exv10w18



 






[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act Of 1933, as amended.




Exhibit 10.18




COLLABORATION AND COMMERCIALIZATION AGREEMENT




          This Collaboration and Commercialization Agreement (the “Agreement”) is entered into
as of February 10, 2006 (the “Effective Date”) by and among Replidyne, Inc., a Delaware
corporation (“Replidyne”), having its principal place of business at 1450 Infinite Drive,
Louisville, Colorado 80027, and Forest Laboratories Holdings Limited, an Irish corporation
(“Forest”), having its principal place of business at Milner House, 18 Parliament Street, Hamilton
HM11, Bermuda.




Recitals




          Whereas, Replidyne and Daiichi Asubio Pharmaceutical, Inc. (“DAP”)
(successor-in-interest to Daiichi Suntory Pharma Co., Ltd.) entered into a License Agreement dated
March 15, 2004 as may be amended in accordance with its terms (the “DAP Agreement”), pursuant to
which DAP granted to Replidyne an exclusive license to certain patents and know-how to develop and
commercialize faropenem medoxomil (formerly designated as faropenem daloxate) in the Field (as
defined below) in specified countries;




          Whereas, Forest develops, manufactures and markets pharmaceutical products, and in
particular, has expertise in promoting pharmaceutical products to primary care physicians;




          Whereas, Replidyne develops anti-infective and other pharmaceutical products and is
building an organization to promote pharmaceutical products to specialist physicians;




          Whereas, Forest and Replidyne desire to collaborate on the further development of
faropenem medoxomil for the treatment of community-acquired infectious diseases in the Territory
(as defined below), with the intent that Forest will market and promote the product(s) primarily to
primary care physicians, and Replidyne will market and promote the product(s) primarily to certain
medical specialists, including pediatricians;




          Whereas, Forest desires to acquire, and Replidyne is willing to grant to Forest,
certain licenses under patents and know-how controlled by Replidyne to develop and commercialize
faropenem medoxomil in the Field in the Territory (as defined below), in accordance with foregoing
and the terms and conditions set forth in this Agreement.




Agreement




          Now, Therefore, in consideration of the foregoing premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:





	1.	 	Definitions





          1.1 “ADEs” has the meaning provided in Section 5.12.




          1.2 “Administrator” has the meaning provided in Section 14.2.





 1.









 








          1.3 “Affiliate” means any company or entity controlled by, controlling, or under common
control with a party hereto. For this purpose, the term “control” shall mean the direct or
indirect ownership of more than 50% of the voting stock or other ownership interests of that
entity, or the power, directly or indirectly to cause the direction of the management and policies
of such entity.




          1.4 “AECB Indication” means a separate, labeled use for the treatment of acute exacerbations
of chronic bronchitis in humans.




          1.5 “ANDA” shall mean an Abbreviated New Drug Application filed with the FDA (as more fully
defined in 21 USC §355(j)).




          1.6 “ANDA Proceeding” has the meaning provided in Section 9.4(b).




          1.7 “AOM Indication” means a separate, labeled use for the treatment of acute otitis media in
humans.




          1.8 “API Supply Agreement” means the agreement setting forth the terms and conditions for the
supply of Drug Substance from NISSO through DAP to Replidyne dated December 20, 2004, as the same
may be amended or assigned to Forest as contemplated in Section 6.2 hereof.




          1.9 “Applicable Laws” means all applicable laws, rules and regulations that apply to the
development, manufacturing or commercialization of Product in the Territory or the performance of
either party’s obligations under this Agreement, including without limitation any rules,
regulations, guidelines or other requirements of the FDA, that may be in effect from time to time.




          1.10 “Arbitrators” has the meaning provided in Section 14.2.




          1.11 “Bayer” means Bayer AG, a prior licensee of the DAP Know-How and DAP Patents pursuant to
a license agreement with Suntory Ltd., Tokyo, Japan, a predecessor in interest to DAP, dated June
28, 1999, which was terminated November 19, 2003.




          1.12 “Bayer Know-How” means the data, information, documentation, know-how and technology,
relating to Drug Substance and/or Products that was generated or acquired by Bayer and/or its
Affiliates and actually provided to Replidyne by DAP.




          1.13 “Calendar Quarter” means each respective period of three (3) consecutive months ending on
March 31, June 30, September 30 and December 31.




          1.14 “Canadian Rights” has the meaning provided in Section 5.9(b).




          1.15 “Ciba-Geigy Patents” means the patents owned by Ciba-Geigy (currently
Novartis) as listed in Exhibit A hereof.




          1.16 “Claim” has the meaning provided in Section 14.2.



[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




 2.









 





          1.17 “[ *** ] Threshold” has the meaning provided in Section 7.3(d).




          1.18 “Combination Product” means a Product containing one or more other therapeutically active
ingredients in addition to the Drug Substance.




          1.19 “Commercially Reasonable Efforts” means, with respect to the development or
commercialization of the Product, except as otherwise explicitly set forth in this Agreement, the
level of efforts required to carry out such obligation in a sustained manner consistent with the
efforts a biotechnology company or pharmaceutical company, as the case may be, devotes to a product
of similar market potential, profit potential or strategic value resulting from its own research
efforts, based on market conditions then prevailing, consistent with the exercise of prudent
scientific and/or business judgment in accordance with generally accepted practices in the
pharmaceutical industry. Commercially Reasonable Efforts shall be determined without regard to the
particular circumstances of a party, including any other product opportunities of such party.
Commercially Reasonable Efforts requires, with respect to such an obligation, that the party: (a)
promptly assign responsibility for such obligation to specific employee(s) who are held accountable
for progress and monitor such progress on an on-going basis; (b) set and consistently seek to
achieve specific, meaningful and measurable objectives for carrying out such obligation; and (c)
consistently make and implement decisions and allocate resources designed to advance progress with
respect to such objectives. The term “commercially reasonable” has the corresponding meaning.




          1.20 “Competitive Product” has the meaning set forth in Section 5.10.




          1.21 “Confidential Information” has the meaning provided in Section 11.1.




          1.22 “Control” means, with respect to any information, Patent or other intellectual property
right, possession by a party of the ability (whether by ownership, license or otherwise) to grant
access, a license or a sublicense to such information, Patent or intellectual property right
without violating the terms of any agreement or other arrangement with any Third Party.




          1.23 “Cost of Goods” for any dosage strength and formulation of the Product for any period
shall mean actual direct out-of-pocket cost incurred by a party for the acquisition of Drug
Substance and actual direct out-of-pocket costs incurred by a party for the acquisition,
manufacture, shipping from the manufacturer to Forest’s initial distribution site, storage at such
site, and final labeling and packaging of the Product for such period, including the cost of
commercially reasonable strategies for hedging of exchange rate risk (in each case, to the extent
not already deducted in the calculation of Net Sales or included in Distribution Costs), as
recognized and recorded in accordance with US GAAP.




          1.24 “Cost of Goods Committee” or “CGC” means the committee formed pursuant to Section 3.3.




          1.25 “DAP Improvement” means any and all developments, enhancements, modifications, inventions
or discoveries in the Field relating to Products for use in the Field, that are developed or
created by or on behalf of DAP (other than by Replidyne, its Affiliates, licensees and
sublicensees, and their respective employees, agents, consultants, subcontractors



[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




 3.









 







and other
representatives) at any time during the term of the DAP Agreement, whether patentable or not,
including but not limited to, developments, inventions or discoveries intended to enhance the
safety or efficacy of Drug Substance and/or Products, and all intellectual property rights thereto
which are necessary or useful for Forest to exercise the rights licensed to it under Section 2.1 of
this Agreement, but excluding those related specifically to manufacturing of Drug Substance.




          1.26 “DAP Know-How” means any and all data, information, documentation, know-how and
technology, whether patentable or not, relating to Drug Substance and/or Products, including,
without limitation, information regarding their stability, pharmacology, toxicology, clinical use,
compositions and formulations for administration, and any scientific information and data developed
by Wyeth relating to Drug Substance and to Products; in each case that was generated or acquired by
DAP and/or its Affiliates prior to the effective date of the DAP Agreement or is generated by DAP
and/or its Affiliates during the term of the DAP Agreement, but excluding data, information,
documentation, know-how and technology, whether patentable or not, related specifically to
manufacturing of Drug Substance.




          1.27 “DAP Logogram” means the logogram adopted by DAP at any time during the term of the DAP
Agreement.




          1.28 “DAP Patents” means the patent applications and patents listed in Exhibit B attached
hereto, and patents issuing from such patent applications, and any and all patents and patent
applications covering DAP Improvements, in each case including any continuations,
continuations-in-part, provisionals, divisionals, reissues, reexaminations, extensions,
substitutions, restorations, additions, revalidations, registrations, confirmations, renewals and
counterparts thereof in the Territory that are necessary or useful for the use, development,
manufacture, marketing, promotion, distribution, sale and/or commercialization of Products in the
Territory for use in the Field.




          1.29 “Detail” means an interactive face-to-face contact of a sales representative, who is
fully equipped with, and knowledgeable of, applicable promotional materials and product labeling
for the Product, with a target physician or other medical professional licensed to prescribe drugs
or other healthcare professional that has a significant impact or influence on prescribing
decisions, during which relevant characteristics of the Product are described by the sales
representative. Details shall be deemed to include only presentations in the first or second
position in a sales presentation and shall not be deemed to include “tertiary” or “reminder”
details, in each case as such terms are generally understood in the pharmaceutical industry.
“Detailing” shall have a corresponding meaning.




          1.30 “Detailing Commencement Date” means the first day following NDA Approval on which
Detailing of the Product by Replidyne begins, as determined by the JMC.




          1.31 “Detailing Year” means, with respect to the first Detailing Year, the twelve (12) month
period commencing on the Detailing Commencement Date, and with respect to subsequent Detailing
Years, each successive twelve (12) month period thereafter.




          1.32 “Detail Reports” means a report of Details performed by a party during the



[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




 4.









 







Calendar
Quarter covered by such statement containing such information and in such format as determined by
the JMC.




          1.33 “Development Costs” means with respect to a particular Product the sum of all internal
costs, including to the extent allocated to the foregoing directly related overhead (but not
general or corporate overhead), and direct out-of-pocket costs, in each case incurred by a party
and/or its Affiliates in connection with the conduct of the activities assigned to it by the JDC
pursuant to the Development Plan, including, without limitation, FTE costs (which fairly reflect
the actual FTE costs of each party for its personnel in the applicable functional areas (but
excluding senior executives), to be discussed and agreed upon by the parties respective finance
departments), costs of preparation of regulatory filings, costs of clinical supply of Product, and
any other activities conducted under the Development Plan that support obtaining or maintaining NDA
Approval of Product in the Territory, such as surveillance studies and pharmacovigilance.
Development Costs shall be determined in accordance with US GAAP and in accordance with the
relevant party’s accounting standards applied on a consistent basis.




          1.34 “Development Information” means any and all information generated by a party (or a
party’s Affiliates or any Third Party on behalf of a party) in the development of the Drug
Substance and/or Product for the Territory as provided in this Agreement, including, without
limitation, protocols, analysis plans, annotated case report forms per study, analysis datasets,
programs, raw data and other relevant documentation used for the study reporting efforts, FDA
outputs relating to the development of, and/or filing of NDAs for, Drug Substance and/or Product in
the Territory (including, without limitation, all substantive correspondence with the FDA,
responses from the FDA, requests for information from the FDA, briefing documents and other
materials relating to interactions with the FDA, and summaries of outputs resulting from
substantive correspondence/ conversations or meetings with the FDA), and information from clinical
advisory boards and investigators.




          1.35 “Development Plan” means the plan and related budget for conducting research and
development of the Drug Substance and Products in the Field in the Territory, as amended from time
to time by the JDC. The initial outline of the Development Plan has been agreed upon by the
parties in writing as of the Effective Date.




          1.36 “Development Program” means a research and development program carried out by Replidyne
and, as applicable, Forest pursuant to Article 4, as more fully described in the Development Plan.




          1.37 “Distribution Costs” for any dosage strength and formulation of the Product for any
period shall mean a reasonable estimate of the direct out-of-pocket costs of shipping, handling and
other Product-specific logistical costs, including, without limitation, quality
assurance and quality control procedures and regulatory reporting obligations, related to
distribution of the Product from Forest’s initial distribution site to Forest’s customers (to the
extent not already deducted in the calculation of Net Sales or included in Costs of Goods) as
recognized and recorded in accordance with US GAAP. The parties’ finance departments will mutually
agree upon a simple rule for Distribution Costs (e.g., as a percentage of Net Sales) after mutual
review and discussion of Forest’s actual Distribution Costs from time to time.




[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




 5.









 








          1.38 “Drug Substance” means the chemical substance identified as faropenem medoxomil as its
generic name (formerly designated as faropenem daloxate) and having the chemical structure:
(5-Methyl-2-oxo-1, 3-dioxolen-4-yl) methyl (5R,
6S)-6-[(R)-1-hydroxyethyl]-2-[(R)-2-tetrahydro-furyl] penem-3-carboxylate.




          1.39 “FDA” means the United States Food and Drug Administration, or any successor agency
thereto having the administrative authority to regulate the marketing of human pharmaceutical
products or biological therapeutic products, delivery systems and devices in the United States of
America.




          1.40 “Field” means the treatment, amelioration or prevention of infectious diseases in humans
and all other pharmaceutical uses and indications for the Product.




          1.41 “First Commercial Sale” means, with respect to any Product, the first sale for end use or
consumption of such Product in the United States after NDA Approval. Sale to an Affiliate or
sublicensee shall not constitute a First Commercial Sale unless the Affiliate or sublicensee is the
end user of the Product.




          1.42 “Forest Costs” has the meaning provided in Section 7.3(d).




          1.43 “Forest Indemnitee” has the meaning provided in Section 13.1.




          1.44 “Forest Inventions” has the meaning provided in Section 9.1.




          1.45 “Forest Know-How” means any and all data, information, documentation, know-how and
technology Controlled by Forest or any of its Affiliates on the Effective Date or during the Term
that is useful for purposes of the Development Program or necessary or useful for the manufacture
of Product (including Drug Substance) anywhere in the world, or the commercialization or use of the
Drug Substance or Product in the Field in the Territory, including, without limitation, all such
data, information, documentation, know-how and technology that is developed or acquired by Forest
or any of its Affiliates in the course of performance of, or pursuant to any right granted under,
this Agreement, but excluding the Forest Patents and the Joint Patents.




          1.46 “Forest Patents” means all Patents Controlled by Forest or any of its Affiliates on the
Effective Date or during the Term to the extent useful for purposes of the Development Program or
necessary or useful for the manufacture of Product (including Drug Substance) anywhere in the
world, or the commercialization or use of the Drug Substance or Product in the Field in the
Territory, including, without limitation, any Patents that claim or disclose any Forest
Invention, but excluding the Joint Patents.




          1.47 “Forest Sales Force” means those members of Forest’s sales force (whether Forest
employees, contractors or agents), who promote Product in the Field in the Territory, but excluding
the Replidyne Pediatrician Sales Force and Replidyne Specialty Sales Force, together with
field-based sales managerial personnel having direct and sole responsibility for the management of
such sales force.



 [ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.



 6.









 





          1.48 “Forest Technology” means the Forest Patents and Forest Know-How.




          1.49 “FTE” means the equivalent of the work time of an employee or consultant of Replidyne or
Forest (or their Affiliates, as applicable) with appropriate qualifications performing work under
the Development Plan on a full-time basis over a 12-month period (including normal vacations, sick
days and holidays).




          1.50 “Generic Equivalent” shall mean, on a Product-by-Product basis, a product that is
therapeutically equivalent to a Product and that: (a) is pharmaceutically equivalent to such
Product (contains the same active ingredient(s) and has the same dosage form, route of
administration and strength); and (b) has gained market approval through an ANDA filed in
accordance with 505(j) of the U.S. Food Drug & Cosmetic Act and prepared in accordance with 21 CFR
314.94 or through any equivalent mechanism under any successor law or regulation in the United
States.




          1.51 “Generic Profits” shall mean, with respect to a generic Product sold by Forest, its
Affiliates or permitted sublicensees, on a Product-by-Product basis, an amount, which shall not be
less than zero (0) for purposes of this Agreement, equal to (a) Net Sales of such generic Product,
minus (b) Cost of Goods, Distribution Costs and sales and marketing costs (such as trade
advertising) of Forest for such generic Product in the Territory.




          1.52 “IND” means an Investigational New Drug Application filed with the FDA, or the equivalent
application or filing filed with any equivalent agency or governmental authority outside the United
States of America (including any supra-national agency such as in the European Union) necessary to
commence human clinical trials in such jurisdiction.




          1.53 “Initial Period” means the first [ *** ] months of the Replidyne Specialist Promotion
Period.




          1.54 “Inventions” has the meaning provided in Section 9.1.




          1.55 “Joint Development Committee” or “JDC” means the committee formed pursuant to Section
3.1.




          1.56 “Joint Inventions” has the meaning provided in Section 9.1.




          1.57 “Joint Marketing Committee” or “JMC” means the committee formed pursuant to Section 3.2.




          1.58 “Joint Patents” means all Patents in the Territory that claim or disclose a Joint
Invention.




          1.59 “Joint Supply Committee” or “JSC” means the committee formed pursuant to Section 6.1.




          1.60 “Licensed Know-How” means any and all data, information, documentation, know-how and
technology Controlled by Replidyne as of the Effective Date or during the Term that is useful for
purposes of the Development Program or necessary or useful for the




[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




 7.









 







manufacture of Product
(including Drug Substance) anywhere in the world (excluding, with respect to the DAP Know-How,
rights in Japan, except to the extent rights in Japan are included in the rights granted to
Replidyne under the DAP Agreement), or the commercialization or use of Drug Substance or Product in
the Field in the Territory, including, without limitation, the DAP Know-How and the Bayer Know-How,
but excluding the Licensed Patents and the Joint Patents.




          1.61 “Licensed Patents” means the Replidyne Patents, the Ciba-Geigy Patents and the DAP
Patents.




          1.62 “Licensed Technology” means the Licensed Patents and Licensed Know-How.




          1.63 “Losses” has the meaning provided in Section 13.1.




          1.64 “Manufacturing Technology” means all information and documentation necessary or advisable
to enable Replidyne or its designee to manufacture Drug Substance, including without limitation,
NISSO’s standard operating procedures, NISSO’s Improvements, and the Drug Master File sections
relevant to chemical manufacturing, testing and release, Sensitive Manufacturing Information, and
all updates thereto.




               (a) “NISSO’s Improvements” means all information, documents and tangible and intangible
materials which result from or are related to the performance by NISSO of the services contemplated
by the API Supply Agreement (including, without limitation, data, test results, measurements,
quantitative and qualitative analyses, processes, samples, inventions, discoveries, improvements,
intellectual property, derivative works, technology and/or any other work product, whether
patentable or not) developed under the API Supply Agreement by NISSO or on behalf of NISSO by any
of its representatives relating to the Drug Substance or the Products.



               (b) “Drug Master File” means the drug master file, as defined in 21 CFR Section 314.420 or
successor provision, filed with the FDA with respect to the Drug Substance, which permits NISSO to
authorize others to rely on the information in such file to support an NDA for the Products.



               (c) “Sensitive Manufacturing Information” means the confidential manufacturing information
that is included in the Drug Master File.



          1.65 “Marketing and Sample Expense” means, generally, the external, out-of-pocket
costs which are incurred by a party or for its account attributable to the marketing of any
dosage strength and formulation of the Product in the Territory, including, without limitation, the
sum of Advertising, Consumer and Physician Promotion, Education, Market and Consumer Research,
Phase IV Programs, Promotional Management and Trade Promotion Expenses, each of which is specified
below. To the extent multiple products are involved and some of such products are not Product,
then such expenses will be allocated on a pro rata basis based upon net sales of each respective
product by such party during the most recent Calendar Quarter. The costs of activities which
promote a party’s business as a whole without being product specific (such as corporate image
advertising) are specifically excluded from Marketing and Sample Expense.




[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




 8.









 








               (a) “Advertising” means all media costs associated with advertising the Product in the
Territory including, but not limited to the following: production expense/artwork including set
up; design and art work for an advertisement; advertising agency fees; the cost of securing print
space, air time and the like in newspapers, magazines, trade journals, television, radio,
billboards and other media.



               (b) “Consumer and Physician Promotion” means the expenses associated with programs to promote
the Product in the Territory directly to the prescriber or end user, including, but not limited to,
expenses associated with promoting products directly to the professional community such as
professional samples (including Cost of Goods of samples), professional literature, promotional
material costs, patient aids and detailing aids.



               (c) “Education” means expenses associated with professional education with respect to the
Product in the Territory through any means not covered under subsections (a) and (b) above,
including, but not limited to, articles appearing in journals, newspapers, magazines or other
media; seminars, lunch and dinner programs, CME programs and professional society programs,
scientific exhibits, and conventions; and symposia, advisory boards and opinion leader development
activities.



               (d) “Market and Consumer Research” means payments to Third Parties related to conducting and
monitoring professional and consumer appraisals of existing, new or proposed Product in the
Territory, such as market share services (e.g., IMS data), special research testing, focus groups,
as well as qualitative and quantitative research studies.



               (e) “Phase IV Programs” means payments to Third Parties and the directly allocable internal
costs of a party (including directly related overhead but not corporate or general overhead) for
functions (such as data collection and analysis) that a party performs internally on a reasonably
cost-effective basis compared to Third Party costs for such functions, in each case for Phase IV
marketing studies of the Product in the Territory, including, but not limited to, the cost of
clinical grants and the cost of clinical research organizations.



               (f) “Promotional Management” means payments to Third Parties for development or management of
marketing or promotional strategies, planning and programs for the Product in the Territory,
including, but not limited to, costs associated with developing overall sales and marketing
strategies (e.g., product line or customer segment), and planning and
programs for the Product in the Territory, including, but not limited to, launch sales force
meetings, promotional meetings, other meetings scheduled solely for the Product (but not periodic
sales force meetings of a party), conventions and seminars. In addition, payments to Third Parties
in connection with Trademark selection, filing, prosecution and enforcement in the Territory are
included in this category.



               (g) “Trade Promotion” means the allowances given to retailers, brokers, distributors, hospital
buying groups and similar groups for purchasing, promoting, and distribution of the Product in the
Territory, including, but not limited to, purchasing, advertising, new distribution, and display
allowances as well as free goods, wholesale allowances and reasonable field sales samples (to the
extent not already deducted in the calculation of Net Sales).




 [ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.



 9.









 








          1.66 “Marketing Expense Ratio” has the meaning set forth in Section 5.3(e).




          1.67 “Marketing Plan” means the annual marketing and commercial plan for the Product in the
Field in the Territory that includes the related budget for Marketing and Sample Expense, as the
same is from time to time in effect in accordance with the terms hereof.




          1.68 “NDA” means a New Drug Application (as more fully defined in 21 C.F.R. 314.5 et seq.) and
all amendments and supplements thereto filed with the FDA, including all documents, data, and other
information concerning a pharmaceutical product which are necessary for gaining approval to market
such pharmaceutical product in the United States.




          1.69 “NDA Acceptance” means the submission of a NDA for Product to the FDA and filing of such
NDA by the FDA.




          1.70 “NDA Approval” means the issuance by the FDA of an action letter indicating that an NDA
for Product is approved. For avoidance of doubt, NDA Approval does not mean that the FDA issues an
action letter indicating that an NDA for Product is approvable.




          1.71 “Net Sales” means, for the applicable period, the gross amount invoiced for sales or
other transfers of the Products (including, for purposes of Section 7.5, any generic Product) by
Forest and its Affiliates and permitted sublicensees to Third Parties that are not Affiliates or
permitted sublicensees of Forest (and to any Affiliate or sublicensee of Forest if such Affiliate
or sublicensee is the final user of and does not further sell such Product, in which case the
amount billed therefor shall be deemed to be the amount that would be billed to an independent
Third Party in an arm’s length transaction), less the following items as allocable to such
Products, all as recorded in accordance with US GAAP and in a manner consistent with Forest’s
revenue recognition policies from the sale of pharmaceutical products consistently applied:




               (a) trade discounts, credits or allowances, including without limitation, discounts provided
by means of chargebacks, rebates and administrative fees charged by customers or health care
organizations determined based upon sales;



               (b) credits or allowances additionally granted upon returns, rejections or recalls (except
where any such recall arises out of Forest’s or its Affiliate’s gross negligence,
willful misconduct or fraud);



               (c) freight, shipping and insurance charges;



               (d) taxes, duties or other governmental tariffs (other than income taxes); and



               (e) rebates, discounts or other payments on sales of Product that are mandated by the
government.



          In the case of the Combination Products, the Net Sales shall be calculated by multiplying
actual Net Sales of the Combination Product (calculated as if such Combination Product did not
contain other therapeutically active ingredients) by the fraction A/(A+B) where A is the invoice
price of a Product containing only Drug Substance, if sold separately, and B is the total invoice
price of the other active ingredient or ingredients in the combination, if sold separately. If the





 [ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.



 10.









 







other active ingredient or ingredients in the Combination Product are not sold separately in the
Territory, Net Sales shall be calculated by multiplying actual Net Sales thereof by the fraction
A/C where A is the invoice price of a Product containing only Drug Substance, if sold separately,
and C is the invoice price of the Combination Product.




          If the Product containing only Drug Substance is not sold separately in the Territory, the
parties shall, in good faith, negotiate and agree upon how to calculate the Net Sales on sales of
the Combination Product, with a view to achieving to the greatest extent possible the economic
balance and mutual understanding established between the parties for calculation of Net Sales on
the Combination Product as reflected in this section.




          1.72 “NISSO” means Nippon Soda Co., Ltd., which is the contract manufacturer of the Drug
Substance for Replidyne as of the Effective Date.




          1.73 “Oral Suspension” means a finished pharmaceutical preparation containing the Drug
Substance as an active ingredient, consisting of a dosage formulation of the Drug Substance
suspended in a liquid for delivery by mouth.




          1.74 “Patents” means: (a) an unexpired patent which has not been held invalid or
unenforceable by a court of competent jurisdiction from which no appeal can be taken or has been
taken within the required time period, including without limitation any substitution, extension,
registration, confirmation, reissue, re-examination, renewal or any like filing thereof; and (b)
pending patent applications, including without limitation any provisional, converted provisional,
continued prosecution application, continuation, divisional or continuation-in-part thereof.




          1.75 “Pediatrician” means a physician specializing in the development, care, and treatment of
children from birth through adolescence and board certified in pediatrics.




          1.76 “Pediatrician Promotion Option” has the meaning set forth in Section 5.5.




          1.77 “Pediatrician Promotion Rights” has the meaning set forth in Section 5.5, as
further described in Schedule 5.5.




          1.78 “Phase 2 Clinical Trial” means a human clinical trial that would satisfy the requirements
for a Phase 2 study as defined in 21 C.F.R. 312.21(b) (or its successor regulation).




          1.79 “Phase 3 Clinical Trial” means a human clinical trial that would satisfy the requirements
for a Phase 3 study as defined in 21 C.F.R. 312.21(c) (or its successor regulation).




          1.80 “Pre-Launch Period” means, with respect to a Product, the twelve (12) month period
preceding the anticipated Detailing Commencement Date for such Product.




