Subscription, Joint Development And Operating

CONFIDENTIAL TREATMENT REQUESTED] /*/ INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.


EXECUTION COPY


SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT


ELAN CORPORATION, PLC
(ACTING THROUGH ITS DIVISION ELAN PHARMACEUTICAL TECHNOLOGIES)


ELAN PHARMA INTERNATIONAL LIMITED


ELAN INTERNATIONAL SERVICES, LTD.


AND


ACUSPHERE, INC.


AND


ACUSPHERE NEWCO, LTD.


INDEX


CLAUSE 1 DEFINITIONS


CLAUSE 2 BUSINESS AND SELECTION OF COMPOUNDS


CLAUSE 3 REPRESENTATIONS AND WARRANTIES


CLAUSE 4 AUTHORIZATION AND CLOSING


CLAUSE 5 DIRECTORS; MANAGEMENT AND R&D COMMITTEES


CLAUSE 6 THE BUSINESS PLAN AND REVIEWS


CLAUSE 7 RESEARCH AND DEVELOPMENT


CLAUSE 8 COMMERCIALIZATION


CLAUSE 9 OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS/NONCOMPETITION


CLAUSE 10 INTELLECTUAL PROPERTY RIGHTS


CLAUSE 11 CROSS LICENSING/EXPLOITATION OF PRODUCTS OUTSIDE FIELD


CLAUSE 12 REGULATORY


CLAUSE 13 MANUFACTURING


CLAUSE 14 TECHNICAL SERVICES AND ASSISTANCE


CLAUSE 15 AUDITORS, BANKERS, ACCOUNTING REFERENCE DATE; SECRETARY


CLAUSE 16 TRANSFER OF SHARES; RIGHTS OF FIRST OFFER; TAG ALONG RIGHTS


CLAUSE 17 MATTERS REQUIRING SHAREHOLDERS' APPROVAL


CLAUSE 18 DISPUTES


CLAUSE 19 TERMINATION


CLAUSE 20 SHARE RIGHTS


CLAUSE 21 CONFIDENTIALITY


CLAUSE 22 COSTS


CLAUSE 23 GENERAL


THIS SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT made this 30th day of June, 2000


BETWEEN:


(1) ELAN CORPORATION, PLC, a public limited company incorporated under the
laws of Ireland, acting through its division ELAN PHARMACEUTICAL
TECHNOLOGIES, and having its registered office at Lincoln House,
Lincoln Place, Dublin 2, Ireland ("ELAN, PLC");


(2) ELAN INTERNATIONAL SERVICES, LTD., a Bermuda exempted limited liability
company incorporated under the laws of Bermuda, and having its
registered office at Clarendon House, 2 Church St., Hamilton, Bermuda
("EIS");


(3) ELAN PHARMA INTERNATIONAL LIMITED a private limited company
incorporated under the laws of Ireland, and having its registered
office at WIL House, Shannon Business Park, Shannon, County Clare,
Ireland ("EPIL");


(4) ACUSPHERE, INC. a corporation duly incorporated and validly existing
under the laws of Delaware and having its principal place of business
at 38 Sidney Street, Cambridge, MA 02139 United States of America
("ACUSPHERE"); and


(5) ACUSPHERE NEWCO LIMITED a Bermuda exempted limited liability company
incorporated under the laws of Bermuda, and having its registered
office at Clarendon House, 2 Church St., Hamilton, Bermuda ("NEWCO").


RECITALS:


A. Newco desires to issue and sell to the Shareholders (as defined below),
and the Shareholders desire to purchase from Newco, for aggregate
consideration of $15,000,000, apportioned between them as set forth
herein, (i) 6,000 shares of Newco's common shares, par value $1.00 per
share (the "COMMON SHARES") to Acusphere, and (ii) 6,000 shares of
Newco's preferred shares, par value $1.00 per share (the "PREFERRED
SHARES") allocated 3,612 shares to Acusphere and 2,388 shares to EIS.


B. As of the Closing Date, Elan, plc and EPIL, have entered into a license
agreement with Newco, and Acusphere has entered into a license
agreement with Newco, in connection with the license to Newco of the
Elan Intellectual Property and the Acusphere Intellectual Property,
respectively (each as defined below).


