	
                  8.15

                	
                  Force
                    Majeure

                	
                  39

                
	
                  18.16

                	
                  Entire
                    Agreement

                	
                  39

                
	
                  18.17

                	
                  Third
                    Party Beneficiaries

                	
                  39

                
	
                  18.18

                	
                  Execution
                    in Counterparts; Facsimile Signatures

                	
                  39

                

        

      

    

     

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

     

     

    AMENDED
      AND RESTATED LICENSE AGREEMENT

     

    THIS
      AMENDED AND RESTATED LICENSE AGREEMENT effective as of March 28, 2008 (the
      “Amended
      and Restated Effective Date”)
      by and
      between DISCOVERY LABORATORIES, INC., a Delaware corporation (“Discovery”),
      and PHILIP
      MORRIS USA INC., d/b/a CHRYSALIS TECHNOLOGIES, a Virginia corporation
      (“Chrysalis”)
      amends
      and restates the Strategic Alliance Agreement effective as of December 9, 2005
      (the “Original
      Effective Date”),
      by
      and between Discovery and Chrysalis (the “Original
      Agreement”).
      Discovery and Chrysalis shall be referred to herein individually as a
“Party”
and
      collectively as the “Parties”.

     

    WHEREAS,
      Discovery and Chrysalis entered into the Original Agreement pursuant to which
      Chrysalis granted to Discovery a worldwide license under its rights in and
      to
      its capillary aerosol generation technology to develop certain combination
      drug-device surfactant products; 

     

    WHEREAS,
      Chrysalis has assigned to Philip Morris Products S.A. (“PMPSA”)
      all
      rights outside of the United States in and to its capillary aerosol generation
      technology (the “Assigned Rights”); 

     

    WHEREAS,
      Discovery and PMPSA are entering into a license agreement as of the Amended
      and
      Restated Effective Date pursuant to which PMPSA will grant to Discovery a
      license under the Assigned Rights (the “PMPSA/Discovery
      Agreement”);
      and

     

    WHEREAS,
      Discovery and Chrysalis now wish to amend the Original Agreement to cease
      Chrysalis’ active involvement in the development of such combination drug-device
      surfactant products, to provide a technology transfer to Discovery to permit
      Discovery to continue with the development of such combination drug-device
      surfactant products, and to account for such assignment of rights to PMPSA,
      all
      on the terms and conditions set forth herein.

     

    NOW,
      THEREFORE, in consideration of the foregoing premises and the representations,
      warranties, covenants, and agreements contained herein, the Parties, intending
      to be legally bound, hereby agree as follows:

     

     

    ARTICLE
      1

    DEFINITIONS

     

    In
      addition to terms defined elsewhere in this Agreement, the following terms
      used
      in this Agreement are defined below:

     

    “AAA”
means
      the American Arbitration Association.

     

    “Actual
      Amount”
has
      the
      meaning set forth in Section 7.8.2.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    [***]  

     

    “Aerosol
      Device”
means
      a
      device to aerosolize a pharmaceutical compound for administration to humans.
      It
      is contemplated that the Aerosol Device shall consist of (i) permanent
      (e.g.,
      nondisposable) components that control power and electronics (e.g.,
      control unit) and (ii) a physical mechanism (e.g.,
      pump)
      to provide a means for dispensing the Drug Product from the container closure
      system.

     

    “Aerosol
      Technology”
means
      any technology related to the aerosolization of a liquid form of a
      pharmaceutical compound. Aerosol Technology does not include technology that
      is
      related to the delivery of aerosols as dry powders.

     

    “Affiliates”
means
      with respect to any Party, any Person, directly or indirectly, controlling,
      controlled by or under common control with such Party. For purposes of this
      Section, “control” means (i) in the case of a Person that is a corporate entity,
      direct or indirect ownership of more than fifty percent (50%) of the stock
      or
      shares having the right to vote (or such lesser percentage which is the maximum
      allowed to be owned by a foreign corporation in a particular jurisdiction)
      for
      the election of directors of such Person or (ii) in the case of a Person that
      is
      an entity, but is not a corporate entity, the possession, directly or
      indirectly, of (A) more than fifty percent (50%) of the economic or partnership
      interest in the income or capital of such Person or (B) the power to direct,
      or
      cause the direction of, the management or policies of such Person, whether
      through the ownership of voting securities, by contract or otherwise; and the
      terms “controlling,” “controlled by” or “under common control” shall have the
      meanings correlative to the foregoing. For the purposes of this Amended and
      Restated License Agreement, Chrysalis and PMPSA shall not be considered
      Affiliates with respect to each other.

     

    “Agreement”
means
      this Amended and Restated License Agreement, including the Schedules attached
      hereto.

     

    “Breaching
      Party”
has
      the
      meaning set forth in Section 15.4.1.

     

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

     

    “Chrysalis”
has
      the
      meaning set forth in the Preamble hereto.

     

    “Chrysalis
      Intellectual Property”
has
      the
      meaning set forth in Section 8.1.1.

     

    “Chrysalis
      Patents”
means
      all Patents owned by Chrysalis in the Territory or to which Chrysalis otherwise
      has rights in the Territory, as of June 30, 2008, that claim or are directed
      to
      the Chrysalis Technology.

     

    “Chrysalis
      Technology”
means
      (a) Chrysalis’ proprietary Aerosol Technology owned or controlled by Chrysalis
      in the Territory as of June 30, 2008 (including without limitation the
      technologies, devices, processes, equipment, materials and know-how relating
      to
      the aerosolization of liquid forms of drug products and the Aerosol Devices
      and
      Disposable Dose Packs therefor) and (b) all Intellectual Property owned by
      or
      licensed to Chrysalis in the Territory as of June 30, 2008 relating to such
      Aerosol Technology, including, without limitation, the Chrysalis
      Patents.

     

    
      

    

    
        Information
        marked by [***]
        has been
        omitted pursuant to a request for confidential treatment. The omitted portion
        has been separately filed with the Securities and Exchange
        Commission.

       

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Chrysalis
      Technology Improvements”
means
      any rights in the Territory in and to any Inventions created or reduced to
      practice [***]  
      in the
      performance of the Agreement or exercise of the license granted pursuant to
      this
      Agreement, or [***]
      under
      the PMPSA/Discovery Agreement or exercise of the license granted pursuant to
      the
      PMPSA/Discovery Agreement, in each case which Inventions relate primarily to
      the
      Chrysalis Technology.

     

    “Clinical
      Trials”
means
      Phase I, II, III and, if required, Phase IV clinical trials and such other
      tests
      and studies in human subjects or patients that are required to obtain, maintain,
      or sustain Regulatory Approval in a country in the Territory. 

     

    “Confidential
      Information”
means
      all information received by either Party or its Affiliates from or on behalf
      of
      the other Party or its Affiliates relating to this Agreement that the disclosing
      Party treats as confidential, including, without limitation: (i) copies of
      any
      nonpublic information regarding a Party’s Patents; (ii) techniques, technology,
      practices, trade secrets, inventions (whether or not patentable), designs,
      methods, manufacturing processes, formulae, formulations, specifications,
      documents, knowledge, know-how, skill, experience, test data, and results,
      (including that related to pharmacology, toxicology, preclinical testing,
      clinical testing, expression data, Chemistry, Manufacturing and Control (CMC)
      data, batch records, trials, and studies, safety and efficacy, analytical,
      and
      quality control); (iii) devices and related components, compounds, polypeptides,
      proteins, formulations, compositions of matter, cells, cell lines, markers,
      assays, and physical, biological, or chemical material; (iv) marketing
      information, market research data, medical/physicians advisory boards, and
      consultant input, including clinical studies designed to support promotional
      efforts; (v) the terms of this Agreement, and (vi) other proprietary business
      information such as business plans, financial or personnel matters, present
      or
      future products, research, process and technology development programs, sales,
      suppliers, customers, employees, investors, or other business information,
      whether in oral, written, graphic, or electronic form.

     

    “Contract
      Month”
      means
      each month during any Contract Year.
      

     

    “Contract
      Quarter”
      means
      each three (3) month period ending on March 31, June 30, September 30 and
      December 31 during any Contract Year.
      

     

    “Contract
      Year”
means
      a
      twelve (12) month period ending on December 31.
      The
      initial Contract Year will be deemed to begin on the Amended and Restated
      Effective Date and end on December
      31 of
      that
      Contract Year in which it falls.

     

    
      

    

    
          Information
        marked by [***]
        has been
        omitted pursuant to a request for confidential treatment. The omitted portion
        has been separately filed with the Securities and Exchange
        Commission.

       

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Diligent
      Commercialization Efforts”
means
      efforts and resources reasonably comparable to those commonly used in the
      research-based pharmaceutical industry for a medical device, pharmaceutical
      product or pharmaceutical compound at a similar stage in its commercialization
      or product life of similar market potential, taking into account safety and
      efficacy, the competitiveness of alternative products in the marketplace, the
      patent and other proprietary position of the product, the likelihood of
      regulatory approval given the regulatory structure involved, the potential
      profitability of the product and alternative products and other relevant factors
      relating to the commercialization of a Licensed Product, including, without
      limitation, the potential cost, risk, timing and reward, provided,
      however,
      that
      the fact that the Parties are required to share revenues with respect to the
      Licensed Products shall not be a factor taken into account in determining
      whether Diligent Commercialization Efforts were satisfied. Diligent
      Commercialization Efforts shall be determined on a market by market basis for
      a
      particular Licensed Product, and it is anticipated that the level of effort
      will
      change over time reflecting changes in the status of the Licensed Product and
      the market involved.

     

    “Diligent
      Development Efforts”
means
      efforts and resources reasonably comparable to those commonly used in the
      research-based pharmaceutical industry for a medical device, pharmaceutical
      product or pharmaceutical compound at a similar stage in its development of
      similar market potential, taking into account safety and efficacy, product
      profile, difficulty in developing the product, competitiveness of alternative
      products in the marketplace, the patent and other proprietary position of the
      product, the likelihood of regulatory approval given the regulatory structure
      involved, the potential profitability of the product and alternative products
      and other relevant factors affecting the cost, risk and timing of development
      and total potential reward to be obtained if a Licensed Product is
      commercialized, provided,
      however,
      that
      the fact that the Parties are required to share revenues with respect to the
      Licensed Products shall not be a factor taken into account in determining
      whether Diligent Development Efforts were satisfied. 

     

    “Discovery”
has
      the
      meaning set forth in the Preamble hereto.

     

    “Discovery
      Intellectual Property”
has
      the
      meaning set forth in Section 8.1.2.

     

    “Discovery
      Patents”
means
      all Patents owned by Discovery or to which Discovery otherwise has rights that
      claim or are directed to any Discovery Intellectual Property. 

     

    “Discovery
      Technology”
means
      (a) Discovery’s proprietary Pulmonary Surfactant technology (including without
      limitation the technologies, formulations, processes, equipment, materials
      and
      know-how relating to the manufacture and use of Pulmonary Surfactants for
      treatment of respiratory conditions), and (b) all Intellectual Property owned
      by
      or licensed to Discovery relating to such Pulmonary Surfactant technology,
      including, without limitation, the Discovery Patents. 

     

    “Discovery
      Technology Improvements”
means
      any Inventions created or reduced to practice [***]  
      in the
      performance of the Agreement or exercise of the license granted pursuant to
      this
      Agreement, which Inventions relate primarily to Pulmonary Surfactants (alone
      or
      in combination with [***]).

     

    
      

         Information
        marked by [***]
        has been
        omitted pursuant to a request for confidential treatment. The omitted portion
        has been separately filed with the Securities and Exchange
        Commission.

       

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    “Disposable
      Dose Packet”
      consists of: (i) Drug Product within a container (comprising the drug
      formulation containing the drug substance and the container closure system
      in
      which it is packaged), (ii) aerosolization capillary (heatable capillary through
      which the formulation is pumped to produce an aerosol), (iii) patient interface
      (components through which the aerosol produced by the capillary travels in
      order
      to reach the patient), and (iv) all ancillary tubing, connectors and fittings
      related thereto. 

     

    “Dispute”
has
      the
      meaning set forth in Section 17.1.

     

    “Dollars”
and
      “$”
means,
      unless otherwise specified, United States Dollars.

     

    “Drug
      Product”
means
      a
      pharmacological agent(s), including Pulmonary Surfactants, together with any
      excipients or inactive ingredients, formulated for use in connection with an
      Aerosol Device or Disposable Dose Packet. 

     

    “Estimated
      Amount”
has
      the
      meaning set forth in Section 7.8.1.

     

    [***]  

     

    “Exchange
      Act”
has
      the
      meaning set forth in Section 16.1.

     

    “Exclusive
      Field”
means
      (i) the therapeutic or preventative use in humans of Aerosol Technology to
      deliver Pulmonary Surfactants (alone or in combination with any other
      pharmaceutical compound(s)) as an active ingredient for the prevention or
      treatment of Respiratory Indications, and (ii) the therapeutic or preventative
      use in humans of Aerosol Technology to deliver [***]
      as an
      active ingredient. 

     

    “FDA”
shall
      mean the United States Food and Drug Administration, and any successor
      agency.

     

    “First
      Commercial Sale”
means
      the first arms-length commercial sale of a Licensed Product to a Third Party
      by
      Discovery or its Affiliates or sublicensees, as the case may be, in any country
      in the Territory after receipt of Marketing Authorization in such country which
      results in an exchange for cash or some equivalent to which value can be
      assigned for the purpose of determining Net Sales.

     

    “Force
      Majeure Event”
means
      an event or occurrence that materially interferes with the ability of a Party
      to
      perform its obligations or duties hereunder which is not within the reasonable
      control of the Party affected or any of its Affiliates, not due to malfeasance
      by such Party or its Affiliates, and which could not with the exercise of due
      diligence have been avoided, including without limitation fire, earthquake,
      acts
      of God, acts of war, labor strikes or lockouts, riots, civil disturbances,
      actions or inactions of governmental authorities (except actions in response
      to
      a breach of applicable Law by such Party).

     

    
      

    

    
       Information
        marked by [***]
        has been
        omitted pursuant to a request for confidential treatment. The omitted portion
        has been separately filed with the Securities and Exchange
        Commission.

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    “GAAP”
means
      generally accepted accounting principles in the United States of America.

     

    “Hospital
      Setting”
means
      a
      (i) hospital-setting in the delivery room, NICU, PICU, CCU, emergency
      department, surgical care unit and/or intermediate care unit, (ii) emergency
      and
      specialized medical treatment centers, such as birthing centers, treatment
      centers for chronic diseases, trauma centers and other similar facilities,
      and
      (iii) an institution setting which is used to provide long-term care for people
      with chronic illness or disability, including hospice settings and nursing
      homes. 

     

    “Indemnitee”
has
      the
      meaning set forth in Section 13.2.1.

     

    “Indemnitor”
has
      the
      meaning set forth in Section 13.2.1.

     

    “Infringement
      Notice”
has
      the
      meaning set forth in Section 8.6.1.

     

    “Intellectual
      Property”
means
      all know how, Inventions, Patents, copyrights, trademarks, trade secrets and
      any
      other intellectual property rights in the Territory that may be secured in
      any
      place under laws now or hereafter in effect.

     

    “Invention”
means
      any new or improved apparatus, process, information, product, invention,
      discovery, idea, suggestion, material, data, equipment, design, circuit
      component, drawing, tooling, prototype, report, computer software, documentation
      or other intellectual property or know-how (whether or not patentable)
      discovered, produced, conceived, created or reduced to practice by either or
      both Parties (or their Affiliates, sublicensees, subcontractors, successors
      or
      assigns).

     

    “Law”
means
      any applicable statute, law, ordinance, regulation, order, or rule of any
      federal, state, local, foreign, or other governmental agency or body or of
      any
      other type of regulatory body (including common law) or securities exchange
      or
      automated quotation system.

     

    “Licensed
      Product”
means
      a
      combination drug-device product using or otherwise practicing the Chrysalis
      Technology and delivering Pulmonary Surfactants or [***]  
      (each
      alone or in combination with [***]).

     

    “Losses”
has
      the
      meaning set forth in Section 13.1.1.

     

    “Marketing
      Authorization”
means,
      with respect to each country in the Territory, the principal
      Regulatory Approval required to market the Licensed Product in such country
      (e.g., the NDA), including satisfactory pricing and reimbursement approval,
      when
      applicable.

     

    
      

          Information
        marked by [***]
        has been
        omitted pursuant to a request for confidential treatment. The omitted portion
        has been separately filed with the Securities and Exchange
        Commission.

       

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    “NDA”
shall
      mean a new drug application, biologics
      license application, pre-market
      approval application, or a pre-market clearance under FDCA Section 510k that
      may
      be filed with the FDA in the United States or any
      comparable application that may be filed with any equivalent Regulatory
      Authority in the Territory.

     

    “Net
      Sales”
means,
      with respect to Licensed Products and Substitute Products, as applicable, sold
      by Discovery, its Affiliates and sublicensees in the Territory, the [***]  
      amount
[***]
      for
      Licensed Products or Substitute Products, as applicable, by Discovery, its
      Affiliates, and any sublicensees of Discovery in arms-length, commercial
      transactions in the Territory with customers that are Third Parties, less the
      following deductions to the extent included in such [***]
      amount:

     

    [***]

     

    Any
      discretionary rebates, discounts or other adjustments to the [***]
      amount
      shall be commercially reasonable and consistent with standard industry
      practices. Net Sales (including each applicable deduction from the [***]
      amount)
      shall be determined from the books and records of Discovery maintained in
      accordance with GAAP consistently applied. 

     

    “Non-Breaching
      Party”
has
      the
      meaning set forth in Section 15.4.1.

     

    “Original
      Effective Date”
has
      the
      meaning set forth in the Preamble hereto.

     

    “Party”
and
      “Parties”
have
      the meanings set forth in the Preamble hereto.

     

    “Patents”
means
      all patents and patent applications, and all patents issuing thereon (including
      utility, model and design patents and certificates of invention), together
      with
      all reissue patents, patents of addition, divisions, renewals, continuations,
      continuations-in-part, substitutions, additions, extensions (including
      supplemental protection certificates), registrations, confirmations,
      re-examinations, and foreign counterparts of any of the foregoing in the
      Territory.

     

    “Person”
means
      any natural person, corporation, company, partnership, limited liability
      company, proprietorship, trust or estate, joint venture, association, or other
      legal entity. 

     

    “Pulmonary
      Surfactant”
means
      surface active agents designed for deposition in the lungs in order to exert
      a
      physiological or pharmacological affect to prevent or treat Respiratory
      Indications. 

     

    “Regulatory
      Approval”
means
      any approvals (including, where necessary for the marketing, use, or other
      distribution of a drug, medical device, or combination drug and medical device
      in a regulatory jurisdiction, pricing, and reimbursement approvals), licenses,
      registrations, or authorizations or equivalents necessary for the manufacture,
      use, storage, import, export, clinical testing, transport, marketing, sale,
      and
      distribution of the Drug Product or Aerosol Device and any Licensed Product
      in a
      regulatory jurisdiction anywhere in the Territory, including Marketing
      Authorizations. 

     

    
      

          Information
        marked by [***]
        has been
        omitted pursuant to a request for confidential treatment. The omitted portion
        has been separately filed with the Securities and Exchange
        Commission.

       

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    “Regulatory
      Authority”
means
      any federal, national, multinational, state, provincial, or local regulatory
      agency, department, bureau, or other governmental entity with authority to
      regulate the marketing and sale of a pharmaceutical product, delivery system
      or
      device in the Territory, including the FDA in the United States. 

     

    “Regulatory
      Data”
means
      any and all research data, pharmacology data, chemistry, manufacturing, and
      control data, preclinical data, clinical data and/or all other documentation
      submitted, or required to be submitted, to Regulatory Authorities in association
      with an Investigational New Drug Application or NDA for Licensed Products
      (including any Drug Master Files, Device Master Files, Chemistry, Manufacturing
      and Control (CMC) data, or similar documentation). 

     

    “Respiratory
      Indications”
means
      all respiratory dysfunctions, failures, syndromes, diseases, disorders, or
      conditions.

     

    “Royalty
      Credit”
has
      the
      meaning set forth in Section7.8.2.

     

    “Royalty
      Report”
means
      the reports to be delivered by Discovery to Chrysalis pursuant to Section 7.7
      with respect to each Contract Month and pursuant to Section 7.8 with respect
      to
      each Contract Quarter, which reports shall give such particulars of each of
      the
      Licensed Products and Substitute Products sold by Discovery and its Affiliates
      and sublicensees during the preceding Contract Month in the Territory in the
      case of Section 7.7 and during the preceding Contract Quarter in the case of
      Section 7.8 as are reasonably pertinent to perform an accounting of royalties
      under this Agreement. 

     

    “SEC”
has
      the
      meaning set forth in Section 9.3.

     

    “Substitute
      Product”
means
      any Aerosol Device, Disposable Dose Packet or Drug Product (other than a
      Licensed Product) sold by Discovery, its Affiliates and sublicensees for use
      within the Exclusive Field.

     

    “Target
      Indications”
means
      the following Respiratory Indications: [***].   

     

    “Target
      Populations”
means
      human patients [***]
      receiving
      forms of treatment for the applicable Respiratory Indication that are typically
      and principally provided [***].
      

     

    “Taxes”
has
      the
      meaning set forth in Section 7.14.

     

    “Term”
has
      the
      meaning set forth in Article 14.

     

    
      

    

        Information
      marked by [***]
      has been
      omitted pursuant to a request for confidential treatment. The omitted portion
      has been separately filed with the Securities and Exchange
      Commission.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    “Territory”
means
      the United States of America and its territories and possessions, including
      the
      Commonwealth of Puerto Rico, Guam, U.S. Virgin Islands, American Samoa, and
      Northern Mariana Islands.

     

    “Third
      Party”
means
      any Person other than Chrysalis or Discovery or their respective
      Affiliates.

     

    “Third
      Party Claim”
has
      the
      meaning set forth in Section 13.1.1.

     

    “Valid
      Claim”
means
      a
      claim of an issued and unexpired patent, which claim has not been held
      unpatentable, invalid, or unenforceable by a court or other government agency
      of
      competent jurisdiction from which no appeal can be or has been taken and has
      not
      been held or admitted to be invalid or unenforceable through re-examination
      or
      disclaimer, opposition procedure, nullity suit or otherwise, which claim, but
      for the licenses granted herein, would be infringed by the sale of a Licensed
      Product. 

     

    ARTICLE
      2

    TECHNOLOGY
      TRANSFER

     

    2.1  Technology
      Transfer.
      Prior
      to June 30, 2008, Chrysalis shall provide Discovery with a technology transfer
      reasonable in scope to enable Discovery to practice the Chrysalis Technology
      for
      purposes of exercising the license rights granted to Discovery hereunder.
      Chrysalis shall have satisfied its obligations pursuant to this Section 2.1
      in
      the event Chrysalis complies with the specific obligations set forth in Exhibit
      A. 

     

    2.2  Transfer
      of Regulatory Files, Data and Filings.
      In connection with the technology transfer contemplated pursuant to Section
      2.1,
      Chrysalis shall provide
      to
      Discovery or its designee, a copy of all governmental or regulatory
      correspondence, conversation logs, filings, and approvals relating to the
      development, manufacture or commercialization of the Licensed Product (including
      study protocols, study results, analytical methodologies, validation
      documentation, and regulatory documentation) that are reasonably necessary
      for
      the continued development and sale of the Licensed Product, including without
      limitation those materials that are reasonably necessary for inclusion in a
      new
      drug application or equivalent filing with the FDA or other regulatory bodies.
      Chrysalis shall also provide to Discovery copies of, and permit Discovery to
      reference in connection with any Licensed Products, all Regulatory Data relating
      to Licensed Products reasonably necessary to continue the development, marketing
      and sale of the Licensed Products. From and after such time, all such Regulatory
      Data and information provided to Discovery shall remain Confidential Information
      of Chrysalis; provided, however, that Discovery may use all such Regulatory
      Data
      and information solely for the purposes of continuing to pursue the development
      and commercialization of Licensed Products. Chrysalis shall execute all
      documents and take all such further actions as may be reasonably requested
      by
      Discovery and required in order to give
      effect
      to the foregoing. 

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      3

    LICENSE

     

    3.1  License.
      Subject
      to the terms, conditions, and limitations of this Agreement, Chrysalis hereby
      grants to Discovery an exclusive right and royalty-bearing license or
      sublicense, as applicable, in the Territory, with the right to grant sublicenses
      solely as set forth in Section 3.3, under the Chrysalis Technology and
      Chrysalis Technology Improvements to make and have made, to use and have used,
      to develop and have developed, to sell and have sold, to offer for sale and
      have
      offered for sale, to import and export and have imported and exported Licensed
      Products in the Exclusive Field in the Territory during the Term.

     

    3.2  Limitations.
      The
      license granted pursuant to Section 3.1 shall be exclusive only to the extent
      that Chrysalis has the right to grant an exclusive license with respect to
      the
      Licensed Product in question. No right or license outside of the Exclusive
      Field
      is granted and all such rights are expressly reserved by Chrysalis. No right
      or
      license is or shall be granted under this Agreement by implication. All such
      rights or licenses are or shall be granted only as expressly provided in this
      Agreement. Discovery shall not practice the Chrysalis Technology in the
      Territory except as expressly licensed herein. Nothing herein shall limit the
      ability of Chrysalis to perform any research or development work on or using
      the
      Chrysalis Technology. Notwithstanding any other provision of this Agreement,
      no
      rights with respect to any trademarks, trade names, service marks or logos
      of
      Chrysalis are granted pursuant to this Agreement.

     

    3.3  Sublicensing
      Rights.
      The
      license granted to Discovery pursuant to Section 3.1 by Chrysalis shall include
      the right of Discovery to grant sublicenses, subject to terms and conditions
      set
      forth in Section 18.7. Discovery shall provide Chrysalis with prompt written
      notice of any sublicenses granted hereunder.

     

    3.4  Retained
      Rights.
      Any
      rights of each Party not expressly granted to the other Party under the
      provisions of this Agreement shall be retained by each Party, and, subject
      to
      any applicable terms, conditions, and limitations of this Agreement, each Party
      shall retain the right to: (a) exploit such Party’s own Intellectual Property
      relating to Licensed Products to develop, manufacture, and commercialize
      products outside the Exclusive Field; (b) exploit such Party’s own Intellectual
      Property relating to Licensed Products for other purposes outside the Exclusive
      Field unrelated to the Licensed Products; and (c) perform its obligations and
      exercise its rights under this Agreement.

     

    ARTICLE
      4

    
      PRODUCT
        DEVELOPMENT

    

     

    4.1  Licensed
      Product Development.
      Discovery shall be solely responsible for the development of Licensed Products
      and Chrysalis shall have no obligations with respect to the development of
      Licensed Products unless Chrysalis agrees otherwise in writing. Chrysalis
      acknowledges and agrees that Discovery may partner with third parties with
      respect to the development of Licensed Products.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    4.2  Notice
      of Development of Licensed Products.
      Discovery shall provide Chrysalis with written notification of its intention
      to
      proceed with Phase II Clinical Trials for a Licensed Product. Such written
      notification shall include sufficient detail for Chrysalis to understand the
      nature of such Licensed Product to be developed by Discovery. 

     

    4.3  Development
      Effort.
      Discovery
      shall use Diligent Development Efforts to
      develop
      at least one Licensed Product and to otherwise carry out its responsibilities
      under this Agreement relating to such Licensed Product promptly and
      expeditiously in accordance with all Laws. Notwithstanding the foregoing, the
      Parties acknowledge that the development of pharmaceutical products is
      inherently speculative and there is no guarantee that the Discovery will be
      successful in developing any commercially viable Licensed Products, or that
      the
      development of any Licensed Products will proceed as anticipated.

     

    4.4  Costs.
      Discovery shall be solely responsible for all costs incurred by Discovery in
      connection with the development of Licensed Products hereunder. 

     

    4.5  Development
      Support by Chrysalis.
      Chrysalis shall use commercially reasonable efforts to perform, in consultation
      with Discovery, the development activities mutually agreed upon by the Parties
      in writing on a mutually agreed upon schedule set forth in writing; provided,
      however, that (if the technology transfer provided for in Article 2 shall have
      been completed in accordance therewith) in no event shall Chrysalis have any
      obligation to perform any development activities or otherwise provide any
      support to Discovery after June 30, 2008. Discovery acknowledges and agrees
      that
      Chrysalis is transitioning out of the aerosol device business and that Chrysalis
      makes no commitment that Chrysalis will have or retain the personnel or
      resources necessary to perform any specific development activities hereunder.
      Chrysalis’ obligation to perform the development activities set forth in this
      Section 4.5 is subject to Chrysalis having qualified personnel to perform such
      development activities. Chrysalis shall be solely responsible for all costs
      incurred by Chrysalis in connection with the development activities performed
      by
      Chrysalis pursuant to this Section. 