          1.81 “Primary Care Physician” or “PCP” means a physician, such as a general practitioner or
internist, chosen by an individual to serve as his or her health-care professional and capable of
handling a variety of health-related problems, of keeping a medical history and medical records on
the individual, and of referring the person to Specialists as needed.




[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




 11.









 








          1.82 “Product” means a finished pharmaceutical preparation containing the Drug Substance as an
active ingredient, in any dosage or formulation, including but not limited to a Tablet or an Oral
Suspension.




          1.83 “Replidyne Indemnitee” has the meaning provided in Section 13.2.




          1.84 “Replidyne Inventions” has the meaning provided in Section 9.1.




          1.85 “Replidyne Patents” means all Patents Controlled by Replidyne as of the Effective Date or
during the Term that are useful for purposes of the Development Program or necessary or useful for
the manufacture of Product (including Drug Substance) anywhere in the world, or the
commercialization or use of Drug Substance or Product in the Field in the Territory, including,
without limitation, any Patents that claim or disclose any Replidyne Invention, but excluding the
Ciba-Geigy Patents, the DAP Patents and the Joint Patents.




          1.86 “Replidyne Pediatrician Sales Force” means those members of Replidyne’s sales force
(subject to the provisions of Section 2.4(b) of Schedule 5.5, whether Replidyne employees,
contractors or agents), who promote Product to Pediatricians in the Territory pursuant to
Replidyne’s exercise of the Pediatrician Promotion Option, together with field-based sales
managerial personnel having direct and sole responsibility for the management of such sales force.




          1.87 “Replidyne Specialist Promotion Period” means the period beginning on the Detailing
Commencement Date and ending on the last day of the fifth (5th) Detailing Year, unless
extended by mutual agreement of the parties or sooner terminated in accordance with the terms of
this Agreement.




          1.88 “Replidyne Specialty Sales Force” means those members of Replidyne’s sales force (subject
to the provisions of Section 5.4(a), whether Replidyne employees, contractors or agents), who
promote Product to Target Specialists in the Field in the Territory pursuant to Section 5.2, together with field-based sales managerial personnel having direct and sole
responsibility for the management of such sales force.




          1.89 “Royalty Payments” shall have the meaning provided in Section 7.5(a).




          1.90 “Royalty Term” means, in the case of any Product in the Territory (on a
Product-by-Product basis), the period of time commencing on the First Commercial Sale of such
Product in the Territory and, subject to the provisions of Section 7.5, ending upon the later of:
(a) the expiration of the last to expire valid claim of the Licensed Patents, Forest Patents or
Joint Patents claiming the manufacture, use or sale of such Product in the Territory, including any
period of extended commercial exclusivity for the Product granted under any such Licensed Patent,
Forest Patent or Joint Patent or under any other laws or regulations in the Territory, (b) the
commercial introduction by a Third Party of a Generic Equivalent to such Product in the Territory;
and (c) twelve (12) years after the date of First Commercial Sale of such Product in the Territory.




          1.91 “Sales Force Expense” means the salaries, bonuses, other cash compensation payments and
benefits provided by Replidyne to the Replidyne Specialty Sales Force, together





[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




 12.









 







with direct
out-of-pocket expenses of Replidyne in utilizing the Replidyne Specialty Sales Force in the
Detailing of the Product (such as automobile, travel and lodging, equipment and other support
costs) recognized and recorded in accordance with US GAAP. In addition, “Sales Force Expense”
shall include out-of-pocket costs of activities in support of the Replidyne Specialist Sales Force
(for example, training and technology support services), provided that Replidyne shall first
consult with Forest to determine whether such support services may be provided by Forest (in which
case Forest shall have the option to provide such services and Replidyne shall utilize such
services if so provided by Forest) and to the extent not so available from Forest, such costs shall
only be included in Sales Force Expense to the extent such costs do not exceed the incremental
costs Forest would have incurred in providing such services to its own sales force. Promptly
following the Effective Date, the JMC will develop a mutually agreed protocol consistent with this
definition to more specifically identify and standardize the components of Sales Force Expense to
facilitate the reimbursement of such expense as contemplated by this Agreement.




          1.92 “Specialists” means physicians whose practices are limited to treating a specific
disease, specific parts of the body, a specific age group or specific procedures, who are potential
prescribers of the Products.




          1.93 “Standstill Period” has the meaning provided in Section 15.1.




          1.94 “Supply Transition” means the period of time, commencing on the Effective Date, during
which the parties shall transition responsibility from Replidyne to Forest under the API Supply
Agreement and Replidyne’s other agreements with Third Party contract manufacturers for the Product.




          1.95 “Tablet” means a finished pharmaceutical preparation containing the Drug Substance as an
active ingredient, consisting of a solid dosage formulation for delivery by mouth
intended to be swallowed whole and to dissolve in the gastrointestinal tract.




          1.96 “Target Specialists” means infectious disease specialists, otolaryngologists, and such
other Specialists (other than Pediatricians) as to which the JMC may agree warrant Detailing of the
Product.




          1.97 “Term” has the meaning provided in Section 12.1.




          1.98 “Territory” means the United States of America, and its territories and possessions,
including Puerto Rico irrespective of political status.




          1.99 “Third Party” means any entity other than Replidyne or Forest or an Affiliate of
Replidyne or Forest.




          1.100 “Trademark” means any trade names or trademarks for the Product that are selected for
use in the marketing and promotion of the Product in the Territory in accordance with the terms
hereof (but not including trademarks or trade names of general use in a party’s business and not
specifically related to the Product).





 [ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.



 13.









 








          1.101 “US GAAP” means generally recognized accounting principles in the United States of
America.




          1.102 “Wyeth” means Wyeth-Ayerst, a prior licensee of the DAP Know-How and DAP Patents
pursuant to a license agreement with Suntory Ltd., Tokyo, Japan, a predecessor in interest to DAP,
dated May 27, 1992, which was terminated March 22, 1996.





	2.	 	Licenses





          2.1 License Grants. Subject to the terms and conditions of this Agreement, Replidyne hereby
grants to Forest during the Term:




               (a) a co-exclusive license (or sublicense, as the case may be) under the Licensed Technology,
with the right to sublicense to Affiliates under Section 2.2, to conduct development of Product in
the Field in the Territory pursuant to the Development Plan;



               (b) an exclusive license (or sublicense, as the case may be) under the Licensed Technology,
with the right to sublicense to Affiliates under Section 2.2, to make and have made anywhere in the
world, excluding Japan (except to the extent rights in Japan are included in the rights granted to
Replidyne under the DAP Agreement), Product for the Territory from Drug Substance supplied by a
Third Party approved by Replidyne;



               (c) a co-exclusive license (or sublicense, as the case may be) under the Licensed Technology,
with the right to sublicense under Section 2.2, to use, market and promote Product in the Field in
the Territory;



               (d) an exclusive license (or sublicense, as the case may be) under the Licensed
Technology, with the right to sublicense under Section 2.2, to sell, offer for sale and import
Product in the Field in the Territory; and



               (e) a co-exclusive license (or sublicense, as the case may be) with the right to sublicense
under Section 2.2, to use and display the Trademarks and the DAP Logogram in connection with the
promotion, marketing and commercialization of Product in the Field in the Territory.



          The licenses (or sublicenses, as the case may be) granted in Section 2.1(a), (c) and (e) shall
be co-exclusive with Replidyne, meaning that Forest and Replidyne will share such rights, on an
exclusive basis as to Third Parties, with respect to Products in the Territory as set forth in this
Agreement. The licenses (or sublicenses, as the case may be) granted in Section 2.1(b) and (d)
shall be exclusive, meaning that such rights with respect to Products in the Territory are
exclusive, even as to Replidyne, its Affiliates and any Third Parties, but subject to the rights of
Replidyne as set forth in this Agreement.




          In addition, in the event the launch of a Generic Equivalent to a Product (on a
Product-by-Product basis) by a Third Party [ *** ], the licenses granted to Forest pursuant to this
Agreement shall be deemed to include the sale and distribution by Forest of such Product as a
generic Product subject to Section 7.5. For purpose of this Agreement, references to “generic




[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




 14.









 







Product” means a product having the same active ingredient(s), dosage form, route of administration
and strength as the Product, but is sold by Forest without use of the Trademark [ *** ] in a manner
typical of the generic industry.




          Forest shall not exercise the foregoing license if it appears that the Generic Equivalent [
*** ]. However, Forest or its Affiliates or sublicensees may nevertheless exercise the foregoing
license if, [ *** ]. If sales of the Generic Equivalent terminate for any reason, then Forest will
promptly cease the sale and distribution of its generic Product or, to the extent to do so would be
prohibited by law or would violate best industry practices, cease the active promotion for sale of
the generic Product.




          2.2 Sublicenses. Forest shall have the right to grant sublicenses of the rights granted to it
under this Agreement (a) to its Affiliates upon prior written notice to Replidyne and (b) to Third
Parties with the prior written consent of Replidyne in its sole discretion, and Forest shall have
no other right to sublicense. Sublicenses granted by Forest to its Affiliates under this Agreement
shall not permit the further grant of sublicenses unless agreed to in writing by Replidyne in its
sole discretion. Any sublicense granted by Forest under this Agreement shall be subject and
subordinate to, and consistent with, the terms and conditions of this Agreement. Forest shall
remain fully responsible for the conduct of its Affiliates and Third Party sublicensees under the
terms of this Agreement, including any breach of the terms hereof by such Affiliates or
sublicensees, and any action or inaction by such Affiliate or Third Party sublicensee shall be
considered the action or inaction of Forest under this Agreement (including, without limitation,
for purposes of the definition of Net Sales). In the event of a material default by an Affiliate
or Third Party under a sublicense agreement with Forest, Forest will inform Replidyne and take such
action as necessary or appropriate to cure such default.




          2.3 Grant to Replidyne by Forest. Subject to the terms and conditions of this Agreement,
Forest hereby grants to Replidyne and its Affiliates, during the Term, (a) a non-exclusive,
worldwide, [ *** ] license under the Forest Technology to: (i) perform Replidyne’s obligations
under the Development Plan (with no right to sublicense); and (ii) to develop, make, have made,
use, sell, offer for sale and import the Product outside the Territory (with the right to
sublicense to the extent and during any period that Replidyne has the necessary licenses from DAP
with respect to territories outside the Territory); and (b) a fully paid, royalty-free license
under the Forest Technology, with the right to sublicense only to Affiliates of Replidyne, to use,
market and promote the Product in the Field in the Territory in accordance with Replidyne’s
promotion rights and obligations under this Agreement. Notwithstanding the preceding, in the event
that [ *** ].




     2.4 Related Compounds. If a party proposes to develop or acquire rights to any analogs,
homologues, derivatives, salts, metabolites, esters, isomers, enantiomers, polymorphs or pro-drugs
of Drug Substance during the Term, the parties agree to work together with regard to such
activities and shall discuss and agree upon matters regarding intellectual property rights and
payment for costs prior to the development or acquisition of the foregoing. Any rights developed
or acquired by a party during the Term as to any analogs, homologues, derivatives, salts,
metabolites, esters, isomers, enantiomers, polymorphs or pro-drugs of Drug Substance shall be
included in the definition of Drug Substance and shall be deemed governed by and subject to the
terms and conditions hereof (i.e., irrespective of which party acquires such rights, all
intellectual



[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




 15.









 







property rights relating thereto shall be deemed included in Licensed Technology
licensed to Forest pursuant to Section 2.1 or in Forest Technology licensed to Replidyne pursuant
to Section 2.3, and any finished pharmaceutical product containing such compound shall be deemed a
“Product” for all purposes of this Agreement). No such product shall be commercialized in the
Territory during the term without the mutual agreement of the parties.




          2.5 Trademark and Trade Dress Matters.




               (a) Sale under Trademarks. In the Territory, Forest and its Affiliates will sell
Products exclusively under the Trademark in accordance with the terms and conditions set forth in
this Agreement. The Trademark has been selected by Replidyne and submitted to the FDA prior the
Effective Date. If the FDA does not approve the use of such submitted Trademark or if either party
determines to use an alternate Trademark in the Territory, the parties shall select by mutual
agreement an alternate Trademark for use with the Product. The Trademark shall be owned by
Replidyne, subject to the license granted to Forest herein.



               (b) Use of Names and Logos on Product and Related Materials. Subject to Applicable
Laws, all packaging and labels and all sales, advertising and promotional literature and other
materials used in connection with Products in the Territory shall indicate that the Product is sold
under license from Replidyne and shall bear the names and logos of both Replidyne and Forest. As
used in this Agreement, “labels” or “labeling” means labels and other written, printed or graphic
matter, including without limitation artwork upon the Products or any container utilized with the
Products, and “packaging” means containers, cartons, shipping cases,
package inserts or other similar material used in packing or accompanying the Products. The
place and manner of use of the names and logos of Replidyne and Forest shall be determined by
Forest in consultation with Replidyne, but in any event shall be of equal size and prominence.



               (c) Use of DAP Name and DAP Logogram. Subject to Applicable Laws and provided that
there is adequate space, Forest and its Affiliates shall specify on certain packaging and labels
used in connection with Products, as mutually agreed (but not including any sales, advertising or
promotional literature or other materials), that Products are manufactured and sold under a license
from Daiichi Asubio Pharmaceutical, Inc., Tokyo Japan, and Forest and its Affiliates shall use on
Products and certain of their labels, packaging, literature, advertising and other printed
materials as mutually agreed the DAP Logogram. The place and manner of such information and DAP
Logogram shall be subject to agreement with DAP, such approval not to be withheld if such
information and DAP Logogram are used in accordance with DAP’s normal practices.



               (d) Trademark Use. The manner of use of the Trademarks shall be subject to periodic
review by the JMC. Forest shall not use the Trademarks in a way that would diminish their value,
and Forest shall not use a trademark confusingly similar to one of the Trademarks with any of its
other products or use the Trademarks in combination with Forest’s other trademarks in a manner
which would create combination marks. Forest shall comply with reasonable policies for usage of
Trademarks, as approved by the JMC from time to time. Replidyne shall utilize the Trademarks
within the Territory only in accordance with this Agreement. Replidyne may utilize the Trademarks
outside the Territory, except that, if there is a reasonable likelihood of a negative impact from
parallel imports of Product (or corresponding



[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




 16.









 







Generic Equivalents) using the Trademark from outside
the Territory into the Territory, then Replidyne may utilize such Trademark outside the Territory
only with Forest’s prior written approval, which shall not be unreasonably withheld or delayed in
light of Replidyne’s proposals to address such negative impact from parallel imports. If Forest
reasonably withholds its approval of the use of the Trademark outside the Territory, Replidyne
shall not authorize the use of the Trademark by DAP outside the Territory. If DAP nevertheless
uses the Trademark outside the Territory, Replidyne shall be responsible, in its sole discretion,
to enforce its rights with respect to the Trademark under the DAP Agreement. Replidyne shall hold
Forest harmless from any direct damages incurred by Forest as a result of parallel imports of
Product attributable to DAP’s un-authorized use of the Trademark outside the Territory or as a
result of other actions taken by DAP directly resulting from Replidyne’s refusal to permit DAP to
use the Trademark outside the Territory, subject to Section 10.5.




          2.6 Sales Outside the Territory. To the extent not otherwise prohibited by law, neither
Forest nor its Affiliates or permitted sublicensees shall sell Product to customers outside the
Territory or to any Third Party in the Territory that Forest has reasonable grounds to believe are
likely to export Product outside the Territory. If Forest becomes aware that a Third Party in the
Territory is exporting Products acquired from Forest to a country outside the Territory, then
Forest shall use Commercially Reasonable Efforts within its legal rights and the remedies afforded
by Applicable Laws to deter such Third Party from continuing such exportation, including, without
limitation by ceasing or limiting the supply of Product to such
Third Party. All inquiries or orders received by Forest for Products to be delivered outside
of the Territory shall be referred to Replidyne. To the extent not otherwise prohibited by law,
neither Replidyne nor its Affiliates or licensees will sell Product to customers inside the
Territory or to any Third Party that Replidyne has reasonable grounds to believe are likely to
import Product into the Territory. If Replidyne becomes aware that a Third Party outside the
Territory is exporting Product acquired from Replidyne or any Affiliate or licensee to a country
within the Territory, then Replidyne shall use Commercially Reasonable Efforts within its legal
rights and the remedies afforded by Applicable Laws to deter such Third Party from continuing such
exportation, including, without limitation, by ceasing or limiting the supply of Product to such
Third Party. All inquiries or orders received by Replidyne for Products to be distributed within
the Territory shall be referred to Forest.




     2.7 Retained Rights; No Implied Licenses. For avoidance of doubt, the licenses granted in
Section 2.1 shall not in any way be interpreted as granting Forest a license to manufacture or have
manufactured Drug Substance or to sell the Drug Substance, except to the extent included in rights
granted to Replidyne under the DAP Agreement, the API Supply Agreement or otherwise included in the
Licensed Patents and Licensed Know-How. Replidyne hereby expressly reserves the right to practice,
and to grant licenses under, the Licensed Patents, the Joint Patents and the Licensed Know-How for
any and all purposes except to the extent that Forest has been granted a license under Section 2.1
and reserves such rights to practice intellectual property rights, including the Manufacturing
Technology, to which it may obtain a license under the API Supply Agreement except to the extent
that Forest may be granted a license under Section 6.5. No right or license under any Patents or
other intellectual property rights of either party is granted or shall be granted by implication to
the other, and each party agrees not to practice any Patents or other intellectual property rights
of the other party except





 [ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.



 17.









 







pursuant to the licenses expressly granted in this Agreement or any other
written agreement between the parties. All such rights or licenses are or shall be granted only as
expressly provided in the terms of this Agreement.





	3.	 	Collaboration Governance





          3.1 Joint Development Committee.




               (a) Formation. Promptly after the Effective Date, the parties will form a Joint
Development Committee (the “JDC”) comprised of three (3) representatives of each of Forest and
Replidyne. One (1) member of the JDC shall be selected to act as the chairperson of the JDC, with
each chairperson acting for a term of twelve (12) months. The chairperson shall be selected
alternately by Replidyne and Forest, and Replidyne shall designate the first chairperson. The JDC
shall meet at least four (4) times per year or at such greater frequency as the JDC agrees. Such
meetings may be conducted by videoconference, teleconference or in person, as agreed by the parties
(except that at least two (2) of such meetings per year shall be conducted in person), and the
parties shall agree upon the time of meetings. Within thirty (30) days after each meeting, the JDC
chairperson will prepare and distribute to the other members of the JDC for review and comment
reasonably detailed minutes of such meeting, which will be approved as the first order of business
at the immediately succeeding JDC meeting. Subject to
prior coordination with the other party, a reasonable number of additional representatives of
a party may attend meetings of the JDC in a non-voting capacity, consistent with the agendas and
purposes for such meetings.



               (b) Responsibilities. The JDC shall oversee and manage the development (including
clinical and non-clinical activities) and regulatory approval of the Product in the Field in the
Territory. In addition to its general responsibilities, the JDC shall in particular:



                    (i) encourage and facilitate communication between the parties with respect to the Development
Program;



                    (ii) establish, update, amend, review and approve the Development Plan for accomplishing the
goals of the Development Program;



                    (iii) oversee development and regulatory strategies for Products;



                    (iv) monitor progress of the Development Program and each party’s diligence in carrying out
its responsibilities thereunder; and



                    (v) carry out the other duties and responsibilities described for it in this Agreement.



               (c) JDC Decision-Making. Decisions of the JDC shall be made by unanimous vote, with
the Replidyne members collectively having one (1) vote and the Forest members collectively having
one (1) vote. No vote of the JDC may be taken unless at least two (2) of each party’s
representatives on the JDC are present to vote. If the JDC is unable to reach a unanimous vote on
any matter, then the matter shall be referred to the Chief Executive Officer of Replidyne





 [ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.



 18.









 







and the
Chief Executive Officer of Forest’s corporate parent, Forest Laboratories, Inc. (“Forest Parent”)
for further discussion and resolution. These individuals shall as soon as practicable attempt in
good faith to resolve the matter and thereby make the decision on behalf of the JDC. These
individuals may obtain the advice of other employees or consultants as they deem necessary or
advisable in order to make the decision.




               (d) Limits on Authority. The JDC will have only such powers as are specifically
delegated to it in this Agreement, and will have no power to amend this Agreement or waive a
party’s rights or obligations under this Agreement.




          3.2 Joint Marketing Committee.




               (a) Formation. Promptly after the Effective Date, the parties will form a Joint
Marketing Committee (the “JMC”) comprised of three (3) representatives of each of Forest and
Replidyne. The chairperson of the JMC shall be selected by Forest. The JMC shall meet at least
four (4) times per year or at such greater frequency as the JMC agrees. Such meetings may be
conducted by videoconference, teleconference or in person, as agreed by the parties (except that at
least two (2) of such meetings per year shall be conducted in person), and
the parties shall agree upon the time of meetings. Within thirty (30) days after each
meeting, the JMC chairperson will provide the parties with a written report describing, in
reasonable detail, the status of the parties’ activities under the Marketing Plan, a summary of the
results and progress to date, the issues requiring resolution, and the agreed resolution of
previously reported issues. Subject to prior coordination with the other party, a reasonable
number of additional representatives of a party may attend meetings of the JMC in a non-voting
capacity, consistent with the agendas and purposes for such meetings. Each party shall make
available personnel having responsibility for Product development for consultation with or
membership on the JMC at such times and to the extent the JMC is considering issues relating to
Phase IV or other clinical trials of the Product.



               (b) Responsibilities. The JMC shall oversee and manage the commercialization strategy
for Products in the Field in the Territory. In addition to its general responsibilities, the JMC
shall in particular:



                    (i) review and approve the Marketing Plan, including, without limitation, the portions
relating to marketing to Target Specialists and Pediatricians, and amendments and updates thereto;



                    (ii) develop strategies for conducting Phase IV clinical trials of Products following the
initial NDA Approval to support marketing the Product;



                    (iii) coordinate the parties selling activities among Primary Care Physicians and Specialists,
including Target Specialists and Pediatricians; and



                    (iv) carry out the other duties and responsibilities described for it in this Agreement.



               (c) JMC Decision Making. Decisions of the JMC shall be made by



[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




 19.









 







unanimous vote, with
the Replidyne members collectively having one (1) vote and the Forest members collectively having
one (1) vote. No vote of the JMC may be taken unless at least two (2) of each party’s
representatives on the JMC are present to vote. If the JMC is unable to reach a unanimous vote on
any matter, including, without limitation, as to the approval or amendment of any Marketing Plan,
the matter shall be referred to the Chief Executive Officer of Replidyne and the Chief Executive
Officer of Forest Parent for further discussion and resolution. These individuals shall as soon as
practicable attempt in good faith to resolve the matter and thereby make the decision on behalf of
the JMC. These individuals may obtain the advice of other employees or consultants as they deem
necessary or advisable in order to make the decision. Except as provided in the following two
sentences, if the Chief Executive Officer of Replidyne and the Chief Executive Officer of Forest
Parent are unable to reach agreement on any such matter, including, without limitation, as to the
approval or amendment of any Marketing Plan (including the determination of aggregate Marketing and
Sampling Expense and the allocation thereof among the various components of such expense, such as
medical education, sales aids, sample expense and journal advertising), the Chief Executive Officer
of Forest Parent shall have the final decision-making authority on such matter. If Replidyne is
then participating in
promotional activities with respect to Target Specialists, the strategic objectives and total
funding commitment and allocation thereof for promotional activities directed to Target Specialists
to be reflected in the Marketing Plan will be decided as above, however any matter relating to the
implementation of the strategic objectives of the Marketing Plan with respect to the promotion of
the Product to Target Specialists, including the specific uses of allocated funding, must be
resolved by the Chief Executive Officer of Replidyne and the Chief Executive Officer of Forest
Parent, which resolution must be consistent with the overall marketing strategy determined by the
JMC for the Tablets, as reflected in the Marketing Plan. If Replidyne has exercised the
Pediatrician Promotion Option and is then participating in promotional activities with respect to
Pediatricians, then any matter that relates to the pediatric portion of the Marketing Plan
(including its approval or amendment, provided, however, that such pediatric portion of the
Marketing Plan shall be consistent with the overall Marketing Plan) or its implementation
including, without limitation, marketing and Detailing of the Oral Suspension to Pediatricians and
non-Pediatricians, must be resolved by the Chief Executive Officer of Replidyne and the Chief
Executive Officer of Forest Parent.




               (d) Limits on Authority. The JMC will have only such powers as are specifically
delegated to it in this Agreement, and will have no power to amend this Agreement or waive a
party’s rights or obligations under this Agreement.



          3.3 Cost of Goods Committee.




               (a) Formation. Promptly after the Effective Date, the parties will form a Cost of
Goods Committee comprised of two (2) representatives of each of Forest and Replidyne, and the CGC
will be operative during any period that it appears reasonably likely, based upon objective
evidence discussed by the parties, that the Cost of Goods for a period will exceed [ *** ]. The
CGC shall oversee matters impacting the Cost of Goods for Products [ *** ]. For example, the CGC
shall review financial decisions for each formulation of the Product that relate to: (i) pricing
and discounting strategies; (ii) dosing and duration of therapy; and (iii) Drug Substance cost
reduction strategies, including hedging of exchange rate risk. The CGC shall meet at least two (2)
times per year or at such greater frequency as the CGC agrees. Such




 [ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.



 20.









 







meetings may be conducted by
videoconference, teleconference or in person, as agreed by the parties (except that at least two
(2) of such meetings per year shall be conducted in person), and the parties shall agree upon the
time of meetings. Within thirty (30) days after each meeting, the CGC chairperson will provide the
parties with a written report describing, in reasonable detail, relevant matters pertaining to Cost
of Goods, any issues requiring resolution, and the agreed resolution of previously reported issues.
Subject to prior coordination with the other party, a reasonable number of additional
representatives of a party may attend meetings of the CGC in a non-voting capacity, consistent with
the agendas and purposes for such meetings.




               (b) CGC Decision Making. Decisions of the CGC shall be made by unanimous vote, with
the Replidyne members collectively having one (1) vote and the Forest members collectively having
one (1) vote. No vote of the CGC may be taken unless at least one (1) of each party’s
representatives on the CGC is present to vote. If the CGC is unable to reach a unanimous vote on
any matter, such matter shall instead be referred to the Chief Executive
Officer of Replidyne and the Chief Executive Officer of Forest Parent for further discussion
and resolution. These individuals shall as soon as practicable attempt in good faith to resolve
the matter and thereby make the decision on behalf of the CGC. These individuals may obtain the
advice of other employees or consultants as they deem necessary or advisable in order to make the
decision. If the Chief Executive Officer of Replidyne and the Chief Executive Officer of Forest
Parent are unable to reach agreement on any matter, the Chief Executive Officer of Forest Parent
shall have the final decision-making authority on such matter.



               (c) Limits on Authority. The CGC will have only such powers as are specifically
delegated to it in this Agreement, and will have no power to amend this Agreement or waive a
party’s rights or obligations under this Agreement.