C. Elan, plc, EPIL and Acusphere have agreed to co-operate in the
research, development and commercialization of the Products (as defined
below) based on their respective technologies.


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D. Elan, plc, EPIL and Acusphere have agreed to enter into this Agreement
for the purpose of recording the terms and conditions regulating their
relationship with each other, with respect to the Licensed Technologies
and with Newco.


NOW IT IS HEREBY AGREED AS FOLLOWS:


CLAUSE 1


DEFINITIONS


1.1 In this Agreement, the following terms shall, where not inconsistent
with the context, have the following meanings respectively.


"ACUSPHERE DIRECTORS" has the meaning set forth in Clause 5.


"ACUSPHERE IMPROVEMENTS" has the meaning assigned thereto in the
Acusphere License Agreement.


"ACUSPHERE INTELLECTUAL PROPERTY" has the meaning assigned thereto in
the Acusphere License Agreement.


"ACUSPHERE JV" shall mean an entity that Acusphere and a third party
(i) establish or has established, (ii) take shareholdings in or have a
right to take shareholdings in, and (iii) grant certain licenses in and
to certain intellectual property rights for the purpose of implementing
a strategic alliance.


"ACUSPHERE KNOW-HOW" has the meaning assigned thereto in the Acusphere
License Agreement.


"ACUSPHERE LICENSE" has the meaning assigned thereto in the Acusphere
License Agreement.


"ACUSPHERE LICENSE AGREEMENT" shall mean the license agreement between
Acusphere and Newco, of even date herewith, attached hereto in
Schedule 2.


"ACUSPHERE PATENTS" has the meaning assigned thereto in the Acusphere
License Agreement.


"ACUSPHERE SECURITIES PURCHASE AGREEMENT" shall mean that certain
securities purchase agreement, of even date herewith, by and between
Acusphere and EIS.


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"AFFILIATE" of any Person (in the case of a legal entity) shall mean
any other Person controlling, controlled or under the common control of
such first Person, as the case may be, excluding an Elan JV and an
Acusphere JV. For the purposes of this definition, "control" shall mean
direct or indirect ownership of [CONFIDENTIAL TREATMENT REQUESTED] /*/
or more of the stock or shares entitled to vote for the election of
directors and "controlling" and "controlled" shall be construed
accordingly. For purposes of this Agreement, Newco is not an Affiliate
of Elan or EIS.


"AGREEMENT" shall mean this agreement (which expression shall be deemed
to include the Recitals and the Schedules hereto).


"BOARD" shall mean the board of directors of Newco.


"BUSINESS" shall mean the business operated by Newco, as described in
Clause 2.1 and as more fully specified in the Business Plan.


"BUSINESS PLAN" shall have the meaning set forth in Clause 6 below.


"CHARTER" shall mean the Amended and Restated Certificate of
Incorporation of Acusphere, in the form attached as an Exhibit to the
Securities Purchase Agreement.


"CLOSING DATE" shall mean the date upon which the Definitive Documents
are executed and delivered by the Parties and the transactions effected
thereby are closed.


"COMMERCIALIZATION" shall mean the manufacture, have manufactured,
promotion, distribution, import, use, market, offer for sale and sale
of the Products in accordance with the terms of this Agreement.


"COMMON SHARE EQUIVALENTS" shall mean any options, warrants, rights or
any other securities convertible, exercisable or exchangeable, in whole
or in part, for or into Common Shares.


"COMPOUNDS" shall mean [CONFIDENTIAL TREATMENT REQUESTED]/*/ and such
other active ingredients for the Products as may be nominated by the
Management Committee in accordance with Clause 2 below.


"CONVERTIBLE NOTE" shall mean that certain convertible promissory note,
of even date herewith, by and between Acusphere and EIS.


"DEFINITIVE DOCUMENTS" shall mean this Agreement, the Elan License
Agreement, the Acusphere License Agreement, the Convertible Note, the
Acusphere Securities Purchase Agreement, the Investors Rights
Agreements, the Charter and associated documentation of even date
herewith, by and between Acusphere, Elan, EIS and Newco, as applicable.


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"DIRECTORS" shall mean, at any time, the directors of Newco.


"EIS DIRECTOR" has the meaning set forth in Clause 5.


"ELAN" shall mean Elan, plc and EPIL.


