Document:

exv10w15

 

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

Exhibit 10.15

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 = [JP¥ [ *** ] 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

	 	[ *** ] percent ([ *** ]%)
	(From and after [ *** ])
	 	 

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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	 	 	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.

	 	 	 	 	 
	 

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	 	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.

	 	 	 	 	 
	 

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	 	 	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.

	 	 	 	 	 
	 

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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.

	 	 	 	 	 
	 

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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.

	 	 	 	 	 
	 

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	 	 	 	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.

	 	 	 	 	 
	 

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	 	 	 	(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.

	 	 	 	 	 
	 

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	 	 	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.

	 	 	 	 	 
	 

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	 	 	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.

					
	 
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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.

					
	 
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	 	 	 	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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	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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	 	 	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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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.

					
	 
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	 	(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.

					
	 
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	 	 	 	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.

					
	 
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	 	 	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.

					
	 
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	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.

					
	 
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	 	 	 	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.

					
	 
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	 	 	 	(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 [ *** ] U. S. dollars (US$[ *** ]) and/or (iii) Section 5.3
(Payment) if and when those obligations prior to the Launch Go Date cumulate to more than [
*** ] U. S. dollars (US$[ *** ]) (not only for the excess of [ *** ] U. S. dollars (US$[ ***
]), but for the full amount of such obligations) and/or (iv) Section 5.3 (Payment) if and when
those obligations after the Launch Go Date for the period starting from the shipment of the
Drug Substance pursuant to Section 4.7 (Delivery, Title and Risk of Loss) and ending at making
the payment by Replidyne on any purchase order pursuant to Section 5.3 (Payment) exceeding [
*** ] U. S. dollars (US$[ *** ]) (not only for the excess of [ *** ] U. S. dollars (US$[ ***
]) 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 [ *** ] U.
S. dollars (US$[ *** ]). (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.

					
	 
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	 	Drug Substance prior to Launch Go Date exceeds [ *** ]
U. S. dollars (US$[ *** ]).
	 
	 	 
	         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.

					
	 
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	 	 	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 $[ *** ] per
occurrence and $[ *** ] in the aggregate; and (ii) clinical studies and product
liability insurance with bodily injury, death and property damage limits of not less
than $[ *** ] per occurrence and $[ *** ] 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
cause Third Parties engaged by such Party to perform its 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.

					
	 
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	 	 	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.

					
	 
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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.

					
	 
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	 	(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.

					
	 
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	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.

					
	 
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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.

					
	 
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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, is filed 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 created by or on behalf of Replidyne at any time during the Term of this Agreement, whether

[ *** ] = 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
	 	 

 

 

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.

*  *  *  *  *

	 	 	 	 	 
	 

	 	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 AGREEMENTexv10w16

 

Exhibit 10.16

LEASE

     THIS LEASE (this “Lease”) dated the 22nd day of March 2005, by and between CROWN
MILFORD LLC, a Delaware limited liability company having an address at c/o Crown Properties, Inc.,
400 Garden City Plaza, Garden City, NY 11530 (“Landlord”) and REPLIDYNE, INC., a Delaware
corporation having an office at 1450 Infinite Drive, Louisville, Colorado 80027 (“Tenant”).

     1. DEFINTIONS. For the purposes of this Lease, the following terms shall be defined
and have the meaning herein below set forth:

	 	(a)	 	“Additional Rent” shall mean Tenant’s Proportionate Share of
increases in Operating Expenses, as provided in Article 7, below, Real Estate
Taxes, as provided in Article 8 below and the Electrical Inclusion Amount as
provided in Article 25, below.
	 
	 	(b)	 	“Base Rent” shall mean the Base Rent payable by Tenant to
Landlord on the rent schedule as set forth on Exhibit “D” annexed
hereto and made a part hereof.
	 
	 	(c)	 	“Broker” shall collectively mean Cushman & Wakefield, Inc. and
Remax Right Choice
	 
	 	(d)	 	“Building” shall mean the building known as 472 Wheelers Farm
Road, Milford, Connecticut known as Building B, Corporate Campus 1.
	 
	 	(e)	 	“Commencement Date” shall mean the earlier of either June 15,
2005 or Substantial Completion of Tenant’s Alterations in the Premises.
	 
	 	(f)	 	“Corporate Campus 1” shall collectively mean the buildings
known as 470 Wheelers Farm Road, 472 Wheelers Farm Road, 476 Wheelers Farm
Road, 478 Wheelers Farm Road, and 488 Wheelers Farm Road.
	 
	 	(g)	 	“Expiration Date” shall mean April 30, 2010, unless sooner
terminated as set forth herein.
	 
	 	(h)	 	“Landlord’s Work” shall mean none.
	 
	 	(i)	 	“Premises” shall mean that certain portion of rentable space
located on the third (3rd) floor of the Building containing
approximately 8,312 rentable square feet as more particularly shown
cross-hatched on Exhibit “A” annexed hereto and made a part hereof.
	 