	4.	 	Conduct of the Development Program





          4.1 Development Program Activities. Development and regulatory activities for Products in the
Field in the Territory will be conducted as outlined in the Development Plan. For clarification,
Phase IV marketing studies are not considered to be development activities. The JDC shall
determine on a Calendar Quarter basis the number of FTEs of each party that will work on the
Development Program during such Calendar Quarter. Any amendments or revisions to the Development
Plan shall be in writing and shall require unanimous approval of the JDC. Each party, as
applicable, will use Commercially Reasonable Efforts to execute and to perform, or cause to be
performed, the activities set forth in the Development Plan, in each case in compliance with the
terms of this Agreement and Applicable Laws. If a party proposes development activities for
Products in the Field in the Territory, but the JDC does not reach agreement to include such
development activities in the Development Plan, the parties will discuss and agree whether one
party can proceed with such development activities at its own expense and, if so, on what terms the
results of such development activities would be made available to the other party by the party that
conducts such development activities.




          4.2 Oral Suspension Development. As a specific activity under the Development Program, the
parties will collaborate to complete development of an Oral Suspension, with the goal of maximizing
efficiency and controlling Development Costs by utilizing the expertise and existing resources of
each of the parties. The JDC shall allocate tasks between the parties and to





[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.



 21.









 







Third Parties based
on the availability of expertise to conduct development activities cost effectively. The
allocation of each party’s responsibilities shall be set forth in the Development Plan.




          4.3 Technology and Information Transfer. Commencing promptly after the Effective Date and
from time to time thereafter during the Term, Replidyne shall disclose to Forest such Licensed
Technology in Replidyne’s possession as is reasonably necessary or useful to enable Forest to
exercise fully the licenses granted to Forest under Article 2. Commencing promptly after the
Effective Date and from time to time thereafter during the Term, Forest will disclose to Replidyne
such Forest Technology in Forest’s possession as is reasonably necessary or useful to enable
Replidyne to perform its Development Program activities hereunder in accordance with the
Development Plan and otherwise to exercise fully the licenses granted to
Replidyne under Article 2 hereof. Each party will, at no cost or expense to the other party,
provide such other party with copies of or access to any and all Development Information generated
or otherwise obtained in the development of Products as provided in this Section 4.3, all of which
Development Information may be used and referenced by or on behalf of Forest in the development,
manufacture and/or commercialization of Product in the Field in the Territory in accordance with
the terms of this Agreement and by or on behalf of Replidyne in the performance by Replidyne of the
development and commercialization activities with respect to the Product in the Field in the
Territory in accordance with the terms of this Agreement and (including, as appropriate and,
without limitation, by DAP) in the development, manufacture and/or commercialization of Product in
the Field outside the Territory, including, without limitation, in the preparation, submission,
filing, prosecution and maintenance of regulatory approvals in the applicable territory. Moreover,
upon reasonable written notice from a party, the other party will provide regulatory authorities
with access to any Development Information for inspection and/or review as may be required under
Applicable Law.




          4.4 Clinical Supply. The parties will utilize Replidyne’s Product facility for Development
Program purposes (e.g., Oral Suspension and Tablet formulation development) unless and until
alternative facilities are available, with the costs incurred for such activity treated as
Development Costs. Costs of manufacture and supply of Drug Substance and Product for development
activities, including clinical trials, shall be treated as a Development Cost. Subject to the
foregoing, the JSC (or if the JSC no longer exists, the party that is in charge of supply) shall be
responsible for arranging for the supply of Drug Substance necessary for producing required
clinical quantities of Product. Responsibility for packaging and labeling of clinical quantities
of Product shall be assigned in the Development Plan.




          4.5 Development Reports. Each party shall keep the other party fully informed as to all
discoveries and technical developments (including, without limitation, any Inventions) made in the
course of performing activities under the Development Program. In particular, each party shall
prepare, and distribute to all members of the JDC no later than ten (10) days prior to the next JDC
meeting, such report as the JDC may request setting forth such information regarding the results
and progress of performance of the Development Program. Nothing herein shall require a party to
disclose information received from or generated for a Third Party that remains subject to bona fide
confidentiality obligations to such Third Party; provided that neither party shall undertake any
such confidentiality obligations in favor of Third Parties to the extent such obligations could
reasonably be expected to prevent the sharing of information necessary or


[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




 22.









 







useful for the efficient
conduct of the Development Program.




          4.6 Development Costs.




               (a) Allocation of Costs. Replidyne will bear [ *** ] percent ([ *** ]%) and Forest
will bear [ *** ] percent ([ *** ]%) of the Development Costs incurred by the parties under the
Development Plan, including without limitation Development Costs incurred for clinical development
necessary to support NDAs for a Tablet in a 600 mg dosage and an Oral Suspension.



               (b) Reports and Payments. Each party shall report to the other party within thirty
(30) days after the end of each Calendar Quarter the Development Costs incurred by such party
during such Calendar Quarter. Such report shall specify in reasonable detail all amounts included
in such Development Costs during such Calendar Quarter (broken down by activity) and shall be
accompanied by invoices or other appropriate supporting documentation for any payments made by such
party to Third Parties that individually exceed fifty thousand dollars ($50,000) or as may be
determined by the JDC. Within forty five (45) days after the end of each Calendar Quarter, the
party that has paid less than its share of such Development Costs as provided in Section 4.6(a)
shall make a reconciling payment to the other party to achieve the appropriate allocation of
Development Costs provided in Section 4.6(a). Each such report shall enable the receiving party to
compare the reported Development Costs against the Development Plan, on both a quarterly basis and
a cumulative basis for each activity. The parties shall seek to resolve any questions related to
such accounting statements within fifteen (15) days following receipt by each party of the other
party’s report hereunder.



          4.7 Registration Activities. Regulatory strategy for the Product and all decision-making with
respect thereto shall be determined by the JDC. Prior to the Effective Date, Replidyne has
prepared and submitted to the FDA a NDA for a Tablet in a 300 mg dosage. Replidyne and Forest will
collaborate to develop and prepare for submission any supplemental NDAs or additional NDAs for the
Products, with the specific responsibilities of each party’s personnel to be assigned by the JDC
based on the availability of expertise and resources within each party’s organization. Replidyne
shall hold the NDA for the Tablet and any subsequent supplemental NDAs for the Tablet until
approval of the NDA for the Tablet, at which time Forest will become the holder of such NDA. The
IND and NDA for the Oral Suspension will be filed in Replidyne’s name, and Replidyne shall hold the
NDA and any subsequent supplemental NDAs for the Oral Suspension until approval of the NDA for the
Oral Suspension, at which time Forest will become the holder of such NDA. Irrespective of which
party prepares any such NDA or portion thereof, the other party shall be given the opportunity to
review and provide comments on any such submission and no such NDA (including any supplemental NDA)
shall be submitted for filing to the FDA without the mutual agreement of Forest and Replidyne, such
consent not to be unreasonably withheld or delayed. Forest and Replidyne shall keep one another
fully informed of the registration process of Product through the Joint Development Committee.
Each party shall use Commercially Reasonable Efforts to obtain in a timely manner NDA Approvals for
Products.




          4.8 Meetings and Communications with the FDA. As of the date(s) to be mutually agreed by the
parties, but in any event within six (6) months after the Effective Date, Forest shall




[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




 23.









 







be
designated as Replidyne’s agent for purposes of adverse event reporting, sample tracking and
submissions and interactions with the FDA’s Division of Drug Marketing, Advertising and
Communications with respect to Products in the Territory and shall have the primary responsibility
for the associated subject matters. Subject to the provisions of Section 4.7, Replidyne shall be
primarily responsible for and have the authority to conduct interactions with the FDA regarding NDA
approval matters until transfer of the NDA to Forest, following which Forest shall have such
primary contact responsibilities. Irrespective of which party has such primary contact
responsibility, the other party shall be notified in advance of any
substantive communications with the FDA and shall be afforded the opportunity to participate
in such communications. Subject to the preceding sentence, to the extent permitted by the FDA,
Replidyne and Forest shall mutually attend all meetings, participate in any oral communications and
agree upon any written communications with the FDA relating to Product and labeling discussions
with the FDA shall be conducted jointly by Forest and Replidyne.




          4.9 Subcontracts. Each party may perform some of their obligations under the Development Plan
through one (1) or more Affiliates or subcontractors; provided that (a) none of the rights of
either party hereunder are diminished or otherwise adversely affected as a result of such
subcontracting, and (b) the Affiliate or subcontractor undertakes in writing obligations of
confidentiality and non-use regarding Confidential Information which are substantially the same as
those undertaken by the parties pursuant to Article 11 hereof. If a party performs any of its
obligations under this Agreement through an Affiliate or subcontractor, then such party will at all
times be responsible for the performance and payment of such Affiliate or subcontractor and will
actively monitor and supervise the work of such Affiliate or subcontractor. Notwithstanding the
foregoing, in the event a party desires to use a subcontractor hereunder, it will first offer the
other party the opportunity to provide the affected services utilizing its internal resources to
the extent such other party possesses qualified resources to provide such services in a timely and
efficient manner and at a cost competitive to the use of Third Party resources.




          4.10 Materials Transfer. In order to facilitate the Development Program, either party may
provide to the other party certain biological materials or chemical compounds Controlled by the
supplying party (collectively, “Materials”) for use by the other party in furtherance of the
Development Program. Except as otherwise provided under this Agreement, all such Materials
delivered to the other party will remain the sole property of the supplying party, will be used
only in furtherance of the Development Program in accordance with this Agreement, will not be used
or delivered to or for the benefit of any Third Party without the prior written consent of the
supplying party, and will be used in compliance with all applicable laws, rules and regulations.
The Materials supplied under this Agreement must be used with prudence and appropriate caution in
any experimental work because not all of their characteristics may be known. Except as expressly
set forth herein, and provided that the materials shall comply with any certificate of analysis or
specifications provided by or on behalf of the supplying party, the Materials are provided “as
is” and without any representation or warranty, express or implied, including without limitation
any implied warranty of merchantability or of fitness for any particular purpose or any warranty
that the use of the Materials will not infringe or violate any patent or other proprietary rights
of any third party.




          4.11 Liability. In connection with the conduct of the Development Program, Replidyne will
bear [ *** ] and Forest will bear [ *** ] of any liability for personal injury or





[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




 24.









 







property damage
arising in connection with the conduct of the clinical development activities and the
indemnification obligations of the parties set forth in Article 13 with respect to these matters
shall be applied in a manner consistent with such allocation of liability; provided, however, that
each party shall be responsible for, and hereby assumes, any and all risks of personal injury or
property damage attributable solely to the negligence or willful misconduct of
that party or its Affiliates, and their respective directors, officers, employees and agents.





	5.	 	Commercialization





          5.1 Forest General Commercial Responsibilities. Forest or its Affiliate shall be responsible,
at its own expense, for the conduct of all promotion, marketing, sampling, pre-launch, launch and
sales activities with respect to Products in the Field in the Territory, subject to Replidyne’s
promotion, marketing, sampling and sales activities with respect to Products to Target Specialists
in the Territory, as more fully described in Section 5.4, and if Replidyne exercises the
Pediatrician Promotion Option pursuant to Section 5.5, to Pediatricians in the Territory.




          5.2 Marketing Plans. Within a reasonable period of time after the Effective Date, Forest or
its Affiliate shall prepare and submit to the Joint Marketing Committee for review and approval a
Marketing Plan. The Marketing Plan for each Detailing Year shall include (a) marketing strategy,
(b) sales forecasts, (c) amounts budgeted for expenditures by Forest on Marketing and Sample
Expense for the Product in such Detailing Year, (d) a sampling plan with respect to the Product,
(e) the aggregate number and monthly or quarterly breakdown of Detailing calls with respect to the
Product that are projected in such Detailing Year, including the frequency of Details and the
proportion of Details to be provided in first and second positions, and (f) the percentage of the
total Detailing calls with respect to the Product to be performed by the Replidyne Specialty Sales
Force in such Detailing Year and shall be prepared with input from Replidyne, including
specifically, input as to those portions of the Marketing Plan describing activities directed to
Target Specialists, which shall be consistent with the overall Marketing Plan for non-Target
Specialists. A separate Marketing Plan shall be prepared for each Product subsequently launched,
the initial version of which shall be submitted to the JMC for review and approval not later than
three (3) months after NDA Acceptance for such Product. The Marketing Plan shall be updated on an
annual basis approximately [ *** ] months in advance of the beginning of the next applicable
Detailing Year. The JMC shall then discuss and agree upon such updated Marketing Plan within
thirty (30) days after submission of such Marketing Plan to the JMC.




          5.3 Diligence.




               (a) Forest shall use Commercially Reasonable Efforts to promote, market and sell Product in
the Field in the Territory in accordance with the Marketing Plan.



               (b) The launch of the Tablet in a 300 mg dosage by Forest or its Affiliates in the Territory
shall take place within no more than six (6) months following NDA Approval of such Product,
including, for this purpose, FDA approval of labeling and product launch promotional materials for
such Product (provided that such that such NDA Approval includes approval for use in (i) acute
sinusitis and (ii) and one of the following: (A) community acquired




 [ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.



25.









 






pneumonia; or (B) the AECB Indication, unless the JMC determines that seasonality
considerations support extending the launch time by up to an additional three (3) months). In
addition, Forest’s obligation to launch is subject to having approved dating for the Product of at
least eighteen (18) months and having available launch supplies of Product having such dating (it
being agreed that Forest shall be required to order Drug Substance when it is commercially
reasonable to do so, with the understanding that receipt of an approvable letter from the FDA is
not necessary for a determination that it is commercially reasonable to order Drug Substance for
such Product supplies).




          (c) Without limiting the generality of the foregoing, Forest agrees that in each of the first
[ *** ] sales years following the First Commercial Sale of the first Tablet subject to NDA
Approval, Forest (i) will provide at least [ *** ] Details for the Tablet and (ii) will incur at
least [ *** ] dollars ($[ *** ]) in Marketing and Sample Expense; provided that if there is any
development (including Forest’s launch of the Product with only one approved respiratory
indication) that is material and adverse to the market potential for the Tablet or materially and
adversely affects the commercial value of Detailing efforts, and such specific commitment is no
longer commercially reasonable in light of such development, then the preceding specific commitment
shall be reduced to a commercially reasonable level mutually agreed by the parties.




          (d) Following launch of the first Oral Suspension, Commercially Reasonable Efforts with
respect to the promotion and marketing of the Product to all audiences in the Territory shall
require a significant increase over the level of resources applied to the promotion of the Tablets
alone in the preceding year to reflect the additional value of the Oral Suspension. Without
limiting the generality of the foregoing, the party responsible for promotional activities directed
toward Pediatricians (i.e., Replidyne, if Replidyne has exercised the Pediatrician Promotion
Option, and otherwise Forest) shall provide at least [ *** ] Details directed to Pediatricians
during each of the first [ *** ] sales years following the First Commercial Sale of the Oral
Suspension; provided that if there is any development (including launch of the Oral Suspension
without approval of the AOM Indication) that is material and adverse to the market potential for
the Oral Suspension or materially and adversely affects the commercial value of Detailing efforts,
and such specific commitment is no longer commercially reasonable in light of such development,
then the preceding specific commitment shall be reduced to a commercially reasonable level mutually
agreed by the parties.




          (e) Irrespective of which party performs Detailing activities directed toward Pediatricians,
the Marketing Plan will contain sections describing activities directed to Pediatricians, as well
as the marketing of the Oral Suspension to non-Pediatricians, which sections will be consistent
with the JMC’s overall marketing strategy for the Product in the Territory and with the overall
Marketing Plan. The Marketing Plan shall establish goals for Detailing of the Product to
Pediatricians and Detailing of the Oral Suspension to non-Pediatricians for each Detailing Year,
including establishing the number and frequency of Details to be provided and the proportion of
Details to be provided in first and second positions. In addition, the Marketing Plan for each
Detailing Year shall also specify the proportion of Marketing and Sample Expense for efforts
directed to Primary Care Physicians and other non-Pediatricians, on the one hand, to Marketing and
Sample Expense for efforts directed to Pediatricians, on the other hand (the “Marketing Expense
Ratio”), with the JMC allocating Forest’s Marketing and Sample Expense directed to Primary Care
Physicians and other non-




[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.





26.









 







Pediatricians on a reasonable basis between the Tablet and the Oral Suspension so that such
Marketing and Sample Expense related to the Oral Suspension may be used as the Non-Pediatrician
Suspension Marketing and Sample Expense, and shall specify minimum marketing contributions to be
made by Forest and Replidyne (if Replidyne has exercised the Pediatrician Promotion Option),
respectively, based on the Marketing Expense Ratio. In the absence of objective evidence to the
contrary, the Marketing Expense Ratio shall assume an equal per physician value of promotion to
Pediatricians and non-Pediatricians. In addition, whether or not Replidyne has exercised the
Pediatrician Promotion Option, the party performing promotional activities directed to
Pediatricians will use Commercially Reasonable Efforts to execute such activities and the diligence
requirements of Section 2.3 of Schedule 5.5 shall apply to such promotional activities.




     5.4 Replidyne Commercial Activities for Target Specialists. Forest shall, through Forest
Parent, engage Replidyne to perform all marketing and promotion-related activities for the Products
directed to Target Specialists. Replidyne will promptly notify Forest at any time that it appears
reasonably likely that Replidyne will not be able to substantially achieve required levels of
Detailing over any significant period or in any significant area. Following any such notice, the
parties will meet and confer in good faith to develop a plan to achieve such required levels of
Detailing as promptly as practicable, including through the reallocation of Replidyne personnel, if
practicable and without adversely affecting Replidyne’s Detailing efforts, and the utilization of
Forest sales force personnel as reasonably required to achieve the required levels of Detailing.
Following the development of such plan, Forest shall have the right to call on Target Specialists
as provided by the plan, in which case the JMC will coordinate the efforts of each of Forest and
Replidyne with respect to the Detailing of Product to Target Specialists by each party. In
addition, if (a) Replidyne elects not to provide Details of the Product to certain Target
Specialists (e.g., due to a particular geographical location), the Detail Reports indicate that
Replidyne’s Detailing has not achieved material Detailing requirements to be performed by Replidyne
as targeted by the Marketing Plan (as to number or position of Details) over a significant period
or (b) the JMC determines, prior to a formal annual update to the Marketing Plan, that Detailing
efforts to Target Physicians in addition to those in the then current Marketing Plan are
appropriate and authorizes additional funds, if required (subject to the maximum funding set forth
in Section 7.10(c)), to support such additional Detailing efforts to Target Physicians, the parties
will meet and confer in the manner set forth above to develop a plan to address the provision of
additional Details, which plan will be based on the considerations, and implemented by the parties,
as provided above. In any such event requiring the utilization of Forest sales force personnel,
the parties will cooperate to transition Detailing efforts to Replidyne as promptly as practicable
in light of the need to assure a smooth transition of Detailing activities once Replidyne possesses
adequate resources to provide Detailing efforts targeted by the Marketing Plan. During the
Replidyne Specialist Promotion Period, Replidyne will use its Commercially Reasonable Efforts to
provide Detailing to Target Specialists in accordance with the Marketing Plan through the Replidyne
Specialty Sales Force.



     (a) Organization of Replidyne Specialty Sales Force. The JMC will determine the
number of Target Specialists to be on the call plan, call frequency and other matters necessary to
determine the size of the Replidyne Specialty Sales Force. The JMC will also determine what
ancillary personnel and activities, if any, are needed to enhance Target



[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.





27.









 







Specialist promotional efforts and which are to be: (i) provided by Replidyne at Replidyne’s
cost; (ii) provided in-kind by Forest for Replidyne’s use; or (iii) provided by Replidyne but
reimbursed by Forest. For purposes of determining the size and geographical distribution of the
Replidyne Specialty Sales Force, the call plan will contemplate approximately [ *** ] Target
Specialists and a call frequency of an average of [ *** ] Details per Detailing Year; provided that
in any event, the Replidyne Specialty Sales Force will be comprised of at least fifty (50) sales
representatives, each having a sales territory that allows such sales representative to call upon a
reasonable number of Target Specialists within a reasonable geographic area (i.e., without
overly-burdensome travel requirements). During the Pre-Launch Period, Replidyne shall use its
Commercially Reasonable Efforts to engage and organize the Replidyne Specialty Sales Force. The
Replidyne Specialty Sales Force will be organized by Replidyne under the general recommendations
and supervision of the JMC as to numbers and qualifications of sales representatives and
field-based sales managerial personnel and the timing of hiring in light of the then-current
Marketing Plan. Such sales representatives shall have qualification and experience at least
comparable to Forest’s sales representatives and shall be entitled to incentive compensation with
respect to the marketing of the Product on a basis not materially less favorable to the Product
than provided by Forest to its sales representatives. During the Initial Period, the Replidyne
Specialty Sales Force may be comprised of personnel provided by a contract sales organization;
provided that at the end of the first [ *** ] of the Initial Period, the JMC shall determine
whether:




               (i) the Replidyne Specialty Sales Force has delivered [ *** ] percent ([ *** ]%) of the
Details set forth in the Marketing Plan for that time period;



               (ii) at least [ *** ] percent ([ *** ]%) of the Details performed by Replidyne Specialty Sales
Force during that time period were delivered to Target Specialists on the call panel and with the
frequency and Detail position established by the JMC; and



               (iii) the performance by the Replidyne Specialty Sales Force meets the metrics previously
established by the JMC to be measured in an ImpactRX report obtained at the [ *** ] benchmark
point.



     If the Replidyne Specialty Sales Force fails to meet the foregoing requirements, Replidyne
will provide written notice to Forest within [ *** ] of such determination by the JMC, indicating
whether Replidyne will (A) transition to a sales force comprised of personnel who are full-time
employees of Replidyne and coordinate Detailing to Target Specialists together with Forest’s sales
representatives pending the achievement of a full-time employee trained and qualified sales force
or (B) terminate its promotional efforts with respect to Target Specialists, in each case over the
course of the [ *** ] month period immediately following such notice.



          (b) Training Materials and Sessions. Forest shall provide Replidyne with training
materials Forest provides to the Forest Sales Force, sufficient in quantity and quality to allow
Replidyne to train the Replidyne Specialty Sales Force in Product-specific sales skills and to
Detail the Product in a manner consistent with the Detailing performed by the Forest Sales Force.
Replidyne will prepare or have prepared any supplementary training materials required for Detailing
the Product to the Target Specialists, consistent with the applicable Marketing Plan. Forest will
permit Replidyne sales representatives to participate in training sessions of the Forest



 [ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.





28.









 







Sales Force in Product-specific sales skills with respect to the Product and the indications
for the Product and will provide reasonable advance notice to Replidyne of scheduled training
events. Without limiting the generality of the foregoing, the parties intend that the Replidyne
Specialty Sales Force will participate in the initial Product launch and subsequent sales force
meetings to the extent related to the Product.




          (c) Promotional Materials. Forest shall provide Replidyne with sales and promotional
materials reasonably sufficient to permit Replidyne to perform Detailing calls in a manner
consistent with the Detailing calls performed by the Forest Sales Force. Replidyne will create or
have created on its behalf such additional sales and promotional materials intended to be specific
to the Target Specialist audience as called for under, and consistent with, the Marketing Plan.
The project managers of each party will share with one another any such materials, and no such
materials may be utilized until completion of Forest’s regulatory and compliance review.




          (d) Sampling. Forest shall provide Replidyne with Product samples reasonably
sufficient to permit Replidyne to perform Detailing calls in accordance with the Marketing Plan.
Replidyne shall be responsible for accounting for sample distribution by the Replidyne Specialty
Sales Force and shall maintain all records with respect to sample distribution as required by
applicable laws and regulations. Within thirty (30) days after the end of each month, Replidyne
shall provide to Forest a written report summarizing samples distributed by the Replidyne Specialty
Sales Force for such calendar month. In addition, Replidyne shall ensure, through appropriate
routine monitoring and auditing standards which conform with current good industry practices, that
sampling of the Product is carried out by Replidyne in a manner which is in compliance with all
Applicable Laws. Replidyne shall immediately advise Forest of its discovery of any act or omission
of Replidyne regarding sample distribution that could violate or require reporting under applicable
law. Forest shall be solely responsible for the filing of any necessary reports to FDA in
connection with sampling. Within thirty (30) days after the expiration or termination of the
Replidyne Specialist Promotion Period, Replidyne shall return, or otherwise dispose of in
accordance with written instructions from Forest, all remaining samples and will provide Forest
with a certified statement that all remaining samples have been returned or otherwise properly
disposed of in accordance with Forest’s instructions and that Replidyne is no longer in possession
or control of any samples in any form or fashion.




          (e) Funding. Forest will reimburse Replidyne for the Sales Force Expense and
Marketing and Sampling Expense incurred by Replidyne in the performance of the activities to be
conducted by the Replidyne Specialty Sales Force and ancillary personnel of Replidyne in accordance
with the Marketing Plan, as provided in Section 7.10. If Replidyne engages a contract sales
organization rather than hiring its own employees for purposes of forming the Replidyne Specialty
Sales Force, [ *** ]. Replidyne shall not be obligated to incur expenses for any marketing or
promotional activities directed at Target Specialists, other than those expenses that are Sales
Force Expense and Marketing and Sampling Expense to be reimbursed by Forest, unless Replidyne
elects in its sole discretion to do so, provided that, unless Replidyne elects to cease promotional
activities to Target Specialists and to transition such activities to Forest within a six-month
period, Replidyne shall be responsible for the ancillary costs of the Replidyne Specialty Sales
Force which are not Sales Force Expense. If at any time during the Replidyne



[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




29.









 







Specialist Promotion Period, the limits on Forest’s reimbursement of the Sales Force Expense
and Marketing and Sampling Expense as set forth in Section 7.10 are such that Forest’s funding of
the Replidyne activities directed to Target Specialists falls below the level sufficient to execute
the Marketing Plan with respect to Target Specialists, except to the extent of the ancillary costs
referred to in the preceding sentence, Replidyne shall not be obligated to supplement the funding
to meet the goals of the Marketing Plan with respect to Target Specialists.




          (f) Additional Support. Forest will offer to Replidyne, free of charge, but at no
additional out-of-pocket cost to Forest, reasonable access to Forest’s personnel and technology
infrastructure as may be available to provide support for Replidyne’s marketing and promotion to
Target Specialists (including without limitation, External Scientific Affairs and trainers,
information technology support personnel and personnel responsible for accounting for sample
distribution, database access, and access to Forest sample ordering systems).




          (g) Extension; Termination. The Replidyne Specialist Promotion Period shall be
subject to renewal or extension by the written agreement of the parties. Replidyne reserves the
right to terminate its promotional efforts under Section 5.4 at any time during the Replidyne
Specialist Promotion Period, effective upon twelve (12) months written notice to Forest. If
Replidyne exercises the foregoing right, Replidyne shall provide such transition activities as and
for such period as Forest may reasonably request, including, without limitation, arranging for
meetings between members of the Replidyne Specialty Sales Force and sales representatives of
Forest, to assure a smooth transition of marketing to Target Specialists, subject to Forest’s
payment of Sales Force Expense and Marketing and Sample Expense incurred by Replidyne with respect
to such transition activities during any such transition period.