     

    4.6  Design
      Configurations.
      The
      Parties agree that any Aerosol Device and Disposable Dose Packet configuration
      developed for use outside the Exclusive Field shall be distinct in appearance
      from those for use with the Licensed Products and shall not be interchangeable
      with the Aerosol Device or Disposable Dose Packet of the Licensed Products.
      Without limiting the generality of the foregoing, Chrysalis shall not offer
      for
      sale or sell, nor authorize any Third Party to offer for sale or sell, any
      pharmaceutical product (i) in packaging similar in appearance to the Disposable
      Dose Packet for a Licensed Product, or (ii) in packaging that is interchangeable
      with the Disposable Dose Packet of a Licensed Product for purposes of use in
      an
      Aerosol Device. 

     

    4.7  Status
      Updates.
      Upon the
      reasonable request of Chrysalis, Discovery shall provide Chrysalis with an
      update on the status of the development of Licensed Products hereunder; provided
      that in no event shall Discovery be required to provide an update more often
      than once a Contract Quarter.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      5

    COMMERCIALIZATION

     

    5.1  Exclusive
      Right to Sell the Licensed Products.
      The
      Parties agree that during the Term, Discovery shall have the exclusive right
      to
      market and have marketed, sell and have sold, and offer for sale or have offered
      for sale any Licensed Products in the Territory.

     

    5.2  Responsibility
      For Commercialization Matters.
      Discovery shall have the sole responsibility for all activities associated
      with
      the commercialization of the Licensed Products in the Territory, including,
      without limitation, (a) preparing, submitting and seeking Marketing
      Authorizations for the Licensed Products, (b) sales, advertising and marketing
      of the Licensed Product, (c) scientific and medical affairs, (d) customer
      service and distribution related services, such as order taking, shipping,
      billing, accounts receivable, returns, allowance activities and product support;
      (e) Phase IV Clinical Trials, (f) commercial manufacture of the Licensed
      Product; and (g) branding of the Licensed Products.

     

    5.3  Commercialization.
      

     

    5.3.1  Diligent
      Commercialization Efforts.
      Discovery shall use Diligent Commercialization Efforts to bring the Licensed
      Products to market and to market and sell the Licensed Products in the
      Territory. Discovery shall promptly notify Chrysalis of the receipt of any
      Marketing Authorization for a Licensed Product in the Territory.

     

    5.3.2  Commercialization
      Initiation.
      With
      respect to each Licensed Product, the First Commercial Sale in the Territory
      shall occur within [***] 
      of
      receipt of the relevant Marketing Authorization for the Territory for such
      Licensed Product. Should Discovery materially fail to achieve any such
      commercialization initiation within [***]
      of
      having received written notice of such failure from Chrysalis [***].

     

    5.4  Status
      Updates.
      Upon
      Chrysalis’ reasonable request, Discovery shall provide Chrysalis with an update
      on the status of the commercialization of Licensed Products in the Territory
      hereunder; provided that in no event shall Discovery be required to provide
      an
      update more often than once a Contract Quarter. 

     

    ARTICLE
      6

    REGULATORY
      MATTERS 

     

    6.1  Responsibility
      and Consultation.
      Discovery shall be responsible for preparing, submitting, seeking and
      maintaining all Regulatory Approvals for the Licensed Products in the Territory,
      including without limitation Marketing Authorizations. 

     

    
      

          Information
        marked by [***]
        has been
        omitted pursuant to a request for confidential treatment. The omitted portion
        has been separately filed with the Securities and Exchange
        Commission.

       

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    6.2  Regulatory
      Updates and Communications.
      Within
      thirty (30) days after the end of each Contract Quarter, Discovery shall provide
      Chrysalis with a written update on the status of the Regulatory Approvals for
      the Licensed Products in the Territory. In addition, Discovery shall provide
      Chrysalis with a copy of any medical device reports relating to the use of
      Licensed Products in the Territory and a copy (if in writing) or a description
      (if oral) of any significant contact or communication from any Regulatory
      Authority relating to a material safety issue with the Chrysalis Technology,
      in
      each case, promptly after Discovery’s receipt of the same. 

     

    6.3  Records.
      Except
      to the extent otherwise required by law, the Parties acknowledge and agree
      that
      Chrysalis shall have no obligation to maintain any records relating to the
      Chrysalis Technology or the Licensed Product. 

     

    6.4  Product
      Liability Litigation.
      Discovery shall promptly inform Chrysalis of the initiation of any (i) recalls,
      corrections or removals of Licensed Products, and (ii) litigation or
investigations
      in the Territory relating to the Licensed Product involving a claim of death
      or
      bodily injury (or allegations thereof) to an individual and shall provide
      Chrysalis with regular written updates with respect thereto. If any such
      recalls, corrections, removals, litigation or investigations relate to the
      Chrysalis Technology, then Chrysalis shall have the right to audit the books,
      records and facilities relating to such Licensed Products (solely to the degree
      that Discovery has the right to grant any such access and solely to the degree
      such books, records and facilities relate to such litigation and investigation),
      and Discovery shall reasonably cooperate with Chrysalis in connection therewith.
      

     

    ARTICLE
      7

    FINANCIAL
      PROVISIONS

     

    7.1  Transition
      Assistance Fees.
      Chrysalis shall pay to Discovery the following fixed fees in accordance with
      the
      following schedule:

     

    7.1.1  Within
      [***]  days
      after the Amended and Restated Effective Date, a fixed fee of two million
      dollars ($2,000,000); and

     

    7.1.2  Within
      [***]
      days
      after the Parties mutually agree in writing that [***],
      a fixed
      fee of two million five hundred thousand dollars ($2,500,000);

     

    provided,
      however, that Chrysalis shall have no obligation to pay Discovery any amounts
      pursuant to this Section 7.1 if Discovery is in material breach of any material
      provision of this Agreement. 

     

    7.2    
      Royalties with Respect to Licensed Products and Substitute
      Products.
      In
      consideration of the significant investments made by Chrysalis in developing
      the
      Chrysalis Technology and the rights granted and payments made to Discovery
      herein, Discovery shall pay royalties to Chrysalis on Net Sales of Licensed
      Products and Substitute Products in the Territory in an amount equal to
[***]  
      of the
      Net Sales for such Licensed Products and Substitute Products. 

     

    
      

          Information
        marked by [***]
        has been
        omitted pursuant to a request for confidential treatment. The omitted portion
        has been separately filed with the Securities and Exchange
        Commission.

       

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    7.3  Minimum
      Royalties.
      Commencing [***]
      and
      continuing thereafter throughout the Term, if the royalties paid by Discovery
      to
      Chrysalis hereunder are not equal to or greater than the following for each
      Contract Quarter of the applicable Contract Year:

     

    [***]
(the
“Minimum
      Royalty”),
      then
      Chrysalis shall have the right to terminate this Agreement pursuant to Section
      15.3; provided, that Discovery can cure any such royalty shortfall by paying
      Chrysalis [***]
      after
      the end of the applicable Contract Quarter the difference between the Minimum
      Royalty due for the applicable Contract Quarter and the actual royalties paid
      by
      Discovery hereunder for such Contract Quarter (the “Royalty
      Shortfall”).
      The
      royalty payments required to be paid in any given Contract Quarter pursuant
      to
      Section 7.2 shall be subject to an offsetting reduction by Discovery in an
      amount equal to the Royalty Shortfall; provided, however, that (i) no such
      offset shall be applied until the royalty payments for such Contract Quarter
      exceed the Minimum Royalties for such Contract Quarter, and (ii) such offset
      may
      be made only to the extent such Royalty Shortfall has not previously been
      subject to offset pursuant to this Section. 

     

    7.4  Prohibition
      on Bundling.
      Notwithstanding any other provision of this Agreement to the contrary, Discovery
      hereby covenants that it will not include or bundle any Licensed Products and
      Substitute Products or components thereof as part of a multiple product offering
      with any other products or services if it would result in the price of the
      Licensed Product or Substitute Product or any components thereof being
      discounted from the then-applicable sale price in such jurisdiction, nor shall
      Discovery permit its Affiliates or sublicensees to do so, except with the prior
      written consent of Chrysalis. In the event any such bundled sales occur, the
      Net
      Sales with respect to such bundled transactions shall be deemed to be the-then
      current average Net Sales for the Licensed Product or Substitute Product in
      such
      jurisdiction in arms length transactions or in the event there are no unbundled
      transactions, the fair market value of such Net Sales.

     

    7.5  Fixed
      Consideration.
      In the
      event that Discovery receives any fixed payment, fee or other consideration
      from
      a Third Party (i) in consideration of any discount, credit or similar allowance
      granted to such Third Party in connection with the purchase of any Licensed
      Product(s) or Substitute Product(s) or (ii) in lieu of any royalties with
      respect to any Licensed Product(s) or Substitute Product(s), then Discovery
      shall pay to Chrysalis a royalty equal to the product of (a) such consideration
      multiplied by (b) the royalty rate set forth in Section 7.2. Discovery shall
      report on the amount of any such consideration, and the royalty payable thereon
      in U.S. Dollars, in the Royalty Report. For the avoidance of doubt, this Section
      7.5 shall not apply with respect to any fixed payment, fee or other
      consideration from a Third Party in respect of development fees, milestone
      payments or other similar payments in transactions that incorporate a
      market-rate royalty structure. 

     

    
      

          Information
        marked by [***]
        has been
        omitted pursuant to a request for confidential treatment. The omitted portion
        has been separately filed with the Securities and Exchange
        Commission.

       

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    7.6  Treatment
      of Partial Product Sales.
      In the
      event that portions of a Licensed Product or Substitute Product are sold
      separately, (e.g., Aerosol Device, Disposable Dose Packet, Drug Product) the
      royalties payable pursuant to this Article 7 shall be paid [***].  

     

     

    7.7  Royalty
      Reports.
      Within
[***]
      days
      after the end of each Contract Month (beginning with [***]
      Licensed
      Product or Substitute Product, as the case may be), Discovery shall deliver
      to
      Chrysalis a preliminary Royalty Report. [***]
      The
      Royalty Report shall include at least the following items, separately stated
      as
      to each of the Licensed Products and Substitute Products, as applicable:

     

    (i)  the
      quantity of each of the Licensed Products and Substitute Products (delineated
      as
      Aerosol Devices and Disposable Dose Packets) invoiced by Discovery and its
      Affiliates and sublicensees during such Contract Month and the [***]
      amount
      therefor; 

     

    (ii)  the
      allowable deductions therefrom and an itemization of each specific deduction
      [***];

     

    (iii)  the
      calculation of royalties, if any, thereon in a manner consistent with the
      amounts set forth in the Royalty Report prepared in accordance with this Section
      7.7.

     

     

    7.8  Payment
      of Estimated and Actual Amounts.
      

     

    7.8.1  Payment
      of Estimated Amounts.
      Simultaneous with the issuance of the preliminary Royalty Report, Discovery
      shall make payment of estimated amounts due to Chrysalis hereunder with respect
      to such Contract Month (the “Estimated
      Amount”).

     

    7.8.2  Quarterly
      Reconciliation and True-Up.
      Within
[***]
      days
      following each Contract Quarter, Discovery shall calculate the actual amount
      due
      to Chrysalis hereunder with respect to the immediately preceding Contract
      Quarter (the “Actual
      Amount”)
      and
      provide to Chrysalis a true and accurate Royalty Report for such Contract
      Quarter, setting forth the corrected calculations for such Contract Quarter.
      If
      the Estimated Amounts paid to Chrysalis pursuant to Section 7.8.1 for the three
      Contract Months comprising the immediately preceding Contract Quarter exceeds
      the Actual Amount for such Contract Quarter, Discovery shall notify Chrysalis
      and such excess amount (the “Royalty
      Credit”)
      shall,
      at the discretion of Discovery, be available to offset future royalties payable
      to Chrysalis by Discovery. If such Actual Amount exceeds such Estimated Amount,
      Discovery shall promptly pay such excess amount to Chrysalis. [***]

     

    
      

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        has been
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        has been separately filed with the Securities and Exchange
        Commission.

       

    

    
      
        
        

      

      
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    7.9  Pass-Through
      Royalties.
      Each
      Party shall be solely responsible for paying any royalties which may be due
      to
      Third Parties with respect to such Party’s Intellectual Property. 

     

    7.10  Records
      and Audits.

     

    7.10.1  Records.
      Discovery shall keep, and shall require its Affiliates and sublicensees to
      keep,
      such records as are necessary to determine accurately the sums due to each
      other
      under this Agreement. Such records shall be retained by Discovery for the Term
      and for three (3) years thereafter. 

     

    7.10.2  Audit.
      At the
      written request of Chrysalis, with reasonable advance notice, Discovery shall
      make available for inspection, review, and audit, by an internationally
      recognized independent certified public accounting firm appointed by Chrysalis
      and reasonably acceptable to Discovery, such records of Discovery as may be
      reasonably necessary to verify Discovery’s accounting reports and payments made
      or to be made pursuant to this Agreement; provided, however, that such audits
      may not be performed by Chrysalis more than once per Contract Year in the
      absence of a reasonable basis for concern regarding compliance with the
      Agreement or any applicable Laws. If such accountants identify a discrepancy,
      then the appropriate Party shall pay the other Party the amount of the
      discrepancy within thirty (30) days of the date of receiving such accountant’s
      written report, or as otherwise agreed upon by the Parties, plus, in the event
      of any underpayment, interest calculated in accordance with Section 7.13.

     

    7.10.3  Audit
      Confidentiality.
      Chrysalis shall cause any accountants selected by it to enter into a
      confidentiality agreement acceptable to Discovery obligating such accountants
      to
      retain all such information in confidence pursuant to such confidentiality
      agreement. Such accountants shall not reveal to Chrysalis the details of its
      review, except for such information as is required to be disclosed under this
      Agreement, and such details shall be treated as Confidential Information. Each
      Party agrees to hold in strict confidence all information concerning payments
      and reports, and all information learned in the course of any audit or
      inspection (and not to make copies of such reports and information), except
      to
      the extent necessary for such Party to reveal such information in order to
      enforce its rights under this Agreement or if disclosure is required by Law,
      regulation or judicial order.

     

    7.10.4  Costs
      of Audits.
      Chrysalis shall pay for such inspections, except that in the event the
      adjustment shown by such inspection is greater than [***] 
      percent
      ([***]%)
      of the
      original royalty amounts in question, Discovery shall pay for such
      inspection.

     

    7.11  Foreign
      Exchange.
      For the
      purpose of computing the Net Sales for Licensed Products and Substitute Products
      sold in a currency other than Dollars, such amounts shall be converted into
      Dollars each Contract Month in the then standard manner used by Discovery in
      the
      preparation of its audited financial statements, consistently applied. Such
      method of currency conversion used by Discovery shall be a commercially
      reasonable method consistent with industry standards, and Discovery shall
      disclose to Chrysalis [***]
      prior to
      First Commercial Sale of a Licensed Product or Substitute Product in a country
      such method of currency conversion. Notwithstanding anything herein to the
      contrary, at Chrysalis’ option, with respect to any particular country in the
      Territory, Discovery shall pay royalties for Licensed Products and Substitute
      Products sold in such country in such country’s local currency. Discovery shall
      not change such method of currency conversion disclosed to Chrysalis pursuant
      to
      this Section 7.11 without obtaining Chrysalis’ prior written consent, such
      consent not to be unreasonably withheld. 

     

    
      

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        has been separately filed with the Securities and Exchange
        Commission.

       

    

    
      
        
        

      

      
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    7.12  Manner
      of Payments.
      All
      sums due to Chrysalis under this Agreement shall be payable by electronic funds
      transfer in immediately available funds to such bank account(s) as Chrysalis
      shall designate at least two (2) Business Days in advance. 

     

    7.13  Late
      Payments.
      Any
      amounts not paid when due under this Agreement shall be subject to interest
      from
      and including the date payment is due through and including the date upon which
      Chrysalis has collected immediately available funds in an account designated
      by
      Chrysalis at an annual rate equal to the sum of [***] 
      percent
      ([***]%)
      plus
      the annual prime rate of interest quoted in the Money Rates section of the
      East
      Coast edition of the Wall
      Street Journal
      calculated daily on the basis of a 365-day year, or similar reputable data
      source, or, if lower, the highest rate permitted under applicable law.
      Notwithstanding the foregoing, any payment of amounts by Discovery representing
      the excess of Actual Amount over Estimated Amount, calculated in accordance
      with
      Section 7.8, shall not be subject to this Section 7.13. 

     

    7.14  Tax
      Withholding.
      Any
      taxes, levies, or other duties (“Taxes”)
      paid
      or required to be withheld under the appropriate local tax Laws by Discovery
      on
      account of monies payable to Chrysalis under this Agreement shall be deducted
      from the amount of monies otherwise payable to Chrysalis under this Agreement
      and paid by Discovery to the proper taxing authority. Discovery shall secure
      and
      send to Chrysalis within a reasonable period of time proof of any such Taxes
      paid or required to be withheld by Discovery for the benefit of Chrysalis.
      The
      Parties shall cooperate reasonably with each other to (i) ensure that any
      amounts required to be withheld by Discovery are reduced in amount to the
      fullest extent permitted by Law and (ii) to resolve such other Party’s taxation
      concerns.

     

    ARTICLE
      8  

    INTELLECTUAL
      PROPERTY

     

    8.1  Ownership.
      

     

    8.1.1  Chrysalis
      Intellectual Property.
      Chrysalis shall own (i) all Intellectual Property owned or controlled by
      Chrysalis relating to the Chrysalis Technology or Licensed Products that was
      existing or conceived prior to the Amended and Restated Effective Date, (ii)
      all
      Intellectual Property relating to the Chrysalis Technology or the Licensed
      Products developed by Chrysalis outside of the performance of this Agreement
      or
      to which Chrysalis otherwise obtains rights from a Third Party; (iii) all
      Inventions conceived, created and reduced to practice solely by or on behalf
      of
      Chrysalis in the course of the performance of this Agreement, except Discovery
      Technology Improvements; and (iv) all Chrysalis Technology Improvements
      (collectively, “Chrysalis
      Intellectual Property”).
      

     

    
      

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    8.1.2  Discovery
      Intellectual Property.
      Discovery shall own (i) all Intellectual Property owned or controlled by
      Discovery relating to Discovery Technology or the Licensed Products that was
      existing or conceived prior to the Amended and Restated Effective Date or is
      developed by Discovery outside of the performance of this Agreement, (ii) all
      Intellectual Property relating to Discovery Technology or the Licensed Products
      developed by Discovery outside of the performance of this Agreement or exercise
      of the license granted hereunder or to which Discovery otherwise obtains rights
      from a Third Party, and (iii) all Inventions conceived, created and reduced
      to
      practice solely by or on behalf of Discovery in the course of the performance
      of
      this Agreement or exercise of the license granted hereunder, except Chrysalis
      Technology Improvements; (iv) all Inventions conceived, created and reduced
      to
      practice jointly by or on behalf of the Parties in the course of the performance
      of this Agreement or exercise of the license granted hereunder, except Chrysalis
      Technology Improvements; and (v) all Discovery Technology Improvements
      (collectively “Discovery
      Intellectual Property”).

     

    8.2  Disclosure,
      Assignment, License and Exploitation.

     

    8.2.1  Disclosure.
      Each
      Party shall cause all personnel conducting work or exercising rights on its
      behalf under the Agreement to, promptly disclose to the other Party all
      Intellectual Property in which the other Party has an ownership interest
      pursuant to Section 8.1, and to assign any and all right, title and
      interest in all such Inventions and Intellectual Property in accordance with
      this Agreement. Each Party shall maintain records in sufficient detail and
      in
      good scientific manner appropriate for patent prosecution purposes to properly
      reflect all work done and results achieved in conducting its work hereunder,
      and
      shall respond to reasonable requests of the other Party for information
      regarding Intellectual Property in which the other Party has an ownership
      interest. 

     

    8.2.2  Assignment
      and License.
      In the
      event Chrysalis conceives, creates or reduces to practice any Discovery
      Technology Improvements, Chrysalis shall promptly notify Discovery and Chrysalis
      shall assign all right, title and interest in and to such Discovery Technology
      Improvements to Discovery. In the event Discovery conceives, creates or reduces
      to practice any Chrysalis Technology Improvements, Discovery shall promptly
      notify Chrysalis and Discovery shall assign all right, title and interest in
      and
      to such Chrysalis Technology Improvements to Chrysalis, however, such Chrysalis
      Technology Improvements are included in the Intellectual Property licensed
      to
      Discovery pursuant to Section 3.1.

     

    8.2.3  Exploitation
      of Intellectual Property.
      To the
      extent permitted by Law, Chrysalis agrees not to exploit the Chrysalis
      Intellectual Property in the Exclusive Field in any country in the world;
      provided, however, that in the event Discovery terminates this Agreement
      pursuant to Article 15 with respect to [***], 
      this
      Section 8.2.3 shall no longer apply to Chrysalis with respect to such
[***]
      and
      Chrysalis shall have the right to exploit the Chrysalis Intellectual Property
      in
      the Exclusive Field in the Territory with respect to such [***].  

     

    
      

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        has been separately filed with the Securities and Exchange
        Commission.

       

      
        
          
          

        

        
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    8.3  Agreement
      with Personnel.
      Each
      Party shall have valid and enforceable written agreements with all personnel
      conducting work on its behalf under the Agreement containing a nondisclosure
      obligation comparable in scope to Article 9 and giving the other Party all
      rights and authority necessary to effectuate the provisions of this Article
      8.
      Each Party shall provide copies of these agreements to the other Party upon
      the
      other Party’s request as allowed by each Party’s internal personnel
      policies.

     

    8.4  Prosecution
      of Patents.
      

     

    8.4.1  Discovery
      and Chrysalis Patent Filings.
      Discovery and Chrysalis each shall use commercially reasonable efforts to
      diligently prosecute and
      maintain their
      respective Chrysalis Patents and Discovery Patents in the Territory; provided
      that solely for the purposes of this Section 8.4.1 Discovery Patents shall
      mean
      those Discovery Patents that claim or are directed to Discovery Technology.
      Within forty-five (45) days of a Party’s receipt of an allowance or grant of a
      Patent, the Party prosecuting the Patent shall inform the other Party of such
      allowance or grant, and provide the other Party with a copy of the allowed
      or
      granted Patent claims thereof. 

     

    8.4.2  Patent
      Prosecution Costs.
      Each
      Party shall bear its own costs to file, prosecute and maintain its Patents
      in
      the Territory (including, without limitation, patent term
      extension).

     

    8.4.3  Abandonment
      of Prosecution or Maintenance.
      Each
      Party shall notify the other Party in the event it is unable for any reason
      to
      meet its obligations under this Article 8 with respect to any Patents that
      are
      subject to Section 8.4.1. Such notification shall be given within a reasonable
      period prior to the date on which such Patents will lapse or become abandoned.
      The Party receiving any notification hereunder shall then have the option,
      exercisable upon written notification to the Party that delivered such
      notification, to assume full responsibility, at its discretion and its sole
      cost
      and expense, for prosecution or maintenance of the affected Patents in such
      country or countries in the Territory.

     

    8.5  Patent
      Term Extensions.
      Each
      Party shall have the right to request that the other Party file all applications
      and take all actions necessary to obtain patent extension pursuant to 35 U.S.C.
      § 156 or like foreign statutes for the respective Parties’ Patents in the
      Territory. If the filing Party declines to pursue such patent term extensions,
      then as permitted by law, the other Party shall have the right (at its cost
      and
      expense) on behalf of the filing Party to file, or direct the filing of, all
      such applications and take all such actions necessary to obtain such patent
      term
      extensions. Each Party agrees to sign such further documents and take such
      further actions as may be requested by the other Party in this
      regard.

     

    8.6  Third
      Party Infringement.

    
      

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        has been separately filed with the Securities and Exchange
        Commission.

       

    

    
      
        
        

      

      
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    8.6.1  Suits
      for Infringement.
      If
      Discovery or Chrysalis becomes aware of infringement of any Patent included
      in
      the Discovery Patents or the Chrysalis Patents by a Third Party in the
      Territory, such Party shall promptly notify the other Party in writing to that
      effect and provide a summary of the relevant facts and circumstances known
      to
      such Party relating to such infringement (“Infringement
      Notice”).
      Each
      Party shall have the right, at its sole discretion and expense, on its own
      behalf, to institute, prosecute, and control any action or proceeding to
      restrain infringement of any of its Patents. A Party instituting suit shall
      have
      control of such suit and all negotiations for its settlement or compromise;
      provided however, that the instituting Party shall not settle or compromise
      any
      such suit or enter into any consent order for the settlement or compromise
      thereof which would materially adversely affect the Intellectual Property rights
      with respect to a Licensed Product without the prior written consent of the
      other Party, which consent shall not be unreasonably withheld, conditioned,
      or
      delayed.

     

    8.6.2  Step-in
      Right.
      If,
      prior to the expiration of three (3) months from said Infringement Notice,
      the
      Party whose Patents are alleged to be infringed has not obtained a
      discontinuance of an alleged infringement by a Third Party or brought an
      infringement action or proceeding or otherwise taken appropriate action to
      abate
      such infringement, such Party shall notify the other Party at any time prior
      thereto of its intention not to bring suit against an alleged infringer. Upon
      such notice and if such infringement is reasonably likely to materially
      adversely affect a Licensed Product in the Territory, then, and in those events
      only, the other Party shall have the right, but not the obligation, at its
      sole
      expense to institute, prosecute, and control any action or proceeding to
      restrain such infringement. Each Party agrees to be joined as a party if
      necessary to prosecute the action or proceeding and shall provide all reasonable
      cooperation, including any necessary use of its name, required to prosecute
      such
      litigation. The other Party shall have control of any such suit and all
      negotiations for its settlement or compromise; provided, however, that the
      other
      Party shall not settle or compromise any such suit or enter into any consent
      order for the settlement or compromise thereof without the prior written consent
      of the patentee Party, which consent shall not be unreasonably withheld,
      conditioned, or delayed.

     

    8.6.3  Allocation
      of Recovery.
      All
      damages, settlements and rewards made or obtained in connection with any suit
      or
      other legal proceeding under this Section 8.6 shall be shared among the parties
      as follows:

     

    (i)      
      [***]  

    (ii)     
      [***]

     

    8.6.4  Declaratory
      Actions and Counterclaims.
      In the
      event that an action alleging invalidity or non-infringement of any of the
      Discovery Patents or Chrysalis Patents is brought against Discovery or Chrysalis
      in the Territory, the Party defending such action or counterclaim, at its sole
      discretion, shall have the right, within thirty (30) days after the commencement
      of such action, to take or regain control of the action at its own expense.
      If
      the defending Party determines not to exercise this right, the other Party
      may
      take over or remain as lead counsel for the action at that Party’s sole
      discretion. Any recovery obtained from such litigation, proceeding or settlement
      shall be shared in accordance with Section 8.6.3.

    

      

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        marked by [***]
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        omitted pursuant to a request for confidential treatment. The omitted portion
        has been separately filed with the Securities and Exchange
        Commission.

       

    

    
      
        
        

      

      
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    8.7  Infringement
      of Third Party Rights.

     

    8.7.1  Infringement
      Claims.
      With
      respect to any and all claims instituted by Third Parties for patent
      infringement involving the manufacture, use, offer for sale, or sale of a
      Licensed Product in the Territory during the Term, the Party named as defendant
      shall promptly notify the other Party of such claim, and the defending Party
      shall have the right, at its sole discretion and expense, to defend and control
      any action or proceeding with respect to such claim. The other Party agrees
      to
      be joined as a Party if necessary to defend the action or proceeding and shall
      provide reasonable cooperation, including any necessary use of its name,
      required to defend such litigation. The defending Party shall have sole control
      of any such suit and all negotiations for its settlement or compromise;
      provided, however, that the defending Party shall not settle or compromise
      any
      such suit or enter into any consent order for the settlement or compromise
      thereof without the prior written consent of the other Party if such settlement
      would materially adversely affect the other Party’s rights or impose any
      obligation on the other Party, which consent shall not be unreasonably withheld,
      conditioned, or delayed.

     

    8.7.2  Step-in
      Right.
      If,
      prior to the expiration of three (3) months from said claim being brought,
      or
      such sooner period as may be necessary to appropriately respond to said claim,
      the defending Party has not elected to defend such action or proceeding, or
      if
      the defending Party shall notify the other Party at any time prior thereto
      of
      its intention not to defend such action or proceeding, then, and in those events
      only, the other Party shall have the right, but not be obligated, at its own
      expense to defend and control any action or proceeding. Such other Party shall
      have sole control of any such suit and all negotiations for its settlement
      or
      compromise; provided, however, that the other Party shall not settle or
      compromise any such suit or enter into any consent order for the settlement
      or
      compromise thereof without the prior written consent of the original defending
      Party, which consent shall not be unreasonably withheld, conditioned, or
      delayed.

