Document:

exv10w15

 

Exhibit 10.15

SUPPLY AGREEMENT

AMONG

REPLIDYNE, INC.

DAIICHI SUNTORY PHARMA CO., LTD.

AND

NIPPON SODA CO., LTD.

DATED: DECEMBER 20TH, 2004

 

[ *** ] = 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.

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	Article	 	Title	 	Page
	1
	 	Definitions	 	2
	2
	 	Validation of Nihongi Facility	 	2
	3
	 	Manufacture and Supply of Drug Substance	 	5
	4
	 	Forecasts, Purchase Orders and Deliveries	 	10
	5
	 	Purchase Price and Payment	 	15
	6
	 	Drug Substance Quality	 	21
	7
	 	Regulatory Matters	 	24
	8
	 	Transfer of Manufacturing	 	28
	9
	 	Proprietary Rights	 	31
	10
	 	Secrecy	 	31
	11
	 	Duration and Termination	 	32
	12
	 	Effect of Termination	 	34
	13
	 	Hold Harmless and Insurance	 	38
	14
	 	Representations, Warranties and Covenants	 	39
	15
	 	Force Majeure	 	40
	16
	 	Non-Waiver	 	40
	17
	 	Modification	 	41
	18
	 	Miscellaneous	 	41
	19
	 	Applicable Law	 	43
	20
	 	Dispute Resolution	 	43
	21
	 	Notice	 	44
	22
	 	Publicity	 	44
	23
	 	Language	 	45
	24
	 	Execution in Counterparts	 	45

TABLE OF ATTACHMENTS

	 	 	 
	Number	 	Title
	1

	 	Definitions
	2.3

	 	Timeline
	3.3

	 	Delay Compensation
	4.1

	 	Batch Sizes
	4.2(a)

	 	Initial Clinical Forecast
	5.1

	 	Purchase Prices
	6.1

	 	Drug Substance Specifications
	7.9

	 	Sensitive Manufacturing Information
	8.2

	 	Manufacturing Patents
	11.1

	 	Patents

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE i

 

 

SUPPLY AGREEMENT

     THIS SUPPLY AGREEMENT (“Agreement”) is made as of December 20th, 2004 (“Effective
Date”) among:

	(1)	 	REPLIDYNE, INC., a corporation organized and existing under the laws of the State of
Delaware, U.S.A., having its principal business office at 1450 Infinite Drive,
Louisville, Colorado 80027, U.S.A. (“Replidyne”);
	 
	(2)	 	DAIICHI SUNTORY PHARMA CO., LTD., a corporation organized and existing under the laws
of Japan and having its registered office at 7-2, Kojimachi 5-chome, Chiyoda-ku, Tokyo
102-8530, Japan (“DSP”); and
	 
	(3)	 	NIPPON SODA CO., LTD., a corporation organized and existing under the laws of Japan,
having its registered office at 2-1, Ohtemachi 2-Chome, Chiyoda-ku, Tokyo 100-8165,
Japan (“Nisso”).

DSP and Nisso are sometimes referred to collectively herein as the “Supplier”, and shall be
jointly and severally liable for the obligations of “Supplier” hereunder as provided in Section
18.5 (Independent Contractor) hereof. Replidyne, DSP and Nisso are sometimes referred to
collectively herein as the “Parties” or individually as a “Party”.

WITNESSETH:

     WHEREAS, Replidyne and DSP have entered into the license agreement on March 15, 2004 pursuant
to which Replidyne has been granted certain licenses in the Territory (as defined herein) under the
patents and the know-how (“License Agreement”); and

     WHEREAS, Replidyne, DSP and Nisso have entered into the Letter of Intent for Key Business
Terms Faropenem Daloxate Supply Agreement on the same date (“Supply LOI”) which require the
execution and delivery of this Agreement by the Parties; and

     WHEREAS, Replidyne, DSP and Nisso entered into a letter agreement on November 15, 2004
(“Letter Agreement”) wherein Replidyne provided Nisso with an instruction to commence
validation activities for Nisso’s Nihongi Facility to manufacture certain quantities of Drug
Substance (hereinafter defined) and procurement of raw materials relating to such Drug Substance
and Nisso agreed to commence such validation activities; and

     WHEREAS, Replidyne desires to purchase from DSP pre-clinical, clinical and commercial
quantities of the Drug Substance, and the Supplier desires to supply such Drug Substance to
Replidyne in accordance with the terms and conditions of this Agreement.

     NOW, THEREFORE, for and in consideration of the premises and the provisions contained herein,
the Parties, intending to be legally bound, agree as follows:

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 1

 

 

     ARTICLE 1: DEFINITIONS

          Certain defined terms as used in this Agreement shall have the meanings respectively specified
in Attachment 1 hereto.

     ARTICLE 2: PREPARATION OF NIHONGI FACILITY

	2.1	 	General. Nisso shall perform all necessary engineering work, equipment acquisition
and commissioning, training, qualification and validation activities and other work required
for the Nihongi Facility to manufacture and supply the Drug Substance meeting the
Specifications in accordance with the then-current Drug Master File for the Drug Substance and
all Regulations and Regulatory Approvals.
	 
	2.2	 	Engineering Activities. Nisso shall undertake and subsequently complete all
necessary engineering activities, equipment acquisition and commissioning, training and other
activities required for the Nihongi Facility to manufacture and supply the Drug Substance
meeting the Specifications in accordance with the then-current Drug Master File for the Drug
Substance (excluding qualification and validation activities as provided in Section
2.3). Subject to Section 12.5(c) (Engineering Costs) hereof, all costs related to
such activities shall be for the sole account of Nisso. It is acknowledged by the Parties
that Nisso have already commenced such activities in accordance with the Letter Agreement.
	 
	2.3	 	Validation Activities. Nisso shall undertake and complete all necessary
qualification and validation activities for the Nihongi Facility to manufacture and supply
commercial quantities of the Drug Substance meeting the Specifications in accordance with the
then-current Drug Master File for the Drug Substance and all Regulations and Regulatory
Approvals. Such activities shall be undertaken in accordance with the timeline and plan set
forth in Attachment 2.3 hereto (“Timeline”). Subject to Section 2.4
(Purchase of Validation Lots of Drug Substance) hereof, all costs related to such
activities shall be for the sole account of Nisso. It is acknowledged by the Parties that
Nisso have already commenced a part of such activities in accordance with the Letter
Agreement.
	 
	2.4	 	Purchase of Validation Batches of Drug Substance. Replidyne shall purchase and take
delivery of Drug Substance manufactured at Nihongi Facility during the validation activities
specified in Section 2.3 (Validation Activities) as follows:

	 	 	 	 	 	 	 
	 

	 	(a)
	 	Number of Batches:
	 	Four (4) batches as further specified in the
protocol approved by Nisso and Replidyne (each a “Validation Batch”).
	 
	 	 	 	 	 	 
	 

	 	(b)
	 	Size of Batches:
	 	[ *** ] kg ([ *** ] kg in the potency basis) for the
first batch and [ *** ] kg ([ *** ] kg in the potency basis) for the second, third and
fourth batches. Estimated total quantity is [ *** ] Kg ([ *** ]Kg in the potency
basis).

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 2

 

 

	 	 	 	 	 	 	 
	 

	 	(c)
	 	Purchase Price:
	 	JP¥[ *** ]/kg (JP¥[ *** ]/kg in the potency basis),
priced on the basis of Ex Works Nihongi (to be increased by mutual
agreement to reflect delivery FCA Narita pursuant to
Section 4.7 (Delivery, Title and Risk of Loss)).
	 
	 	 	 	 	 	 
	 

	 	(d)
	 	Delivery:
	 	In accordance with the Timeline (shipment from Nihongi
Facility by [ *** ]) and Section 4.7 (Delivery, Title and Risk of Loss).
	 
	 	 	 	 	 	 
	 

	 	(e)
	 	Payment Terms:
	 	As set out in Section 5.3 (Payment), provided
that [ *** ] percent ([ *** ]%) of the purchase price of JP¥[ *** ] which is calculated
based on the estimated total quantity (JP¥[ *** ] x [ *** ]Kg) shall be paid by
Replidyne in advance within five (5) days after Replidyne places its purchase orders
for the relevant delivery to DSP. Within thirty (30) days after receipt of each of 1st,
2nd and 3rd Batches, Replidyne shall pay DSP the purchase price corresponding to [ ***
]percent ([ *** ]%) of the quantity of each Validation Batch actually delivered.
Further, within thirty (30) days after receipt of the 4th Batch, Replidyne shall pay
DSP the balance of the total purchase price which shall be calculated as follows:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Payment for the 4th Validation Batch = [ *** ] x Total
quantity (potency) actually delivered for 4 batches (1st
through 4th Validation Batch) ] - [(Initial payment described
above (a)) + (Total amount paid for the 1st, 2nd and 3rd
Validation Batches described above (b))].
	 
	 	 	 	 	 	 
	 

	 	(f)
	 	Condition:
	 	Only Drug Substance meeting the Specifications manufactured
under a protocol approved by Replidyne. (For clarity, Replidyne shall not be required
to purchase Drug Substance that results from experimental, pilot, scale-up or other
batches that do not meet the Specifications.)

Upon the execution of this Agreement, Replidyne shall deliver Supplier the purchase
order of the Validation Batch containing the above (a) to (f).

Nisso shall provide to Replidyne (i) written notice of its release of the relevant
Validation Batch, (ii) a certificate of analysis for such Validation Batch, (iii) the
results of all relevant testing data for such Validation Batch, and (iv) samples of such
Validation Batch for Replidyne’s independent testing, which shall be reasonably satisfactory
to Replidyne and Replidyne shall pay Nisso the reasonable shipping cost of such samples
separately. Within thirty (30) days after the date of Replidyne’s actual receipt of Nisso’s
notice, certificate, information and samples provided pursuant to this Section 2.4,
Replidyne shall review

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 3

 

 

such documents and, if desired, independently test such samples.
Replidyne, by written notice to Nisso, shall either accept such Validation Batch or reject
such Validation Batch with written reasonable reasons for such rejection. Nisso at its cost
shall create and retain
all necessary and customary batch samples and records. Other than the Validation
Batches, Replidyne shall not be obligated to purchase quantities of Drug Substance
manufactured pursuant to Section 2.3 (Validation Activities) hereof.

	2.5	 	Replidyne Review. Nisso shall provide Replidyne with the opportunity to review and
approve all plans and protocols for Validation Batches prior to commencing any such batch,
such approval not to be unreasonably withheld or delayed, provided that Replidyne may withhold
such approval if such plans or protocols fail to meet industry, FDA or ICH standards or cGMP
or if Nisso’s equipment or process will not reasonably deliver the Drug Substance that would
meet the warranties specified in Section 6.5 (Warranties) hereof.
	 
	2.6	 	Inspections. Prior to use of the Nihongi Facility for the production of Drug
Substance, and in addition to the provisions of Sections 7.3 (Inspections) and 7.6
(Access to Facilities), such facility shall have passed inspection and audit by Replidyne
and all relevant Regulatory Authorities, including without limitation the FDA, for compliance
with cGMPs, USP GMPs, ICH Guidelines or other guidelines issued by such Regulatory Authorities
in the Territory or ICH. At the request of Replidyne or any relevant such Regulatory
Authorities, Nisso shall correct any deficiency at the Nihongi Facility which would reasonably
cause the production of the Drug Substance not to be in compliance with such requirements. If
there is any difference in the opinion of Replidyne and Nisso with respect to the correction
of the deficiencies identified in any inspection or audit of such facilities by Replidyne and
Replidyne and Nisso are not able to agree upon a plan for correction of such deficiencies
within thirty (30) days after inspection and audit by Replidyne, Replidyne and Nisso shall,
without undue delay, reach an agreement on a Third Party expert who shall finally decide the
issue regarding the correction of such deficiencies. The award issued by such Third Party
expert shall be final and binding upon Replidyne and Nisso. Replidyne and Nisso shall share
the cost of the Third Party expert equally. If Nisso agrees to make a correction or is
obliged to make a correction of the deficiency in accordance with the award issued by the
Third Party expert, Nisso shall bear all costs relating to such correction.
	 
	2.7	 	Launch Go Date. When Replidyne decides in its sole discretion to Launch the Drug
Product and place its first firm purchase order for scaled up production of Drug Substance for
commercial use in such Launch, Replidyne shall so notify the Supplier in writing. The date of
such notice to Supplier shall be referred to herein as the “Launch Go Date”. (For
clarity, Replidyne may, at its option prior to the Launch Go Date, delay its decision to
commercially sell a Drug Product, or determine to not commercially sell a Drug Product, or
make a limited launch of a Drug Product, without liability to Supplier other than pursuant to
Section 3.3 (Compensation to Nisso for Delay in Launch) or Section 12.5(c)
(Engineering Costs) or Section 12.5(d) (Other Pre-Approved Reimbursable Costs)  hereof.)
Nisso shall use its commercially reasonable efforts to have the capability 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 4

 

 

commercially
produce the Drug Substance at the Nihongi Facility in accordance with the Timeline.

	2.8	 	Registration. Replidyne shall have the right to specify the Nihongi Facility as the
site for production of the Drug Substance in all NDAs and Regulatory Approvals related to the
Drug Products. Nisso shall register the Nihongi Facility with all relevant Regulatory
Authorities, including, without limitation, with the FDA by (i) filing a FDA Form 2656 for
the Nihongi Facility, and (ii) completing a foreign site listing with the registration of a
U.S. agent for the Nihongi Facility.
	 
	2.9	 	Available Capacity. From and after the Launch Go Date during the Term, Nisso shall
at all times maintain an annual manufacturing capacity for Drug Substance of not less than [
*** ] tons in potency base at the Nihongi Facility.
	 
	2.10	 	Stability Studies. Nisso shall undertake stability studies in accordance with a
timeline and plan that shall be mutually agreed in writing between Replidyne and Nisso. Nisso
shall provide Replidyne with the opportunity to review and approve all plans and protocols
related to such stability studies, such approval shall not be unreasonably withheld or
delayed, provided that Replidyne may withhold such approval if such plans or protocols fail to
meet cGMPs, Regulations or other guidelines issued by Regulatory Authorities or ICH.

     ARTICLE 3: MANUFACTURE AND SUPPLY OF DRUG SUBSTANCE

	3.1	 	Supply of the Drug Substance. Subject to the provisions of this Agreement, during
the Term, the Supplier shall exclusively supply Replidyne with all the Drug Substance which
Replidyne, Replidyne’s Affiliates and its sublicensees, as authorized and directed in writing
by Replidyne from time to time (hereinafter collectively called “Replidyne’s
Designees”), require for their pre-clinical, clinical and commercial use in the Territory,
and Replidyne shall exclusively purchase all of Replidyne’s and Replidyne’s Designees’
pre-clinical, clinical and commercial requirements of the Drug Substance in the Territory from
DSP, which in turn shall obtain such supply from Nisso; provided, however, that such
obligation of Replidyne shall cease to apply, and Replidyne may in its sole discretion
manufacture or purchase any quantities of the Drug Substance from Third Parties, as provided
in Section 3.2 (Minimum Purchase Quantities) hereof and Article 8 (Transfer of
Manufacturing) hereof. Supplier hereby undertakes to supply such quantities of the Drug
Substance as may be ordered by Replidyne, on the terms and conditions provided herein.
Subject to Supplier’s prior written consent (such consent not to be unreasonably withheld),
upon written request to Supplier by Replidyne, Nisso shall deliver the Drug Substance directly
to Replidyne’s Designees. During the Term, all quantities of Drug Substance manufactured or
supplied by Supplier and their Affiliates for use or sale in the Territory shall be
exclusively for Replidyne. In the event that Supplier or their Affiliates manufacture or
supply, or agree to manufacture or supply, any product which is, or is to be used for, a
pharmaceutical formulation of faropenem daloxate to any Third Party on terms which are in any
respect more favorable than the terms of this Agreement, then Supplier

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 5

 

 

shall disclose such
terms to Replidyne, and the Parties shall meet and negotiate in good faith commercially
reasonable changes to this Agreement.

	3.2	 	Minimum Purchase Quantities.

	 	(a)	 	First Three Years. Within ninety (90) days after the Launch Go Date,
Replidyne and Nisso shall negotiate in good faith and mutually agree in writing upon
appropriate minimum purchase quantities of the Drug Substance for the three (3) year
period (the “Three Year Period”) which commences on date of the first
shipment of Drug Substance from Nisso for use in such Launch. The Parties agree
that a minimum purchase quantity of [ *** ] metric tons of the Drug Substance during
the Three Year Period is a reasonable requirement based on Nisso’s investment and
costs associated with the production of the Drug Substance. Accordingly, the
minimum purchase quantity for the Three Year Period shall be [ *** ] metric tons of
the Drug Substance unless Replidyne determines that it is necessary to have a lower
minimum based on results of the Phase III clinical studies, market conditions,
reasonable sales projections and other relevant information relating to the
commercialization of the Drug Products. In such event, Replidyne and Nisso shall
negotiate in good faith in an effort to agree in writing on a lower minimum purchase
quantity of the Drug Substance for the Three Year Period. If Replidyne and Nisso
cannot agree on a lower minimum within such ninety (90) day period and Replidyne
does not agree to the [ *** ] metric ton minimum within ten (10) days thereafter,
then (i) Nisso shall have the right to terminate this Agreement and receive
reimbursement from Replidyne pursuant to Section 12.5(c) (Engineering Costs)
hereof, and (ii) Replidyne shall have the right to require Nisso to transfer the
Manufacturing Technology of the Drug Substance to Replidyne or its designee (the
“Manufacturing Designee”) pursuant to the terms and conditions stipulated in
Sections 8.2, 8.3, 8.4 and 8.5 hereof.
	 
	 	(b)	 	Next Five Years. Within ninety (90) days prior to the end of the Three
Year Period, Replidyne and Nisso shall negotiate in good faith and agree in writing
upon appropriate minimum purchase quantities of the Drug Substance for the five (5)
year period commencing on the date following the last day of the Three Year Period and
ending on the fifth (5th) anniversary date thereof (the “Five Year Period”).
The Parties agree that a minimum purchase quantity of [ *** ] metric tons per year of
the Drug Substance during the Five Year Period is a reasonable requirement based on
Nisso’s investment and costs associated with the production of the Drug Substance.
Accordingly, the minimum purchase quantity for the Five Year Period shall be [ *** ]
metric tons per year of the Drug Substance during the Five Year Period unless Replidyne
determines that it is necessary to have a lower minimum based on market conditions,
reasonable sales projections and other relevant information relating to the
commercialization of the Drug Products. In such event, Replidyne and Nisso shall
negotiate in good faith in an effort to agree in writing on a lower minimum purchase
quantity of the Drug Substance for the Five Year Period. If Replidyne and Nisso cannot
agree on a lower minimum within such ninety-day

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 6

 

 

period and Replidyne does not agree to
the [ *** ] metric ton per year minimum within ten (10) days thereafter, then (i) Nisso
shall have the right to terminate this Agreement, and (ii) Replidyne shall have the
right to require Nisso to transfer the Manufacturing Technology of the Drug Substance
to Replidyne or its Manufacturing Designee pursuant to the terms and conditions
stipulated in Sections 8.2, 8.3, 8.4 and 8.5 hereof.

