Exhibit 10.1

  Confidential Treatment Requested

EXECUTION COPY

LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT


by and between


windtree therapeutics, inc.


and


Lee’s pharmaceutical (hk) LTD.

Table of Contents

Page

Table Of Contents
(continued)

Page

Table Of Contents
(continued)

Page

Table Of Contents
(continued)

Page

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

LICENSE, DEVELOPMENT AND COMMERCIALIZATION
AGREEMENT

This License, Development and Commercialization Agreement (this “ Agreement ”) is entered into as of June 12, 2017 (the “ Effective Date ”) , by and between Windtree Therapeutics, Inc., a Delaware corporation with its principal offices at 2600 Kelly Rd., Suite 100, Warrington, PA 18976 (“ Licensor ”), and Lee’s Pharmaceutical (HK) Ltd., a Hong Kong company organized and existing under the laws of Hong Kong with its principal offices at Unit 110-111, Bio-Informatics Centre, No. 2 Science Park West Avenue, Hong Kong Science Park, Shatin, Hong Kong (“ Licensee ”). Licensor and Licensee are sometimes referred to in this Agreement individually as a “ Party ” and together as the “ Parties .”

RECITALS

Whereas ,  Licensor Controls rights in and to the Surfaxin Product and Surfaxin LS and certain Licensor Technology related to the Surfaxin Product and Surfaxin LS, and desires to have Licensee Develop, manufacture and Commercialize the Surfaxin Product and Surfaxin LS in the Licensed Territory;

Whereas , Licensor Controls rights in and to Aerosurf and certain Licensor Technology related to Aerosurf, and desires to have Licensee Develop and Commercialize Aerosurf in the Licensed Territory;

Whereas , Licensor is currently conducting a Phase 2 Study in respect of Aerosurf for the treatment of respiratory distress syndrome (RDS) in up to fifty (50) clinical sites in North America, Latin America and Europe under an investigational new drug application filed with the FDA and is planning for a global Phase 3 Study in respect of Aerosurf for the treatment of RDS to support the potential registration of Aerosurf for the treatment of RDS in the U.S. and other international markets;

Whereas ,  Licensee possesses resources and expertise in the development, manufacture, marketing and commercialization of pharmaceutical products and medical devices in the Licensed Territory; and

Whereas , Licensor and Licensee desire to collaborate with the aim of advancing the Development, registration and Commercialization of the Surfaxin Product, Surfaxin LS, Aerosurf, and any other pharmaceutical composition containing synthetic KL4 Surfactant in the Licensed Territory, and Licensor wishes to grant Licensee certain rights in respect of the Licensor Technology, the Surfaxin Product, Surfaxin LS, Aerosurf and any other pharmaceutical composition containing synthetic KL4 Surfactant in the Licensed Territory for this purpose .

Now, Therefore , in consideration of the foregoing premises and the mutual promises, covenants and conditions contained in this Agreement, the Parties hereby agree as follows:

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

ARTICLE 1

DEFINITIONS

“ Accounting Standards ” means , with respect to a Party, as applicable, (a) United States generally accepted accounting principles as promulgated by the Financial Accounting Standards Board, (b) Hong Kong Accounting Standard and Hong Kong Financial Reporting Standards as promulgated by the Hong Kong Institute of Certified Public Accountants , or (c) international financial reporting standards as promulgated by the International Accounting Standards Board, in each case consistently applied.

“ Acquiror ” has the meaning set forth in Section 14.5 .

“ Aerosolized Product ( s ) ” means any combination drug/device product that utilizes a pharmaceutical composition containing synthetic KL4 Surfactant and Licensor’s proprietary aerosol delivery system to produce aerosolized KL4 Surfactant and includes Aerosurf.

“ Aerosurf ” means AEROSURF® (lucinactant for inhalation), a combination drug/device product that utilizes lyophilized synthetic KL4 Surfactant and Licensor’s proprietary aerosol delivery system to produce aerosolized KL4 Surfactant for non-invasive aerosolized delivery.

“ Affiliate ” means, with respect to either Party, any person, firm, trust, corporation, partnership or other entity or combination thereof that directly or indirectly controls, is controlled by or is under common control with such Party; the term “control” (including, with correlative meaning, the terms “controlled by” or “under common control with”) meaning direct or indirect ownership of fifty percent (50%) or more, including ownership by one or more trusts with substantially the same beneficial interests, of the voting and equity rights of such person, firm, trust, corporation, partnership or other entity or combination thereof, or the power to direct the management of such person, firm, trust, corporation, partnership or other entity or combination thereof.

“ Agreement ” has the meaning set forth in the introductory paragraph.

[***]

[***]

“ Bankruptcy Code ” means, as applicable, the U.S. Bankruptcy Code, as amended from time to time, and the rules and regulations and guidelines promulgated thereunder , or the bankruptcy laws of any Governmental Authority, as amended from time to time, and the rules and regulations and guidelines promulgated thereunder , or any applicable bankruptcy laws of any other country or competent Governmental Authority, as amended from time to time, and the rules and regulations and guidelines promulgated thereunder.

“ Breaching Party ” has the meaning set forth in Section 12.5(a) .

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

“ Business Day ” means any day other than a day on which the commercial banks in New York, New York, Hong Kong or Beijing are authorized or required to be closed.

“ Calendar Quarter ” means each successive period of three (3) calendar months commencing on January 1, April 1, July 1 and October 1, except that the first Calendar Quarter of the Term commences on the Effective Date and ends on the day immediately before the first to occur of January 1, April 1, July 1 or October 1 after the Effective Date, and the last Calendar Quarter ends on the last day of the Term.

“ Calendar Year ” means each successive period of twelve (12) calendar months commencing on January 1 and ending on December 31, except that the first Calendar Year of the Term commences on the Effective Date and ends on December 31 of the year in which the Effective Date occurs and the last Calendar Year of the Term commences on January 1 of the year in which the Term ends and ends on the last day of the Term.

“ Change of Control ” means, with respect to a Party, (a) the sale of all or substantially all of such Party’s assets or business relating to this Agreement; (b) a merger (including a reverse triangular merger), consolidation, share exchange or other similar transaction involving such Party and any Third Party which results in the holders of the outstanding voting securities of such Party, or any Affiliate that controls such Party directly or indirectly immediately before such merger, consolidation, share exchange or other similar transaction , ceasing to hold fifty percent (50%) or more of the combined voting power of the surviving, purchasing or continuing entity immediately after such merger, consolidation, share exchange or other similar transaction, or (c) the acquisition by a person or entity, or group of persons or entities acting in concert, of more than fifty percent (50%) of the outstanding voting equity securities of such Party; in all cases of clauses (a) -(c), where such transaction is to be entered into with any person or group of persons other than the other Party or its Affiliates.

“ Claims ” has the meaning set forth in Section 10.1 .

“ Clinical Studies ” means any of Phase 1 Studies, Phase 2 Studies, Phase 3 Studies, Phase 4 Studies, or variations of such studies ( e . g ., Phase 2/3).

“ CMC Information ” means Information related to the chemistry, manufacturing and controls of a Product as specified by the FDA and/or other applicable Regulatory Authorities.

“ Commercialization ,” with a correlative meaning for “ Commercialize ” and “ Commercializing ,” means all activities undertaken before and after obtaining Regulatory Approvals relating specifically to the pre-launch, launch, promotion, detailing, marketing, pricing, reimbursement, sale and distribution of a Product in the Licensed Territory, including Medical Affairs Activities, strategic marketing, sales force detailing, advertising, market and product support, customer support, product distribution, logistics, order taking, invoicing and sales activities, shipping, and handling of returns and allowances; provided , however , “Commercialization” excludes any activities relating to Development or manufacture of a Product .

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

“ Commercialization Plan ” has the meaning set forth in Section 6.2(a) .

“ Commercially Reasonable Efforts ” means, with respect to a Party’s obligations or tasks under this Agreement, the performance of such obligations or tasks by such Party in an diligent, active and sustained manner, without undue interruption, pause or delay, using a level of efforts and employing resources consistent with the exercise of good faith and prudent scientific and business judgment as commonly practiced by similarly situated companies in the pharmaceutical industry for the development or commercialization of similarly situated products of similar commercial or strategic importance as a Product, and at a similar stage of development or commercialization based on conditions then prevailing, taking into account efficacy, safety, patent exclusivity, anticipated or approved labeling , competitive market conditions, the clinical setting in which such Product is expected to be used, and all other relevant factors .

“ Confidential Information ” of a Party means any and all Information of such Party or its Affiliates that is disclosed by such Party or its Affiliates to the other Party or its Affiliates under this Agreement, whether in oral, written, graphic, or electronic form.

“ Control ” or “ Controlled ” means with respect to any (a) material or item of Information or (b) intellectual property right, the possession (whether by ownership or license, other than pursuant to this Agreement) by a Party or its Affiliates of the ability to grant to the other Party access and/or a license as provided herein under such item or right without violating any Third Party rights thereto or the terms of any agreement or other arrangement with any Third Party existing before or after the Effective Date.

“ Default Notice ” has the meaning set forth in Section 12.5(a) .

“ Develop ” or “ Development ” means all activities relating to preparing and conducting non-clinical studies, Clinical Studies and regulatory activities ( e . g ., preparation of regulatory applications) that are necessary or useful to obtain and maintain Drug Approval of Product in the Licensed Territory .

“ Development Plan ” has the meaning set forth in Section 4.2(a) .

“ Device ” means Licensor’s proprietary aerosol delivery system, which produces and delivers an aerosolized form of Drug.

“ Device Manufacturing Option ” has the meaning set forth in Section 15.5.

“ Distributor ” means a Third Party that sells Product to the trade but to which a sublicense is not granted pursuant to Section 2.1(c).

“ Dollars ” or “ $ ” means U.S. dollars.

“ Drug ” means KL4 Surfactant.

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

“ Drug Approval ” means an approval granted by the appropriate Regulatory Authority to market a Product in the Field in any particular country or jurisdiction in the Licensed Territory; provided , “Drug Approval” includes any and all Marketing Authorizations but excludes any and all Pricing Approvals and Reimbursement Approvals. The term Drug Approval also includes an approval of (a) a drug/ device combination such as Aerosurf and (b) each of Drug and Device if required to be obtained separately.

“ Drug Approval Application ” means an application to the appropriate Regulatory Authority for approval to market a Product in the Field in any particular country or jurisdiction in the Licensed Territory; provided , “Drug Approval Application” includes any and all Marketing Authorization applications but excludes any and all applications for Pricing Approvals and Reimbursement Approvals.

“ Effective Date ” has the meaning set forth in the introductory paragraph.

“ Executive Officers ” has the meaning set forth in Section 3.1(d) .

“ FD&C Act ” means the U. S. Federal Food, Drug, and Cosmetic Act, as amended.

“ FDA ” means the U.S. Food and Drug Administration or any successor entity.