	 	(j)	 	“Property” shall mean the Building together with the plot of
land upon which such Building stands, as shown on the site plan (the “Site
Plan”) on Exhibit “B” annexed hereto and made a part hereof.

 

 

	 	(k)	 	“Rent Commencement Date” shall mean the Commencement Date.
	 
	 	(l)	 	“Security Deposit” shall mean the sum of $81,042.00.
	 
	 	(m)	 	“Substantial Completion” shall mean Tenant’s Alterations are
fully and finally completed with respect to the Premises and in accordance with
Article 9 herein, subject only to a reasonable punch-list of items which can
reasonably be expected to be completed within 30 days and which will not
materially interfere with Tenant’s use or occupancy of the Premises.
	 
	 	(n)	 	“Term” shall mean five (5) years.

     2. PREMISES. Landlord hereby leases to Tenant, upon the terms and conditions
hereinafter specified, the Premises. The Premises does not include any space located outside of
the Premises and Tenant shall not use the exterior of the Building or the roof for any purpose
without Landlord’s express written consent which may be withheld in Landlord’s sole discretion.

     3. TERM.

          (a) The Term of this Lease shall commence on the Commencement Date, and end on the Expiration
Date, unless the Term shall sooner terminate pursuant to the terms hereof. Tenant shall, at
Landlord’s option, within five (5) days of written request made by Landlord to Tenant, execute the
certificate (the “Landlord’s Certificate”) annexed hereto as Exhibit “C” certifying the
Commencement Date, the Rent Commencement Date and the Expiration Date of this Lease and such dates
shall be deemed conclusive for purposes of this Article and this Lease.

          (b) Notwithstanding the foregoing, Tenant shall be permitted access to the Premises no more
than three (3) weeks prior to the Commencement Date, without charge, for the purposes of installing
wiring for telephone/data communication systems and for installation of any and all furniture and
personal property in the Premises. Tenant is fully responsible at its sole cost and expense and
exclusive of the Allowance (as hereinafter defined), for the installation and maintenance of the
foregoing.

     4. USE OF PREMISES.

          (a) Tenant shall use the Premises only for general office purposes and other related uses
only. No signs of any kind shall be installed or maintained in the Premises, which shall be visible
from outside the Premises.

          (b) Tenant, at its expense, shall comply with all laws, orders and regulations of Federal,
State and municipal authorities and with any direction of any public officer which shall impose any
violation, order or duty upon Landlord or Tenant with respect to the use of the Premises to the
extent that any such law, order, regulation or direction is enacted, or first becomes effective,
after the Commencement Date. Tenant shall have the right to contest any such law, order, regulation
or direction, in good faith, provided that no such contest exposes

2

 

Landlord to any liability, fine, penalty or expense as a result thereof and Tenant shall
defend, indemnify and hold Landlord harmless from and against any such liability, fine, penalty or
expense including reasonable attorneys fees. Landlord shall, at its cost, comply with all laws,
orders, regulations or directions with respect to the Premises except those relating to Tenant’s
use of the Demises Premises. Tenant shall not do or permit to be done any act or thing upon the
Premises, which will invalidate or be in conflict with fire, public liability or other insurance
policies covering the Premises.

          (c) Tenant, at its expense, shall comply with all rules, orders, regulations and requirements
of the Board of Fire Underwriters or other similar body or authority having jurisdiction and shall
not do or permit anything to be done in or upon the Premises, or bring or keep anything therein,
which is prohibited by the applicable fire department, fire marshal or any such Board of Fire
Underwriters or other body or authority, or which would increase the rate of fire insurance
applicable to the Premises over that in effect on the Commencement Date.

     5. RENT.

          (a) Each Lease Year (as hereinafter defined), Tenant shall pay to Landlord Base Rent, without
setoff or deductions of any kind, in equal monthly installments, in advance, on the first day of
each calendar month of the Term at the address of Landlord stated above or such other place as
Landlord may designate in writing from time to time, with payment in advance of appropriate
fractions of a monthly payment for any portion of a month at the commencement and termination of
the Term. The first monthly installment of Base Rent shall, however, be payable on the execution
hereof. Every amount payable by Tenant hereunder in addition to Base Rent shall be deemed
Additional Rent, which shall be paid without setoff or deductions of any kind on demand. Base Rent
and Additional Rent are herein collectively called “Rent”. Any Rent not paid by Tenant within ten
(10) days after its due date shall thereafter be payable with a late charge equal to five (5%)
percent of the unpaid rent installment, as Additional Rent.

          (b) Tenant’s obligation to pay Base Rent under this Lease shall commence on the Rent
Commencement Date.

          (c) The obligation of Tenant to pay all sums of Additional Rent and the Electrical Inclusion
Amount shall commence on the Commencement Date of the Lease and there shall be no abatement
whatsoever of the obligation of Tenant to pay such sums during any period or part of any lease year
during the term of the Lease.