	 	(c)	 	Remainder of the Term. For each year during the Term after the Five
Year Period (the “Remaining Term”), Replidyne and Nisso shall negotiate in good
faith and agree in writing upon an appropriate minimum purchase quantity of the Drug
Substance on an annual basis (each such year shall be a “Remaining Term Year”).
Within ninety (90) days prior to the end of the Five Year Period or the then-current
Remaining Term Year, as applicable, Replidyne and Nisso shall meet or communicate for
the purpose of establishing the minimum purchase quantity for the next Remaining Term
Year. The Parties agree that a minimum purchase quantity of [ *** ] metric tons per
year of the Drug Substance for each Remaining Term Year is a reasonable requirement
based on Nisso’s investment and costs associated with the production of the Drug
Substance. Accordingly, the minimum purchase quantity for each such Remaining Term
Year shall be [ *** ] metric tons of the Drug Substance unless Replidyne determines
that it is necessary to have a lower minimum based on market conditions, reasonable
sales projections and other relevant information relating to the commercialization of
the Drug Products. In such event, Replidyne and Nisso shall negotiate in good faith in
an effort to agree in writing on a lower minimum purchase quantity of the Drug
Substance for the next Remaining Term Year. If Replidyne and Nisso cannot agree on a
lower minimum within such ninety (90) day period and Replidyne does not agree to the [
*** ] metric ton per year minimum within ten (10) days thereafter, then (i) Nisso shall
have the right to terminate this Agreement, and (ii) Replidyne shall have the right to
require Nisso to transfer the Manufacturing Technology of the Drug Substance to
Replidyne or its Manufacturing Designee pursuant to the terms and conditions stipulated
in Sections 8.2, 8.3, 8.4 and 8.5 hereof.
	 
	 	(d)	 	Effect of Non-Exclusive Rights. If for any reason the rights of
Replidyne pursuant to the License Agreement become non-exclusive rather than exclusive,
including without limitation pursuant to Section 8.3 of the License Agreement, then the
minimum purchase quantities obligations of Replidyne pursuant to this Section 3.2
shall cease to apply.
	 
	 	(e)	 	Credit to Replidyne. For purposes of Replidyne’s performance of its
minimum purchase obligations hereunder, in case, without Replidyne’s failure, although
Replidyne is unable to receive all quantities of the Drug Substance from Supplier which
Replidyne ordered in good faith pursuant to Section 4.3 (Purchase Orders)
hereof, it shall be deemed that Replidyne has satisfied its corresponding minimum
purchase obligation hereunder to the extent that the quantities not received 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 7

 

 

Replidyne would have caused Replidyne to meet or exceed the applicable minimum purchase
quantities.

	 	(f)	 	Termination of Purchase in the event of Transfer of Manufacturing. In
the event of the transfer of the manufacturing of the Drug Substance pursuant to
Section 8.1 (Termination of Exclusive Purchase), Replidyne’s obligation to
complete the purchase of such minimum purchase quantities shall terminate, provided,
however, that if the cause for such transfer of manufacturing is due to
Section 8.1 (a) (Prices Not Competitive), then Replidyne’s obligation shall
not terminate for the Three Year Period.
	 
	 	(g)	 	Security of Supply. If Replidyne has reasonably determined that for
security of supply against the risk stipulated in Section 8.1(c) (Failure to Supply
Requirements) and 8.1(d) (Force Majeure) it would be necessary or advisable
to have alternative sources of the Drug Substance, and Replidyne has consulted with
Supplier regarding the basis for such determination, and Supplier has not provided
adequate assurances that are satisfactory to Replidyne related to Replidyne’s concerns,
then Nisso shall disclose all Manufacturing Technology (excluding, however, the
Sensitive Manufacturing Information (defined below)) to Replidyne and/or a Third Party
designated by Replidyne for Replidyne’s use in the production of the Drug Substance and
the Drug Product only. DSP and Nisso shall assist Replidyne and/or such Third Party
designated by Replidyne as reasonably necessary to manufacture the Drug Substance;
provided that such assistance shall be at Replidyne’s expense.
	 
	 	(h)	 	Remedies. The compensation provisions of Section 5.8 (Compensation
to Supplier) and Section 12.5(b) (Minimum Purchase Obligations) shall be
Supplier’s sole remedy for Replidyne’s failure to purchase the minimum purchase
quantities of Drug Substance pursuant to this Section 3.2. For clarity, the provisions
of this Section 3.2, Section 5.8 and Section 12.5(b) shall only apply from and
after the Launch Go Date.
	 
	 	(i)	 	Low Dose Drug Product. It is expressly understood that the provisions
of the minimum purchase quantities stipulated in this Section 3.2 shall not be applied
in case Replidyne makes only a limited launch (and not the Launch) of the Drug Product
in the Territory.

	3.3	 	Compensation to Nisso for Delay. If the Launch Go Date has not occurred by January
1, 2007, then Replidyne shall compensate Nisso for a percentage of actual, documented and
reasonable maintenance and depreciation costs incurred by Nisso relating to the Nihongi
Facility (Nisso’s estimate of such costs are specified in Attachment 3.3 hereto) (the
“Delay Compensation”) for the period (the “Delay Compensation Period”)
beginning on July 1, 2007 and ending on the date on which this Agreement terminates or
Replidyne has both (i) provided its Launch Go Date notice to Supplier pursuant to Section
2.7 (Launch Go Date) hereof and (ii) made payment for delivery of the first firm purchase
order for scaled up

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 8

 

 

production of Drug Substance for commercial use in Launch contemplated by
the Launch Go Date, as follows:

	 	 	 
	Portion of Delay Compensation Period	 	Percentage of Delay Compensation Payable
	[ *** ]
	 	[ *** ] percent ([ *** ]%)
	([ *** ] to [ *** ])

	 	 
	[ *** ]
	 	[ *** ] percent ([ *** ]%)
	([ *** ] to [ *** ])

	 	 
	Remainder of Delay Compensation Period

(From and after [ *** ])

	 	[ *** ] percent ([ *** ]%)

provided, that the Delay Compensation for any twelve month period (before the above
percentages are applied) shall not exceed JP¥[ *** ]. For clarity, it is expressly
understood that in case the Launch Go Date occurs between January 1, 2007 and June 30, 2007,
the Delay Compensation hereof shall not be applied. If Replidyne disagrees with the amount
of the Delay Compensation as calculated by Nisso, Replidyne and Nisso shall negotiate in
good faith to resolve any differences. If both Parties cannot reach an agreement on the
Delay Compensation after thirty (30) days, Replidyne and Nisso shall select a Third Party
accounting firm mutually agreed by both Parties to finally decide any differences in the
calculation of the Delay Compensation. The award issued by such Third Party accounting firm
shall be final and binding upon both Parties. Replidyne and Nisso shall share equally the
cost of the Third Party accounting firm. No other fees or compensation shall be payable to
Nisso related to such delay pursuant to this Agreement. Notwithstanding the foregoing, no
Delay Compensation shall be payable (i) if Nisso is not in material compliance with its
obligations under this Agreement, or (ii) Nisso or the Nihongi Facility is not on schedule
to manufacture and supply the Drug Substance in accordance with the provisions of this
Agreement and the Timeline and Nisso has not satisfied all material qualification,
validation and registration matters in the Territory, or (iii) for time periods after the
expiration or termination of this Agreement. The payment of the Delay Compensation shall be
made to the bank account designated by Nisso within thirty (30) days following (i) the end
of each calendar year during the Delay Compensation Period, and (ii) the end of the Delay
Compensation for the partial calendar year in which the Delay Compensation Period ends.

	3.4	 	Coordinators. During the Term, Replidyne, DSP and Nisso shall each appoint one or
more authorized representatives (“Coordinators”) for the exchange of all
communications, other than formal notices hereunder, related to the supply of the Drug
Substance. Each Party shall provide notice to the other Parties as to the name and title of
the individuals so appointed. Each Party may replace its Coordinators at any time for any
reason by providing written notice to the other Parties. The Coordinators shall meet at least
once in each calendar year to review each Party’s past and future performance hereunder.

	3.5	 	Drug Products Plans. Replidyne’s plans and schedule for arrangements to manufacture
the Drug Substance into Drug Products shall be provided to Supplier on or before the Launch Go
Date. Replidyne reserves the right to modify such plans, schedule 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.

					
	 	 	 	 	 
	 
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	 	PAGE 9

 

arrangements from time
to time in its sole discretion, provided that Replidyne shall inform Supplier of material
changes to such plans and schedule related to this Agreement.

	3.6	 	Observance of Applicable Laws. The Parties shall exercise and perform their
respective rights and obligations under this Agreement in accordance with all applicable laws,
including, without limitation, all Applicable Laws and Regulations of Japan, the U.S. and
Canada and each country in which Drug Substance manufacturing is being conducted or that
pertain to the performance by the Supplier of their obligations in connection with the
manufacturing of the Drug Substance. The Parties shall assist each other in complying with
all Applicable Laws and Regulations.
	 
	3.7	 	Protective Measures. Each Party acknowledges that the Drug Substance is a Class 3
product that presents significant risks for employee injury and environmental contamination,
and accordingly each Party undertakes and agrees at its cost to take all necessary and
advisable precautions to ensure, and each Party shall be solely liable for, (i) the health and
safety of its employees and all other persons under its direction or control having contact
with the Drug Substance, and (ii) the protection of the environment related to Drug Substance
in its possession.
	 
	3.8	 	Facilities. Nisso shall manufacture (i) pre-clinical and clinical quantities of the
Drug Substance at the Takaoka Facility or the Nihongi Facility, as mutually agreed, and (ii)
commercial quantities of the Drug Substance only at the Nihongi Facility.
	 
	3.9	 	No Cross-Contamination. Nisso shall use the Nihongi Facility only for the
manufacture of (i) faropenem drug substance (i.e. faropenem sodium and faropenem daloxate),
and (ii) drug substance for other anti-biotic pharmaceuticals in the penem class. Nisso
shall not produce any other drugs or products at the Nihongi Facility, except with the
prior written consent of Replidyne, not to be unreasonably withheld.

     ARTICLE 4: FORECASTS, PURCHASE ORDERS AND DELIVERIES

	4.1	 	Batch Sizes. The permissible batch sizes for the purposes of forecasts and Purchase
Orders pursuant to this Article 4 are as specified in Attachment 4.1 hereto.
	 
	4.2	 	Forecasts. Replidyne shall provide DSP with the following forecasts for the purchase
of quantities of the Drug Substance pursuant to this Agreement (which DSP will promptly
transfer such forecasts to Nisso), which shall constitute non-binding estimates of expected
orders for the Drug Substance so that Nisso may make plans for the manufacturing of the Drug
Substance. At the request of Nisso or DSP, the Parties shall review and discuss forecasts
provided by Replidyne to assist the Nisso in efficiently scheduling the manufacture of the
Drug Substance to meet the requirements of Replidyne pursuant to this Agreement.

	 	(a)	 	Clinical Forecasts. Replidyne’s initial plan for the purchase of
quantities of the Drug Substance to manufacture Drug Product for clinical use on a
quarterly basis during the twelve (12) month period following the Effective Date is
attached 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 10

 

 

Attachment 4.2(a) hereto. Such forecast shall be reviewed and
updated by Replidyne at least every six (6) months.

	 	(b)	 	Planning Forecasts for Commercial Quantities. Twelve (12) months
prior to the first anticipated commercial shipment of the Drug Substance, and on or
before the first day of each calendar quarter thereafter, Replidyne shall provide the
Supplier with a written rolling five (5) year forecast, beginning on such first day of
such calendar quarter, on a calendar quarterly basis (each a “Planning
Forecast”, which shall include the items specified in Section 4.3(i) and
(ii) hereof, but need not include other items) of its expected orders of the
Drug Substance for the commercial sale of Drug Products.
	 
	 	(c)	 	Purchase Forecasts for Commercial Quantities. Twelve (12) months prior
to the first anticipated commercial shipment of the Drug Substance, and on or before
the first day of each calendar quarter thereafter, Replidyne shall provide the Supplier
with a written rolling twelve (12) month forecast, beginning on such first day of such
calendar quarter, on a monthly basis (each a “Purchase Forecast”, which shall
include the items specified in Section 4.3(i) and (ii) hereof, but need not
include other items) of its expected orders of the Drug Substance for the commercial
sale of the Drug Products.

	4.3	 	Purchase Orders. Replidyne may submit purchase orders to DSP (which DSP will
promptly transfer such purchase order to Nisso) (“Purchase Orders”) during the Term
for Drug Substance, with delivery dates in accordance with the lead times specified in
Section 4.4 (Lead Times). Purchase Orders shall, at a minimum, include: (i)
identification of the specific Drug Substance ordered; (ii) quantity; (iii) delivery date;
(iv) shipping instructions and shipping address; and (v) the Purchase Price of the Drug
Substance ordered. Any Purchase Order placed by Replidyne shall be subject to acceptance by
Nisso; provided, however, that all Purchase Orders issued in accordance with this Agreement
for quantities up to [ *** ] percent ([ *** ]%) of the quantities of the Drug Substance set
forth in the first three (3) months of the most recent Purchase Forecast shall be
automatically confirmed and accepted by Nisso and shall be supplied by the Supplier. The
Supplier shall not be obligated, but shall use commercially reasonable efforts, to ship more
than such quantities if ordered by Replidyne. It is expressly understood that, after using
commercially reasonable efforts, if the Supplier fails to supply such excess quantities of the
Drug Substance ordered by Replidyne, such failure shall not be deemed as a breach of this
Supply Agreement, and Section 8.1 (Termination of Exclusive Purchase) hereof shall not
apply, unless Nisso had accepted Replidyne’s Purchase Order(s) for the excess quantities not
supplied. Replidyne shall have the obligation to purchase at least [ *** ] percent ([ *** ]%)
of the quantities of the Drug Substance set forth in the first three (3) months of the most
recent Purchase Forecast. The terms and conditions of this Agreement shall govern and
supersede any additional or contrary terms set forth in any Purchase Order of Replidyne or any
acceptance, confirmation, invoice or other document of the Supplier or Replidyne unless duly
signed by an officer of Replidyne, an officer of DSP and an officer of Nisso and expressly
stating and identifying which specific additional or contrary terms shall supersede the terms
and conditions of this Agreement. Notwithstanding the foregoing,

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 11

 

 

Replidyne shall make the
Purchase Order prior to the Launch Go Date no more than once every three (3) months.

	4.4	 	Lead Times. Supplier acknowledges and agrees that time is of the essence in making
deliveries of Drug Substance. The normal lead time for delivery of Drug Substance under any
Purchase Order shall be [ *** ] months. Replidyne shall specify a delivery date in each
Purchase Order, which shall not be a date that is less than [ *** ] months following the date
of such Purchase Order, provided that:

	 	(a)	 	Waivers by Nisso. This limitation shall be waived if Nisso confirms
such Purchase Order, even if such delivery date is less than [ *** ] months following
the date of such Purchase Order.
	 
	 	(b)	 	First Purchase Order. The lead time for Replidyne’s first Purchase
Order for commercial quantities of Drug Substance (whether such Purchase Order is
issued before or at the Launch Go Date) shall be [ *** ] months, provided that
Replidyne and Nisso shall in good faith negotiate and agree shorter lead time for the
first Purchase Order subject to Replidyne’s cooperation with Nisso to guarantee payment
for the advance purchase of raw materials pursuant to Section 12.5(d) (Other
Pre-Approved Reimbursable Costs) hereof.
	 
	 	(c)	 	Launch Go Date Purchase Order. Subject to Section 4.4(b) (First
Purchase Order) hereof, the lead time for Replidyne’s Purchase Order submitted with
Replidyne’s notice to Supplier of the Launch Go Date pursuant to Section 2.7
(Launch Go Date) hereof shall have a lead time equal to the sum of (i) [ *** ]
months, plus (ii) the time period, not to exceed an additional [ *** ] months,
during which Replidyne and Nisso reach agreement upon minimum purchase quantities of
the Drug Substance for the Three Year Period pursuant to Section 3.2(a) (First
Three Years) hereof.

Nisso (i) shall confirm any Purchase Order with a delivery date that is more than [ *** ]
months (or other time periods specified above) following the date of such Purchase Order
subject to the provisions in Section 4.3 above, and (ii) may, but shall not be
obligated to, confirm any Purchase Order with a delivery date that is less than [ *** ]
months following the date of such Purchase Order. Nisso shall timely deliver the specified
quantities of the Drug Substance by the date that is specified in Replidyne’s Purchase
Order. If Nisso is unable, at any time, to supply Replidyne on a timely basis with the
quantity of Drug Substance ordered by Replidyne in accordance with Section 4.3 for
any reason, including the occurrence of a force majeure event under Article 15 (FORCE
MAJEURE), the Supplier shall immediately notify Replidyne of such inability to supply and
the estimated extent of such inability (including delay time and the quantity of Drug
Substance involved).

	4.5	 	Modification of Purchase Orders. No Purchase Order shall be modified or canceled
except upon the mutual written agreement of Replidyne and the Supplier, except as provided in
this Section 4.5. Mutually agreed change orders shall be subject to all

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 12

 

 

provisions of
this Agreement, whether or not the changed Purchase Order so states. Notwithstanding the
foregoing, any Purchase Order may be canceled by Replidyne as to any quantity of Drug
Substance which is not delivered by or on the delivery date specified by Replidyne in the
relevant Purchase Order (as modified if applicable). Replidyne shall have the right to modify
all forecasts provided pursuant to Section 4.2 (Forecasts) hereof but shall not have
the right to modify or cancel the Purchase Order, if for any reason DSP decides to alter the
exclusive license granted to Replidyne under the License Agreement to become a non-exclusive
license, including without limitation pursuant to Section 8.3 of the License Agreement,
provided, however, that DSP shall postpone such alteration of the exclusive license to a
non-exclusive license until the Drug Substance of such Purchase
Order is used up for the manufacturing of the Drug Product and such Drug Product has been
sold by Replidyne in the ordinary course of its business, but such postpone period shall not
exceed twelve (12) months.