     

    8.7.3  Notice
      of Certification.
      Discovery and Chrysalis each shall immediately give notice to the other of
      any
      certification filed under the U.S. “Drug Price Competition and Patent Term
      Restoration Act of 1984” claiming that Discovery Patents or Chrysalis Patents
      are invalid or that any infringement will not arise from the manufacture, use,
      or sale of any Licensed Product by a Third Party. If a Party decides not to
      bring infringement proceedings against the entity making such a certification,
      that Party shall give notice to the other Party of its decision not to bring
      suit within twenty-one (21) days after receipt of notice of such certification.
      The other Party may then, but is not required to, bring suit against the party
      that filed the certification. Any suit by Discovery or Chrysalis shall either
      be
      in the name of Discovery or in the name of Chrysalis, or jointly in the name
      of
      Discovery and Chrysalis, as may be required by Law. For this purpose, the Party
      not bringing suit shall execute such legal papers necessary for the prosecution
      of such suit as may be reasonably requested by the Party bringing suit.

     

    
      
        
        

      

      
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    ARTICLE
      9

    CONFIDENTIAL
      INFORMATION

     

    9.1  Use
      of
      Confidential Information.
      A Party
      receiving Confidential Information (the “Receiving
      Party”)
      from
      the other Party (the “Disclosing
      Party”)
      shall
      keep all such Confidential Information with the same degree of care it maintains
      the confidentiality of its own confidential information, but in no event less
      than a reasonable degree of care. Neither Party shall use such Confidential
      Information for any purpose other than in performance of this Agreement, and
      shall not disclose the same to any Person other than to its Affiliates and
      such
      of its and their employees or agents who have a need to know such Confidential
      Information to implement the terms of this Agreement, and who are subject to
      a
      nondisclosure obligation comparable in scope to this Article 9. Each Party
      shall
      advise any employee or agent who receives such Confidential Information of
      the
      confidential nature thereof and of the obligations contained in this Agreement
      relating thereto, and such Party shall ensure that all such employees and agents
      comply with such obligations as if they had been a Party hereto. Upon
      termination of this Agreement, each Party shall use commercially reasonable
      efforts to return or destroy all documents, tapes or other media containing
      Confidential Information of the Disclosing Party that remains in such Party’s or
      its agents’ or employees’ possession, except that each Party may keep one (1)
      copy of the Confidential Information solely for archival purposes. Such archival
      copy shall be deemed to be the property of the Disclosing Party, and shall
      continue to be subject to the provisions of this Article 9. Notwithstanding
      anything to the contrary in this Agreement, Confidential Information shall
      not
      include any information or materials that the Receiving Party can demonstrate
      by
      documentary evidence: 

     

    (i)  were
      already known to the Receiving Party (other than under an obligation of
      confidentiality), at the time of disclosure by the Disclosing
      Party;

     

    (ii)  were
      generally available to the public or otherwise part of the public domain at
      the
      time of its disclosure to the Receiving Party;

     

    (iii)  became
      generally available to the public or otherwise part of the public domain after
      its disclosure or development, as the case may be, and other than through any
      act or omission of a Party in breach of such Party’s confidentiality obligations
      under this Agreement;

     

    (iv)  were
      disclosed to a Party, other than under an obligation of confidentiality, by
      a
      Third Party who had no obligation to the Disclosing Party not to disclose such
      information to others; or

     

    (v)  were
      independently discovered or developed by or on behalf of the Receiving Party
      without the use of the Confidential Information belonging to the other Party.
      

     

    9.2  Permitted
      Disclosure and Use.
      Notwithstanding anything to the contrary in this Agreement, in the event that
      the Receiving Party or any of its directors, officers, employees, agents and
      advisors and their representatives deems it necessary or are requested or
      required (by oral questions, deposition, interrogatories, requests for
      information or documents, subpoena, civil investigative demand or other legal
      process by a court or other governmental authority, or by any Regulatory
      Authority to obtain Regulatory Approval of a Licensed Product) to disclose
      all
      or any part of any Confidential Information, the Receiving Party will provide
      the Disclosing Party with prompt notice of such request or requirement (which
      notice shall be reasonably in advance of such requested or required disclosure),
      as well as notice of the terms and circumstances surrounding such request or
      requirement, so that the Disclosing Party may seek an appropriate protective
      order or waive compliance with the provisions of this Agreement. In such case,
      the Receiving Party shall consult with the Disclosing Party with respect to
      the
      advisability of pursuing any such order or other legal action or available
      steps
      to resist or narrow such request or requirement. If, failing the entry of a
      protective order or the receipt of a waiver hereunder, the Receiving Party
      is,
      in the opinion of counsel satisfactory to the Disclosing Party and its counsel,
      legally compelled to disclose any Confidential Information, the Receiving Party
      may disclose that portion of the Confidential Information which its counsel
      advises the Receiving Party that the Receiving Party is legally compelled to
      disclose. In any event, the Receiving Party will use reasonable efforts to
      obtain and will not oppose action by the Disclosing Party to obtain, an
      appropriate protective order or other reliable assurance that confidential
      treatment will be afforded the disclosure of such Confidential Information.
      The
      Receiving Party will use best efforts to cause its directors, officers,
      employees, affiliates, agents and advisors and their representatives to comply
      with the terms of this Section. A Receiving Party may disclose Confidential
      Information belonging to a Disclosing Party to the extent such disclosure is
      reasonably necessary to enforce the provisions of this Agreement. 

     

    
      
        
        

      

      
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    9.3  Disclosure
      for SEC Filings.
      Notwithstanding anything to the contrary in this Agreement, the Parties
      expressly acknowledge that Discovery may file a copy of this Agreement with
      the
      Securities and Exchange Commission (the “SEC”)
      in any
      of its SEC reports and filings, as well as incorporate them by reference into
      other SEC filings. Discovery shall request confidential treatment of sensitive
      terms hereof to the extent such confidential treatment is reasonably available
      to Discovery under the prevailing circumstances. Discovery shall coordinate
      in
      advance with Chrysalis with regard to the terms of this Agreement, for which
      Discovery shall seek to be redacted in any such SEC filings, and Discovery
      shall
      use reasonable efforts to seek confidential treatment for such mutually agreed
      terms and terms reasonably requested by Chrysalis; provided, however, that
      each
      Party shall retain ultimate control and responsibility for their respective
      disclosures to the SEC and the public generally. To the extent permitted by
      Law,
      Discovery shall use reasonable efforts to provide Chrysalis reasonable advance
      notice of any SEC filing related to this Agreement which differs materially
      from
      prior filings.

     

    9.4  Publications.
      Subject
      to any Third Party rights existing as of the Original Effective Date, each
      Party
      shall submit to the other Party for review and approval all proposed academic,
      scientific and medical publications and public presentations relating to a
      Licensed Product or any research or development activities conducted as part
      of
      the Agreement for review in connection with preservation of Patents, and trade
      secrets and/or to determine whether Confidential Information should be modified
      or deleted from the proposed publication or public presentation. Written copies
      of such proposed publications and presentations shall be submitted to the
      non-publishing Party no later than sixty (60) days before submission for
      publication or presentation and the non-publishing Party shall provide its
      comments with respect to such publications and presentations within ten (10)
      Business Days of its receipt of such written copy. The review period may be
      extended for an additional thirty (30) days if the non-publishing Party can
      demonstrate a reasonable need for such extension including the preparation
      and
      filing of patent applications. By written agreement, this period may be further
      extended. The Parties will each comply with standard academic practice regarding
      authorship of scientific publications and recognition of contribution of other
      Persons in any publications relating to a Licensed Product or any research
      or
      development activities under this Agreement. 

     

    
      
        
        

      

      
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    9.5  Public
      Announcements.
      Subject
      to Section 9.2 and Section 9.3, (i) neither Party will make any public
      announcement of any information regarding this Agreement, the Licensed Products
      or any research or development activities under this Agreement without the
      prior
      written approval of the other Party, and (ii) Discovery shall not make any
      public statements regarding its activities with Chrysalis (including without
      limitation any other division of Philip Morris USA Inc.), its relationship
      with
      Chrysalis (including without limitation any other division of Philip Morris
      USA
      Inc.) or any other public statements regarding Chrysalis (including without
      limitation any other division of Philip Morris USA Inc.) without the prior
      written approval of Chrysalis, provided however that each Party may disclose
      (a)
      the general stage of development, commercialization and manufacturing at any
      given time during the course of the Agreement, except to the extent that any
      such information constitutes Confidential Information, (b) any information
      required by Law, and (c) any other information that has been previously approved
      for disclosure by the other Party, without further approval from the other
      Party
      hereunder. The Parties agree and acknowledge that Discovery may, at its sole
      discretion, subject to its compliance with this Article 9, file a Current Report
      on Form 8-K with the SEC to announce the filing of the press release and file
      it
      as an exhibit thereto, as well as to incorporate it by reference into other
      SEC
      filings. Without
      limiting the generality of the foregoing and without any inference with respect
      to any other requirement of this Section 9.5, the Parties hereby acknowledge
      and
      agree that any breach of this Section 9.5 in the form of any public statement
      related to this Amended and Restated License Agreement or the Original Agreement
      (including without limitation, the performance or non-performance of any
      obligation by Chrysalis under the Amended and Restated License Agreement or
      Original Agreement and Chrysalis ceasing active involvement in the development
      of Licensed Products under the Amended and Restated License Agreement and the
      Original Agreement) that disparages Chrysalis (including without limitation
      any
      other division of Philip Morris USA Inc.) (x) by an officer or executive of
      Discovery or any other individual holding a senior level management position
      at
      Discovery, or (y) any other personnel or agent of Discovery, but, in the case
      of
      this Section 9.5(y), only if Discovery does not take immediate action to
      publicly repudiate such statement, in the case of both (x) and (y) shall
      constitute a material breach of a material provision of this
      Agreement.

     

    9.6  Survival.
      The
      obligations and prohibitions contained in this Article 9 shall survive the
      expiration or termination of this Agreement.

     

    ARTICLE
      10

    REPRESENTATIONS,
      WARRANTIES AND COVENANTS

     

    10.1  Mutual
      Representations and Warranties.
      Each
      Party hereby represents, warrants and covenants to the other Party that as
      of
      the Amended and Restated Effective Date:

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    10.1.1  Organization;
      Authority.
      It is
      duly organized, validly existing and in good standing under the laws of the
      jurisdiction of its incorporation, has full right, corporate power and authority
      to enter into this Agreement, to perform its obligations under this Agreement,
      to grant the licenses granted by such Party pursuant to this Agreement and
      to
      carry out the provisions hereof. 

     

    10.1.2  Consents.
      Except
      for any Regulatory Approvals necessary for the development, manufacture, or
      commercialization of a Licensed Product, all necessary consents, approvals,
      orders, permits and authorizations of all government authorities and Regulatory
      Authorities and other Persons or Third Parties required to be obtained by it
      as
      of the Amended and Restated Effective Date in connection with the execution,
      delivery, and performance of this Agreement have been obtained. 

     

    10.1.3  No
      Conflict.
      The
      execution and delivery of this Agreement by such Party, the performance of
      such
      Party’s obligations hereunder, and the rights, licenses and sublicenses to be
      granted by such Party pursuant to this Agreement, (i) do not conflict with,
      violate or constitute a breach or default under any requirement of Laws or
      regulations existing as of the Amended and Restated Effective Date and
      applicable to such Party or under any instrument, judgment, order, writ, decree,
      contract of such Party or any of its Affiliates existing as of the Amended
      and
      Restated Effective Date; (ii) do not give rise to any event that results in
      the
      creation of any lien, charge or encumbrance upon any assets of such Party or
      the
      suspension, revocation, impairment, forfeiture or non-renewal of any material
      permit, license, authorization or approval that applies to such Party, its
      business or operations or any of its assets or properties; or (iii) conflict
      with any rights granted by such Party to any Third Party or breach any
      obligation that such Party has to any Third Party. 

     

    10.1.4  Enforceability.
      This
      Agreement is a legal and valid obligation binding upon it and is enforceable
      against it in accordance with its terms, subject
      to and limited by: (i) applicable bankruptcy, insolvency, reorganization,
      moratorium, and other laws generally applicable to creditors’ rights; and (ii)
      judicial discretion in the availability of equitable relief.

     

    10.1.5  Regulatory.
      There
      are no investigations, inquiries, actions or other proceedings pending before
      or, to such Party’s knowledge, threatened, by any Regulatory Authority or other
      government agency with respect to any Licensed Products (or components thereof)
      or any facility where such Licensed Products (or components thereof) are
      manufactured, and such Party has not received written notice threatening any
      such investigation. 

     

    10.2  Intellectual
      Property.
      Discovery represents, warrants, and covenants to Chrysalis that as of the
      Amended and Restated Effective Date with respect to the Discovery Intellectual
      Property and, except with regard to Chrysalis’ intellectual property rights in
      the name “Aria,” Chrysalis represents, warrants, and covenants to Discovery that
      as of the Amended and Restated Effective Date with respect to the Chrysalis
      Intellectual Property:

     

    (i)  It
      (a)
      holds good title to and is the legal and beneficial owner of, or (b) is the
      licensee of, such Intellectual Property in the Territory free and clear of
      any
      lien, mortgage, security interest, license, right, pledge, restriction on
      transferability, defect of title or other claim, charge, or encumbrance of
      any
      nature whatsoever on or affecting any property or property interest and no
      Third
      Party has any right, title, or interest in or to such Intellectual Property
      in
      the Territory. 

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    (ii)  To
      its
      knowledge, the Patents included in such Intellectual Property are valid and
      enforceable in the Territory and there have been no, and such Party has no
      reason to believe that there will be any, inventorship challenges with respect
      to any of such Patents in the Territory.

     

    (iii)  There
      are
      no infringement proceedings, actions, suits or complaints pending against nor
      any outstanding injunctions, judgments, orders, decrees, rulings or other
      charges against such Party relating to such Intellectual Property in the
      Territory.

     

    (iv)  It
      has
      not received any form of notice from a third party of infringement of Third
      Party Patent rights that may affect the making, using or selling of Licensed
      Products in the Territory; and to its knowledge (a) the manufacture, development
      and commercialization of the Licensed Products in the Territory will not
      infringe the Patents of any Third Party in the Territory and (b) there are
      no
      Third Party patent applications in the Territory pending which, if issued,
      would
      materially adversely affect the ability to make, use or sell the Licensed
      Products in the Territory.

     

    (v)  It
      has
      not granted any third party any license, covenant not to sue, options, or other
      right with respect to such Intellectual Property in the Territory that would
      impact its ability to enforce such Intellectual Property in the Territory.
      There
      are no existing agreements, options, commitments, or rights with, of, or to
      any
      Person to acquire or obtain any rights with respect to the Intellectual Property
      in the Territory that are inconsistent with the rights granted
      herein.

     

    (vi)  Each
      agreement pursuant to which a Third Party has granted, assigned or otherwise
      transferred rights with respect to such Intellectual Property in the Territory
      are in full force and effect, and no Party to such agreements is in breach
      or
      default thereunder, and the execution and performance of this Agreement will
      not
      result in a breach or default thereunder. It has provided a true and complete
      copy of each such Third Party agreement to which it is a party to the other
      Party.

     

    10.3  No
      Adverse Effects.
      Discovery represents, warrants and covenants to Chrysalis that as of the Amended
      and Restated Effective Date, the studies of Pulmonary Surfactants conducted
      by
      Discovery prior to the Amended and Restated Effective Date have not shown any
      adverse effects or toxicity of the Pulmonary Surfactant in humans that could
      reasonably be anticipated to frustrate the purposes of this Agreement, and
      as of
      the Amended and Restated Effective Date, Discovery has not been informed of
      any
      such adverse effects or toxicity.

     

     

    ARTICLE
      11

    ADDITIONAL
      COVENANTS

     

    11.1  Compliance
      with Laws.
      Each
      Party
      shall perform its responsibilities in a good scientific manner in accordance
      with the terms of this Agreement and in compliance in all material respects
      with
      the requirements of Laws. 

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    11.2  Cooperation.
      The
      Parties agree that maintaining effective and open communication between the
      Parties on matters relating to the Agreement is important to the success of
      the
      Agreement. 

     

    11.3  Sharing
      of Information.
      Subject
      to applicable Law and privileges and obligations of confidentiality, the Parties
      agree to provide the other Party, upon such other Party’s reasonable request,
      copies or access to all data, documentation and work products, including
      Clinical Trials, relating to any Licensed Product.

     

    ARTICLE
      12

    DISCLAIMERS
      AND LIMITATION OF LIABILITY

     

    12.1  Disclaimer
      of Warranties.
      EXCEPT
      AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY
      REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE,
      CONCERNING THE DEVELOPMENT, COMMERCIALIZATION, MARKETING, OR SALE OF ANY PRODUCT
      INCLUDING THE SUCCESS OR POTENTIAL SUCCESS THEREOF. EXCEPT AS EXPRESSLY SET
      FORTH HEREIN, EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL REPRESENTATIONS,
      WARRANTIES AND AGREEMENTS OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING THE
      WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

     

    THE
      PARTIES UNDERSTAND THAT THE LICENSED PRODUCTS ARE THE SUBJECT OF ONGOING
      CLINICAL RESEARCH AND DEVELOPMENT AND THAT NEITHER PARTY CAN ASSURE THE SAFETY
      OR USEFULNESS OF LICENSED PRODUCTS. NEITHER PARTY MAKES ANY REPRESENTATION
      OR
      WARRANTY EXCEPT AS SET FORTH IN THIS ARTICLE 12 CONCERNING ITS PATENT RIGHTS
      OR
      KNOW-HOW, INCLUDING THE VALIDITY OR SCOPE OF ITS PATENT RIGHTS OR THAT THE
      MANUFACTURE, USE OR SALE OF ANY LICENSED PRODUCT WILL NOT INFRINGE THE PATENT
      RIGHTS OF THIRD PARTIES.

     

    12.2  Limitation
      of Liability.
      IN NO
      EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY OF ITS PERSONNEL
      FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE OR EXEMPLARY
      DAMAGES (INCLUDING, LOST PROFITS, BUSINESS, OR GOODWILL) SUFFERED OR INCURRED
      BY
      SUCH OTHER PARTY OR ITS AFFILIATES AND THEIR RESPECTIVE PERSONNEL IN CONNECTION
      WITH A BREACH OR ALLEGED BREACH OF THIS AGREEMENT EXCEPT WHERE ATTRIBUTABLE
      TO A
      WILLFUL OR INTENTIONAL BREACH OF THIS AGREEMENT. NOTHING IN THIS SECTION 12.2
      IS
      INTENDED TO, NOR SHALL, LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR
      OBLIGATIONS OF EITHER PARTY WITH RESPECT TO THIRD PARTY CLAIMS UNDER THIS
      ARTICLE 12, OR ANY REMEDIES OR DAMAGES AVAILABLE FOR BREACHES OF CONFIDENTIALITY
      OBLIGATIONS IN ARTICLE 9.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      13

    INDEMNIFICATION;
      INSURANCE

     

    13.1  Indemnification.
      

     

    13.1.1  Obligations
      of the Parties.
      Each of
      the Parties shall defend, indemnify and hold harmless the other Party, its
      Affiliates and its and their respective directors, officers, employees,
      consultants, contractors, representatives and agents (collectively, the
“Indemnified
      Parties”)
      from
      and against any and all losses, costs, damages, fees, liabilities, or expenses
      (including reasonable attorneys’ fees and expenses) (collectively, “Losses”)
      incurred in connection with any Third Party claim, action or proceeding (a
      “Third
      Party Claim”)
      arising out of or related to: 

     

    (i)  any
      material breach by the indemnifying Party of any of its representations,
      warranties, covenants or obligations pursuant to this Agreement;
      and

     

    (ii)  any
      negligence, recklessness, willful misconduct or wrongful intentional acts or
      omissions of the indemnifying Party, its Affiliates, or their officers,
      directors, employees, contractors, consultants, agents, representatives, or
      sublicensees in the exercise of any of the indemnifying Party’s rights or the
      performance of any of the indemnifying Party’s obligations under this Agreement.

     

    13.1.2  Additional
      Indemnification by Chrysalis.
      In
      addition to the indemnity set forth in Section 13.1.1 above, Chrysalis shall
      defend, indemnify and hold harmless Discovery, its Affiliates and its and their
      respective directors, officers, employees, consultants, contractors,
      representatives and agents from and against any and all Losses incurred in
      connection with any Third Party Claim that the Chrysalis Technology infringes
      or
      misappropriates such Third Party intellectual property in the Territory to
      the
      extent such Losses are directly attributable to actual infringement or
      misappropriation of such Third Party’s intellectual property by the Chrysalis
      Technology, except to the extent such infringement and misappropriation is
      attributable to further development, modifications or enhancements of the
      Chrysalis Technology by Discovery or due to the combination by Discovery
      (directly or indirectly) of the Chrysalis Technology with any other technology
      and provided that Discovery uses all reasonable efforts to minimize any such
      Losses. 

     

    13.1.3  Additional
      Indemnification by Discovery.
      In
      addition to the indemnity set forth in Section 13.1.1 above, Discovery shall
      defend, indemnify and hold harmless Chrysalis, its Affiliates and its and their
      respective directors, officers, employees, consultants, contractors,
      representatives and agents from and against any and all Losses incurred in
      connection with any Third Party Claim arising out of or related to any
      intellectual property infringement and trade secret misappropriation liability
      relating to the development, manufacture, or commercialization of any Licensed
      Product, except to the extent such Losses are due to matters for which Chrysalis
      is required to provide indemnification pursuant to Section 13.1.2.

     

    13.1.4  Certain
      Product Liability Claims.
      Notwithstanding Sections 13.1.1, 13.1.2, and 13.1.3, Discovery shall defend,
      indemnify and hold harmless Chrysalis, its Affiliates and its and their
      respective directors, officers, employees, consultants, contractors,
      representatives and agents from and against any and all Losses incurred in
      connection with any Third Party Claims arising out of or relating to the
      commercialization, marketing, sale, use, handling, manufacture and/or storage
      of
      any Licensed Product, including any claims that involve death or bodily injury
      (or allegations thereof) to any individual.

     

    
      
        
        

      

      
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    13.1.5  Complete
      Indemnification.
      As the
      Parties intend complete indemnification, all direct out of pocket costs and
      expenses reasonably incurred by an Indemnitee in connection with enforcement
      of
      Section 13.1 shall also be reimbursed by the Indemnitor.

     

    13.2  Indemnification
      Procedures.
      

     

    13.2.1  Notification.
      In the
      case of a Third Party Claim as to which a Party may be obligated to provide
      indemnification pursuant to this Agreement (the “Indemnitor”),
      such
      Indemnified Party seeking indemnification hereunder (“Indemnitee”)
      will
      notify the Indemnitor in writing of the Third Party Claim (and specifying in
      reasonable detail the factual basis for the Third Party Claim and to the extent
      known, the amount of the Third Party Claim) reasonably promptly after becoming
      aware of such Third Party Claim; provided, however, that failure to give such
      notification will not affect the indemnification provided hereunder except
      to
      the extent the Indemnitor shall have been actually prejudiced as a result of
      such failure.

     

    13.2.2  Assumption
      of Defense.
      If a
      Third Party Claim is made against an Indemnitee, the Indemnitor will be
      entitled, within one hundred twenty (120) days after receipt of written notice
      from the Indemnitee of the commencement or assertion of any such Third Party
      Claim, to assume the defense thereof (at the expense of the Indemnitor) with
      counsel selected by the Indemnitor and reasonably satisfactory to the
      Indemnitee, for so long as the Indemnitor is conducting a good faith and
      diligent defense. Should the Indemnitor so elect to assume the defense of a
      Third Party Claim, the Indemnitor will not be liable to the Indemnitee for
      any
      legal or other expenses subsequently incurred by the Indemnitee in connection
      with the defense thereof; provided, however, that if in the opinion of counsel,
      such counsel and opinion being satisfactory to Indemnitor and its counsel,
      a
      conflict of interest exists between the Indemnitor and an Indemnitee in respect
      of such claim, such Indemnitee shall have the right to employ separate counsel
      (which shall be reasonably satisfactory to the Indemnitor) to represent such
      Indemnitee with respect to the matters as to which a conflict of interest exists
      and in that event, the reasonable fees and expenses of such separate counsel
      shall be paid by such Indemnitor; provided further, that the Indemnitor shall
      only be responsible for the reasonable fees and expenses of one (1) separate
      counsel for such Indemnitee. If the Indemnitor assumes the defense of any Third
      Party Claim, the Indemnitee shall have the right to participate in the defense
      thereof and to employ counsel, at its own expense, separate from the counsel
      employed by the Indemnitor. If the Indemnitor assumes the defense of any Third
      Party Claim, the Indemnitor will promptly supply to the Indemnitee copies of
      all
      correspondence and documents relating to or in connection with such Third Party
      Claim and keep the Indemnitee informed of developments relating to or in
      connection with such Third Party Claim, as may be reasonably requested by the
      Indemnitee (including providing to the Indemnitee on reasonable request updates
      and summaries as to the status thereof). If the Indemnitor chooses to defend
      a
      Third Party Claim, all Indemnitees shall reasonably cooperate with the
      Indemnitor in the defense thereof (such cooperation to be at the expense,
      including reasonable legal fees and expenses, of the Indemnitor). If the
      Indemnitor does not elect to assume control of the defense of any Third Party
      Claim, within the one hundred twenty (120) day period set forth above, or if
      such good faith and diligent defense is not being or ceases to be conducted
      by
      the Indemnitor, the Indemnitee shall have the right, at the expense of the
      Indemnitor, after three (3) Business Days notice to the Indemnitor of its intent
      to do so, to undertake the defense of the Third Party Claim for the account
      of
      the Indemnitor (with counsel selected by the Indemnitee), and to compromise
      or
      settle such Third Party Claim, exercising reasonable business
      judgment.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    13.2.3  Settlements.
      The
      Indemnitee may agree to any settlement, compromise, or discharge of such Third
      Party Claim that the Indemnitor may recommend that by its terms obligates the
      Indemnitor to pay the full amount of Losses (whether through settlement or
      otherwise) in connection with such Third Party Claim and unconditionally and
      irrevocably releases the Indemnitee completely from all liability in connection
      with such Third Party Claim; provided, however, that, without the Indemnitee’s
      prior written consent, the Indemnitor shall not consent to any settlement,
      compromise, or discharge (including the consent to entry of any judgment),
      and
      the Indemnitee may refuse in good faith to agree to any such settlement,
      compromise, or discharge, that provides for injunctive or other nonmonetary
      relief affecting the Indemnitee. The Indemnitee shall not (unless required
      by
      Law) admit any liability with respect to, or settle, compromise, or discharge,
      such Third Party Claim without the Indemnitor’s prior written consent (which
      consent shall not be unreasonably withheld, conditioned, or delayed).

     

    13.3  Insurance.
      Discovery agrees to obtain and maintain commercial general liability insurance
      and/or self-insurance, including prior to the date a Licensed Product is first
      administered in humans, commercial general liability insurance and/or
      self-insurance for Clinical Trials and products liability, with reputable and
      financially secure insurance carriers, in such amounts and subject to such
      deductibles as are reasonable and customary in the pharmaceutical industry
      for
      companies of comparable size and activities. Discovery shall maintain such
      insurance for so long as Licensed Products in the Territory continue to be
      developed, manufactured, or commercialized and thereafter for so long as is
      necessary to cover any and all Third Party Claims required to be indemnified
      by
      Discovery which Third Party Claims may arise from the development, manufacture,
      and/or commercialization of a Licensed Product in the Territory. Upon reasonable
      request by Chrysalis, Discovery shall produce evidence that such insurance
      policies are valid, kept up to date, and in full force and effect. The insurance
      obligations set forth in this Section 13.3 may be satisfied by commercially
      reasonable self-insurance or a commercially reasonable combination of insurance
      and self-insurance. 

     

    ARTICLE
      14

    TERM

     

    This
      Agreement shall become effective on the Amended and Restated Effective Date,
      and
      unless terminated earlier in accordance with the provisions of Article 15
      shall expire as follows as to each Licensed Product in each country in the
      Territory, on a country-by-country basis, upon the latest of: (a) the
      10th
      anniversary of the date of the First Commercial Sale of the Licensed Product;
      (b) the date on which the sale of such Licensed Product ceases to be covered
      by
      a Valid Claim in such country, or (c) in consideration of the performance by
      Chrysalis of development services
      without charge, the date a generic form of the product is introduced in such
      country (the “Term”). 

     

    
      
        
        

      

      
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    ARTICLE
      15

    TERMINATION

     

    15.1  Termination
      by Discovery On or Before [***]. 
      At any
      time on or before [***]
      from
      the
      Amended and Restated Effective Date, Discovery may terminate this Agreement
      in
      its entirety upon written notice to Chrysalis, provided that Discovery pays
      Chrysalis [***].
      Upon
      Chrysalis’ receipt of such notice and such payment, this Agreement shall
      terminate.

     

    15.2  Termination
      by Discovery After [***].
      After
[***]
      from the
      Amended and Restated Effective Date, Discovery may terminate this Agreement
      for
      any reason, in its entirety, [***],
      upon
[***]
      days
      written notice to Chrysalis.  