          (d) The term “Lease Year” shall mean a period of twelve (12) consecutive calendar months. The
first “Lease Year” shall commence on the Rent Commencement Date, and shall end with the expiration
of the next succeeding twelve (12) months, plus the number of days, if any, required to have the
period end at the expiration of the calendar month, and each Lease Year shall run consecutively
thereafter.

     6. CONDITION OF PREMISES. Landlord shall deliver the Premises to Tenant in the
condition which the Premises exist as of the date hereof and Tenant shall accept the Premises

3

 

in a strictly “as is” condition. Tenant acknowledges that Tenant has inspected, or been given the
opportunity to inspect the Premises prior to entering into this Lease and Tenant acknowledges that
Landlord has made absolutely no warranties or representations concerning the Premises, or their
condition, except that Landlord represents that all Building systems servicing the Premises shall
be in good working order and condition as of the Commencement Date.

     7. INCREASE IN OPERATING EXPENSES.

          (a) The base year (the “Base Year”) for purposes of this Lease shall be the calendar year
2005. “Operating Expenses” shall mean the expenses incurred by Landlord in the operation,
administration and maintenance of the Premises and of the “Common Areas” of Corporate Campus 1,
other than the Premises and all other demised premises in Corporate Campus 1 designated for
occupancy by tenants, in a first class manner and in accordance with sound and reasonable practices
for facilities of a like kind and character in accordance with (and subject to) Exhibit “E”
hereto. Operating Expenses for the Common Areas shall include, without limitation, all expenses
incurred by Landlord in connection with the Campus Road and sewage pump station and related
equipment serving Corporate Campus I which, in accordance with generally accepted accounting
principles consistently applied, as applied to the operation and maintenance of first-class office
parks, are properly chargeable to the operation and maintenance of Corporate Campus 1. Tenant’s
proportionate share of Operating Expenses for Corporate Campus I is 1.804% (“Tenant’s Proportionate
Share Park”); Tenant’s proportionate share of Operating Expenses of the Building is 8.588%
(“Tenant’s Proportionate Share Building”). (“Tenant’s Proportionate Share Park” and “Tenant’s
Proportionate Share Building” are hereinafter referred to, collectively, as “Tenant’s Proportionate
Shares”). Tenant’s Proportionate Shares shall also apply to Increases in Real Estate Taxes as
provided in Article 8 hereof. Tenant’s Proportionate Shares shall be adjusted, as necessary, to
reflect increases or decreases in the total rentable square feet contained in Corporate Campus 1,
resulting from construction or demolition of space therein, or any other cause, other than
temporary vacancy in Corporate Campus I for which Landlord is willing to accept tenancies.

          (b) After the expiration of the Base Year and of each Operational Year (as hereinafter
defined), Landlord shall furnish Tenant a written statement prepared by Landlord of the Operating
Expenses incurred for such year (“Landlord’s Statement”). Tenants Proportionate Shares of any
increase of Operating Expenses during any Operational Year over the Operating Expenses in the Base
Year shall be referred to herein as the “Cost Increases”. Landlord shall retain and make available
for inspection by Tenant all the records reflected in Landlord’s statement as to each Operational
Year for a period of 180 days after rendering a statement to Tenant (the “Inspection Period”), and
Tenant shall be entitled, on reasonable notice, to inspect same at any time during the Inspection
Period, at Landlord’s office, provided that Landlord shall have the right to change such address on
notice to Tenant. In the event Tenant shall dispute Landlord’s Statement, Tenant shall, within the
Inspection Period, deliver to Landlord a statement (“Tenant’s Statement”) specifying the
inaccuracies in Landlord’s Statement, with reasonable detail. If Landlord and Tenant cannot, within
thirty (30) days of Landlord’s receipt of Tenant’s Statement, resolve their differences, Landlord
and Tenant shall, within fifteen (15) days thereafter, agree on a national certified public
accounting firm to undertake a review thereof and to fix, in writing, the Operating Expenses and
the Cost Increases in accordance with the terms of

4

 

this Lease (the “Review”) which shall be final and binding on Landlord and Tenant. The certified
public accounting firm shall be charged with completion of the Review within a thirty (30) day
period. Where Landlord and Tenant cannot timely agree on a national certified public accounting
firm for the foregoing, Landlord and Tenant shall each select a member of a national certified
public accounting firm who shall be directed to select a national certified public accounting firm
to undertake the Review. Where the result of the Review discloses a variation in Operating Expenses
from that asserted by Landlord of more than seven and one-half percent (7.5%), the charges of the
national certified public accounting firm shall be paid by Landlord; where the variation is more
than five (5%) percent but not in excess of seven and one-half (7.5%) percent, same shall be shared
equally by Landlord and Tenant, and where five (5%) percent or less, by Tenant. Tenant shall pay to
Landlord any amounts in dispute pending resolution in accordance with the above procedure.

          In the event Tenant shall not deliver to Landlord Tenant’s Statement as to any Operational
Year prior to expiration of the applicable Inspection Period, Landlord’s Statement for such
Operational Year shall be deemed accurate in all regards.