“ Field ” means (a) with respect to Non-Aerosolized Products , the prevention, mitigation and/or treatment of any disease, disorder or condition in humans, and (b) with respect to Aerosolized Products , the prevention, mitigation and/or treatment of any respiratory disease, disorder or condition in humans .

“ First Commercial Sale ” means, with respect to a particular Product, the first sale by Licensee or its Affiliate or Sublicensee to a Third Party of such Product in a given country or regulatory jurisdiction after Drug Approval for such Product has been obtained in such country or regulatory jurisdiction .

“ Generic/Branded Generic ” shall mean, with respect to (a) a Non-Aerosolized Product, a drug product containing [***] other than any such drug product distributed by Licensee or its Affiliates or Sublicensees on an unbranded basis or under a private label of any Affiliate or Sublicensee; and (b) an Aerosolized Product, a drug/device combination product containing [***]   For clarity, a drug/device combination product containing [***] shall not be considered a Generic/Branded Generic with respect to an Aerosolized Product, for purposes of this Agreement.

“ Good Clinical Practices ” or “ GCP ” means the then-current standards, practices and procedures promulgated or endorsed by the FDA as set forth in the guidelines entitled “Guidance for Industry E6 Good Clinical Practice: Consolidated Guidance,” including related regulatory requirements imposed by the FDA and comparable regulatory standards, practices and procedures promulgated by other Regulatory Authorities applicable to the Licensed Territory, the Licensor Territory, or both, as such standards, practices and procedures may be updated from time to time, including applicable quality guidelines promulgated under the ICH.

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

“ Good Laboratory Practices ” or “ GLP ” means the then-current good laboratory practice standards promulgated or endorsed by the FDA as defined in 21 C.F.R. Part 58, and comparable regulatory standards promulgated by other Regulatory Authorities applicable to the Licensed Territory, the Licensor Territory, or both, as such standards may be updated from time to time, including applicable quality guidelines promulgated under the ICH.

“ Governmental Authority ” means any multi-national, federal, state, local, municipal, provincial or other governmental authority of any nature (including any governmental division, prefecture, subdivision, department, agency, bureau, branch, office, commission, council, court or other tribunal).

“ ICH ” means the International Conference on Harmonization of Technical Requirements for Registration of Pharmaceuticals for Human Use.

“ ICH Guidelines ” means the guidelines of the ICH.

“ Improvements ” means any and all ideas, Information, research results, writings, inventions, discoveries, modifications, enhancements, derivatives, new uses, developments, techniques, materials, compounds, products, designs, processes or other technology or intellectual property, whether or not patentable or copyrightable, and all patent rights and other intellectual property rights in any of the foregoing.

“ In-License Agreements ” means [***]

“ In-License Agreements Royalty Rate ” means the sum of the applicable royalty rates payable by Licensor pursuant to, and as specified in, the In-License Agreements.

“ Indemnified Party ” has the meaning set forth in Section 10.3 .

“ Indemnifying Party ” has the meaning set forth in Section 10.3 .

“ Information ” means any non-public, proprietary data, results, technology, business or financial information or information of any type whatsoever, in any tangible or intangible form, including trade secrets, practices, techniques, methods, processes, protocols, inventions, discoveries, developments, specifications, formulations, formulae, materials, drawings, illustrations or other artwork, or compositions of matter of any type or kind (patentable or otherwise), software, algorithms, marketing reports, expertise, technology, experimentation or test data (including pharmacological, biological, chemical, biochemical, clinical test data and data resulting from non-clinical studies), CMC Information, stability data and other study data and procedures, and other know-how, whether or not patentable or copyrightable .

“ JAMS Rules ” has the meaning set forth in Section 13.1 .

“ JCC ” has the meaning set forth in Section 3.3(a) .

“ JDC ” has the meaning set forth in Section 3.2(a) .

“ JSC ” has the meaning set forth in Section 3.1(a) .

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

“ Joint Improvements” has the meaning set forth in Section 8.1(c).

“ Joint Patents ” has the meaning set forth in Section 8.1(c) .

“ KL 4 Surfactant ” means a pharmaceutical composition containing the peptide known as KL4 with the following amino acid sequence KLLLLKLLLLKLLLLKLLLLK .

“ Knowledge ” means, with respect to a Party or its Affiliates, the actual knowledge of the executive officers of such Party or its Affiliates (without any inquiry) .

“ Laws ” means all applicable laws, statutes, rules, regulations, ordinances and other pronouncements having the effect of law of any federal, national, multinational, state, provincial, county, city or other political subdivision, domestic or foreign.

“ Licensed Marks ” has the meaning set forth in Section 8.6(b) .

“ Licensed Territory ” means PRC, Hong Kong, [***]Taiwan, [***] South Korea, Thailand , [***] and subject to Licensee timely exercise of the Option, Japan .

“ Licensed Territory Development Costs ” means all costs and expenses incurred by or on behalf of Licensor or Licensee after the Effective Date in accordance with this Agreement and in accordance with the Development Plan attributable to the Development of Product in and for the Licensed Territory, including all out-of-pocket costs actually incurred by Licensor or Licensee, filing fees payable to Regulatory Authorities in the Licensed Territory, costs of Product or comparator drugs used in Clinical Studies and non-clinical studies, ethics committee fees, investigators fees, investigators meetings costs, hospital fees, and clinical research organization fees and any other development and regulatory costs in and for the Licensed Territory .

“ Licensed Territory Infringement ” has the meaning set forth in Section 8.3(a) .

“ Licensee ” has the meaning set forth in the introductory paragraph.

“ Licensee Improvements” has the meaning set forth in Section 8.1(d).

“ Licensee Indemnitees ” has the meaning set forth in Section 10.1 .

“ Licensee Know-How ” means all Information, subject to Section 8.1, that is necessary or useful for the Development, manufacture or Commercialization of a Product in the Field, and (b) is Controlled by Licensee or its Affiliates during the Term; provided , the use of “Affiliate” in this definition excludes any Third Party that becomes an Affiliate of Licensee after the Effective Date due to a Change of Control of Licensee .

“ Licensee Marks ” means the trademarks to be used by Licensee in connection with its Commercialization of Product in the Licensed Territory.

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

“ Licensee Patent ” means any Patents, subject to Section 8.1, that (a) claim a Product, the Drug or the Device, or the manufacture or use of a Product, the Drug or the Device, in the Field , and (b) are Controlled by Licensee or its Affiliates during the Term; provided , that the use of “Affiliate” in this definition excludes any Third Party that becomes an Affiliate of Licensee after the Effective Date due to a Change of Control of Licensee .

“ Licensee Technology ” means, subject to Section 8.1, the Licensee Know-How and Licensee Patents .

“ Licensor ” has the meaning set forth in the introductory paragraph.

“ Licensor Improvements” has the meaning set forth in Section 8.1(b)(ii).

“ Licensor Indemnitees ” has the meaning set forth in Section 10.2 .

“ Licensor Know-How ” means all Information, subject to Section 8.1, that (a) is necessary or useful for the Development or Commercialization of an Aerosolized Product in the Field but is not directed to the manufacture of Aerosolized Product , or (b) is necessary or useful for the Development, manufacture and Commercialization of Non-Aerosolized Product in the Field, and (c) in the case of either clause (a) or (b), is (i)  Controlled by Licensor or its Affiliates as of the Effective Date or (ii) subject to Section 2.7, Controlled by Licensor or its Affiliates during the Term; provided , the use of “Affiliate” in this definition excludes any Third Party that becomes an Affiliate of Licensor after the Effective Date due to a Change of Control of Licensor .

“ Licensor Patent ” means any Patents, subject to Section 8.1, that (a) claim a Product, the Drug or the Device, or the manufacture or use of a Product, the Drug or the Device, in the Field , and (b)(i) are Controlled by Licensor or its Affiliates as of the Effective Date, which Patents are set forth in Schedule  1 hereto, (ii) subject to Section 2.8, are Controlled by Licensor or its Affiliates during the Term and claims priority to a Patent Controlled by Licensor or its Affiliates as of the Effective Date, or (iii) subject to Section 2.8, are Controlled by Licensor or its Affiliates during the Term; provided , that the use of “Affiliate” in this definition excludes any Third Party that becomes an Affiliate of Licensor after the Effective Date due to a Change of Control of Licensor .

“ Licensor Prosecuted Patents ” has the meaning set forth in Section 8.2(a) .

“ Licensor Technology ” means, subject to Section 8.1, the Licensor Know-How and Licensor Patents.

“ Licensor Territory ” means the entire world, excluding the Licensed Territory .

“ Manufacturing Effective Date ” means the date the technology transfer contemplated in Section 15.3 is completed.

“ Marketed ” has the meaning set forth in Section 7.4(d).

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

“ Marketing Authorization ” means an official document issued by a competent Regulatory Authority for the purpose of importation, manufacturing, marketing, sale or free distribution of a product after evaluation for safety, efficacy and quality. It must set out, subject to the prevailing Laws, inter alia, the name of the product, the pharmaceutical dosage form, the quantitative formula (including excipients) per unit dose, the shelf-life and storage conditions, and packaging characteristics. It specifies the information on which authorization is based and contains the product information approved for health professionals and the public, the sales category, the name and address of the holder of the authorization, and the period of validity of the authorization.

“ Material Impact ” means with respect to a Product, a material adverse impact on the development, regulatory status or commercial sale of the Product .

“ Medical Affairs Activities ” means, with respect to a Product, activities designed to ensure or improve appropriate medical use of, conduct medical education of, or further research regarding, such Product, including, with respect to such Product: (a) conducting service based medical activities , including providing input and assistance with consultancy meetings, recommending investigators for Clinical Studies and providing input in the design of such Clinical Studies and other research related activities, and delivering non-promotional communications and conducting non-promotional activities, including presenting new clinical trial data and other scientific information; (b) grants to support continuing medical education, symposia, or Third Party research specifically related to such Product; (c)  development, publication and dissemination of publications relating to such Product and relevant disease states; (d) medical information services provided in response to inquiries communicated via sales representatives or received by letter, phone call or email; (e) conducting advisory board meetings or other consultant programs; (f) support of investigator-initiated clinical trials; (g) managing relationships with cooperative groups, physician/hospital networks and advocacy groups; and (h) establishing and implementing risk, evaluation and mitigation strategies.

“ Net Sales ” means, with respect to a particular Product, the total amount invoiced by Licensee or its Affiliates or Sublicensees to each Third Party receiving such Product in arm’s length transactions, less the following deductions from such total amounts that are actually incurred, allowed, accrued or specifically allocated in accordance with the Accounting Standards:

[***]

Upon the sale or other disposal of such Product, other than in a transaction generating revenues from or based on a sales price for such Product (which sales price is either customary or would be reasonably expected), such sale or disposal will constitute a sale with the consideration for the sale being the consideration for the relevant transaction and will constitute Net Sales hereunder or if the consideration is not a monetary amount, such sale or disposal will have the value of whatever consideration has been provided in exchange for the supply.