          (h) Forest Termination Right. If Forest ceases the promotion, sale or distribution of
the Product in the Territory under the circumstances permitted under this Agreement, then upon
written notice to Replidyne, Forest may terminate the Replidyne Specialist Promotion Period,
effective within a reasonable period of time in light of the circumstances underlying any such
cessation by Forest. In addition, Forest reserves the right to terminate the Replidyne Specialist
Promotion Period, effective upon [ *** ] written notice to Replidyne in the event that the Detail
Reports for at least [ *** ] indicate that Replidyne’s Detailing has not achieved at least [ *** ]
percent ([ *** ]%) of the Detailing to be performed by Replidyne as targeted by the Marketing Plan
(as to number or position of Details) for each such Calendar Quarter or upon the failure by
Replidyne to achieve at least [ *** ] percent ([ *** ]%) of the Detailing to be performed by
Replidyne as targeted by the Marketing Plan (as to numbers or portions of Details) in the aggregate
over a period of [ *** ], unless in either case, during such [ *** ] period Replidyne develops and
implements a program of increased Detailing which provides, to Forest’s reasonable satisfaction,
assurance that Detail shortfalls will not again occur. Failure of Replidyne to meet the number of
Details required under the Marketing Plan with respect to promotion efforts directed to Target
Specialists shall not be deemed a material breach under this Agreement and, notwithstanding Section
12.8, shall not entitle Forest to claim any damages, compensation or relief except as provided in
this Section 5.4(h) and Section 7.10(c)(ii).




     5.5 Pediatrician Promotion Option. Forest hereby grants to Replidyne an exclusive




[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




30.









 







option (the “Pediatrician Promotion Option”) to promote the Products on an exclusive basis to
Pediatricians in the Territory through the Replidyne Pediatrician Sales Force (the “Pediatrician
Promotion Rights”), exercisable by written notice to Forest at any time before the date that is six
(6) months prior to the projected date determined by the JDC for the submission of the first NDA
for an Oral Suspension. If Replidyne exercises the Pediatrician Promotion Option, the terms and
conditions of Schedule 5.5 shall apply with respect to the launch, promotion, marketing, sampling
and sale of Products in the Field in the Territory to Pediatricians and shall take precedence over
any provision of this Agreement to the contrary to the extent applicable to the launch, promotion,
marketing, sampling and sale of the Product to Pediatricians in the Field in the Territory.




     5.6 Product Management; Distribution; Returns.


          (a) Forest shall have sole responsibility for the distribution, sale and invoicing of the
Product in the Field in the Territory. All orders for the Product in the Field in the Territory
shall be subject to acceptance by Forest. Forest shall have sole discretion to make pricing and
discounting decisions with respect to the Product, provided that material pricing and discount
strategies will be reviewed and discussed by the JMC.



          (b) Forest will have the exclusive right and responsibility at its cost to (i) receive and
fill order for the Product in the Territory, (ii) warehouse and distribute the Product in the
Territory, (iii) control invoicing, order processing and collection of accounts receivable for the
Product in the Territory, and (iv) engage in all other activities relating to the ordering and
distribution of the Product in the Territory.



          (c) If quantities of the Product sold in the Territory are returned to Replidyne, Replidyne
shall notify Forest in writing and ship them to the facility designated by Forest, with any
reasonable or authorized shipping or other cost to be paid by Forest. Replidyne, at its option,
may advise the customer who made the return that the Product has been returned to Forest, but shall
take no other steps in respect of any such return without the written consent of Forest.




     5.7 Medical Inquiries; Product Complaints.



          (a) Forest shall be responsible for formulating responses and answering medical questions and
inquiries from members of the medical and paramedical professions and consumers regarding the
Product in the Territory. Replidyne shall comply with the reasonable directions and policies
established by Forest in connection therewith, including, but not limited to, that all requests for
written responses to medical inquiries shall be routed to and answered by Forest.




          (b) Replidyne shall refer all Product complaints (e.g., tampering, contamination, mix-up,
discoloration, incorrect quantities) in the Territory to Forest promptly after notice thereof (but
in any event within one (1) business day). Product complaints shall be handled by Forest in the
ordinary course of its business and, subject only to Replidyne’s right to comply with all
applicable laws and regulations, Replidyne shall not otherwise handle any such Product complaints
in the Territory.





[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




31.









 








          (c) If Replidyne has exercised the Pediatrician Promotion Right, Forest shall consult with
Replidyne regarding standardized responses to medical inquiries and product complaints involving
the Oral Suspension (as may be updated from time to time), and shall give good faith consideration
to any comments provided by Replidyne with respect thereto. On a periodic basis, Forest will
provide Replidyne with copies of product technical complaints regarding the Oral Suspension and the
results of Forest’s investigations of such complaints.




     5.8 Compliance with Law.



          (a) Each party shall comply in all material respects with Applicable Laws with respect to its
obligations under this Article 5 and shall maintain all licenses, permits, approvals and other
authorizations applicable to it in order to enable it to perform its obligations under this Article
5. Forest shall adopt and maintain compliance standards consistent with guidelines announced by
the Office of Inspector General of the Department of Health and Human Services, the American
Medical Association and other recognized medical or pharmaceutical organizations. With respect to
its marketing and promotion-related activities for the Products directed to Target Specialists,
Replidyne shall comply with Forest’s compliance standards. Forest will periodically inform
Replidyne of such compliance standards and issues may be submitted to the JMC for resolution by
Forest’s compliance function.




          (b) Forest shall be responsible for accounting for sample distribution by the Forest Sales
Force and shall maintain all records with respect to sample distribution as required by applicable
laws and regulations. In addition, Forest shall ensure, through appropriate routine monitoring and
auditing standards which conform with current good industry practices, that sampling of the Product
is carried out by Forest and its Affiliates in a manner which is in compliance with all Applicable
Laws. Forest shall immediately advise Replidyne of its discovery of any act or omission of Forest
with respect to Products that could violate or require reporting under applicable law.




          (c) Neither party shall make any claims or statements with respect to the Product that are not
strictly consistent with the sales and marketing materials approved for use pursuant to the
Marketing Plan.




     5.9 Commercialization Outside the Territory.



     (a) Subject to the coordination of worldwide Phase IV programs and publications pursuant to
Section 5.13, Replidyne shall have full control, authority and responsibility for the
commercialization of Product outside the Territory, subject to its agreements with Third Parties,
including, without limitation, pricing and reimbursement for Product, Product advertising and
promotional materials, Product packaging, sales force training and all interactions with regulatory
authorities regarding the commercialization of Product. The parties acknowledge that parallel
imports of the Product from Canada into the Territory at a substantially lower price than Product
is sold in the Territory could have a detrimental effect on the marketplace in the Territory.
Accordingly, Replidyne shall not: (i) sublicense rights to commercialize the Product in Canada; or
(ii) itself implement a launch plan for the Product in Canada, in each case without first
conferring with Forest regarding Replidyne’s or its sublicensee’s plans for mitigating the negative
impact of parallel imports of Product into the




 [ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.



32.









 







Territory. Forest’s approval of such sublicense or
launch plan shall be required, which approval may be withheld only if Forest can reasonably
demonstrate that the plans to mitigate parallel imports of the Product (or corresponding generic
equivalents) from Canada into the Territory are inadequate for that purpose.




          (b) In the event that Replidyne proposes to sublicense rights to commercialize the Product in
the Field in Canada (the “Canadian Rights”) to any Third Party, Replidyne shall first provide
Forest with written notice thereof and hereby grants Forest the first right of negotiation with
respect to the Canadian Rights in accordance with this Section 5.9(b). Forest shall within [ *** ]
days after receipt of such notice notify Replidyne in writing either that (i) Forest is interested
in negotiating for the Canadian Rights; or (ii) Forest is not interested in negotiating the
Canadian Rights and therefore waives the right of first negotiation with respect to the Canadian
Rights. If Forest notifies Replidyne in writing within [ *** ] days that Forest is interested in
negotiating for the Canadian Rights, the parties shall negotiate in good faith the terms of the
Canadian Rights for up to [ *** ] days from such notification, it being understood that
the financial terms for the Canadian Rights shall be based on the value of the market for the
Product in Canada only (without valuing any expected sales into the United States market). Failure
by Forest to give written notice of its interest or lack of interest in negotiating for the
Canadian Rights within [ *** ] days after receipt of written notice from Replidyne shall be deemed
a waiver by Forest of its first right of negotiation with respect to the Canadian Rights. If
Forest waives or otherwise fails to exercise its first right of first negotiation with respect the
Canadian Rights, or if the parties fail to agree to the terms of the grant of the Canadian Rights
to Forest within such [ *** ] day negotiation period, then Replidyne shall be free to
grant the Canadian Rights to any Third Party and Forest shall have no further rights with respect
to the Canadian Rights, except as provided in Section 5.9(a), and except that Replidyne shall not
grant the Canadian Rights to any Third Party on terms which are less favorable to Replidyne than
those last offered to Replidyne by Forest without first offering the Canadian Rights to Forest on
such terms for a period of at least [ *** ] days. If Forest notifies Replidyne in writing within
such [ *** ] day period that Forest accepts such terms, the parties shall enter into an agreement
on such terms within thirty (30) days after such notice from Forest. If Forest does not notify
Replidyne in writing within such sixty (60) day period that Forest accepts such terms, then
Replidyne shall be free, subject only to the requirements of Section 5.9(a) (which shall be
addressed, if possible, during the period of negotiation under this Section 5.9(b)), to grant the
Canadian Rights to any Third Party on such terms, and Forest shall have no further rights with
respect to the Canadian Rights.




     5.10 Competitive Products. The parties agree that (i) from the Effective Date until the [ ***
] anniversary of the Effective Date, neither party shall, directly or indirectly, itself or through
one or more Affiliates or Third Parties, conduct or cause to be conducted clinical development of a
Competitive Product (including, without limitation, under any collaboration, license or similar
agreement), and (ii) from the Effective Date until the [ *** ] anniversary of the First Commercial
Sale, both parties agree that they shall not, directly or indirectly, itself or through one or more
Affiliates or Third Parties, market or sell any Competitive Product in the Field in the Territory.
For purposes of this Section 5.10, “Competitive Product” means exclusively any product, other than
a Product, that is [ *** ] an antibiotic having [ *** ] and directed to [ *** ]. The foregoing
restriction shall not prevent either party from marketing or



[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




33.









 







selling a [ *** ] antibiotic for [ ***
]. If, after the [ *** ] anniversary of the First Commercial Sale, either party proposes to market
or sell a Competitive Product in the Territory, (a) such party must first consult with the other
party and provide reasonable assurances that such activities will not impair promotion and sale
efforts for the Product in the Territory, and (b) subject to subsection (a), such party may market
and sell a Competitive Product in the Territory; provided that such activities do not in fact
impair promotion and sales efforts with respect to Product in the Territory. At either party’s
request, the other party will provide documentation and other objective evidence to substantiate
that the marketing and sale of such Competitive Product will not impair promotion and sales efforts
for the Product. Further, at either party’s request, Forest and Replidyne will meet to discuss
such matters, and Forest agrees that DAP shall be permitted to attend such meeting. If either
party proposes to market or sell [ *** ] antibiotic in the Territory prior to the the [ *** ]
anniversary of the First Commercial Sale, it must first consult with the other party and provide
reasonable assurances that such activities will not impair promotion and sale efforts for the
Product in the Territory. Subject to the preceding sentence, either party may market and sell [
*** ] antibiotic in the Territory prior to the [ *** ] anniversary of the First Commercial Sale;
provided that such activities do not in fact impair promotion and sales efforts with respect to
Product in the Territory. Notwithstanding the foregoing, a party shall not be deemed in breach of
subsection (i) of this Section 5.10 if such party is subject to a Change in Control and promptly
following such Change in Control implements firewall mechanisms which assure to the reasonable
satisfaction of the other party that investment, clinical development efforts and subsequent sales
and promotion efforts with respect to the Product will not be adversely affected by such Change in
Control, and a party shall not be deemed in breach of subsection (ii) of this Section 5.10 if it
acquires a Competitive Product through a merger or acquisition by or of a Third Party and the
surviving entity (x) does not (or promptly ceases to) promote the Competitive Product actively, (y)
promptly announces its intention to divest such Competitive Product and thereafter completes such
divestment within [ *** ] months, or (z) promptly implements firewall mechanisms (including
separate sales forces and marketing management) which assure to the reasonable satisfaction of the
other party that sales and promotional efforts with respect to the Product will not be adversely
affected by such merger or acquisition.




     5.11 Phase IV and Publication Strategy. Neither party will undertake, or permit its
Affiliates or (sub)licensees to undertake, whether within or outside the Territory, any
pre-clinical or clinical marketing studies of the Product, including, without limitation, Phase IV
marketing studies, but excluding any studies required for registration or imposed by regulatory
authority in a country within a party’s territory, without consultation with, and approval of, the
JMC (which shall consult with appropriate development personnel of the parties for this purpose).
Forest agrees that it shall be subject to the same requirement of consultation with, and approval
of, Replidyne, DAP or their (sub)licensees outside the Territory, with regard to marketing studies
of the Product by Forest.



     The parties will also coordinate worldwide publication strategy and activities related to
scientific conferences inside and outside the Territory, including through delegation to
appropriate working groups of the parties. Each party shall be afforded the opportunity to review
and approve any scientific paper or presentation with respect to the Product proposed for
publication, presentation or distribution by the other party or its Affiliates and shall have no
more



[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




34.









 







than ten (10) days to complete such review and approval. The party proposing publication or
presentation shall not unreasonably reject comments furnished by the other party, will comply with
the other party’s request to delete references to the its Confidential Information in any such
publication or presentation and will delay publication for such reasonable period requested by the
other party to permit the filing of patent applications concerning any Licensed Technology, Forest
Technology or Joint Inventions disclosed in material proposed for such publication or presentation.
In no event will Confidential Information of a party be published without the consent of such
party.




     The parties will coordinate the disclosure of the initiation and results of clinical studies
performed pursuant to the Development Plan to the extent required by law or best industry
practices; provided that all proposed disclosures and publications will be submitted for
expeditious review by the JDC and due regard will be given to the comments of each party, the
maintenance of confidentiality of Confidential Information of each party and allowing time for
intellectual property registrations as provided under Article 9. Nothing set forth herein shall be
deemed to limit or restrict either party from disclosing the results of clinical trials (whether
performed by the parties or by Third Parties) to the extent required by law or best industry
practices. The parties intend that the provisions of this Section 5.11 shall apply to the parties
and their respective Affiliates and (sub)licensees, as well as DAP and its licensees.



     5.12 Adverse Events. For purposes of this Section, adverse drug experiences (“ADEs”) shall
mean any adverse medical occurrence in a patient to whom the Product has been administered and
which does not necessarily have a casual relationship with the treatment (as defined by 21 C.F.R.
312.32, 314.80 and any other applicable definitions in regulations promulgated by the FDA or ICH)
which are required to be reported to the FDA or to international regulatory agencies. The parties
will cooperate to develop, as promptly as possible (and in any event within six (6) months
following the Effective Date), an ADE information exchange protocol to provide each party with such
information as it may require to comply with legal and regulatory ADE reporting standards. Pending
finalization of such protocol, each of the parties hereto shall disclose to the other party all
safety reports and other information which they may from time to time receive or obtain whether
from sources within or without the Territory with respect to any adverse experiences with respect
to the Product. Specifically, all serious adverse events and reactions occurring in a patient to
whom the Product has been administered, whether believed due to the Product or not, will be
transmitted to the other party as promptly as possible and in any event within ten (10) calendar
days of first knowledge of the event/reaction, except for deaths which will be transmitted within
five (5) calendar days. All aggregate reports of ADEs (i.e., IND annual reports, NDA periodic
reports, PSURs etc.) submitted to a Regulatory Authority will be transmitted to the other party
within five (5) calendar days of transmission to the Regulatory Authority. All questions from and
responses to a health authority regarding ADEs will be transmitted to the other party within five
(5) days of receipt/transmission. Each party will use its best efforts to obtain in a timely
manner from Third Parties (including without limitation, DAP and its licensees) who are developing
or commercializing the Product or other forms of faropenem outside of the Territory all such
information regarding adverse events and reactions with respect to the Product or other forms of
faropenem required by regulatory authorities in the Territory.



     5.13 Recalls or Other Corrective Actions. If the FDA issues or requests a recall or




 [ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.



35.









 







takes
similar action in connection with the Product or in the event either party determines that an
event, incident or circumstance has occurred that may result in the need for a recall or market
withdrawal of the Product in the Territory, the party notified of or desiring such recall or
similar action shall, within twenty-four (24) hours, advise the other party thereof by telephone
(and confirmed by email or facsimile), email or facsimile. Forest shall have sole responsibility
and shall make all decisions with respect to any recall, market withdrawals or any other corrective
action related to the Product in the Territory, including the right to cease all sales of Product
in the Territory or the promotion and Detailing of the Product in the Territory. At Forest’s
request, Replidyne shall use Commercially Reasonable Efforts to assist Forest in conducting such
recall, market withdrawal or other corrective action with respect to Target Specialists, and any
documented out-of-pocket costs incurred by Replidyne with respect to participating in such recall,
market withdrawal or other corrective action shall be reimbursed by Forest as Sales Force Expense
hereunder.




     5.14 Product Liability. In connection with the commercialization of the Products, Forest will
be responsible for any liability for personal injury or property damage arising in connection with
use of the Product; provided, however, that in any event each party shall be responsible for, and
hereby assumes, any and all risks of personal injury or property damage to the extent attributable
to the negligence or willful misconduct of that party or its Affiliates or licensees (excluding, in
the case of Replidyne, Forest and its Affiliates and sublicensees), and their respective directors,
officers, employees and agents.



6. Supply Matters




     6.1 Joint Supply Committee. Promptly after the Effective Date, the parties will form a Joint
Supply Committee (the “JSC”) comprised of two (2) representatives of each of Forest and Replidyne,
which shall oversee manufacturing activities for the Drug Substance and Product for use in the
Territory during the Supply Transition. The JSC shall meet at least four (4) times per year during
the Supply Transition or at such greater frequency as the JSC agrees. Such meetings may be
conducted by videoconference, teleconference or in person, as agreed by the parties, and the
parties shall agree upon the time of meetings. Subject to coordination with the other party, a
reasonable number of additional representatives of a party may attend meetings of the JSC in a
non-voting capacity, consistent with the agendas and purposes for such meetings. Decisions of the
JSC shall be made by unanimous vote, with the Replidyne members collectively having one (1) vote
and the Forest members collectively having one (1) vote. No vote of the JSC may be taken unless at
least one (1) of each party’s representatives on the JSC are present to vote. If the JSC is unable
to reach a unanimous vote on any matter, then Forest shall have the tie-breaking vote. The JSC
will have no power to amend this Agreement or waive a party’s rights or obligations under this
Agreement.



     6.2 Supply Transition. As soon as practicable and subject to the further provisions hereof,
Forest will take over responsibility for the obligations in the API Supply Agreement and existing
supply contracts for manufacture and packaging of the Product in the Territory, [ *** ].



     6.3 Launch Delay Compensation.




          (a) Provided that Forest is in compliance with its obligations under this





[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




36.









 







Agreement, Replidyne
shall be responsible for all compensation that may accrue under Section 3.3 of the API Supply
Agreement for any period ending on or prior to [ *** ]. Forest shall be responsible for the
payment of all compensation that may become due under Section 3.3 of the API Supply Agreement other
than as provided in the preceding sentence.




          (b) With respect to the supply contract with Tropon GmbH existing as of the Effective Date for
the manufacture and packaging of Tablets, Replidyne shall be responsible for the maintenance and
qualification fees incurred under such agreement for any period ending prior to December 31, 2005.
With respect to any credits accrued by Replidyne under such agreement prior to that date, Forest
will apply such credits at the first opportunity and thereafter promptly reimburse Replidyne for
such credited amounts (other than credits accrued with respect to payments made under Section 3.3
of the Tropon/Replidyne supply contract as in effect immediately prior to the Effective Date, for
which Forest will reimburse Replidyne only if Forest either is not required to produce additional
registration batches of Tablets or is able to use for commercial distribution any such additional
registration batches of Tablets produced for Forest). Replidyne shall also be responsible for any
charge incurred with respect to minimum purchase obligations for calendar year 2006 that is not
creditable against future payments pursuant to the terms of such agreement, and Forest shall be
responsible for any such charges incurred under such agreement other than such charges for which
Replidyne is responsible.




     6.4 Supply Costs. Subject to Section 6.3, all costs incurred after October 1, 2005 related to
manufacture, packaging and distribution of Drug Substance and Product will be borne by Forest;
provided, however, that, [ *** ]. Replidyne has provided Forest a reconciliation of all costs
accrued since October 1, 2005 through December 31, 2005 under the API Supply Agreement and existing
supply agreements for the manufacturing and packaging of Product. If the API Supply Agreement and
Replidyne’s other existing Third Party supply agreements for manufacture and packaging of Product
are not assigned to Forest, Forest’s required quantities of Drug Substance and Product will be
supplied to Forest by Replidyne at Replidyne’s cost under the API Supply Agreement and other
applicable Third Party agreements. Forest will bear the risk and have the benefit of currency
fluctuations applied to Drug Substance and Product purchases in foreign currencies. Following the
Effective Date, Replidyne shall not incur FTE costs for the account of Forest with respect to
Replidyne personnel participating in activities related to the manufacture, packaging and
distribution of Drug Substance, without prior mutual agreement of the parties to a plan for such
activities.



     6.5 Manufacturing Rights. Unless and until Forest becomes an assignee of the API Supply
Agreement and existing supply contracts for manufacture and packaging of the Product in the
Territory (or enters into a separate agreement with the parties to such agreements providing for
supply of Drug Substance and for manufacture and packaging of the Product in the Territory),
Replidyne will use Commercially Reasonable Efforts to make available to Forest the benefits
available to Replidyne under such agreements. In particular, if Replidyne is granted a license
pursuant to Section 8.2 of the API Supply Agreement (thus triggering the grant of manufacturing
rights under the DAP Agreement), Replidyne grants to Forest or its Third Party manufacturing
designee during the Term, a non-exclusive worldwide license to manufacture the Drug Substance,
under all patents, know-how and other intellectual property rights, including, without limitation,
the Manufacturing Technology and the patents and patent applications listed in Attachment 8.2 of
the API Supply Agreement and all foreign counterparts thereof and any





 [ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.



37.









 







intellectual property rights
pertaining to the manufacture of Drug Substance under the DAP Agreement, that are Controlled by
NISSO and/or DAP, to (i) research, develop, make, have made and use Drug Substance and Products
anywhere in the world, and (ii) promote, offer to sell, sell, have sold and otherwise commercialize
the Drug Substance and Products in the Territory. Such license shall be royalty free except to the
extent of any amounts due to NISSO and DAP pursuant to the API Supply Agreement in connection
therewith. In addition, unless and until Forest becomes an assignee of the API Supply Agreement
and existing supply contracts for manufacture and packaging of the Product in the Territory (or
enters into separate agreements relating to such matters), to the extent necessary to preserve
Forest’s economic interest as provided in this Agreement, Replidyne shall (i) perform its
obligations under such agreements in accordance with their terms, (ii) [ *** ].




     6.6 Manufacturing Transfer Compensation. After the initial NDA filing for the Product, if
Forest transfers responsibility for manufacturing Drug Substance to a Third Party manufacturer in
accordance with the API Supply Agreement, then, provided that NISSO and DAP are then in full
compliance with the API Supply Agreement, [ *** ].



     6.7 Supply Chain Management. Replidyne will retain responsibility for supply chain management
with respect to its requirements of Drug Substance and the Product outside of the Territory;
provided however, that the parties will work together in good faith to establish and coordinate a
mutually acceptable global supply chain (including, without limitation, the coordination of
forecasts and orders) for the manufacture of Drug Substance and Product.



7. Fees and Payments




     7.1 Upfront Fee. Forest shall pay to Replidyne a non-refundable, non-creditable upfront fee
equal to fifty million dollars ($50,000,000) within five (5) days of the Effective Date.



     7.2 Milestone Payments.




          (a) Forest shall pay Replidyne the following non-refundable, non-creditable payments within [
*** ] after the occurrence of each of the following milestone events with respect to Product in the
Territory:




	 	 	 	 	 
	Development Milestones	 	 	 
	Milestone Event	 	Milestone Payment	 
	First NDA Acceptance for a Tablet
	 	$	10,000,000	 
	[ *** ](1)
	 	$	[ *** ]	 
	[ *** ](2)
	 	$	[ *** ]	 
	[ *** ](3)
	 	$	[ *** ]	 
	[ *** ](4)
	 	$	[ *** ]	 
	[ *** ](4)
	 	$	[ *** ]	 
	 
	 	 	 
	Total Potential Development Milestone Payments:
	 	$	[ *** ]	 





 [ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.



38.









 








	 	 	 	 	 
	Commercial Milestones	 	 	 
	Milestone Event	 	Milestone Payment(5)(6)	 
	The first time Net Sales in the Territory for
Tablets exceed $[ *** ] in any consecutive twelve
(12) month period during the first [ *** ]
following First Commercial Sale of the first Tablet
	 	$	[ *** ]	 
	 
	 	 	 	 
	The first time Net Sales in the Territory for
Tablets exceed $[ *** ] in any consecutive twelve
(12) month period during the first [ *** ]
following First Commercial Sale of the first Tablet
	 	$	[ *** ]	 
	 
	 	 	 	 
	The first time Net Sales in the Territory for Oral
Suspension exceed $[ *** ] in any consecutive
twelve (12) month period during the first [ *** ]
following First Commercial Sale of the first Oral
Suspension
	 	$	[ *** ]	 
	 
	 	 	 	 
	The first time Net Sales in the Territory for Oral
Suspension exceed $[ *** ] in any consecutive
twelve (12) month period during the first [ *** ]
following First Commercial Sale of the first Oral
Suspension
	 	$	[ *** ]	 
	 
	 	 	 	 
	Total Potential Commercialization Milestone Payments
	 	$	[ *** ]	 








 




			
	(1)	 	[ *** ]
	 
	(2)	 	[ *** ]
	 
	(3)	 	[ *** ]
	 
	(4)	 	[ *** ]
	 
	(5)	 	[ *** ]
	 
	(6)	 	[ *** ]





          (b) Each of the milestone payments described in this Section 7.2 shall be payable one (1)
time and only for the first time that the corresponding milestone is achieved, regardless of how
many times such milestone is achieved, and no milestone payments will be owed for a milestone which
is not reached. All payments made to Replidyne pursuant to this Section 7.2 are non-refundable and
may not be credited against any other payments payable by Forest to Replidyne under this Agreement.




     7.3 Royalties. Forest shall pay to Replidyne royalties on Net Sales of Products as follows
(references to Net Sales of Products in this Section exclude Net Sales of any generic Product,
which are subject to compensation under Section 7.5 below):



          (a) during the [ *** ] year period commencing with First Commercial Sale of the first Product
in the Territory, a royalty on annual Net Sales of all Products equal to [ *** ] percent ([ ***
]%);




          (b) during the [ *** ] year period commencing on the [ *** ] anniversary of the First
Commercial Sale of the first Product in the Territory, a royalty on annual Net Sales of






 [ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.



39.









 







all
Products equal to [ *** ] percent ([ *** ]%); and




     (c) after the [ *** ] anniversary of the First Commercial Sale of the first Product in the
Territory, a royalty on Net Sales of all Products equal to:



               (i) [ *** ] percent ([ *** ]%) of that portion of total Net Sales of Products in each sales
year that is less than or equal to $[ *** ] (which threshold shall be reduced to $[ *** ] if no NDA
Approval has been granted for a Product [ *** ] by the end of calendar year [ *** ]); and



               (ii) [ *** ] percent ([ *** ]%) of that portion of total Net Sales of Products in each sales
year that is greater than $[ *** ] (which threshold shall be reduced to $[ *** ] if no NDA Approval
has been granted for a Product [ *** ] by the end of calendar year [ *** ]).