          (c) Each calendar year after the Base Year shall be referred to herein as an “Operational
Year”. Commencing with the first Operational Year, Tenant shall pay to Landlord, as Additional
Rent, Tenant’s Projected Shares. Such “Projected Shares” shall be equal to Landlord’s written
estimate of Tenant’s Proportionate Shares of the Cost Increases for the Operational Year. On the
first day of each month of each Operational Year during the Term, and within thirty (30) days after
Tenants receipt of Landlord’s written estimate, Tenant shall pay to Landlord one-twelfth (1/12) of
its Projected Shares of the estimated Cost Increases for such Operational Year. If Landlord’s
statement after the end of an Operational Year shall indicate that Tenant’s Projected Shares exceed
Tenant’s Proportionate Shares of Cost Increases, Landlord shall forthwith credit the amount of such
excess against the subsequent payments of Additional Rent due hereunder. If Landlord’s statement
shall indicate that Tenant’s Proportionate Shares of Cost Increases exceeded Tenant’s Projected
Shares for the completed Operational Year, Tenant shall forthwith pay the amount of such excess to
Landlord.

          (d) Landlord’s failure to render Landlord’s Statement with respect to any Operational Year or
Tax Year (as defined in Article 8 below), or Landlord’s delay in rendering said statement shall not
prejudice Landlord’s right to render a Landlord’s Statement with respect to that or any subsequent
Operational Year or Tax Year. The obligations of Landlord and Tenant under this Article 7 with
respect to any Additional Rent, which obligations have accrued prior to the termination of the
Term, shall survive the termination of the Term.

     8. INCREASE IN REAL ESTATE TAXES. If Real Estate Taxes (as hereinafter defined)
with respect to the Common Areas or the Premises are increased, at any time or from time to time
during the Term hereof over Real Estate Taxes paid by Landlord during the “Tax Base Year” as
defined hereinbelow, then Tenant shall pay to Landlord, as Additional Rent, an amount equal to
Tenant’s Proportionate Shares of such increase (the “Tax Increases”). The Tax Base Year shall be
July 1, 2004 through and including June 30, 2005. Payment of such increases shall be made in the
installments provided by the taxing authority, within fifteen (15) days after Tenant receives from
Landlord notice of such tax increase and a bill for Tenant’s Proportionate

5

 

Shares thereof. Notwithstanding the foregoing, at Landlord’s option, Tenant shall pay to
Landlord, commencing with the first Tax Year after the Base Tax Year, as Additional Rent, Tenant’s
Projected Tax Shares. Such Projected Tax Shares shall be equal to Landlord’s written estimate of
Tenant’s Proportionate Shares of the Tax Increase for each Operational Year. On the first day of
each month of each Operational Year during the Term, and within thirty (30) days after Tenant’s
receipt of Landlord’s written estimate, Tenant shall pay to Landlord one-twelfth (1/12) of its
Projected Shares of the estimated Tax Increases for such Operational Year. If Landlord’s statement
after the end of an Operational Year shall indicate that Tenant’s projected Shares exceeded
Tenant’s Proportionate Shares of the Tax Increases, Landlord shall forthwith credit the amount of
such excess against the subsequent payments of Additional Rent due hereunder. If Landlord’s
statement shall indicate that Tenant’s Proportionate Shares of the Tax Increases exceeded Tenant’s
Projected Tax Shares for the completed Operational Year, Tenant shall forthwith pay the amount of
such excess to Landlord. “Real Estate Taxes” shall mean all taxes or assessments and governmental
charges, whether Federal, State or municipal, which are levied or charged against real estate,
personal property or rents, or on the right or privilege of leasing real estate or collecting rents
thereon and any other taxes and assessments attributable to Corporate Campus 1, the Building or the
Premises or their operation, excluding, however, Federal, State or other general income taxes not
limited to real property. Real Estate Taxes allocable to the Common Areas shall consist of (a) 100%
of the Real Estate Taxes on Corporate Campus I excluding Real Estate Taxes on any portion of the
Building designated for occupancy by tenants; and (b) 100% of the taxes on the main road (Campus
Road) and the sewage treatment plant servicing the Park. “Tax Year” shall mean each fiscal year of
July 1 through June 30 following the Tax Base Year.

     9. ALTERATIONS, IMPROVEMENTS, ALLOWANCE, ETC.

          (a) All alterations, improvements or additions made by Landlord or Tenant upon the Premises,
except furniture, light fixtures, office equipment, or movable partitions or trade fixtures
installed at the expense of Tenant, shall be the property of Landlord and shall remain and be
surrendered with the Premises as a part thereof at the termination of this Lease, without
compensation to Tenant, unless Landlord, at the time that it consents to Tenant’s changes or
alterations, elects to have them removed by Tenant, in which event the same shall be removed from
the Premises by Tenant at Lease expiration, at Tenant’s expense.