     

    15.3  Termination
      Due to Failure to Meet Minimum Royalties.
      Chrysalis may terminate this Agreement upon [***]
      days’
      prior written notice to Discovery, if commencing [***]
      and
      continuing [***],
      Discovery does not pay Chrysalis each Contract Quarter the Minimum Royalties
      due
      pursuant to Section 7.3, and Discovery does not cure such shortfall as provided
      for in Section 7.3; provided, however, that Chrysalis shall not have a right
      to
      terminate the Agreement pursuant to this Section 15.3 for any time period in
      which Discovery is disputing in good faith amounts due under this Agreement.
      

     

    15.4  Termination
      for Material Breach.
      

     

    15.4.1  Right
      to Terminate Agreement.
      If a
      Party (the “Breaching
      Party”)
      commits a material breach of this Agreement and fails to cure such breach within
      the applicable Cure Period (as provided in 15.4.2 below), the other Party (the
      “Non-Breaching
      Party”)
      may, by
      written notice of termination within thirty (30) days after the expiration
      of
      the applicable Cure Period, elect to terminate the Agreement. Without limiting
      the generality of the foregoing, and notwithstanding the Cure Period set forth
      in Section 15.4.2, the practice by Discovery of the Chrysalis Technology outside
      the scope of the licenses and sublicenses granted herein, which practice does
      not cease within thirty (30) days after the receipt of written notice of such
      breach from Chrysalis, shall constitute a material breach. 

     

    15.4.2  Applicable
      Cure Periods.
      Upon
      receipt of written notice of a material breach pursuant to Section 15.4.1,
      and
      except as otherwise provided for in Section 15.4.1, the allegedly Breaching
      Party shall have sixty (60) days to cure such material breach (the “Cure
      Period”),
      provided, however, that in
      the case of any material breach that cannot be reasonably cured within the
      sixty
      (60) day cure period, should the Breaching Party deliver to the Non-Breaching
      Party a plan for curing such material
      breach
      which is reasonably sufficient to effect a cure and uses commercially reasonable
      efforts to pursue such plan and effect a cure, the Cure Period shall be extended
      for an additional sixty (60) days.

     

    
      

          Information
        marked by [***]
        has been
        omitted pursuant to a request for confidential treatment. The omitted portion
        has been separately filed with the Securities and Exchange
        Commission.

       

    

    
      
        
        

      

      
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    15.5  Termination
      Due to Certain Events.
      Without
      prejudice to any other remedies available to it at Law or in equity, either
      Party may, subject to the provisions set forth herein, terminate this Agreement
      immediately upon written notice to the other Party if, at any time, the other
      Party shall (i) file in any court pursuant to any statute a petition for
      bankruptcy or insolvency, or for reorganization
      in
      bankruptcy, or for an arrangement or for the appointment of a receiver, trustee
      or administrator of such Party or of its assets, (ii) be served with an
      involuntary petition against it, filed in any insolvency proceeding, and such
      petition shall not be dismissed within sixty (60) days after the filing thereof,
      (iii) propose or be a party to any dissolution, (iv) make an assignment for
      the
      benefit of its creditors; or (v) ceases to do business in the ordinary course.
      

     

    15.6  Effects
      of Termination Generally.

     

    15.6.1  Accrued
      Obligations; Survival.
      Upon
      expiration or termination of this Agreement, all
      of the Parties’ rights and obligations under this Agreement including the
      exclusive license in Section 3.1, shall terminate immediately except: (a)
any
      rights that shall have accrued to the benefit of any Party prior to such
      termination or expiration, including the right of Chrysalis to receive royalties
      as provided in Article 7; and (b) any rights and obligations of the Parties
      which are expressly indicated to survive termination or expiration of this
      Agreement. All
      of the Parties’ rights and obligations under, and the provisions contained in
[***]
      shall
      survive termination or expiration of this Agreement. [***] 

     

    15.6.2  Outstanding
      Payments.
      All
      payments of amounts owing to either Party under this Agreement as of its
      expiration or termination shall be due and payable within the later of (i)
      to
      the extent such amounts can be calculated and a fixed sum determined at the
      time
      of expiration or termination of this Agreement, sixty (60) days after the date
      of such expiration or termination, and (ii) ten (10) days after the date in
      which such amounts can be calculated and a fixed sum determined. 

     

     

    ARTICLE
      16

    STANDSTILL
      AGREEMENT

     

    16.1  General
      Standstill.
      Except
      as set forth in this Section 16.1, Chrysalis hereby agrees that, without the
      written consent of Discovery, during the Term and for a [***]  period
      beginning on the date of termination of this Agreement for any reason, neither
      Chrysalis nor any of its Affiliates will (nor assist or encourage others to),
      directly or indirectly, without the written consent of Discovery: (i) acquire,
      or agree to acquire, directly or indirectly, alone or in concert with others,
      by
      purchase, gift, or otherwise, any direct or indirect beneficial ownership
      (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934,
      as
      amended (the “Exchange
      Act”),
      or
      interest in any securities or direct or indirect rights, warrants, or options
      to
      acquire, or securities convertible into or exchangeable for, any securities
      of
      Discovery; (ii) directly or indirectly effect or seek, initiate, offer, or
      propose or participate in any (A) tender or exchange offer, merger,
      consolidation, or other business combination involving Discovery, or (B) any
      recapitalization, restructuring, liquidation, dissolution, sale of all or
      substantially all the assets, or other extraordinary transaction with respect
      to
      Discovery; (iii) make, or in any way participate in, directly or indirectly,
      alone or in concert with others, any “solicitation” of “proxies” to vote (as
      such terms are used in the proxy rules of the SEC promulgated pursuant to
      Section 14 of the Exchange Act); (iv) form or become a member of a “group” (as
      defined under the Exchange Act) with respect to any voting securities of
      Discovery (including by depositing any securities of Discovery in a voting
      trust
      or by subjecting any securities of Discovery to any other arrangement or
      agreement with respect to the voting of such securities); or (v) enter into
      any
      agreements, discussions, or arrangements with any Third Party with respect
      to
      any of the foregoing. 

     

    
      

          Information
        marked by [***]
        has been
        omitted pursuant to a request for confidential treatment. The omitted portion
        has been separately filed with the Securities and Exchange
        Commission.

       

    

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    16.2  Certain
      Exceptions.
      Nothing
      in this Article 16 shall prohibit Chrysalis’ or its Affiliates’ employees from
      purchasing securities of Discovery pursuant to (i) a pension plan established
      for the benefit of Chrysalis’ or its Affiliates’ employees, (ii) any employee
      benefit plan of Chrysalis or its Affiliates, (iii) any stock portfolios not
      controlled by Chrysalis or any of its Affiliates that invest in Discovery among
      other companies, or (iv) de
      minimis
      passive
      investments not to exceed five percent (5%) of Discovery’s outstanding voting
      securities. 

     

    16.3  Exception
      for an Acquisition Transaction.
      This
      Article 16 shall terminate (subject to revival as provided below) and Chrysalis
      and its Affiliates shall have the right to acquire any securities of Discovery
      without regard to the limitations set forth in this Article 16 in the event
      that
      Discovery publicly announces a transaction, an intention or desire to effect
      any
      transaction, or the receipt of any offer, which would result in (a) the sale
      of
      all or substantially all of the assets of Discovery within the meaning of
      Section 271 of the Delaware General Corporation Law, or (b) Discovery common
      shareholders immediately prior to such transaction owning less than fifty
      percent (50%) of the outstanding common stock of the acquiring entity or, in
      the
      case of a merger transaction, the surviving corporation (an “Acquisition
      Transaction”).
      If
      the proposed Acquisition Transaction has not been consummated within six (6)
      months following Discovery’s public announcement in respect thereof, the
      provisions of this Article 16 shall be revived and have full force and effect
      until such time as Discovery makes a subsequent public announcement regarding
      an
      Acquisition Transaction, at which time the provisions of this Article 16 shall
      once again apply.

     

    ARTICLE
      17

    DISPUTE
      RESOLUTION

     

    17.1  Dispute
      Resolution.
      Except
      as expressly otherwise provided in this Agreement, any material dispute,
      difference, claim, action, demand, request, investigation, controversy, threat
      or other question arising out of or relating to the interpretation of any
      provisions of this Agreement or the failure of any Party to perform or comply
      with any obligations or conditions applicable to such Party pursuant to this
      Agreement (a “Dispute”)
      shall
      be settled in accordance with the provisions of this Article 17. If a Party
      intends to initiate executive negotiation, mediation or arbitration (as set
      forth below) to resolve a Dispute, such Party shall provide written notice
      to
      the other Party informing such other Party of such intention and the issues
      to
      be resolved. 

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    17.2  Executive
      Negotiation.
      Promptly upon a Party’s receipt of a notice by the other Party as provided in
      Section 17.1 with respect to a Dispute, and in any event within thirty (30)
      days
      of such receipt, the senior executives of each Party shall meet for attempted
      resolution of such Dispute by good faith negotiations. 

     

    17.3  Mediation.
      If the
      senior executives referenced in Section 17.2 are unable to resolve any such
      Dispute within ten (10) Business Days, either Party may, upon written notice
      to
      the other Party, refer such Dispute to mediation. Upon such written notice,
      the
      Parties shall mutually agree on a mediator to assist in the negotiations. If
      the
      Parties fail to mutually agree on a mediator within one week of the written
      notice, a mediator shall be appointed by the AAA. The Party responsible for
      referring the Dispute to mediation shall bear the costs of such mediation.
      Any
      settlement reached by mediation shall be resolved in writing, signed by the
      Parties, and shall be binding on them. 

     

    17.4  Arbitration.
      

     

    17.4.1  Referral
      to Arbitration.
      In the
      event that a Dispute is not resolved during mediation within thirty (30) days
      of
      the selection of a mediator, either Party may refer such Dispute to final and
      binding arbitration by sending written notice of such election to the other
      Party clearly marked “Arbitration Demand,” whereupon such Dispute shall be
      arbitrated in accordance with this Section 17.4. 

     

    17.4.2  Rules
      and Procedures.
      Except
      as expressly otherwise provided in this Agreement, any Dispute shall be finally
      settled by arbitration under the then-current expedited procedures applicable
      to
      the then-current Commercial Arbitration Rules of the AAA in accordance with
      the
      terms set forth in this Section 17.4. The arbitration of any Dispute shall
      be
      kept confidential and shall be filed with the office of the AAA located in
      Washington, D.C. or such other AAA office as the Parties may agree. Such
      arbitration shall be conducted by three arbitrators, one appointed by each
      of
      Chrysalis and Discovery and the third selected by the first two appointed
      arbitrators. Each arbitrator shall be a person with relevant experience in
      the
      pharmaceutical industry. Chrysalis and Discovery must make their respective
      arbitrator appointments within ten (10) Business Days of notice being given
      to a
      Party by the other Party of its intention to resolve such Dispute through
      arbitration. Such appointed arbitrators shall select the third arbitrator within
      ten (10) Business Days of the last to occur of their respective appointments.
      Chrysalis and Discovery shall instruct such arbitrators to render a
      determination of any such Dispute within sixty (60) days after the appointment
      of the third arbitrator. All
      Disputes shall be resolved by submission of documents unless the arbitration
      panel determines that an oral hearing is necessary.

     

    17.4.3  Awards.
      The
      decision of the arbitrators with respect to any Dispute shall be in writing
      and
      state the findings, facts and conclusions of law upon which the decision is
      based. Any such decision and award rendered by the arbitrators shall be final
      and binding upon the Parties. Judgment upon any award rendered may be entered
      in
      any court having jurisdiction, or application may be made to such court for
      a
      judicial acceptance of the award and an order of enforcement, as the case may
      be. Each Party submits itself to the jurisdiction of any such court for the
      entry and enforcement to judgment with respect to the decision of the
      arbitrators hereunder. The arbitrators shall have the power to grant all legal
      and equitable remedies except specific performance and award compensatory
      damages provided by applicable law, but shall not have the power or authority
      to
      award punitive damages. No Party shall seek punitive damages or specific
      performance in relation to any matter under, arising out of, or in connection
      with or relating to this Agreement in any other forum, provided however, that
      the foregoing does not preclude suits or limit damages associated with
      infringement.

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    17.4.4  Costs.
      Each
      Party shall pay its own expenses of arbitration, and the expenses of the
      arbitrators shall be equally shared between Chrysalis and Discovery unless
      the
      arbitrators assess as part of their award all or any part of the arbitration
      expenses of a Party or Parties (including reasonable attorneys’ fees) against
      the other Party or Parties, as the case may be.

     

    17.4.5  No
      Other Forum.
      Except
      as provided in Section 17.5, the provisions of this Section 17.4 shall be a
      complete defense to any suit, action or proceeding instituted in any federal,
      state or local court or before any administrative tribunal with respect to
      any
      Dispute arising under this Agreement. Any Party commencing a lawsuit in
      violation of this Section 17.4 shall pay the costs of the other Party,
      including, without limitation, reasonable attorney’s fees and defense
      costs.

     

    17.5  Right
      to Injunctive and Other Relief.
      Nothing in this Agreement, shall prohibit
      either Party from seeking injunctive relief from a court of competent
      jurisdiction in the event of a breach or prospective breach of this Agreement
      by
      the other Party which would cause irreparable harm to the first Party. Nothing
      in this Agreement shall prevent a Party from seeking any remedies available
      at
      law or in equity in any court of competent jurisdiction in the event of the
      practice of such Party’s Intellectual Property outside the scope of the rights
      granted herein. 

     

    ARTICLE
      18

    MISCELLANEOUS

     

    18.1  Original
      Agreement.
      The
      rights and obligations of the Parties prior to the Amended and Restated
      Effective Date are governed by the Original Agreement. As of the Amended and
      Restated Effective Date, the Original Agreement is terminated and the rights
      and
      obligations of the Parties are as set forth herein. 

     

    18.2  Choice
      of Law.
      This
      Agreement shall be governed by and interpreted under, and any action or
      proceeding shall apply, the Laws of the State of New York excluding (i) its
      conflicts of Laws principles, other than Section 5-1401 of the New York General
      Obligations Law (ii), the United Nations Conventions on Contracts for the
      International Sale of Goods and (iii) the 1974 Convention on the Limitation
      Period in the International Sale of Goods and any Protocols thereto, done at
      Vienna, April 11, 1980.

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    18.3  Severability.
      If,
      under Law, any provision of this Agreement is invalid or unenforceable, or
      otherwise directly or indirectly affects the validity of any other material
      provision(s) of this Agreement, this Agreement shall endure except for such
      provision. The Parties shall consult one another and use their best efforts
      to
      agree upon a valid and enforceable provision that is a reasonable substitute
      for
      such invalid or unenforceable provision in view of the intent of this
      Agreement.

     

    18.4  Relationship
      of the Parties.
      Each
      Party shall bear its own fees, expenses, and disbursements, including the fees
      and expenses of their respective counsel, accountants, bankers, and other
      experts, in connection with the subject matter of this Agreement and costs
      incurred in the performance of its obligations hereunder without charge or
      expense to the other except as expressly provided in this Agreement. Neither
      Party shall have any responsibility for the hiring, termination or compensation
      of the other Party’s employees or for any employee benefits of such employee. No
      employee or representative of a Party shall have any authority to bind or
      obligate the other Party to this Agreement for any sum or in any manner
      whatsoever, or to create or impose any contractual or other liability on the
      other Party without said Party’s approval. For all purposes, and notwithstanding
      any other provision of this Agreement to the contrary, the Parties’ legal
      relationship under this Agreement shall be that of independent contractors.
      This
      Agreement is not a partnership agreement and nothing in this Agreement shall
      be
      construed to establish a partnership, joint venture,
      agency, or employer-employee relationship between
      the Parties.

     

    18.5  Parties
      in Interest.
      This
      Agreement shall be binding upon and inure to the benefit of and be enforceable
      by the respective legal representatives, successors, and permitted assigns
      of
      the Parties hereto. Nothing in this Agreement, express or implied, is intended
      to confer on any Person other than the Parties hereto, or their respective
      successors and assigns, any rights, remedies, obligations, or liabilities under
      or by reason of this Agreement.

     

    18.6  Enforcement
      of Certain Agreements.
      Each
      Party shall use commercially reasonable efforts at its expense to enforce the
      provisions of any confidentiality agreements and agreements with respect to
      noncompetition existing as of the Original Effective Date and the Amended and
      Restated Effective Date with any of its present or former employees, agents,
      consultants or independent contractors of Discovery that relate to any Licensed
      Product; provided, however, that the obligation with respect to any agreement
      related to this Section 18.6 shall terminate as of the date on which such
      agreement and the obligations regarding noncompetition have terminated or
      expired in accordance with its terms. 

     

    18.7  Use
      of
      Affiliates, Subcontractors, Sublicensees and Distributors.
      Each
      Party shall have the right to use Affiliates, subcontractors, sublicensees
      and
      distributors in exercising its rights and carrying out its obligations under
      this Agreement, provided, however, that (i) such entities agree in writing
      to be
      bound by the provisions of Article 9, (ii) the use of such entities does not
      in
      any way materially diminish the other Party’s rights or otherwise modify the
      other Party’s rights or obligations hereunder without such other Party’s prior
      written consent, (iii) Discovery may not delegate, sublicense, assign, or
      otherwise transfer any of its rights or obligations hereunder to any entity
      (including any Affiliate) that competes with any tobacco product of Chrysalis
      or
      its Affiliates without Chrysalis’ prior written consent, (iv) Chrysalis may not
      delegate, assign or otherwise transfer any of its rights or obligations
      hereunder to a company engaged in pulmonary critical care medicine, without
      Discovery’s prior written consent and (v) except with respect to rights,
      benefits and obligations assigned as permitted pursuant to Section 18.8, each
      Party shall be liable for any actions or omissions of its Affiliates,
      subcontractors, sublicensees and distributors in connection with this Agreement
      and the Intellectual Property and Confidential Information of the other Party
      to
      the same extent as if such actions or omissions were conducted by the Party
      itself. 

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    18.8  Assignment.
      Chrysalis may assign or otherwise transfer this Agreement or any or all right,
      benefit or obligation hereunder (whether by operation of Law or otherwise)
      to
      any Affiliate of Chrysalis without the prior written consent of Discovery
      subject only to the limitations set forth in Section 18.7 (iv) above. Discovery
      may assign or otherwise transfer this Agreement or any or all right, benefit
      or
      obligation hereunder (whether by operation of Law or otherwise) to any Affiliate
      of Discovery without the prior written consent of Chrysalis, subject only to
      the
      limitations set forth in Section 18.7 (iii) above, provided, however,
      notwithstanding such an assignment, Discovery shall remain responsible for
      the
      performance of the indemnification obligations set forth herein. No Party may
      assign or otherwise transfer this Agreement or any or all right, benefit or
      obligation hereunder (whether by operation of Law or otherwise) to any other
      Person other than an Affiliate without the prior written consent of the other
      Party, which consent shall not be unreasonably withheld, conditioned, or
      delayed; except that, subject to the limitations set forth in Section 18.7
      (iii)
      and (iv) above, either Party may assign or otherwise transfer any or all of
      its
      rights and interests hereunder in connection with the sale of all or
      substantially all of its assets or business to which this Agreement relates,
      whether by way of merger, sale of stock, sale of assets or other similar
      transaction, provided that the assignee or transferee expressly agrees to assume
      all of the obligations hereunder.

     

    18.9  Further
      Assurances and Actions.
      From
      time to time after the Original Effective Date, Discovery and Chrysalis shall
      execute, acknowledge and deliver to each other any further documents,
      assurances, and other matters, and will take any other action consistent with
      the terms and conditions of this Agreement, that may reasonably be requested
      by
      a Party and necessary or desirable to carry out the purpose and intent of this
      Agreement. Chrysalis and Discovery shall cooperate and use all reasonable
      efforts to make all other registrations, filings, and applications, to give
      all
      notices, and to obtain as soon as practicable all governmental or other
      consents, transfers, approvals, orders, qualifications, authorizations, permits,
      and waivers, if any, and to do all other things necessary or desirable for
      the
      consummation of this Agreement. 

     

    18.10  Waiver.
      Any
      term or condition of this Agreement may be waived at any time by the Party
      that
      is entitled to the benefit thereof, but no such waiver shall be effective unless
      set forth in a written instrument duly executed by or on behalf of the Party
      waiving such term or condition. No waiver by any Party of any term or condition
      of this Agreement, in any one or more instances, shall be deemed to be or
      construed as a waiver of the same or any other term or condition of this
      Agreement on any future occasion. Except as expressly set forth in this
      Agreement, all rights and remedies available to a Party, whether under this
      Agreement or afforded by Law or otherwise, will be cumulative and not in the
      alternative to any other rights or remedies that may be available to such
      Party.

     

    18.11  Section
      365(n) of the Bankruptcy Code.
      All
      rights and licenses granted under or pursuant to any section of this Agreement
      are, and shall otherwise be deemed to be, for purposes of Section 365(n) of
      the
      Bankruptcy Reform Act of 1978, 11 U.S.C. §§ 101 et
      seq.,
      as
      amended (the “Bankruptcy
      Code”),
      licenses of rights to “intellectual property” as defined under
      Section 101(35A) of the Bankruptcy Code. The Parties shall retain and may
      fully exercise all of their respective rights and elections under Section 365(n)
      of the Bankruptcy Code. 

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    18.12  Notices.
      All
      notices that are required or permitted hereunder shall be in writing and shall
      be sufficient if personally delivered or sent by mail or Federal Express or
      other delivery service. Any notices shall be deemed given upon the earlier
      of
      the date when received at, or the third day after the date when sent by
      registered or certified mail or the day after the date when sent by Federal
      Express to, the address set forth below, unless such address is changed by
      notice to the other Parties hereto:

     

    If
      to
      Chrysalis:

     

    Chrysalis
      Technologies

    615
      Maury
      Street

    Richmond,
      VA 23224

    Attention:
      Timothy Beane

     

    If
      to
      Discovery:

     

    Discovery
      Laboratories, Inc.

    2600
      Kelly Road, Suite 100

    Warrington,
      PA 18976

    Attention
      : David L. Lopez, Esq., CPA

    

    with
      a
      copy to:

     

    Dickstein
      Shapiro LLP

    1177
      Avenue of the Americas

    New
      York,
      NY 10036

    Attention:
      Ira L. Kotel, Esq.

     

    18.13  Construction.
      Unless
      the context of this Agreement clearly requires otherwise, (i) references to
      any
      gender include all genders, (ii) “or” has the inclusive meaning frequently
      identified with the phrase “and/or,” (iii) “including” has the inclusive meaning
      frequently identified with the phrase “including but not limited to” or
“including without limitation”, and (iv) references to “hereunder” or “herein”
relate to this Agreement and (v) all terms defined in the singular shall have
      the same meaning in the plural and vice versa. The section and other headings
      contained in this Agreement are for reference purposes only and shall not
      control or affect the construction of this Agreement or the interpretation
      thereof in any respect. Section, subsection, Schedule and Exhibit references
      are
      to this Agreement unless otherwise specified. Each accounting term used herein
      that is not specifically defined herein shall have the meaning given to it
      under
      GAAP.

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    18.14  Registration
      and Filing of this Agreement.
      To the
      extent, if any, that either Party concludes in good faith that it or the other
      Party is required to file or register this Agreement or a notification thereof
      with any Regulatory Authority, including the SEC or the U.S. Federal Trade
      Commission, in accordance with Law, such Party shall inform the other Party
      thereof. Should both Parties jointly agree that either of them is required
      to
      submit or obtain any such filing, registration or notification, they shall
      cooperate, each at its own expense, in such filing, registration or notification
      and shall execute all documents reasonably required in connection therewith.
      In
      such filing, registration or notification, the Parties shall request
      confidential treatment of sensitive provisions of this Agreement, to the extent
      permitted by Law. The Parties shall promptly inform each other as to the
      activities or inquiries of any such Regulatory Authority relating to this
      Agreement, and shall reasonably cooperate to respond to any request for further
      information therefrom on a timely basis. 

     

    18.15  Force
      Majeure.
      No
      Party shall be held liable or responsible to the other Party nor be deemed
      to be
      in default under, or in breach of any provision of, this Agreement for failure
      or delay in fulfilling or performing any obligation of this Agreement when
      such
      failure or delay is due to Force Majeure, and without the fault or negligence
      of
      the Party so failing or delaying. For purposes of this Agreement, Force Majeure
      is defined as causes beyond the control of the Party, including, without
      limitation, acts of God; acts, regulations, or laws of any government; war;
      civil commotion; destruction of production facilities or materials by fire,
      flood, earthquake, explosion or storm; labor disturbances; epidemic; and failure
      of public utilities or common carriers. In such event Discovery or Chrysalis,
      as
      the case may be, shall immediately notify the other Party of such inability
      and
      of the period for which such inability is expected to continue. The Party giving
      such notice shall thereupon be excused from such of its obligations under this
      Agreement as it is thereby disabled from performing for so long as it is so
      disabled and the thirty (30) days thereafter. To the extent possible, each
      Party
      shall use reasonable efforts to minimize the duration of any Force Majeure.
      

     

    18.16  Entire
      Agreement.
      This
      Agreement constitutes the entire agreement between the Parties with respect
      to
      the subject matter and supersedes all previous agreements and understandings
      between the Parties, whether written or oral. This Agreement may be altered,
      amended or changed only by a writing making specific reference to this Agreement
      and signed by duly authorized representatives of Discovery and
      Chrysalis.

     

    18.17  Third
      Party Beneficiaries.
      Except
      for any Third Party Indemnities under Article 13, none of the provisions of
      this
      Agreement shall be for the benefit of or enforceable by any Third Party,
      including any creditor of either Party hereto, and no such Third Party (except
      for such Indemnitees, as such) shall obtain any right under any provision of
      this Agreement or shall by reasons of any such provision make any claim in
      respect of any debt, liability or obligation (or otherwise) against either
      Party
      hereto.

     

    18.18  Execution
      in Counterparts; Facsimile Signatures.
      This
      Agreement may be executed in counterparts, each of which counterparts, when
      so
      executed and delivered, shall be deemed to be an original, and both of which
      counterparts, taken together, shall constitute one and the same instrument
      even
      if both Parties have not executed the same counterpart. Signatures provided
      by
      facsimile transmission shall be deemed to be original signatures.

     

    

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, this Agreement has been executed by the Parties hereto as
      of
      the day and year first written above.

     

    
      	 	 	 
	 	
              PHILIP
                MORRIS USA INC., 

              d/b/a
                CHRYSALIS TECHNOLOGIES

            
	 
 	 
 	 
 
	 	By:  	/s/ Dr. Ken Podrecz 
	 	
              

              Name:   
                Dr. Ken Podrecz 

              Title:    
                 VP RD & E  Administration &
                Compliance

            
	 	 

    

     

    
      	 	 	 
	 	DISCOVERY
              LABORATORIES, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Robert J. Capetola, Ph.D. 
	 	
              

              Name:   
                Robert
                J. Capetola, Ph.D.

              Title:     
                President
                and Chief Executive Officer

            
	 	 

    

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    [***]  

     

     

    
 

    
      
        

      

      
            Information
          marked by [***]
          has been
          omitted pursuant to a request for confidential treatment. The omitted portion
          has been separately filed with the Securities and Exchange
          Commission.

         

         

        
          
            
            

          

          
            41Unassociated Document

    
      
         

      

    

    
      	
              Exhibit
                10.5

            
	 
	
               Confidential
                Treatment
                Requested

            
	 
	
              Execution
                Version

            

    

     

    LICENSE
      AGREEMENT

     

    by
      and between

    

    DISCOVERY
      LABORATORIES, INC.

    (a
      Delaware corporation)

    

    and

    

    PHILIP
      MORRIS PRODUCTS S.A. 