"ELAN IMPROVEMENTS" has the meaning assigned thereto in the Elan
License Agreement.


"ELAN INTELLECTUAL PROPERTY" has the meaning assigned thereto in the
Elan License Agreement.


"ELAN JV" has the meaning assigned thereto in the Elan License
Agreement.


"ELAN KNOW-HOW" has the meaning assigned thereto in the Elan License
Agreement.


"ELAN LICENSE" has the meaning assigned thereto in the Elan License
Agreement.


"ELAN LICENSE AGREEMENT" shall mean the license agreement between Elan
and Newco, of even date herewith, attached hereto in Schedule 1.


"ELAN PATENTS" has the meaning assigned thereto in the Elan License
Agreement.


"ENCUMBRANCE" shall mean any liens, charges, encumbrances, equities,
claims, options, proxies, pledges, security interests, or other similar
rights of any nature.


"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.


"EXCHANGE AGREEMENT" shall mean the Exchange Agreement of even date
herewith between EIS and Acusphere.


"EXCHANGE RIGHT" has the meaning assigned to such term in the Exchange
Agreement in effect on the Closing Date.


"FDA" shall mean the United States Food and Drug Administration or any
other successor agency in the USA.


"FIELD" shall mean delivery of a specified Compound by a specific Mode
of Administration in a specific device to treat a specific medical
condition, as set


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forth in Clause 2.3 below with respect to [CONFIDENTIAL TREATMENT
REQUESTED] /*/ and as further determined by the unanimous vote of the
Management Committee in accordance with Clause 2 hereof.


"FINANCIAL YEAR" shall mean each year commencing on January 1 (or in
the case of the first Financial Year, the Closing Date) and expiring on
December 31 of each year.


"FULLY DILUTED COMMON SHARES" shall mean all of the issued and
outstanding Common Shares, assuming the conversion, exercise or
exchange of all outstanding Common Share Equivalents.


"INVESTORS RIGHTS AGREEMENT" shall mean the Amended and Restated
Investors Rights Agreement, of even date herewith, among Acusphere, EIS
and other investors in Acusphere.


"LICENSE AGREEMENTS" shall mean the Elan License Agreement and the
Acusphere License Agreement.


"LICENSED TECHNOLOGIES" shall mean, collectively, the Elan Intellectual
Property and the Acusphere Intellectual Property.


"LICENSES" shall mean the Elan License and the Acusphere License.


"MANAGEMENT COMMITTEE" shall have the meaning set forth in Clause 5.2
hereof.


"MODE OF ADMINISTRATION" shall mean administration via the pulmonary
route (a) for local or systemic effect and (b) by immediate or
controlled release.


"NEWCO INTELLECTUAL PROPERTY" shall mean all rights to patents,
know-how and other intellectual property arising out of the conduct of
the Project by any person, including any technology acquired by Newco
from a third party, that relates to the Products and which is not (in
the case of the Compound) or which cannot be segregated into (nor does
it constitute) Elan Intellectual Property or Acusphere Intellectual
Property.


"NEWCO BYE-LAWS" shall mean the Memorandum of Association and Bye-Laws
of Newco Limited.


"PARTICIPANT" shall mean Acusphere or Elan, as the case may be, and
"PARTICIPANTS" shall mean both of the Participants together.


"PARTY" shall mean Elan, Acusphere, or Newco, as the case may be, and
"PARTIES" shall mean all such parties together.


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"PERSON" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, governmental entity or
authority or other entity of whatever nature.


"PERMITTED TRANSFEREE" shall mean any Affiliate or subsidiary of Elan,
EIS or Acusphere, to whom this Agreement may be assigned, in whole or
in part, pursuant to the terms hereof or in the case of Elan and EIS, a
special purpose financing entity created by Elan or EIS or their
respective Affiliates.


"PRODUCTS" shall mean formulations of the Compound(s) for use as a
human therapeutic for a specified medical condition.


"PROJECT" shall mean all activity as undertaken by or on behalf of
Newco in order to develop the Products in accordance with the Business
Plan.


"R&D COMMITTEE" shall have the meaning set forth in Clause 5.2 hereof.


"REGISTRATION RIGHTS AGREEMENTS" shall mean the Registration Rights
Agreements of even date herewith relating to Newco and Acusphere,
respectively.