          (d) If Forest’s [ *** ] for Product in the Territory (the “Forest Costs”) exceeds (i) [ *** ]
(on a Calendar Quarter basis) at any time prior to the [ *** ] anniversary of the First Commercial
Sale or (ii) [ *** ] during any Calendar Quarter thereafter (the “[ *** ] Threshold”), the royalty
payable by Forest to Replidyne under this Section 7.3 for such Calendar Quarter shall be reduced by
an amount equal to [ *** ]% of the amount by which the Forest Costs for such Calendar Quarter
exceeds the [ *** ] Threshold, but in no event by more than [ *** ] for such Calendar Quarter. To
the extent that, after giving effect to any such reduction in royalties, Forest Costs continue to
exceed [ *** ] Threshold, [ *** ].




     7.4 Payments to DAP. Replidyne will be responsible for payment of all milestone payments and
royalty payments owed to DAP pursuant to the DAP Agreement.



     7.5 Royalty Term; Generic Product. The payments specified in Section 7.3 (collectively,
“Royalty Payments”) shall be payable on a Product-by-Product basis for a period equal to the
Royalty Term for such Product.



          (a) Branded Product When Generic Equivalent is Sold. If during the Term, a Third
Party introduces and commercializes in the Territory a Generic Equivalent to a Product, then (i)
the royalty rate applicable to the Net Sales of such Product (excluding Net Sales of any Generic
Equivalent to such Product which are subject to Section 7.5(b)) shall be reduced to [ *** ] percent
([ *** ]%) of the royalty rates set forth in Section 7.3, and (ii) the Royalty Term for such
Product shall instead end on the later of (A) the expiration of the last to expire valid claim of
those Licensed Patents that are issued as of the Effective Date claiming the manufacture, use or
sale of such Product in the Territory, including any period of extended commercial exclusivity for
the Product under any such Licensed Patent granted under any laws or regulations in the Territory,
(B) twelve (12) years after the date of First Commercial Sale of such Product in the Territory or
(C) five (5) years after the First Commercial Sale of the Generic Equivalent to such Product;
except that [ *** ].




     (b) Generic Product Sold by Forest. In consideration of the rights granted to Forest
under this Agreement with regard to generic Product, Forest shall pay to Replidyne, on each generic
Product an amount equal to [ *** ] percent ([ *** ]%) of Generic Profits so long as



[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




40.









 







such generic
Product is sold or transferred in the Territory.




     7.6 Bioterror Applications. If a Product is developed for the treatment of Bacillus anthracis
or other bioterrorism and biowarfare applications with the intent to sell the Product to government
and military agencies for military or civilian use for such applications, then (a) notwithstanding
Section 4.6(a) and references to Section 4.6(a) in this Agreement, the Development Costs and other
expenses specific to the development and commercialization of the Product for such purpose shall be
shared by the parties such that Replidyne shall bear [ *** ]% and Forest shall bear [ *** ]%, and
(b) in lieu of Royalty Payments under Section 7.3 on sales of the Product to government and
military agencies for military or civilian use for such applications, Forest shall pay Replidyne [
*** ]% of the profit margin on such sales of the Product, where profit margin is equal to such
sales of the Product to the government or military agencies for military or civilian use for such
applications, less Cost of Goods and Distribution Costs for such Product and royalties owed to DAP
on such sale. Forest shall be responsible for paying the Cost of Goods and Distribution Costs for
such Product and will pay to Replidyne the royalties owed to DAP, which Replidyne shall pass
through to DAP. Any other sales of the Product for bioterrorism and biowarfare applications shall
remain subject to the Royalty Payments as provided in Section 7.3.



     7.7 Other Royalty Adjustments. In the event that the parties develop a modified or sustained
release formulation of the Product, royalties payable pursuant to Section 7.3 in respect of such
formulation of the Product shall be [ *** ].



     7.8 Acknowledgment of Replidyne Contribution. The parties hereby acknowledge that the value
contributed by Replidyne to any Product developed and/or commercialized by or on behalf of Forest
and its Affiliates is the access to the Licensed Technology and that the up front, milestone and
Royalty Payments described above in this Article 7 will be payable by Forest in accordance with the
terms and conditions hereof regardless of whether or not a Product is covered by a Licensed Patent,
Forest Patent and/or Joint Patent.



     7.9 Reimbursement of Development Costs. Each party shall be responsible for its share of
Development Costs as provided under Section 4.6(a). Reconciliation and reimbursement for
Development Costs shall be carried out pursuant to Section 4.6(b).



     7.10 Reimbursement of Replidyne Target Specialist Commercial Activities.




          (a) Reimbursement of Pre-Launch Period Sales Force Expense. Forest agrees to
reimburse Sales Force Expense incurred by Replidyne during the Pre-Launch Period in an amount not
to exceed an aggregate of [ *** ] dollars ($[ *** ]). Replidyne shall provide a statement to
Forest within thirty (30) days of the end of each Calendar Quarter during the Pre-Launch Period
setting forth the Sales Force Expense incurred for the preceding Calendar Quarter and identifying
the components thereof in such detail as determined by the JMC. Subject to the maximum limitation
set forth above, Forest will provide reimbursement of the Sales Force Expense reflected in the
statement for each such Calendar Quarter within thirty (30) days of the receipt thereof by Forest.




          (b) Reimbursement of Marketing and Sample Expense. In consideration for





[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




41.









 







the marketing
and promotional activities directed to Target Specialists to be provided by Replidyne hereunder,
Forest shall reimburse Replidyne for all actual Marketing and Sample Expense incurred by Replidyne
during each Detailing Year of the Replidyne Specialist Promotion Period, not to exceed the amount
of Marketing and Sample Expense to be incurred by Replidyne as budgeted under the Marketing Plan
for the applicable Detailing Year unless otherwise agreed in writing by the parties; provided that,
if the Marketing and Sample Expense that Replidyne would have to incur to achieve the objectives
set forth in the Marketing Plan exceeds the amount of the Marketing and Sample Expense to be
incurred by Replidyne as budgeted under the Marketing Plan (unless Forest agrees to reimburse such
amount to Replidyne and adjust the Marketing Plan accordingly), Replidyne shall not be obligated to
incur such amount of Marketing and Sample Expense in excess of the amount budgeted under the
Marketing Plan, unless it decides to do so in its sole discretion, and, if it does not incur such
excess Marketing and Sample Expense, Replidyne shall not be responsible to the extent that it does
not achieve the objectives set forth in the Marketing Plan. Replidyne shall provide a statement to
Forest within thirty (30) days of the end of each Calendar Quarter during the Replidyne Specialist
Promotion Period setting forth the Marketing and Sample Expense incurred for the preceding Calendar
Quarter and identifying the components thereof in such detail as determined by the JMC. Forest
will provide reimbursement of the Marketing and Sample Expense reflected in each statement for such
Calendar Quarter within thirty (30) days of the receipt thereof by Forest.




          (c) Reimbursement of Sales Force Expense. In consideration for the Details to be
provided by Replidyne to Target Specialists hereunder, Forest shall reimburse Replidyne for Sales
Force Expense in accordance with the following:




               (i) With respect to the Initial Period, Forest shall reimburse one hundred percent (100%) of
Sales Force Expense up to an aggregate maximum per Detailing Year equal to [ *** ] dollars ($[ ***
]) and with the expectation that such amount will be sufficient, at a minimum, to support Detailing
by the Replidyne Specialty Sales Force to approximately [ *** ] Target Specialists at an average
frequency of [ *** ] Details per Detailing Year. Reimbursement shall be made on a Calendar Quarter
basis against receipt of statements from Replidyne on the same basis provided in Section 7.10(a)
above, together with a Detail Report. With respect to each Detailing Year during the remainder of
the Replidyne Specialist Promotion Period following the Initial Period, Forest shall reimburse
Sales Force Expense as follows:



                    (1) [ *** ] percent ([ *** ]%) of Sales Force Expense shall be multiplied by the percentage of
first position Details to total Details required to be provided by Forest pursuant to the Marketing
Plan with respect to Forest’s own Detailing of the Product; and



                    (2) [ *** ] percent ([ *** ]%) of Sales Force Expense shall be multiplied by the percentage of
second position Details to total Details required to be provided by Forest pursuant to the
Marketing Plan with respect to Forest’s own Detailing of the Product,



     subject to an aggregate maximum per Detailing Year equal to [ *** ] dollars ($[ *** ]) as
proportionately reduced to reflect the change in Forest’s reimbursement of Sales Force Expense from
one hundred percent (100%) of Sales Force Expense in the Initial Period to a percentage of



[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.





42.









 







Sales
Force Expense based on the application of the foregoing Detail weighting scheme after the Initial
Period (subject to further adjustment pursuant to Section 7.10(d)(ii)).




     The total of the amounts so determined shall be the amount of Sales Force Expense to be
reimbursed by Forest (i.e., for example, if the Marketing Plan for a Detailing Year requires that
fifty percent (50%) of Forest’s Details be in first position, Forest shall reimburse a total of
fifty percent (50%) of Sales Force Expense (consisting of the sum of [ *** ] percent ([ *** ]%) x
fifty percent (50%) (reflecting Forest’s first position obligation) and [ *** ] percent ([ *** ]%)
x fifty percent (50%) (reflecting Forest’s second position obligation)). Reimbursement shall be
made on a Calendar Quarter basis against receipt of statements and Detail Reports from Replidyne in
the same manner as provided above.



               (ii) In the event that Detailing actually provided by Replidyne for a given Detailing Year did
not achieve at least [ *** ] percent ([ *** ]%) of the Detailing targeted by the Marketing Plan (as
to number of weighted Details, with Details at second position weighted at fifty percent (50%) of a
first position Detail), Forest may credit an amount determined within sixty (60) days of the end of
such Detailing Year against the reimbursement of Sales Force Expense in the next Detailing Year
(which may, to the extent the amount of such credit exceeds Sales Force Expense in such next
Detailing Year, be carried forward and applied in a subsequent Detailing Year or applied to reduce
royalties if no further Sales Force Expense remains payable by Forest). The amount of such credit
shall be equal to (A) the amount by which the Detailing actually provided by Replidyne as a
percentage of the Detailing to be provided by Replidyne as targeted by the Marketing Plan for the
applicable Detailing Year is less than one hundred percent (100%), multiplied by (B) the actual
Sales Force Expense reimbursed by Forest for such Detailing Year.



          (d) Additional Adjustments. Notwithstanding the provisions of Section 7.10(c), the
reimbursement of Sales Force Expense is subject to the following:




               (i) In the event that, during the Initial Period or thereafter, the Replidyne Specialty Sales
Force commences the detailing of pharmaceutical products other than the Product, the parties shall
negotiate in good faith as to a reduction in the percentage of Sales Force Expense subject to
reimbursement by Forest taking into account the percentage of Replidyne Specialty Sales Force
detailing activity proposed to be devoted to such new product.



               (ii) Within sixty (60) days following the expiration of the Initial Period, the JMC will
evaluate the productivity of Detailing to Target Specialists in terms of prescriptions and sales
generated through such efforts (based upon IMS Xponent data or other mutually-agreed generally
recognized prescription data source). In the event that the JMC recommends a significantly reduced
level of Details to Target Specialists, Forest reserves the right to reduce the total Sales Force
Expense subject to reimbursement in accordance with the terms hereof in proportion to the reduction
in Detailing to Target Specialists for the immediately preceding Detailing Year as so recommended
by the JMC, with a commensurate reduction in the aggregate maximum amount of Sales Force Expense
subject to reimbursement in such Detailing Year as provided in Section 7.10(c)(i). Replidyne shall
only be obligated to perform the number of Details to Target Specialists corresponding to the
recommendation of the JMC.




[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




43.









 








8. Payment; Records; Audits




     8.1 Payment; Reports. Royalty Payments shall be calculated and reported for each Calendar
Quarter. All payments due to Replidyne under this Agreement shall be paid within forty-five (45)
days of the end of each Calendar Quarter, unless otherwise specifically provided herein. Each
payment shall be accompanied by [ *** ] and Net Sales of Products by Forest and its Affiliates,
each in sufficient detail to permit confirmation of the accuracy of the payment made, including,
without limitation and on a Product-by-Product basis, the number of Products sold, the gross sales
and Net Sales of such Products, the Royalty Payments and other payments payable and the method used
to calculate the Royalty Payments and other payments. [ *** ].



     8.2 Manner and Place of Payment. All payments hereunder shall be payable in U.S. dollars.
All payments owed under this Agreement shall be made by wire transfer in immediately available
funds to a bank and account designated in writing by Replidyne, unless otherwise specified in
writing by Replidyne.



     8.3 Income Tax Withholding. Replidyne will pay any and all taxes levied on account of any
payments made to it under this Agreement. If any taxes are required to be withheld by Forest,
Forest will: (a) deduct such taxes from the payment made to Replidyne; (b) timely pay the taxes to
the proper taxing authority; and (c) send proof of payment to Replidyne and certify its receipt by
the taxing authority (to the extent the taxing authority provides such certification to Forest)
within thirty (30) days following such payment.



     8.4 Financial Records.




          (a) Both parties shall, and shall cause their respective Affiliates to, keep complete and
accurate books and records pertaining to Development Costs. Such books and records shall be
retained by both parties and their Affiliates until three (3) years after the end of the period to
which such books and records pertain, or for such longer period as may be required by Applicable
Laws.




          (b) Forest shall keep, and shall cause its Affiliates to keep, complete and accurate records
pertaining to the sale or other disposition of Products in sufficient detail to permit Replidyne to
confirm [ *** ] and the accuracy of all Royalty Payments due hereunder. In addition, Forest shall
maintain accurate records relating to its promotion obligations hereunder (including, without
limitation, records relating to the performance of Details by Forest (including records of
physicians called on, frequency of calls and other data which underlies the Detail Reports required
by Section 8.1) which records shall be kept available for three (3) years following the Detailing
Year to which such records relate unless a longer period is otherwise required by Applicable Laws.




          (c) Replidyne shall maintain accurate records relating to its promotion obligations hereunder
(including, without limitation, records relating to the performance of Details by Replidyne
(including records of physicians called on, frequency of calls and other data which underlies the
Detail Reports required by Section 7.10(c)(i)), and records supporting the determination of Sales
Force Expense and Marketing and Sample Expense) which records shall be kept available for three (3)
years following the Detailing Year to which such records






[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




44.









 







relate unless a longer period is otherwise
required by Applicable Laws.




     8.5 Audits. At the request of either party, the other party shall, and shall cause its
Affiliates to, permit the requesting party to cause an independent auditor or other representative,
at reasonable times and upon reasonable notice, to examine the books and records maintained
pursuant to Section 8.4. Such examinations may not: (a) be conducted for any Calendar Quarter
ended more than three (3) years prior to the date that such request is made; (b) be conducted more
than once in any twelve (12) month period or (c) be repeated for any Calendar Quarter; provided,
however, that audits may be conducted more frequently or for such periods as may be reasonable in
the event a party has good cause, based upon objective evidence, to perform such additional audits.
Except as provided below, the cost of this examination shall be borne by the party that requested
the examination, unless the audit reveals a variance of more than five percent (5%) from the
reported amounts covering a period of at least twelve (12) months, in which case the audited party
shall bear the cost of the audit. If such audit concludes that additional payments were owed or
that excess payments were made during such period, the paying party shall pay the additional
payments or the receiving party shall reimburse such excess payments, within sixty (60) days after
the date on which such written audit report is delivered to the parties.



     8.6 Late Payments. If any payment due under this Agreement is not made when due, the payment
shall accrue interest from the tenth day following the furnishing by Replidyne of written notice of
such late payment, unless payment is made during such 10 day period, at the prime rate of interest,
as adjusted monthly, plus one percent (1%) per month; provided, however, that in no event shall
such rate exceed the maximum legal annual interest rate. In addition, interest shall not accrue as
to the portion of any payment which is being disputed diligently and in good faith until from and
after an amount is awarded by arbitration in accordance with Article 14 hereof, unless the
Arbitrators elect to award interest in light of the circumstances. The payment of such interest
shall not limit a party from exercising any other rights it may have as a consequence of the
lateness of any payment.



9. Intellectual Property




     9.1 Ownership of Inventions. Inventorship of inventions conceived of and reduced to practice
in the course of the Development Program (“Inventions”) shall be determined in accordance with the
rules of inventorship under United States patent laws. Replidyne shall own all Inventions
conceived of and reduced to practice in the course of the Development Program solely by its
employees and contractors (“Replidyne Inventions”), and all Replidyne Patents. Forest shall own
all Inventions conceived of and reduced to practice in the course of the Development Program solely
by its or its Affiliate’s employees and contractors (“Forest Inventions”), and all Forest Patents.
All Inventions conceived of and reduced to practice in the course of the Development Program
jointly by one or more employees or contractors of Forest or its Affiliate and one or more
employees or contractors of Replidyne (“Joint Inventions”), and all Joint Patents, shall be owned
jointly by Forest and Replidyne. Forest’s interest in Joint Patents shall be deemed Forest
Technology for purposes of the rights granted to Replidyne in Section 2.3.





[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




45.









 








     9.2 Patent Prosecution and Maintenance.



          (a) DAP Patents. Forest acknowledges that DAP is responsible for prosecution and maintenance
of all DAP Patents under the DAP Agreement. Replidyne shall keep Forest informed of progress with
regard to the prosecution and maintenance of the DAP Patents by providing Forest with all copies of
official actions, amendments and responses with respect to such prosecution and will exercise its
rights under the DAP Agreement to require DAP to provide all such documents and related information
for purposes of this Section. Replidyne shall exercise its rights under the DAP Agreement to
require DAP to consult with Replidyne in the prosecution and maintenance of the DAP Patents in the
Territory and will request that DAP include Forest in such consultation (or will make such comments
to DAP as requested by Forest in the course of such consultation). Without limiting the generality
of the foregoing, Replidyne will communicate to DAP Forest’s comments on any related document that
DAP intends to file or to cause to be filed with the relevant governmental authority in advance of
such filing and shall exercise its rights under the DAP Agreement to require DAP not to
unreasonably deny or delay any actions recommended by Forest in its comments.




          (b) Replidyne Patents. Replidyne shall be responsible for the preparation, filing,
prosecution and maintenance of the Replidyne Patents at its own expense. Replidyne shall keep
Forest informed of progress with regard to the preparation, filing, prosecution and maintenance of
Replidyne Patents and consider in good faith the requests and suggestions of Forest with respect to
strategies for filing and prosecuting the Replidyne Patents. In the event that Replidyne
determines that the patent costs exceed the value of any Replidyne Patent claiming the manufacture,
use or sale of a Product being developed or commercialized by or on behalf of Forest pursuant to a
license granted under this Agreement, Replidyne shall (i) provide reasonable prior written notice
to Forest of such determination (which notice shall, in any event, be given no later than sixty
(60) days prior to the next deadline for any action that may be taken with respect to such
Replidyne Patent with the U.S. Patent & Trademark Office or any foreign patent office) and (ii) at
Forest’s election with regard to any Replidyne Patent, Replidyne will continue to prosecute and
maintain such Replidyne Patent at Forest’s expense and direction.




          (c) Forest Patents. Forest shall be responsible for the preparation, filing, prosecution and
maintenance of the Forest Patents at Forest’s expense. Forest shall keep Replidyne informed of
progress with regard to the preparation, filing, prosecution and maintenance of Forest Patents and
consider in good faith the requests and suggestions of Replidyne with respect to strategies for
filing and prosecuting the Forest Patents. In the event that Forest desires to abandon any Forest
Patent claiming the manufacture, use or sale of a Product being developed or commercialized by or
on behalf of Forest pursuant to a license granted under this Agreement, Forest shall provide
reasonable prior written notice to Replidyne of such intention to abandon (which notice shall, in
any event, be given no later than sixty (60) days prior to the next deadline for any action that
may be taken with respect to such Forest Patent with the U.S. Patent & Trademark Office or any
foreign patent office) and provide Replidyne an opportunity to assume, at Replidyne’s cost,
responsibility for such Forest Patent. At Replidyne’s request, Forest shall permit Replidyne to
submit foreign equivalents of any Patents filed by Forest in the Territory with claims relating
exclusively to the Product, at Replidyne’s expense, using counsel reasonably acceptable to Forest.




[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




46.









 








          (d) Joint Patents. The parties shall mutually determine which party shall be responsible for
the preparation, filing, prosecution and maintenance of Joint Patents, in appropriate countries
throughout the world. Replidyne and Forest shall share equally the costs for preparation, filing,
prosecuting and/or maintaining Joint Patents, except as provided below. The prosecuting party
shall consult with the other party as to the preparation, filing, prosecution and maintenance of
the Joint Patents reasonably prior to any deadline or action with the U.S. Patent & Trademark
Office or any foreign patent office, and shall furnish to the other party copies of all relevant
documents reasonably in advance of such consultation. If the prosecuting party desires to abandon
any Joint Patent for which it is responsible, or if the prosecuting party later declines
responsibility for any Joint Patent, the prosecuting party shall provide reasonable prior written
notice to the other party of such intention to abandon or decline responsibility (which notice
shall, in any event, be given no later than sixty (60) days prior to the next deadline for any
action that may be taken with respect to such Joint Patent with the U.S. Patent & Trademark Office
or other patent office in the Territory), and the other party shall have the right, at its expense,
to prepare, file, prosecute, and maintain such Joint Patent, in which case the prosecuting party
shall assign all of its right, title and interest in such Joint Patent to the other party, and,
upon such assignment, such Joint Patent(s) shall become the sole property of the other party,
subject only to the licenses granted herein.




          (e) Patent Strategy. Notwithstanding anything to the contrary set forth herein, strategic
decisions relating to the prosecution (including decisions relating to reexamination or reissue of
issued patents) of DAP Patents, Replidyne Patents or Forest Patents in the Territory and material
components of the implementation of such decisions shall require the consensus of Forest, Replidyne
and DAP (as to DAP, to the extent provided by the DAP Agreement).




     9.3 Cooperation of the Parties. Each party agrees to cooperate fully in the preparation,
filing, prosecution and maintenance of any Patents under this Agreement and in the obtaining and
maintenance of any patent extensions, supplementary protection certificates and the like with
respect to any Patent claiming a Product being developed or commercialized in accordance with this
Agreement. Such cooperation includes, but is not limited to:



          (a) executing all papers and instruments, or requiring its employees or contractors, to
execute such papers and instruments, so as to effectuate the ownership of Inventions set forth in
Section 9.1, and the ownership of Patents as provided in this Agreement, and to enable the other
party to apply for and to prosecute patent applications in any country; and




          (b) promptly informing the other party of any matters coming to such party’s attention that
may affect the preparation, filing, prosecution or maintenance of any such patent applications.




     9.4 Infringement by Third Parties.




     (a) Notification. Replidyne and Forest shall promptly notify the other in writing of any
alleged or threatened infringement in the Territory of any Licensed Patent, Forest Patent, Joint
Patent or Trademark of which they become aware. Both parties shall use their commercially
reasonable efforts in cooperating with each other to terminate such infringement




[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




47.









 







without
litigation, if appropriate.




          (b) Licensed Patents, Forest Patents and Joint Patents. Subject to mutual agreement of the
parties with respect to litigation strategy and consultation by Forest with Replidyne with respect
to all material decisions, [ *** ] shall have the first right to bring and control any action or
proceeding with respect to infringement of any of the Licensed Patents, Joint Patents or Forest
Patents, including any action or proceeding filed in connection with an ANDA filed by a Third Party
(an “ANDA Proceeding”) related to the Licensed Patents, Joint Patents or Forest Patents, in the
Territory, subject to this Section 9.4(b). [ *** ] shall manage the action or proceeding on a
day-to-day basis and shall keep [ *** ] updated regarding the status and costs of such action or
proceeding. [ *** ] shall have the right to be represented in any such action or proceeding by
counsel of its own choice. [ *** ] may enter into a financial settlement or other compromise in
connection with an action or proceeding it brings; provided, that [ *** ] shall be required to
obtain [ *** ]’s prior written consent before entering into any such settlement or other compromise
that involves a grant of rights under the Licensed Patents or Joint Patents or that otherwise
diminishes the rights or interests of [ *** ] in any manner, such consent not to be unreasonably
withheld. If [ *** ] fails to bring such an action or proceeding within (i) [ *** ] days following
the notice of alleged infringement or (ii) [ *** ] days before the time limit, if any, set forth in
the Applicable Laws for the filing of such actions or the waiver of any legal rights associated
therewith, whichever comes first, [ *** ] shall have the right to bring and control any such action
and by counsel of its own choice, and [ *** ] shall have the right, at its own expense, to be
represented in any such action by counsel of its own choice. If [ *** ] brings any such action or
proceeding, [ *** ] shall keep [ *** ] updated regarding the status and costs of such action or
proceeding. Irrespective of which party brings and controls any such action or proceeding, [ ***
]. If the party that brings such action or proceeding finds it legally necessary to join DAP as a
party to such action or proceeding, Replidyne will exercise its rights under the DAP Agreement
(including the Letter Agreement) to cause DAP to be joined as a party plaintiff to any such action
or proceeding or will permit by Forest to enforce Replidyne’s rights under the DAP Agreement to do
so. Forest acknowledges that, if neither Forest nor Replidyne commences an infringement suit or
action or settlement negotiations with the alleged infringer within [ *** ] days after (A)
Replidyne receives notification from DAP of any such infringement or (B) Replidyne sends notice to
DAP of such action, as applicable, DAP may bring an appropriate suit or action against the Third
Party infringer.




          (c) Cooperation. In the event a party brings an infringement action in accordance with this
Section 9.4, the other party shall cooperate fully, including, if required to bring such action,
the furnishing of a power of attorney or being named as a party. Neither party shall have the
right to settle any patent infringement litigation under this Section 9.4 relating to any Patent
claiming the manufacture, use or sale of the Products being developed or commercialized pursuant to
this Agreement without the prior written consent of such other party, such consent not to be
unreasonably withheld. [ *** ].




     9.5 Infringement of Third Party Rights. Each party shall promptly notify the other in writing
of any allegation by a Third Party that the activity of either of the parties pursuant to this
Agreement infringes or may infringe the intellectual property rights of such Third Party. Forest
shall have the sole right, subject to the following provisions of this Section, to control the
defense of any such claim involving alleged infringement of Third Party rights by the sale of the




[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




48.









 







Product, [ *** ] by counsel of its own choice, and Replidyne shall have the right, at its own
expense, to be represented in any such action by counsel of its own choice. Forest will keep
Replidyne fully informed of the status of and developments with respect to any such action and will
consult with Replidyne as to strategic decisions with respect thereto. The parties shall cooperate
in the defense of any such claim, [ *** ]. Neither party shall have the right to settle any patent
infringement litigation under this Section 9.5 in a manner that diminishes the rights or interests
of the other party without the written consent of such other party (which shall not be unreasonably
withheld).




     9.6 Privileged Communications. In furtherance of this Agreement, it is expected that Forest
and Replidyne will, from time to time, disclose to one another privileged communications with
counsel, including opinions, memoranda, letters and other written, electronic and verbal
communications. Such disclosures are made with the understanding that they shall remain
confidential, they will not be deemed to waive any applicable attorney-client privilege and that
they are made in connection with the shared community of legal interests existing between Replidyne
and Forest, including the community of legal interests in avoiding infringement of any valid,
enforceable patents of Third Parties and maintaining the validity of Patents included in Licensed
Technology, Forest Patents and Joint Patents.