	4.6	 	Release Documentation. All Drug Substance shall meet the Specifications and shall be
subjected to a quality control inspection and final release by Nisso. Nisso, at its cost,
shall complete the manufacture, inspect and complete all necessary testing and other functions
for each batch of the Drug Substance to demonstrate conformance to the warranties provided in
Section 6.5 (Warranties) hereof prior to the release of the Drug Substance for
shipment, all in accordance with Nisso’s quality control standards and in compliance with
cGMPs. Nisso shall provide to Replidyne prompt written notice of such release, and shall
include a packing list and documents in each shipment of the Drug Substance providing the
following information and such other information as may be reasonably requested by Replidyne
from time to time (“Release Documentation”): (i) Purchase Order number; (ii) Drug
Substance code; (iii) quantity; (iv) Nisso lot number; (v) a certificate of analysis for each
batch of the Drug Substance (which shall contain, at a minimum, analytical tests and results,
date of manufacture, date of re-control (or shelf-life of the batch), batch size (total amount
produced), a release statement, and a certification that the analytical tests are performed in
accordance with the United States Pharmacopoeia); (vi) a certificate of compliance for each
batch of the Drug Substance (confirming that the Drug Substance was manufactured in accordance
with cGMPs); (vii) the results of all relevant testing data for each batch of the Drug
Substance; and (viii) if required by Replidyne, samples of each batch of the Drug Substance
(which shall be included in the quantities ordered by Replidyne under the relevant Purchase
Order) for Replidyne’s independent testing pursuant to Section 4.8 (Inspection, Shortages
and Defects) hereof (the reasonable shipping costs of such samples shall be for the
account of Replidyne), which shall be reasonably satisfactory to Replidyne. Nisso shall also
mail (i) copies of such packing list and documents to the shipping destination and to
Replidyne, and (ii) such samples to Replidyne, for each shipment at the time of shipment.
Nisso shall also notify Replidyne of rejected batches of the Drug Substance with the reasons
for such rejection, and upon Replidyne’s request shall provide copies of Nisso’s internal
documents related to deviation investigations.
	 
	4.7	 	Delivery, Title and Risk of Loss. All Drug Substance shall be shipped by the
Supplier FCA (“Free Carrier”), INCOTERMS 2000, Narita airport (“Shipping Point”) after
its

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 13

 

 

release by Nisso at the time notified by Replidyne to the Supplier. The Parties
acknowledge and agree that the sale of Drug Substance to Replidyne under this Agreement is an
export sale which should not be subject to Japanese Consumption Tax; in the event that any
Japanese tax authority asserts such a tax liability against Replidyne, Supplier shall
cooperate with Replidyne, including without limitation providing any necessary documentation
and properly reforming this Agreement, to confirm that the sales of Drug Substance hereunder
are export sales from Japan. All Drug Substance shall be properly stored by Nisso in
accordance with the Specifications, cGMPs and Replidyne’s reasonable instructions. Physical
delivery of the Drug Substance and the Release Documentation to Replidyne may be made directly
by Nisso.

	4.8	 	Inspection, Shortages and Defects.

	 	(a)	 	Inspection. As between the Parties, Replidyne and its representatives
shall have the right, but not the obligation, to inspect the Drug Substance and, if
desired, independently test the samples (using such testing methods as Replidyne may
determine) sent to Replidyne pursuant to Section 4.6 (Release Documentation)
hereof, provided, however, that Replidyne acknowledges that Replidyne is subject to the
inspection requirements, as applicable, for the Drug Substance in accordance with
cGMPs, USP GMPs, ICH Guidelines or other guidelines issued by such Regulatory
Authorities in the Territory or ICH, including, but not limited to, the inspection of
the Release Documentation. Replidyne shall provide notice to Supplier if it discovers
any shortage in quantity or Defect in quality pursuant to this Section 4.8.
	 
	 	(b)	 	Shortages. After the receipt of each shipment of the Drug Substance,
Replidyne or its authorized representatives shall carry out a quantity count of such
shipment. Replidyne shall notify Supplier in writing of any obvious shortage in
quantity of any shipment of Drug Substance within its possession within forty (40) days
after receipt by Replidyne and/or Replidyne’s Designees. A shipment of the Drug
Substance is to be considered to have fulfilled the quantity specified in the Purchase
Orders if Replidyne or its representatives does not notify the Supplier about any
objections within such time periods.
	 
	 	(c)	 	Defects. Upon notification to Supplier, Replidyne shall have the right
to reject any lot in whole or in part that contains Drug Substance which is damaged or
has a Defect (“Defective Product”) which should reasonably be discovered in the
inspection stipulated in Section 4.8 (a) (Inspection) and quantity count of the
shipment stipulated in Section 4.8 (b) (Shortages) above, provided, however,
that such notification shall be provided to the Supplier within forty (40) days
following the receipt of the Drug Substance by Replidyne and/or Replidyne’s Designees,
and provided, further, that such notification shall be provided to the Supplier within
one hundred eighty (180) days following the receipt of the Defective Product with
respect to latent Defect which Replidyne cannot reasonably discover through the
inspection stipulated in Section 4.8(a) (Inspection) above. For purposes of
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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 14

 

 

Section 4.8 (but not for purposes of any other provision of this
Agreement, including without limitation Sections 6.5 (Warranties) and 13.2 (Hold
Harmless by Supplier) hereof), a shipment of the Drug Substance is to be considered
to have fulfilled the Specifications, and Replidyne shall not request a replacement or
credit for such shipment, if Replidyne or its representatives does not notify the
Supplier about any Defects within such time periods. Replidyne shall provide Supplier
with information as to the reason for the rejection of the Defective Product, including
a description of the test procedure and results, if any, on which the rejection is
based.

	 	(d)	 	Disposal or Return. Supplier shall instruct Replidyne as to the
disposal or return of Defective Product. If Supplier instructs Replidyne to dispose of
Defective Product, Supplier shall be responsible for such disposal costs. If Supplier
instructs Replidyne to return Defective Product, Supplier shall be responsible for such return
shipping charges.
	 
	 	(e)	 	Replacement or Credit. At Replidyne’s option, Supplier shall either
(i) immediately replace shortages of the Drug Substance or Defective Product, without
additional cost to Replidyne, permit Replidyne to issue a debit memorandum to Supplier
for the Purchase Price for shortages of the Drug Substance or Defective Product, and
re-invoice Replidyne for the Drug Substance shipped to replace such shortages or
Defective Product at the time of shipment of the replacement Drug Substance; or (ii)
credit Replidyne for the Purchase Price for such shortages or Defective Product after
receipt of Replidyne’s debit memorandum related to such shortage of the Drug Substance
or Defective Product.
	 
	 	(f)	 	Exceptions. The provisions of this Section 4.8 shall not apply
to any Drug Substance which has a Defect due solely to (i) storage, handling,
formulation, labeling or shipping by Replidyne, its Affiliate, sublicensees or
customers, or (ii) Defects first discovered after the expiry of its shelf life.
	 
	 	(g)	 	Disputes. In the event of a dispute regarding whether any Drug
Substance has a Defect which Supplier and Replidyne are unable to resolve, a sample of
such Drug Substance shall be submitted by Replidyne to an independent laboratory
reasonably acceptable to Nisso and Replidyne for testing and the test results obtained
by such laboratory shall be final and controlling. The fees and expenses of such
laboratory testing and all additional shipping and transportation costs incurred as a
result of the dispute shall be borne entirely by the party against whom such
laboratory’s findings are made.

     ARTICLE
5: PURCHASE PRICE AND PAYMENT

	5.1	 	Purchase Prices.

	 	(a)	 	General. As full compensation for the purchase by Replidyne of the
Drug Substance and all other obligations to be performed by Supplier hereunder (other
than as provided in Sections 3.3 (Compensation to Nisso for Delay), 5.8

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 15

 

 

(Compensation to Supplier) and 12.5 (Compensation to Nisso) hereof),
Replidyne shall pay DSP the prices specified in Attachment 5.1 hereto (the
“Purchase Prices”) for quantities of the Drug Substance actually delivered by
Nisso pursuant to Section 4.7 (Delivery, Title and Risk of Loss) hereof,
subject to adjustment pursuant to this Article 5. No other fees shall apply.

(b) Reconciliation. The Purchase Price to be paid by Replidyne for the
Drug Substance is based solely upon quantities of the Drug Substance purchased during
any given calendar year. Based on the Purchase Forecast of Replidyne for the relevant
year, an estimated Purchase Price for each Purchase Order in such year shall be
calculated by the Parties. Within thirty (30) days following the end of each calendar
year, the Supplier shall submit to Replidyne a reconciliation of the total amount that
should have been paid by Replidyne for all quantities of the Drug
Substance purchased during such calendar year in accordance with the actual Purchase
Price against the total amounts actually billed by Supplier and paid for by
Replidyne for such quantities based on the estimated Purchase Price for such
calendar year. Replidyne shall within a period of thirty (30) calendar days after
receipt of any reconciliation prepared by the Supplier by written notice either
issue its confirmation of the amount identified therein as an overpayment or
underpayment or state that it disagrees therewith with reasons set out therein. If
no such written objection is delivered to Supplier by the end of such thirty (30)
day period, then the overpayment or underpayment amount identified in such
reconciliation shall be deemed to be accepted and approved by Replidyne and shall be
final and binding on the Parties. If a written objection is delivered to the
Supplier within such thirty (30) day period, then the matter shall be resolved in
accordance with Article 20 (Dispute Resolution) hereof. If such reconciliation, as
accepted or as so finally determined, shows that Replidyne has overpaid for such
purchases, then the Supplier shall within ten (10) calendar days of the
reconciliation being finally determined (the “Final Reconciliation”), at
Replidyne’s election, either refund such overpayment or credit such overpayment
against future purchases of the Drug Substance. If such reconciliation shows that
Replidyne has underpaid for such purchases, then Replidyne shall remit the balance
so determined to be due to the Supplier within ten (10) calendar days of the Final
Reconciliation.

	5.2	 	Adjustment of Purchase Prices. If Nisso reasonably decides that an adjustment of the
Purchase Price is commercially necessary due to an increase in the aggregate direct
manufacturing costs of Nisso (including labor costs and costs of materials, but excluding
indirect administrative and other allocated or fixed costs) for the Drug Substance, which can
be documented by Nisso (after taking into account items of cost decreases), the Parties shall
negotiate with each other in good faith a reasonable mechanism for increasing the Purchase
Prices that would apply during the following calendar year taking into account net increases
and decreases in the aggregate in such direct manufacturing costs experienced by Nisso or a
general inflationary factor equal to the increase or decrease in the wholesale price index
(“WPI”) as published by the Bank of Japan, in both cases from the Effective Date (or,
if a previous adjustment to the Purchase Prices has been made

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 16

 

 

pursuant to this Section
5.2, from the date of such adjustment); provided, however, that in no event will the
cumulative increase in the Purchase Prices during the Term exceed [ *** ] percent ([ *** ]%)
of the prices specified in Attachment 5.1 hereto. Any claims of increased direct
manufacturing costs of Nisso for an increase in the Purchase Prices pursuant to this
Section 5.2 shall (i) be accompanied by a detailed statement with reasonable
supporting documentation from Nisso, evidencing the changes in all direct manufacturing cost
items from the direct manufacturing costs as of the Effective Date (or, if a previous
adjustment to the Purchase Prices has been made pursuant to this Section 5.2, from the
date of such adjustment), and (ii) be subject to audit by independent auditors pursuant to
Section 5.5 (Audits) hereof. Nisso warrants that it shall provide to an independent
certified public accountant or attorney nominated by Nisso and approved by Replidyne under
confidentiality the details of the actual cost for each direct manufacturing cost item of the
Drug Substance within thirty (30) days after the Effective Date, which shall be verified by
such independent certified public accountant or attorney and then made
available to independent auditors appointed by Replidyne in connection with audits
undertaken pursuant to Section 5.5 (Audits) hereof to verify changes in Purchase
Prices pursuant to this Section 5.2.

	5.3	 	Payment. Amounts payable pursuant to this Article 5 shall be paid by Replidyne to
DSP within forty five (45) days of receipt of the Supplier’s invoice (which shall not be
issued by the Supplier prior to the release and delivery of the relevant Drug Substance) by
wire transfer in immediately available funds to the following bank account of DSP:

Sumitomo Mitsui Banking Co.

Tokyo-Chuo Branch

2-7-9 Nihonbashi, Chuo-ku, Tokyo, 103-0027 Japan

SWIFT : SMBCJPJT

Account Number: 246171

If any amount payable to DSP under this Agreement is not paid when due and
payable, DSP shall notify Replidyne of such non-payment, stipulating that payment must
be made within seven (7) days from the date of notice. If Replidyne fails to make
payment by the end of such notice period, then Replidyne shall pay to DSP interest on
such amount at the rate that is three percent (3%) per annum above the rate 30 day U.S.
Dollar LIBOR rate, as published in The Financial Times effective on the date such
payment is due, such rate not to exceed the maximum interest rate permitted by
Applicable Laws, from the date when due and payable until paid in full. Such interest
rate shall change to a new thirty (30) day U.S. Dollar LIBOR date period (as
applicable), shall be compounded monthly and shall be due and payable by Replidyne to
DSP at the end of each calendar month that the amount remains unpaid until the date
when such amount and all interest is paid in full.

	5.4	 	Taxes. Replidyne shall be responsible for and shall pay all taxes, duties, import,
deposits, sales taxes and value added taxes that are: (i) associated with the payment of any
amounts by Replidyne to DSP pursuant to this Agreement, or (ii) based on the sale or use of
the Drug Substance following delivery of the Drug Substance to Replidyne; provided,

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 17

 

 

however,
that Replidyne shall not be responsible for (A) taxes imposed on the Supplier by the country
of manufacture of the Drug Substance or (B) taxes imposed on the Supplier’s income. Supplier
shall be responsible for and shall pay all taxes, duties, import deposits, sales tax or value
added taxes prior to delivery of the Drug Substance to Replidyne. If Applicable Laws require
that taxes be withheld on any payment made under this Agreement, the paying Party shall be
entitled to (i) deduct those taxes from the payment, (ii) pay the taxes to the proper taxing
authority, and (iii) send evidence of the obligation together with proof of payment to the
other Party hereto.

	5.5	 	Audits.

	 	(a)	 	By Replidyne. Nisso shall permit an independent auditor appointed by
Replidyne subject to the reasonable approval of Nisso, and who shall enter into a
confidentiality agreement in favor of Nisso, during the Term and for a period of two
(2) years after the Term to examine and audit the books and records of Nisso related
to Section 3.3 (Compensation to Nisso for Delay), Section 5.1 (Purchase Prices),
Section 5.2 (Adjustment of Purchase Prices), Section 5.4 (Taxes), Section 5.9 (Cost
Reduction Opportunities) or Section 12.5 (Compensation to Nisso), for the preceding
three (3) year period, at a mutually convenient time within normal business hours to
the extent necessary to determine the accuracy of any calculations for payments due
to Nisso hereunder. The costs of such examination and audit shall be borne by
Replidyne; provided, however, that if any such examination and audit discloses an
overpayment by Replidyne of five percent (5%) or more for any relevant time period
due to Nisso’s fault and/or negligence, Nisso shall reimburse Replidyne for the
reasonable costs of such examination and audit. The amount of any such overpayments
shall be reimbursed to Replidyne.
	 
	 	(b)	 	By Nisso. Effective upon the occurrence of any of the circumstances
specified in Section 8.1 (Termination of Exclusive Purchase), Replidyne shall
permit an independent auditor appointed by Nisso subject to the reasonable approval of
Replidyne, and who shall enter into a confidentiality agreement with Replidyne, for a
period commencing from the date on which Replidyne or Manufacturing Designee begins the
manufacturing of the Drug Substance and ending two (2) years after such manufacturing
ceases, to examine and audit the books and records of Replidyne related to Section 8.3
(Royalty), for the preceding three (3) year period, at a mutually convenient time
within normal business hours to the extent necessary to determine the accuracy of any
calculations for payments due from Replidyne under such Section 8.3. The costs of such
examination and audit shall be borne by Nisso; provided, however, that if any such
examination and audit discloses an underpayment by Replidyne of five percent (5%) or
more for any relevant time period due to Replidyne’s fault and/or negligence, Replidyne
shall reimburse Nisso for the reasonable costs of such examination and audit. The
amount of any such underpayments shall be reimbursed to Nisso.

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 18

 

 

	5.6	 	Third Party Royalties. Except as provided in the License Agreement, the Purchase
Prices are inclusive of all royalty payment obligations to Third Parties, which shall be for
the sole account of and paid by DSP, including without limitation royalties due to Tanabe
Seiyaku for U.S. Patent No. 5,260,438 and all counterparts thereto in Japan and the
Territory.
	 
	5.7	 	Exchange Rate Risk. The Purchase Prices specified in Attachment 5.1 shall be
adjusted for currency fluctuation based on this Section 5.7. For any month in which
the Suppler issues an invoice to Replidyne under Section 5.3 (Payment) hereof, the Supplier
shall include in such invoice the calculation of the average of the closing Yen/U.S. Dollar
exchange rate as published in The Financial Times for the tenth (10th) and the last
business day of each month for the immediately preceding six (6) months from the invoice date
(“Averaged 6 Month Rate”).

	 	(a)	 	If the Average 6 Month Rate is greater than the exchange rate benchmark
of [ *** ] ¥/US$ (“Benchmark”) by more than [ *** ] percent ([ *** ]%), the
Purchase Price shall be revised as follows:

provided, however, that if the Average 6 Month Rate is greater than [ *** ] ¥/US$,
then the figure [ *** ] ¥/US$ shall be used in place of the Average 6 Month Rate for
purposes of this Section 5.7(a).

SP: Supply Price Stipulated in Attachment 5.1

Q: Quantities of the Drug Substance delivered by Nisso

	 	(b)	 	If the Average 6 Month Rate is less than the Benchmark by more than [
*** ] percent ([ *** ]%) but not more than [ *** ] percent ([ *** ]%), the Purchase
Price shall be revised as follows:

SP: Supply Price Stipulated in Attachment 5.1

Q: Quantities of the Drug Substance delivered by Nisso

For example, if the Average 6 Month Rate increases to [ *** ] ¥/US$ (+[ *** ]%),
then the Purchase Prices will increase by [ *** ]%; and if the Average 6 Month Rate
decreases to [ *** ] ¥/US$ (-[ *** ]%), then the Purchase Prices will decrease 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 19

 

 

	 	(c)	 	If the Average 6 Month Rate fluctuates by [ *** ] percent ([ *** ]%) or less,
then the Purchase Prices stipulated in Attachment 5.1 shall continue to apply.
	 