    (a
      Switzerland corporation)

     

    March
      28, 2008

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
       TABLE
        OF CONTENTS

    

    
       

      
        	 	
                Page 

              

      

      
        	 	 
	
                ARTICLE
                  1 DEFINITIONS

              	
                1 

              
	 	 
	ARTICLE
                2 LICENSE	 

      

      
        	
                 2.1

              	
                License

              	
                8

              
	
                 2.2

              	
                Limitations

              	
                9

              
	
                 2.3

              	
                Sublicensing
                  Rights

              	
                9

              
	
                 2.4

              	
                Retained
                  Rights

              	
                10

              

      

      
        	 	 
	
                ARTICLE
                  3 PRODUCT DEVELOPMENT

              	
                10

              
	
                 3.1

              	
                Licensed
                  Product Development and No PMPSA Obligations With Respect to
                  the

              	 
	 	
                Development
                  of Licensed Products

              	
                10

              
	
                 3.2

              	
                Notice
                  of Development of Licensed Products

              	
                10

              
	
                 3.3

              	
                Development
                  Effort

              	
                10

              
	
                 3.4

              	
                Costs

              	
                10

              
	
                 3.5

              	
                Design
                  Configurations

              	
                10

              
	
                 3.6

              	
                Status
                  Updates

              	
                11

              
	 	 
	
                ARTICLE
                  4 COMMERCIALIZATION

              	
                11

              
	
                 4.1

              	
                Exclusive
                  Right to Sell the Licensed Products

              	
                11

              
	
                 4.2

              	
                Responsibility
                  For Commercialization Matters

              	
                11

              
	
                 4.3

              	
                Commercialization

              	
                11

              
	
                 4.4

              	
                Status
                  Updates

              	
                11

              
	 	 
	
                ARTICLE
                  5 REGULATORY MATTERS

              	
                12

              
	
                 5.1

              	
                Responsibility
                  and Consultation

              	
                12

              
	
                 5.2

              	
                Regulatory
                  Updates and Communications

              	
                12

              
	
                 5.3

              	
                Records

              	
                12

              
	
                 5.4

              	
                Product
                  Liability Litigation

              	
                12

              
	 	 
	
                ARTICLE
                  6 FINANCIAL PROVISIONS

              	
                12

              
	
                 6.1

              	
                Royalties
                  with Respect to Licensed Products and Substitute Products

              	
                12

              
	
                 6.2

              	
                Minimum
                  Royalties

              	
                13

              
	
                 6.3

              	
                Prohibition
                  on Bundling

              	
                13

              
	
                 6.4

              	
                Fixed
                  Consideration

              	
                13

              
	
                 6.5

              	
                Treatment
                  of Partial Product Sales

              	
                14

              
	
                 6.6

              	
                Royalty
                  Reports

              	
                14

              
	
                 6.7

              	
                Payment
                  of Estimated and Actual Amounts

              	
                14

              
	
                 6.8

              	
                Pass-Through
                  Royalties

              	
                14

              
	
                 6.9

              	
                Records
                  and Audits

              	
                14

              
	
                 6.10

              	
                Foreign
                  Exchange

              	
                15

              
	
                 6.11

              	
                Manner
                  of Payments

              	
                16

              
	
                 6.12

              	
                Late
                  Payments

              	
                16

              
	
                 6.13

              	
                Tax
                  Withholding

              	
                16

              
	 	 
	
                ARTICLE
                  7 INTELLECTUAL PROPERTY

              	
                16

              
	
                 7.1

              	
                Ownership

              	
                16

              
	
                 7.2

              	
                Disclosure,
                  Assignment, License and Exploitation

              	
                17

              
	
                 7.3

              	
                Agreement
                  with Personnel

              	
                17

              
	
                 7.4

              	
                Prosecution
                  of Patents

              	
                18

              

      

       

      
        
          
          

        

        
          i

          
            

          

        

        
          
          

        

      

       

    

    
      
        	
                 7.5

              	
                Patent
                  Term Extensions

              	
                18

              
	
                 7.6

              	
                Third
                  Party Infringement

              	
                18

              
	
                 7.7

              	
                Infringement
                  of Third Party Rights

              	
                19

              
	 	
                 

              
	
                ARTICLE
                  8 CONFIDENTIAL INFORMATION

              	
                20

              
	
                 8.1

              	
                Use
                  of Confidential Information

              	
                20

              
	
                 8.2

              	
                Permitted
                  Disclosure and Use

              	
                21

              
	
                 8.3

              	
                Disclosure
                  for SEC Filings

              	
                22

              
	
                 8.4

              	
                Publications

              	
                22

              
	
                 8.5

              	
                Public
                  Announcements

              	
                22

              
	
                 8.6

              	
                Survival

              	
                23

              
	 	
                 

              
	
                ARTICLE
                  9 REPRESENTATIONS, WARRANTIES AND COVENANTS

              	
                23

              
	
                 9.1

              	
                Mutual
                  Representations and Warranties

              	
                23

              
	
                 9.2

              	
                Intellectual
                  Property

              	
                23

              
	
                 9.3

              	
                No
                  Adverse Effects

              	
                24

              
	 	 
	
                ARTICLE
                  10 ADDITIONAL COVENANTS

              	
                25

              
	
                 10.1

              	
                Compliance
                  with Laws

              	
                25

              
	
                 10.2

              	
                Cooperation

              	
                25

              
	
                 10.3

              	
                Sharing
                  of Information

              	
                25

              
	 	 
	
                ARTICLE
                  11 DISCLAIMERS AND LIMITATION OF LIABILITY

              	
                26

              
	
                 11.1

              	
                Disclaimer
                  of Warranties

              	
                26

              
	
                 11.2

              	
                Limitation
                  of Liability

              	
                26

              
	 	
                 

              
	
                ARTICLE
                  12 INDEMNIFICATION; INSURANCE

              	
                27

              
	
                 12.1

              	
                Indemnification

              	
                27

              
	
                 12.2

              	
                Indemnification
                  Procedures

              	
                28

              
	
                 12.3

              	
                Insurance

              	
                29

              
	 	
                 

              
	
                ARTICLE
                  13 TERM

              	
                30

              
	 	
                 

              
	
                ARTICLE
                  14 TERMINATION

              	
                30

              
	
                 14.1

              	
                Termination
                  by Discovery

              	
                30

              
	
                 14.2

              	
                Termination
                  Due to Failure to Meet Minimum Royalties

              	
                30

              
	
                 14.3

              	
                Termination
                  for Material Breach

              	
                30

              
	
                 14.4

              	
                Termination
                  Due to Certain Events

              	
                31

              
	
                 14.5

              	
                Effects
                  of Termination Generally

              	
                31

              
	 	 
	
                ARTICLE
                  15 STANDSTILL AGREEMENT

              	
                31

              
	
                 15.1

              	
                General
                  Standstill

              	
                31

              
	
                 15.2

              	
                Certain
                  Exceptions

              	
                32

              
	
                 15.3

              	
                Exception
                  for an Acquisition Transaction

              	
                32

              
	 	
                 

              
	
                ARTICLE
                  16 DISPUTE RESOLUTION

              	
                32

              
	
                 16.1

              	
                Dispute
                  Resolution

              	
                32

              
	
                 16.2

              	
                Executive
                  Negotiation

              	
                33

              
	
                 16.3

              	
                Mediation

              	
                33

              
	
                 16.4

              	
                Arbitration

              	
                33

              
	
                 16.5

              	
                Right
                  to Injunctive and Other Relief

              	
                34

              
	 	 
	
                ARTICLE
                  17 MISCELLANEOUS

              	
                34

              
	
                 17.1

              	
                Choice
                  of Law

              	
                34

              
	
                 17.2

              	
                Severability

              	
                34

              

      

       

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

       

      
        	
                17.3

              	
                Relationship
                  of the Parties

              	
                35

              
	
                17.4

              	
                Parties
                  in Interest

              	
                35

              
	
                17.5

              	
                Enforcement
                  of Certain Agreements

              	
                35

              
	
                17.6

              	
                Use
                  of Affiliates, Subcontractors, Sublicensees and
                  Distributors

              	
                35

              
	
                17.7

              	
                Assignment

              	
                36

              
	
                17.8

              	
                Further
                  Assurances and Actions

              	
                36

              
	
                17.9

              	
                Waiver

              	
                36

              
	
                17.10

              	
                Section
                  365(n) of the Bankruptcy Code

              	
                36

              
	
                17.11

              	
                Notices

              	
                37

              
	
                17.12

              	
                Construction

              	
                37

              
	
                17.13

              	
                Registration
                  and Filing of this Agreement

              	
                37

              
	
                17.14

              	
                Force
                  Majeure

              	
                38

              
	
                17.15

              	
                Entire
                  Agreement

              	
                38

              
	
                17.16

              	
                Third
                  Party Beneficiaries

              	
                38

              
	
                17.17

              	
                Execution
                  in Counterparts; Facsimile Signatures

              	
                38

              

      

       

      
        
          
          

        

        
          iii

          
            

          

        

        
          
          

        

      

    

     

    LICENSE
      AGREEMENT

     

    THIS
      LICENSE AGREEMENT effective as of March 28, 2008 (the “Effective
      Date”)
      by and
      between DISCOVERY LABORATORIES, INC., a Delaware corporation (“Discovery”),
      and Philip
      Morris Products S.A., a Switzerland corporation (“PMPSA”).
      Discovery and PMPSA shall be referred to herein individually as a “Party”
and
      collectively as the “Parties”.

     

    WHEREAS,
      Discovery and Philip Morris USA Inc., Chrysalis Technologies Division,
      (“Chrysalis”)
      entered into a Strategic Alliance Agreement effective December 9, 2005 (the
      “Original
      Agreement”)
      pursuant to which Chrysalis granted to Discovery a worldwide license under
      its
      rights in and to its capillary aerosol generation technology to develop certain
      combination drug-device pulmonary surfactant products; 

     

    WHEREAS,
      Chrysalis has assigned to PMPSA all rights outside of the United States in
      and
      to its capillary aerosol generation technology (the “Assigned
      Rights”);
      and

     

    WHEREAS,
      Chrysalis and Discovery are amending and restating the Original Agreement as
      of
      the Effective Date to reflect such assignment of rights to PMPSA and to cease
      Chrysalis’ active involvement in the development of such combination drug-device
      pulmonary surfactant products (the “Amended
      and Restated Chrysalis/Discovery Agreement”);
      and

     

    WHEREAS,
      PMPSA and Discovery desire to enter into a license agreement pursuant to which
      PMPSA will grant to Discovery a license under the Assigned Rights;

     

    NOW,
      THEREFORE, in consideration of the foregoing premises and the representations,
      warranties, covenants, and agreements contained herein, the Parties, intending
      to be legally bound, hereby agree as follows:

     

    ARTICLE
      1

    DEFINITIONS

     

    In
      addition to terms defined elsewhere in this Agreement, the following terms
      used
      in this Agreement are defined below:

     

    “AAA”
means
      the American Arbitration Association.

     

    “Actual
      Amount”
has
      the
      meaning set forth in Section 6.7.2.

     

    [***]  

     

    “Aerosol
      Device”
means
      a
      device to aerosolize a pharmaceutical compound for administration to humans.
      It
      is contemplated that the Aerosol Device shall consist of (i) permanent
      (e.g.,
      nondisposable) components that control power and electronics (e.g.,
      control unit) and (ii) a physical mechanism (e.g.,
      pump)
      to provide a means for dispensing the Drug Product from the container closure
      system.

     

    “Aerosol
      Technology”
means
      any technology related to the aerosolization of a liquid form of a
      pharmaceutical compound. Aerosol Technology does not include technology that
      is
      related to the delivery of aerosols as dry powders.

     

    
      

    

    
        Information
        marked by [***]
        has been
        omitted pursuant to a request for confidential treatment. The omitted portion
        has been separately filed with the Securities and Exchange
        Commission.

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Affiliates”
means
      with respect to any Party, any Person, directly or indirectly, controlling,
      controlled by or under common control with such Party. For purposes of this
      Section, “control” means (i) in the case of a Person that is a corporate entity,
      direct or indirect ownership of more than fifty percent (50%) of the stock
      or
      shares having the right to vote (or such lesser percentage which is the maximum
      allowed to be owned by a foreign corporation in a particular jurisdiction)
      for
      the election of directors of such Person or (ii) in the case of a Person that
      is
      an entity, but is not a corporate entity, the possession, directly or
      indirectly, of (A) more than fifty percent (50%) of the economic or partnership
      interest in the income or capital of such Person or (B) the power to direct,
      or
      cause the direction of, the management or policies of such Person, whether
      through the ownership of voting securities, by contract or otherwise; and the
      terms “controlling,” “controlled by” or “under common control” shall have the
      meanings correlative to the foregoing. For the purposes of this Amended and
      Restated License Agreement, Chrysalis and PMPSA shall not be considered
      Affiliates with respect to each other.

     

    “Agreement”
means
      this License Agreement, including the Schedules attached hereto.

     

    “Breaching
      Party”
has
      the
      meaning set forth in Section 14.3.1.

     

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

     

    “Clinical
      Trials”
means
      Phase I, II, III and, if required, Phase IV clinical trials and such other
      tests
      and studies in human subjects or patients that are required to obtain, maintain,
      or sustain Regulatory Approval in a country in the Territory. 

     

    “Confidential
      Information”
means
      all information received by either Party or its Affiliates from or on behalf
      of
      the other Party or its Affiliates relating to this Agreement that the disclosing
      Party treats as confidential, including, without limitation: (i) copies of
      any
      nonpublic information regarding a Party’s Patents; (ii) techniques, technology,
      practices, trade secrets, inventions (whether or not patentable), designs,
      methods, manufacturing processes, formulae, formulations, specifications,
      documents, knowledge, know-how, skill, experience, test data, and results,
      (including that related to pharmacology, toxicology, preclinical testing,
      clinical testing, expression data, Chemistry, Manufacturing and Control (CMC)
      data, batch records, trials, and studies, safety and efficacy, analytical,
      and
      quality control); (iii) devices and related components, compounds, polypeptides,
      proteins, formulations, compositions of matter, cells, cell lines, markers,
      assays, and physical, biological, or chemical material; (iv) marketing
      information, market research data, medical/physicians advisory boards, and
      consultant input, including clinical studies designed to support promotional
      efforts; (v) the terms of this Agreement, and (vi) other proprietary business
      information such as business plans, financial or personnel matters, present
      or
      future products, research, process and technology development programs, sales,
      suppliers, customers, employees, investors, or other business information,
      whether in oral, written, graphic, or electronic form.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Contract
      Month”
      means
      each month during any Contract Year.
      The
      initial Contract Month will be deemed to begin on the Effective Date and end
      on
      the expiration of that Contract Month in which the Effective Date
      falls.

     

    “Contract
      Quarter”
      means
      each three (3) month period ending on March 31, June 30, September 30 and
      December 31 during any Contract Year.
      The
      initial Contract Quarter will be deemed to begin on the Effective Date and
      end
      on the expiration of that Contract Quarter in which the Effective Date
      falls.

     

    “Contract
      Year”
means
      a
      twelve (12) month period ending on December 31.
      The
      initial Contract Year will be deemed to begin on the Effective Date and end
      on
December
      31 of
      that
      Contract Year in which it falls.

     

    “Diligent
      Commercialization Efforts”
means
      efforts and resources reasonably comparable to those commonly used in the
      research-based pharmaceutical industry for a medical device, pharmaceutical
      product or pharmaceutical compound at a similar stage in its commercialization
      or product life of similar market potential, taking into account safety and
      efficacy, the competitiveness of alternative products in the marketplace, the
      patent and other proprietary position of the product, the likelihood of
      regulatory approval given the regulatory structure involved, the potential
      profitability of the product and alternative products and other relevant factors
      relating to the commercialization of a Licensed Product, including, without
      limitation, the potential cost, risk, timing and reward, provided,
      however,
      that
      the fact that the Parties are required to share revenues with respect to the
      Licensed Products shall not be a factor taken into account in determining
      whether Diligent Commercialization Efforts were satisfied. Diligent
      Commercialization Efforts shall be determined on a market by market basis for
      a
      particular Licensed Product, and it is anticipated that the level of effort
      will
      change over time reflecting changes in the status of the Licensed Product and
      the market involved.

     

    “Diligent
      Development Efforts”
means
      efforts and resources reasonably comparable to those commonly used in the
      research-based pharmaceutical industry for a medical device, pharmaceutical
      product or pharmaceutical compound at a similar stage in its development of
      similar market potential, taking into account safety and efficacy, product
      profile, difficulty in developing the product, competitiveness of alternative
      products in the marketplace, the patent and other proprietary position of the
      product, the likelihood of regulatory approval given the regulatory structure
      involved, the potential profitability of the product and alternative products
      and other relevant factors affecting the cost, risk and timing of development
      and total potential reward to be obtained if a Licensed Product is
      commercialized, provided,
      however,
      that
      the fact that the Parties are required to share revenues with respect to the
      Licensed Products shall not be a factor taken into account in determining
      whether Diligent Development Efforts were satisfied. 

     

    “Discovery”
has
      the
      meaning set forth in the Preamble hereto.

     

    “Discovery
      Intellectual Property”
has
      the
      meaning set forth in Section 7.1.2.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Discovery
      Patents”
means
      all Patents owned by Discovery or to which Discovery otherwise has rights that
      claim or are directed to any Discovery Intellectual Property. 

     

    “Discovery
      Technology”
means
      (a) Discovery’s proprietary Pulmonary Surfactant technology (including without
      limitation the technologies, formulations, processes, equipment, materials
      and
      know-how relating to the manufacture and use of Pulmonary Surfactants for
      treatment of respiratory conditions), and (b) all Intellectual Property owned
      by
      or licensed to Discovery relating to such Pulmonary Surfactant technology,
      including, without limitation, the Discovery Patents. 

     

    “Discovery
      Technology Improvements”
means
      any Inventions created or reduced to practice [***]
      in the
      performance of the Agreement or exercise of the license granted pursuant to
      this
      Agreement, which Inventions relate primarily to Pulmonary Surfactants (alone
      or
      in combination with  [***]).

     

    “Disposable
      Dose Packet”
      consists of: (i) Drug Product within a container (comprising the drug
      formulation containing the drug substance and the container closure system
      in
      which it is packaged), (ii) aerosolization capillary (heatable capillary through
      which the formulation is pumped to produce an aerosol), (iii) patient interface
      (components through which the aerosol produced by the capillary travels in
      order
      to reach the patient), and (iv) all ancillary tubing, connectors and fittings
      related thereto. 

     

    “Dispute”
has
      the
      meaning set forth in Section 16.1.

     

    “Dollars”
and
      “$”
means,
      unless otherwise specified, United States Dollars.

     

    “Drug
      Product”
means
      a
      pharmacological agent(s), including Pulmonary Surfactants, together with any
      excipients or inactive ingredients, formulated for use in connection with an
      Aerosol Device or Disposable Dose Packet. 

     

    “Effective
      Date”
has
      the
      meaning set forth in the Preamble hereto.

     

    “Estimated
      Amount”
has
      the
      meaning set forth in Section 6.7.1.

     

    [***]  

     

    “Exchange
      Act”
has
      the
      meaning set forth in Section 15.1.

     

    “Exclusive
      Field”
means
      the therapeutic or preventative use in humans of Aerosol Technology to deliver
      Pulmonary Surfactants (alone or in combination with [***]
      as
      an
      active ingredient for the prevention or treatment of Respiratory Indications.
      

     

    “FDA”
shall
      mean the United States Food and Drug Administration, and any successor
      agency.

     

    
      

        Information
        marked by [***]
        has been
        omitted pursuant to a request for confidential treatment. The omitted portion
        has been separately filed with the Securities and Exchange
        Commission.

       

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    “First
      Commercial Sale”
means
      the first arms-length commercial sale of a Licensed Product to a Third Party
      by
      Discovery or its Affiliates or sublicensees, as the case may be, in any country
      in the Territory after receipt of Marketing Authorization in such country which
      results in an exchange for cash or some equivalent to which value can be
      assigned for the purpose of determining Net Sales.

     

    “Force
      Majeure Event”
means
      an event or occurrence that materially interferes with the ability of a Party
      to
      perform its obligations or duties hereunder which is not within the reasonable
      control of the Party affected or any of its Affiliates, not due to malfeasance
      by such Party or its Affiliates, and which could not with the exercise of due
      diligence have been avoided, including without limitation fire, earthquake,
      acts
      of God, acts of war, labor strikes or lockouts, riots, civil disturbances,
      actions or inactions of governmental authorities (except actions in response
      to
      a breach of applicable Law by such Party).

     

    “GAAP”
means
      generally accepted accounting principles in the United States of America.

     

    “Hospital
      Setting”
means
      a
      (i) hospital-setting in the delivery room, NICU, PICU, CCU, emergency
      department, surgical care unit and/or intermediate care unit, (ii) emergency
      and
      specialized medical treatment centers, such as birthing centers, treatment
      centers for chronic diseases, trauma centers and other similar facilities,
      and
      (iii) an institution setting which is used to provide long-term care for people
      with chronic illness or disability, including hospice settings and nursing
      homes. 

     

    “Indemnitee”
has
      the
      meaning set forth in Section 12.2.1.

     

    “Indemnitor”
has
      the
      meaning set forth in Section 12.2.1.

     

    “Infringement
      Notice”
has
      the
      meaning set forth in Section 7.6.1.

     

    “Intellectual
      Property”
means
      all know how, Inventions, Patents, copyrights, trademarks, trade secrets and
      any
      other intellectual property rights in the Territory that may be secured in
      any
      place under laws now or hereafter in effect.

     

    “Invention”
means
      any new or improved apparatus, process, information, product, invention,
      discovery, idea, suggestion, material, data, equipment, design, circuit
      component, drawing, tooling, prototype, report, computer software, documentation
      or other intellectual property or know-how (whether or not patentable)
      discovered, produced, conceived, created or reduced to practice by either or
      both Parties (or their Affiliates, sublicensees, subcontractors, successors
      or
      assigns).

     

    “Law”
means
      any applicable statute, law, ordinance, regulation, order, or rule of any
      federal, state, local, foreign, or other governmental agency or body or of
      any
      other type of regulatory body (including common law) or securities exchange
      or
      automated quotation system.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    “Licensed
      Product”
means
      a
      combination drug-device product using or otherwise practicing the PMPSA
      Technology and delivering Pulmonary Surfactants (alone or in combination with
      [***]).  

     

    “Losses”
has
      the
      meaning set forth in Section 12.1.1.

     

    “Major
      Markets”
means
      [***]. 

     

    “Marketing
      Authorization”
means,
      with respect to each country in the Territory, the principal
      Regulatory Approval required to market the Licensed Product in such country
      (e.g., the NDA), including satisfactory pricing and reimbursement approval,
      when
      applicable.

     

    “NDA”
shall
      mean a new drug application, biologics
      license application, pre-market
      approval application, or a pre-market clearance under FDCA Section 510k that
      may
      be filed with the FDA in the United States or any
      comparable application that may be filed with any equivalent Regulatory
      Authority in the Territory.

     

    “Net
      Sales”
means,
      with respect to Licensed Products and Substitute Products, as applicable, sold
      by Discovery, its Affiliates and sublicensees in the Territory, the [***]
      amount
[***]
      for
      Licensed Products or Substitute Products, as applicable, by Discovery, its
      Affiliates, and any sublicensees of Discovery in arms-length, commercial
      transactions in the Territory with customers that are Third Parties, less the
      following deductions to the extent included in such [***]
      amount:

     

    [***]

     

    Any
      discretionary rebates, discounts or other adjustments to the [***]
      amount
      shall be commercially reasonable and consistent with standard industry
      practices. Net Sales (including each applicable deduction from the [***]
      amount)
      shall be determined from the books and records of Discovery maintained in
      accordance with GAAP consistently applied. 

     

    “Non-Breaching
      Party”
has
      the
      meaning set forth in Section 14.3.1.

     

    “Other
      Product”
      has the meaning set forth in Section 2.1.2.

     

    “Party”
and
      “Parties”
have
      the meanings set forth in the Preamble hereto.

     

    “Patents”
means
      all patents and patent applications, and all patents issuing thereon (including
      utility, model and design patents and certificates of invention), together
      with
      all reissue patents, patents of addition, divisions, renewals, continuations,
      continuations-in-part, substitutions, additions, extensions (including
      supplemental protection certificates), registrations, confirmations,
      re-examinations, and foreign counterparts of any of the foregoing in the
      Territory.

     

    “Person”
means
      any natural person, corporation, company, partnership, limited liability
      company, proprietorship, trust or estate, joint venture, association, or other
      legal entity. 

     

    
      
        

          Information
          marked by [***]
          has been
          omitted pursuant to a request for confidential treatment. The omitted portion
          has been separately filed with the Securities and Exchange
          Commission.

         

      

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    “PMPSA”
has
      the
      meaning set forth in the Preamble hereto.

     

    “PMPSA
      Intellectual Property”
has
      the
      meaning set forth in Section 7.1.1.

     

    “PMPSA
      Patents”
means
      all Patents owned by PMPSA in the Territory or to which PMPSA otherwise has
      rights in the Territory, as of the Effective Date, that claim or are directed
      to
      the PMPSA Technology.

     

    “PMPSA
      Technology”
means
      (a) PMPSA’s proprietary Aerosol Technology owned or controlled by PMPSA in the
      Territory as of the Effective Date (including without limitation the
      technologies, devices, processes, equipment, materials and know-how relating
      to
      the aerosolization of liquid forms of drug products and the Aerosol Devices
      and
      Disposable Dose Packs therefor) and (b) all Intellectual Property owned by
      or
      licensed to PMPSA in the Territory as of the Effective Date relating to such
      Aerosol Technology, including, without limitation, the PMPSA
      Patents.

     

    “PMPSA
      Technology Improvements”
means
      any rights in the Territory in and to any Inventions created or reduced to
      practice [***]
      in the
      performance of the Agreement or exercise of the license granted pursuant to
      this
      Agreement, or [***]
      under
      the Amended and Restated Chrysalis/Discovery Agreement or in the exercise of
      the
      license granted pursuant to the Amended and Restated Chrysalis/Discovery
      Agreement, in each case which Inventions relate primarily to the PMPSA
      Technology.   

     

    “Pulmonary
      Surfactant”
means
      surface active agents designed for deposition in the lungs in order to exert
      a
      physiological or pharmacological affect to prevent or treat Respiratory
      Indications. 

     

    “Regulatory
      Approval”
means
      any approvals (including, where necessary for the marketing, use, or other
      distribution of a drug, medical device, or combination drug and medical device
      in a regulatory jurisdiction, pricing, and reimbursement approvals), licenses,
      registrations, or authorizations or equivalents necessary for the manufacture,
      use, storage, import, export, clinical testing, transport, marketing, sale,
      and
      distribution of the Drug Product or Aerosol Device and any Licensed Product
      in a
      regulatory jurisdiction anywhere in the Territory, including Marketing
      Authorizations. 

     

    “Regulatory
      Authority”
means
      any federal, national, multinational, state, provincial, or local regulatory
      agency, department, bureau, or other governmental entity with authority to
      regulate the marketing and sale of a pharmaceutical product, delivery system
      or
      device in a country in the Territory. 

     

    “Respiratory
      Indications”
means
      all respiratory dysfunctions, failures, syndromes, diseases, disorders, or
      conditions.

     

    “Royalty
      Credit”
has
      the
      meaning set forth in Section6.7.2.

     

    
      
   Information
      marked by [***]
      has been
      omitted pursuant to a request for confidential treatment. The omitted portion
      has been separately filed with the Securities and Exchange Commission.
       

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    “Royalty
      Report”
means
      the reports to be delivered by Discovery to PMPSA pursuant to Section 6.6 with
      respect to each Contract Month and pursuant to Section 6.7 with respect to
      each
      Contract Quarter, which reports shall give such particulars of each of the
      Licensed Products and Substitute Products sold by Discovery and its Affiliates
      and sublicensees during the preceding Contract Month in the Territory in the
      case of Section 6.6 and during the preceding Contract Quarter in the case of
      Section 6.7 on a country-by-country basis as are reasonably pertinent to perform
      an accounting of royalties under this Agreement. 

     

    “SEC”
has
      the
      meaning set forth in Section 8.3.

     

    “Substitute
      Product”
means
      any Aerosol Device, Disposable Dose Packet or Drug Product (other than a
      Licensed Product) sold by Discovery, its Affiliates and sublicensees for use
      within the Exclusive Field.  

     

    “Target
      Indications”
means
      the following Respiratory Indications: [***].
      

     

    “Target
      Populations”
means
      human patients [***]
      receiving
      forms of treatment for the applicable Respiratory Indication that are typically
      and principally provided [***].
      

     

    “Taxes”
has
      the
      meaning set forth in Section 6.13.

     

    “Term”
has
      the
      meaning set forth in Article 13.

     

    “Territory”
means
      all countries in the world, except the United States of America and its
      territories and possessions, including the Commonwealth of Puerto Rico, Guam,
      U.S. Virgin Islands, American Samoa, and Northern Mariana Islands. 

     

    “Third
      Party”
means
      any Person other than PMPSA or Discovery or their respective
      Affiliates.

     

    “Third
      Party Claim”
has
      the
      meaning set forth in Section 12.1.1.

     

    “Valid
      Claim”
means
      a
      claim of an issued and unexpired patent, which claim has not been held
      unpatentable, invalid, or unenforceable by a court or other government agency
      of
      competent jurisdiction from which no appeal can be or has been taken and has
      not
      been held or admitted to be invalid or unenforceable through re-examination
      or
      disclaimer, opposition procedure, nullity suit or otherwise, which claim, but
      for the licenses granted herein, would be infringed by the sale of a Licensed
      Product. 

     

    ARTICLE
      2

    LICENSE

     

    2.1  License.

     

    
      

    

    
        Information
        marked by [***] has been omitted pursuant to a request for confidential
        treatment. The omitted portion has been separately filed with the Securities
        and
        Exchange Commission.

       

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    2.1.1  Exclusive
      License.
      Subject
      to the terms, conditions, and limitations of this Agreement, PMPSA hereby grants
      to Discovery an exclusive right and royalty-bearing license or sublicense,
      as
      applicable, in the Territory, with the right to grant sublicenses solely as
      set
      forth in Section 2.3, under the PMPSA Technology and PMPSA Technology
      Improvements to make and have made, to use and have used, to develop and have
      developed, to sell and have sold, to offer for sale and have offered for sale,
      to import and export and have imported and exported Licensed Products in the
      Exclusive Field in the Territory during the Term.