          (b) Tenant shall not make any alterations, installations, improvements, additions or other
physical changes in or about the Premises (“Alterations”) without Landlord’s prior consent.
Landlord’s consent shall not be required with regard to any nonstructural Alteration that costs
less than $25,000.00 (provided that Tenant shall notify Landlord of the same and otherwise comply
with the provisions of this Article 9 with respect thereto), and Landlord shall not unreasonably
withhold its consent to any other proposed nonstructural Alteration. Landlord shall not be
responsible for any effect on the Premises systems caused by any such alterations for which Tenant
does not obtain Landlord’s consent. An Alteration shall be deemed nonstructural if the Alteration
(i) is not visible from the outside of the Premises, (ii) does not adversely affect any service
required to be furnished by Landlord to Tenant, (iii) does not adversely affect the proper
functioning of any Premises system, (iv) does not adversely reduce the value or utility of the
Premises, (v) does not affect the certificate of occupancy for the

6

 

Premises, and (vi) does not affect any ceiling slab, floor slab, load-bearing column, load-bearing
wall, exterior wall or exterior window, of the Premises.

          (c) Prior to making any Alterations, Tenant shall: (i) submit to Landlord detailed plans and
specifications (including layout, architectural, mechanical and structural drawings) for each
proposed Alteration, and shall not commence any such Alteration without first obtaining Landlord’s
approval of such plans and specifications, which, in the case of nonstructural Alterations, shall
not be unreasonably withheld; (ii) at Tenant’s expense, obtain all permits, approvals and
certificates required by any governmental authorities; and (iii) furnish to Landlord certificates
evidencing worker’s compensation policies (covering all persons to be employed by Tenant, and by
Tenant’s contractors and subcontractors, in connection with such Alteration) and comprehensive
commercial) public liability (including property damage coverage) insurance in such form, with such
companies, for such periods and in such amounts as Landlord may reasonably approve, naming Landlord
and its agents, any ground lessor and any mortgagee, as additional insureds. Upon completion of all
Alteration, Tenant, at Tenant’s expense, shall obtain certificates of final approval of such
Alteration required by any governmental authority and shall furnish Landlord copies thereof,
together with the “as-built” plans and specifications (“as-built drawings”) for such Alteration, it
being agreed that all filings with governmental authorities to obtain such permits, approvals and
certificates shall be made at Tenants’ expense. Provided that such drawings shall be certified as
correct by Tenant’s architect and satisfy the requirement of any governmental authorities to which
Landlord or Tenant shall be required to submit as-built drawings, Tenant’s obligation to furnish
as-built drawings to Landlord may be satisfied by the furnishing of appropriate marked “MEP”
drawings, architectural drawings and/or Tenant’s contractors “shop” drawings. All Alterations shall
be made and performed substantially in accordance with the plans and specifications therefor as
approved by Landlord, all applicable laws and any construction rules and regulations promulgated by
Landlord from time to time. All materials and equipment to be incorporated in the Premises as a
result of any Alterations or a part thereof shall be of a quality at least equal to the quality of
the Premises, and no such materials or equipment shall be subject to any lien, encumbrance, chattel
mortgage or title retention or security agreement.

          (d) If Landlord shall fail to respond to a request by Tenant to approve Tenant’s plans and
specifications for any nonstructural Alteration within seven (7) business days, or within five (5)
business days with respect to any resubmission of previously disapproved plans, after Landlord’s
receipt thereof (provided in each instance the same shall be of a scope and scale reasonably
susceptible of review in such periods), Landlord shall be deemed to have approved such plans and
specifications. Any disapproval given by Landlord shall be accompanied by a statement of the
reasons for such disapproval. Landlord reserves the right to disapprove any plans and
specifications in part, to reserve approval of items shown thereon (the “Pending Items”) pending
Landlord’s review and approval of other plans and specifications for other items which may impact
the Pending Items, and to condition Landlord’s approval upon Tenant making revisions to the plans
and specifications or supplying additional information. In order for Landlord to be deemed to have
given approval to any plans and specifications submitted (or resubmitted) by Tenant, the same must
be accompanied by a notice which identifies the architect or engineer who prepared said plans and
specifications, and which bears the following legend typed in bold, capital letters at the top: “IF
LANDLORD SHALL FAIL TO APPROVE OR

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DISAPPROVE THE ENCLOSED PLANS AND SPECIFICATIONS WITHIN THE TIME PERIODS SPECIFIED IN ARTICLE
9(d) OF THE LEASE, LANDLORD SHALL BE DEEMED TO HAVE APPROVED SUCH PLANS AND SPECIFICATIONS.” Any
review or approval by Landlord of any plans and/or specifications or any preparation or design of
any plans by Landlord’s architect or engineer (or any architect or engineer designated by Landlord)
with respect to any Alteration shall be solely for Landlord’s benefit, and without any
representation or warranty whatsoever to Tenant or any other person with respect to the compliance
thereof with any laws or to the adequacy, correctness or efficiency thereof or otherwise.