	 	(d)	 	If the Average 6 Month Rate decreases by more than [ *** ] percent ([ *** ]%)
below the Benchmark (that is, the exchange rate is less than [ *** ] ¥/US$), then
Replidyne may propose, in writing, to confer with the Parties regarding an adjustment
of the Purchase Price, and the Parties shall discuss in good faith the amendment of the
Purchase Prices. If the Parties cannot agree on the amendment of the Purchase Prices
within sixty (60) days after commencing such discussions, Replidyne shall have the
right to (i) terminate this Agreement and (ii) require Nisso to transfer the
Manufacturing Technology of the Drug Substance to Replidyne or the Manufacturing
Designee pursuant to the terms and conditions stipulated in Sections 8.2,
8.3, 8.4 and 8.5 hereof. Pending an agreement by the Parties
on an adjustment of the Purchase Price or if the Parties cannot agree on a new Purchase
Price in connection with the decrease in the exchange rate of more than [ *** ] percent
([ *** ]%), the Parties shall apply the exchange rate of [ *** ] ¥/US$ with respect to
all Drug Substance shipped to Replidyne during such pending period.

	5.8	 	Compensation to Supplier for Minimum Purchase Obligation. In the event that
Replidyne fails to purchase the applicable minimum purchase quantities of Drug Substance as
required by Section 3.2 (Minimum Purchase Quantities) at the end of the Three Year
Period or at the end of applicable calendar year in the Five Year Period or at the end of
then-current Remaining Term Year (but not thereafter), whichever is applicable, then as
Supplier’s sole and exclusive remedy for the failure of such purchase Replidyne shall
compensate Supplier in an amount equal to [ *** ] percent ([ *** ]%) of the aggregate Purchase
Price pursuant to this Article 5 for such minimum purchase quantities which have not been
purchased by Replidyne within thirty (30) days after the end of the Three Year Period, the
applicable year in the Five Year Period and/or the then-current Remaining Term Year.

	5.9	 	Cost Reduction Opportunities.

	 	(a)	 	Alternative AOSA Supplies. If at any time (i) a Third Party vendor or
Replidyne provides a firm quote to supply, for a specific period and a specific
quantity, AOSA meeting the Specifications, or modified Specifications as accepted by
Replidyne pursuant to Section 6.1 (Drug Substance Specifications) hereof, and
specifying in detail the quantity and the validity period of such offer, at a lower
cost than the greater of (A) Nisso’s current actual cost to manufacture AOSA (assuming
an annual volume of Drug Substance of at least [ *** ] metric tons), or (B) JP¥[ *** ]
per kilogram (the greater of such two amounts for purposes of this clause shall be
“Nisso’s Cost”), (ii) such Third Party vendor or Replidyne agrees to commit in
writing to supply, for a specific period and a specific quantity, Nisso’s requirements
for AOSA to manufacture the Drug Substance for Replidyne’s requirements, (iii) an
independent Third Party consultant who is knowledgeable in the field reasonably
verifies that such Third Party vendor or Replidyne is able 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 20

 

 

meet Nisso’s requirements
for AOSA, then Nisso shall be required to purchase and accept AOSA from such Third
Party vendor or Replidyne. All of the costs and all of the benefits of such supply
shall be for the account of Replidyne, provided that Nisso shall not be liable for
failure or delay of supply of the Drug Substance by Nisso due to the failure or delay
of the supply of AOSA by such Third Party vendor or Replidyne or any defect in the AOSA
supplied by such Third Party vender or Replidyne. In such case, each purchase of AOSA
from the Third Party vendor shall be made by Replidyne or be manufactured by Replidyne
and Replidyne shall transfer such AOSA to Nisso at the same price per kilogram as
Replidyne’s cost for such AOSA (the “Alternative AOSA Price”). The Purchase
Prices for the Drug Substance, per kilogram, shall be reduced by an amount equal to the
product of the Cost Difference times the AOSA Consumption. For such calculation,
“Cost Difference” means the difference between Nisso’s Cost and the Alternative
AOSA Price, and “AOSA Consumption” means the ratio (which is greater than 1:1)
of the average quantity of AOSA used to manufacture one (1) kilogram of the Drug
Substance, as specified in the then-current Drug Master File. Replidyne shall be
responsible for any incremental costs associated with obtaining AOSA from such
alternative Third Party vendor or Replidyne, including, but not limited to, reasonable
validation costs. Notwithstanding the foregoing, Nisso may meet the
Alternative AOSA Price in stead of accepting to purchase AOSA from such Third Party
vender or Replidyne. In such event, the Purchase Price shall be reduced in the same
manner as described above in this Section 5.9 (a). The provisions of Section 5.5
(Audits) hereof shall apply to permit Replidyne or its representatives to
confirm that such cost reductions are so passed through to Replidyne, if requested
by Replidyne.

	 	(b)	 	Other Cost Reductions. For all cost reduction opportunities other than
as provided in Section 5.9(a) (Alternative AOSA Supplies), Nisso shall use good
faith efforts to identify and implement such opportunities to reduce the costs of the
manufacture and supply of the Drug Substance, provided that Replidyne shall not share
in the costs or benefits of such opportunities (except as provided in Section 5.2
(Adjustment of Purchase Prices)), unless if (i) Replidyne makes concrete proposal
to reduce such costs and presents such proposal to Nisso, and (ii) Nisso concurs that
such proposal is desirable or implements such proposal, then Nisso and Replidyne shall
agree in writing to jointly pursue such proposal made by Replidyne and the costs and
benefits of their efforts shall be equally shared.

     ARTICLE 6: DRUG SUBSTANCE QUALITY

	6.1	 	Drug Substance Specifications; DMF. The specifications (“Specifications”),
including without limitation the route of synthesis (“Route of Synthesis”) which is
included within the Specifications, for the Drug Substance are specified in Attachment
6.1 hereto. The Drug Substance shall comply with the requirements of the Specifications
at the time of purchase. The current Specifications have been jointly established by the
Parties (attached hereto as Attachment 6.1) and may only be amended or supplemented
from time to time pursuant to the provisions below. No changes, modifications, deviations or
exceptions 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 21

 

 

the Specifications, place of manufacture, materials or fabrication manufacturing
or packaging processes may be made without the prior written approval of Replidyne, which
approval may be provided or withheld by Replidyne in its sole discretion.

	 	(a)	 	Significant Changes by Nisso. If Nisso intends to make any changes to
its Route of Synthesis, major raw materials or supply sources thereof, manufacturing
locations or analytical methods or any other amendment to the Drug Master File or
Specifications which have the potential to impact Replidyne’s Regulatory Approvals
(each a “Significant Change”), Nisso shall obtain Replidyne’s prior written
approval before making such Significant Change. For any proposed Significant Changes
that Replidyne does not approve, Replidyne shall notify the Supplier of its
non-approval within three (3) months of Replidyne’s receipt of the notice of change and
supporting documents from Nisso. Nisso shall not make a Significant Change until after
Replidyne has given its written approval.
	 
	 	(b)	 	Other DMF Changes by Nisso. For other changes or updates to Nisso’s
Drug Master File, Nisso shall notify Replidyne thirty (30) days prior to the filing of
making such change or updates so that the Parties may discuss such changes or updates.
In addition, Nisso shall provide Replidyne with written notification of
Nisso’s Drug Master File updates and of any changes to the Drug Master File
thereafter.
	 
	 	(c)	 	Changes by Replidyne. In the event that Replidyne requests Nisso to
make changes to the Specifications, raw materials, fabrication, manufacturing or
packaging processes, Nisso shall (i) make such change if related to a regulatory or
safety concern, or (ii) reasonably consider such request in good faith if related to
any other concern. In the event that raw materials costs, fabrication costs,
manufacturing costs or packaging costs are materially increased or decreased by any
such change requested by Replidyne and approved by Nisso, then Replidyne shall receive
the benefit and obligation, as applicable, of such increase or decrease of the cost and
the Parties shall adjust the Purchase Price accordingly; provided, however, that if
additional engineering work, equipment acquisition and commissioning, training,
qualification and validation activities and/or other works are required to implement
any such changes requested by Replidyne, Replidyne shall bear all such costs.
	 
	 	(d)	 	Certain Costs and Benefits for Changes by Nisso. In the event that
Nisso makes changes to the Specifications, raw materials, fabrication, manufacturing or
packaging processes in accordance with Section 6.1 (a) and/or (b)
above, (i) the Purchase Prices shall be reduced as provided in Section 5.9 (Cost
Reduction Opportunities) if such changes result in cost reductions, and (ii) Nisso
shall bear cost increases resulting from such changes, without an increase in the
Purchase Prices, provided that Replidyne shall be compensated for any reasonable costs
incurred by Replidyne for updates to its Regulatory Approvals and costs to manufacture
Drug Products. In addition, if additional engineering work, equipment acquisition and
commissioning, training, qualification and validation activities 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 22

 

 

other work are
required to implement any such changes, Nisso shall bear all such costs.

	 	(e)	 	Certain Costs for Changes Required by Regulatory Authorities. Changes
or modifications required to address the requirements of Regulatory Authorities shall
be (i) borne and paid for by Replidyne if related to Drug Substance Specifications or
Drug Product Specifications, or (ii) be borne and paid for by Nisso if related to the
manufacturing or packaging processes. For clarity, Nisso shall promptly (and in any
event within the time period specified by the applicable Regulatory Authority, or if no
such time period is specified, within thirty (30) calendar days unless another suitable
time period is mutually agreed by the Parties) make any change in the Specifications as
required to address the requirements of the Regulatory Authorities approved in writing
by Replidyne.

	6.2	 	Packaging and Labeling. Replidyne shall, in its sole discretion, have control of and
shall deliver the text of all packaging and labeling for the Drug Substance, and Nisso shall
incorporate all reasonable changes directed in writing by Replidyne. If requested by
Replidyne, Nisso shall provide Replidyne with a cost quote for any such change prior to
Replidyne’s final authorization to make the change. Replidyne shall pay Nisso its actual
costs of changes to packaging and labeling that are requested by Replidyne.
	 
	6.3	 	Subcontracts and Suppliers. Commercial quantities of the Drug Substance shall be
manufactured at and supplied from the Nihongi Facility. Nisso shall not use any subcontractor
or supplier which (i) is not expressly specified in the then-current Specifications, or (ii)
approved in writing by Replidyne.
	 
	6.4	 	Minimum Shelf Life. All Drug Substance, as of the date shipped to Replidyne pursuant
to Section 4.7 (Delivery, Title and Risk of Loss) hereof, shall have a remaining shelf
life of not less than the longer of (i) eighteen (18) months, or (ii) the period that is a
half of the duration of stability reasonably confirmed by Nisso in the ordinary course of its
stability testing program, not to exceed four (4) years, provided, that Replidyne shall store
the Drug Substance at a warehouses at a constant temperature of lower than ten (10) degrees
centigrade and follow storage instructions in the Technical Agreement.
	 
	6.5	 	Warranties. The Supplier represents, warrants and covenants to Replidyne as follows:

	 	(a)	 	Drug Substance. The Drug Substance, at the time of delivery to
Replidyne by Nisso pursuant to Section 4.7 (Delivery, Title and Risk of Loss)
hereof:

	 	(i)	 	shall conform to the Specifications, as then in effect;
	 
	 	(ii)	 	shall be free from defects in processing, materials and
workmanship; 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 23

 

 

	 	(iii)	 	shall have been manufactured, packaged, tested and stored in
conformity with the Drug Master File and Applicable Laws including without
limitation then-current cGMPs.

	 	(b)	 	Conduct. Nisso shall perform all services, including storage and
delivery, hereunder in accordance with the applicable professional standards of the
pharmaceutical industry and in accordance with provision of Section 4.7 (Delivery,
Title and Risk of Loss) and reasonable written instructions given by Replidyne.
	 
	 	(c)	 	Adherence to Specifications. The Supplier shall produce the Drug
Substance strictly in accordance with the Specifications.
	 
	 	(d)	 	Compliance with Applicable Laws. The Supplier shall fully comply with,
and the Drug Substance shall be manufactured, packaged, tested and stored by Supplier
in conformity with, all Applicable Laws.
	 
	 	(e)	 	Qualified Personnel. The Supplier shall engage and employ only
professionally qualified personnel to perform the services contemplated hereunder. The
Supplier shall not in the performance of its obligations under this Agreement use the
services of any person debarred or suspended pursuant to any Applicable Law, including
without limitation Sections 302(a) and (b) or 335 (a) or
(b) of the Act. The Supplier
does not as of the Effective Date have, and covenants that it will not during the
Term hire, as an officer or an employee, any person who has been convicted of a
crime, including without limitation a felony under the laws of the United States of
America, for conduct relating to the regulation of any drug product under the Act.
	 
	 	(f)	 	Necessary Rights. The Supplier shall have all rights of any nature
whatsoever required to perform its obligations under this Agreement. To the Supplier’s
best knowledge as of the Effective Date, the manufacture and sale to Replidyne of the
Drug Substance hereunder shall not interfere with, infringe upon, misappropriate, or
otherwise come into conflict with any intellectual property rights of Third Parties.
All Drug Substance sold to Replidyne pursuant to this Agreement shall not be subject to
any liens, security interests or any other encumbrances.

	6.6	 	Reprocessing. Nisso shall not, without the prior written consent of Replidyne,
reprocess or “rework” any Drug Substance or components thereof. If Replidyne provides such
written consent, such consent to not be unreasonably withheld (provided that it shall be
reasonable for Replidyne to withhold such consent for regulatory concerns), Nisso ensure that
such reprocess or rework meets the Specifications and cGMPs and is fully validated under all
Applicable Laws.
	 
	6.7	 	Complaints. In the event that any Party receives any complaint regarding the Drug
Substance, it shall notify the other Parties promptly. Nisso shall evaluate each such
complaint and respond to Replidyne in writing. Replidyne may also evaluate each such
complaint. Replidyne shall have the sole right to manage all communication with Third
Parties, provided that the parties shall cooperate to permit Supplier to defend against Third

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 24

 

 

Party claims in accordance with Section 13.2 (Hold Harmless by Supplier) from and
after such time as Replidyne asserts an indemnification claim thereunder.

     ARTICLE 7: REGULATORY MATTERS

	7.1	 	Technical Agreement. The Parties shall agree to the allocation of certain regulatory
responsibilities as are customarily contained in a Technical Agreement for the manufacture of
active pharmaceutical ingredients. In the event of any conflict between the provisions of
this Agreement and such Technical Agreement, the provisions of this Agreement shall govern.
	 
	7.2	 	Establishment Registrations. The Supplier shall maintain all registrations as are
required by Applicable Laws to perform its obligations hereunder.
	 
	7.3	 	Inspections. Nisso shall promptly notify Replidyne of any inspection or notice of
inspection of the Nihongi Facility, the Takaoka Facility or any other facilities used in the
manufacturing or processing the Drug Substance by the FDA or any other Regulatory Authority
which relates to the manufacture or processing of the Drug Substance and provide Replidyne
with information about the progress and outcome of such inspection, including, without
limitation, copies of any notice of observations or warnings, requests for remedial action,
corrective actions or other adverse findings. Nisso shall permit such inspections pursuant to
Section 7.6 (Access to Facilities) hereof. Nisso at its cost shall
promptly address and correct any deficiencies identified in any inspection or audit of such
facilities by the FDA or any other Regulatory Authorities in an appropriate manner.
	 
	7.4	 	Tests; Retained Samples and Records. Nisso shall perform, or cause to be performed,
tests on each lot of the Drug Substance, including all samples thereof, manufactured pursuant
to this Agreement before delivery to Replidyne. Such tests shall include required assay and
stability testing and the testing of the Drug Substance for compliance with the Specifications
and applicable registrations of and approvals for the Drug Substance and Applicable Laws.
Nisso, at its cost, shall maintain and retain for five (5) years following the end of the
applicable calendar year in which a lot is released (or such longer period as may be required
by Applicable Laws or prudent industry standards, which at a minimum shall be the shelf life
of the relevant Drug Product plus one year), (i) true and accurate books and records relating
to its performance under this Agreement, including without limitation, the master batch
records, the batch record specifications, the test records for the Drug Substance and other
records of the manufacture, testing and shipping of the Drug Substance, and (ii) all retained
samples of the Drug Substance and of the raw materials for the Drug Substance as are necessary
to (A) comply with regulatory requirements applicable to the Supplier or Replidyne, and (B)
assist with resolving product complaints and other similar investigations, provided that
procedures for retained samples for raw materials shall be as mutually agreed in writing
between Replidyne and Nisso from time to time on a case-by-case basis. Replidyne or an
independent testing laboratory nominated by Replidyne may inspect and test Nisso’s samples
relating to the Drug Substance in accordance with standard industry practice upon reasonable
written request.

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 25

 

 

	7.5	 	Manufacturing Compliance. Nisso shall manufacture the Drug Substance, including all
samples thereof, in accordance with the Specifications, the Drug Master File, cGMPs and
applicable registrations of and approvals for the Drug Substance. Nisso shall promptly notify
Replidyne of any out-of-specification manufacturing events, shall investigate such events, and
shall provide Replidyne with a report with full supporting data of such investigation and
corrective actions, which Replidyne may comment upon and dispute. As requested from time to
time, Nisso shall provide Replidyne with a letter certifying that the manufacture of Drug
Substance is in compliance with cGMPs, including without limitation, as required by the CFR.
	 
	7.6	 	Access to Facilities. Upon the reasonable prior written request of Replidyne,
Replidyne and its authorized representatives shall have the right to inspect the facilities
where the Drug Substance is being manufactured, processed, tested or stored, as the case may
be, during regular business hours, to ascertain compliance with cGMPs, the Specifications and
Nisso’s obligations hereunder. In addition, Nisso shall permit all Regulatory Authorities to
inspect the Facilities where the Drug Substance is being manufactured, processed or stored, as
the case may be, at reasonable times and within reasonable limits and in a reasonable manner.
If (i) Nisso agrees to make a correction requested by Replidyne, or (ii) Nisso is obligated to
make a correction to ensure its compliance with this Agreement or the requirements of
Regulatory Authorities, including without limitation as identified in any such inspection by a
Regulatory Authority, then Nisso, at its cost, shall promptly address and correct any
deficiencies in an appropriate manner to ensure its compliance with this Agreement and such
requirements.
	 
	7.7	 	Regulatory Correspondence, Responses and Communications. Supplier shall promptly
(and in all cases within five (5) calendar days) provide to Replidyne copies of all Supplier
correspondence to or from the FDA or any other Regulatory Agency relating to the Drug
Substance, including without limitation, FDA Form 483 letters, deficiency letters and warning
letters. Supplier shall promptly respond to all such correspondence in compliance with the
applicable time frames which are required or advisable under pharmaceutical industry
standards, provided that all such responses shall be subject to the review and comments of
Replidyne (with Replidyne having at least five (5) business days to review the draft response
proposed by Supplier) prior to submission. Supplier shall consider all such comments in good
faith. Supplier shall consult with Replidyne prior to any communication or meeting with any
Regulatory Agency relating to the Drug Substance, and shall permit an authorized
representative of Replidyne to attend any such communication (if by telephone call) or
meeting.
	 