"REGULATORY APPLICATION" shall mean any regulatory application or any
other application for marketing approval for a Product, which Newco
will file in any country of the Territory, including any supplements or
amendments thereto.


"REGULATORY APPROVAL" shall mean the final approval to market a Product
in any country of the Territory, and any other approval which is
required to launch the Product in the normal course of business.


"RHA" shall mean any relevant government health authority (or successor
agency thereof) in any country of the Territory whose approval is
necessary to market a Product in the relevant country of the Territory.


"RESEARCH AND DEVELOPMENT PROGRAM" has the meaning set forth in Clause
6.1.


"RESEARCH AND DEVELOPMENT TERM" shall mean the research and development
stage of the Business Plan, which stage shall be deemed terminated upon
the first commercial launch of a Product by Newco.


"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.


"SHARES" shall mean the shares of Common Shares and shares of Preferred
Shares of Newco.


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"SHAREHOLDER" shall mean any of EIS, Acusphere, any Permitted
Transferee or any other Person who subsequently becomes bound by this
Agreement as a holder of the Shares, and "SHAREHOLDERS" shall mean all
of the Shareholders together.


"TECHNOLOGICAL COMPETITOR OF ELAN" shall have the meaning assigned
thereto in the Elan License Agreement.


"TERM" shall mean the term of this Agreement.


"TERRITORY" shall mean all of the countries of the world.


"UNITED STATES DOLLAR" and "US$" and "$" shall mean the lawful currency
of the United States of America.


1.2 In addition, the following definitions have the meanings in the Clauses
corresponding thereto, as set forth below.


DEFINITION CLAUSE


"AAA" 18.4
"Closing" 4.3
"Common Shares" Recital
"Confidential Information" 21.1
"Co-sale Notice" 16.4
"Expert" 18.4
"Management Committee" 5.2.1
"Notice of Exercise" 16.3
"Notice of Intention" 16.3
"Offered Shares" 16.3
"Offer Price" 16.3
"Preferred Shares" Recital
"R&D Committee" 5.2.2
"Remaining Shareholders" 16.4
"Relevant Event" 19.2
"Selling Shareholder" 16.3
"Tag-Along Right" 16.4
"Transaction Proposal" 16.3
"Transfer" 16.1
"Transferee Terms" 16.4
"Transferring Shareholder" 16.4


1.3 Words importing the singular shall include the plural and vice versa.


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1.4 Unless the context otherwise requires, reference to a recital, article,
paragraph, provision, clause or schedule is to a recital, article,
paragraph, provision, clause or schedule of or to this Agreement.


1.5 Reference to a statute or statutory provision includes a reference to
it as from time to time amended, extended or re-enacted.


1.6 The headings in this Agreement are inserted for convenience only and do
not affect its construction.


1.7 Unless the context or subject otherwise requires, references to words
in one gender include references to the other genders.


1.8 Capitalized terms used but not defined herein shall have the meanings
ascribed in the Definitive Documents, if defined therein.


CLAUSE 2


BUSINESS AND SELECTION OF COMPOUNDS


2.1 The primary objective of the Agreement is to regulate the business of
the development, testing, registration, manufacture, commercialization
and licensing of Products in the Field in the Territory and to achieve
the other objectives set out in this Agreement. The focus of the
Business will be to develop the Products using the Elan Intellectual
Property, the Acusphere Intellectual Property and the Newco
Intellectual Property to agreed-upon specifications and timelines.


2.2 The central management and control of Newco shall be exercised in
Bermuda and shall be vested in the Directors and such Persons as they
may delegate the exercise of their powers in accordance with the Newco
Bye-Laws. The Shareholders agree to conduct the Business in such a
manner as to ensure that Newco is liable to taxation in Bermuda and not
in any other jurisdiction. The Participants shall use their best
endeavors to ensure that to the extent required the sole residence of
Newco in Bermuda, that all meetings of the Directors are held in
Bermuda or other jurisdictions outside the United States and generally
to ensure that Newco is treated as resident for taxation purposes in
Bermuda.