For this definition:

(i)      the transfer of Product by Licensee or one of its Affiliates to another Affiliate or a Sublicensee shall not be considered a sale; and

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

(ii)      any disposal of Product for, or use of Product in, Clinical Studies is not a sale under this definition.

The amount of Product transferred pursuant to subsections (i) and (ii) of this definition shall be determined from the books and records of Licensee or its Affiliates or Sublicensees, maintained in accordance with international financial reporting standards, consistently applied, but excluding any notes thereto.

“ Non-Aerosolized Product ” means Surfaxin Product, Surfaxin LS and any other pharmaceutical composition containing the synthetic KL4 Surfactant, in each case to be administered in any form other than as aerosol.

“ Non-Breaching Party ” has the meaning set forth in Section 12.5(a) .

“ Non-Governmental Authority ” means any public body or non-Governmental Authority with the authority to control, approve, recommend or otherwise determine pricing and reimbursement of pharmaceutical products and/or medical devices, including those with authority to enter into risk sharing schemes or to impose retroactive price reductions, discounts, or rebates.

“ Option ” has the meaning set forth in Section 2.3 .

“ Other Committees ” has the meaning set forth in Section 3.1(a)(ix).

“ Party ” or “ Parties ” has the meaning set forth in the introductory paragraph.

“ Patents ” means (a) pending patent applications, issued patents, utility models and designs; (b) reissues, substitutions, confirmations, registrations, validations, re-examinations, additions, continuations, continued prosecution applications, continuations-in-part, or divisions of or to any of the foregoing; (c) any other patent application claiming priority to any of the foregoing anywhere in the world; and (d) extension, renewal or restoration of any of the foregoing by existing or future extension, renewal or restoration mechanisms, including supplementary protection certificates or the equivalent thereof.

“ Payee ” has the meaning set forth in Section 7.7 .

“ PDF ” has the meaning set forth in Section 14.13.

“ Pharmacovigilance Agreement ” has the meaning set forth in Section 5.7 .

“ Phase  1 Study ” means a human clinical trial of a Product with the endpoint of determining initial tolerance, safety or pharmacokinetic information in single dose, single ascending dose, multiple dose or multiple ascending dose regimens, as described in 21 C.F.R. § 312.21(a) (or its successor regulation) or the equivalent thereof in any jurisdiction outside the U.S.

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

“ Phase  2 Study ” means a human clinical trial of a Product, the principal purpose of which is a preliminary determination of safety and efficacy in the target patient population over a range of doses and dose regimens, as described in 21 C.F.R. § 312.21(b) (or its successor regulation) or the equivalent thereof in any jurisdiction outside the U.S.

“ Phase 3 Study ” means a human clinical trial of a compound or product (including a Product) in a sufficient number of subjects that is designed to establish that such compound or product is safe and efficacious for its intended use, and to determine warnings, precautions and adverse reactions that are associated with the compound or product in the dosage range to be prescribed, and to support Regulatory Approval of such compound or product or label expansion of such compound or product.

“ Phase 4 Study ” means a human clinical trial of a compound or product in patients commenced after receipt of Regulatory Approval for such compound or product, which clinical trial is conducted within the parameters of such Regulatory Approval, including clinical trials required or requested by any Regulatory Authority as a condition of, or in connection with, obtaining such Regulatory Approval of such compound or product, provided , a “Phase 4 Study” may also include clinical trials to gather additional information regarding such compound’s or product’s potential risks, medical or pharmacoeconomic benefits, justification and descriptions for other indications of such compound or product, data to be included in compendial listings, optimal use, dose, route and schedule of administration, epidemiological studies, modeling and pharmacoeconomic studies.

“ PRC ” means the People’s Republic of China .

“ Pricing Approval ” means the governmental approval, agreement, determination or decision establishing prices for a Product that can be charged in a particular country or regulatory jurisdiction where the applicable Governmental Authorities approve or determine the price of pharmaceutical products.

“ Product License Holder ” means the holder of a Marketing Authorization.

“ Product ” means an Aerosolized Product and/or a Non-Aerosolized Product, as the context requires.

“ Publication ” has the meaning set forth in Section 11.3 .

“ RDS ” means respiratory distress syndrome.

“ Regulatory Approval ” means (a) Drug Approval and all other approvals necessary for the commercial sale of a Product in a given country or regulatory jurisdiction; (b) Pricing Approval, but only in those countries or regulatory jurisdictions where Pricing Approval is required by Law for commercial sale; and (c) Reimbursement Approval, but only in those countries or regulatory jurisdictions where Reimbursement Approval is required for the price paid for a Product to be reimbursed by a Governmental Authority or a Non-Governmental Authority with the authority to approve reimbursement.

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

“ Regulatory Authority ” means, in a particular country or jurisdiction, any applicable Governmental Authority or Non-Governmental Authority involved in granting Regulatory Approval in such country or jurisdiction.

“ Regulatory Exclusivity ” means, with respect to a Product, that Third Parties are prevented from legally developing, manufacturing or commercializing a product that could compete with such Product in a country, either through data exclusivity rights, orphan drug designation, or such other rights conferred by a Regulatory Authority in such country, other than through Patent rights.

“ Regulatory Materials ” means regulatory applications, submissions, notifications, communications, correspondence, registrations, Drug Approvals or other filings made to, received from or otherwise conducted with a Regulatory Authority to Develop, manufacture, market, sell or otherwise Commercialize a Product in a particular country or jurisdiction.

“ Regulatory Plan ” means a plan regarding the timing and approach to preparing, submitting or reviewing Regulatory Materials and obtaining and maintaining Drug Approval.

“ Reimbursement Approval ” means the approval, agreement, determination or decision recommending or approving a Product for use or establishing the prices for a Product that can be reimbursed in regulatory jurisdictions where the applicable Governmental Authority or Non-Governmental Authority approves, determines or recommends the reimbursement or use of pharmaceutical products.

“ Remedial Action ” has the meaning set forth in Section 5.8 .

“ Safety Reason ” has the meaning set forth in Section 13.2(a) .

“ SEC ” has the meaning set forth in Section 11.4(c) .

“ Sublicense Income ” means income received by Licensee or its Affiliates in consideration for a sublicense or other agreement providing the right to negotiate or obtain a sublicense pursuant to Section 2.1(c). “Sublicense Income” shall include income received from a Sublicensee in the form of [***] .

“ Sublicensee ” means any entity to which a sublicense is validly granted pursuant to Section 2.1(c) . For clarity, a Distributor shall not be considered a Sublicensee. Any intended full service Distributors may be reviewed by the JSC to ensure proper capabilities of safety and/or adverse event reporting.

“ Surfaxin Product ” means Surfaxin® (lucinactant) intratracheal suspension, a pulmonary KL4 Surfactant, based on NDA No. 21-746, as approved by the FDA on March 6, 2012.

“ Surfaxin LS ” means the lyophilized dosage form of the Surfaxin Product .

“ Term ” has the meaning set forth in Section 12.1 .

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

“ Third Party ” means any entity other than Licensor or Licensee or an Affiliate of either of them.

“ Third Party Claim ” has the meaning set forth in Section 8.4 .

“ Third Party Technology ” means any Patents, Information, inventions, or other intellectual property owned or controlled by a Third Party but not Controlled by a Party or its Affiliates.

“ U.S. ” means the United States of America, its possessions and territories.

“ Valid Claim ” means a claim of (a) an issued and unexpired Patent, which claim has not been revoked or held unenforceable, unpatentable or invalid by a decision of a court or other governmental agency of competent jurisdiction, which is not appealable or has not been appealed within the time allowed for appeal, and which has not been abandoned, disclaimed, denied or admitted to be invalid or unenforceable through reissue, re-examination or disclaimer or otherwise, or (b) a patent application for a patent included within the Patents and which claim has not been cancelled, withdrawn or abandoned or finally rejected by an administrative agency action from which no appeal can be taken.

ARTICLE 2

LICENSES; OTHER RIGHTS

2.1.      Licenses to Licensee .

(a)     Aer o solized Product s . Subject to the terms and conditions of this Agreement, Licensor hereby grants to Licensee an exclusive (even as to Licensor), milestone- and royalty-bearing license, with the right to grant sublicenses solely as permitted under Section 2.1(c) , under the Licensor Technology, to Develop, use, sell, offer for sale, import, distribute and otherwise Commercialize Aerosolized Products in the Field in the Licensed Territory, provided that Licensor or an Affiliate of Licensor will be the Product License Holder for Aerosolized Products in each country of the Licensed Territory (i) unless the prevailing Laws or regulations in any given country of the Licensed Territory would not allow Licensor or its Affiliate to hold the Marketing Authorization, in which case the identity of the Product License Holder in such country and arrangements concerning the ownership, maintenance and transferability of such Marketing Authorization shall be subject to Licensor’s approval, such approval not to be unreasonably withheld or delayed, and (ii) in case, however, no alternative solution is agreed upon between the Parties, or available to the Parties in accordance with the prevailing Laws and regulations, then the Product License Holder in such country will be the Licensee (or its Affiliate or Sublicensee, as the case may be).

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

(b)      Non-Aerosoli zed Products . In addition to the rights granted under Section 2.1(a), and subject to the terms and conditions of this Agreement , Licensor hereby grants to Licensee an exclusive (even as to Licensor), milestone and royalty-bearing license, with the right to grant sublicenses solely as permitted under Section 2.1(c), under the Licensor Technology, to Develop, register , manufacture, use, sell, offer for sale, import, distribute and otherwise Commercialize Non-Aerosolized Products in the Field in the Licensed Territory. Licensee’s right to manufacture Non-Aerosolized Products is not sublicensable other than to its Affiliates in accordance with Section 2.1(c).

(c)     Sublicense Rights . Licensee may grant sublicenses of the licenses granted in Sections  2.1(a) and 2.1(b) without the prior approval of Licensor, only to (A) its Affiliates, provided that such sublicense will automatically terminate if such person, corporation, partnership or entity ceases to be an Affiliate of Licensee, and (B) Third Party subcontractors for the sole purpose of performing part of Licensee’s obligations under this Agreement (excluding any Third Party manufacturers), and in each case on the condition that Licensee shall at all times Develop, use, sell, offer for sale, import, distribute , register and manufacture and otherwise Commercialize Product in Licensee’s or its Affiliate’s name. Licensee shall not grant any sublicenses of the licenses granted in Sections  2.1(a) or 2.1(b) to any Third Party (including any Third Party manufacturer but excluding any non-manufacturing Third Party subcontractors as permitted in the preceding sentence) without the prior written approval of Licensor, which approval will not be unreasonably withheld or delayed by Licensor . A Sublicensee or a subcontractor may not be a competitor or an Affiliate of a competitor identified by Licensor to Licensee in writing. Licensee shall remain responsible for and shall guarantee the performance of each Sublicensee under this Agreement, including for all payments due hereunder, even if such Sublicensee has read and agreed in writing to be bound to all of Licensee’s rights and obligations under this Agreement to the same extent as Licensee . Sublicenses granted under this Section 2.1(c) shall not include the right to sublicense. As stated in Section 2.1(b), Licensee’s right to manufacture Non-Aerosolized Products is not sublicensable other than to its Affiliates in accordance with this Section 2.1(c).