	7.8	 	Additional Information. Nisso shall provide to Replidyne in a timely manner, but in
no event less than sixty (60) days prior to the due date of Replidyne’s annual report to the
FDA or any other Regulatory Authority with respect to the Drug Product, all information (in
written form) which Replidyne reasonably requests regarding the Drug Substance in order to
comply with Applicable Laws.
	 
	7.9	 	Ownership of Regulatory Approvals. Nisso and Replidyne shall cooperate as necessary
to obtain and maintain Regulatory Approvals. Replidyne shall own and control all

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 26

 

 

Regulatory
Approvals and applications, amendments or supplements underlying any such Regulatory
Approvals; provided that it is expressly understood and agreed that the Drug Master File for
the Drug Substance shall be registered and controlled by Nisso. Nisso shall, without
additional compensation, (i) collaborate with Replidyne to prepare and file the Drug Master
File in “Common Technical Document” format, which shall be in form and substance satisfactory
to both Nisso and Replidyne prior to filing by Nisso with the FDA, (ii) maintain such Drug
Master File in good standing with all applicable Regulatory Authorities, including the payment
of all required fees and the filing of all required reports (including without limitation an
annual report filed with the FDA within thirty (30) days of the anniversary date of original
Drug Master File submission date of each year), supplements and amendments, (iii) give a
reference letter to the Regulatory Authorities in connection with Replidyne’s efforts in
seeking Regulatory Approvals and submitting any such applications, amendments, or supplements
for Drug Products, and (iv) only make or permit filings, submissions, changes, reports,
supplements, modifications, deviations or exceptions to such Drug Master File in accordance
with Section 6.1 (Drug Substance Specifications; DMF) hereof. Replidyne acknowledges
and agrees that Nisso may maintain as confidential and not disclose to Replidyne the
manufacturing information specified in Attachment 7.9 hereto that will be included in
the Drug Master File (the “Sensitive Manufacturing Information”), provided that
Replidyne shall have the right to engage a mutually agreeable third party to verify the
suitability of such information for filing with the FDA in “Common Technical Document” format.
Nisso shall cooperate with Replidyne in the coordination of supplements and annual reports
for the Drug Master File and Regulatory Approvals, including without limitation classification
of changes as “minor”, “moderate” and “major” for reporting purposes. Replidyne shall have
the right, but not the obligation, to list all patents of the Supplier which are relevant to
the Drug
Substance in the FDA’s “Orange Book” and similar documents for other Regulatory Authorities
with respect to each Drug Product. Upon the occurrence of any of the circumstances
specified in Section 8.1 (Termination of Exclusive Purchase) hereof, Nisso shall
promptly provide Replidyne with a complete copy of all Drug Master File documents, and
Replidyne shall have the right to prepare and file a new drug master file and use all
information in or related to the Drug Master File.

	7.10	 	Adverse Events. The Parties shall promptly provide each other with necessary
information and data relating to adverse events, regardless of causality, associated with the
use of the Drug Substance or the Drug Products or other forms of faropenem, received by or
reported to the Parties from any sources anywhere in the world during the Term of this
Agreement, in accordance with the written reporting procedure to be separately agreed upon by
the Parties.
	 
	7.11	 	Recalls. Each Party shall notify the other of any information, whether received
directly or indirectly, which might affect the marketability, safety or effectiveness of the
Drug Substance and/or which might result in the Recall or seizure of the Drug Substance or the
Drug Products incorporating the Drug Substance. The Parties shall take all appropriate
corrective actions, and shall cooperate in the investigations, related to a Recall. In the
event that a Recall results from a Defect in Nisso’s manufacture, storage or handling of the
Drug Substance which constitutes a breach by Nisso of this Agreement, in addition to all

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
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	 	 	other
remedies available to Replidyne, Nisso shall be responsible for all documented out-of-pocket
expenses of Replidyne related to such Recall; provided, however, that the Parties acknowledge
and agree that Replidyne shall use commercially reasonable efforts to mitigate such
out-of-pocket expenses. For purposes of this Agreement, the out-of-pocket expenses of Recall
shall include the expenses of notification and destruction or return of the Recalled products,
all other documented out-of-pocket costs incurred in connection with such Recall and the
replacement of the Recalled products. In the event that the Recall does not result from a
Defect in Nisso’s manufacturing, storage or handling of the Drug Substance which constitutes a
breach by Nisso of this Agreement, Replidyne shall be responsible for all costs and expenses
of the Recall.

	7.12	 	Further Cooperation. The Supplier shall cooperate with Replidyne as may be
reasonably necessary or appropriate to satisfy all governmental requirements and obtain all
needed permits, approvals and licenses with respect to the development, manufacture, storage,
packaging, marketing and sale of the Drug Products incorporating the Drug Substance. Such
cooperation may include communicating with regulatory authorities and making available as
promptly as practicable all information, documents and other materials which result from the
performance by the Supplier of its services hereunder which Replidyne is required to submit or
which Replidyne may otherwise reasonably request in connection with governmental filings
relating to the Drug Substance or the Drug Products incorporating the Drug Substance.
Replidyne shall reimburse the Supplier for its reasonable out-of-pocket costs and expenses of
such cooperation, if applicable, as quoted in writing by Supplier and approved in writing by
Replidyne in advance.

     ARTICLE 8: TRANSFER OF MANUFACTURING

	8.1	 	Termination of Exclusive Purchase. Notwithstanding Sections 3.1 (Supply of the
Drug Substance) and 3.2 (Minimum Purchases Quantities) hereof, Replidyne may, in
its sole discretion, (i) itself manufacture any quantities of the Drug Substance, (ii)
purchase any quantities of the Drug Substance from Third Parties, and/or (iii)
transfer and license the Manufacturing Technology and all other relevant documents,
know-how, intellectual property and other rights as provided in this Article 8 to Replidyne or
one or more Third Parties, and Replidyne shall not thereafter be obligated to purchase the
Drug Substance exclusively from Supplier, under any one or more of the following
circumstances:

	 	(a)	 	Prices Not Competitive. After an NDA is filed for a Drug Product in
the United States, if all events (i) through (iii) have occurred:

	 	(i)	 	the Purchase Prices cause the retail prices for Drug Products to not be
competitive (i.e., the retail prices of Drug Products would be at a
competitive disadvantage to the prices of competitive, single active
ingredient (excluding combination products), branded community anti-biotic
products in oral formulation in the relevant market in the Territory for
treatment for a similar set of indications, including but not limited to
Acute Sinusitis and Community Acquired Pneumonia, as for the Drug Product,
taking into consideration all other relevant costs and a normal 

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 28

 

 

profit margin to Replidyne), or render the commercialization of Drug
Product not viable;

	 	(ii)	 	the Parties are unable to agree after discussions over a six (6) month
period of time on revised Purchase Prices that addresses the issues specified
in Section 8.1(a)(i) hereof; and
	 
	 	(iii)	 	Replidyne can demonstrate with documentary evidence that
Replidyne is more likely itself or with a Third Party than with Supplier to be
able to realize a lower supply price for the Drug Substance as required by
Replidyne to address the issues specified in Section 8.1(a)(i) hereof
over the course of a commercially reasonable period of time following the
transfer of the manufacturing to Replidyne or Replidyne’s then-current
Manufacturing Designee.

	(b)	 	Failure to Timely Validate the Nihongi Facility. Nisso has not
completed, or it becomes reasonably evident that Nisso will not be able to complete,
its obligations pursuant to Article 2 (VALIDATION OF NIHONGI FACILITY) hereof in
accordance with the Timeline.

	(c)	 	Failure to Supply Requirements. Except for an occurrence of a force
majeure event pursuant to Article 15 (FORCE MAJEURE), the Supplier is unable or
unwilling, during a consecutive six (6) month period, to deliver at least eighty
percent (80%) in the aggregate of the quantities of the Drug Substance without Defects
ordered pursuant to Purchase Orders. (For example, this Section 8.1(c) would apply if
Replidyne orders 40 tons for delivery in a six month period and Supplier only delivers
31 tons in such period. (40 tons x 80% = 32 tons))

	(d)	 	Force Majeure. An occurrence of a force majeure event pursuant to
Article 15 (FORCE MAJEURE) hereof prevents or can reasonably be foreseen to prevent
the Supplier from delivering fifty percent (50%) in the aggregate of the quantities of
the Drug Substance without Defects ordered pursuant to Purchase Orders during a
consecutive six (6) month period; provided that such quantities are consistent with
the Purchase Forecasts.

	(e)	 	Termination or Non-Renewal. A notice of termination of this
Agreement has been properly provided by any Party to the other Parties pursuant to
Article 11 (TERM AND TERMINATION) hereof (other than termination pursuant to
Sections 11.2(b) (Material Breach by Replidyne), 11.2(d) (Bankruptcy Event
for Replidyne), or 11.2(h) (Abandonment of Development or Commercialization
), or termination of the License Agreement due to the material breach or
bankruptcy event of Replidyne), or the expiration of this Agreement due to Nisso
declining after reasonable negotiation to extend the Term of this Agreement for the
next Renewal Term.

	(f)	 	Bankruptcy Event. Either DSP or Nisso is the subject of a
Bankruptcy Event.

 

[ *** ] = 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.

					
	 
	 
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	 	PAGE 29

 

 

	8.2	 	Grant of License. Effective upon the occurrence of any of the circumstances
specified in Section 8.1 (Termination of Exclusive Purchase) hereof, the Supplier
hereby grants to Replidyne a non-exclusive, royalty-bearing, worldwide license to manufacture
the Drug Substance, with the right to sublicense to the Manufacturing Designee, 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 hereof and all foreign counterparts, that are owned or controlled by Supplier
(excluding DSP’s patents and all other intellectual property rights licensed to Replidyne
pursuant to the License Agreement) to (i) research, develop, make, have made and use the Drug
Substance and Drug Products anywhere in the world, and (ii) promote, offer to sell, sell, have
sold and otherwise commercialize the Drug Substance and Drug Products in the Territory.

	8.3	 	Royalty. In compensation for the license granted pursuant to Section 8.2 (Grant
of License) hereof, Replidyne shall pay:

	 	(a)	 	a royalty to Supplier, in amounts equal to [ *** ] percent ([ *** ]%) of the
transfer price (net of transportation costs, insurance costs, taxes and duties, and
royalties payable to Third Parties) for the Drug Substance purchased from a Third
Party manufacturer by Replidyne or Replidyne’s Designees for a period of [ *** ] years
commencing from the date on which Replidyne or Manufacturing Designee begins the
manufacturing of the Drug Substance; and
	 
	 	(b)	 	royalties properly payable to Tanabe Seiyaku, if applicable.

If Replidyne or its Affiliates manufacture the Drug Substance by themselves, the Parties
shall negotiate in good faith and agree on the formula to decide appropriate royalty amount
for the compensation of the license granted pursuant to Section 8.2 (Grant of
License) hereof which shall approximate the royalties that would be payable to Nisso if
Replidyne would have sourced the Drug Substance from a Third Party manufacturer.

Nisso and DSP shall discuss and agree separately with respect to the sharing of the royalty
payments received in accordance with Section 8.3 (a) above by Nisso and DSP. If
Replidyne requests a (sub)license under the relevant Tanabe Seiyaku patents, DSP and Nisso
shall either (i) grant a sublicense at the same rate DSP/Nisso pays, if the Tanabe Seiyaku
agreement permits sublicensing, or (ii) [ *** ].

	8.4	 	Disclosure of Manufacturing Technology. Effective upon the occurrence of any of
the circumstances specified in Section 8.1 (Termination of Exclusive Purchase) hereof,
Nisso shall disclose all Manufacturing Technology to Replidyne and/or the Manufacturing
Designee, for Replidyne’s use in the production of the Drug Substance and the Drug Product
only. DSP and Nisso shall assist Replidyne and/or the Manufacturing Designee as reasonably
necessary to effectively enable Replidyne or the Manufacturing Designee to manufacture the
Drug Substance. In the event this Section 8.4 applies due to Section 8.1 (a)
or (d) above, such assistance shall be at Replidyne’s expense. In the event this
Section 8.4 applies due to Section 8.1 (b), (c), (e) or (f)
above, such assistance shall be at 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.

					
	 
	 
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	 	PAGE 30

 

 

Supplier’s expense for the first three (3) months and
at Replidyne’s reasonable expense thereafter. In no event shall the term for such technical
assistance exceed two (2) years from the date of Replidyne’s notice invoking provisions of
Section 8.1 (Termination of Exclusive Purchase) hereof. In case Replidyne requires
Nisso to disclose the Manufacturing Technology to the Manufacturing Designee pursuant to this
Section 8.4, Replidyne shall be responsible to have such Manufacturing Designee
observe the terms and conditions of this Agreement.

	8.5	 	Continued Supply. In the event this Article 8 (TRANSFER OF MANUFACTURING) applies
due to Section 8.1 (a), (e) or (f) above, at Replidyne’s election and
request, the Supplier shall continue to supply such quantities of the Drug Substance as
Replidyne may request in an uninterrupted manner (or, in the case of Section 8.1(b),
(c) or (d) above, use commercially reasonable efforts to do so), until such
time as Replidyne’s or the Manufacturing Designee’s facility is certified by the applicable
Regulatory Authorities and able to meet Replidyne’s requirements for the Drug Substance,
provided, however, that such term shall not exceed two (2) years from the date of Replidyne’s notice invoking
the provisions of Section 8.1 (Termination of Exclusive Purchase) hereof. The
supply prices pursuant to this Section 8.5 shall be the Purchase Prices in accordance with
Article 5 (PURCHASE PRICE AND PAYMENT) hereof. At such time as Replidyne’s or
Manufacturing Designee’s facility is certified by the applicable Regulatory Authorities and
is able to meet Replidyne’s requirements for the Drug Substance, the Supplier’s obligations
to supply the Drug Substance pursuant to this Section 8.5 (Continued Supply) shall
terminate.

	8.6	 	Escrow of Manufacturing Technology. Upon Replidyne’s reasonable request, Nisso shall
deposit documentation of the Manufacturing Technology in accordance with the provisions of
that certain Manufacturing Technology Escrow Agreement of even date herewith, which among
other things provides that Replidyne shall reimburse Nisso for its reasonable costs to provide
such documentation. From time to time after such request and deposit during the term hereof
as such Manufacturing Technology changes, and in any event promptly upon the request of
Replidyne, Nisso shall update and supplement, but shall not delete, the contents of the
Manufacturing Technology pursuant to such Manufacturing Technology Escrow Agreement.

     ARTICLE 9: PROPRIETARY RIGHTS 

	9.1	 	Replidyne Property. Replidyne shall own and retain all right, title and interest in
and to the Replidyne Property under this Agreement. The Supplier shall have no right or
license to the Replidyne Property under this Agreement except as required to perform their
obligations hereunder during the Term.

	9.2	 	Supplier’s Work Product and Improvements. Nisso shall own and retain all right,
title and interest in and to Nisso’s Improvements. Replidyne and its Representatives shall
have no right or license to Nisso’s Improvements, except as provided in this Agreement and to
research, develop, make, have made, use, promote, offer to sell, sell, have sold and otherwise
commercialize the Drug Substance and the Drug Products for 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.

					
	 
	 
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	 	PAGE 31

 

 

     ARTICLE 10: SECRECY

	10.1	 	Secrecy. Each Party shall keep secret and confidential any information, data and
know-how of the other Parties received from each other Party after the date of the Supply LOI
or under this Agreement (“Confidential Information”) and shall not use such
Confidential Information for any purpose other than for the purposes permitted in this
Agreement, except as otherwise expressly authorized herein, provided that a Party shall have
no obligation to maintain the secrecy of Confidential Information which:

	 	(i)	 	at the time of disclosure by the disclosing Party is in the public domain;
	 
	 	(ii)	 	after disclosure by the disclosing Party enters the public domain through no
improper conduct of the receiving Party;
	 
	 	(iii)	 	prior to disclosure by the disclosing Party was already in the possession of
the receiving Party as evidenced by the receiving Party’s written records;
	 
	 	(iv)	 	subsequent to disclosure hereunder is obtained by the receiving Party from
Third Parties who are lawfully in possession of such information, data and know-how
and are not subject to an obligation to refrain from disclosing such information, data
and know-how to others; or
	 
	 	(v)	 	is required to be revealed under compulsion of law; provided, that the Party
under a legal compulsion to disclose the Confidential Information makes every effort
to preserve the confidentiality of the information and also provides the disclosing
Party sufficient prior notice of the disclosure, so that such disclosing Party shall
have an opportunity to take whatever action it deems necessary or desirable to protect
its Confidential Information.

	10.2	 	Exceptions. Notwithstanding the provisions of the preceding Section 10.1
(Secrecy) hereof, a Party shall be entitled to disclose Confidential Information for the
purpose of implementing this Agreement to any of the following:

	 	(i)	 	the Party’s Representatives who have a need to know for the purposes of the
performance of this Agreement; provided, that the recipients have been informed of and
are bound to the secrecy obligations of this Agreement;
	 
	 	(ii)	 	Replidyne’s Affiliates, Replidyne’s Designees, the Manufacturing Designee,
actual or potential investors, contract manufacturers, contract research
organizations, professional service providers, distributors, sublicensees and the
like, or Supplier’s Affiliates or their employees, who have a need to know, to the
extent they are involved in the development, manufacturing, sale and/or marketing of
the Drug Products or the manufacturing of the Drug Substance; provided, that the
recipients have been informed of and are bound to secrecy obligations substantially
similar to those in this Agreement; 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.

					
	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 32

 

 

	 	(iii)	 	Regulatory Authorities which have been advised of the confidential status of
the Confidential Information, provided all necessary procedures are followed to
preserve confidentiality.

It is expressly understood that Nisso may, at its choice, not provide Sensitive
Manufacturing Information to Third Party manufacturers pursuant to Section 3.2(g)
(Security of Supply) hereof. In addition, prior to the commercial sale of the
Drug Products, the Parties shall mutually discuss and agree upon the reasonable
disclosure of any Confidential Information necessary to be disclosed in connection
with Replidyne’s, its Affiliates’ and Replidyne’s Designees’ pre-launch sales and
marketing activities.

     ARTICLE 11: DURATION AND TERMINATION

	11.1	 	Term. The term of this Agreement (“Term”) shall become effective on the
Effective Date and shall, unless sooner terminated as hereinafter provided in this Agreement,
continue in full force and effect, on a country-by-country basis, in each country in the
Territory until the latest of:

(i) the expiration date of all valid claims of all patents specified in Attachment 11.1
licensed to Replidyne pursuant to the License Agreement and all periods of extended
commercial exclusivity for Drug Products granted under any laws or regulations in such
country in the Territory for Drug Products actually manufactured, used or sold by
Replidyne; or

(ii) the date that is twelve (12) years after the date of the first commercial sale of a
Drug Product (other than the Drug Product of which Replidyne makes only a limited launch
and not the Launch) in such country in the Territory.