10. Representations and Warranties




     10.1 Mutual Representations and Warranties. Each party represents and warrants to the other
that:



          (a) it is duly organized and validly existing under the laws of its jurisdiction of
incorporation or formation, and has full corporate or other power and authority to enter into this
Agreement and to carry out the provisions hereof;




          (b) it is duly authorized to execute and deliver this Agreement and to perform its obligations
hereunder, and the person or persons executing this Agreement on its behalf has been duly
authorized to do so by all requisite corporate or partnership action;




          (c) this Agreement is legally binding upon it, enforceable in accordance with its terms, and
does not conflict with any agreement, instrument or understanding, oral or written, to which it is
a party or by which it may be bound, nor violate any material law or regulation of any court,
governmental body or administrative or other agency having jurisdiction over it; and




          (d) neither party nor its Affiliates has engaged any investment banker, broker or finder that
would impose any liability on the other party for fees, commissions or other charges in connection
with the execution of this Agreement, and any such fees, commissions or other charges are the sole
responsibility of the engaging party.




     10.2 Replidyne Representations and Warranties. Replidyne represents and warrants to Forest
that, as of the Effective Date:



     (a) Replidyne Controls the Licensed Patents and the Licensed Know-How and has the right to
grant the licenses to the Licensed Technology as provided in Section 2.1 and





[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




49.









 







Section 6.5.
Replidyne has not received, to Replidyne’s knowledge, any written or oral claim of ownership,
inventorship or patent infringement from any Third Party (including, without limitation, by current
or former employees, consultants or other Replidyne personnel) with respect to the Licensed
Patents, and Replidyne is not aware that DAP, Wyeth or Bayer has received any such claim and is not
aware of any reasonable basis for any such claim. To Replidyne’s knowledge, the development,
manufacture or commercialization of the Product in the Field in the Territory, as currently
conducted or proposed to be conducted by Replidyne, does not infringe any issued patent of any
Third Party. Replidyne is not subject to any royalty or similar payment obligation to any Third
Party with respect to the grant of rights to Replidyne to practice the Licensed Technology, except
as set forth in the DAP Agreement (a true copy of which, with confidential information redacted,
has been provided to Forest).




          (b) The DAP Agreement remains in full force and effect and, to Replidyne’s knowledge, DAP is
not in material breach under the DAP Agreement. Replidyne has paid all amounts due and payable
under the DAP Agreement to the extent accrued on or before the Effective Date and is not in
material breach under the DAP Agreement.




     10.3 Debarment; Proceedings. During the Term, neither of the parties shall knowingly use any
employee, representative, agent, assistant or associate who has been debarred by the FDA pursuant
to 21 U.S.C. Section 335 (a) or (b) of the United States Federal Food Drug and Cosmetic Act (21
U.S.C. Section 301 et seq.), as amended from time to time, in connection with any of the activities
to be carried out under this Agreement. In addition, as of the Effective Date, neither party is
subject to any proceeding by any regulatory authority having jurisdiction over the registration,
manufacture or marketing of pharmaceutical products which could reasonably be expected to prevent
or delay such party’s completion of its responsibilities under the Development Plan.



     10.4 Disclaimer. Except as expressly set forth herein, the technology and intellectual
property rights provided by each party hereunder are provided “as is” and each party expressly
disclaims any and all warranties of any kind, express or implied, including without limitation any
warranties of merchantability, fitness for a particular purpose, title, non-infringement of the
intellectual property rights of third parties, or arising from a course of dealing, usage or trade
practices, in all cases with respect thereto. Without limiting the generality of the
foregoing, neither party warrants (a) the success of any study or test commenced under the
Development Program or (b) the safety or usefulness for any purpose of the technology it provides
hereunder.



     10.5 Limitation of Liability. EXCEPT FOR FRAUDULENT BREACHES OF THE REPRESENTATIONS
AND WARRANTIES IN Article 10 or liability for breach of Section 2.1 or Article 11,
neither party shall be entitled to recover from the other party any special, incidental,
consequential or punitive damages in connection with this agreement or any license granted
hereunder; provided, however, that this Section 10.5 shall not be construed to limit either party’s
indemnification obligations under Article 13. The Parties agree that payments accrued and payable
under Article 7 are general (not special, incidental, consequential or punitive) damages.



[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




50.










 







11. Confidentiality




     11.1 Confidential Information. Except to the extent expressly authorized by this Agreement or
otherwise agreed in writing by the parties, the parties agree that, during the Term and for five
(5) years thereafter, the receiving party shall keep confidential and shall not publish or
otherwise disclose and shall not use for any purpose other than as expressly provided for in this
Agreement any data, information, documentation, know-how and technology furnished to it by the
other party pursuant to this Agreement or developed as part of the Development Program hereunder
(collectively, “Confidential Information”). Each party may use such Confidential Information only
to the extent required to accomplish the purposes of this Agreement. Each party will use at least
the same standard of care as it uses to protect proprietary or confidential information of its own
to ensure that its employees, agents, consultants and other representatives do not disclose or make
any unauthorized use of the Confidential Information. Each party will promptly notify the other
upon discovery of any unauthorized use or disclosure of the Confidential Information.



     11.2 Exceptions. Confidential Information shall not include any information which the
receiving party can prove by competent written evidence:



          (a) is now, or hereafter becomes, through no act or failure to act on the part of the
receiving party, generally known or available;




          (b) is known by the receiving party at the time of receiving such information, as evidenced by
its records;




          (c) is hereafter furnished to the receiving party by a Third Party, as a matter of right and
without restriction on disclosure;




          (d) is independently discovered or developed by the receiving party without the use of
Confidential Information belonging to the disclosing party; or




          (e) is the subject of a written permission to disclose provided by the disclosing party.




     11.3 Authorized Disclosure. Each party may disclose Confidential Information belonging to the
other party to the extent such disclosure is reasonably necessary in the following instances:



          (a) filing or prosecuting Patents as permitted by this Agreement;




          (b) regulatory filings for Products such party has a license or right to develop hereunder or
otherwise conducting development and/or commercialization activities in accordance with this
Agreement;




          (c) prosecuting or defending litigation as permitted by this Agreement;




          (d) complying with applicable court orders or governmental regulations; and





[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




51.









 








          (e) disclosure to Affiliates, sublicensees, licensors (including DAP), contractors, employees,
consultants, bankers, lawyers, accountants, agents or other Third Parties in connection with due
diligence or similar investigations by such Third Parties, and disclosure to potential Third Party
investors in confidential financing documents; provided, in each case, that any such Affiliate,
sublicensee, contractor, employee, consultant, banker, lawyer, accountant, agent or Third Party
agrees to be bound by terms of confidentiality and non-use comparable in scope to those set forth
in this Article 11.



Notwithstanding the foregoing, in the event a party is required to make a disclosure of the other
party’s Confidential Information pursuant to Section 11.3(c) or (d), it will, except where
impracticable, give reasonable advance notice to the other party of such disclosure and use efforts
to secure confidential treatment of such information at least as diligent as such party would use
to protect its own confidential information, but in no event less than reasonable efforts. In any
event, the parties agree to take all reasonable action to avoid disclosure of Confidential
Information hereunder. The parties will consult with each other on the provisions of this
Agreement to be redacted in any filings made by the parties with the Securities and Exchange
Commission or as otherwise required by law.




     11.4 Publicity. It is understood that the parties intend to issue a joint press release
announcing the execution of this Agreement and agree that each party may desire or be required to
issue subsequent press releases relating to this Agreement or activities performed hereunder. The
parties agree to consult with each other reasonably and in good faith with respect to the text and
timing of such press releases prior to the issuance thereof; provided that a party may not
unreasonably withhold consent to such releases, and that either party may issue such press releases
as it determines, based on advice of counsel, are reasonably necessary to comply with laws or
regulations or for appropriate market disclosure. In addition, following the initial joint press
release announcing this Agreement, either party shall be free to disclose, without the other
party’s prior written consent, the existence of this Agreement, the identity of the other party and
those terms of the Agreement which have already been publicly disclosed in accordance herewith.
Forest acknowledges that Replidyne is required under the DAP Agreement to review with DAP certain
press releases relating to the DAP Agreement and may require that DAP-related information be
inserted or deleted from press releases proposed by the parties under this Agreement.



12. Term and Termination




     12.1 Term. The term of this Agreement shall commence on the Effective Date and continue until
the expiration of the last Royalty Term for any Product with respect to which Forest has a license,
unless earlier terminated pursuant to the further provisions hereof (the “Term”).



     12.2 Forest Right of Termination. Forest reserves the right to terminate this Agreement in
its entirety at any time effective upon [ *** ] days prior written notice to
Replidyne in the event Forest reasonably believes issues of safety or efficacy (which arise or
become more significant following the Effective Date) are reasonably likely to (a) prevent
regulatory approval of the Product in the United States, (b) materially delay such approval or (c)
substantially negatively impact the marketing potential of the Product in the United States, in



[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




52.









 







each case without regard to the particular circumstances of Forest, including any other product
opportunities of Forest. Prior to any notice of termination under this Section 12.2, the parties
will discuss such issues for a period of up to [ *** ] days, which discussions shall include a
face-to-face meeting of the Chief Executive Officer of Replidyne and the Chief Executive Officer of
Forest Parent if requested by either party. Forest shall have no obligation to develop, promote or
sell the Product during [ *** ] notice period, if Forest’s intent to terminate is based upon safety
issues. Forest shall have no obligation to pay to Replidyne any milestone payment under Section
7.2 with respect to a milestone event achieved during such discussion period or notice period;
provided that Forest actually terminates the Agreement effective at the end of the [ *** ]-day
notice period.




     12.3 Termination for Material Breach.



          (a) Material Breach. Subject to Section 12.3(b), each party shall have the right to
terminate this Agreement and its obligations hereunder for material breach by the other party,
which breach remains uncured for sixty (60) days (ten (10) days in the event of failure to make any
payment when due), after written notice is provided to the breaching party specifying the nature of
the breach in reasonable detail and demanding its cure. In the case of a non-payment related
material breach, if such breach cannot be cured within the sixty (60) day cure period, this
Agreement shall not terminate if the breaching party has made diligent efforts to cure such breach
within the sixty (60) day period and this Agreement shall remain in effect for such period after
notice of breach as may be reasonable in the circumstances as long as the breaching party continues
to use diligent efforts to pursue the cure with a reasonable expectation that cure will be effected
as promptly as practicable thereafter. As an alternative to termination of this Agreement in its
entirety, in the case of any uncured material breach by Replidyne (other than a breach as described
in Section 12.3(b)), Forest may terminate the Replidyne Specialist Promotion Period and the
Pediatrician Promotion Rights, together with other operational rights, as more fully described, and
with consequences set forth, in Section 12.5(e). In the event the parties in good faith dispute
the existence of a material breach or a party’s diligence in attempting to cure a material breach,
termination of this Agreement shall not be deemed to occur unless and until such dispute has been
referred for resolution in accordance with Section 14 hereof, material breach of the Agreement or
failure to make diligent efforts to cure such breach has been established by an arbitration
thereunder and, if such breach can be cured by the payment of money or the taking of specific
remedial actions, the breaching party does not pay the amount so determined to be due within ten
(10) days of receipt of the arbitration decision or otherwise diligently undertake and complete
such remedial actions within the timeframe established by such arbitration decision.




          (b) Material Breach Regarding Target Specialist or Pediatrician Promotion Efforts. In
the event of an uncured material breach by Replidyne of this Agreement with respect to the conduct
of Replidyne’s promotion efforts directed to Target Specialists (other than as provided in Section
5.4(h)) or Replidyne’s performance of the Pediatrician Promotion Rights (other than as provided in
Section 2.4(g) of Schedule 5.5), after any dispute resolution in
accordance with Article 14, the remedy of termination shall only be effective with respect to
Replidyne’s continued performance of promotional efforts to Target Specialists as provided in
Section 5.4 and the Pediatrician Promotion Rights as provided in Schedule 5.5, and all other
provisions of this Agreement shall remain in full force and effect in accordance with their terms.




[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




53.









 








     12.4 Termination for Insolvency. This Agreement may be terminated by either party upon at
least sixty (60) days’ prior written notice thereof if the other party makes a general assignment
for the benefit of creditors, is the subject of proceedings in voluntary or involuntary bankruptcy
instituted on behalf of or against such party, or has a receiver or trustee appointed for all or
substantially all of its property; provided that in the case of an involuntary bankruptcy
proceeding such right to terminate shall only become effective if the party consents to the
involuntary bankruptcy or such proceeding is not dismissed within ninety (90) days after the filing
thereof.



     12.5 Rights following Expiration of Term or Termination.



          (a) Expiry of Term Under Section 12.1. Upon expiration of the Term pursuant to
Section 12.1, Forest shall have a fully-paid, perpetual, non-exclusive license to the Licensed
Technology and, for so long as Forest continues to sell the Product in the Territory) a fully paid,
exclusive license to the Trademark in connection with the manufacture, marketing, sale and
distribution of the Product in or for purposes of the Territory.




          (b) Termination of this Agreement by Forest Under Section 12.2 or Replidyne Under Section
12.3(a) or 12.4. In the event of a termination by Forest pursuant to Section 12.2 or by
Replidyne pursuant to Section 12.3(a) or 12.4, Forest shall furnish Replidyne with reasonable
cooperation to assure a smooth transition of any or all aspects of the on-going Product programs
which Replidyne determines to continue, including without limitation, clinical studies, regulatory
activities, manufacture and supply and marketing and promotion, and Forest shall continue to
perform any of such activities (except under the circumstances regarding safety issues provided in
Section 12.2), as may be requested by Replidyne, for a period of up to six (6) months following
Forest’s notice of termination provided under Section 12.2. Such activities shall be performed
under the terms of this Agreement. However, if this results in a net loss to Forest over the
period from the 91st day to the end of the six (6) month transition period (i.e., income
attributable to such period less costs for such period), then Replidyne shall reimburse Forest to
the extent of such net loss, subject to receipt of supporting documentation. In addition,




               (i) all rights under the licenses granted under Sections 2.1, 2.3 and 6.5 shall automatically
terminate and revert to the granting party;



               (ii) Forest shall, and it hereby does (but only effective upon such termination), grant to
Replidyne a worldwide, exclusive (even as to Forest), perpetual, fully paid license, with the right
to sublicense, under the Forest Technology and Forest’s interest in the Joint Patents, to make,
have made, use, sell, have sold, offer for sale and import Products;



               (iii) Forest shall (A) transfer to Replidyne as soon as reasonably practicable all data and
information in Forest’s or its Affiliates’ possession relating to any Product as may be necessary
to enable Replidyne to practice the license granted under
Section 12.5(b)(ii), (B) transfer and assign to Replidyne all of its right, title and interest
in and to all INDs, NDAs, drug dossiers and master files with respect to any and all Products, (C)
assign and transfer to Replidyne all of Forest’s rights and obligations under any Third Party
manufacturing contracts entered into by Forest in connection with the Product, (D) sell to
Replidyne Forest’s remaining Product inventory, at a transfer price not to exceed Forest’s cost,


[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




54.









 







and (E) take such other actions and execute such other instruments, assignments and documents as
may be necessary to effect the transfer of rights hereunder to Replidyne; and




               (iv) Forest will destroy or return all Replidyne Confidential Information to Replidyne.


Except as provided by this Section, Forest shall have no further obligation to Replidyne in respect
of the termination of this Agreement pursuant to this Section, including, without limitation, the
payment of any milestone payment the time for payment of which has not occurred as of the notice of
termination by Forest in accordance with Section 7.2 hereof.




          (c) Termination of this Agreement by Forest under Section 12.3(a) or Section 12.4.
Upon any termination of this Agreement by Forest pursuant to Section 12.3(a) or 12.4,




               (i) all rights under the licenses granted under Sections 2.1, 2.3 and 6.5 shall automatically
terminate and revert to the granting party; and



               (ii) Forest will destroy or return to Replidyne all Confidential Information of Replidyne, and
Replidyne shall destroy or return all Confidential Information of Forest to Forest.



          (d) Termination by Forest under Section 12.3(b). If Forest terminates the Replidyne
Specialist Promotion Period and the Pediatrician Promotion Rights pursuant to Section 12.3(b),
Forest shall assume responsibility for promotion of the Product to Target Specialists and
Pediatricians, and shall use Commercially Reasonable Efforts to do so in accordance with the terms
of this Agreement. Upon any termination of such rights by Forest pursuant to Section 12.3(b),
Replidyne shall provide such transition activities as Forest may reasonably request, for up to
ninety (90) days, including, without limitation, arranging for meetings between members of the
applicable Replidyne sales force and sales representatives of Forest, to assure a smooth transition
of marketing to Target Physicians and Pediatricians, as the case may be. In addition, Replidyne
shall destroy or return to Forest all Forest Confidential Information pertaining to such promotion
activities and will transfer to Forest, as soon as reasonably practicable, data in Replidyne’s or
its Affiliates possession comparable to the data referred to in subsection (b)(iii) above.




          (e) Termination by Forest Under Section 12.3(a). If Forest elects to terminate the
Replidyne Specialist Promotion Period, the Pediatrician Promotion Rights and other operational
rights pursuant to the penultimate sentence of Section 12.3(a), the following shall apply:




               (i) Such termination will be effected in the manner set forth in
subsection (d) above, Replidyne shall be obligated to perform the transitional activities
provided by such subsection and Forest shall assume the additional responsibilities for Product
promotion to the extent provided by such subsection;



               (ii) Replidyne’s rights to participate in the JDC, JMC or CGC shall



 [ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.



55.









 







terminate; provided that
in any event Forest will continue to periodically provide information to Replidyne with respect to
manufacturing, development, intellectual property and commercialization matters to the extent
reasonably related to Replidyne’s continuing rights under the Agreement. Notwithstanding the
preceding, Replidyne shall not be obligated to incur or reimburse Development Costs accruing from
and after such termination, except for those Development Costs approved by the JDC with Replidyne’s
participation or to the extent of commercially reasonable development efforts consistent with the
previously agreed Development Plan;




               (iii) Each of the licenses granted to Forest by Section 2.1 shall be construed in such manner
so as to give effect to the termination of Replidyne’s promotional (and, if applicable, other
operational) rights; and



               (iv) Without limiting the generality of the termination of the Pediatrician Promotion Rights,
from and after such termination, Forest shall no longer be required to extend any further credit
pursuant to Section 4.1 of Schedule 5.5.



     12.6 Survival. Termination of this Agreement, in whole or in part, shall not relieve the
parties of any liability or obligation which accrued hereunder prior to the effective date of such
termination nor, except as otherwise specifically provided herein, preclude either party from
pursuing all rights and remedies it may have hereunder or at law or in equity with respect to any
breach of this Agreement nor prejudice either party’s right to obtain performance of any
obligation. In addition, termination of this Agreement shall not terminate provisions which
provide by their respective terms for obligations or undertakings following the expiration of the
term of this Agreement.



     12.7 Exercise of Right to Terminate. The use by either party hereto of a termination right
provided for under this Agreement shall not give rise to the payment of damages or any other form
of compensation or relief to the other party with respect thereto.



     12.8 Damages; Relief. Subject to Section 12.7 above, termination of this Agreement shall not
preclude either party from claiming any other damages, compensation or relief that it may be
entitled to upon such termination.



     12.9 Rights in Bankruptcy. All rights and licenses granted under or pursuant to this
Agreement by Forest or Replidyne are, and will otherwise be deemed to be, for purposes of Section
365(n) of the U.S. Bankruptcy Code, licenses of right to “intellectual property” as defined under
Section 101 of the U.S. Bankruptcy Code. The parties agree that the parties, as licensees of such
rights under this Agreement, will retain and may fully exercise all of their rights and elections
under the U.S. Bankruptcy Code. The parties further agree that, in the event of the commencement
of a bankruptcy proceeding by or against either party under the U.S. Bankruptcy Code, the party
hereto that is not a party to such proceeding will be entitled to a
complete duplicate of (or complete access to, as appropriate) any such intellectual property
and all embodiments of such intellectual property, and same, if not already in their possession,
will be promptly delivered to them (i) upon any such commencement of a bankruptcy proceeding upon
their written request therefor, unless the party subject to such proceeding elects to continue to
perform all of its obligations under this Agreement, or (ii) if not delivered under (i) above,



 [ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.



56.









 







following the rejection of this Agreement by or on behalf of the party subject to such proceeding
upon written request therefor by the non-subject party.




     12.10 Effect of Termination of DAP Agreement. All rights in the Bayer Know-How, Ciba-Geigy
Patents, DAP Know-How and DAP Patents that revert to DAP upon termination of the DAP Agreement in
accordance with its terms shall, in the event of termination of the DAP Agreement, cease to be
subject to this Agreement (other than the provisions of Article 11).



13. Indemnification




     13.1 Indemnification by Replidyne. Replidyne hereby agrees to save, defend and hold Forest
and its Affiliates and their respective directors, officers, employees and agents (each, a “Forest
Indemnitee”) harmless from and against (a) any and all liabilities, expenses and/or losses,
including reasonable legal expense and attorneys’ fees (collectively, “Losses”), to which any
Forest Indemnitee may become subject as a result of any claim, demand, action or other proceeding
by any Third Party to the extent such Losses arise directly or indirectly out of: (i) the practice
by Replidyne of any license granted to it hereunder, (ii) the development, manufacture, use,
handling, storage, promotion, marketing or sale or other disposition of any Product by Replidyne or
its Affiliates or sublicensees (other than Forest and its Affiliates and sublicensees), but
excluding any liability for personal injury or property damage arising in connection with the
Product in the Territory (except as provided in Section 13.1(a)(iii) and subject to Section 5 of
Schedule 5.5, if applicable), (iii) liability for personal injury or property damage arising in
connection with the Product in the Territory to the extent attributable to the negligence or
willful misconduct of Replidyne or its Affiliates or licensees (other than Forest and its
Affiliates and sublicensees) and their respective directors, officers, employees and agents, or
(iv) the breach by Replidyne of any warranty, representation, covenant or agreement made by
Replidyne in this Agreement; except, in each case, to the extent such Losses result from the
negligence or willful misconduct of any Forest Indemnitee or the breach by Forest of any warranty,
representation, covenant or agreement made by Forest in this Agreement, and (b) any Losses to which
Forest may become subject as a result of any claim, demand, action or other proceeding by DAP
against Forest as a result of Forest reasonably withholding consent to use of the Trademark outside
the Territory pursuant to Section 2.5(d).



     13.2 Indemnification by Forest. Forest hereby agrees to save, defend and hold Replidyne and
its Affiliates, DAP and its Affiliates and their respective directors, officers, employees and
agents (each, a “Replidyne Indemnitee”) harmless from and against any and all Losses to which any
Replidyne Indemnitee may become subject as a result of any claim, demand, action or other
proceeding by any Third Party to the extent such Losses arise directly or indirectly out of: (i)
the practice by Forest of any license granted to it hereunder, (ii) the development, manufacture,
use, handling, storage, promotion, marketing, sale or other disposition of any Product by Forest or
its Affiliates or sublicensees, (iii) any liability for
personal injury or property damage arising in connection with use of the Product in the
Territory (except as provided in Section 13.1(a)(iii) and subject to Section 5 of Schedule 5.5, if
applicable), or (iv) the breach by Forest of any warranty, representation, covenant or agreement
made by Forest in this Agreement; except, in each case, to the extent such Losses result from the
negligence or willful misconduct of any Replidyne Indemnitee or the breach by Replidyne of any
warranty, representation, covenant or agreement made by Replidyne in this Agreement.


[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




57.









 








     13.3 Control of Defense. Any entity entitled to indemnification under this Article 13 shall
give notice to the indemnifying party of any Losses that may be subject to indemnification,
promptly after learning of such Losses, and the indemnifying party shall assume the defense of such
Losses with counsel reasonably satisfactory to the indemnified party. If such defense is assumed
by the indemnifying party with counsel so selected, the indemnifying party will not be subject to
any liability for any settlement of such Losses made by the indemnified party without its consent
(but such consent will not be unreasonably withheld or delayed), and will not be obligated to pay
the fees and expenses of any separate counsel retained by the indemnified party with respect to
such Losses.



     13.4 Insurance. Each party, at its own expense, shall maintain such types and amounts of
liability insurance (or self-insure) as are appropriate for the activities for which it is
responsible under this Agreement and consistent with industry standards during the Term and shall
name the other party to this Agreement as an additional insured with respect to such insurance.
The insured party shall provide a certificate of insurance (or evidence of self-insurance)
evidencing such coverage to the other party upon request.



14. Dispute Resolution




     14.1 Dispute Resolution. Any dispute arising under or relating to the parties rights and
obligations under this Agreement will be referred to the Chief Executive Officer of Replidyne and
the Chief Executive Officer of Forest, or the Chief Executive Officer of any Affiliate of Forest
that is primarily responsible for the activities of Forest under this Agreement, as directed by
Forest, for resolution. In the event the two Chief Executive Officers are unable to resolve such
dispute within (30) days of such dispute being referred to the officers, the dispute shall be
subject to arbitration, as provided in Section 14.2. Notwithstanding the preceding, the parties
acknowledge that the failure of the JMC, JDC, JSC or CGC to reach consensus as to any matter, which
failure does not involve a breach by a party of its obligations hereunder, shall not be deemed a
dispute which may be referred for resolution by arbitration hereunder.



     14.2 Arbitration.



               (a) Claims. Any claim, dispute, or controversy of whatever nature arising between the parties
out of or relating to this Agreement that is not resolved under Section 14.1 within the required
thirty (30) day time period, including without limitation, any action or claim based on tort,
contract, or statute (including any claims of breach or violation of statutory or common law
protections from discrimination, harassment and hostile working environment), or concerning the
interpretation, effect, termination, validity, performance and/or breach of this Agreement
(“Claim”), shall be resolved by final and binding arbitration before a panel of three experts with
relevant industry experience (the “Arbitrators”). One Arbitrator shall
be chosen by Replidyne and one Arbitrator shall be chosen by Forest within fifteen (15) days
from the notice of initiation of arbitration. The third Arbitrator shall be chosen by mutual
agreement of the Arbitrator chosen by Replidyne and the Arbitrator chosen by Forest within fifteen
(15) days of the date that the last of such Arbitrators were appointed. The Arbitrators shall be
administered by the International Chamber of Commerce (the “Administrator”) in accordance with its
then existing arbitration rules or procedures regarding commercial or business disputes. The
arbitration shall be held in Denver, Colorado if requested by Forest and in New York, New York



[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




58.









 







if
requested by Replidyne. The arbitrators shall be instructed by the parties to complete the
arbitration within ninety (90) days after selection of the final Arbitrator.




               (b) Arbitrators’ Award. The Arbitrators shall, within fifteen (15) calendar days after the
conclusion of the arbitration hearing, issue a written award and statement of decision describing
the essential findings and conclusions on which the award is based, including the calculation of
any damages awarded. The decision or award rendered by the Arbitrators shall be final and
non-appealable, and judgment may be entered upon it in accordance with applicable law in the State
of New York or Colorado, as applicable, or any other court of competent jurisdiction. The
Arbitrators shall be authorized to award compensatory damages, but shall NOT be authorized (i) to
award non-economic damages, such as for emotional distress, pain and suffering or loss of
consortium, (ii) to award punitive damages, or (iii) to reform, modify or materially change this
Agreement or any other agreements contemplated hereunder; provided, however, that the damage
limitations described in parts (i) and (ii) of this sentence will not apply if such damages are
statutorily imposed.