     

    2.1.2  Non-Exclusive,
      Research License.
      Subject
      to the terms, conditions, and limitations of this Agreement, PMPSA hereby grants
      to Discovery a non-exclusive, royalty-free, research only license or sublicense,
      as applicable, in the Territory, with the right to grant sublicenses solely
      as
      set forth in Section 2.3, under the PMPSA Technology and PMPSA Technology
      Improvements to [***].
      An
“Other
      Product”
means
      a
      combination drug-device product using or otherwise practicing the PMPSA
      Technology and [***]
      as an
      active ingredient in humans, alone or in combination with  [***] ([***]).
      

     

    2.1.3  Other
      Products.
      In the
      event Discovery wishes to obtain a license under the PMPSA Technology and PMPSA
      Technology Improvements to develop and commercialize an Other Product for
[***],
      Discovery shall provide PMPSA with written notice of the same. Such written
      notice shall include a description of the Other Product and shall specify the
      [***].
      Within
[***]
      days of
      receipt of such notice, and in the exercise of reasonable discretion and good
      faith, PMPSA shall notify Discovery in writing whether it is willing to grant
      Discovery such a license under the PMPSA Technology and PMPSA Technology
      Improvements. In the event PMPSA is willing to grant Discovery a license under
      the PMPSA Technology and PMPSA Technology Improvements to develop and
      commercialize such Other Product for [***],
      PMPSA
      and Discovery shall use reasonable efforts to enter into a written amendment
      to
      this Agreement pursuant to which PMPSA shall grant to Discovery such a license
      on the same terms and conditions set forth herein. 

     

    2.2  Limitations.
      The
      license granted pursuant to Section 2.1 shall be exclusive only to the extent
      that PMPSA has the right to grant an exclusive license with respect to the
      Licensed Product in question. No right or license outside of the Exclusive
      Field
      is granted and all such rights are expressly reserved by PMPSA. No right or
      license is or shall be granted under this Agreement by implication. All such
      rights or licenses are or shall be granted only as expressly provided in this
      Agreement. Discovery shall not practice the PMPSA Technology in the Territory
      except as expressly licensed herein. Nothing herein shall limit the ability
      of
      PMPSA to perform any research or development work on or using the PMPSA
      Technology. Notwithstanding any other provision of this Agreement, no rights
      with respect to any trademarks, trade names, service marks or logos of PMPSA
      are
      granted pursuant to this Agreement.

     

    2.3  Sublicensing
      Rights.
      The
      license granted to Discovery pursuant to Section 2.1 by PMPSA shall include
      the
      right of Discovery to grant sublicenses, subject to terms and conditions set
      forth in Section 17.6. Discovery shall provide PMPSA with prompt written notice
      of any sublicenses granted hereunder.

     

    
      

    

    
        Information
        marked by [***]
        has been
        omitted pursuant to a request for confidential treatment. The omitted portion
        has been separately filed with the Securities and Exchange
        Commission.

       

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    2.4  Retained
      Rights.
      Any
      rights of each Party not expressly granted to the other Party under the
      provisions of this Agreement shall be retained by each Party, and, subject
      to
      any applicable terms, conditions, and limitations of this Agreement, each Party
      shall retain the right to: (a) exploit such Party’s own Intellectual Property
      relating to Licensed Products to develop, manufacture, and commercialize
      products outside the Exclusive Field; (b) exploit such Party’s own Intellectual
      Property relating to Licensed Products for other purposes outside the Exclusive
      Field unrelated to the Licensed Products; and (c) perform its obligations and
      exercise its rights under this Agreement.

     

     

    ARTICLE
      3

    PRODUCT
      DEVELOPMENT

     

    3.1  Licensed
      Product Development
      and No PMPSA Obligations With Respect to the Development of Licensed
      Products.
      Discovery shall be solely responsible for the development of Licensed Products
      and PMPSA shall have no obligations with respect to the development of Licensed
      Products unless PMPSA agrees otherwise in writing. PMPSA acknowledges and agrees
      that Discovery may partner with third parties with respect to the development
      of
      Licensed Products.

     

    3.2  Notice
      of Development of Licensed Products.
      Discovery shall provide PMPSA with written notification of its intention to
      proceed with Phase II Clinical Trials for a Licensed Product. Such written
      notification shall include sufficient detail for PMPSA to understand the nature
      of such Licensed Product to be developed by Discovery. 

     

    3.3  Development
      Effort.
      Discovery
      shall use Diligent Development Efforts to
      develop
      at least one Licensed Product and to otherwise carry out its responsibilities
      under this Agreement relating to such Licensed Product promptly and
      expeditiously in accordance with all Laws. Notwithstanding the foregoing, the
      Parties acknowledge that the development of pharmaceutical products is
      inherently speculative and there is no guarantee that Discovery will be
      successful in developing any commercially viable Licensed Products, or that
      the
      development of any Licensed Products will proceed as anticipated.

     

    3.4  Costs.
      Discovery shall be solely responsible for all costs incurred by Discovery in
      connection with the development of Licensed Products hereunder. 

     

    3.5  Design
      Configurations.
      The
      Parties agree that any Aerosol Device and Disposable Dose Packet configuration
      developed for use outside the Exclusive Field shall be distinct in appearance
      from those for use with the Licensed Products and shall not be interchangeable
      with the Aerosol Device or Disposable Dose Packet of the Licensed Products.
      Without limiting the generality of the foregoing,
      and provided PMPSA has received appropriate prior written notification from
      Discovery describing the packaging for the Disposable Dose Packets and Licensed
      Products in sufficient detail for PMPSA to comply with this Section 3.5,
PMPSA
      shall not offer for sale or sell, nor authorize any Third Party to offer for
      sale or sell, any pharmaceutical product (i) in packaging similar in appearance
      to the Disposable Dose Packet for a Licensed Product, or (ii) in packaging
      that
      is interchangeable with the Disposable Dose Packet of a Licensed Product for
      purposes of use in an Aerosol Device. 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

     

    3.6  Status
      Updates.
      Upon the
      reasonable request of PMPSA, Discovery shall provide PMPSA with an update on
      the
      status of the development of Licensed Products hereunder; provided that in
      no
      event shall Discovery be required to provide an update more often than once
      a
      Contract Quarter.

     

    ARTICLE
      4

    COMMERCIALIZATION

     

    4.1  Exclusive
      Right to Sell the Licensed Products.
      The
      Parties agree that during the Term, Discovery shall have the exclusive right
      to
      market and have marketed, sell and have sold, and offer for sale or have offered
      for sale any Licensed Products in the Territory.

     

    4.2  Responsibility
      For Commercialization Matters.
      Discovery shall have the sole responsibility and
      assumes all liabilities for
      all
      activities associated with the commercialization of the Licensed Products in
      the
      Territory, including, without limitation, (a) preparing, submitting and seeking
      Marketing Authorizations for the Licensed Products, (b) sales, advertising
      and
      marketing of the Licensed Product, (c) scientific and medical affairs, (d)
      customer service and distribution related services, such as order taking,
      shipping, billing, accounts receivable, returns, allowance activities and
      product support; (e) Phase IV Clinical Trials, (f) commercial manufacture of
      the
      Licensed Product; and (g) branding of the Licensed Products.

     

    4.3  Commercialization.
      

     

    4.3.1  Diligent
      Commercialization Efforts.
      Discovery shall use Diligent Commercialization Efforts to bring the Licensed
      Products to market and to market and sell the Licensed Products in the Territory
      with a particular focus on obtaining Marketing Authorizations for and
      commercializing Licensed Products in the Major Markets. Discovery shall promptly
      notify PMPSA of the receipt of any Marketing Authorization for a Licensed
      Product in the Territory.

     

    4.3.2  Commercialization
      Initiation.
      With
      respect to each Licensed Product, the First Commercial Sale in each country
      constituting the Major Markets shall occur within [***]
      of
      receipt of the relevant Marketing Authorization for such country for such
      Licensed Product. Should Discovery materially fail to achieve any such
      commercialization initiation within [***]of
      having
      received written notice of such failure from PMPSA [***]. 

     

    

    4.4  Status
      Updates.
      Upon
      PMPSA’s reasonable request, Discovery shall provide PMPSA with an update on the
      status of the commercialization of Licensed Products in the Territory hereunder;
      provided that in no event shall Discovery be required to provide an update
      more
      often than once a Contract Quarter. 

     

    
      

    

    
        Information
        marked by [***]
        has been
        omitted pursuant to a request for confidential treatment. The omitted portion
        has been separately filed with the Securities and Exchange
        Commission.

       

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      5

    REGULATORY
      MATTERS 

     

    5.1  Responsibility
      and Consultation.
      Discovery shall be responsible for preparing, submitting, seeking and
      maintaining all Regulatory Approvals for the Licensed Products in the Territory,
      including without limitation Marketing Authorizations. 

     

    5.2  Regulatory
      Updates and Communications.
      Within
      thirty (30) days after the end of each Contract Quarter, Discovery shall provide
      PMPSA with a written update on the status of the Regulatory Approvals for the
      Licensed Products in the Territory. In addition, Discovery shall provide PMPSA
      with a copy of any medical device reports relating to the use of Licensed
      Products in the Territory and a copy (if in writing) or a description (if oral)
      of any significant contact or communication from any Regulatory Authority
      relating to a material safety issue with the PMPSA Technology, in each case,
      promptly after Discovery’s receipt of the same. 

     

    5.3  Records.
      Except
      to the extent otherwise required by law, the Parties acknowledge and agree
      that
      PMPSA shall have no obligation to maintain any records relating to the PMPSA
      Technology or the Licensed Product. 

     

    5.4  Product
      Liability Litigation.
      Discovery shall promptly inform PMPSA of the initiation of any (i) recalls,
      corrections or removals of Licensed Products in the Territory, and (ii)
      litigation or investigations in the Territory relating to the Licensed Product
      involving a claim of death or bodily injury (or allegations thereof) to an
      individual and shall provide PMPSA with regular written updates with respect
      thereto. If any such recalls, corrections, removals, litigation or
      investigations relate to the PMPSA Technology, then PMPSA shall have the right
      to audit the books, records and facilities relating to such Licensed Products
      (solely to the degree that Discovery has the right to grant any such access
      and
      solely to the degree such books, records and facilities relate to such
      litigation and investigation), and Discovery shall reasonably cooperate with
      PMPSA in connection therewith. 

     

    ARTICLE
      6

    FINANCIAL
      PROVISIONS

     

    6.1  Royalties
      with Respect to Licensed Products and Substitute Products.
      In
      consideration of the rights granted and payments made to Discovery herein,
      Discovery shall pay royalties to PMPSA on Net Sales of Licensed Products and
      Substitute Products in the Territory in an amount equal to [***]
      of
      the
      Net Sales for such Licensed Products and Substitute Products.  

     

    
      

    

     

    
         Information
        marked by [***] has been omitted pursuant to a request for confidential
        treatment. The omitted portion has been separately filed with the Securities
        and
        Exchange Commission.

       

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    6.2  Minimum
      Royalties.
      Commencing [***]
      and
      continuing thereafter throughout the Term, if the royalties paid by Discovery
      to
      PMPSA hereunder are not equal to or greater than the following for each Contract
      Quarter of the applicable Contract Year:

     

    [***]
      (the
“Minimum
      Royalty”),
      then
      PMPSA shall have the right to terminate this Agreement pursuant to Section
      14.2;
      provided, that Discovery can cure any such royalty shortfall by paying PMPSA
      [***]  after
      the
      end of the applicable Contract Quarter the difference between the Minimum
      Royalty due for the applicable Contract Quarter and the actual royalties paid
      by
      Discovery hereunder for such Contract Quarter (the “Royalty
      Shortfall”).
      The
      royalty payments required to be paid in any given Contract Quarter pursuant
      to
      Section 6.1 shall be subject to an offsetting reduction by Discovery in an
      amount equal to the Royalty Shortfall; provided, however, that (i) no such
      offset shall be applied until the royalty payments for such Contract Quarter
      exceed the Minimum Royalties for such Contract Quarter, and (ii) such offset
      may
      be made only to the extent such Royalty Shortfall has not previously been
      subject to offset pursuant to this Section.

     

    6.3  Prohibition
      on Bundling.
      Notwithstanding any other provision of this Agreement to the contrary, Discovery
      hereby covenants that it will not include or bundle any Licensed Products and
      Substitute Products or components thereof as part of a multiple product offering
      with any other products or services if it would result in the price of the
      Licensed Product or Substitute Product or any components thereof being
      discounted from the then-applicable sale price in such jurisdiction, nor shall
      Discovery permit its Affiliates or sublicensees to do so, except with the prior
      written consent of PMPSA. In the event any such bundled sales occur, the Net
      Sales with respect to such bundled transactions shall be deemed to be the-then
      current average Net Sales for the Licensed Product or Substitute Product in
      such
      jurisdiction in arms length transactions or in the event there are no unbundled
      transactions, the fair market value of such Net Sales.

     

    6.4  Fixed
      Consideration.
      In the
      event that Discovery receives any fixed payment, fee or other consideration
      from
      a Third Party (i) in consideration of any discount, credit or similar allowance
      granted to such Third Party in connection with the purchase of any Licensed
      Product(s) or Substitute Product(s) or (ii) in lieu of any royalties with
      respect to any Licensed Product(s) or Substitute Product(s), then Discovery
      shall pay to PMPSA a royalty equal to the product of (a) such consideration
      multiplied by (b) the royalty rate set forth in Section 6.1 Discovery shall
      report on the amount of any such consideration, and the royalty payable thereon
      in U.S. Dollars, in the Royalty Report. For the avoidance of doubt, this Section
      6.4 shall not apply with respect to any fixed payment, fee or other
      consideration from a Third Party in respect of development fees, milestone
      payments or other similar payments in transactions that incorporate a
      market-rate royalty structure. 

     

    
      

    

    
       

      
          Information
          marked by [***] has been omitted pursuant to a request for confidential
          treatment. The omitted portion has been separately filed with the Securities
          and
          Exchange Commission.

      

       

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    6.5  Treatment
      of Partial Product Sales.
      In the
      event that portions of a Licensed Product or Substitute Product are sold
      separately (e.g., Aerosol Device, Disposable Dose Packet, Drug Product), the
      royalties payable pursuant to this Article 6 shall be paid [***].
       

     

    6.6  Royalty
      Reports.
      Within
[***]
      days
      after the end of each Contract Month (beginning with [***]
      Licensed
      Product or Substitute Product, as the case may be), Discovery shall deliver
      to
      PMPSA a preliminary Royalty Report. [***]
      The
      Royalty Report shall include at least the following items, separately stated
      as
      to each of the Licensed Products and Substitute Products, as applicable:

     

    (i)  the
      quantity of each of the Licensed Products and Substitute Products (delineated
      as
      Aerosol Devices and Disposable Dose Packets) invoiced by Discovery and its
      Affiliates and sublicensees during such Contract Month and the [***]
      amount
      therefor; 

     

    (ii)  the
      allowable deductions therefrom and an itemization of each specific deduction
      [***];

     

    (iii)  the
      calculation of royalties, if any, thereon in a manner consistent with the
      amounts set forth in the Royalty Report prepared in accordance with this Section
      6.6.

     

    6.7  Payment
      of Estimated and Actual Amounts.
      

     

    6.7.1  Payment
      of Estimated Amounts.
      Simultaneous with the issuance of the preliminary Royalty Report, Discovery
      shall make payment of estimated amounts due to PMPSA hereunder with respect
      to
      such Contract Month (the “Estimated
      Amount”).

     

    6.7.2  Quarterly
      Reconciliation and True-Up.
      Within
[***]
      days
      following each Contract Quarter, Discovery shall calculate the actual amount
      due
      to PMPSA hereunder with respect to the immediately preceding Contract Quarter
      (the “Actual
      Amount”)
      and
      provide to PMPSA a true and accurate Royalty Report for such Contract Quarter,
      setting forth the corrected calculations for such Contract Quarter. If the
      Estimated Amounts paid to PMPSA pursuant to Section 6.7.1 for the three Contract
      Months comprising the immediately preceding Contract Quarter exceeds the Actual
      Amount for such Contract Quarter, Discovery shall notify PMPSA and such excess
      amount (the “Royalty
      Credit”)
      shall,
      at the discretion of Discovery, be available to offset future royalties payable
      to PMPSA by Discovery. If such Actual Amount exceeds such Estimated Amount,
      Discovery shall promptly pay such excess amount to PMPSA. [***]

     

    6.8  Pass-Through
      Royalties.
      Each
      Party shall be solely responsible for paying any royalties which may be due
      to
      Third Parties with respect to such Party’s Intellectual Property. 

     

    6.9  Records
      and Audits.

     

    
      

        Information
        marked by [***]
        has been
        omitted pursuant to a request for confidential treatment. The omitted portion
        has been separately filed with the Securities and Exchange
        Commission.

       

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    6.9.1  Records.
      Discovery shall keep, and shall require its Affiliates and sublicensees to
      keep,
      such records as are necessary to determine accurately the sums due to each
      other
      under this Agreement. Such records shall be retained by Discovery for the Term
      and for three (3) years thereafter. 

     

    6.9.2  Audit.
      At the
      written request of PMPSA, with reasonable advance notice, Discovery shall make
      available for inspection, review, and audit, by an internationally recognized
      independent certified public accounting firm appointed by PMPSA and reasonably
      acceptable to Discovery, such records of Discovery as may be reasonably
      necessary to verify Discovery’s accounting reports and payments made or to be
      made pursuant to this Agreement; provided, however, that such audits may not
      be
      performed by PMPSA more than once per Contract Year in the absence of a
      reasonable basis for concern regarding compliance with the Agreement or any
      applicable Laws. If such accountants identify a discrepancy, then the
      appropriate Party shall pay the other Party the amount of the discrepancy within
      thirty (30) days of the date of receiving such accountant’s written report, or
      as otherwise agreed upon by the Parties, plus, in the event of any underpayment,
      interest calculated in accordance with Section 6.12. 

     

    6.9.3  Audit
      Confidentiality.
      PMPSA
      shall cause any accountants selected by it to enter into a confidentiality
      agreement acceptable to Discovery obligating such accountants to retain all
      such
      information in confidence pursuant to such confidentiality agreement. Such
      accountants shall not reveal to PMPSA the details of its review, except for
      such
      information as is required to be disclosed under this Agreement, and such
      details shall be treated as Confidential Information. Each Party agrees to
      hold
      in strict confidence all information concerning payments and reports, and all
      information learned in the course of any audit or inspection (and not to make
      copies of such reports and information), except to the extent necessary for
      such
      Party to reveal such information in order to enforce its rights under this
      Agreement or if disclosure is required by Law, regulation or judicial
      order.

     

    6.9.4  Costs
      of Audits.
      PMPSA
      shall pay for such inspections, except that in the event the adjustment shown
      by
      such inspection is greater than [***]
      percent
      ([***]%)
      of the
      original royalty amounts in question, Discovery shall pay for such
      inspection. 

     

    6.10  Foreign
      Exchange.
      For the
      purpose of computing the Net Sales for Licensed Products and Substitute Products
      sold in a currency other than Dollars, such amounts shall be converted into
      Dollars each Contract Month in the then standard manner used by Discovery in
      the
      preparation of its audited financial statements, consistently applied. Such
      method of currency conversion used by Discovery shall be a commercially
      reasonable method consistent with industry standards, and Discovery shall
      disclose to PMPSA [***]
      prior
      to
      First Commercial Sale of a Licensed Product or Substitute Product in a country
      such method of currency conversion.

     

    
      Notwithstanding
        anything herein to the contrary, at PMPSA’s option, with respect to any
        particular country in the Territory, Discovery shall pay royalties for Licensed
        Products and Substitute Products sold in such country in such country’s local
        currency. Discovery shall not change such method of currency conversion
        disclosed to PMPSA pursuant to this Section 6.10 without obtaining PMPSA’s prior
        written consent, such consent not to be unreasonably withheld.

    

     

    
      

    

      Information
      marked by [***]
      has been
      omitted pursuant to a request for confidential treatment. The omitted portion
      has been separately filed with the Securities and Exchange
      Commission.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    6.11  Manner
      of Payments.
      All
      sums due to PMPSA under this Agreement shall be payable by electronic funds
      transfer in immediately available funds to such bank account(s) as PMPSA shall
      designate at least two (2) Business Days in advance. 

     

    6.12  Late
      Payments.
      Any
      amounts not paid when due under this Agreement shall be subject to interest
      from
      and including the date payment is due through and including the date upon which
      PMPSA has collected immediately available funds in an account designated by
      PMPSA at an annual rate equal to the sum of [***] 
      percent
      ([***]%)
      plus
      the annual prime rate of interest quoted in the Money Rates section of the
      East
      Coast edition of the Wall
      Street Journal
      calculated daily on the basis of a 365-day year, or similar reputable data
      source, or, if lower, the highest rate permitted under applicable law.
      Notwithstanding the foregoing, any payment of amounts by Discovery representing
      the excess of Actual Amount over Estimated Amount, calculated in accordance
      with
      Section 6.7, shall not be subject to this Section 6.12. 

     

    6.13  Tax
      Withholding.
      Any
      taxes, levies, or other duties (“Taxes”)
      paid
      or required to be withheld under the appropriate local tax Laws by Discovery
      on
      account of monies payable to PMPSA under this Agreement shall be deducted from
      the amount of monies otherwise payable to PMPSA under this Agreement and paid
      by
      Discovery to the proper taxing authority. Discovery shall secure and send to
      PMPSA within a reasonable period of time proof of any such Taxes paid or
      required to be withheld by Discovery for the benefit of PMPSA. The Parties
      shall
      cooperate reasonably with each other to (i) ensure that any amounts required
      to
      be withheld by Discovery are reduced in amount to the fullest extent permitted
      by Law and (ii) to resolve such other Party’s taxation concerns.

     

    ARTICLE
      7

    INTELLECTUAL
      PROPERTY

     

    7.1  Ownership.
      

     

    7.1.1  PMPSA
      Intellectual Property.
      PMPSA
      shall own (i) all Intellectual Property owned or controlled by PMPSA relating
      to
      the PMPSA Technology or Licensed Products that was existing or conceived prior
      to the Effective Date, (ii) all Intellectual Property developed by PMPSA outside
      of the performance of this Agreement or to which PMPSA otherwise obtains rights
      from a Third Party (including without limitation all Intellectual Property
      relating to the PMPSA Technology or the Licensed Products); (iii) all Inventions
      conceived, created and reduced to practice solely by or on behalf of PMPSA
      in
      the course of the performance of this Agreement, except Discovery Technology
      Improvements; and (iv) all PMPSA Technology Improvements (collectively,
“PMPSA
      Intellectual Property”).
      

     

    
      

        Information
        marked by [***]
        has been
        omitted pursuant to a request for confidential treatment. The omitted portion
        has been separately filed with the Securities and Exchange
        Commission.

       

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    7.1.2  Discovery
      Intellectual Property.
      Discovery shall own (i) all Intellectual Property owned or controlled by
      Discovery relating to Discovery Technology or the Licensed Products that was
      existing or conceived prior to the Effective Date or is developed by Discovery
      outside of the performance of this Agreement, (ii) all Intellectual Property
      relating to Discovery Technology or the Licensed Products developed by Discovery
      outside of the performance of this Agreement or exercise of the license granted
      hereunder or to which Discovery otherwise obtains rights from a Third Party,
      and
      (iii) all Inventions conceived, created and reduced to practice solely by or
      on
      behalf of Discovery in the course of the performance of this Agreement or
      exercise of the license granted hereunder, except PMPSA Technology Improvements;
      (iv) all Inventions conceived, created and reduced to practice jointly by or
      on
      behalf of the Parties in the course of the performance of this Agreement or
      exercise of the license granted hereunder, except PMPSA Technology Improvements;
      and (v) all Discovery Technology Improvements (collectively “Discovery
      Intellectual Property”).

     

    7.2  Disclosure,
      Assignment, License and Exploitation.

     

    7.2.1  Disclosure.
      Each
      Party shall cause all personnel conducting work or exercising rights on its
      behalf under the Agreement to, promptly disclose to the other Party all
      Intellectual Property in which the other Party has an ownership interest
      pursuant to Section 7.1, and to assign any and all right, title and
      interest in all such Inventions and Intellectual Property in accordance with
      this Agreement. Each Party shall maintain records in sufficient detail and
      in
      good scientific manner appropriate for patent prosecution purposes to properly
      reflect all work done and results achieved in conducting its work hereunder,
      and
      shall respond to reasonable requests of the other Party for information
      regarding Intellectual Property in which the other Party has an ownership
      interest. 

     

    7.2.2  Assignment
      and License.
      In the
      event PMPSA conceives, creates or reduces to practice any Discovery Technology
      Improvements, PMPSA shall promptly notify Discovery and PMPSA shall assign
      all
      right, title and interest in and to such Discovery Technology Improvements
      to
      Discovery. In the event Discovery conceives, creates or reduces to practice
      any
      PMPSA Technology Improvements, Discovery shall promptly notify PMPSA and
      Discovery shall assign all right, title and interest in and to such PMPSA
      Technology Improvements to PMPSA, however, such PMPSA Technology Improvements
      are included in the Intellectual Property licensed to Discovery pursuant to
      Section 2.1.

     

    7.2.3  Exploitation
      of Intellectual Property.
      To the
      extent permitted by Law, PMPSA agrees not to exploit the PMPSA Intellectual
      Property in the Exclusive Field in any country in the world; provided, however,
      that in the event Discovery terminates this Agreement pursuant to Article 14
      with respect to [***],
      this
      Section 7.2.3 shall no longer apply to PMPSA with respect to such [***]
      and
      PMPSA shall have the right to exploit the PMPSA Intellectual Property in the
      Exclusive Field in the Territory with respect to such [***].
       

     

    7.3  Agreement
      with Personnel.
      Each
      Party shall have valid and enforceable written agreements with all personnel
      conducting work on its behalf under the Agreement containing a nondisclosure
      obligation comparable in scope to Article 8 and giving the other Party all
      rights and authority necessary to effectuate the provisions of this Article
      7.
      Each Party shall provide copies of these agreements to the other Party upon
      the
      other Party’s request as allowed by each Party’s internal personnel
      policies.

     

    
      

    

    
        Information
        marked by [***]
        has been
        omitted pursuant to a request for confidential treatment. The omitted portion
        has been separately filed with the Securities and Exchange
        Commission.

       

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    7.4  Prosecution
      of Patents.
      

     

    7.4.1  Discovery
      and PMPSA Patent Filings.
      Discovery and PMPSA each shall use commercially reasonable efforts to diligently
      prosecute and
      maintain their
      respective PMPSA Patents and Discovery Patents in
      the
      Territory; provided that solely
      for the purposes of this Section, Discovery Patents shall mean those Discovery
      Patents that claim or are directed to Discovery Technology.
      Within
      forty-five (45) days of a Party’s receipt of an allowance or grant of a Patent,
      the Party prosecuting the Patent shall inform the other Party of such allowance
      or grant, and provide the other Party with a copy of the allowed or granted
      Patent claims thereof. 

     

    7.4.2  Patent
      Prosecution Costs.
      Each
      Party shall bear its own costs to file, prosecute and maintain its Patents
      in
      the Territory (including, without limitation, patent term
      extension).

     

    7.4.3  Abandonment
      of Prosecution or Maintenance.
      Each
      Party shall notify the other Party in the event it is unable for any reason
      to
      meet its obligations under this Article 7 with respect to any Patents that
      are
      subject to Section 7.4.1. Such notification shall be given within a reasonable
      period prior to the date on which such Patents will lapse or become abandoned.
      The Party receiving any notification hereunder shall then have the option,
      exercisable upon written notification to the Party that delivered such
      notification, to assume full responsibility, at its discretion and its sole
      cost
      and expense, for prosecution or maintenance of the affected Patents in such
      country or countries in the Territory.

     

    7.5  Patent
      Term Extensions.
      Each
      Party shall have the right to request that the other Party file all applications
      and take all actions necessary to obtain patent extension pursuant to 35 U.S.C.
      § 156 or like foreign statutes for the respective Parties’ Patents in the
      Territory. If the filing Party declines to pursue such patent term extensions,
      then as permitted by law, the other Party shall have the right (at its cost
      and
      expense) on behalf of the filing Party to file, or direct the filing of, all
      such applications and take all such actions necessary to obtain such patent
      term
      extensions. Each Party agrees to sign such further documents and take such
      further actions as may be requested by the other Party in this
      regard.