If Replidyne desires to continue to purchase Drug Substance from Supplier following the
expiration of this Agreement, the Parties shall also discuss in good faith the terms and
conditions for the extension of this Agreement, which such negotiation shall commence no
later than one (1) year prior to the expiration of this Agreement.

	11.2	 	Termination. The Party respectively specified below, as the case may be, may
terminate this Agreement forthwith by notice in writing to the other Parties upon the
occurrence of any of the following events:

	 	(a)	 	Termination of License Agreement. Replidyne may terminate this
Agreement in the event of the expiration or termination, for whatever reason, of the
License Agreement.
	 
	 	(b)	 	Material Breach by Replidyne. DSP or Nisso may terminate this
Agreement if Replidyne commits a material breach of this Agreement, which in the case
of a breach shall not have been remedied within ninety (90) days of the receipt by
Replidyne of a notice identifying the breach and requiring its remedy or such longer

 

[ *** ] = 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.

					
	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 33

 

 

time as Replidyne may demonstrate to DSP or Nisso is necessary to remedy the breach
using its reasonable efforts to do so.

	(c)	 	Material Breach by DSP or Nisso. Replidyne may terminate this
Agreement if DSP or Nisso commits a material breach of this Agreement, which in the
case of a breach shall not have been remedied within ninety (90) days of the receipt
by DSP or Nisso of a notice identifying the breach and requiring its remedy or such
longer time as DSP or Nisso may demonstrate to Replidyne is necessary to remedy the
breach using its reasonable efforts to do so.

	(d)	 	Bankruptcy Event for Replidyne. DSP or Nisso may terminate this
Agreement if Replidyne is the subject of a Bankruptcy Event.

	(e)	 	Bankruptcy Event for DSP or Nisso. Replidyne may terminate this
Agreement if DSP or Nisso is the subject of a Bankruptcy Event.

	(f)	 	Force Majeure Event for Replidyne. DSP or Nisso may terminate this
Agreement if Replidyne is unable to perform its obligations under this Agreement by an
event of Force Majeure for more than six (6) months.

	(g)	 	Force Majeure Event for DSP or Nisso. Replidyne may terminate this
Agreement if DSP or Nisso is unable (or it is reasonably foreseeable that DSP or Nisso
will be unable) to deliver [ *** ] percent ([ *** ]%) of quantities of the Drug
Substance without Defects ordered pursuant to Purchase Orders during a six (6) month
period, provided that such quantities are consistent with the Purchase Forecasts, by
an event of Force Majeure.

	(h)	 	Abandonment of Development or Commercialization. Replidyne may
terminate this Agreement if Replidyne determines in its sole discretion to abandon the
development and/or commercialization of Drug Products.

	(i)	 	Intolerable Delay. Nisso shall have the right to terminate this
Agreement any time following July 1 2009, at sole discretion, if Replidyne does not
notify Supplier of the Launch Go Date on or before July 1, 2009, provided, that if
Nisso exercises such right, Replidyne shall have the right to require Nisso to
transfer the Manufacturing Technology of the Drug Substance to Replidyne or its
Manufacturing Designee pursuant to the terms and conditions stipulated in Section
7.9 (Ownership of Regulatory Approvals) and Article 8 (Transfer of
Manufacturing) hereof.

ARTICLE 12: EFFECT OF TERMINATION 

	12.1	 	Survival. The provisions of Sections 3.7 (Protective Measures), 4.8 (Inspection,
Shortages and Defects), 5.4 (Taxes), 5.5 (Audits), 6.5 (Warranties), 6.7 (Complaints), 7.4
(Tests; Retained Samples and Records), 7.10 (Adverse Events), 7.11 (Recalls), 13.1 (Hold
Harmless by Replidyne), 13.2 (Hold Harmless by Supplier) and Articles 9 (Proprietary

 

[ *** ] = 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.

					
	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 34

 

 

Rights),
10 (Secrecy), 12 (Effect of Termination), 19 (Applicable Law), 20 (Dispute Resolution), 21
(Notice) and 22 (Publicity) shall survive the expiration or termination of this Agreement for
any reason. In addition, any other provisions including Section 3.2 (Minimum Purchase
Quantities), 8.2 (Grant of License), 8.3 (Royalty), 8.4 (Disclosure of Manufacturing
Technology) and Section 13.3 (Insurance) which are required to interpret and enforce the
Parties’ rights and obligations under this Agreement shall also survive such expiration or
termination to the extent required for the full observation and performance of this Agreement
by the Parties.

	12.2	 	Accrued Rights and Obligations. Expiration or termination of this Agreement for
whatever reason shall not affect the accrued rights and obligations of any Party arising under
this Agreement.

	12.3	 	Extension of Supply. Upon expiration of this Agreement, if Replidyne desires to
continuously purchase the Drug Substance from the Supplier following the expiration of this
Agreement, the Parties shall also discuss in good faith of the terms and conditions for the
extension of this Agreement which such negotiation shall commence no later than one (1) year
prior to the expiration of this Agreement.

	12.4	 	Fulfillment of Purchase Orders. If this Agreement is terminated as provided in
Section 11.2(a) (Termination of License Agreement) other than the termination of
the License Agreement due to the material
breach or bankruptcy event of Replidyne,
Section 11.2(c) (Material Breach by DSP or
Nisso), 11.2(e) (Bankruptcy Event for DSP or
Nisso) or 11.2 (g) (Force Majeure Event for DSP
or Nisso) by Replidyne, then (i) Replidyne may
cancel without liability (other than for
reimbursement as provided in Section 12.5(a)
(Reimbursement for Purchase Orders) hereof) all
outstanding Purchase Orders for which delivery
has not been completed, as determined by
Replidyne in its sole discretion, and (ii) such
termination, except the termination as provided
in Section 11.2 (g) (Force Majeure Event for
DSP or Nisso), shall not relieve the Supplier
of its obligation to deliver Drug Substance
ordered by Replidyne prior to the effective
date of termination (except to the extent
Purchase Orders are so cancelled by 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.

					
	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 35

 

 

	12.5	 	Compensation to Nisso.

	 	(a)	 	Reimbursement for Purchase Orders. In the event of the termination of this
Agreement pursuant to Section 11.2(b) (Material Breach by Replidyne) or
Section 11.2(d) (Bankruptcy Event for Replidyne) or Section 11.2(h)
(Abandonment of Development or Commercialization) or in the event of the termination of this
Agreement caused by the termination of the License Agreement due to the material breach or
bankruptcy event of Replidyne, but not in the event of any other termination or the expiration of
this Agreement, within sixty (60) days after the effective date of such termination of this
Agreement, Replidyne shall reimburse Nisso for reasonable costs and expenses incurred or which
cannot be avoided or cancelled for quantities of Drug Substance which are the subject of Purchase
Orders delivery of which will not be completed pursuant to Section 12.4 (Fulfillment of
Purchase Orders) hereof.

	 	(b)	 	Minimum Purchase Obligations. In the event (i) of the termination
of this Agreement pursuant to Section 11.2(b) (Material Breach by
Replidyne) or Section 11.2(d) (Bankruptcy Event for Replidyne)
or Section 11.2(h) (Abandonment of Development or Commercialization) or in the
event of the termination of this Agreement caused by the termination of the License Agreement due
to the material breach or bankruptcy event of Replidyne, but not in the event of any other
termination or the expiration of this Agreement, and (ii) that the Launch Go Date has occurred (but only if the Launch Go Date has occurred), Replidyne shall pay Nisso, at Replidyne’s election, either:

	 	(A)	 	within sixty (60) days after the effective date of termination of this Agreement, an amount equal to the net present value (using as the discount factor the rate that is one and half percent (1.5%) per annum above the 30 day U.S. Dollar LIBOR rate, as published in The Financial Times for the effective date of termination, compounded) of an amount equal to [ *** ] percent ([ *** ]%) of the aggregate Purchase Price pursuant to Article 5 for
the applicable minimum purchase quantities of Drug Substance which Replidyne has failed to purchase as required by Section 3.2 (Minimum Purchase Quantities) for the Three Year Period, the applicable calendar year in the Five Year Period or the then-current Remaining Term Year (but not thereafter), whichever is applicable (for clarity, the period that is applicable is only the period in which such termination occurs, and not prior or subsequent periods); or
	 
	 	(B)	 	on an annual basis, after the effective date of termination of this Agreement, by March 1st of each such year, the amount of the compensation due to Supplier pursuant to Section 5.8 (Compensation to Supplier) hereof;

to the extent not already compensated by Replidyne, and for such minimum purchase quantities, if any, which have not been purchased by Replidyne as of the effective date of termination or will not be purchased by Replidyne pursuant 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.

					
	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 36

 

 

Section 12.3 (Extension of Supply) or Section 12.4(ii) (Fulfillment of
Purchase Orders) hereof, as follows:

	 	(i)	 	if such termination occurs in the Three Year Period,
Replidyne’s obligation pursuant to this Section 12.5(b) shall only
apply to the minimum purchase quantities applicable pursuant to Section
3.4(a) (First Three Years) hereof; or
	 
	 	(ii)	 	if such termination occurs in the Five Year Period, Replidyne’s
obligation pursuant to this Section 12.5(b) shall only apply to the
minimum purchase quantities applicable for the then-current year in the Five
Year Period pursuant to Section 3.4(b) (Next Five Years) hereof; or
	 
	 	(iii)	 	if such termination occurs in the Remaining Term, Replidyne’s
obligation pursuant to this Section 12.5(b) shall apply to the minimum
purchase quantities applicable only for the Remaining Term Year in which such
termination occurs prorated to the effective date of termination for such year.

The foregoing shall be Supplier’s sole remedy for Replidyne’s failure to purchase
the minimum purchase quantities of Drug Substance pursuant to Section 3.4 
(Minimum Purchase Quantities) hereof due to the termination of this
Agreement, but shall only apply if the Launch Go Date has occurred.

	 	(c)	 	Engineering Costs. In the event (i) of the termination of this
Agreement pursuant to Section 11.2(b) (Material Breach by Replidyne) or
Section 11.2(d) (Bankruptcy Event for Replidyne) or Section 11.2(h)
(Abandonment of Development or Commercialization) or Section 11.2(i)
(Intolerable Delay of Launch Go Date) or in the event of the termination of this
Agreement caused by the termination of the License Agreement due to the material breach
or bankruptcy event of Replidyne, but not in the event of any other termination or the
expiration of this Agreement, and (ii) that the Launch Go Date has NOT
occurred, within thirty (30) days after the effective date of termination of this
Agreement, Replidyne shall reimburse Nisso for [ *** ] percent ([ *** ]%) of all actual
costs incurred by Nisso (including, without limitation, all materials and labor costs),
but excluding overhead expenses, relating to engineering activities (but not
qualification or validation activities) undertaken by Nisso, and approved by Replidyne
pursuant to Section 2.5 (Replidyne Review) hereof, in connection with
Sections 2.2 (Engineering Activities) in the event that this Agreement is
terminated at any time after the Effective Date but prior to the Launch Go Date;
provided that Replidyne’s payment obligation to Nisso pursuant to this Section
12.5(c) shall not exceed JP¥[ *** ].
	 
	 	(d)	 	Other Pre-Approved Reimbursable Costs. In the event (i) of the
termination of this Agreement pursuant to Section 11.2(b) (Material Breach by
Replidyne) or Section 11.2(d) (Bankruptcy Event for Replidyne) or
Section 11.2(h) (Abandonment of Development or Commercialization) or
Section 11.2(i)

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 37

 

 

	 	 	 	(Intolerable Delay of Launch Go Date) or in the event of the
termination of this Agreement caused by the termination of the License Agreement due to
the material breach or bankruptcy event of Replidyne, but not in the event of any other
termination or the expiration of this Agreement, and (ii) that the Launch Go
Date has NOT occurred, within thirty (30) days after the effective date of
termination of this Agreement, Replidyne shall reimburse Nisso for such costs and
expenses as may be mutually agreed in writing from time to time prior to the Launch Go
Date to be reimbursed by Replidyne by express reference to this Section
12.5(d). For example purposes, such costs may include by such written agreement
the cost of a quality control laboratory or the advance purchase of raw materials
pursuant to Section 4.4(b) (First Purchase Order) hereof.

	12.6	 	Payment Assurance. To secure Replidyne’s payment obligations of or under (i)
Section 12.5(b) (Minimum Purchase Obligations) and/or (ii) Sections 12.5(c)
(Engineering Costs) and 12.5(d) (Other Pre-Approved Reimbursable Costs) if and when those
obligations cumulate to more than three million U. S. dollars (US$3,000,000) and/or (iii)
Section 5.3 (Payment) if and when those obligations prior to the Launch Go Date cumulate to
more than three million U. S. dollars (US$3,000,000) (not only for the excess of three million
U. S. dollars (US$3,000,000), but for the full amount of such obligations) and/or (iv) Section
5.3 (Payment) if and when those obligations after the Launch Go Date for the period starting
from the shipment of the Drug Substance pursuant to Section 4.7 (Delivery, Title and Risk of
Loss) and ending at making the payment by Replidyne on any purchase order pursuant to
Section 5.3 (Payment) exceeding three million U. S. dollars (US$3,000,000) (not only for the
excess of three million U. S. dollars (US$3,000,000) but for the full amount of such
purchase order), Replidyne shall, independently or together with one or more of Replidyne’s
Designees, establish a commercially reasonable mechanism for securing Replidyne’s financial
ability to make payment of, or obtain an insurance for, such obligations in accordance with
the following time line:

	 	 	 	 	 
	 

	 	Minimum Purchase Obligations:
	 	Upon agreement of the minimum purchase quantities
	 
	 	 	 	 
	 

	 	Engineering & Other:
	 	No later than thirty (30) days prior to the date on which it is
reasonably foreseen that accumulated amount stipulated in Section 12.5 (c)
(Engineering Costs) and other payment obligations of Replidyne stipulated in
Section 12.5 (d) (Other Pre-Approved Reimbursable Costs) will exceed three
million U. S. dollars (US$3,000,000). (The cost for raw materials for the Drug
Substance for the first purchase order shall be included for the purpose of the
calculation of such amount, regardless of whether or not Replidyne requests Nisso to
shorten the delivery time.)
	 
	 	 	 	 
	 

	 	Certain Purchase Orders

Before the Launch Go Date:
	 	
No later than sixty (60) days prior to shipment in case then
outstanding aggregate purchase amount 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 38

 

 

	 	 	 	 	 
	 

	 	 	 	Drug Substance prior to Launch Go Date
exceeds three million U. S. dollars (US$3,000,000).
	 
	 	 	 	 
	 

	 	Certain Purchase Orders

After the Launch Go Date:
	 	
No later than thirty (30) days prior to shipment; provided
that Supplier agrees to bear any third party costs associated with the financial
assurance mechanism for the period starting from the shipment of the Drug Substance
pursuant to Section 4.7 (Delivery, Title and Risk of Loss) and ending at making the
payment by Replidyne on any purchase order pursuant to Section 5.3 (Payment), such as
customary and reasonable bank fees for a letter of credit, escrow, or other
arrangement.

ARTICLE 13: HOLD HARMLESS AND INSURANCE 

Notwithstanding and in addition to Sections 18.1 (Hold Harmless by Replidyne) and 18.2 (Hold
Harmless by DSP) of the License Agreement, the Parties hereto agree as follows:

	13.1	 	Hold Harmless by Replidyne. Replidyne shall indemnify, defend and hold the Supplier
and the Supplier’s Affiliates and their respective officers, directors, employees, partners
and agents (“Supplier Indemnitees”) harmless from and against any and all liability, damages,
cost or expenses (including reasonable attorneys’ fees and disbursements) (“Damages”) incurred
as a result of any claim made or suit brought by a Third Party against a Supplier Indemnitee
arising out of or related to (i) the development, manufacture, handling, sale, storage,
transportation, testing, labeling, packaging, marketing or use of the Drug Products by
Replidyne, or any of Replidyne’s Designees, (ii) the manufacture, handling, sale, storage,
transportation, testing, labeling, packaging, marketing or use of the Drug Substance by
Replidyne or the Manufacturing Designee or (iii) the negligence or intentional misconduct or
breach of this Agreement by Replidyne, except to the extent that such Damages arise out of or
relate to (a) any Defect in the Drug Substance supplied by Nisso hereunder existing at the
time the Drug Substance is delivered to Replidyne, and/or (b) the negligence or intentional
misconduct or breach of this Agreement by the Supplier Indemnitees. Upon receipt of any such
claim or suit by any of the Supplier Indemnitees, the Supplier or such Supplier Indemnitees
shall promptly notify Replidyne in writing of such claim or suit, and shall permit Replidyne
to defend against and control the defense of such claim or suit; provided, that Replidyne
shall not compromise or settle such claim or suit in a manner materially and adversely
affecting the Supplier without the written approval of the Supplier and the Supplier shall
have the right to participate in the defense of such claim or suit at its own expense. The
Supplier or any Supplier Indemnitee shall not compromise or settle such claim or suit without
the prior written approval of Replidyne.

	13.2	 	Hold Harmless by Supplier. The Supplier shall indemnify, defend and hold Replidyne
and Replidyne’s Affiliates and their respective officers, directors, employees, contractors,
partners and agents (“Replidyne Indemnitees”) harmless from and against any and all

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 39

 

 

	 	 	Damages
incurred as a result of any claim made or suit brought by a Third Party against a Replidyne
Indemnitee arising out of or related to (i) any Defect in the Drug Substance supplied to
Replidyne hereunder, and/or (ii) the negligence or intentional misconduct or breach of this
Agreement by the Supplier except to the extent that such Damages arise out of or relate to the
negligence or intentional misconduct or breach of this Agreement by the Replidyne Indemnitees.
Upon receipt of any such claim or suit by any of the Replidyne Indemnitees, Replidyne or such
Replidyne Indemnitees shall promptly notify the Supplier in writing of such claim or suit and
shall permit the Supplier to defend against and control the defense of such claim or suit;
provided, that the Supplier shall not compromise or settle such claim or suit in a manner
materially and adversely affecting Replidyne without the written approval of Replidyne and
Replidyne shall have the right to participate in the defense of such claim or suit at its own
expense. Replidyne or any Replidyne Indemnitee shall not compromise or settle such claim or
suit without the prior written approval of the Supplier.