               (c) Costs. Each party shall bear its own attorney’s fees, costs, and disbursements arising
out of the arbitration and the costs of the arbitrator selected by it, and shall pay an equal share
of the fees and costs of the third arbitrator; provided, however, the Arbitrators shall be
authorized to determine whether a party is the prevailing party, and if so, to award to that
prevailing party reimbursement for its reasonable attorneys’ fees, costs and disbursements
(including, for example, expert witness fees and expenses, photocopy charges, travel expenses,
etc.), and/or the fees and costs of the Administrator and the Arbitrators.



               (d) Compliance with this Agreement. Unless the parties otherwise agree in writing, during the
period of time that any arbitration proceeding is pending under this Agreement, the parties shall
continue to comply with all those terms and provisions of this Agreement that are not the subject
of the pending arbitration proceeding.



               (e) Injunctive or Other Equity Relief. Nothing contained in this Agreement shall deny any
party the right to seek injunctive or other equitable relief from a court of competent jurisdiction
in the context of a bona fide emergency or prospective irreparable harm, and such an action may be
filed and maintained notwithstanding any ongoing arbitration proceeding.



15. General Provisions




     15.1 Standstill. During the Term (the “Standstill Period”), a party will not, without the
prior written consent of the other party, in any manner, directly or indirectly:



          (a) make, effect, initiate, cause or participate in (i) any acquisition of beneficial
ownership of any securities of the other party or any securities of any Affiliate of such other
party (other than de minimus investments as part of normal cash management activities), (ii) any
acquisition of any assets of the other party or any assets of any Affiliate of such other party,
(iii) any tender offer, exchange offer, merger, business combination, recapitalization,
restructuring, liquidation, dissolution or extraordinary transaction involving the other party or
any Affiliate of such other party, or involving any securities or assets of the other party or any



[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




59.









 







securities or assets of any Affiliate of such other party, or (iv) any “solicitation” of “proxies”
(as those terms are used in the proxy rules of the Securities and Exchange Commission) or consents
with respect to any securities of the other party;




          (b) form, join or participate in a “group” (as defined in the Securities Exchange Act of 1934
and the rules promulgated thereunder) with respect to the beneficial ownership of any securities of
the other party;




          (c) act, alone or in concert with others, to seek to control or influence the management,
board of directors or policies of the other party;




          (d) take any action that might require the other party to make a public announcement regarding
any of the types of matters set forth in Section 15.1(a);




          (e) agree or offer to take, or encourage or propose (publicly or otherwise) the taking of, any
action referred to in Section 15.1(a), (b), (c) or (d);




          (f) assist, induce or encourage any third party to take any action of the type referred to in
Section 15.1(a), (b), (c), (d) or (e);




          (g) enter into any discussions, negotiations, arrangement or agreement with any Third Party
relating to any of the foregoing.




     15.2 Governing Law. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of New York, excluding application of any conflict of laws principles that
would require application of different law.



     15.3 Entire Agreement; Modification. This Agreement is both a final expression of the
parties’ agreement and a complete and exclusive statement with respect to all of its terms. This
Agreement supersedes all prior and contemporaneous agreements and communications, whether oral,
written or otherwise, concerning any and all matters contained herein. This Agreement may only be
modified or supplemented in a writing expressly stated for such purpose and signed by the parties
to this Agreement.



     15.4 Relationship Between the Parties. The parties’ relationship, as established by this
Agreement, is solely that of independent contractors. This Agreement does not create any
partnership, joint venture or similar business relationship between the parties. Neither party is
a legal representative of the other party, and neither party can assume or create any obligation,
representation, warranty or guarantee, express or implied, on behalf of the other party for any
purpose whatsoever.



     15.5 Non-Waiver. The failure of a party to insist upon strict performance of any provision of
this Agreement or to exercise any right arising out of this Agreement shall neither impair that
provision or right nor constitute a waiver of that provision or right, in whole or in part, in that
instance or in any other instance. Any waiver by a party of a particular provision or right shall
be in writing, shall be as to a particular matter and, if applicable, for a particular period of
time and shall be signed by such party.



[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




60.









 








     15.6 Assignment; Change in Control. Except as expressly provided hereunder, neither this
Agreement nor any rights or obligations hereunder may be assigned or otherwise transferred by
either party without the prior written consent of the other party (which consent shall not be
unreasonably withheld); provided, however, that either party may assign this Agreement and its
rights and obligations hereunder without the other party’s consent:



          (a) in connection with the transfer or sale to a Third Party of all or substantially all of
the business of such party to which this Agreement relates, whether by merger, sale of stock, sale
of assets or otherwise; provided that the Third Party does not have a Competitive Product (except
under the circumstances provided under Section 5.10) and the Third Party provides a written
statement to the other party confirming that such Third Party is familiar with the terms of this
Agreement and will comply, or cause the acquired party or such other entity affiliated with the
Third Party that is the surviving entity in such transaction to comply, with the obligations of the
transaction party under this Agreement; and provided, further that in the event of such a
transaction (whether this Agreement is actually assigned or is assumed by the acquiring party by
operation of law (e.g., in the context of a reverse triangular merger)), intellectual property
rights of the acquiring party to such transaction (if other than one of the parties to this
Agreement) shall not be included in the intellectual property rights licensed hereunder; or




          (b) to an Affiliate, provided that the assigning party shall remain liable and responsible to
the non-assigning party hereto for the performance and observance of all such duties and
obligations by such Affiliate.



The rights and obligations of the parties under this Agreement shall be binding upon and inure to
the benefit of the successors and permitted assigns of the parties. Any assignment not in
accordance with this Agreement shall be void.




     Notwithstanding the preceding, in the event Forest is subject to a Change in Control (as
defined below) which has not been approved by the Board of Directors of Forest as constituted
immediately prior to such Change in Control, Replidyne shall have the right, but not the
obligation, to terminate this Agreement upon written notice furnished within sixty (60) days of
such Change in Control. In connection with any such termination by Replidyne pursuant to this
paragraph, Replidyne shall pay Forest the Fair Market Value of Forest’s rights under this Agreement
at such time, which payment shall be made in a lump-sum cash payment at the time of the
effectiveness of such termination or, if later, within thirty (30) business days following the
determination of Fair Market Value.



          (i) “Change of Control” shall mean (i) the acquisition, directly or indirectly, of beneficial
ownership of a percentage of the voting power of a party sufficient to exercise de
facto control over the policies and business decisions of a party or of all or
substantially all of the business or assets of such party (whether by way of merger, sale of stock,
sale of assets or otherwise) by any person or entity (including a “group” as defined in Section
13(d)-3 of the Securities Exchange Act of 1934 (the “Exchange Act”)) (provided that the acquisition
of less than fifty percent (50%) of such voting power shall not be deemed to constitute a “Change
of Control” for as long as the acquiror or “group” qualifies to report, and does in fact report,
its beneficial ownership on Schedule 13G in accordance with Rule 13(d)-1 promulgated under the



[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




61.









 







Exchange Act) or (ii) individuals who, for a period of at least two (2) consecutive years prior to
such determination (together with any other individuals whose election was approved by a two-thirds
(2/3) vote of the directors then in office) shall cease to constitute at any time a majority of the
members of the Board of Directors of such party.




          (ii) “Fair Market Value” shall mean with respect to a valuation required by any provision
hereof, the price which a willing buyer would pay, on an arm’s length basis, for all rights and
related intellectual property assets which comprise the assets, data or rights being valued, in
light of the status of development and reasonably anticipated risks and costs of further
development and the market potential for the commercialization of such assets, data or rights. In
any case where Fair Market Value must be determined, the determination shall be made by mutual
agreement of the parties through good faith negotiations based upon objective data possessed and
disclosed by both parties; provided that if no agreement as to Fair Market Value is reached after a
period of sixty (60) days, Fair Market Value shall be determined by a panel of three experts with
experience in the valuation of pharmaceutical products in the Territory, two of whom shall be
chosen by the parties, and the third, who will serve as chairperson, shall be chosen by the experts
selected by the parties, whose decision shall be binding and conclusive upon the parties.




     15.7 No Third Party Beneficiaries. This Agreement is neither expressly nor impliedly made for
the benefit of any party other than those executing it; provided that the parties acknowledge and
agree that DAP is intended to be a Third Party beneficiary of all provisions in this Agreement
specifically referring to DAP or a licensor of Replidyne or to obligations applicable to any
sublicensee of Replidyne under the DAP Agreement.



     15.8 Severability. If, for any reason, any part of this Agreement is adjudicated invalid,
unenforceable or illegal by a court of competent jurisdiction, such adjudication shall not affect
or impair, in whole or in part, the validity, enforceability or legality of any remaining portions
of this Agreement. All remaining portions shall remain in full force and effect as if the original
Agreement had been executed without the invalidated, unenforceable or illegal part.



     15.9 Notices. Any notice to be given under this Agreement must be in writing and delivered
either in person, by any method of mail (postage prepaid) requiring return receipt, or by overnight
courier or facsimile confirmed thereafter by any of the foregoing, to the party to be notified at
its address(es) given below, or at any address such party has previously designated by prior
written notice to the other. Notice shall be deemed sufficiently given for all purposes upon the
earliest of: (a) the date of actual receipt; (b) if mailed, three days after the date of postmark;
or (c) if delivered by overnight courier, the next business day the overnight courier regularly
makes deliveries.



 [ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.



62.









 








     If to Forest, notices must be addressed to:


Forest Laboratories Holdings Limited

Milner House

18 Parliament Street

Hamilton, HM11

Bermuda

Attention: Chief Executive Officer

Telephone: (441) 295-4630

Facsimile: (441) 292-7880




     With a required copy to:


Forest Laboratories, Inc.

909 Third Avenue

New York, New York 10022

Attention: Chief Executive Officer

Telephone: (212) 421-7850

Facsimile: (212) 224-6740




     If to Replidyne, notices must be addressed to:


Replidyne, Inc.

1450 Infinite Drive

Louisville, Colorado 80027

Attention: President and Chief Executive Officer

Telephone: (303) 996-5500

Facsimile: (303) 996-5599




     with a copy to:


Cooley Godward llp

380 Interlocken Crescent, Suite 900

Broomfield, Colorado 80021-8021

Attention: James C. T. Linfield

Telephone: (720) 566-4000

Facsimile: (720) 566-4099




     15.10 Force Majeure. Except for the obligation to make payment when due, each party shall be
excused from liability for the failure or delay in performance of any obligation under this
Agreement by reason of any event beyond such party’s reasonable control including but not limited
to Acts of God, fire, flood, explosion, earthquake, or other natural disaster, war, civil unrest,
accident, destruction or other casualty, any lack or failure of transportation facilities, or any
other event similar to those enumerated above. Such excuse from liability shall be effective only
to the extent and duration of the event(s) causing the failure or delay in performance and provided
that the party has not caused such event(s) to occur. Notice of a party’s failure or delay in
performance due to force majeure must be given to the other party
within ten (10) days after


[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




63.









 







its occurrence. All delivery dates under this Agreement that have
been affected by force majeure shall be tolled for the duration of such force majeure. In no event
shall any party be required to prevent or settle any labor disturbance or dispute. Notwithstanding
the foregoing, should the event(s) of force majeure suffered by a party extend beyond a period of
one hundred eighty (180) days, the other party may then terminate this Agreement by written notice
to the non-performing party, with the consequences of such termination as set forth in Sections
12.3, 12.4 and 12.5, or, in lieu of such termination, may undertake the development, manufacturing,
marketing and other functions of a party whose performance has been affect by such event of force
majeure for the period of such force majeure and such additional period as may be reasonably
required to assure the smooth and uninterrupted transition of such activities.




     15.11 Interpretation.



          (a) Captions & Headings. The captions and headings of clauses contained in this Agreement
preceding the text of the articles, sections, subsections and paragraphs hereof are inserted solely
for convenience and ease of reference only and shall not constitute any part of this Agreement, or
have any effect on its interpretation or construction.




          (b) Singular & Plural. All references in this Agreement to the singular shall include the
plural where applicable, and all references to gender shall include both genders and the neuter.




          (c) Articles, Sections & Subsections. Unless otherwise specified, references in this
Agreement to any article shall include all sections, subsections, and paragraphs in such article;
references in this Agreement to any section shall include all subsections and paragraphs in such
sections; and references in this Agreement to any subsection shall include all paragraphs in such
subsection.




          (d) Days. All references to days in this Agreement shall mean calendar days, unless otherwise
specified.




          (e) Ambiguities. Ambiguities and uncertainties in this Agreement, if any, shall not be
interpreted against either party, irrespective of which party may be deemed to have caused the
ambiguity or uncertainty to exist.




          (f) English Language. This Agreement has been prepared in the English language and the
English language shall control its interpretation. In addition, all notices required or permitted
to be given hereunder, and all written, electronic, oral or other communications between the
parties regarding this Agreement shall be in the English language.




     15.12 Counterparts. This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original document, and all of which, together with this writing, shall be deemed
one instrument.



     15.13 DAP Agreement. Replidyne shall not agree to any amendment or modification of the DAP
Agreement or waive any of its rights thereunder to the extent such amendment, modification or
waiver would adversely affect Forest’s interests under this
Agreement except



 [ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.



64.









 







with Forest’s prior written consent, which shall not be unreasonably withheld
or delayed.




     Replidyne agrees to exercise its rights and perform its obligations under the DAP Agreement to
the extent necessary to preserve Forest’s interests under this Agreement and the then current plans
of the JDC or JMC. [ *** ]



     Replidyne shall promptly notify Forest of [ *** ] to the extent material to Forest’s interest
in the development, regulatory approval or commercialization of Product in the Territory and
including, without limitation, [ *** ]. Replidyne hereby affirms that Forest shall have the right,
but not the obligation, to cure any material breach by Replidyne under the DAP Agreement (but
excluding any such breach caused by Forest) at any time during [ *** ] prior to the final effective
date of termination pursuant to the terms provided under Section 16.2 of the DAP Agreement, all to
the extent necessary for Forest to preserve its interests under this Agreement. In the event
Forest is required, acting in good faith, [ *** ].



     In the event of a breach by DAP of the DAP Agreement, Replidyne shall have the right to first
discuss the matter with DAP and to attempt to reach a resolution; [ *** ]. If, with respect to
such breach by DAP, Replidyne institutes an arbitration pursuant to Article 25 of the DAP
Agreement, [ *** ]



     Replidyne hereby affirms that Forest shall have the right, but not the obligation, to assume
the obligations of Replidyne under the DAP Agreement in order to preserve Forest’s sublicense under
the DAP Agreement on the terms provided in Section 16.5 of the DAP Agreement regarding insolvency
or bankruptcy of Replidyne.



     Replidyne and Forest agree that they will meet together with DAP up to twice per year to
review and discuss among the three companies the progress of development and commercial efforts for
Products.



[Remainder of this page intentionally left blank.]



[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.





65.









 








     In Witness Whereof, the parties hereto have duly executed this Collaboration and
Commercialization Agreement as of the Effective Date.



	 	 	 	 	 	 	 
	Replidyne, Inc.	 	Forest Laboratories Holdings Limited
	 
	 	 	 	 	 	 
	By:

	 	/s/ Kenneth Collins
	 	By:
	 	/s/ Howard Solomon
	 

	 	 
	 	 	 	 
	Name:

	 	 	 	Name:	 	 
	 

	 	 
	 	 	 	 
	Title:

	 	 	 	Title:	 	 
	 

	 	 
	 	 	 	 




Collaboration and Commercialization Agreement

Signature Page




[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.




66.










 







EXHIBIT A




Ciba-Geigy Patents



6-substituted thia-aza compounds (Ciba-Geigy)




	 	 	 	 	 	 	 	 	 	 	 	 	 
	Country	 	Application Date	 	Patent No.	 	Expiration Date
	U.S.A

	 	 	1989.08.21	 	 	 	4952690	 	 	 	2007.08.28	 








[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.



Exhibit A-1



 









 








EXHIBIT B



DAP Patents




     1. Composition of Matter of faropenem daloxate:



	 	 	 	 	 	 	 	 	 
	Country	 	Application Date	 	Patent No.	 	Registration Date	 	Expiration Date
	U.S.A
	 	1991.08.16	 	5830889	 	1998.11.03	 	2015.11.03
	U.S.A (divisional)
	 	1991.08.16	 	5885981	 	1999.03.23	 	2015.11.03






     2. Sustained Release Formulation:




	 	 	 	 	 	 	 	 	 
	Application	 	Publication	 	Pub. Date	 	Filed	 	Title
	US2004000791270

	 	US20050169984A1
	 	2005-08-04
	 	2004-03-03
	 	Pharmaceutical hard

capsule containing

inorganic substance








[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.

Exhibit B-1





 









 











SCHEDULE 5.5




Pediatrician Promotion Rights




SCHEDULE 5.5




Terms and Conditions for Pediatrician Promotion Rights



Upon Replidyne’s exercise of the Pediatrician Promotion Option pursuant to Section 5.5 of this
Agreement, the provisions of this Schedule 5.5 shall apply, notwithstanding anything to the
contrary in the Agreement. Forest shall cause Forest Parent to perform the obligations of Forest
specified in this Schedule 5.5.




     1. Definitions. All terms defined in the Agreement shall have the meaning given such
terms in the Agreement. For purposes of this Schedule 5.5, the following terms shall have
the respective meanings set forth below:



          1.1. “Non-Pediatrician Suspension Cost of Goods” for any dosage strength of the Oral
Suspension for any period, shall mean the Cost of Goods for the units of such dosage strength of
the Oral Suspension included in the Non-Pediatrician Suspension Net Sales for such period.




          1.2. “Non-Pediatrician Suspension Distribution Costs” for any dosage strength of the Oral
Suspension for any period, shall mean the Distribution Costs for the units of such dosage strength
of the Oral Suspension included in the Non-Pediatrician Suspension Net Sales for such period.




          1.3. “Non-Pediatrician Suspension Marketing and Sample Expense” for any dosage strength of the
Oral Suspension for any period, shall mean a reasonable allocation of Marketing and Sample Expense
attributable to the marketing and promotion of the Oral Suspension to non-Pediatricians, as
determined by the JMC.




          1.4. “Non-Pediatrician Suspension Marketing Margin” for any dosage strength of the Oral
Suspension for any period, shall mean the amount equal to:





	 	(a)	 	Non-Pediatrician Suspension Net Sales, minus
	 
	 	(b)	 	all of the following:






	 	(i)	 	Non-Pediatrician Suspension Cost of Goods;
	 
	 	(ii)	 	Non-Pediatrician Suspension Royalty;
	 
	 	(iii)	 	Non-Pediatrician Suspension Distribution Costs; and
	 
	 	(iv)	 	Non-Pediatrician Suspension Marketing and Sample Expense.




In the event that the Non-Pediatrician Suspension Marketing Margin for a period is a negative
amount, such amount shall be referred to as a “Non-Pediatrician Suspension Loss,” and
“Non-Pediatrician Suspension Losses” shall have the corresponding meaning.






[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.


Schedule 5.5-1




 









 








          1.5. “Non-Pediatrician Suspension Net Sales” for any dosage strength of the Oral Suspension
for any period, shall mean (a) the Net Sales for such dosage strength for such period, less (b)
Pediatrician Net Sales for such dosage strength of the Oral Suspension for such period.




          1.6. “Non-Pediatrician Suspension Royalty” for any dosage strength of the Oral Suspension for
any period, shall mean the Royalty Payments to Replidyne for the units of such dosage strength and
formulation of the Oral Suspension included in the Non-Pediatrician Suspension Net Sales for such
period.




          1.7. “Pediatrician Cost of Goods” for any dosage strength and formulation of the Product for
any period, shall mean the Cost of Goods for the units of such dosage strength and formulation of
the Product included in the Pediatrician Net Sales for such period.




          1.8. “Pediatrician Distribution Costs” for any dosage strength and formulation of the Product
for any period, shall mean the Distribution Costs for the units of such dosage strength and
formulation of the Product included in the Pediatrician Net Sales for such period.




          1.9. “Pediatrician Marketing and Sample Expense” for any dosage strength and formulation of
the Product for any period, shall mean the Marketing and Sample Expense for the units of such
dosage strength and formulation of the Product included in the Pediatrician Net Sales for such
period.




          1.10. “Pediatrician Marketing Margin” for any dosage strength and formulation of the Product
for any period, shall mean the amount equal to:





	 	(a)	 	Pediatrician Net Sales, minus
	 
	 	(b)	 	all of the following:






	 	(i)	 	Pediatrician Cost of Goods;
	 
	 	(ii)	 	Pediatrician Royalty;
	 
	 	(iii)	 	Pediatrician Distribution Costs; and
	 
	 	(iv)	 	Pediatrician Marketing and Sample Expense.




In the event that the Pediatrician Marketing Margin for a period is a negative amount, such amount
shall be referred to as a “Pediatrician Loss,” and “Pediatrician Losses” shall have the
corresponding meaning.




          1.11. “Pediatrician Net Sales” for any dosage strength and formulation of the Product for any
period, shall mean (a) the Net Sales for such dosage strength or formulation for such period,
multiplied by (b) the percentage that the units of such dosage strength and formulation included in
Net Sales which are represented by prescriptions originating from Pediatricians represent of the
total units of such dosage strength and formulation included in Net Sales represented by all
prescriptions for such period based upon IMS Xponent data or other mutually-agreed generally
recognized prescription data source.






[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.


Schedule 5.5-2




 









 








          1.12. “Pediatrician Promotion Fee” shall have the meaning assigned to such term in Section
4.3(a).




          1.13. “Pediatrician Promotion Period” shall mean the period beginning on the date on which
Replidyne exercises the Pediatrician Promotion Option and ending on the earlier of: (a) the
expiration of the last to expire valid claim of the Licensed Patents, Forest Patents or Joint
Patents claiming the manufacture, use or sale of the Oral Suspension in the Territory, including
any period of extended commercial exclusivity for the Oral Suspension under any Licensed Patent,
Forest Patent or Joint Patent granted under any laws or regulations in such country; and (b) date a
Third Party commences the distribution of a generic equivalent to the Oral Suspension in the
Territory, unless sooner terminated in accordance with the terms of this Agreement.




          1.14. “Pediatrician Royalty” for any dosage strength and formulation of the Product for any
period, shall mean the Royalty Payments to Replidyne for the units of such dosage strength and
formulation of the Product included in the Pediatrician Net Sales for such period.




     2. Pediatrician Promotion Rights.



          2.1. Promotion to Pediatricians. During the Pediatrician Promotion Period, Forest and
Replidyne agree to promote the Product in the Field in the Territory in accordance with the
Agreement, as modified by the terms and conditions of this Schedule 5.5.




          2.2. Marketing Plan. Replidyne shall draft and submit to the JMC for review and
approval those portions of the Marketing Plan describing activities directed to Pediatricians, and
Forest shall draft and submit to the JMC for review and approval those portions of the Marketing
Plan describing activities directed to marketing the Oral Suspension to non-Pediatricians, both of
which shall be consistent with the JMC’s overall marketing strategy for the Product in the
Territory and with the overall Marketing Plan.




          2.3. Diligence. The parties acknowledge that additional promotional efforts following
the First Commercial Sale of an Oral Suspension is warranted to increase awareness of the
commercial availability of that additional Product. Subject to the minimum promotional efforts
required by Section 5.3(d) of the Agreement, such efforts shall be Commercially Reasonable Efforts
as established by the JMC pursuant to the Marketing Plan. Forest’s promotional efforts to
non-Pediatricians with respect to the Oral Suspension will be performed in conjunction with the
promotion of the Tablet to such physicians. Accordingly, the JMC will establish for each Detailing
Year objectives specifically for the promotion of the Oral Suspension by Forest to
non-Pediatricians, such as the priority of the Oral Suspension relative to the Tablet in Details to
Primary Care Physicians, the list of non-Pediatricians that warrant detailing of the Oral
Suspension and the positioning of the Oral Suspension relative to the Tablet in marketing
campaigns.




          2.4. Replidyne Commercial Activities for Pediatricians. During the Pediatrician
Promotion Period, Replidyne shall perform all marketing and promotion-related activities for the
Products directed to Pediatricians. Replidyne will promptly notify Forest at any






[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.



 Schedule 5.5-3



 









 







time that it appears reasonably likely that Replidyne will not be able to substantially
achieve required levels of Detailing over any significant period or in any significant area.
Following any such notice, the parties will meet and confer in good faith to develop a plan to
achieve such required levels of Detailing as promptly as practicable, including through the
reallocation of Replidyne personnel, if practicable and without adversely affecting Replidyne’s
Detailing efforts, and the utilization of Forest sales force personnel as reasonably required to
achieve the required levels of Detailing. Following the development of such plan, Forest shall
have the right to call on Pediatricians as provided by the plan, in which case the JMC will
coordinate the efforts of each of Forest and Replidyne with respect to the Detailing of Product to
Pediatricians by each party. In addition, if (a) Replidyne elects not to provide Details of the
Product to certain Pediatricians (e.g., due to a particular geographical location), the Detail
Reports indicate that Replidyne’s Detailing has not achieved material Detailing requirements to be
performed by Replidyne as targeted by the Marketing Plan (as to number or position of Details) over
a significant period or (b) the JMC determines, prior to a formal annual update to the Marketing
Plan, that Detailing efforts to Pediatricians in addition to those in the then current Marketing
Plan are appropriate and authorizes additional funds, if required to support such additional
Detailing efforts to Pediatricians, the parties will meet and confer in the manner set forth above
to develop a plan to address the provision of additional Details, which plan will be based on the
considerations, and implemented by the parties, as provided above. In any such event requiring the
utilization of Forest sales force personnel, the parties will cooperate to transition Detailing
efforts to Replidyne as promptly as practicable in light of the need to assure a smooth transition
of Detailing activities once Replidyne possesses adequate resources to provide Detailing efforts
targeted by the Marketing Plan.




               (a) Marketing. During the Pediatrician Promotion Period and subject to the minimum
requirements set forth in Section 5.3(d) of the Agreement, Replidyne will use its Commercially
Reasonable Efforts to execute on the activities under the Marketing Plan regarding marketing and
promotion to Pediatricians. Forest will reimburse Replidyne for expenses incurred by Replidyne in
performing such activities as provided in Section 4.3(b) of this Schedule 5.5. Forest will share
with Replidyne any market research or other marketing information or materials relevant to
marketing and promotion to Pediatricians that Forest possesses, as requested by Replidyne.



               (b) Organization of Replidyne Pediatrician Sales Force. The JMC will determine the
minimum number of Pediatricians to be on the call plan and minimum frequency. During the
Pre-Launch Period with respect to the Oral Suspension, Replidyne shall use its Commercially
Reasonable Efforts to engage and organize the Replidyne Pediatrician Sales Force in accordance with
strategic plans agreed to by the JMC and provided in the Marketing Plan. To form the Replidyne
Pediatrician Sales Force, Replidyne may expand its then-existing sales force by engaging personnel
provided by a contract sales organization; provided that personnel of a contract sales organization
shall make up no more than [ *** ] of the Replidyne Pediatrician Sales Force; and provided, further
that Replidyne will transition to a Replidyne Pediatrician Sales Force comprised entirely of
personnel who are full-time employees of Replidyne by the [ *** ] anniversary of the Detailing
Commencement Date for the Oral Suspension. At the end of the first [ *** ] following the Detailing
Commencement Date for the Oral Suspension, if the





[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.