2.3 The Parties hereby nominate as a Compound [CONFIDENTIAL TREATMENT
REQUESTED] /*/ for local effect and controlled release using a Mode of
Administration (other than a [CONFIDENTIAL TREATMENT REQUESTED]/*/) to
treat asthma [CONFIDENTIAL TREATMENT REQUESTED]/*/. Subject to Clauses
2.4 and 2.5, the Management Committee shall, by unanimous agreement,
nominate two other Compounds, in addition to [CONFIDENTIAL TREATMENT
REQUESTED]/*/, for development as a


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Product in a specific device by a specific Mode of Administration to
treat a specific medical condition having regard to the following
criteria:


2.3.1 development cost of each of the Compounds in such Field, as
estimated by the Management Committee;


2.3.2 market potential of each of the Compounds in such Field, as
estimated by the Management Committee;


2.3.3 results of regulatory and intellectual property due diligence
primarily focused on determining whether there are any
regulatory and third party intellectual property issues which
might impact the development and marketing of each of the
Compounds in such Field; and


2.3.4 whether the nominated Compound is subject to contractual
obligations, existing at the date of nomination, of Elan or
Acusphere which would prevent the conduct of the research and
development program or from granting Newco the right to
Commercialize the nominated Compound or which may adversely
affect the scope and/or nature of the rights which could be
granted to Newco and thereby the potential commercial
viability of the nominated Compound.


The Management Committee shall prioritize the research and development
programs with respect to such additional Compounds. If the Management
Committee unanimously determines that the research, development and
Commercialization of a Product would require additional technology
owned or licensed by Elan and/or Acusphere, as the case may be, then
the Parties shall discuss in good faith in-licensing such additional
technology, subject to among other things, third party contractual
obligations. In such case, the Parties shall negotiate in good faith
such amendments as are required to this Agreement.


2.4 The selection of the Compounds or any substitute Compounds shall be
subject to, inter alia, the then existing contractual arrangements of
Elan and Acusphere and such discussions as Elan or Acusphere are having
with one or more third parties at the time of such selection.
[CONFIDENTIAL TREATMENT REQUESTED]/*/ On the date of selection of a
Compound by the Management Committee,


(a) [CONFIDENTIAL TREATMENT REQUESTED]/*/; and


(b) Acusphere shall confirm that the Acusphere
Intellectual Property as it relates to the selected
Compound is not subject to contractual obligations of
Acusphere to an unaffiliated third party; and


provided, however, that if any such contractual obligation exists,
Acusphere and/or


9


Elan, as the case may be, shall prior to the date of selection of the
Compound inform the other of the scope and extent of any such
contractual obligation.


2.5 The Management Committee may determine, by unanimous agreement, that a
Compound should be abandoned by Newco and accordingly deleted from the
list of Compounds to be advanced in the Project where the results of
the regulatory and intellectual property due diligence described in
Clause 2.3.3 reveal regulatory or third party intellectual property
issues which might materially impact the development and
Commercialization of a Compound in the Field.


2.6 Should a Compound fail to meet agreed specifications, the Management
Committee shall terminate the portion of the Project that relates to
such Compound. The Parties shall review in good faith the possibility
of developing one substitute compound, or in-licensing or acquiring the
rights from one or more third parties to one substitute compound,
unless Phase II (as such term is commonly used in connection with FDA
applications) has been initiated with respect to the terminated
Compound; provided that no more than one substituted compound is
contemplated to be considered during the course of this Agreement.
Alternatively, [CONFIDENTIAL TREATMENT REQUESTED]/*/. In either case,
the Parties shall negotiate in good faith such amendments as are
required to this Agreement, such as amending the provisions regulating
non-competition.


CLAUSE 3


REPRESENTATIONS AND WARRANTIES


3.1 REPRESENTATIONS AND WARRANTIES OF NEWCO: Newco hereby represents and
warrants to each of the Shareholders as follows, as of the Closing
Date:


3.1.1 ORGANIZATION: Newco is an exempted company duly organized,
validly existing and in good standing under the laws of
Bermuda, and has all the requisite corporate power and
authority to own and lease its properties, to carry on its
business as presently conducted and as proposed to be
conducted.


3.1.2 CAPITALIZATION: As of the Closing Date, the authorized capital
stock of Newco consists of 6,000 shares of Common Shares and
6,000 shares of Preferred Shares. Prior to the Closing Date,
no shares of capital stock of Newco have been issued.


3.1.3 AUTH ...