	13.3	 	Insurance. Each Party shall, at its sole cost and expense, obtain and keep in force
during the Term of this Agreement and for a period of not less than seven (7) years after
termination or expiration of this Agreement the following insurance:

	 	(a)	 	Nisso. Nisso shall have general liability insurance, including
product liability insurance and blanket contractual liability coverage with bodily
injury, death and property damage limits of $[ *** ] per occurrence and $[ *** ] in the
aggregate.
	 
	 	(b)	 	DSP. DSP has already bought, and will obtain and keep in force,
during the term of the License Agreement, the following insurance, under the License
Agreement: general liability insurance and blanket contractual liability coverage with
bodily injury, death and property damage limits of $[ *** ] per occurrence and $[ *** ]
in the aggregate; provided, however, that DSP’s obligation to have such insurance shall
not be required until commencement of the production of the Drug Substance for use in
clinical use and commercialization of the Drug Products.
	 
	 	(c)	 	Replidyne. Replidyne has already bought, and will obtain and keep in
force, during the term of the License Agreement, the following insurance, under the
License Agreement: (i) general liability insurance, including blanket contractual
liability coverage with bodily injury, death and property damage limits of $10,000,000
per occurrence and $10,000,000 in the aggregate; and (ii) clinical studies and product
liability insurance with bodily injury, death and property damage limits of not less
than $10,000,000 per occurrence and $10,000,000 in the aggregate; provided, however,
that Replidyne’s obligation to have such insurance shall not be required until
commencement of the Development (as defined in the License Agreement).

After the execution of this Agreement, and upon the other Party’s request thereafter, each
Party shall furnish the other with a certificate of insurance signed by an authorized
representative of such Party’s insurance underwriter evidencing the insurance coverage
required by this Agreement. Each Party shall use its commercially reasonable efforts 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 40

 

 

cause Third Parties engaged by such Party to perform its obligations under this Agreement to
maintain such types of insurance coverage and for such period of time as are customary for
such Third Parties given the nature of the services to be provided.

  ARTICLE 14: REPRESENTATIONS, WARRANTIES AND COVENANTS 

	14.1	 	Corporate Power. Each Party hereby represents, warrants and covenants that, as of
the Effective Date, such Party is duly organized, validly existing under the laws of its state
or country of incorporation and has full corporate power and authority to enter into this
Agreement and carry out the provisions hereof.

	14.2	 	Due Authorization. Each Party hereby represents and warrants that, as of the
Effective Date, such Party is duly authorized to execute and deliver this Agreement and to
perform its obligations hereunder.

	14.3	 	Binding Obligations/No Conflict. Each Party hereby represents, warrants and
covenants that, as of the Effective Date: (i) this Agreement is a legal and valid obligation
binding upon it and is enforceable in accordance with its terms; and (ii) the execution,
delivery and
performance of this Agreement by such Party does not, and will not during the Term of this
Agreement, conflict with any agreement, instrument or understanding to which it is a party
or by which it is bound, nor to the best knowledge of each Party as of the Effective Date
will such execution, delivery and performance violate any Applicable Laws. Without limiting
the generality of the foregoing, Nisso represents, warrants and covenants that during the
Term Nisso shall own the Nihongi Facility, free and clear of all liens, claims and
encumbrances, including without limitation any obligation to the Bayer group.

	14.4	 	Debarment. During the Term of this Agreement, each Party shall not 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 Act in connection with any of the
activities to be carried out under this Agreement. Each of DSP and Nisso represents and
warrants that, as of the Effective Date, it has not engaged in any conduct or activity which
could lead to any debarment action.

  ARTICLE 15: FORCE MAJEURE

     No Party hereto shall be liable to the other Parties for any losses or damages attributable to
a default in or breach of this Agreement which is the result of any cause beyond the reasonable
control of such Party, including but not limited to war (whether declared or undeclared), acts of
God, revolution, terrorism, civil commotion, strike or labor disruption, fire, earthquake, flood,
pestilence, explosion, riot, enactment or change of laws and regulations, accident(s), labor
trouble, or shortage of or inability to obtain services, material, equipment or transport. The
performance of obligations hereunder shall be suspended during, but no longer than, the existence
of such cause mentioned in this Article. In the event that a cause mentioned in this Article
prevents or will prevent implementation of this Agreement for more than six (6) months, the
additional rights of the Parties specified in Sections 8.1(d), 11.2(f) (Force Majeure
Event for Replidyne) and 11.2(g) (Force Majeure Event for DSP or Nisso) hereof shall
apply.

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 41

 

 

  ARTICLE 16: NON-WAIVER 

     A Party’s failure to exercise and/or delay in exercising, any right, remedy, power or
privilege hereunder, shall not operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege.

  ARTICLE 17: MODIFICATION 

     No modification, extension, or waiver of any provision of this Agreement shall be valid unless
the same is in writing signed by the duly authorized officers of all Parties hereto.

  ARTICLE 18: MISCELLANEOUS

	18.1	 	Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY
MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, OR NON-INFRINGEMENT.

	18.2	 	Liquidated Damages. Except with respect to a breach of Article 10 (Confidentiality)
and respect to each Party’s obligation to indemnify the other Parties for indemnification
liability to a Third Party under Article 13 (Hold Harmless and Insurance) and the provisions
of this Section 18.2, no Party shall be liable for any special, consequential,
indirect, incidental or punitive damages, under any cause of action, whether under any
contract, negligence, strict liability or other legal or equitable theory, with respect to any
subject matter of this Agreement and whether or not such Party or its agents have been advised
of the possibility of such damage. This limitation shall apply notwithstanding any failure of
the essential purpose of any limited remedy provided herein. Notwithstanding the foregoing,
as liquidated damages and not as a penalty, Nisso shall pay to Replidyne an amount equal to
Replidyne’s Net Margin for Lost Sales. For purposes of this Section 18.2:

	 	(i)	 	“Supply Interruption” means any period during the Term after Nisso has
failed to timely deliver to Replidyne more than twenty percent (20%) of quantities of
the Drug Substance ordered by Replidyne for delivery in a ninety (90) day period
conforming to the applicable Purchase Orders, warranties, Specifications and Applicable
Laws as required by this Agreement, including without limitation due to Supplier’s
failure to perform its obligations under Article 2 hereof in accordance with the
Timeline, other than due to (i) a material breach by Replidyne of its obligations
hereunder, or (ii) Force Majeure. (For example, if Replidyne ordered 100 kilograms of
the Drug Substance for delivery in a 90 day period and Nisso only delivered 79
kilograms (or 79% of the quantities ordered) in such period, then a Supply Interruption
would have occurred.)

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 42

 

 

	 	(ii)	 	“Lost Sales” means, determined on a quarterly basis for each calendar
quarter or portion thereof during a Supply Interruption, the quantity of sales that
Replidyne would have reasonably realized from Third Parties for Drug Products which
Replidyne cannot fill because it is out-of-stock due to a Supply Interruption.
	 
	 	(iii)	 	“Net Margin” shall mean the gross invoice amount for Drug Products
ordinarily invoiced by Replidyne for the relevant Third Party, less (i) promotional and
trade discounts; (ii) sales and excise taxes, value-added and other taxes, shipping
costs and insurance premiums and duties which are billed to such Third Party as
separate items on invoices; (iii) allowances for short shipments, claims for returned
goods and price adjustments; (iv) contracts charge-backs and government rebates; and
(v) the cost of the Drug Products to Replidyne. Also deducted from Net Margin shall be
out-of-pocket costs to Replidyne related to the commercialisation of Drug Products that
are reasonably cancellable by Replidyne without penalty.

Replidyne shall invoice Nisso quarterly for such payments, and Nisso shall pay each such
invoice not later than forty five (45) calendar days after its receipt thereof. Each such
invoice shall be accompanied by documentation reasonably satisfactory to Nisso setting forth
the Net Margin for Lost Sales covered by the invoice.

	18.3	 	Severability. In the event that any one or more of the provisions of this Agreement
should for any reason be held by the competent authorities to be invalid, illegal or
unenforceable, to the extent practicable such provision or provisions shall be reformed or
renegotiated to as nearly approximate the original reasonable intent of the Parties as
possible and the validity, legality or enforceability of the remaining provisions shall in no
way be affected or impaired thereby.

	18.4	 	Accrued Obligation. Termination of this Agreement for any reason shall not release
any Party hereto from any liability which at the time of such termination has already accrued
to such Party or which is attributable to a period prior to such termination, nor preclude any
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.

	18.5	 	Independent Contractor. The relationship among DSP, Nisso and Replidyne is that of
independent contractors. DSP, Nisso and Replidyne are not joint venturers, partners,
principal and agent, employer and employee, and have no other relationship other than
independent contracting Parties. No Party shall have the authority to make any statements,
representations or commitments of any kind, or to take any action, which shall be binding on
another Party, without the prior written consent of such other Party. Notwithstanding the
foregoing, DSP and Nisso shall be jointly and severally liable for the obligations of the
“Supplier” hereunder but only where it is explicitly specified as the “Supplier” in this
Agreement and Replidyne shall be entitled to pursue any claim for such obligations of the
Supplier hereunder against either of DSP or Nisso or both of them. Subject to the foregoing,
the obligations and liabilities of each Party hereunder (except those of DSP and Nisso as
“Supplier”) are several only and are not joint or joint and several.

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 43

 

 

	18.6	 	Assignment. This Agreement shall not be assignable by any Party to any Third Party
without the prior written consent of the other Parties hereto, such consent not to be
unreasonably withheld, except (i) in connection with any acquisition or merger of such Party
or sale of all or substantially all of its assets, or (ii) by Replidyne, in connection with a
permitted assignment of the License Agreement. Any attempted assignment in breach of this
Section 18.6 (Assignment) shall be null and void. This Agreement including any
amendment and/or supplement hereto shall inure to the benefit of and be binding upon the
Parties hereto and their respective successors and permitted assigns.

	18.7	 	Entire Agreement. This Agreement and the Attachments hereto and the purchase
agreement dated May 25, 2004 (“Purchase Agreement”) constitute the entire agreement among all
of the Parties hereto concerning the subject matter hereof and any representation, promise or
condition in connection therewith, not incorporated in this Agreement or the Purchase
Agreement shall not be binding upon any Party, except that the Parties may amend such
agreement(s) by a written agreement executed by all of the Parties. The Supply LOI and Letter
Agreement are hereby superceded and terminated completely.

	18.8	 	Captions. The captions used in this Agreement are for convenience only, and this
Agreement shall not be construed or interpreted by reference to such captions.

	18.9	 	Guarantee on Mergers and Acquisitions. In case any Party (“Acquired Party”)
is merged with or acquired by or has sold all or substantially all of its assets to a Third
Party (“Acquiring Party”), the Acquired Party shall obtain from the Acquiring Party a
written assurance addressed to the other Parties stating that the Acquiring Party agrees be to
bound by and perform and comply with all of the rights and obligations of the Acquired Party
under this Agreement. In case any such assurance is not obtained within six (6) months of
the effective date of such merger, acquisition or sale, such other Parties shall have the
right to terminate this Agreement at any time within six (6) months after the expiration of
such six (6) month period, by ninety (90) days’ notice in writing to the Acquired Party.

	18.10	 	Cumulative Remedies. Except as expressly provided herein, the rights and remedies
afforded to each Party pursuant to any provision of this Agreement are in addition to and do
not in any way limit any other rights or remedies afforded to any Party by any other provision
of this Agreement or by law. All such rights and remedies are cumulative and may be exercised
singularly or concurrently.

  ARTICLE 19: APPLICABLE LAW

     This Agreement and any additional agreements, documents or instruments to be executed in
connection herewith between the Parties hereto shall be prepared in English language. This
Agreement shall be governed by and construed in accordance with the laws of the State of New York
unless the mandatory law of any country of the Territory is applicable.

  ARTICLE 20: DISPUTE RESOLUTION

     The Parties shall endeavor to resolve all conflicts and disputes arising out of or in any way
in connection with this Agreement amicably between themselves. In the event the Parties are

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 44

 

 

unable
to amicably resolve any such conflict or dispute among themselves, any such conflict or dispute
shall be finally settled by arbitration according to the rules of the International Chamber of
Commerce (“ICC”). If a Party intends to commence arbitration to resolve such dispute, it
shall give the other Parties written notice (“Arbitration Notice”) of such intention and
the issues to be resolved. The arbitration shall take place in Tokyo, Japan if Replidyne demands
arbitration, or in Denver, Colorado U.S.A., if DSP or Nisso demands arbitration. The award shall
be final and binding upon the Parties hereto. The arbitration shall be conducted by a panel of
industry experts experienced in the issues comprising any such dispute, selected in such a manner
that DSP and Nisso are considered to be one Party, and Replidyne considered to be one Party,
pursuant to such rules. In no event shall the arbitration proceeding extend more than twelve (12)
months from the date of filing of the Arbitration Notice with the ICC. Each Party shall bear its
own expense in the arbitration and share equally the fees of the arbitration panel, unless such
panel determines that its fees are to be paid by the non-prevailing Party. The Panel shall have
the authority to award any remedy allowed by law or in equity, excluding however, punitive damages
and those damages described in Section 18.2 (Liquidated Damages) hereof.

  ARTICLE 21: NOTICE 

     All notice, given by one Party hereto to the other Parties hereunder, shall be in writing and
made by registered or certified air mail, facsimile, express overnight courier or delivered
personally to the following addresses of the respective Parties:

	 	 	 	 	 
	 

	 	If to DSP:
	 	Daiichi Suntory Pharma Co., Ltd.
	 

	 	 	 	General Manager,
	 

	 	 	 	Business Planning & Development Dept.
	 

	 	 	 	7-2, Kojimachi 5-chome, Chiyoda-ku
	 

	 	 	 	Tokyo 102-8530, Japan
	 

	 	 	 	Facsimile Number: +81-3-5210-5068
	 
	 	 	 	 
	 

	 	If to Replidyne:
	 	Replidyne, Inc.
	 

	 	 	 	Chief Executive Officer
	 

	 	 	 	1450 Infinite Drive
	 

	 	 	 	Louisville, Colorado 80302
	 

	 	 	 	U.S.A.
	 

	 	 	 	Facsimile Number: (303) 665 3455
	 
	 	 	 	 
	 

	 	If to Nisso:
	 	Nippon Soda Co., Ltd.
	 

	 	 	 	General Manager
	 

	 	 	 	Pharma-Chemicals Business Group
	 

	 	 	 	2-1, Ohtemachi 2-Chome, Chiyoda-ku
	 

	 	 	 	Tokyo 100-8165, Japan
	 

	 	 	 	Facsimile Number: +81-3-3245-6059

The notice, unless otherwise provided, shall be deemed to be effective: (a) upon receipt if
personally delivered or by facsimile with evidence of transmission; (b) on the tenth (10th)
business day following the date of mailing if sent by registered or certified air mail; or (c) on
the second

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 45

 

 

business day following the date of transmission or delivery to the overnight courier if
sent overnight courier. A Party may change its address listed above by sending notice to the other
Parties.

  ARTICLE 22: PUBLICITY

     No Party, without the prior written approval of the other Parties, shall originate any
publicity, news release or public announcement, written or oral, whether to the public press,
stockholders or otherwise, relating to this Agreement, including, without limitation, its
existence, the subject matter to which it relates, performance under it or any of its terms, to any
amendment hereto or performance hereunder, (“Announcement”), except to the extent such
Announcement contains only information authorized for release in a previous Announcement, or such
an Announcement is required by Applicable Laws to be made, as determined by counsel for the Party
making such Announcement. Other than Announcements required by law, a Party will give the other
Parties at least fifteen (15) business days’ advance written notice of the text of any proposed
Announcement so that the other Parties will have an opportunity to comment upon the
Announcement. For an Announcement required by law, each Party will endeavor to give the other
Parties reasonable notice, which presumptively shall be fifteen (15) days notice, unless
circumstances require that the Announcement be released sooner.

  ARTICLE 23: LANGUAGE

     All notices, plans, protocols, reports and other documents to be provided by the Supplier to
Replidyne or by Replidyne to the Supplier under this Agreement, whether for approval or for
information, shall be provided in the English language.

  ARTICLE 24: EXECUTION IN COUNTERPARTS

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

[Remainder of 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 46

 

 

     IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by
their duly authorized officers effective as of the Effective Date.

	 	 	 	 	 	 	 	 	 	 	 
	DAIICHI SUNTORY PHARMA CO., LTD.	 	 	 	REPLIDYNE, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Signature:

	 	/s/ George Nakayama
	 	 	 	Signature:
	 	/s/ Kenneth Collins	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Name:

	 	George Nakayama
	 	 	 	Name:
	 	Kenneth Collins	 	 
	Title:

	 	President
	 	 	 	Title:
	 	President and	 	 
	 

	 	 	 	 	 	 	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:

	 	27/4/2005
	 	 	 	Date:
	 	5/31/05	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	NIPPON SODA CO., LTD.	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Signature:

	 	/s/ Yasuhiko Otaki	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Name:

	 	Yasuhiko Otaki	 	 	 	 	 	 	 	 
	Title:

	 	Board of Directors	 	 	 	 	 	 	 	 
	 

	 	General Manager	 	 	 	 	 	 	 	 
	 	 	Specialty & Performance Chemicals Div.	 	 	 	 
	 
	Date:

	 	19/5/2005	 	 	 	 	 	 	 	 

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	PAGE 47

 

 

Attachment 1

Definitions

     “Act” means the United States Federal Food Drug and Cosmetic Act (21 U.S.C. Section
301 et seq.), as amended from time to time, and similar laws and regulations in the Territory.

     “Affiliates” means any entity which directly or indirectly controls, is controlled by,
or is under common control with a specified entity. For purposes of this definition, an entity is
deemed to be in control of another entity if the former has the direct or indirect power to control
the management and policies of the latter, whether through ownership of voting securities, by
contract, or otherwise.

     “Applicable Law(s)” means the Act, Regulations and all other applicable laws, rules,
regulations and guidelines that apply to the import, export, development, marketing, distribution
or sale of the Drug Products in the Territory or the performance of any Party’s obligations under
this Agreement, to the extent applicable and relevant, including without limitation cGMPs and
current Good Clinical Practices standards or similar guidelines promulgated by the Regulatory
Authorities.

     “AOSA” means the chemical substance identified by the following chemical formula:
(3R,4R)-4-acetoxy-3-[(R)-1-tert-butyldimethylsiloxyethyl]-2-azetidinone.

     “Bankruptcy Event” means if a Party: (i) passes any resolution for or permits any
proceedings for its winding up; or (ii) makes a general assignment for the benefit of creditors; or
(iii) has filed against it or files a petition in bankruptcy or insolvency or is declared bankrupt
or insolvent or declares that it is bankrupt or insolvent; or (iv) has filed against it or files
any petition or answer seeking reorganization, readjustment, or arrangement of its business or
debts and such action remains undismissed or unstayed for a period of more than sixty (60) days.