Schedule 5.5-4





 









 







Replidyne Pediatrician Sales Force is then comprised of personnel provided by a contract sales
organization, the JMC shall determine whether:




                    (i) the Replidyne Pediatrician Sales Force has delivered [ *** ] percent ([ *** ]%) of the
Details set forth in the Marketing Plan for that time period;



                    (ii) at least [ *** ] percent ([ *** ]%) of the Details performed by Replidyne Pediatrician
Sales Force during that time period were delivered to Pediatricians on the call panel and with the
frequency and Detail position established by the JMC; and



                    (iii) the performance by the Replidyne Pediatrician Sales Force meets the metrics previously
established by the JMC to be measured in an ImpactRX report obtained at the [ *** ] benchmark
point.



               If the Replidyne Pediatrician Sales Force fails to meet the foregoing requirements, Replidyne
will provide written notice to Forest within [ *** ] of such determination by the JMC, indicating
whether Replidyne will (A) transition to a sales force comprised of personnel who are full-time
employees of Replidyne and coordinate Detailing to Pediatricians together with Forest’s sales
representatives pending the achievement of a full-time employee trained and qualified sales force
or (B) terminate the Pediatrician Promotion Period, in each case over the course of the [ *** ]
month period immediately following such notice.



               (c) Training Materials and Sessions. Forest shall provide Replidyne with the training
materials Forest provides to the Forest Sales Force, sufficient in quantity and quality to allow
Replidyne to train the Replidyne Pediatrician Sales Force in Product-specific sales skills and to
Detail the Product in a manner consistent with the Detailing performed by the Forest Sales Force.
Replidyne will prepare or have prepared any supplementary training materials required for Detailing
the Product to Pediatricians, consistent with the applicable Marketing Plan. Forest will permit
Replidyne sales representatives to participate in training sessions of the Forest Sales Force with
respect to the Product and will provide reasonable advance notice to Replidyne of scheduled
training events, provided the Replidyne salary and out-of-pocket travel and related expenses of
such attendance shall be for the account of Replidyne. Without limiting the generality of the
foregoing, the parties intend that the Replidyne Pediatrician Sales Force will participate in the
initial Oral Suspension launch and subsequent sales force meetings to the extent related to the
Oral Suspension. Training sessions or modules specific to promotion to Pediatricians will be the
responsibility and at the cost of Replidyne.



               (d) Promotional Materials. Forest shall provide Replidyne with sales and promotional
materials reasonably sufficient to permit Replidyne to perform Detailing calls to Pediatricians in
a manner consistent with the Detailing calls performed by the Forest Sales Force. Replidyne will
create or have created on its behalf such additional sales and promotional materials intended to be
specific to the Pediatrician audience as called for under the Marketing Plan. The project managers
of each party will share with one another any such materials. No such materials shall be used
until they have been approved by the regulatory and compliance functions of each party.





[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.


Schedule 5.5-5




 









 








               (e) Sampling. Forest shall provide Replidyne with Product samples as requested by
Replidyne to permit Replidyne to perform Detailing calls to Pediatricians in accordance with the
Marketing Plan. Replidyne shall be responsible for accounting for sample distribution by the
Replidyne Pediatrician Sales Force and shall maintain all records with respect to sample
distribution as required by Applicable Laws. Within thirty (30) days after the end of each month,
Replidyne shall provide to Forest a written report summarizing samples distributed by the Replidyne
Pediatrician Sales Force for such calendar month. In addition, Replidyne shall ensure, through
appropriate routine monitoring and auditing standards which conform with current good industry
practices, that sampling of the Product is carried out by Replidyne in a manner which is in
compliance with all Applicable Laws. Replidyne shall immediately advise Forest of its discovery of
any act or omission of Replidyne regarding sample distribution that could violate or require
reporting under Applicable Laws. Forest shall be solely responsible for the filing of any
necessary reports to FDA in connection with sampling. Within thirty (30) days after the expiration
or termination of the Pediatrician Promotion Period, Replidyne shall return, or otherwise dispose
of in accordance with written instructions from Forest, all remaining samples and will provide
Forest with a certified statement that all remaining samples have been returned or otherwise
properly disposed of in accordance with Forest’s instructions and that Replidyne is no longer in
possession or control of any samples in any form or fashion.



               (f) Termination. Replidyne reserves the right to terminate its Pediatrician Promotion
Rights at any time during the Pediatrician Promotion Period, effective upon eighteen (18) months
written notice to Forest, or immediately upon written notice to Forest if Replidyne believes that a
recall, market withdrawal or other corrective action related to the Oral Suspension is warranted in
the Territory. If Replidyne exercises the foregoing right, Replidyne shall provide such transition
activities as and for such period as Forest may reasonably request, including, without limitation,
arranging for meetings between members of the Replidyne Pediatrician Sales Force and sales
representatives of Forest, to assure a smooth transition of marketing to Pediatricians.



               (g) Forest Right of Termination. If Forest ceases the promotion, sale or distribution
of the Product in the Territory under the circumstances permitted under this Agreement, then upon
written notice to Replidyne, Forest may terminate the Pediatrician Promotion Period, effective
within a reasonable period of time in light of the circumstances underlying any such cessation by
Forest. In addition, Forest reserves the right to terminate the Pediatrician Promotion Period,
effective upon [ *** ] written notice to Replidyne in the event that the Detail Reports for at
least [ *** ] indicate that Replidyne’s Detailing has not achieved at least [ *** ] percent ([ ***
]%) of the Detailing to be performed by Replidyne as targeted by the Marketing Plan (as to number
or position of Details) for each such Calendar Quarter or upon the failure by Replidyne to achieve
at least [ *** ] percent ([ *** ]%) of the Detailing to be performed by Replidyne as targeted by
the Marketing Plan (as to numbers or portions of Details) in the aggregate over a period of [ ***
], unless in either case, during such [ *** ] period Replidyne develops and implements a program of
increased Detailing which provides, to Forest’s reasonable satisfaction, assurance that Detail
shortfalls will not again occur. Failure of Replidyne to meet the number of Details required under
the Marketing Plan with respect to promotion efforts directed to Pediatrician shall not be deemed a
material breach under this





[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.

Schedule 5.5-6





 









 







Agreement and, notwithstanding Section 12.8, shall not entitle Forest to claim any damages,
compensation or relief except as provided in this Section 2.4(g) and Section 4.3(e).




          2.5. Market Withdrawals. Each party shall have the right to determine whether a
market withdrawal of the Oral Suspension in the Territory is warranted. If Replidyne makes such a
determination, it shall have the right to cease the promotion and Detailing of the Oral Suspension
in the Territory immediately upon written notice to Forest. If Forest makes such a determination,
it shall have the right to cease all sales of Oral Suspension in the Territory and the promotion
and Detailing of the Oral Suspension in the Territory immediately upon written notice to Replidyne.
If Replidyne ceases promotion and Detailing of the Oral Suspension in the Territory and Forest
continues the sale of the Oral Suspension in Territory, Replidyne shall have no liability for sales
of Oral Suspension after the date that Replidyne discontinues its promotion and Detailing of the
Oral Suspension in the Territory.




     3. Supply Matters. During the Pediatrician Promotion Period, Forest shall keep
Replidyne advised of matters regarding the supply of the Oral Suspension in the Territory and shall
consult with Replidyne on strategic decisions to be made with respect thereto.



     4. Financial Matters.



          4.1. Credit Facility. Forest will extend a line of credit of sixty million dollars
($60,000,000) to Replidyne against which, beginning upon commencement of the Pediatrician Promotion
Period, Replidyne may draw down in one (1) or more installments such amounts as are necessary to
constitute and maintain the Replidyne Pediatrician Sales Force and conduct pre-launch, marketing
and other activities related to the exercise of the Pediatrician Promotion Rights. Replidyne
agrees to draw down on the line of credit only such amounts as expected to be needed to finance the
Pediatrician Promotion Rights by providing written notice to Forest that specifies the amount
requested and the reasons for the draw down with reasonable specificity. Any amounts owing by
Replidyne to Forest under the line of credit shall bear interest at the prime rate of interest, as
adjusted monthly, plus one percent (1%) and shall be repaid on a Calendar Quarter basis over a
period ending four (4) years from the date of the first draw, with no penalty for pre-payments.
The outstanding balance at any given time may be applied against Royalty Payments and milestone
payments due from Forest under this Agreement in the event of a default by Replidyne under the
loan, subject to a customary notice requirement and cure period to be provided for under the loan
documents and Replidyne shall grant Forest a security interest in Replidyne’s interest in the
Royalty Payments and milestone payments receivable by Replidyne under this Agreement to the extent
necessary to further secure Replidyne’s obligations in connection with the loan. At the time of
execution of the loan documents, Replidyne’s rights to receive Royalty Payments or milestone
payments under the Agreement shall be free from any pledge, hypothecation, security interest or
other encumbrance in an amount necessary to secure Replidyne’s repayment obligations under the
loan. Other standard loan terms will be negotiated in good faith by the parties.




          4.2. Reporting. Within forty-five (45) days after each Calendar Quarter during a
Detailing Year, each party shall provide to the other a report, in a form specified by the JMC,
summarizing (a) information regarding such party’s actual performance of marketing and promotional
activities, as compared to marketing and promotional commitments set forth in the






[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.

Schedule 5.5-7





 









 







Marketing Plan, including, without limitation, the number and frequency of Details of Oral
Suspension provided by such party, including the proportion of Details in first and second
position, and Marketing and Sample Expense incurred by such party during the Calendar Quarter, and
(b) such information as is necessary to allow calculation of the Non-Pediatrician Suspension
Marketing Margin and the Pediatrician Marketing Margin.




          4.3. Compensation to Replidyne.




               (a) Pediatrician Promotion Fee. In addition to the Royalty Payments and other
payments due to Replidyne under Section 7 of the Agreement (including, without limitation,
development and commercial milestones for the Oral Suspension and royalties on all sales of the
Oral Suspension), subject to adjustment in accordance with subsections (d) and (e) below, Forest
shall pay to Replidyne a fee (the “Pediatrician Promotion Fee") equal to the sum of:



                    (i) [ *** ] percent ([ *** ]%) of the Pediatrician Marketing Margin; and



                    (ii) [ *** ] percent ([ *** ]%) of the Non-Pediatrician Suspension Marketing Margin.



               (b) Reimbursement of Replidyne’s Marketing and Sample Expense. Together with each
payment of the Pediatrician Promotion Fee, Forest shall reimburse Replidyne for the Pediatrician
Marketing and Sample Expense incurred by Replidyne and, if applicable, any Non-Pediatrician
Suspension Marketing and Sample Expense incurred by Replidyne as provided for under the Marketing
Plan, as well as any other expenses related to the Oral Suspension that are incurred by Replidyne
but are to be borne by Forest under this Agreement (such as Cost of Goods and Distribution Costs),
which are reported to Forest for the Calendar Quarter to which such payment relates.



               (c) Payment. Within forty-five (45) days of the end of each Calendar Quarter during
the Pediatrician Promotion Period, Forest shall pay Replidyne an amount equal to the Pediatrician
Promotion Fee earned by Replidyne for such Calendar Quarter. In the event that the Pediatrician
Promotion Fee for a Calendar Quarter is negative, Replidyne shall pay Forest the amount by which
such Pediatrician Promotion Fee is negative within forty-five (45) days of the end of such Calendar
Quarter.



               (d) Annual Adjustment. With respect to the payment of the Pediatrician Promotion Fee
for the fourth Calendar Quarter of a Detailing Year, Forest shall calculate the actual Pediatrician
Promotion Fee payable for the entire such Detailing Year and Forest shall make payment (or receive
a credit), as appropriate, for the balance of the Pediatrician Promotion Fee due for such Detailing
Year (taking into account any payments by Replidyne to Forest of negative amounts).



               (e) Additional Adjustment. If the Detailing actually provided by Replidyne to
Pediatricians for a given Detailing Year fails to achieve at least [ *** ] percent ([ *** ]%) of
the Detailing targeted by the Marketing Plan (as to number or position of Details), the





[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.


Schedule 5.5-8




 









 







percentage of Pediatrician Marketing Margin used in calculating the Pediatrician Promotion Fee
shall be reduced [ *** ].




               (f) Records. Each party shall maintain accurate records relating to its obligations
hereunder (including, without limitation, records relating to the performance of Details (including
records of physicians called on, frequency of calls and other data which underlies the Detail
Reports required by Section 3.2, and the calculation of Pediatrician Marketing Margin and
Suspension Marketing Margin), which records shall be kept available for three (3) years following
the Detailing Year to which such records relate unless a longer period is otherwise required by
Applicable Laws. The audit provisions of Section 8.5 of the Agreement shall apply to such records.



     5. Product Liability. In connection with the commercialization of the Oral
Suspension, Forest and Replidyne will share responsibility equally for any liability for personal
injury or property damage arising in connection with use of the Oral Suspension; provided, however,
that in any event each party shall be responsible for, and hereby assumes, any and all risks of
personal injury or property damage attributable solely to the gross negligence or willful
misconduct of that party or its Affiliates, and their respective directors, officers, employees and
agents.



     6. Intellectual Property Matters.



          6.1. Infringement by Third Parties. With regard to any action or proceeding with
respect to infringement of any of the Licensed Patents, Joint Patents or Forest Patents pertaining
to the Oral Suspension, including any ANDA Proceeding related to such Licensed Patents, Joint
Patents or Forest Patents, in the Territory during the Pediatrician Promotion Period, the parties
shall cooperate in bringing and shall share control of such action or proceeding with counsel
mutually acceptable to the parties. In any such action or proceeding that relates to the Oral
Suspension during the Pediatrician Promotion Period, the parties will share equally the costs
associated with such action or proceeding, unless otherwise agreed in writing by the parties.




          6.2. Infringement of Third Party Rights. With regard to the defense of any claim by a
Third Party alleging that the activity of either of the parties pursuant to this Agreement with
respect to the Oral Suspension infringes or may infringe the intellectual property rights of such
Third Party during the Pediatrician Promotion Period, the parties shall cooperate in and shall
share control of the defense of such claim with counsel mutually acceptable to such parties and
shall share equally the costs associated with the defense of such claim, unless otherwise agreed in
writing by the parties.






[ *** ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.


Schedule 5.5-9





 










 







Table Of Contents




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page	 
	1.	 	DEFINITIONS	 	 	1	 
	2.	 	LICENSES	 	 	14	 
	 	 	2.1	 	License Grants	 	 	14	 
	 	 	2.2	 	Sublicenses	 	 	15	 
	 	 	2.3	 	Grant to Replidyne by Forest	 	 	15	 
	 	 	2.4	 	Related Compounds	 	 	16	 
	 	 	2.5	 	Trademark and Trade Dress Matters	 	 	16	 
	 
	 	 	 	(a)	 	Sale under Trademarks	 	 	16	 
	 
	 	 	 	(b)	 	Use of Names and Logos on Product and Related Materials	 	 	16	 
	 
	 	 	 	(c)	 	Use of DAP Name and DAP Logogram	 	 	16	 
	 
	 	 	 	(d)	 	Trademark Use	 	 	17	 
	 	 	2.6	 	Sales Outside the Territory	 	 	17	 
	 	 	2.7	 	Retained Rights; No Implied Licenses	 	 	17	 
	3.	 	COLLABORATION GOVERNANCE	 	 	18	 
	 	 	3.1	 	Joint Development Committee	 	 	18	 
	 
	 	 	 	(a)	 	Formation	 	 	18	 
	 
	 	 	 	(b)	 	Responsibilities	 	 	18	 
	 
	 	 	 	(c)	 	JDC Decision-Making	 	 	19	 
	 
	 	 	 	(d)	 	Limits on Authority	 	 	19	 
	 	 	3.2	 	Joint Marketing Committee	 	 	19	 
	 
	 	 	 	(a)	 	Formation	 	 	19	 
	 
	 	 	 	(b)	 	Responsibilities	 	 	19	 
	 
	 	 	 	(c)	 	JMC Decision Making	 	 	20	 
	 
	 	 	 	(d)	 	Limits on Authority	 	 	20	 
	 	 	3.3	 	Cost of Goods Committee	 	 	20	 
	 
	 	 	 	(a)	 	Formation	 	 	20	 
	 
	 	 	 	(b)	 	CGC Decision Making	 	 	21	 
	 
	 	 	 	(c)	 	Limits on Authority	 	 	21	 
	4.	 	CONDUCT OF THE DEVELOPMENT PROGRAM	 	 	21	 
	 	 	4.1	 	Development Program Activities	 	 	21	 






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Table Of Contents

(continued)




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page	 
	 	 	4.2	 	Oral Suspension Development	 	 	22	 
	 	 	4.3	 	Technology and Information Transfer	 	 	22	 
	 	 	4.4	 	Clinical Supply	 	 	22	 
	 	 	4.5	 	Development Reports	 	 	22	 
	 	 	4.6	 	Development Costs	 	 	23	 
	 
	 	 	 	(a)	 	Allocation of Costs	 	 	23	 
	 
	 	 	 	(b)	 	Reports and Payments	 	 	23	 
	 	 	4.7	 	Registration Activities	 	 	23	 
	 	 	4.8	 	Meetings and Communications with the FDA	 	 	24	 
	 	 	4.9	 	Subcontracts	 	 	24	 
	 	 	4.10	 	Materials Transfer	 	 	24	 
	 	 	4.11	 	Liability	 	 	25	 
	5.	 	COMMERCIALIZATION	 	 	25	 
	 	 	5.1	 	Forest General Commercial Responsibilities	 	 	25	 
	 	 	5.2	 	Marketing Plans	 	 	25	 
	 	 	5.3	 	Diligence	 	 	26	 
	 	 	5.4	 	Replidyne Commercial Activities for Target Specialists	 	 	27	 
	 
	 	 	 	(a)	 	Organization of Replidyne Specialty Sales Force	 	 	28	 
	 
	 	 	 	(b)	 	Training Materials and Sessions	 	 	29	 
	 
	 	 	 	(c)	 	Promotional Materials	 	 	29	 
	 
	 	 	 	(d)	 	Sampling	 	 	29	 
	 
	 	 	 	(e)	 	Funding	 	 	29	 
	 
	 	 	 	(f)	 	Additional Support	 	 	30	 
	 
	 	 	 	(g)	 	Extension; Termination	 	 	30	 
	 
	 	 	 	(h)	 	Forest Termination Right	 	 	30	 
	 	 	5.5	 	Pediatrician Promotion Option	 	 	31	 
	 	 	5.6	 	Product Management; Distribution; Returns	 	 	31	 
	 	 	5.7	 	Medical Inquiries; Product Complaints	 	 	32	 
	 	 	5.8	 	Compliance with Law	 	 	32	 
	 	 	5.9	 	Commercialization Outside the Territory	 	 	33	 






-ii-









 






Table Of Contents

(continued)




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page	 
	 	 	5.10	 	Competitive Products	 	 	34	 
	 	 	5.11	 	Phase IV and Publication Strategy	 	 	35	 
	 	 	5.12	 	Adverse Events	 	 	35	 
	 	 	5.13	 	Recalls or Other Corrective Actions	 	 	36	 
	 	 	5.14	 	Product Liability	 	 	36	 
	6.	 	SUPPLY MATTERS	 	 	36	 
	 	 	6.1	 	Joint Supply Committee	 	 	36	 
	 	 	6.2	 	Supply Transition	 	 	37	 
	 	 	6.3	 	Launch Delay Compensation	 	 	37	 
	 	 	6.4	 	Supply Costs	 	 	38	 
	 	 	6.5	 	Manufacturing Rights	 	 	38	 
	 	 	6.6	 	Manufacturing Transfer Compensation	 	 	39	 
	 	 	6.7	 	Supply Chain Management	 	 	39	 
	7.	 	FEES AND PAYMENTS	 	 	39	 
	 	 	7.1	 	Upfront Fee	 	 	39	 
	 	 	7.2	 	Milestone Payments	 	 	39	 
	 	 	7.3	 	Royalties	 	 	41	 
	 	 	7.4	 	Payments to DAP	 	 	42	 
	 	 	7.5	 	Royalty Term; Generic Product	 	 	42	 
	 
	 	 	 	(a)	 	Branded Product When Generic Equivalent is Sold	 	 	42	 
	 
	 	 	 	(b)	 	Generic Product Sold by Forest	 	 	42	 
	 	 	7.6	 	Bioterror Applications	 	 	42	 
	 	 	7.7	 	Other Royalty Adjustments	 	 	43	 
	 	 	7.8	 	Acknowledgment of Replidyne Contribution	 	 	43	 
	 	 	7.9	 	Reimbursement of Development Costs	 	 	43	 
	 	 	7.10	 	Reimbursement of Replidyne Target Specialist Commercial Activities	 	 	43	 
	 
	 	 	 	(a)	 	Reimbursement of Pre-Launch Period Sales Force Expense	 	 	43	 
	 
	 	 	 	(b)	 	Reimbursement of Marketing and Sample Expense	 	 	43	 
	 
	 	 	 	(c)	 	Reimbursement of Sales Force Expense	 	 	44	 
	 
	 	 	 	(d)	 	Additional Adjustments	 	 	45	 






-iii-









 






Table Of Contents

(continued)




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page	 
	8.	 	PAYMENT; RECORDS; AUDITS	 	 	46	 
	 	 	8.1	 	Payment; Reports	 	 	46	 
	 	 	8.2	 	Manner and Place of Payment	 	 	46	 
	 	 	8.3	 	Income Tax Withholding	 	 	46	 
	 	 	8.4	 	Financial Records	 	 	46	 
	 	 	8.5	 	Audits	 	 	47	 
	 	 	8.6	 	Late Payments	 	 	47	 
	9.	 	INTELLECTUAL PROPERTY	 	 	47	 
	 	 	9.1	 	Ownership of Inventions	 	 	47	 
	 	 	9.2	 	Patent Prosecution and Maintenance	 	 	48	 
	 
	 	 	 	(a)	 	DAP Patents	 	 	48	 
	 
	 	 	 	(b)	 	Replidyne Patents	 	 	48	 
	 
	 	 	 	(c)	 	Forest Patents	 	 	48	 
	 
	 	 	 	(d)	 	Joint Patents	 	 	49	 
	 
	 	 	 	(e)	 	Patent Strategy	 	 	49	 
	 	 	9.3	 	Cooperation of the Parties	 	 	49	 
	 	 	9.4	 	Infringement by Third Parties	 	 	49	 
	 
	 	 	 	(a)	 	Notification	 	 	49	 
	 
	 	 	 	(b)	 	Licensed Patents, Forest Patents and Joint Patents	 	 	50	 
	 
	 	 	 	(c)	 	Cooperation	 	 	50	 
	 	 	9.5	 	Infringement of Third Party Rights	 	 	51	 
	 	 	9.6	 	Privileged Communications	 	 	51	 
	10.	 	REPRESENTATIONS AND WARRANTIES	 	 	51	 
	 	 	10.1	 	Mutual Representations and Warranties	 	 	51	 
	 	 	10.2	 	Replidyne Representations and Warranties	 	 	52	 
	 	 	10.3	 	Debarment; Proceedings	 	 	52	 
	 	 	10.4	 	Disclaimer	 	 	52	 
	 	 	10.5	 	Limitation of Liability	 	 	53	 
	11.	 	CONFIDENTIALITY	 	 	53	 
	 	 	11.1	 	Confidential Information	 	 	53	 






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	 	 	11.2	 	Exceptions	 	 	53	 
	 	 	11.3	 	Authorized Disclosure	 	 	54	 
	 	 	11.4	 	Publicity	 	 	54	 
	12.	 	TERM AND TERMINATION	 	 	55	 
	 	 	12.1	 	Term	 	 	55	 
	 	 	12.2	 	Forest Right of Termination	 	 	55	 
	 	 	12.3	 	Termination for Material Breach	 	 	55	 
	 
	 	 	 	(a)	 	Material Breach	 	 	55	 
	 
	 	 	 	(b)	 	Material Breach Regarding Target Specialist or Pediatrician Promotion Efforts	 	 	56	 
	 	 	12.4	 	Termination for Insolvency	 	 	56	 
	 	 	12.5	 	Rights following Expiration of Term or Termination	 	 	56	 
	 
	 	 	 	(a)	 	Expiry of Term Under Section 12.1	 	 	56	 
	 
	 	 	 	(b)	 	Termination of this Agreement by Forest Under Section 12.2 or Replidyne Under Section 12.3(a) or 12.4	 	 	56	 
	 
	 	 	 	(c)	 	Termination of this Agreement by Forest under Section 12.3(a) or Section 12.4	 	 	57	 
	 
	 	 	 	(d)	 	Termination by Forest under Section 12.3(b)	 	 	57	 
	 
	 	 	 	(e)	 	Termination by Forest Under Section 12.3(a)	 	 	58	 
	 	 	12.6	 	Survival	 	 	58	 
	 	 	12.7	 	Exercise of Right to Terminate	 	 	58	 
	 	 	12.8	 	Damages; Relief	 	 	58	 
	 	 	12.9	 	Rights in Bankruptcy	 	 	59	 
	 	 	12.10	 	Effect of Termination of DAP Agreement	 	 	59	 
	13.	 	INDEMNIFICATION	 	 	59	 
	 	 	13.1	 	Indemnification by Replidyne	 	 	59	 
	 	 	13.2	 	Indemnification by Forest	 	 	59	 
	 	 	13.3	 	Control of Defense	 	 	60	 
	 	 	13.4	 	Insurance	 	 	60	 
	14.	 	DISPUTE RESOLUTION	 	 	60	 
	 	 	14.1	 	Dispute Resolution	 	 	60	 






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	 	 	14.2	 	Arbitration	 	 	60	 
	 
	 	 	 	(a)	 	Claims	 	 	60	 
	 
	 	 	 	(b)	 	Arbitrators’ Award	 	 	61	 
	 
	 	 	 	(c)	 	Costs	 	 	61	 
	 
	 	 	 	(d)	 	Compliance with this Agreement	 	 	61	 
	 
	 	 	 	(e)	 	Injunctive or Other Equity Relief	 	 	61	 
	15.	 	GENERAL PROVISIONS	 	 	62	 
	 	 	15.1	 	Standstill	 	 	62	 
	 	 	15.2	 	Governing Law	 	 	62	 
	 	 	15.3	 	Entire Agreement; Modification	 	 	62	 
	 	 	15.4	 	Relationship Between the Parties	 	 	62	 
	 	 	15.5	 	Non-Waiver	 	 	63	 
	 	 	15.6	 	Assignment; Change in Control	 	 	63	 
	 	 	15.7	 	No Third Party Beneficiaries	 	 	64	 
	 	 	15.8	 	Severability	 	 	64	 
	 	 	15.9	 	Notices	 	 	64	 
	 	 	15.10	 	Force Majeure	 	 	65	 
	 	 	15.11	 	Interpretation	 	 	66	 
	 	 	15.12	 	Counterparts	 	 	66	 
	 	 	15.13	 	DAP Agreement	 	 	67	 







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