     

    7.6  Third
      Party Infringement.

     

    7.6.1  Suits
      for Infringement.
      If
      Discovery or PMPSA becomes aware of infringement of any Patent included in
      the
      Discovery Patents or the PMPSA Patents by a Third Party in the Territory, such
      Party shall promptly notify the other Party in writing to that effect and
      provide a summary of the relevant facts and circumstances known to such Party
      relating to such infringement (“Infringement
      Notice”).
      Each
      Party shall have the right, at its sole discretion and expense, on its own
      behalf, to institute, prosecute, and control any action or proceeding to
      restrain infringement of any of its Patents. A Party instituting suit shall
      have
      control of such suit and all negotiations for its settlement or compromise;
      provided however, that the instituting Party shall not settle or compromise
      any
      such suit or enter into any consent order for the settlement or compromise
      thereof which would materially adversely affect the Intellectual Property rights
      with respect to a Licensed Product without the prior written consent of the
      other Party, which consent shall not be unreasonably withheld, conditioned,
      or
      delayed.

     

    
      
        
        

      

      
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    7.6.2  Step-in
      Right.
      If,
      prior to the expiration of three (3) months from said Infringement Notice,
      the
      Party whose Patents are alleged to be infringed has not obtained a
      discontinuance of an alleged infringement by a Third Party or brought an
      infringement action or proceeding or otherwise taken appropriate action to
      abate
      such infringement, such Party shall notify the other Party at any time prior
      thereto of its intention not to bring suit against an alleged infringer. Upon
      such notice and if such infringement is reasonably likely to materially
      adversely affect a Licensed Product in the Territory, then, and in those events
      only, the other Party shall have the right, but not the obligation, at its
      sole
      expense to institute, prosecute, and control any action or proceeding to
      restrain such infringement. Each Party agrees to be joined as a party if
      necessary to prosecute the action or proceeding and shall provide all reasonable
      cooperation, including any necessary use of its name, required to prosecute
      such
      litigation. The other Party shall have control of any such suit and all
      negotiations for its settlement or compromise; provided, however, that the
      other
      Party shall not settle or compromise any such suit or enter into any consent
      order for the settlement or compromise thereof without the prior written consent
      of the patentee Party, which consent shall not be unreasonably withheld,
      conditioned, or delayed.

     

    7.6.3  Allocation
      of Recovery.
      All
      damages, settlements and rewards made or obtained in connection with any suit
      or
      other legal proceeding under this Section 7.6 shall be shared among the parties
      as follows:

     

    (i)  [***]

     

    (ii)  [***] 

     

    7.6.4  Declaratory
      Actions and Counterclaims.
      In the
      event that an action alleging invalidity or non-infringement of any of the
      Discovery Patents or PMPSA Patents is brought against Discovery or PMPSA in
      the
      Territory, the Party defending such action or counterclaim, at its sole
      discretion, shall have the right, within thirty (30) days after the commencement
      of such action, to take or regain control of the action at its own expense.
      If
      the defending Party determines not to exercise this right, the other Party
      may
      take over or remain as lead counsel for the action at that Party’s sole
      discretion. Any recovery obtained from such litigation, proceeding or settlement
      shall be shared in accordance with Section 7.6.3.

     

    7.7  Infringement
      of Third Party Rights.

     

    7.7.1  Infringement
      Claims.
      With
      respect to any and all claims instituted by Third Parties for patent
      infringement involving the manufacture, use, offer for sale, or sale of a
      Licensed Product in the Territory during the Term, the Party named as defendant
      shall promptly notify the other Party of such claim, and the defending Party
      shall have the right, at its sole discretion and expense, to defend and control
      any action or proceeding with respect to such claim. The other Party agrees
      to
      be joined as a Party if necessary to defend the action or proceeding and shall
      provide reasonable cooperation, including any necessary use of its name,
      required to defend such litigation. The defending Party shall have sole control
      of any such suit and all negotiations for its settlement or compromise;
      provided, however, that the defending Party shall not settle or compromise
      any
      such suit or enter into any consent order for the settlement or compromise
      thereof without the prior written consent of the other Party if such settlement
      would materially adversely affect the other Party’s rights or impose any
      obligation on the other Party, which consent shall not be unreasonably withheld,
      conditioned, or delayed.

     

    
      

        Information
        marked by [***]
        has been
        omitted pursuant to a request for confidential treatment. The omitted portion
        has been separately filed with the Securities and Exchange
        Commission.

       

    

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    7.7.2  Step-in
      Right.
      If,
      prior to the expiration of three (3) months from said claim being brought,
      or
      such sooner period as may be necessary to appropriately respond to said claim,
      the defending Party has not elected to defend such action or proceeding, or
      if
      the defending Party shall notify the other Party at any time prior thereto
      of
      its intention not to defend such action or proceeding, then, and in those events
      only, the other Party shall have the right, but not be obligated, at its own
      expense to defend and control any action or proceeding. Such other Party shall
      have sole control of any such suit and all negotiations for its settlement
      or
      compromise; provided, however, that the other Party shall not settle or
      compromise any such suit or enter into any consent order for the settlement
      or
      compromise thereof without the prior written consent of the original defending
      Party, which consent shall not be unreasonably withheld, conditioned, or
      delayed.

     

    ARTICLE
      8

    CONFIDENTIAL
      INFORMATION

     

    8.1  Use
      of
      Confidential Information.
      A Party
      receiving Confidential Information (the “Receiving
      Party”)
      from
      the other Party (the “Disclosing
      Party”)
      shall
      keep all such Confidential Information with the same degree of care it maintains
      the confidentiality of its own confidential information, but in no event less
      than a reasonable degree of care. Neither Party shall use such Confidential
      Information for any purpose other than in performance of this Agreement, and
      shall not disclose the same to any Person other than to its Affiliates and
      such
      of its and their employees or agents who have a need to know such Confidential
      Information to implement the terms of this Agreement, and who are subject to
      a
      nondisclosure obligation comparable in scope to this Article 8. Each Party
      shall
      advise any employee or agent who receives such Confidential Information of
      the
      confidential nature thereof and of the obligations contained in this Agreement
      relating thereto, and such Party shall ensure that all such employees and agents
      comply with such obligations as if they had been a Party hereto. Upon
      termination of this Agreement, each Party shall use commercially reasonable
      efforts to return or destroy all documents, tapes or other media containing
      Confidential Information of the Disclosing Party that remains in such Party’s or
      its agents’ or employees’ possession, except that each Party may keep one (1)
      copy of the Confidential Information solely for archival purposes. Such archival
      copy shall be deemed to be the property of the Disclosing Party, and shall
      continue to be subject to the provisions of this Article 8. Notwithstanding
      anything to the contrary in this Agreement, Confidential Information shall
      not
      include any information or materials that the Receiving Party can demonstrate
      by
      documentary evidence: 

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    (i)  were
      already known to the Receiving Party (other than under an obligation of
      confidentiality), at the time of disclosure by the Disclosing
      Party;

     

    (ii)  were
      generally available to the public or otherwise part of the public domain at
      the
      time of its disclosure to the Receiving Party;

     

    (iii)  became
      generally available to the public or otherwise part of the public domain after
      its disclosure or development, as the case may be, and other than through any
      act or omission of a Party in breach of such Party’s confidentiality obligations
      under this Agreement;

     

    (iv)  were
      disclosed to a Party, other than under an obligation of confidentiality, by
      a
      Third Party who had no obligation to the Disclosing Party not to disclose such
      information to others; or

     

    (v)  were
      independently discovered or developed by or on behalf of the Receiving Party
      without the use of the Confidential Information belonging to the other Party.
      

     

    8.2  Permitted
      Disclosure and Use.
      Notwithstanding anything to the contrary in this Agreement, in the event that
      the Receiving Party or any of its directors, officers, employees, agents and
      advisors and their representatives deems it necessary or are requested or
      required (by oral questions, deposition, interrogatories, requests for
      information or documents, subpoena, civil investigative demand or other legal
      process by a court or other governmental authority, or by any Regulatory
      Authority to obtain Regulatory Approval of a Licensed Product) to disclose
      all
      or any part of any Confidential Information, the Receiving Party will provide
      the Disclosing Party with prompt notice of such request or requirement (which
      notice shall be reasonably in advance of such requested or required disclosure),
      as well as notice of the terms and circumstances surrounding such request or
      requirement, so that the Disclosing Party may seek an appropriate protective
      order or waive compliance with the provisions of this Agreement. In such case,
      the Receiving Party shall consult with the Disclosing Party with respect to
      the
      advisability of pursuing any such order or other legal action or available
      steps
      to resist or narrow such request or requirement. If, failing the entry of a
      protective order or the receipt of a waiver hereunder, the Receiving Party
      is,
      in the opinion of counsel satisfactory to the Disclosing Party and its counsel,
      legally compelled to disclose any Confidential Information, the Receiving Party
      may disclose that portion of the Confidential Information which its counsel
      advises the Receiving Party that the Receiving Party is legally compelled to
      disclose. In any event, the Receiving Party will use reasonable efforts to
      obtain and will not oppose action by the Disclosing Party to obtain, an
      appropriate protective order or other reliable assurance that confidential
      treatment will be afforded the disclosure of such Confidential Information.
      The
      Receiving Party will use best efforts to cause its directors, officers,
      employees, affiliates, agents and advisors and their representatives to comply
      with the terms of this Section. A Receiving Party may disclose Confidential
      Information belonging to a Disclosing Party to the extent such disclosure is
      reasonably necessary to enforce the provisions of this Agreement. 

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    8.3  Disclosure
      for SEC Filings.
      Notwithstanding anything to the contrary in this Agreement, the Parties
      expressly acknowledge that Discovery may file a copy of this Agreement with
      the
      Securities and Exchange Commission (the “SEC”)
      in any
      of its SEC reports and filings, as well as incorporate them by reference into
      other SEC filings. Discovery shall request confidential treatment of sensitive
      terms hereof to the extent such confidential treatment is reasonably available
      to Discovery under the prevailing circumstances. Discovery shall coordinate
      in
      advance with PMPSA with regard to the terms of this Agreement, for which
      Discovery shall seek to be redacted in any such SEC filings, and Discovery
      shall
      use reasonable efforts to seek confidential treatment for such mutually agreed
      terms and terms reasonably requested by PMPSA; provided, however, that each
      Party shall retain ultimate control and responsibility for their respective
      disclosures to the SEC and the public generally. To the extent permitted by
      Law,
      Discovery shall use reasonable efforts to provide PMPSA reasonable advance
      notice of any SEC filing related to this Agreement which differs materially
      from
      prior filings.

     

    8.4  Publications.
      Subject
      to any Third Party rights existing as of the Effective Date, each Party shall
      submit to the other Party for review and approval all proposed academic,
      scientific and medical publications and public presentations relating to a
      Licensed Product or any research or development activities conducted as part
      of
      the Agreement for review in connection with preservation of Patents, and trade
      secrets and/or to determine whether Confidential Information should be modified
      or deleted from the proposed publication or public presentation. Written copies
      of such proposed publications and presentations shall be submitted to the
      non-publishing Party no later than sixty (60) days before submission for
      publication or presentation and the non-publishing Party shall provide its
      comments with respect to such publications and presentations within ten (10)
      Business Days of its receipt of such written copy. The review period may be
      extended for an additional thirty (30) days if the non-publishing Party can
      demonstrate a reasonable need for such extension including the preparation
      and
      filing of patent applications. By written agreement, this period may be further
      extended. The Parties will each comply with standard academic practice regarding
      authorship of scientific publications and recognition of contribution of other
      Persons in any publications relating to a Licensed Product or any research
      or
      development activities under this Agreement. 

     

    8.5  Public
      Announcements.
      Subject
      to Section 8.2 and Section 8.3, (i) neither Party will make any public
      announcement of any information regarding this Agreement, the Licensed Products
      or any research or development activities under this Agreement without the
      prior
      written approval of the other Party, and (ii) Discovery shall not make any
      public statements regarding its activities with PMPSA, its relationship with
      PMPSA or any other public statements regarding PMPSA without the prior written
      approval of PMPSA, provided however that each Party may disclose (a) the general
      stage of development, commercialization and manufacturing at any given time
      during the course of the Agreement, except to the extent that any such
      information constitutes Confidential Information, (b) any information required
      by Law, and (c) any other information that has been previously approved for
      disclosure by the other Party, without further approval from the other Party
      hereunder. The Parties agree and acknowledge that Discovery may, at its sole
      discretion, subject to its compliance with this Article 8, file a Current Report
      on Form 8-K with the SEC to announce the filing of the press release and file
      it
      as an exhibit thereto, as well as to incorporate it by reference into other
      SEC
      filings. 

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    8.6  Survival.
      The
      obligations and prohibitions contained in this Article 8 shall survive the
      expiration or termination of this Agreement.

     

    ARTICLE
      9

    REPRESENTATIONS,
      WARRANTIES AND COVENANTS

     

    9.1  Mutual
      Representations and Warranties.
      Each
      Party hereby represents, warrants and covenants to the other Party that as
      of
      the Effective Date:

     

    9.1.1  Organization;
      Authority.
      It is
      duly organized, validly existing and in good standing under the laws of the
      jurisdiction of its incorporation, has full right, corporate power and authority
      to enter into this Agreement, to perform its obligations under this Agreement,
      to grant the licenses granted by such Party pursuant to this Agreement and
      to
      carry out the provisions hereof. 

     

    9.1.2  Consents.
      Except
      for any Regulatory Approvals necessary for the development, manufacture, or
      commercialization of a Licensed Product, all necessary consents, approvals,
      orders, permits and authorizations of all government authorities and Regulatory
      Authorities and other Persons or Third Parties required to be obtained by it
      as
      of the Effective Date in connection with the execution, delivery, and
      performance of this Agreement have been obtained. 

     

    9.1.3  No
      Conflict.
      The
      execution and delivery of this Agreement by such Party, the performance of
      such
      Party’s obligations hereunder, and the rights, licenses and sublicenses to be
      granted by such Party pursuant to this Agreement, (i) do not conflict with,
      violate or constitute a breach or default under any requirement of Laws or
      regulations existing as of the Effective Date and applicable to such Party
      or
      under any instrument, judgment, order, writ, decree, contract of such Party
      or
      any of its Affiliates existing as of the Effective Date; (ii) do not give rise
      to any event that results in the creation of any lien, charge or encumbrance
      upon any assets of such Party or the suspension, revocation, impairment,
      forfeiture or non-renewal of any material permit, license, authorization or
      approval that applies to such Party, its business or operations or any of its
      assets or properties; or (iii) conflict with any rights granted by such Party
      to
      any Third Party or breach any obligation that such Party has to any Third Party.
      

     

    9.1.4  Enforceability.
      This
      Agreement is a legal and valid obligation binding upon it and is enforceable
      against it in accordance with its terms, subject
      to and limited by: (i) applicable bankruptcy, insolvency, reorganization,
      moratorium, and other laws generally applicable to creditors’ rights; and (ii)
      judicial discretion in the availability of equitable relief.

     

    9.1.5  Regulatory.
      There
      are no investigations, inquiries, actions or other proceedings pending before
      or, to such Party’s knowledge, threatened, by any Regulatory Authority or other
      government agency with respect to any Licensed Products (or components thereof)
      or any facility where such Licensed Products (or components thereof) are
      manufactured, and such Party has not received written notice threatening any
      such investigation. 

     

    9.2  Intellectual
      Property.
      Discovery represents, warrants, and covenants to PMPSA that as of the Effective
      Date with respect to the Discovery Intellectual Property and, except with regard
      to PMPSA’s intellectual property rights in the name “Aria,” PMPSA represents,
      warrants, and covenants to Discovery that as of the Effective Date with respect
      to the PMPSA Intellectual Property:

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    (i)  To
      its present actual knowledge, it
      (a)
      holds good title to and is the legal and beneficial owner of, or (b) is the
      licensee of, such Intellectual Property in the Territory free and clear of
      any
      lien, mortgage, security interest, license, right, pledge, restriction on
      transferability, defect of title or other claim, charge, or encumbrance of
      any
      nature whatsoever on or affecting any property or property interest and no
      Third
      Party has any right, title, or interest in or to such Intellectual Property
      in
      the Territory. 

     

    (ii)  To
      its
      present actual knowledge, the Patents included in such Intellectual Property
      are
      valid and enforceable in the Major Markets and there have been no, and such
      Party has no reason to believe that there will be any, inventorship challenges
      with respect to any of such Patents in the Major Markets.

     

    (iii)  To
      its present actual knowledge, there
      are
      no infringement proceedings, actions, suits or complaints pending against nor
      any outstanding injunctions, judgments, orders, decrees, rulings or other
      charges against such Party relating to such Intellectual Property in the
      Territory.

     

    (iv)  To
      its present actual knowledge, it
      has not
      received any form of notice from a third party of infringement of Third Party
      Patent rights that may affect the making, using or selling of Licensed Products
      in the Territory; and to its knowledge (a) the manufacture, development and
      commercialization of the Licensed Products in the Territory will not infringe
      the Patents of any Third Party in the Territory and (b) there are no Third
      Party
      patent applications in the Territory pending which, if issued, would materially
      adversely affect the ability to make, use or sell the Licensed Products in
      the
      Territory.

     

    (v)  To
      its present actual knowledge, it
      has not
      granted any third party any license, covenant not to sue, options, or other
      right with respect to such Intellectual Property in the Territory that would
      impact its ability to enforce such Intellectual Property in the Territory.
      There
      are no existing agreements, options, commitments, or rights with, of, or to
      any
      Person to acquire or obtain any rights with respect to the Intellectual Property
      in the Territory that are inconsistent with the rights granted
      herein.

     

    (vi)  To
      its present actual knowledge, each
      agreement pursuant to which a Third Party has granted, assigned or otherwise
      transferred rights with respect to such Intellectual Property in the Territory
      are in full force and effect, and no Party to such agreements is in breach
      or
      default thereunder, and the execution and performance of this Agreement will
      not
      result in a breach or default thereunder. 

     

    9.3  No
      Adverse Effects.
      Discovery represents, warrants and covenants to PMPSA that as of the Effective
      Date, the studies of Pulmonary Surfactants conducted by Discovery prior to
      the
      Effective Date have not shown any adverse effects or toxicity of the Pulmonary
      Surfactant in humans that could reasonably be anticipated to frustrate the
      purposes of this Agreement, and as of the Effective Date, Discovery has not
      been
      informed of any such adverse effects or toxicity.

     

    
      
        
        

      

      
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    ARTICLE
      10

    ADDITIONAL
      COVENANTS

     

    10.1  Compliance
      with Laws.
      Each
      Party
      shall perform its responsibilities in a good scientific manner in accordance
      with the terms of this Agreement and in compliance in all material respects
      with
      the requirements of Laws. 

     

    10.2  Cooperation.
      The
      Parties agree that maintaining effective and open communication between the
      Parties on matters relating to the Agreement is important to the success of
      the
      Agreement. 

     

    10.3  Sharing
      of Information.
      Subject
      to applicable Law and privileges and obligations of confidentiality, the Parties
      agree to provide the other Party, upon such other Party’s reasonable request,
      copies or access to all data, documentation and work products, including
      Clinical Trials, relating to any Licensed Product.

     

    
      
        
        

      

      
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    ARTICLE
      11

    DISCLAIMERS
      AND LIMITATION OF LIABILITY

     

    11.1  Disclaimer
      of Warranties.
      EXCEPT
      AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY
      REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE,
      CONCERNING THE DEVELOPMENT, COMMERCIALIZATION, MARKETING, OR SALE OF ANY PRODUCT
      INCLUDING THE SUCCESS OR POTENTIAL SUCCESS THEREOF. EXCEPT AS EXPRESSLY SET
      FORTH HEREIN, EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL REPRESENTATIONS,
      WARRANTIES AND AGREEMENTS OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING THE
      WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

     

    THE
      PARTIES UNDERSTAND THAT THE LICENSED PRODUCTS ARE THE SUBJECT OF ONGOING
      CLINICAL RESEARCH AND DEVELOPMENT AND THAT NEITHER PARTY CAN ASSURE THE SAFETY
      OR USEFULNESS OF LICENSED PRODUCTS. NEITHER PARTY MAKES ANY REPRESENTATION
      OR
      WARRANTY EXCEPT AS SET FORTH IN THIS ARTICLE 11 CONCERNING ITS PATENT RIGHTS
      OR
      KNOW-HOW, INCLUDING THE VALIDITY OR SCOPE OF ITS PATENT RIGHTS OR THAT THE
      MANUFACTURE, USE OR SALE OF ANY LICENSED PRODUCT WILL NOT INFRINGE THE PATENT
      RIGHTS OF THIRD PARTIES.

     

    11.2  Limitation
      of Liability.
      IN NO
      EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY OF ITS PERSONNEL
      FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE OR EXEMPLARY
      DAMAGES (INCLUDING, LOST PROFITS, BUSINESS, OR GOODWILL) SUFFERED OR INCURRED
      BY
      SUCH OTHER PARTY OR ITS AFFILIATES AND THEIR RESPECTIVE PERSONNEL IN CONNECTION
      WITH A BREACH OR ALLEGED BREACH OF THIS AGREEMENT EXCEPT WHERE ATTRIBUTABLE
      TO A
      WILLFUL OR INTENTIONAL BREACH OF THIS AGREEMENT. NOTHING IN THIS SECTION 11.2
      IS
      INTENDED TO, NOR SHALL, LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR
      OBLIGATIONS OF EITHER PARTY WITH RESPECT TO THIRD PARTY CLAIMS UNDER THIS
      ARTICLE 11, OR ANY REMEDIES OR DAMAGES AVAILABLE FOR BREACHES OF CONFIDENTIALITY
      OBLIGATIONS IN ARTICLE 8.

     

    
      
        
        

      

      
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    ARTICLE
      12

    INDEMNIFICATION;
      INSURANCE

     

    12.1  Indemnification.
      

     

    12.1.1  Obligations
      of the Parties.
      Each of
      the Parties shall defend, indemnify and hold harmless the other Party, its
      Affiliates and its and their respective directors, officers, employees,
      consultants, contractors, representatives and agents (collectively, the
“Indemnified
      Parties”)
      from
      and against any and all losses, costs, damages, fees, liabilities, or expenses
      (including reasonable attorneys’ fees and expenses) (collectively, “Losses”)
      incurred in connection with any Third Party claim, action or proceeding (a
      “Third Party Claim”) arising out of or related to: 

     

    (i)  any
      material breach by the indemnifying Party of any of its representations,
      warranties, covenants or obligations pursuant to this Agreement;
      and

     

    (ii)  any
      negligence, recklessness, willful misconduct or wrongful intentional acts or
      omissions of the indemnifying Party, its Affiliates, or their officers,
      directors, employees, contractors, consultants, agents, representatives, or
      sublicensees in the exercise of any of the indemnifying Party’s rights or the
      performance of any of the indemnifying Party’s obligations under this Agreement.

     

    12.1.2  Additional
      Indemnification by PMPSA.
      In
      addition to the indemnity set forth in Section 12.1.1 above, PMPSA shall defend,
      indemnify and hold harmless Discovery, its Affiliates and its and their
      respective directors, officers, employees, consultants, contractors,
      representatives and agents from and against any and all Losses incurred in
      connection with any Third Party Claim that the PMPSA Technology infringes or
      misappropriates such Third Party intellectual property in the Territory to
      the
      extent such Losses are directly attributable to actual infringement or
      misappropriation of such Third Party’s intellectual property by the PMPSA
      Technology, except to the extent such infringement and misappropriation is
      attributable to further development, modifications or enhancements of the PMPSA
      Technology by Discovery or due to the combination by Discovery (directly or
      indirectly) of the PMPSA Technology with any other technology and provided
      that
      Discovery uses all reasonable efforts to minimize any such Losses. 

     

    12.1.3  Additional
      Indemnification by Discovery.
      In
      addition to the indemnity set forth in Section 12.1.1 above, Discovery shall
      defend, indemnify and hold harmless PMPSA, its Affiliates and its and their
      respective directors, officers, employees, consultants, contractors,
      representatives and agents from and against any and all Losses incurred in
      connection with any Third Party Claim arising out of or related to any
      intellectual property infringement and trade secret misappropriation liability
      relating to the development, manufacture, or commercialization of any Licensed
      Product, except to the extent such Losses are due to matters for which PMPSA
      is
      required to provide indemnification pursuant to Section 12.1.2.

     

    
      
        
        

      

      
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    12.1.4  Certain
      Product Liability Claims.
      Notwithstanding Sections 12.1.1, 12.1.2, and 12.1.3, Discovery shall defend,
      indemnify and hold harmless PMPSA, its Affiliates and its and their respective
      directors, officers, employees, consultants, contractors, representatives and
      agents from and against any and all Losses incurred in connection with any
      Third
      Party Claims arising out of or relating to the commercialization, marketing,
      sale, use, handling, manufacture and/or storage of any Licensed Product,
      including any claims that involve death or bodily injury (or allegations
      thereof) to any individual.

     

    12.1.5  Complete
      Indemnification.
      As the
      Parties intend complete indemnification, all direct out of pocket costs and
      expenses reasonably incurred by an Indemnitee in connection with enforcement
      of
      Section 12.1 shall also be reimbursed by the Indemnitor.

     

    12.2  Indemnification
      Procedures.
      

     

    12.2.1  Notification.
      In the
      case of a Third Party Claim as to which a Party may be obligated to provide
      indemnification pursuant to this Agreement (the “Indemnitor”),
      such
      Indemnified Party seeking indemnification hereunder (“Indemnitee”)
      will
      notify the Indemnitor in writing of the Third Party Claim (and specifying in
      reasonable detail the factual basis for the Third Party Claim and to the extent
      known, the amount of the Third Party Claim) reasonably promptly after becoming
      aware of such Third Party Claim; provided, however, that failure to give such
      notification will not affect the indemnification provided hereunder except
      to
      the extent the Indemnitor shall have been actually prejudiced as a result of
      such failure.

     

    12.2.2  Assumption
      of Defense.
      If a
      Third Party Claim is made against an Indemnitee, the Indemnitor will be
      entitled, within one hundred twenty (120) days after receipt of written notice
      from the Indemnitee of the commencement or assertion of any such Third Party
      Claim, to assume the defense thereof (at the expense of the Indemnitor) with
      counsel selected by the Indemnitor and reasonably satisfactory to the
      Indemnitee, for so long as the Indemnitor is conducting a good faith and
      diligent defense. Should the Indemnitor so elect to assume the defense of a
      Third Party Claim, the Indemnitor will not be liable to the Indemnitee for
      any
      legal or other expenses subsequently incurred by the Indemnitee in connection
      with the defense thereof; provided, however, that if in the opinion of counsel,
      such counsel and opinion being satisfactory to Indemnitor and its counsel,
      a
      conflict of interest exists between the Indemnitor and an Indemnitee in respect
      of such claim, such Indemnitee shall have the right to employ separate counsel
      (which shall be reasonably satisfactory to the Indemnitor) to represent such
      Indemnitee with respect to the matters as to which a conflict of interest exists
      and in that event, the reasonable fees and expenses of such separate counsel
      shall be paid by such Indemnitor; provided further, that the Indemnitor shall
      only be responsible for the reasonable fees and expenses of one (1) separate
      counsel for such Indemnitee. If the Indemnitor assumes the defense of any Third
      Party Claim, the Indemnitee shall have the right to participate in the defense
      thereof and to employ counsel, at its own expense, separate from the counsel
      employed by the Indemnitor. If the Indemnitor assumes the defense of any Third
      Party Claim, the Indemnitor will promptly supply to the Indemnitee copies of
      all
      correspondence and documents relating to or in connection with such Third Party
      Claim and keep the Indemnitee informed of developments relating to or in
      connection with such Third Party Claim, as may be reasonably requested by the
      Indemnitee (including providing to the Indemnitee on reasonable request updates
      and summaries as to the status thereof). If the Indemnitor chooses to defend
      a
      Third Party Claim, all Indemnitees shall reasonably cooperate with the
      Indemnitor in the defense thereof (such cooperation to be at the expense,
      including reasonable legal fees and expenses, of the Indemnitor). If the
      Indemnitor does not elect to assume control of the defense of any Third Party
      Claim, within the one hundred twenty (120) day period set forth above, or if
      such good faith and diligent defense is not being or ceases to be conducted
      by
      the Indemnitor, the Indemnitee shall have the right, at the expense of the
      Indemnitor, after three (3) Business Days notice to the Indemnitor of its intent
      to do so, to undertake the defense of the Third Party Claim for the account
      of
      the Indemnitor (with counsel selected by the Indemnitee), and to compromise
      or
      settle such Third Party Claim, exercising reasonable business
      judgment.

     

    
      
        
        

      

      
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    12.2.3  Settlements.
      The
      Indemnitee may agree to any settlement, compromise, or discharge of such Third
      Party Claim that the Indemnitor may recommend that by its terms obligates the
      Indemnitor to pay the full amount of Losses (whether through settlement or
      otherwise) in connection with such Third Party Claim and unconditionally and
      irrevocably releases the Indemnitee completely from all liability in connection
      with such Third Party Claim; provided, however, that, without the Indemnitee’s
      prior written consent, the Indemnitor shall not consent to any settlement,
      compromise, or discharge (including the consent to entry of any judgment),
      and
      the Indemnitee may refuse in good faith to agree to any such settlement,
      compromise, or discharge, that provides for injunctive or other nonmonetary
      relief affecting the Indemnitee. The Indemnitee shall not (unless required
      by
      Law) admit any liability with respect to, or settle, compromise, or discharge,
      such Third Party Claim without the Indemnitor’s prior written consent (which
      consent shall not be unreasonably withheld, conditioned, or delayed).