     “CFR” means the United States Code of Federal Regulations, as amended from time to
time.

     “cGMPs” means current good manufacturing practices as required by any applicable
regulatory authority in the Territory and all other laws and regulations relating to the
manufacture of the Drug Substance, including, but not limited to, the Current Good Manufacturing
Practices as specified in the CFR and established under the Act and the Regulations, the EU Good
Manufacturing Guidelines, the International Conference on Harmonization Guidelines and any other
Applicable Laws, guidelines and/or regulations, together with the latest FDA and other applicable
guidance documents pertaining to manufacturing and quality control practice, all as updated,
amended and revised from time to time.

     “Defect” means a non-conformity of the Drug Substance with the Specifications, the
warranties provided in Section 6.5 (Warranties) hereof or Applicable Laws, or the
contamination of the Drug Substance with other substances and/or active ingredients.

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	 

 

 

     “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, and other filings in
other countries in the Territory similar to such drug master file (including without limitation
“Common Technical Documents”) which permit Nisso to authorize others to rely on the information in
such file to support an application for Regulatory Approval of the Drug Products.

     “Drug Product(s)” means finished pharmaceutical preparations for human use in all
dosage forms containing the Drug Substance as a sole active ingredient or containing one or more
other therapeutically active ingredients in addition to the Drug Substance.

     “Drug Substance” means the chemical substance identified as faropenem daloxate as its
generic name (code number: SUN A0026) 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.

     “Facilities” means the Nihongi Facility and the Takaoka Facility.

     “FDA” means the United States Food and Drug Administration, or any successor entity
thereto.

     “Field” means all uses of the Drug Product to treat, ameliorate or prevent infectious
diseases in humans.

     “Good Clinical Practices” means the then current standards for the performance of
clinical trials for pharmaceuticals, as set forth in the Act, applicable Regulations and guidance
documents promulgated thereunder, as amended from time to time.

     “ICH Guidelines” means all relevant guidelines promulgated from time to time by the
International Conference on Harmonisation of Technical Requirements for Registration of
Pharmaceuticals for Human Use.

     “Launch” means the first invoiced sale of a Drug Product by Replidyne, its Affiliates
or sublicensees, on a commercial basis to a Third Party (other than a Replidyne’s sublicensee) in
a country of the Territory after Regulatory Approval has been granted by the Regulatory Authority
of that country as part of a comprehensive, nationwide (covering more than half number of the
states in the United States of America, and not just in Canada) commercial introduction of a Drug
Product in a manner comparable to the commercial introduction of other community antibiotics in the
pharmaceutical industry.

     “Manufacturing Technology” means all information and documentation necessary or
advisable to enable Replidyne or the Manufacturing Designee to manufacture the 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.

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	 

 

 

     “NDA” means a New Drug Application filed with the FDA for Regulatory Approval, along
with any supplements and/or amendments to any NDA, or any other equivalent application in any
country in the Territory other than the U.S.

     “Nihongi Facility” means that portion of the manufacturing facility of Nisso located
at Nihongi, Japan in which Drug Substance is manufactured, tested or stored.

     “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 this 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 hereunder by Nisso or on behalf of Nisso by any of its Representatives relating to the
Drug Substance or the Drug Products.

     “Recall” means any action: (i) by Replidyne to recover title to or possession of
quantities of Drug Products incorporating the Drug Substance sold or shipped to third parties
(including, without limitation, the voluntary withdrawal of Drug Products incorporating the Drug
Substance from the market), (ii) by any regulatory authorities to detain or destroy any Drug
Products incorporating the Drug Substance, or (iii) by a court of competent jurisdiction to order
such a recall. “Recall” shall also include the election by Replidyne to refrain from
selling or shipping quantities of such products to Third Parties which would have been subject to a
Recall if sold or shipped.

     “Regulations” means regulations, statutes, rules, guidelines and procedures
promulgated by the FDA and any other Regulatory Authority pursuant to the Act or other law
applicable to the manufacture, use or sale of the Drug Products in the Territory, including without
limitation those regulations currently contained in Title 21 of the CFR.

     “Regulatory Approval” means authorization granted by a Regulatory Authority to market
and sell the Drug Products in a country in the Territory that is required before the Drug Products
may be commercially marketed and sold in such country, including without limitation any pricing
and/or reimbursement approval(s) which must be obtained before placing a Drug Product on the market
in any country in the Territory in which such approval(s) is required.

     “Regulatory Authority(ies)” means any regulatory agency, department, bureau, or other
governmental entity, including without limitation the FDA, which is responsible for issuing
approvals, licenses, registrations, clearances, or authorizations necessary for the manufacture,
use, storage, import, transport, marketing or sale of Drug Substance and/or Drug Products in a
country in the Territory.

     “Replidyne Improvement” means any and all developments, enhancements, modifications,
inventions or discoveries in the Field relating to the Drug Products (but excluding those related
to the Drug Substance) for use in the Field and under the control of Replidyne that are developed
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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	 

 

 

created by or on behalf of Replidyne at any time during the Term of this Agreement, whether
patentable or not, including, but not be limited to, developments, inventions or discoveries
intended to enhance the safety or efficacy of the Drug Products, and all intellectual property
rights thereto which are necessary or useful for Replidyne to exercise the rights licensed to it
under the License Agreement.

     “Replidyne Property” means (i) all information, documents and tangible and intangible
materials owned or controlled by Replidyne, which Replidyne provides to Supplier in connection with
the performance of services hereunder, and (ii) any data, inventions, discoveries, improvements,
Replidyne Improvements, intellectual property, derivative works and/or any other work product,
whether patentable or not, developed hereunder by Replidyne or on behalf of Replidyne by any of its
Representatives.

     “Representatives” means, in respect of a Party, its Affiliates, licensees,
sublicensees, and their respective employees, agents, consultants, subcontractors and other
representatives. Without limiting the generality of the foregoing, Replidyne’s Representatives
shall include the a Third Party engaged by or on behalf of Replidyne to produce the Drug Product
from the Drug Substance, other contractors, clinical research organizations and vendors, and other
collaborators/business partners with respect to the Drug Products.

     “Takaoka Facility” means that portion of the manufacturing facility of Nisso located
at Takaoka, Japan in which the Drug Substance is manufactured, tested or stored.

     “Territory” means the United States of America and Canada.

     “Third Party” means any entity other than DSP, Nisso or Replidyne or an Affiliate of
DSP, Nisso or Replidyne.

     “U.S.” or “United States of America” means the fifty (50) states, the District
of Columbia, all territories, possessions and commonwealths of the United States, Puerto Rico, Guam
and the U.S. Virgin Islands.

     “USP GMPs” means Good Manufacturing Practices as promulgated from time to time by the
United States Pharmacopoeia.

*  *  *  *  *

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	 

 

 

Attachment 2.3

Timeline

[ *** ]

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	 

 

 

Attachment 3.3

Delay Compensation

The cost items and their costs of the delay compensation for twelve month period are estimated as
follows:

	 	 	 
	Cost Item	 	Cost per twelve months
	[ *** ]
	 	JPY[ *** ]
	[ *** ]
	 	JPY[ *** ]
	[ *** ]
	 	JPY[ *** ]
	[ *** ]
	 	JPY[ *** ]
	Total
	 	JPY[ *** ]

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	 

 

 

Attachment 4.1

Batch Sizes

The batch size of Nihongi commercial production is planned as follows:

	 	-	 	The first batch of each campaign production

[ *** ]Kg as is. Control range is [ *** ]Kg to [ *** ]Kg
	 
	 	-	 	The second batch and then after

[ *** ]Kg as is. Control range is [ *** ]Kg to [ *** ]Kg

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	 

 

 

Attachment 4.2(a)

Initial Clinical Forecast

	1.	 	The quantity of Drug Substance purchased and delivered pursuant to that certain Purchase
Agreement dated as of May 25, 2004 among the parties.

	2.	 	The Validation Batches to be purchased pursuant to Section 2.4 (Purchase of Validation
Batches of Drug Substance) hereof.

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	 

 

 

Attachment 5.1

Purchase Prices

Clinical Quantities Pricing

     To be negotiated by the Parties on a case-by-case basis.

Commercial Quantities Pricing

	 	 	 
	Annual Quantity	 	Supply Price from DSP to Replidyne
	[ *** ]t-[ *** ]t
	 	To be negotiated by the Parties on a case-by-case basis.
	[ *** ]t-[ *** ]t
	 	[ *** ] JP¥/kg
	[ *** ]t-[ *** ]t
	 	[ *** ] JP¥/kg
	[ *** ]t-[ *** ]t
	 	[ *** ] JP¥/kg
	[ *** ]t-[ *** ]t
	 	[ *** ] JP¥/kg
	[ *** ]t-[ *** ]t
	 	[ *** ] JP¥/kg
	[ *** ]t-[ *** ]t
	 	[ *** ] JP¥/kg
	[ *** ]t-[ *** ]t
	 	  [ *** ] JP¥/kg*
	> [ ***
]t          
	 	[ *** ]            

 

t = metric tons of the Drug Substance in the potency basis

Potency basis means the quantity of the Drug Substance divided by one point three nine
three (1.393), representing the quantity of active faropenem.

*
=  The price for the Annual Quantity of [ *** ]t-[ *** ]t in the potency basis as of the Effective
Date shall be [ *** ]JP¥/kg. However, Replidyne and Nisso shall engage in cost reduction programs
aiming to lower the future price at this level of quantity through the works stipulated in
Section 5.9 (Cost Reduction Opportunities).

Only one price tier in the table above will apply for all purchases in any given year, based upon a
Purchase Forecast of total demand for the year.

*  *  *  *  *

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	 

 

 

Attachment 6.1

Drug Substance Specifications

Release Specification

[ *** ]

*  *  *  *  *

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	 

 

 

Attachment 7.9

Sensitive Manufacturing Information

Sensitive Manufacturing Information is the detailed technical information with regard to the
production of Drug Substance that provides Nisso with competitive advantages relative to other
manufacturers but which is not necessary in order for Replidyne and/or its manufacturing designee
to produce Drug Substance in accordance with the Specifications and Applicable Laws (including
regulatory history and requirements specific to faropenem daloxate). For example:

	 	-	 	Process Description of Drug Substance written in the DMF
	 
	 	-	 	Process Diagram
	 
	 	-	 	Engineering drawing of Nihongi facility
	 
	 	-	 	Batch records
	 
	 	-	 	Document of production instruction

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	 

 

 

Attachment 8.2

Manufacturing Patents

[ *** ]

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENT
	 	 

 

 

Attachment 11.1

Patents

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
	Canada
	 	1991.08.16
	 	2089368
	 	2002.08.06
	 	2011.08.16

Sustained Release Formulation

The patent application filed in the US on March 3, 2004 which is the Application Number in Japan
2004 0022624.

6-substituted penem compounds

	 	 	 	 	 	 	 
	Country	 	Application Date	 	Patent No.	 	Expiration Date
	U.S.A
	 	1980.11.18
	 	4692442
	 	2004.09.08

6-substituted thia-aza compounds

	 	 	 	 	 	 	 
	Country	 	Application Date	 	Patent No.	 	Expiration Date
	U.S.A
	 	1989.08.21
	 	4952690
	 	2007.08.28

6-substituted thia-aza compounds

	 	 	 	 	 	 	 
	Country	 	Application Date	 	Patent No.	 	Expiration Date
	Canada
	 	1979.01.31
	 	1340273
	 	2015.12.15

 

[ *** ] = 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.

					
	 	 	 	 	 
	 
	 	SUPPLY AGREEMENTexv10w18

 

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:

 

[ *** ] = 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.

1.

 

1. Definitions

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

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

     1.3 “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).

 

[ *** ] = 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.

 

     1.15 “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.

     1.17 “COGS 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.

 

[ *** ] = 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.

 

     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 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)

 

[ *** ] = 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.

 

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 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

 

[ *** ] = 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.

 

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.

     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

 

[ *** ] = 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.

 

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.

     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.

 

[ *** ] = 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.

 

     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 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

 

[ *** ] = 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.

 

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.

          (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,

 

[ *** ] = 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.

 

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).

     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

 

[ *** ] = 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.

 

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 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

 

[ *** ] = 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.

 

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.

     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.

 

[ *** ] = 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.

 

     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 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

 

[ *** ] = 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.

 

business and not specifically related to the Product).

     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 [ *** ] in the Territory, based upon objective evidence
shared, discussed and agreed to by the parties, and provided that the launch of a generic Product
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.

14.

 

Forest or its Affiliates or sublicensees has not [ *** ], 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 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 will
be sold before [ *** ] in the Territory and such Generic Equivalent [ *** ], and any of Forest,
Replidyne or DAP [ *** ]. 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 Replidyne receives compensation from DAP (or any successor-in-interest to DAP’s rights under
the DAP Agreement, but excluding any Third Party licensees or sublicensees of Replidyne under such
rights) with respect to Forest Technology developed during the Term and licensed under Section
2.3(a)(ii) and in furtherance of the objectives of this Agreement, Replidyne shall pay Forest [ ***
] percent ([ *** ]%) of such compensation in such forms and at such times as paid by DAP.

 

[ *** ] = 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.

 

     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 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.

 

[ *** ] = 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.

 

          (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 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

 

[ *** ] = 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.

 

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 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

 

[ *** ] = 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.

 

               (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 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;

 

[ *** ] = 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.

 

               (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 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

 

[ *** ] = 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.

 

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 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

 

[ *** ] = 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.

 

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 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

 

[ *** ] = 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.

 

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 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

 

[ *** ] = 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
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 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

 

[ *** ] = 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.

 

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 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

 

[ *** ] = 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.

 

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 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

 

[ *** ] = 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.

 

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-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

 

[ *** ] = 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.

 

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 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.

 

[ *** ] = 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.

 

          (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 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

 

[ *** ] = 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.

 

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 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.

 

[ *** ] = 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.

 

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 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.

 

[ *** ] = 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.

 

          (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.

          (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

 

[ *** ] = 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.

 

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
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 third
(3rd) 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

 

[ *** ] = 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.

 

development of a Competitive Product (including, without limitation, under any
collaboration, license or similar agreement), and (ii) from the Effective Date until the fourth
(4th) 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 selling a [ *** ] antibiotic for [ *** ]. If, after the fourth
(4th) 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 fourth (4th) 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 fourth (4th) 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

 

[ *** ] = 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.

 

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 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

 

[ *** ] = 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.

 

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 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.

 

[ *** ] = 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.

 

     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 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, with regard to validation batches of Drug Substance for which the parties
may agree to pay NISSO and DAP in advance, subject to refund if such validation batches do not meet
the specified requirements, [ *** ], Replidyne shall promptly [ *** ]. Replidyne shall have the
right, in its sole discretion, to enforce or otherwise settle with NISSO and DAP the parties’
agreement regarding such refund. 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

 

[ *** ] = 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.

 

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 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:

 

[ *** ] = 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.

 

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:
	 	$	100,000,000	 

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
	 	$	100,000,000	 

 

			
	(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

 

[ *** ] = 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.

 

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 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 Cost of Goods 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 “COGS 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 COGS 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 the COGS 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

 

[ *** ] = 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.

 

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 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).

 

[ *** ] = 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.

 

     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 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:

 

[ *** ] = 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.

 

                    (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 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

 

[ *** ] = 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.

 

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.

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

 

[ *** ] = 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.

 

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 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

 

[ *** ] = 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.

 

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.

     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

 

[ *** ] = 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.

 

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.

          (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

 

[ *** ] = 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.

 

          (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 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

 

[ *** ] = 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.

 

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
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

 

[ *** ] = 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.

 

          (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 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.

 

[ *** ] = 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.

 

     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.

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:

 

[ *** ] = 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.

 

          (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

          (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

 

[ *** ] = 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.

 

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 ninety (90) 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 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 thirty (30) 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 either such 30-day discussion period or 90-day 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 90-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.

 

[ *** ] = 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.

 

          (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.

     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

 

[ *** ] = 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.

 

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, 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

 

[ *** ] = 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.

 

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 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

 

[ *** ] = 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.

 

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, 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,

 

[ *** ] = 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.

 

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.

     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

 

[ *** ] = 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.

 

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 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.

 

[ *** ] = 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.

 

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
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

 

[ *** ] = 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.

 

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.

     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

 

[ *** ] = 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.

 

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
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

 

[ *** ] = 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.

 

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.

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

 

[ *** ] = 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.

 

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 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,

 

[ *** ] = 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.

 

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 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. [ *** ] percent ([ *** ]%) of the sales forecasts provided to DAP as provided
in Section 8.3 of the DAP Agreement, thereby triggering DAP’s right to convert the license to
non-exclusive, then [ *** ]. During any periods that Forest is solely responsible for sales
promotional efforts, Forest shall [ *** ]. To the extent the sales shortfall results from factors
other than promotional efforts, then [ *** ]

     Replidyne shall promptly notify Forest of all substantive communications from DAP to the
extent material to Forest’s interest in the development, regulatory approval or commercialization
of Product in the Territory and including, without limitation, communications with respect to
disputes arising under the DAP Agreement or alleging a material breach thereof. 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 the last fifteen (15) days 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; provided, however, that Forest
shall have the right to approve any such resolution to the extent affecting its interests under
this Agreement, such approval not to be unreasonably withheld. If, with respect to such breach by
DAP, Replidyne institutes an arbitration pursuant to Article 25 of the DAP Agreement, Forest shall
have the right to participate with Replidyne and represent Forest’s own interests in the dispute,
and the parties agree to cooperate in the proceedings. If Replidyne elects not to
institute an arbitration proceeding, it shall promptly notify Forest, and Forest shall have
the right, but not the obligation, to institute an arbitration on its own behalf to protect its own
interests under this Agreement. Replidyne shall make such election and furnish such notice in a
reasonable period of time in light of the effects of such breach, and in any event within six (6)
months of becoming aware thereof. Any reasonable expenses incurred by the parties or damages
recovered by the parties pursuant to such arbitration proceeding shall be shared by the parties
based on the relative economic interests of the parties in the arbitration proceeding.

     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

 

[ *** ] = 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.

 

review and discuss among the three companies the progress of development and commercial efforts for
Products.

[ *** ]

 

[ *** ] = 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.

 

     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: 	 	 
	 
	 	 	 	 

 

[ *** ] = 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.

Collaboration
And Commercialization Agreement

Signature
Page

 

 

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 sixty (60) days 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 sixty (60) day 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

 

[ *** ] = 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

 

 

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 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	 

-i-

 

 

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	 

-iv-

 

Table of Contents

(continued)

	 	 	 	 	 
	 	 	Page	 
	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	 

-v-

 

Table of Contents

(continued)

	 	 	 	 	 
	 	 	Page	 
	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	 

-vi-

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