(d)     Retained Rights . Notwithstanding the foregoing exclusive grant of rights to Licensee under this Section 2.1, Licensor retains the right to conduct development of Product in the Licensed Territory to support the development and commercialization of Product in the Licensor Territory. Such development activities specifically conducted by Licensor in the Licensed Territory will be subject to the Development Plan and JSC review and approval .

2.2.      License to Licensor .

Subject to the terms and conditions of this Agreement, including section 8.1, Licensee hereby grants to Licensor an exclusive (even as to Licensee), fully paid, royalty-free right and license (with the right to grant sublicenses), under the Licensee Know How, to (A)  develop Product in the Field in order to obtain or maintain Regulatory Approval in the Licensor Territory, and (B) make, use, sell, offer for sale, import, distribute, warehouse, market, promote, apply for and submit applications for Drug Approval, Pricing Approval and Reimbursement Approval, and otherwise commercialize Product in the Field in the Licensor Territory.

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

2.3.      Option .

Subject to the terms and conditions of this Agreement, Licensor hereby grants to Licensee an option, exercisable in Licensee’s sole discretion, to add Japan to the Licensed Territory subject to approval of the JSC based on the JSC’s review and evaluation of the business case and a business plan for Japan presented by Licensee, as well as other market conditions and strategic options and considerations then relevant to the Japan market (an “ Option ”). It is expressly agreed that the JSC’s review and evaluation of the business case and business plan, and its determination as to whether or not to approve the addition of Japan to the Licensed Territory, shall not be unreasonably withheld or delayed by the JSC. The Option must be exercised no later than [***] , and Licensee must also provide a written progress update to the JSC [***] on activities undertaken by Licensee with respect to its strategy in Japan.

2.4.      Negative Covenant s .

(a)      Licensee shall not, and will not permit any of its Affiliates or Sublicensees to use or practice any Licensor Technology outside the scope of the licenses granted to it under Section 2.1. Licensor shall not, and shall not permit any of its Affiliates or its Sublicensees to use or practice any Licensee Technology outside the scope of the licenses granted to it under Section 2.2 .

(b)      Licensee shall not at any time seek to aerosolize a Non-Aerosolized Product or use it as a powder or in combination with any aerosol device, nebulizer or other delivery system, or any device that provides a liquid/gas mixture .

(c)      Neither Party will participate in any cross-territorial selling or distribution into the other Party’s territory without the other Party’s written consent.

2.5.      Non-Compete Covenant s .

(a)      During the Term , for a period of ten (10) years after the later of (x) the First Commercial Sale in the PRC of the first Aerosolized Product under this Agreement , and (y) the First Commercial Sale in the PRC of the first Non-Aerosolized Product under this Agreement , Licensee, Licensee’s Affiliates, and its and their respective Sublicensees shall not develop, register, manufacture, have manufactured, import, export, market, distribute, or sell anywhere in the world any product for the prevention and/or treatment of (i) RDS in premature infants, or (ii) diseases and conditions (other than RDS) in humans, in either case that administers, utilizes or contains pulmonary surfactant, other than in accordance with this Agreement , without Licensor’s prior written consent, which consent Licensor may grant or withhold in its sole discretion .

(b)      During the Term, Licensee shall not reverse engineer or otherwise deconstruct any active pharmaceutical ingredients or component parts of a Product for the purpose of developing a product that would compete in any way with a Product in the Field.

(c)      Neither Party nor any of their respective Affiliates will take, support or encourage any action with respect to any Product that is substantially likely to have a Material Impact in the other Party’s territory.

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

(d)      For the avoidance of doubt, the Parties intend that each of Licensor and Licensee shall have the right to enjoy the benefits of Licensor Technology in its respective territory without intrusion or interruptions by the other Party. Licensee acknowledges that the provisions of this Section 2.5 are in partial consideration of the licensed rights, including trade secrets delivered and/or all other Licensor Technology rights granted to Licensee under this Agreement.

2.6.      No Implied Licenses . Except as explicitly set forth in this Agreement, neither Party will be deemed by estoppel or implication to have granted the other Party any license or other right to any intellectual property of such Party.

2.7.      Third Party Technology . If, after the Effective Date, Licensor or any of its Affiliates (i) acquires a license with the right to sublicense under Third Party Technology for use in connection with the Development or Commercialization of a Product in or for the Licensed Territory, and (ii) would be subject to payment obligations to such Third Party on account of Licensee’s exploitation of such Third Party Technology in connection with the Development or Commercialization of such Product in or for the Licensed Territory, then Licensor will promptly provide Licensee with written notice of such acquisition and the additional financial terms to which Licensor would be subject if Licensee were to exploit a license under such Third Party Technology. If Licensee desires to obtain such license it will notify Licensor in writing and this Agreement will be deemed amended to reflect such additional financial terms and to provide that the applicable Third Party Technology will be included in Licensor Technology under this Agreement.

2.8.      In-Licenses . All licenses and other rights granted to Licensee by Licensor under this Article 2 are subject to the rights and obligations of the parties under the In-License Agreements. Licensee agrees to be bound by the pertinent portions of the In-License Agreements to the same extent that Licensor is bound thereby. In addition, the sublicense to Licensee of the Licensor Technology , to the extent such Licensor Technology is licensed to Licensor under each In-License Agreement , and as long as such In-License Agreement remains in force, shall automatically terminate if and to the extent such In-License Agreement terminates. In such a case, Licensor will use Commercially Reasonable Efforts to allow Licensee to negotiate the continuation of the rights and licenses granted to Licensee in Article 2 directly with Licensor’s respective licensor(s) under the In-License Agreement(s) being terminated.

ARTICLE 3

GOVERNANCE

3.1.      Joint Steering Committee .

(a)      Formation and Role . Within thirty (30) days after the Effective Date, the Parties shall establish a joint steering committee (the “ JSC ”) for the overall coordination and oversight of the Parties’ activities under this Agreement. The role of the JSC shall be:

(i)     to review, discuss and approve the overall strategy for the Development and Regulatory Approval of Product in the Field in the Licensed Territory;

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

(ii)       to review, discuss and approve the inclusion of Japan in the Licensed Territory based on the business plan presented by Licensee to the JSC;

(iii)      to review and discuss the overall performance of the Parties pursuant to this Agreement and to compare such performance to the objectives outlined in the Development Plan and to the diligence obligations set forth in Section 4.4 ;

(iv)      to review, d iscuss and approve the Development Plan (including the Regulatory Plan), and any amendments to the Development Plan proposed by the JDC;

(v)       to review, discuss and approve the conduct by Licensee of all country-specific or jurisdiction-specific regulatory acti vities in the Licensed Territory;

(vi)      to review and discuss the Commercialization Plan and any amendments to the Commercialization Plan proposed by either Party;

(vii)     to review and discuss the overall strategy for Pricing Approval and Reimbursement Approval of Product in the Field in the Licensed Territory, and all country-specific or jurisdiction-specific pricing and reimbursement negotiations in the Licensed Territory, provided global pricing of Product (including pricing floors for referencing countries) will be established collaboratively at the JSC (and in conjunction with other applicable parties, as necessary);

(viii)     to discuss the Parties ’ activities with respect to Product in the Field in the Licensed Territory in conjunction with Licensor’s and its other licensees’ activities with respect to Product in the Field in the Licensed Territory or the Licensor Territory;

(ix)      to direct and oversee the JDC, JCC and any other operating committee (the “ Other Committees ”) established by the JSC on all significant issues that fall within the purview of such committees;

(x)       to appoint Other Committees, consisting of equal numbers of appropriately qualified members appointed by each Party, from time to time as it deems fit;

(xi)      to attempt to resolve, in a timely manner, issues presented to it by, and disputes within, the JDC, JCC and Other Committees; and

(xii)     to perform such other functions as appropriate to further the purposes of this Agreement, as expressly set forth in this Agreement or as mutually determin ed by the Parties in writing.

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

The JSC has only the powers expressly assigned to it in this Section 3.1 and elsewhere in this Agreement. The JSC has no power to interpret, amend, modify, or waive compliance with this Agreement.

(b)     Members . Each Party shall initially appoint two (2) representatives to the JSC, each of whom will be an officer or employee of such Party having sufficient seniority within the applicable Party to make decisions arising within the scope of the JSC’s responsibilities. The JSC may change its size from time to time by mutual written consent of its members and each Party may replace its representatives at any time upon written notice to the other Party; provided , however , that the JSC will at all times consist of equal numbers of members appointed by each Party. If a JSC representative from either Party is unable to attend or participate in a meeting of the JSC, the Party who designated such representative may designate an appropriately qualified substitute representative for the meeting. The JSC will have a chairperson, who will be designated, on an annual basis, alternatively by Licensor or Licensee. The Licensor shall select the initial chairperson. The role of the chairperson is to convene and preside at all meetings of the JSC and to ensure the preparation of meeting minutes, but the chairperson has no additional powers or rights beyond those held by other JSC representatives.

(c)     Meet ings . The JSC shall meet at least one (1) time every other Calendar Quarter during the Term until Regulatory Approval of each Product is achieved; thereafter, the JSC shall meet at least one (1) time per Calendar Year during the Term. Either Party may also call a special meeting of the JSC (by videoconference or teleconference) upon at least [***] prior written notice to the other Party if such Party reasonably believes that a significant matter must be addressed before the next regularly scheduled meeting, and such Party shall provide the JSC no later than [***] before the special meeting with materials reasonably adequate to enable an informed decision to be made by its members. The JSC may meet in person, by videoconference or by teleconference, provided , however , [***]; all other meetings shall alternate as between Licensor’s headquarters and Licensee’s headquarters. Each Party shall pay for its own expenses relating to such meetings. As appropriate, other employee representatives or agents of the Parties may attend JSC meetings as non-voting observers or presenters. The chairperson of the JSC shall prepare reasonably detailed written minutes of all JSC meetings that reflect and include all material decisions made at such meetings. The JSC chairperson shall send draft meeting minutes to each member of the JSC for review and approval within [***] after each JSC meeting. Such minutes will be approved unless one or more members of the JSC object to the accuracy of such minutes within [***] after receipt.