          (e) All Alterations shall be performed at Tenant’s own cost and expense, by Tenant’s
contractors, subcontractors or mechanics approved by Landlord with such approval not to be
unreasonably withheld or delayed. At Tenant’s request, Landlord shall furnish Tenant with a list of
at least three (3) contractors who may perform Alterations to the Premises on behalf of Tenant. If
Tenant engages any contractor set forth on the list, Tenant shall not be required to obtain
Landlord’s consent for such contractor unless, prior to entering into a contract with such
contractor, such contractor has been removed from the list, provided, however, said list shall at
all times contain the names of at least three (3) contractors.

          (f) With respect to any Alteration affecting, any Premises system, the Alteration shall, at
Tenant’s cost and expense, be designed by Tenant’s engineer for the relevant Premises system,
subject to review and approval at Tenant’s cost and expense, by Landlord’s engineer. Within thirty
(30) days after being billed therefor, Tenant shall reimburse Landlord, as additional
rent, for the reasonable and actual expenses incurred by Landlord in connection therewith (the
“Engineering Fee”).

          (g) Any mechanic’s lien filed against the Building or the Premises for work claimed to have
been done for, or materials claimed to have been furnished to, Tenant, shall be discharged by
Tenant, at Tenant’s expense, within thirty (30) days after Tenant shall have received notice
thereof, by payment or filing the bond required by law. Tenant shall not, at any time prior to or
during the Term, directly or indirectly employ, or permit the employment of, any contractor,
mechanic or laborer at the Premises, whether in connection with any Alteration or otherwise, if
such employment would interfere or cause any conflict with other contractors, mechanics or laborers
engaged in the maintenance or operation of the Building by Landlord, Tenant or others, or of any
adjacent property owned by Landlord. In the event of any such interference or conflict, Tenant,
upon demand of Landlord, shall cause all contractors, mechanics or laborers causing such
interference or conflict to leave the Premises immediately.

          (h) In addition to the Engineering Fee, Tenant shall pay to Landlord or to Landlord’s agent
from time to time during the performance of any Alterations, within thirty (30) days after demand
therefor and as additional rent, an amount equal to the out-of-pocket costs incurred by Landlord in
connection with each such Alteration (the “Alteration Fee”).

          (i) Landlord shall provide Tenant with an allowance of up to $15.00 per rentable square foot
allocated to the Premises ($124,680.00) (the “Allowance”) for Tenant’s initial Alterations in the
Premises. The Allowance shall be paid by Landlord to Tenant upon receipt of invoices from Tenant
along with a waiver of lien for the funds to be disbursed under each respective invoice from

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each contractor participating in the initial Alterations. Tenant agrees that the Allowance may not
be used for “soft costs” (i.e. architectural fees and expenses) associated with the initial
Alterations. In the event the Allowance is not fully utilized by Tenant, Landlord shall not be
required to reimburse Tenant the balance of the Allowance.

     10. REPAIRS.

          (a) The Building and the Property and the chillers and related equipment that are part of the
Common HVAC System (as defined in Exhibit “F” attached hereto), which are located within
the Building, and all other parts of the Building systems which are not within the Premises, shall
be maintained in good order and condition and repaired by Landlord at its expense, except to the
extent resulting from the negligence or wrongful act of Tenant, its employees, agents or invitees,
in which event Landlord shall maintain and repair same at Tenant’s expense and Tenant shall
reimburse Landlord for the cost of same upon demand.

          (b) Tenant, at its expense, shall maintain in good order and condition and repair the interior
of the Premises, including without limitation, all Premises systems within the Premises, except as
set forth in Article 10(a) above, provided that any repairs to, or replacements of the Building
systems within the Premises shall be performed by Landlord, at Tenant’s expense. Tenant shall keep
the interior of the Premises clean and orderly in accordance with Landlord’s standards for the
Premises and the Park.

          (c) As used in this Article 10 the term “repair” shall include replacement when required in
Landlord’s reasonable opinion.

     11. PARKING. Parking for the Premises is provided by way of a surface parking area
and a parking deck, which provide parking spaces for the Premises and the Building. Tenant and its
agents, employees and invitees shall have the right to use said surface parking area and parking
deck, on a non-reserved basis and at no additional cost to Tenant, in common with tenants of the
Building and their agents, employees, and invitees. At all times during the term of this Lease,
there shall be at least four (4) parking spaces for every 1,000 rentable square feet attributable
to the Premises in said surface parking area and parking deck, of which four (4) spaces shall be
reserved for Tenant’s executive employees at locations set forth on Exhibit “H” annexed
hereto.