     

    12.3  Insurance.
      Discovery agrees to obtain and maintain commercial general liability insurance
      and/or self-insurance, including prior to the date a Licensed Product is first
      administered in humans, commercial general liability insurance and/or
      self-insurance for Clinical Trials and products liability, with reputable and
      financially secure insurance carriers, in such amounts and subject to such
      deductibles as are reasonable and customary in the pharmaceutical industry
      for
      companies of comparable size and activities. Discovery shall maintain such
      insurance for so long as Licensed Products in the Territory continue to be
      developed, manufactured, or commercialized and thereafter for so long as is
      necessary to cover any and all Third Party Claims required to be indemnified
      by
      Discovery which Third Party Claims may arise from the development, manufacture,
      and/or commercialization of a Licensed Product in the Territory. Upon reasonable
      request by PMPSA, Discovery shall produce evidence that such insurance policies
      are valid, kept up to date, and in full force and effect. The insurance
      obligations set forth in this Section 12.3 may be satisfied by commercially
      reasonable self-insurance or a commercially reasonable combination of insurance
      and self-insurance. 

     

    
      
        
        

      

      
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    ARTICLE
      13

    TERM

     

    This
      Agreement shall become effective on the Effective Date, and unless terminated
      earlier in accordance with the provisions of Article 14 shall expire as
      follows as to each Licensed Product in each country in the Territory, on a
      country-by-country basis, upon the latest of: (a) the 10th
      anniversary of the date of the First Commercial Sale of the Licensed Product;
      (b) the date on which the sale of such Licensed Product ceases to be covered
      by
      a Valid Claim in such country, or (c) the date a generic form of the product
      is
      introduced in such country (the “Term”). 

     

    ARTICLE
      14

    TERMINAION

     

    14.1  Termination
      by Discovery.
      Discovery may terminate this Agreement for any reason, in its entirety,
[***],
      upon
[***]
      days
      written notice to PMPSA. 

     

    14.2  Termination
      Due to Failure to Meet Minimum Royalties.
      PMPSA
      may terminate this Agreement upon [***]
      days’
      prior written notice to Discovery, if commencing [***]
      and
      continuing [***],
      Discovery does not pay PMPSA each Contract Quarter the Minimum Royalties due
      pursuant to Section 6.2, and Discovery does not cure such shortfall as provided
      for in Section 6.2; provided, however, that PMPSA shall not have a right to
      terminate the Agreement pursuant to this Section 14.2 for any time period in
      which Discovery is disputing in good faith amounts due under this Agreement.
       

     

    14.3  Termination
      for Material Breach.
      

     

    14.3.1  Right
      to Terminate Agreement.
      If a
      Party (the “Breaching
      Party”)
      commits a material breach of this Agreement and fails to cure such breach within
      the applicable Cure Period (as provided in 15.1.2 below), the other Party (the
      “Non-Breaching
      Party”)
      may, by
      written notice of termination within thirty (30) days after the expiration
      of
      the applicable Cure Period, elect to terminate the Agreement. Without limiting
      the generality of the foregoing, and notwithstanding the Cure Period set forth
      in Section 14.3.2, the practice by Discovery of the PMPSA Technology outside
      the
      scope of the licenses and sublicenses granted herein, which practice does not
      cease within thirty (30) days after the receipt of written notice of such breach
      from PMPSA, shall constitute a material breach. 

     

    14.3.2  Applicable
      Cure Periods.
      Upon
      receipt of written notice of a material breach pursuant to Section 14.3.1,
      and
      except as otherwise provided for in Section 14.3.1, the allegedly Breaching
      Party shall have sixty (60) days to cure such material breach (the “Cure
      Period”),
      provided, however, that in
      the case of any material breach that cannot be reasonably cured within the
      sixty
      (60) day cure period, should the Breaching Party deliver to the Non-Breaching
      Party a plan for curing such material
      breach
      which is reasonably sufficient to effect a cure and uses commercially reasonable
      efforts to pursue such plan and effect a cure, the Cure Period shall be extended
      for an additional sixty (60) days.

     

    
      

    

    
        Information
        marked by [***]
        has been
omitted pursuant to a request for confidential treatment. The omitted portion
        has been separately filed with the Securities and Exchange
        Commission.

       

    

    
      
        
        

      

      
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    14.4  Termination
      Due to Certain Events.
      Without
      prejudice to any other remedies available to it at Law or in equity, either
      Party may, subject to the provisions set forth herein, terminate this Agreement
      immediately upon written notice to the other Party if, at any time, the other
      Party shall (i) file in any court pursuant to any statute a petition for
      bankruptcy or insolvency, or for reorganization
      in
      bankruptcy, or for an arrangement or for the appointment of a receiver, trustee
      or administrator of such Party or of its assets, (ii) be served with an
      involuntary petition against it, filed in any insolvency proceeding, and such
      petition shall not be dismissed within sixty (60) days after the filing thereof,
      (iii) propose or be a party to any dissolution, (iv) make an assignment for
      the
      benefit of its creditors; or (v) ceases to do business in the ordinary course.
      

     

    14.5  Effects
      of Termination Generally

     

    14.5.1  Accrued
      Obligations; Survival.
      Upon
      expiration or termination of this Agreement, all
      of the Parties’ rights and obligations under this Agreement including the
      exclusive license in Section 2.1, shall terminate immediately except: (a)
any
      rights that shall have accrued to the benefit of any Party prior to such
      termination or expiration, including the right of PMPSA to receive royalties
      as
      provided in Article 6; and (b) any rights and obligations of the Parties which
      are expressly indicated to survive termination or expiration of this Agreement.
      All
      of the Parties’ rights and obligations under, and the provisions contained in
[***] shall
      survive termination or expiration of this Agreement. [***]  

     

    14.5.2  Outstanding
      Payments.
      All
      payments of amounts owing to either Party under this Agreement as of its
      expiration or termination shall be due and payable within the later of (i)
      to
      the extent such amounts can be calculated and a fixed sum determined at the
      time
      of expiration or termination of this Agreement, sixty (60) days after the date
      of such expiration or termination, and (ii) ten (10) days after the date in
      which such amounts can be calculated and a fixed sum determined. 

     

    ARTICLE
      15  

    STANDSTILL
      AGREEMENT

     

    15.1  General
      Standstill.
      Except
      as set forth in this Section 15.1, PMPSA hereby agrees that, without the written
      consent of Discovery, during the Term and for a [***]
      period
      beginning on the date of termination of this Agreement for any reason, neither
      PMPSA nor any of its Affiliates will (nor assist or encourage others to),
      directly or indirectly, without the written consent of Discovery: (i) acquire,
      or agree to acquire, directly or indirectly, alone or in concert with others,
      by
      purchase, gift, or otherwise, any direct or indirect beneficial ownership
      (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934,
      as
      amended (the “Exchange
      Act”),
      or
      interest in any securities or direct or indirect rights, warrants, or options
      to
      acquire, or securities convertible into or exchangeable for, any securities
      of
      Discovery; (ii) directly or indirectly effect or seek, initiate, offer, or
      propose or participate in any (A) tender or exchange offer, merger,
      consolidation, or other business combination involving Discovery, or (B) any
      recapitalization, restructuring, liquidation, dissolution, sale of all or
      substantially all the assets, or other extraordinary transaction with respect
      to
      Discovery; (iii) make, or in any way participate in, directly or indirectly,
      alone or in concert with others, any “solicitation” of “proxies” to vote (as
      such terms are used in the proxy rules of the SEC promulgated pursuant to
      Section 14 of the Exchange Act)
      involving Discovery;
      (iv)
      form or become a member of a “group” (as defined under the Exchange Act) with
      respect to any voting securities of Discovery (including by depositing any
      securities of Discovery in a voting trust or by subjecting any securities of
      Discovery to any other arrangement or agreement with respect to the voting
      of
      such securities); or (v) enter into any agreements, discussions, or arrangements
      with any Third Party with respect to any of the foregoing. 

     

    
      

    

    

       Information
        marked by [***] has been omitted pursuant to a request for confidential
        treatment. The omitted portion has been separately filed with the Securities
        and
        Exchange Commission.

    

     

    
      
        
        

      

      
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    15.2  Certain
      Exceptions.
      Nothing
      in this Article 15 shall prohibit PMPSA’s or its Affiliates’ employees from
      purchasing securities of Discovery pursuant to (i) a pension plan established
      for the benefit of PMPSA’s or its Affiliates’ employees, (ii) any employee
      benefit plan of PMPSA or its Affiliates, (iii) any stock portfolios not
      controlled by PMPSA or any of its Affiliates that invest in Discovery among
      other companies, or (iv) de
      minimis
      passive
      investments not to exceed five percent (5%) of Discovery’s outstanding voting
      securities. 

     

    15.3  Exception
      for an Acquisition Transaction.
      This
      Article 15 shall terminate (subject to revival as provided below) and PMPSA
      and
      its Affiliates shall have the right to acquire any securities of Discovery
      without regard to the limitations set forth in this Article 15 in the event
      that
      Discovery publicly announces a transaction, an intention or desire to effect
      any
      transaction, or the receipt of any offer, which would result in (a) the sale
      of
      all or substantially all of the assets of Discovery within the meaning of
      Section 271 of the Delaware General Corporation Law, or (b) Discovery common
      shareholders immediately prior to such transaction owning less than fifty
      percent (50%) of the outstanding common stock of the acquiring entity or, in
      the
      case of a merger transaction, the surviving corporation (an “Acquisition
      Transaction”).
      If
      the proposed Acquisition Transaction has not been consummated within six (6)
      months following Discovery’s public announcement in respect thereof, the
      provisions of this Article 15 shall be revived and have full force and effect
      until such time as Discovery makes a subsequent public announcement regarding
      an
      Acquisition Transaction, at which time the provisions of this Article 15 shall
      once again apply.

     

    ARTICLE
      16

    DISPUTE
      RESOLUTION

     

    16.1  Dispute
      Resolution.
      Except
      as expressly otherwise provided in this Agreement, any material dispute,
      difference, claim, action, demand, request, investigation, controversy, threat
      or other question arising out of or relating to the interpretation of any
      provisions of this Agreement or the failure of any Party to perform or comply
      with any obligations or conditions applicable to such Party pursuant to this
      Agreement (a “Dispute”)
      shall
      be settled in accordance with the provisions of this Article 16. If a Party
      intends to initiate executive negotiation, mediation or arbitration (as set
      forth below) to resolve a Dispute, such Party shall provide written notice
      to
      the other Party informing such other Party of such intention and the issues
      to
      be resolved. 

     

    
      
        
        

      

      
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    16.2  Executive
      Negotiation.
      Promptly upon a Party’s receipt of a notice by the other Party as provided in
      Section 16.1 with respect to a Dispute, and in any event within thirty (30)
      days
      of such receipt, the senior executives of each Party shall meet for attempted
      resolution of such Dispute by good faith negotiations. 

     

    16.3  Mediation.
      If the
      senior executives referenced in Section 16.2 are unable to resolve any such
      Dispute within ten (10) Business Days, either Party may, upon written notice
      to
      the other Party, refer such Dispute to mediation. Upon such written notice,
      the
      Parties shall mutually agree on a mediator to assist in the negotiations. If
      the
      Parties fail to mutually agree on a mediator within one week of the written
      notice, a mediator shall be appointed by the AAA. The Party responsible for
      referring the Dispute to mediation shall bear the costs of such mediation.
      Any
      settlement reached by mediation shall be resolved in writing, signed by the
      Parties, and shall be binding on them. 

     

    16.4  Arbitration.
      

     

    16.4.1  Referral
      to Arbitration.
      In the
      event that a Dispute is not resolved during mediation within thirty (30) days
      of
      the selection of a mediator, either Party may refer such Dispute to final and
      binding arbitration by sending written notice of such election to the other
      Party clearly marked “Arbitration Demand,” whereupon such Dispute shall be
      arbitrated in accordance with this Section 16.4. 

     

    16.4.2  Rules
      and Procedures.
      Except
      as expressly otherwise provided in this Agreement, any Dispute shall be finally
      settled by arbitration under the then-current expedited procedures applicable
      to
      the then-current Commercial Arbitration Rules of the AAA in accordance with
      the
      terms set forth in this Section 16.4. The arbitration of any Dispute shall
      be
      kept confidential and shall be filed with the office of the AAA located in
      Washington, D.C. or such other AAA office as the Parties may agree. Such
      arbitration shall be conducted by three arbitrators, one appointed by each
      of
      PMPSA and Discovery and the third selected by the first two appointed
      arbitrators. Each arbitrator shall be a person with relevant experience in
      the
      pharmaceutical industry. PMPSA and Discovery must make their respective
      arbitrator appointments within ten (10) Business Days of notice being given
      to a
      Party by the other Party of its intention to resolve such Dispute through
      arbitration. Such appointed arbitrators shall select the third arbitrator within
      ten (10) Business Days of the last to occur of their respective appointments.
      PMPSA and Discovery shall instruct such arbitrators to render a determination
      of
      any such Dispute within sixty (60) days after the appointment of the third
      arbitrator. All
      Disputes shall be resolved by submission of documents unless the arbitration
      panel determines that an oral hearing is necessary.

     

    
      
        
        

      

      
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    16.4.3  Awards.
      The
      decision of the arbitrators with respect to any Dispute shall be in writing
      and
      state the findings, facts and conclusions of law upon which the decision is
      based. Any such decision and award rendered by the arbitrators shall be final
      and binding upon the Parties. Judgment upon any award rendered may be entered
      in
      any court having jurisdiction, or application may be made to such court for
      a
      judicial acceptance of the award and an order of enforcement, as the case may
      be. Each Party submits itself to the jurisdiction of any such court for the
      entry and enforcement to judgment with respect to the decision of the
      arbitrators hereunder. The arbitrators shall have the power to grant all legal
      and equitable remedies except specific performance and award compensatory
      damages provided by applicable law, but shall not have the power or authority
      to
      award punitive damages. No Party shall seek punitive damages or specific
      performance in relation to any matter under, arising out of, or in connection
      with or relating to this Agreement in any other forum, provided however, that
      the foregoing does not preclude suits or limit damages associated with
      infringement.

     

    16.4.4  Costs.
      Each
      Party shall pay its own expenses of arbitration, and the expenses of the
      arbitrators shall be equally shared between PMPSA and Discovery unless the
      arbitrators assess as part of their award all or any part of the arbitration
      expenses of a Party or Parties (including reasonable attorneys’ fees) against
      the other Party or Parties, as the case may be.

     

    16.4.5  No
      Other Forum.
      Except
      as provided in Section 16.5, the provisions of this Section 16.4 shall be a
      complete defense to any suit, action or proceeding instituted in any federal,
      state or local court or before any administrative tribunal with respect to
      any
      Dispute arising under this Agreement. Any Party commencing a lawsuit in
      violation of this Section 16.4 shall pay the costs of the other Party,
      including, without limitation, reasonable attorney’s fees and defense
      costs.

     

    16.5  Right
      to Injunctive and Other Relief.
      Nothing in this Agreement, shall prohibit
      either Party from seeking injunctive relief from a court of competent
      jurisdiction in the event of a breach or prospective breach of this Agreement
      by
      the other Party which would cause irreparable harm to the first Party. Nothing
      in this Agreement shall prevent a Party from seeking any remedies available
      at
      law or in equity in any court of competent jurisdiction in the event of the
      practice of such Party’s Intellectual Property outside the scope of the rights
      granted herein. 

     

    ARTICLE
      17

    MISCELLANEOUS

     

    17.1  Choice
      of Law.
      This
      Agreement shall be governed by and interpreted under, and any action or
      proceeding shall apply, the Laws of the State of New York excluding (i) its
      conflicts of Laws principles, other than Section 5-1401 of the New York General
      Obligations Law (ii), the United Nations Conventions on Contracts for the
      International Sale of Goods and (iii) the 1974 Convention on the Limitation
      Period in the International Sale of Goods and any Protocols thereto, done at
      Vienna, April 11, 1980.

     

    17.2  Severability.
      If,
      under Law, any provision of this Agreement is invalid or unenforceable, or
      otherwise directly or indirectly affects the validity of any other material
      provision(s) of this Agreement, this Agreement shall endure except for such
      provision. The Parties shall consult one another and use their best efforts
      to
      agree upon a valid and enforceable provision that is a reasonable substitute
      for
      such invalid or unenforceable provision in view of the intent of this
      Agreement.

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    17.3  Relationship
      of the Parties.
      Each
      Party shall bear its own fees, expenses, and disbursements, including the fees
      and expenses of their respective counsel, accountants, bankers, and other
      experts, in connection with the subject matter of this Agreement and costs
      incurred in the performance of its obligations hereunder without charge or
      expense to the other except as expressly provided in this Agreement. Neither
      Party shall have any responsibility for the hiring, termination or compensation
      of the other Party’s employees or for any employee benefits of such employee. No
      employee or representative of a Party shall have any authority to bind or
      obligate the other Party to this Agreement for any sum or in any manner
      whatsoever, or to create or impose any contractual or other liability on the
      other Party without said Party’s approval. For all purposes, and notwithstanding
      any other provision of this Agreement to the contrary, the Parties’ legal
      relationship under this Agreement shall be that of independent contractors.
      This
      Agreement is not a partnership agreement and nothing in this Agreement shall
      be
      construed to establish a partnership, joint venture,
      agency, or employer-employee relationship between
      the Parties.

     

    17.4  Parties
      in Interest.
      This
      Agreement shall be binding upon and inure to the benefit of and be enforceable
      by the respective legal representatives, successors, and permitted assigns
      of
      the Parties hereto. Nothing in this Agreement, express or implied, is intended
      to confer on any Person other than the Parties hereto, or their respective
      successors and assigns, any rights, remedies, obligations, or liabilities under
      or by reason of this Agreement.

     

    17.5  Enforcement
      of Certain Agreements.
      Each
      Party shall use commercially reasonable efforts at its expense to enforce the
      provisions of any confidentiality agreements and agreements with respect to
      noncompetition existing as of the Effective Date with any of its present or
      former employees, agents, consultants or independent contractors of Discovery
      that relate to any Licensed Product; provided, however, that the obligation
      with
      respect to any agreement related to this Section 17.5 shall terminate as of
      the
      date on which such agreement and the obligations regarding noncompetition have
      terminated or expired in accordance with its terms. 

     

    17.6  Use
      of
      Affiliates, Subcontractors, Sublicensees and Distributors.
      Each
      Party shall have the right to use Affiliates, subcontractors, sublicensees
      and
      distributors in exercising its rights and carrying out its obligations under
      this Agreement, provided, however, that (i) such entities agree in writing
      to be
      bound by the provisions of Article 8, (ii) the use of such entities does not
      in
      any way materially diminish the other Party’s rights or otherwise modify the
      other Party’s rights or obligations hereunder without such other Party’s prior
      written consent, (iii) Discovery may not delegate, sublicense, assign, or
      otherwise transfer any of its rights or obligations hereunder to any entity
      (including any Affiliate) that competes with any tobacco product of PMPSA or
      its
      Affiliates without PMPSA’s prior written consent, (iv) PMPSA may not delegate,
      assign or otherwise transfer any of its rights or obligations hereunder to
      a
      company engaged in pulmonary critical care medicine, without Discovery’s prior
      written consent and (v) except with respect to rights, benefits and obligations
      assigned as permitted pursuant to Section 17.7, each Party shall be liable
      for
      any actions or omissions of its Affiliates, subcontractors, sublicensees and
      distributors in connection with this Agreement and the Intellectual Property
      and
      Confidential Information of the other Party to the same extent as if such
      actions or omissions were conducted by the Party itself. 

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    17.7  Assignment.
      PMPSA
      may assign or otherwise transfer this Agreement or any or all right, benefit
      or
      obligation hereunder (whether by operation of Law or otherwise) to any Affiliate
      of PMPSA without the prior written consent of Discovery subject only to the
      limitations set forth in Section 17.6 (iv) above. Discovery may assign or
      otherwise transfer this Agreement or any or all right, benefit or obligation
      hereunder (whether by operation of Law or otherwise) to any Affiliate of
      Discovery without the prior written consent of PMPSA, subject only to the
      limitations set forth in Section 17.6 (iii) above, provided, however,
      notwithstanding such an assignment, Discovery shall remain responsible for
      the
      performance of the indemnification obligations set forth herein. No Party may
      assign or otherwise transfer this Agreement or any or all right, benefit or
      obligation hereunder (whether by operation of Law or otherwise) to any other
      Person other than an Affiliate without the prior written consent of the other
      Party, which consent shall not be unreasonably withheld, conditioned, or
      delayed; except that, subject to the limitations set forth in Section 17.6
      (iii)
      and (iv) above, either Party may assign or otherwise transfer any or all of
      its
      rights and interests hereunder in connection with the sale of all or
      substantially all of its assets or business to which this Agreement relates,
      whether by way of merger, sale of stock, sale of assets or other similar
      transaction, provided that the assignee or transferee expressly agrees to assume
      all of the obligations hereunder.

     

    17.8  Further
      Assurances and Actions.
      From
      time to time after the Effective Date, Discovery and PMPSA shall execute,
      acknowledge and deliver to each other any further documents, assurances, and
      other matters, and will take any other action consistent with the terms and
      conditions of this Agreement, that may reasonably be requested by a Party and
      necessary or desirable to carry out the purpose and intent of this Agreement.
      PMPSA and Discovery shall cooperate and use all reasonable efforts to make
      all
      other registrations, filings, and applications, to give all notices, and to
      obtain as soon as practicable all governmental or other consents, transfers,
      approvals, orders, qualifications, authorizations, permits, and waivers, if
      any,
      and to do all other things necessary or desirable for the consummation of this
      Agreement. 

     

    17.9  Waiver.
      Any
      term or condition of this Agreement may be waived at any time by the Party
      that
      is entitled to the benefit thereof, but no such waiver shall be effective unless
      set forth in a written instrument duly executed by or on behalf of the Party
      waiving such term or condition. No waiver by any Party of any term or condition
      of this Agreement, in any one or more instances, shall be deemed to be or
      construed as a waiver of the same or any other term or condition of this
      Agreement on any future occasion. Except as expressly set forth in this
      Agreement, all rights and remedies available to a Party, whether under this
      Agreement or afforded by Law or otherwise, will be cumulative and not in the
      alternative to any other rights or remedies that may be available to such
      Party.

     

    17.10  Section
      365(n) of the Bankruptcy Code.
      All
      rights and licenses granted under or pursuant to any section of this Agreement
      are, and shall otherwise be deemed to be, for purposes of Section 365(n) of
      the
      Bankruptcy Reform Act of 1978, 11 U.S.C. §§ 101 et
      seq.,
      as
      amended (the “Bankruptcy
      Code”),
      licenses of rights to “intellectual property” as defined under
      Section 101(35A) of the Bankruptcy Code. The Parties shall retain and may
      fully exercise all of their respective rights and elections under Section 365(n)
      of the Bankruptcy Code. 

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    17.11  Notices.
      All
      notices that are required or permitted hereunder shall be in writing and shall
      be sufficient if personally delivered or sent by mail or Federal Express or
      other delivery service. Any notices shall be deemed given upon the earlier
      of
      the date when received at, or the third day after the date when sent by
      registered or certified mail or the day after the date when sent by Federal
      Express to, the address set forth below, unless such address is changed by
      notice to the other Parties hereto:

     

    If
      to
      PMPSA:

     

    Vice
      President and Associate General Counsel Intellectual Property Law
      Group

    Philip
      Morris International 

    Avenue
      de
      Rhodanie 50 

    Case
      Postale 1171

    1001
      Lausanne

    Switzerland

    Fax :
      +41(0)58-242-0101

     

    If
      to
      Discovery:

     

    Discovery
      Laboratories, Inc.

    2600
      Kelly Road, Suite 100

    Warrington,
      PA 18976

    Attention
      : David L. Lopez, Esq., CPA

    

    with
      a
      copy to:

     

    Dickstein
      Shapiro LLP

    1177
      Avenue of the Americas

    New
      York,
      NY 10036

    Attention:
      Ira L. Kotel, Esq.

     

    17.12  Construction.
      Unless
      the context of this Agreement clearly requires otherwise, (i) references to
      any
      gender include all genders, (ii) “or” has the inclusive meaning frequently
      identified with the phrase “and/or,” (iii) “including” has the inclusive meaning
      frequently identified with the phrase “including but not limited to” or
“including without limitation”, and (iv) references to “hereunder” or “herein”
relate to this Agreement and (v) all terms defined in the singular shall have
      the same meaning in the plural and vice versa. The section and other headings
      contained in this Agreement are for reference purposes only and shall not
      control or affect the construction of this Agreement or the interpretation
      thereof in any respect. Section, subsection, Schedule and Exhibit references
      are
      to this Agreement unless otherwise specified. Each accounting term used herein
      that is not specifically defined herein shall have the meaning given to it
      under
      GAAP.

     

    17.13  Registration
      and Filing of this Agreement.
      To the
      extent, if any, that either Party concludes in good faith that it or the other
      Party is required to file or register this Agreement or a notification thereof
      with any Regulatory Authority, including the SEC or the U.S. Federal Trade
      Commission, in accordance with Law, such Party shall inform the other Party
      thereof. Should both Parties jointly agree that either of them is required
      to
      submit or obtain any such filing, registration or notification, they shall
      cooperate, each at its own expense, in such filing, registration or notification
      and shall execute all documents reasonably required in connection therewith.
      In
      such filing, registration or notification, the Parties shall request
      confidential treatment of sensitive provisions of this Agreement, to the extent
      permitted by Law. The Parties shall promptly inform each other as to the
      activities or inquiries of any such Regulatory Authority relating to this
      Agreement, and shall reasonably cooperate to respond to any request for further
      information therefrom on a timely basis. 

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    17.14  Force
      Majeure.
      No
      Party shall be held liable or responsible to the other Party nor be deemed
      to be
      in default under, or in breach of any provision of, this Agreement for failure
      or delay in fulfilling or performing any obligation of this Agreement when
      such
      failure or delay is due to Force Majeure, and without the fault or negligence
      of
      the Party so failing or delaying. For purposes of this Agreement, Force Majeure
      is defined as causes beyond the control of the Party, including, without
      limitation, acts of God; acts, regulations, or laws of any government; war;
      civil commotion; destruction of production facilities or materials by fire,
      flood, earthquake, explosion or storm; labor disturbances; epidemic; and failure
      of public utilities or common carriers. In such event Discovery or PMPSA, as
      the
      case may be, shall immediately notify the other Party of such inability and
      of
      the period for which such inability is expected to continue. The Party giving
      such notice shall thereupon be excused from such of its obligations under this
      Agreement as it is thereby disabled from performing for so long as it is so
      disabled and the thirty (30) days thereafter. To the extent possible, each
      Party
      shall use reasonable efforts to minimize the duration of any Force Majeure.
      

     

    17.15  Entire
      Agreement.
      This
      Agreement constitutes the entire agreement between the Parties with respect
      to
      the subject matter and supersedes all previous agreements and understandings
      between the Parties, whether written or oral. This Agreement may be altered,
      amended or changed only by a writing making specific reference to this Agreement
      and signed by duly authorized representatives of Discovery and
      PMPSA.

     

    17.16  Third
      Party Beneficiaries.
      Except
      for any Third Party Indemnities under Article 12, none of the provisions of
      this
      Agreement shall be for the benefit of or enforceable by any Third Party,
      including any creditor of either Party hereto, and no such Third Party (except
      for such Indemnitees, as such) shall obtain any right under any provision of
      this Agreement or shall by reasons of any such provision make any claim in
      respect of any debt, liability or obligation (or otherwise) against either
      Party
      hereto.

     

    17.17  Execution
      in Counterparts; Facsimile Signatures 
      This
      Agreement may be executed in counterparts, each of which counterparts, when
      so
      executed and delivered, shall be deemed to be an original, and both of which
      counterparts, taken together, shall constitute one and the same instrument
      even
      if both Parties have not executed the same counterpart. Signatures provided
      by
      facsimile transmission shall be deemed to be original signatures.

     

    [Signature
      Page Follows]

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, this Agreement has been executed by the Parties hereto as
      of
      the day and year first written above.

     

     

    
      	 	 	 
	 	PHILIP
              MORRIS
              PRODUCTS S.A.
	 
 	 
 	 
 
	 	By:  	/s/ Frances
              Bruttin 
	 	
              

              Name: 
                Frances Bruttin

              Title:   
                VP Applied Science

            
	 	 

    

    

    
      	 	 	 
	 	DISCOVERY
              LABORATORIES, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Robert J. Capetola, Ph.D. 
	 	
              

              Name: 
                Robert J. Capetola, Ph.D.

              Title:   
                President and Chief Executive Officer

            
	 	 

    

     

    
      
        
        

      

      
        39

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