(d)     Decision Making . Actions to be taken by the JSC will be taken only following [***] vote, with each Party having [***] representing the views of its members. If the JSC fails to reach [***] agreement on a matter before it for decision for a period in excess of [***], either Party may submit the matter in writing to the other, and the Parties shall refer such dispute to a designated executive officer of Licensor and a designated executive officer of Licensee (or their respective designees) (the “ Executive Officers ”) for resolution in accordance with the decision-making procedures described in Section 13.2 ; provided , however , [***] . Each Party retains the rights, powers, and discretion granted to it under this Agreement and neither Party shall delegate to or vest any such rights, powers, or discretion in the JSC unless such delegation or vesting of rights is expressly provided for in this Agreement or the Parties expressly so agree in writing. Without limiting the foregoing, the JSC does not have the power to interpret, amend, modify, or waive compliance with this Agreement.

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

3.2.      Joint Development Committee .

(a)      Formation and Role . Within [***] after the Effective Date, the Parties shall establish a joint development committee (the “ JDC ”) that will monitor the Development of Product in the Field in the Licensed Territory. The role of the JDC is:

(i)      to monitor the Development of Product in the Field in the Licensed Territory , and to discuss the development of Product in the Field in the Licensor Territory;

(ii)     to prepare the Development Plan (including the Regulatory Plan) and any amendments to the Development Plan, including the budget and anticipated timeline for performing each Development activity and the design of each Clinical Study or other study included or proposed to be included in the Development Plan, for review, discussion and approval by the JSC;

(iii)     to agree on the requirements for Drug Approval in the Licensed Territory;

(iv)     to review, discuss and coordinate the Parties ’ scientific presentation and publication strategy relating to Product in the Field, if any;

(v)      to discuss Development activities in the Field as between the Licensed Territory and the Licensor Territory;

(vi)     to facilitate the flow of Information between the Parties with respect to the development of, and obtaining Drug Approval for, Product in the Field; and

(vii)     to perform such other functions as may be appropriate to further the purposes of this Agreement with respect to the Development of Product in the Field in the Licensed Territory, as directed by the JSC.

(b)       Members . Each Party shall initially appoint two (2) representatives to the JDC, each of whom will be an officer or employee of such Party having sufficient seniority within the applicable Party to make decisions arising within the scope of the JDC’s responsibilities. The JDC may change its size from time to time by mutual written consent of its members and each Party may replace its representatives at any time upon written notice to the other Party. If a JDC representative from either Party is unable to attend or participate in a meeting of the JDC, the Party who designated such representative may designate an appropriately qualified substitute representative for the meeting. The JDC will have a chairperson, who will be designated, on an annual basis, alternatively by Licensor or Licensee. The Licensee shall select the initial chairperson. The role of the chairperson is to convene and preside at all meetings of the JDC and to ensure the preparation of meeting minutes, but the chairperson has no additional powers or rights beyond those held by other JDC representatives.

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

(c)     Meetings . The JDC shall meet at least one (1)  time per Calendar Quarter during the Term. Either Party may also call a special meeting of the JDC (by videoconference or teleconference) upon at least [***] prior written notice to the other Party if such Party reasonably believes that a significant matter must be addressed before the next regularly scheduled meeting, and such Party shall provide the JDC no later than [***] before the special meeting with materials reasonably adequate to enable an informed decision to be made by its members. The JDC may meet in person, by videoconference or by teleconference; provided , however , [***]; all other meetings shall alternate as between Licensor’s headquarters and Licensee’s headquarters . Each Party shall pay for its own expenses relating to such meetings. As appropriate, other employee representatives or agents of the Parties may attend JDC meetings as non-voting observers or presenters. The chairperson of the JDC shall prepare reasonably detailed written minutes of all JDC meetings that reflect and include all material decisions made at such meetings. The JDC chairperson shall send draft meeting minutes to each member of the JDC for review and approval within [***] after each JDC meeting. Such minutes will be approved unless one or more members of the JDC object to the accuracy of such minutes within [***] of receipt.

(d)     Decision Making . Actions to be taken by the JDC will be taken only following [***] vote, with each Party having [***] the views of its members. If the JDC fails to reach unanimous agreement on a matter before it for decision for a period in excess of [***] from the date first presented to the JDC in writing, the JDC shall refer the matter promptly to the JSC for timely resolution. Each Party retains the rights, powers, and discretion granted to it under this Agreement and neither Party shall delegate to or vest any such rights, powers, or discretion in the JDC unless such delegation or vesting of rights is expressly provided for in this Agreement or the Parties expressly so agree in writing. Without limiting the foregoing, the JDC does not have the power to interpret, amend, modify, or waive compliance with this Agreement.

3.3.     Joint Commercialization Committee .

(a)     Formation and Role . At least [***] before the anticipated launch of Product in the Field in [***], whichever shall occur first, the Parties shall establish a joint commercialization committee (the “ JCC ”) that will oversee the Commercialization of Product in the Field in the Licensed Territory. The role of the JCC is:

(i)     to discuss the Parties ’ respective Commercialization activities in and as between the Licensed Territory and the Licensor Territory;

(ii)     to review and comment upon the Commercialization Plan submitted by Licensee, a s well as any amendments thereto submitted by Licensee, and to submit such Commercialization Plan or amendment thereto to the JSC for review and discussion;

(iii)     to monitor implementation of the Commercialization Plan;

(iv)     to review and discuss overall strategy for Pricing Approval and Reimbursement Approval of Product in the Field in the Licensed Territory;

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

(v)     to review, discuss and coordinate the Parties ’ attendance, Product messaging and presentations (including “poster-board” presentations and industry booths) at international seminars and conferences at which Product is being discussed, if any; and

(vi)     to perform such other functions as appropriate to further the purposes of this Agreement with respect to the Commercialization of Product, as directed by the JSC.

(b)      Member s . Each Party shall initially appoint two (2) representatives to the JCC, each of whom will be an officer or employee of such Party having sufficient seniority within the applicable Party to make decisions arising within the scope of the JCC’s responsibilities. The JCC may change its size from time to time by mutual written consent of its members and each Party may replace its representatives at any time upon written notice to the other Party. If a JCC representative from either Party is unable to attend or participate in a meeting of the JCC, the Party who designated such representative may designate an appropriately qualified substitute representative for the meeting. The JCC will have a chairperson, who will be designated, on an annual basis, alternatively by Licensor or Licensee. Licensee shall select the initial chairperson. The role of the chairperson is to convene and preside at all meetings of the JCC and to ensure the preparation of meeting minutes, but the chairperson has no additional powers or rights beyond those held by other JCC representatives.

(c)      Meetings . The JCC shall meet at least one (1)  time per Calendar Year after its formation during the Term. Either Party may also call a special meeting of the JCC (by videoconference or teleconference) upon at least five (5) Business Days’ prior written notice to the other Party if such Party reasonably believes that a significant matter must be addressed before the next regularly scheduled meeting, and such Party shall provide the JCC no later than five (5) Business Days before the special meeting with materials reasonably adequate to enable an informed decision to be made by its members. The JCC may meet in person, by videoconference or by teleconference; provided , however , at least one (1)  meeting every other Calendar Year occur in person at a mutually agreeable location; all other meetings shall alternate as between Licensor’s headquarters and Licensee’s headquarters. Each Party shall pay for its own expenses relating to such meetings. As appropriate, other employee representatives or agents of the Parties may attend JCC meetings as non-voting observers or presenters. The chairperson of the JCC shall prepare reasonably detailed written minutes of all JCC meetings that reflect and include all material decisions made at such meetings. The JCC chairperson shall send draft meeting minutes to each member of the JCC for review and approval within [***] after each JCC meeting. Such minutes will be approved unless one or more members of the JCC object to the accuracy of such minutes within [***] of receipt.

(d)      Decision Making . Actions to be taken by the JCC will be taken only following [***] vote, with each Party having [***] representing the views of its members. If the JCC fails to reach [***] agreement on a matter before it for decision for a period in excess of [***] from the date first presented to the JCC in writing, the JCC shall refer the matter promptly to the JSC for timely resolution. Each Party retains the rights, powers, and discretion granted to it under this Agreement and no such rights, powers, or discretion will be delegated to or vested in the JCC unless such delegation or vesting of rights is expressly provided for in this Agreement or the Parties expressly so agree in writing. Without limiting the foregoing, the JCC does not have the power to interpret, amend, modify, or waive compliance with this Agreement.

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

3.4.      Good Faith . In conducting themselves on any committees, all representatives of both Parties shall consider diligently, reasonably and in good faith all input received from the other Party, and shall use Commercially Reasonable Efforts to reach consensus on all matters before them. In exercising any decision-making authority granted to it under this Article 3 , each Party shall conduct its discussions in good faith with a view toward operating for the mutual benefit of the Parties and in furtherance of the successful Development and Commercialization of Product in the Licensed Territory. Notwithstanding anything to the contrary in this Agreement, neither Party nor any of their respective Affiliates will be required to take, or will be penalized for not taking, any action that is not in compliance with such Party’s ethical business practices and policies or that such Party reasonably believes is not in compliance with Laws.

ARTICLE 4

PRODUCT DEVELOPMENT

4.1.      Overview . The Parties desire and intend to collaborate with respect to the development of Product in the Field, as and to the extent set forth in this Agreement. As between the Parties, except as set forth in this Article 4 or in the Development Plan, Licensor shall be responsible for development of Product in the Licensor Territory and Licensee shall be responsible for Development of Product in the Licensed Territory. In particular, Licensee will take primary responsibility for Development of Non-Aerosolized Products in the Licensed Territory. Furthermore, Licensor will designate Licensee its exclusive agent and exclusive representative to Develop Aerosolized Products in the name of and on behalf of Licensor (as the Product License Holder), consistent with and subject to the license grant provided to Licensee under Section 2.1(a) , in the Licensed Territory. Licensor will use Commercially Reasonable Efforts to provide Licensee access to all relevant supplies, licenses, regulatory correspondence and all other information required to enable Licensee to fulfill its responsibilities.

4.2.      Development Plan .

(a)     General . The Licensee shall develop Product with respect to the Field pursuant to a comprehensive written development plan (the “ Development Plan ”) that specifies all Development activities for Product in the Field in the Licensed Territory, and that includes an anticipated timeline for performing those activities necessary to obtain Regulatory Approval in the Field in the PRC and other countries of the Licensed Territory (such timeline, the “ Regulatory Plan ”) .

(b)     Preparation and Approval . Within [***] after the Effective Date, the JDC will prepare and submit to the JSC for its review, discussion and approval the initial Development Plan (which initial Development Plan, for clarity, shall also include the initial Regulatory Plan).

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

(c)      Amendments .

(i)     The JDC shall periodically (including at the specific times specified in this Section 4.2(c) ) review, and, as required, prepare an amendment to the then-current Development Plan, for review, discussion and approval by the JSC. Such amended Development Plan will reflect any changes (including additions) to the Development of Product in the Field in the Licensed Territory. Once approved by the JSC, the amended Development Plan will become effective and supersede the previous Development Plan as of the date of such approval.