     12. UTILITIES AND SERVICES.

          (a) Mondays through Fridays from 8:00 A.M. to 6:00 P.M. and Saturdays from 8:00 A.M. to 1:00
P.M. (except the days observed by the Federal or State governments as legal holidays), Landlord
shall furnish and distribute to the Premises air conditioning and heat with a system designed in
accordance with Exhibit “F” hereto. If Tenant shall require air conditioning or heat at any
other time (“after-hours”), Landlord shall furnish after-hours air conditioning and heat upon
reasonable advance notice from Tenant, and Tenant shall pay Landlord’s costs (direct and related)
therefor on Landlord’s demand. The current charge for after hours heat is $40.00 per hour and for
after hours air conditioning is $75.00 per hour, which charges are subject to revision.

9

 

          (b) Landlord shall supply reasonably adequate quantities of water to the Premises for ordinary
lavatory and drinking purposes.

          (c) Landlord shall cause the Premises to be cleaned in accordance with Exhibit “G”
hereto; provided that to the extent any area is used for the preparation, dispensing or consumption
of food or for a computer room, data processing or similar equipment and requires additional
cleaning, Tenant shall pay to Landlord the premium charged for same by Landlord’s cleaning
contractor.

          (d) In no event shall Landlord be required to provide any security services to the Premises.
Tenant shall supply such security services to the Premises as Tenant requires and at Tenant’s sole
cost and expense, subject to Landlord’s prior approval of plans, provided that Landlord’s consent
shall not be required to the extent the work is nonstructural, as defined in Article 9(b) hereof.
As of the Commencement Date, Landlord shall provide twenty-five (25) card keys to Tenant for its
employees at Landlord’s sole cost and expense. In the event Tenant requires additional or
replacement card keys during the Term, same shall be provided by Landlord to Tenant at Tenant’s
expense.

          (e) Landlord does not warrant that any of the services referred to above, or any other
services which Landlord may supply, will be free from interruption, Tenant acknowledging that any
or more such services may be suspended by reason of accident or of repairs, alterations or
improvements necessary to be made, or by strikes or lockouts, or by operation of law, or causes
beyond the reasonable control of Landlord. Any such interruption or discontinuance of service shall
not be deemed an eviction or disturbance of Tenants use and possession of the Premises, or any part
thereof, or render Landlord liable to Tenant for damages by abatement of Rent or otherwise, or
relieve Tenant from performance of Tenant’s obligations under this Lease.

     13. LIABILITY INSURANCE.

          (a) Tenant shall obtain and keep in full force and effect (i) an “all risk” insurance policy
for all improvements made by Tenant to the Premises (including, without limitation, Tenant’s
Alterations), to the extent that such improvements are above “Premises standard” (examples of which
are set forth in Article 9(a) hereof) and Tenant’s property at the Premises, and (ii) a policy of
commercial general liability and property damage insurance on an occurrence basis, with a broad
form contractual liability endorsement. Such policies shall provide that Tenant is named as the
insured. Landlord, Landlord’s managing agent, and any ground lessors and any mortgagees (whose
names shall have been furnished to Tenant) shall be named as additional insured, as their
respective interests may appear with respect to the insurance required to be carried pursuant to
clause (i) above, and to the extent of the named insured’s negligence with respect to the insurance
required to be carried pursuant to clause (ii) above. Such policy with respect to clause (ii) above
shall include a provision under which the insurer agrees to indemnify and hold Landlord, Landlord’s
managing agent, Landlord’s agent and such lessors and mortgagees harmless from and against, subject
to the limits of liability set forth in this Article 13(a), all cost, expense and liability arising
out of or based upon, any and all claims, accidents, injuries and damages mentioned in Article
38(c) hereof. In addition, the policy required to be carried pursuant to clause (ii) above shall
contain a provision that (a) no act or

10

 

omission of Tenant shall affect or limit the obligation of the insurer to pay the amount of any
covered loss sustained, and (b) the policy shall provide that Landlord shall receive at least
thirty (30) days’ written notice of any-cancellation thereof. The policy required pursuant to this
Article 13 shall be for a combined single limit with respect to each occurrence in an amount of
$3,000,000 for injury (or death) to personal and damage to property, which amount may be increased
(not more frequently than one (1) time in every three (3) years) to that amount of insurance which
in Landlord’s reasonable judgment is then being customarily required by prudent landlords of first
class demised premises in New Haven County of tenants having substantially similar office or
ancillary uses to those of Tenant. All insurance required to be carried by Tenant pursuant to the
terms of this Lease shall be effected under valid and enforceable policies issued by reputable and
independent insurers licensed to do business in the State of Connecticut, and rated in Best’s
Insurance Guide, or any successor thereto (or if there be none, an organization having a national
reputation) as having a general policy holder rating of “A” and a financial rating of at least
“XIII”. No failure on Tenant’s part to maintain any of the insurance required pursuant to this
Article 13 shall vitiate Tenant’s liability to indemnify Landlord and all other parties named
herein as additional insureds from and against all claims, damages, loss, liability and expense
which would otherwise have been covered by such insurance coverage.

          (b) On or prior to the Commencement Date, Tenant shall deliver to Landlord the appropriate
certificates or insurance, (including evidence of waiver of subrogation required pursuant to
Article 13(d) hereof required to be carried by Tenant pursuant to this Article 13. Evidence of each
renewal or replacement of a policy shall be delivered by Tenant at least twenty (20) days prior to
the expiration of such policy.