(ii)     In addition to the foregoing, [***], and more frequently at the discretion of the JDC, the JDC shall determine if an amendment is needed to the then-current Development Plan and, if appropriate, shall prepare and submit to the JSC for its review, comment and approval, such amendment to the Development Plan.

(d)      Performa nce . The Parties shall collaborate in good faith and each Party shall use Commercially Reasonable Efforts so that the Development activities for the Licensed Territory as set forth in the Development Plan are conducted as efficiently and as timely as possible. Each Party shall conduct its activities under the Development Plan in a good scientific manner and in compliance in all material respects with all Laws and practice standards . The Parties shall only engage in Development activities that are included in the Development Plan approved by the JSC and shall not undertake or otherwise conduct any Development that is outside the scope of the Development Plan.

4.3.      Development Costs . Licensee shall pay [***] of all Licensed Territory Development Costs.

4.4.      Diligence . Licensee shall use Commercially Reasonable Efforts to Develop each Product in the Field in the PRC as the primary target country and subsequently in the other countries or jurisdictions in the Licensed Territory , in accordance with the activities and responsibilities under the Development Plan. Licensee shall initiate the necessary Development activities in respect of the Surfaxin Product and Surfaxin LS set forth in the Development Plan (a) within [***], or (b) [***], whichever shall occur later .

4.5.      Data Exchange and Use . Subject to the terms and conditions of this Agreement, each Party shall promptly provide to the other Party, free of charge, all Information and all clinical and non-clinical data obtained by such Party or any of its Affiliates or sublicensees related to Product. The Party that provides such Information shall be responsible for obtaining all governmental approvals or filings required by Laws for the purpose of providing such Information to the other Party. Each Party shall cooperate in good faith to provide the other Party access to and reasonable assistance with all Licensor Technology or Licensee Technology, as applicable, and other Confidential Information as may be required for such Party to exercise the rights and licenses explicitly granted to it and to perform its obligations under this Agreement .

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

4.6.      Development Reports . Licensee shall provide the JDC with written reports detailing its Development activities under this Agreement and the results of such activities at least [***] in advance of each regularly scheduled JDC meeting. The Parties shall discuss the status, progress and results of Licensee’s Development activities under this Agreement at such regularly scheduled JDC meetings.

4.7.      Development Records . Each Party shall maintain complete, current and accurate records of all Development activities conducted by it hereunder, and all data and other Information resulting from such activities. Such records will fully and properly reflect all work done and results achieved in the performance of the Development activities in good scientific manner appropriate for regulatory and patent purposes. Licensee shall document all non-clinical studies and Clinical Studies in formal written study records according to Laws, including applicable national and international guidelines such as ICH, GCP and GLP. Licensor may review and copy all such records maintained by Licensee at reasonable times, and upon reasonable notice, may also obtain access to the original records to the extent Licensor has a right to use the data and other Information contained in such records.

4.8.      Compliance with Laws . Each Party shall conduct its activities under this Agreement in a good scientific manner and comply in all material respects with all Laws, including applicable national and international guidelines such as ICH, GCP and GLP , and all applicable Laws related to data exchange .

ARTICLE 5

REGULATORY MATTERS

5.1.      Regulatory Responsibilities in the Licensed Territory .

(a)      Subject to the oversight of the JDC, Licensee shall lead and be responsible to conduct all country-specific or jurisdiction-specific regulatory activities and pricing and reimbursement negotiations in the Licensed Territory with respect to Product in the Field. Licensee shall use Commercially Reasonable Efforts in respect of Product as the primary interface with and shall otherwise handle all correspondence, meetings and other interactions with the relevant Regulatory Authorities concerning regulatory activities related to Product in the Field in the Licensed Territory, and Licensee shall prepare and file any and all Regulatory Materials for Product in the Field in the Licensed Territory at its sole expense in accordance with the Development Plan. Licensor shall assist and cooperate with Licensee in connection with the preparation and filing of such Regulatory Materials, as reasonably requested by Licensee, including preparation of ongoing Clinical Studies, study reports, Periodic Safety Update Reports, and any required Drug and Device reports . Licensor shall have the right to approve all regulatory filings and communications in the Licensed Territory for Product for which Licensor is or will be the Product License Holder . Upon the issuance of the Drug Approval for any Aerosolized Product for which Licensor is the Product License Holder, one original of the Drug Approval shall be provided to Licensor, who shall take and retain physical possession thereof.

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

(b)      Licensee shall keep Licensor informed at JDC meetings of regulatory developments relating to Product in the Field in the Licensed Territory and shall promptly notify Licensor in writing of any action or decision by any Regulatory Authority in the Licensed Territory regarding Product in the Field. Licensee shall provide Licensor with reasonable advance notice of all non-routine meetings, conferences and discussions scheduled with any Regulatory Authority in the Licensed Territory concerning Product, and shall consider in good faith any input from Licensor in preparing for such meetings, conferences or discussions. To the extent permitted by Laws, Licensor may participate in any such meetings, conferences or discussions and Licensee shall facilitate such participation. Upon Licensor’s request, Licensee shall provide Licensor with written summaries of such meetings, conferences or discussions in English as soon as practicable after the conclusion thereof.

(c)      Licensor shall compile and provide to Licensee the CMC I nformation that is required for Licensee to obtain and maintain Regulatory Approval of Product in the Field in the Licensed Territory. Licensee shall use the CMC Information provided to it by Licensor for obtaining and maintaining Regulatory Approval of Product in the Field in the Licensed Territory. At Licensee’s request, Licensor shall provide reasonable assistance to Licensee with respect to communications with Regulatory Authorities in the Licensed Territory regarding the manufacture of Product or the CMC Information. Furthermore, as expressly contemplated in Article 15, Licensor shall promptly provide to Licensee the CMC information, technology transfer information and relevant know-how that is necessary or useful for Licensee to be able to manufacture the Surfaxin Product, Surfaxin LS and other Non-Aerosolized Products in the Licensed Territory.

(d)      Further to its obligations as exclusive agent and exclusive representative to Develop Aerosolized Products in the name of and on behalf of Licensor in the Licensed Territory, consistent with and subject to the license grant provided to Licensee under Section 2.1(a) and except as otherwise determined by the JSC, Licensee shall seek Regulatory Approval of Aerosurf for the prevention and/or treatment of RDS in premature infants (or the regulatory equivalent thereof in the Licensed Territory) (i) in each of [***] after Licensor’s completion of a final, successful Phase 3 Study in respect of Aerosurf for the prevention and/or treatment of RDS in premature infants and Licensee’s completion of such other Development obligations of each of said countries’ Regulatory Authorities in respect of Aerosurf for such indication(s), or such longer period as may be required and set forth in the Development Plan, and (ii) everywhere else in the Licensed Territory, as soon as practicable following Licensor’s completion of a final, successful Phase 3 Study in respect of Aerosurf for the prevention and/or treatment of RDS in premature infants and Licensee’s completion of such other Development obligations of each of said countries’ Regulatory Authorities in respect of Aerosurf for such indication(s) . In the event that the applicable Laws or Regulatory Authorities in the Licensed Territory enforce any obligations on the Licensor as the Product License Holder, to the extent permissible by Laws, Licensor hereby authorizes and delegates Licensee to perform and complete such required obligations on behalf of Licensor.

(e)      Licensee shall file a Drug Approval Application in respect of the Surfaxin Product and/or Surfaxin LS, as the case may be, with the appropriate Regulatory Authority in [***] after Licensee’s completion of any Development obligations [***] in respect of Surfaxin Product and/or Surfaxin LS, as the case may be, or such longer period as may be required and set forth in the Development Plan .

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

5.2.      Regulatory Responsibilities in the Licensor Territory .

(a)      Licensor shall lead and be responsible to conduct all regulatory activities in the Licensor Territory with respect to Product.

(b)      Licensor owns all Regulatory Materials (including Regulatory Approvals) for Pr oduct in the Licensor Territory and shall prepare and file any and all Regulatory Materials for Product in the Licensor Territory at its sole expense .

(c)      Licensor shall keep Licensee informed of regulatory developments relating to Product in the Field in the Licensor Territory through regular reports at the JDC meetings and shall promptly notify Licensee in writing of any action or decision by any Regulatory Authority in the Licensor Territory relating to Product in the Field .

(d)      Unless the Parties otherwise agree in writing: (i) Licensee shall not communicate with respect to Product with any Regulatory Authority having jurisdiction in the Licensor Territory, unless so ordered by such Regulatory Authority, in which case Licensee shall provide immediate notice to Licensor of such order; and (ii) Licensee shall not submit any Regulatory Materials or seek Regulatory Approvals for Product in the Licensor Territory.

5.3.      Regulatory Costs . Licensee shall pay all costs and expenses related to the preparation, filing and maintenance of all Regulatory Materials and Regulatory Approvals for Product in the Field in the Licensed Territory, subject to Section 7.2. Licensor shall pay all costs and expenses related to the preparation, filing and maintenance of all Regulatory Materials and Regulatory Approvals for Product in the Licensor Territory.

5.4.      Rights of Reference to Regulatory Materials . Licensor hereby grants to Licensee a right of reference to all Regulatory Materials filed by or on behalf of Licensor, which right of reference Licensee may use for the sole purpose of seeking, obtaining and maintaining Regulatory Approvals and Developing and Commercializing the Aerosolized Products in the Field in the Licensed Territory and Developing, manufacturing and Commercializing the Non-Aerosolized Products in the Field in the Licensed Territory. Licensee hereby grants to Licensor and Licensor’s licensees in the Licensor Territory a right of reference to all Regulatory Materials filed by or on behalf of Licensee, which right of reference Licensor may use for the sole purpose of seeking, obtaining and maintaining Regulatory Approvals and developing , manufacturing (for Non-Aerosolized Products) and commercializing Product in the Licensor Territory. Each Party shall support the other Party, as reasonably requested by such other Party, in obtaining Regulatory Approvals in such other Party’s territory, including providing necessary documents or other materials required by Laws to obtain Regulatory Approval in such territory, all in accordance with the terms and conditions of this Agreement.

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

5.5.      No Harmful Actions .

(a)      If Licensor reasonably believes that Licensee is taking or intends to take any action with respect to a Product that is substantially likely to have a Material Impact in the Licensor Territory, Licensor may bring the matter to the attention of the JSC. Licensee shall not proceed with any such action or alternative course of action until it is approved by the JSC in accordance with Section 3.1(d) .

(b)      If Licensee reasonably believes that Licensor is taking or intends to take any action with respect to a Product that is substantially likely to have a Material Impact in the Field in the Licensed Territory, Licensee may bring the matter to the attention of the JSC. Licensor shall not proceed with any such action or alternative course of action until it is approved by the JSC in accordance with Section 3.1(d) .

5.6.      Notification of Threatened Action . Each Party shall immediately notify the other Party of any information it receives regarding any threatened or pending action, inspection or communication by or from any Third Party, including a Regulatory Authority, which may affect the Development, Commercialization or regulatory status of a Product. Upon receipt of such information, the Parties shall consult with each other to arrive at a mutually acceptable procedure for taking appropriate action.

5.7.      Adverse Event Reporting and Safety Data Exchange . Within [***] the anticipated launch of a Product in the Licensed Territory, the Parties shall define and finalize the actions that the Parties shall employ with respect to such Product to protect patients and promote their well-being in a written pharmacovigilance agreement (the “ Pharmacovigilance Agreement ”). These responsibilities shall include mutually acceptable guidelines and procedures for the receipt, investigation, recordation, communication, and exchange (as between the Parties) of adverse event reports, and any other information concerning such Product’s safety. Such guidelines and procedures will be in accordance with, and enable the Parties to fulfill, local and national regulatory reporting obligations under Laws. Furthermore, such agreed procedure will be consistent with relevant ICH Guidelines, except where said guidelines may conflict with existing local regulatory or safety reporting requirements, in which case local reporting requirements shall prevail. Licensee shall report quality complaints, adverse events and safety data related to such Product in the Field to applicable Regulatory Authorities in the Licensed Territory, and shall respond to safety issues and to all requests of Regulatory Authorities relating to such Product in the Field in the Licensed Territory. Licensor shall maintain a worldwide safety database pursuant to the terms of the Pharmacovigilance Agreement. Each Party shall comply with its respective obligations under the Pharmacovigilance Agreement and shall cause its Affiliates and Sublicensees to comply with such obligations.

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

5.8.     Remedial Actions . Each Party will notify the other Party immediately, and promptly confirm such notice in writing, if it obtains information indicating that a Product may be subject to any recall, corrective or other regulatory action taken by virtue of Laws (a “ Remedial Action ”). The Parties will assist each other in gathering and evaluating such information as is necessary to determine the necessity of conducting a Remedial Action. Each Party shall, and shall ensure that its Affiliates and sublicensees will, maintain adequate records to permit the Parties to trace the manufacture, distribution and use of such Product. If Licensee determines that any Remedial Action with respect to such Product in the Field in the Licensed Territory should be commenced or is required by Law or the applicable Regulatory Authority, Licensee may, at its expense (except to the extent that such Remedial Action is due to Licensor’s default or inaction), control and coordinate all efforts necessary to conduct such Remedial Action; provided that, with respect to any such Remedial Action that is not required by Laws or the applicable Regulatory Authority, the JSC will review and approve such Remedial Action. If the JSC fails to approve a Remedial Action that is not imposed upon Licensee by Laws or a Regulatory Authority within [***] after such Remedial Action is presented to the JSC for review and approval, then the Parties’ Executive Officers shall, within [***] thereafter, review and approve such Remedial Action or, if the Executive Officers fail to approve such Remedial Action within such time period, Licensee shall make the final decision regarding such Remedial Action notwithstanding Sections  13.1 and  13.2 , provided that, so long as Licensor is the Product License Holder for a Product, Licensor shall make the final decision regarding such Remedial Action involving such Product notwithstanding Sections 13.1 and 13.2 . Notwithstanding the foregoing, the terms and conditions of any agreements entered into by and between the Parties regarding manufacture and supply of a Product shall govern any Remedial Action that relates to the manufacture and supply of such Product.

ARTICLE 6

COMMERCIALIZATION

6.1.     Overview of Commercialization in the Licensed Territory . Subject to the terms and conditions of this Article 6 and subject to oversight by the JSC, as between the Parties, Licensee is responsible for all aspects of the Commercialization of Product in the Field in the Licensed Territory, including: (a) developing and executing a commercial launch and pre-launch plan; (b) negotiating with applicable Governmental Authorities regarding the price and achieving reimbursement status of such Product; (c) pre-launch, launch and post-launch marketing and promotion activities (including providing appropriate marketing personnel and various marketing tools as appropriate to meet the Parties’ business objectives in the Licensed Territory); (d) booking sales, and distribution and performance of related services; (e) handling all aspects of order processing, invoicing and collection, inventory and receivables; (f) providing customer support, including handling medical queries, and performing other related functions; and (g) conforming its practices and procedures to Laws relating to the marketing, detailing and promotion of such Product in the Field in the Licensed Territory. Licensee shall bear all of the costs and expenses incurred in connection with such Commercialization activities. For clarity, Licensee shall control and execute the commercial strategy for Product in the Field within the Licensed Territory.

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

6.2.      Commercialization Plan for Licensed Territory .

(a)     Commercialization . Licensee shall Commercialize Product in the Field in the Licensed Territory pursuant to a commercialization plan prepared by Licensee (the “ Commercialization Plan ”). The Commercialization Plan will include a reasonably detailed description and timeline of Licensee’s Commercialization activities in the Field in each country or jurisdiction in the Licensed Territory for the next year, including Medical Affairs Activities, sales forecasts and projections, pricing, reimbursement, market research, sales training, distribution channels, customer service and sales force matters (such as size, structure of promotional resources and Product positioning and messaging) related to the launch and sale of Product in such country or jurisdiction in such year.

(b)     Plan and Amendments . Licensee shall inform the JCC of the Commercialization Plan no later than [***] before the anticipated launch of the first Product to be Commercialized in the PRC, for review and comment, after which the JCC shall submit such Commercialization Plan to the JSC for review. On at least an annual basis, Licensee shall prepare an amendment, as appropriate, to the then-current Commercialization Plan. Licensee shall keep the JCC informed about any material amendment to the Commercialization Plan.

(c)     Data Sharing . Licensor shall provide at all times during the Term, relevant data or information reasonably requested by Licensee in Licensor’s possession or Control to support Commercialization of Product in the Field in the Licensed Territory. Licensee shall provide at all times during the Term, relevant data or information reasonably requested by Licensor in Licensee’s possession or Control to support commercialization of Product in the Licensor Territory.

6.3.      Pricing . Licensee shall determine all pricing of Product in the Field in the Licensed Territory. For the avoidance of doubt, Licensor does not have any right to direct, control, or approve Licensee’s pricing of Product in the Field in the Licensed Territory. With respect to each Product that may be subject to global price referencing affecting markets outside the Licensed Territory, Licensee and Licensor shall develop through the JCC a global pricing strategy for submission and approval by the JSC.

6.4.      Pricing Approval . On a country-by-country basis, Licensee shall use Commercially Reasonable Efforts to obtain and maintain Pricing Approval where applicable, for Product in the Field in each country in the Licensed Territory in which it has obtained Drug Approval for such Product.

6.5.      Reimbursement Approval . On a country-by-country basis, Licensee shall use Commercially Reasonable Efforts to obtain and maintain Reimbursement Approval where applicable, for Product in the Field in each country in the Licensed Territory in which it has obtained Drug Approval for such Product.

6.6.      Commercial Diligence .

(a)      Licensee s hall use Commercially Reasonable Efforts to Commercialize Product in the Field in each country or jurisdiction in the Licensed Territory in which it receives Regulatory Approval. After the launch of each Product in the Field in the Licensed Territory, Licensee shall commit at least the same number of sales representatives and the same level of resources and infrastructure in connection with the Commercialization of such Product as are expended by Licensee and similarly-sized pharmaceutical companies with similarly-sized infrastructure to support and carry out similar operations in connection with the commercialization of products with similar market potential.

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

(b)      Licensee shall achieve F irst Commercial Sale of (i) the Surfaxin Product and/or Surfaxin LS, as the case may be, [***] after Drug Approval therefor has been obtained from the appropriate Regulatory Authority (or pricing and reimbursement approval where applicable) [***] to Commercialize the Surfaxin Product and Surfaxin LS, as applicable, [***]; and (ii) Aerosurf [***] after the appropriate Regulatory Authority [***] has approved Licensor’s imported product registration permitting Licensee to Commercialize Aerosurf [***], provided that Aerosurf is made available [***] by Licensor within a reasonable period of time in advance of the deadlines set forth in this Section 6.6(b).

(c)      Licensee’s FTE and marketing spend (inclusive of costs of sales force, marketing materials, trade show attendance and medical affairs team) in respect of Commercializing the Surfaxin Product, Surfaxin LS and Aerosurf in the Licensed Territory shall be not less than [***] of the gross forecasted revenues expected to be derived from the sale of such Products as set forth in the Commercialization Plan.

6.7.      Cross-Territorial Restrictions . As permitted by Law, Licensee shall not, and shall ensure that its Affiliates and Sublicensees will not, either directly or indirectly, knowingly promote, market, distribute, import, sell or have sold Product, including via internet or mail order, into countries in the Licensor Territory. As to such countries in the Licensor Territory, Licensee shall not, and shall ensure that its Affiliates and Sublicensees will not: (i) establish or maintain any branch, warehouse or distribution facility for Product in such countries, (ii) engage in any advertising or promotional activities relating to Product that are directed primarily to customers or other purchasers or users of Product located in such countries, (iii) solicit or accept orders from any prospective purchaser located in such countries, or (iv) sell or distribute Product to any person in the Licensed Territory who it knows intends to sell Product in such countries. If Licensee receives any order from a prospective purchaser located in a country in the Licensor Territory, Licensee shall refer that order to Licensor, and Licensee shall not accept any such orders. Licensee shall not deliver or tender (or cause to be delivered or tendered) Product into a country in the Licensor Territory.

6.8.      Territorial Coordination . The Parties shall, where appropriate, coordinate their Commercialization activities between the Licensor Territory and the Licensed Territory through the JCC, which coordination may include implementation of a global branding strategy for each Product in the Field .

6.9.      Reports . Each Party shall update the JCC at each regularly scheduled JCC meeting regarding its commercialization activities and results metrics with respect to Product in the Field in its applicable territory. Each such update will be in a form to be agreed by the JCC and will summarize such Party’s significant commercialization activities with respect to Product in the Field in its applicable territory pursuant to this Agreement, covering subject matter at a level of detail reasonably requested by the Parties and sufficient to enable each Party to assess the other Party’s compliance with its obligations pursuant to Section 6.6 .

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

ARTICLE 7

COMPENSATION

7.1.      Upfront Payment . In partial consideration of Licensor’s investment in development of Product in the Field before the Effective Date and Licensor’s grant of exclusive licenses to Licensee under the Licensor Technology, on or before July 5, 2017, Licensee shall pay to Licensor a one-time upfront fee of One Million Dollars ($1 ,000,000). Such fee shall be non-creditable and non-refundable.

7.2.      Licensed Territory Development Costs . Pursuant to Section 4.3, Licensee shall solely bear [***] Licensed Territory Development Costs and shall reimburse Licensor for any expenses paid by Licensor with respect to Development costs directly incurred in or for the Licensed Territory . Such costs will be discussed with Licensee and approved by Licensee in advance. Notwithstanding the above, so long as Licensor is the Product License Holder of a Product in the Licensed Territory, Licensor shall solely bear all Licensed Territory Development costs in connection with any filing fees payable to Regulatory Authorities in the Licensed Territory relative to such Product .

7.3.      Milestone Payments .

(a)     Regulatory/Commercial Milestones . In addition to the payment set forth in Section 7.1 , Licensee shall pay the following one-time non-refundable regulatory/commercial milestone payments to Licensor, each within [***] after the first achievement of each regulatory/commercial milestone event indicated below:

(b)      Net Sales Milestone Payments in the Licensed Territory . Licensee shall make the following one-time, non-refundable, non-creditable milestone payments to Licensor when the aggregate Net Sales of a given Product or Products, as applicable, in the Field in the Licensed Territory first reaches the specified amount listed in the “Milestone Event” column below in any Calendar Year. Licensee shall pay to Licensor such amount within [***] in which such Milestone Event is achieved .

(c)      Milestones for [***]

7.4.      Royalties .

(a)      Royalty Rates . Licensee shall pay to Licensor non-refundable, non-creditable royalties on Net Sales of each Product in the Field in the Licensed Territory during the Term, as calculated by multiplying the applicable royalty rate set forth below by the corresponding amount of incremental, aggregated Net Sales of each Product or Products, as applicable, in the Field in the Licensed Territory each Calendar Year.

(i)      Royalty Rates for [***]

(ii)      Royalty Rates for Product s other than [***]

(b)      Duration . Licensee shall pay to Licensor royalties under this Section 7.4 on a country-by-country and Product-by-Product basis as follows:

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

(i)      [***] In consideration of licensed rights to Regulatory Materials, the technology transfer contemplated under Section 15.3 and trade secrets delivered and/or any other Licensor Technology rights granted to Licensee under this Agreement, with respect to [***] as applicable, from the time of First Commercial Sale of such Product in such country until the latest of (A) the expiration of the last Valid Claim of all Licensor Patents claiming or covering such Product, as applicable, in the country of sale, (B) the expiration or revocation of any applicable Regulatory Exclusivity in the country of sale, and (C) ten (10) years from the date of First Commercial Sale of such Product in such country, at the rates set forth in Section 7.4(a)(i). Thereafter, for the remainder of the Term, Licensee shall pay to Licensor royalties on a country-by-country basis equal to (x) [***] of the royalty rates set forth in Section 7.4(a)(i) for a period of [***], and (y) [***] of the royalty rates set forth in Section 7.4(a)(i) thereafter .

(ii)      Product other than [***] , from the date of First Commercial Sale of such Product in such country until the latest of (A) the expiration of the last Valid Claim of all Licensor Patents claiming or covering such Product, the Drug or the Device, as applicable, or a component thereof , in the country of sale, (B) the expiration or revocation of any applicable Regulatory Exclusivity in the country of sale, and (C) ten (10) years from the date of First Commercial Sale of such Product in such country, at the rates set forth in Section 7.4(a)(ii); provided , thereafter, in consideration of trade secrets delivered and/or any other Licensor Technology rights granted to Licensee under this Agreement, for the remainder of the Term, Licensee shall pay to Licensor royalties on a country-by-country basis of [***] the rates set forth in Section 7.4(a)(ii) for a period of (x) [***] and, thereafter, of [***] of the royalty rates set forth in Section 7.4(a)(ii) or (y) [***], if any, whichever is the higher .

(c)      Reports and Payments . Within [***] following the end of each Calendar Quarter, commencing with the Calendar Quarter in which the First Commercial Sale of a Product is made anywhere in the Licensed Territory, Licensee shall provide Licensor with a report containing the following information for such Calendar Quarter, on a country-by-country basis: (i) the amount of gross sales of each Product in the Licensed Territory, (ii) an itemized calculation of Net Sales of each Product in the Licensed Territory showing deductions provided for in the definition of “Net Sales” and any rebates that are known to be required in respect of the Calendar Quarter in question, (iii) the conversion of such Net Sales from the currency of sale into Dollars, and (iv) the calculation of the royalty payment due on such sales, showing the application of the reduction, if any, made in accordance with the terms of Sections 7.4(a) or 7.4(b) . Concurrent with the delivery of the applicable quarterly report, Licensee shall pay in Dollars all amounts due to Licensor pursuant to this Section 7.4 with respect to Net Sales by Licensee, its Affiliates and their respective Sublicensees for such Calendar Quarter.

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

(d)     Royalty Adjustment . In the event that, at any time during the Term, a Generic/Branded Generic of a Product is Marketed by a Third Party in any country in the Licensed Territory, the royalty rate applicable to such Product in such country shall be reduced by (i) [***] for as long as there is only one Generic/Branded Generic of such Product being Marketed in such country; and (ii) [***] for as long as there is more than one Generic/Branded Generic of such Product being Marketed in such country. Notwithstanding the foregoing: [***] . Prior to any royalty reduction pursuant to this Section 7.4(d), Licensee shall provide evidence of such Generic/Branded Generic of Product in such country. Solely for purposes of this Section 7.4(d), “ Marketed ” means the Third Party is active in its marketing and promotional efforts with respect to such Generic/Branded Generic of Product. Examples of “active” include: (x) pursuing inclusion in a tender process, and (y) marketing and promotional activities that are similar to those undertaken by Licensee with respect to such Product.

7.5.      Sublicense Income . In partial consideration of Licensor’s investment in development of Products in the Field before the Effective Date and Licensor’s grant of exclusive licenses to Licensee under the Licensor Technology, Licensee shall pay to Licensor [***] of any Sublicense Income it receives during the Term. Licensee will make such payment to Licensor on or before the following dates:

(a)      February 28 for any Sublicense Income received by Licensee on or before the last day of t he Calendar Quarter ending December 31 of the prior Calendar Year;

(b)      May 31 for any Sublicense Income received by Licensee on or before the last day of the Calendar Quarter ending March 31 of such Calendar Year;

(c)      August 31 for any Sublicense Income received b y Licensee on or before the last day of the Calendar Quarter ending June 30 of such Calendar Year; and

(d)      November 30 for any Sublicense Income received by Licensee on or before the last day of the Calendar Quarter ending September 30 of such Calendar Year.

W ithin [***] after the end of each Calendar Quarter (i.e. Feb. 28, May 31, August 31 and Nov. 30), Licensee shall deliver to Licensor a report setting out all details necessary to calculate Sublicense Income due under this Section 7.5 for such Calendar Quarter, including the method and currency exchange rates (if any) used to calculate Sublicense Income.

7.6.      Foreign Exchange . Conversion of sales recorded in local currencies to Dollars will be calculated, on a quarterly basis, using the mid-point rate of exchange for the last Business Day of the Calendar Quarter as reported in the Financial Times (London edition) on the last Business Day of each Calendar Quarter in the quarter before the date of payment.

7.7.      Payment Method; Late Payments . Each Party shall make all payments due hereunder in Dollars by wire transfer of immediately available funds into an account designated by the Party that is owed such payment (such Party, the “ Payee ”). For the avoidance of doubt, to the extent permissible by Laws, the Payee for Licensee shall be a non-PRC entity. If the Payee does not receive payment of any sum due to it on or before the due date, simple interest will thereafter accrue on the sum due to the Payee until the date of payment at the per annum rate of two percent (2%) over the then-current prime rate as reported in The Wall Street Journal or the maximum rate allowable by Laws, whichever is lower.

Confidential Materials Omitted and Filed Separately with the Securities and Exchange Commission Pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Exchange Act of 1934, as amended.   Confidential Portions are marked: [***]

7.8.      Records . Each Party shall keep (and shall ensure that its Affiliates and Sublicensees keep) such records as are required to determine, in accordance with the Accounting Standards, and this Agreement, the sums or credits due under this Agreement, including Licensed Territory Development Costs, Net Sales and Sublicense Income. Such Party shall retain all such books, records and accounts until the later of (a) three (3) years after the end of the period to which such books, records and accounts pertain and (b) the expiration of the applicable tax statute of limitations (or any extensions thereof), or for such longer period as may be required by Laws. Licensee shall require its Sublicensees to provide to it a report detailing the foregoing expenses and calculations incurred or made by such Sublicensee, which report will be made available to Licensor in connection with any audit conducted by Licensor pursuant to Section 7.9 .

7.9.      Audits . Each Party may have an independent certified public accountant, reasonably acceptable to the audited Party, have access during normal business hours, and upon reasonable prior written notice, to examine only those records of the audited Party (and its Affiliates and sublicensees) as may be reasonably necessary to determine, with respect to any Calendar Year ending not more than three (3) years before such Party’s request, the correctness or completeness of any report or payment made under this Agreement. The foregoing right of review may be exercised only once per year and only once with respect to each such periodic report and payment. Reports of the results of any such examination will be (a) limited to details of any discrepancies in the audited Party’s records relating to Product together with an explanation of the discrepancy and the circumstances giving rise to the discrepancy (b) made available to both Parties and (c) subject to Article 11 . If the audit report concludes that (i) additional amounts were owed by the audited Party, the audited Party shall pay the additional amounts, with interest from the date originally due as provided in Section 7.7 or (ii) excess payments were made by the audited Party, the auditing Party shall reimburse such excess payments, with interest from the date when the original payment was made, in either case ((i) or (ii)), within thirty (30) days after the date on which such audit report is delivered to both Parties. The Party requesting the audit shall bear the full cost of the performance of any such audit, unless such audit, which covers the entire Calendar Year, discloses a variance to the detriment of the auditing Party of more than five percent (5%) from the amount of the original report, royalty or payment calculation, in which case the audited Party shall bear the full cost of the performance of such audit. The results of such audit will be final, absent manifest error.

7.10.      Taxes .

(a)     Taxes on Income . Each Party shall pay all taxes imposed on its share of income arising directly or indirectly from the efforts of the Parties under this Agreement.

(b)     Tax Cooperation . The Parties agree to cooperate with one another and use reasonable efforts to reduce or eliminate tax withholding or similar obligations in respect of royalties, milestone payments, and other payments made by one Party to the other Party under this Agreement. To the extent a Party is required to deduct and withhold taxes on any payment to the other Party, it shall pay the amounts of such taxes to the proper Governmental Authority in a timely manner and promptly transmit to the other Party an official tax certificate or other evidence of such withholding sufficient to enable the other Party to claim such payment of taxes. The other Party shall provide the deducting Party any tax forms that may be reasonably necessary in order for it to not withhold tax or to withhold tax at a reduced rate under an applicable bilateral income tax treaty. Each Party shall provide the other with reasonable assistance to enable the recovery, as permitted by Laws, of withholding taxes, value added taxes, or similar obligations resulting from payments made under this Agreement, such recovery to be for the benefit of the Party bearing such withholding tax or value added tax.