          (c) Tenant agrees that Landlord shall not be obligated to carry insurance on, and shall not be
responsible for damage to any improvements made to the Premises (including without limitation,
Alterations or Tenant’s personnel property at the Premises), and that Landlord shall not carry
insurance against, or be responsible for any loss suffered by Tenant due to, interruption of
Tenant’s business.

          (d) The parties hereto shall procure an appropriate clause in, or endorsement on, any fire or
extended coverage insurance covering the Premises and personal property, fixtures and equipment
located thereon or therein, pursuant to which the insurance companies waive subrogation or consent
to a waiver of right of recovery and having obtained such clauses or endorsements of waiver of
subrogation or consent to a waiver of right of recovery, and each party on behalf of itself and all
persons claiming under or through such party by subrogation or otherwise hereby releases the other
party and agrees that it will not make any claim against or seek to recover from the other for any
loss or damage to its property or the property of others resulting from fire or other hazards
covered by such fire and extended coverage insurance, provided, however, that the release,
discharge, exoneration and covenant not to sue herein contained shall be limited by and be
coextensive with the terms and provisions of the waiver of subrogation clause or endorsements or
clauses or endorsements consenting to a waiver of right of recovery. If the payment of an
additional premium is required for the inclusion of such waiver of subrogation provision, each
party shall advise the other of the amount of any such additional premiums and the other party at
its own election may, but shall not be obligated to, pay the same.

11

 

If such other party shall not elect to pay such additional premium, the first party shall not be
required to obtain such waiver of subrogation provision. If either party shall be unable to obtain
the inclusion of such clause even with the payment of an additional premium, then such party shall
attempt to name the other party as an additional insured (but not a loss payee) under the policy.

          (e) Landlord represents to Tenant that during the Term, Landlord shall maintain comprehensive
property, casualty and liability insurance coverage for Corporate Campus 1 in amounts as required
by its current mortgagee. Landlord further represents that said coverage will be in amounts no
less than the coverage to be maintained pursuant to this Article 13.

     14. SUBORDINATION.

          (a) This Lease is and shall be subject and subordinate to (i) any and all mortgages now or
hereafter affecting the fee title of the Property, and to any and all present and future
extensions, modifications, renewals, replacements and amendments thereof; and (ii) any and all
ground or underlying leases now or hereafter affecting the Property or any part thereof and to any
and all extensions, modifications, renewals, replacements and amendments thereof. Such
subordination shall be automatic provided that Tenant shall execute and deliver to any present or
future mortgagee such documentation as shall be required by such mortgagee to confirm such
subordination. Landlord shall request and use its reasonable good faith efforts to obtain for
Tenant a non-disturbance agreement from any present or future or ground lessor provided that
Landlord shall have no liability to Tenant in the event Landlord is unable to obtain such
agreement. Tenant will execute and deliver promptly to Landlord any certificate or instrument which
Landlord, from time to time, may request for confirmation of the provisions of this Article 14.

          (b) If at any time prior to the expiration of the Term, any superior lease shall terminate or
be terminated for any reason or any mortgagee comes into possession of the Property or the estate
created by any superior lease by receiver or otherwise, Tenant agrees, at the election and upon
demand of any owner of the Property, or of the lessor, or of any mortgaged in possession of the
Property, to attorn, from time to time, to any such owner, lessor or mortgagee or any person
acquiring the interest of Landlord as a result of any such termination, or as a result of a
foreclosure of the mortgage or the granting of a deed in lieu of foreclosure, upon the then
executory terms and conditions of this Lease, subject to the provisions of Article 14(a) hereof,
and this Article 14(b) for the remainder of the Term, provided that such owner, lessor or
mortgagee, or receiver caused to be appointed by any of the foregoing, as the case may be, shall
then be entitled to possession of the Premises and provided further that such owner, lessor or
mortgagee, as the case may be, or anyone claiming by, through or under such owner, lessor or
mortgagee, as the case may be, including a purchaser at a foreclosure sale, shall not be:

	 	(i)	 	liable for any act or omission of any prior
landlord (including, without limitation, the then defaulting landlord),
or

12

 

	 	(ii)	 	subject to any defense or offsets which Tenant
may have against any prior landlord (including, without limitation, the
then defaulting landlord), or
	 
	 	(iii)	 	bound by any payment of Rent which Tenant may
have made to any prior landlord (including, without limitation, the
then defaulting landlord) more than one (l) month in advance of the
date upon which such payment was due, or
	 
	 	(iv)	 	bound by any amendment or modification of this
Lease made after the date when such mortgagee acquired its interest as
mortgagee and Tenant received notice of such mortgage, or such lessor
acquired its interest as lessor, as the case may be, without its
consent.

     15. CASUALTY.

          (a) If the Premises shall be partially damaged by fire or other casualty so that the damage
can reasonably be repaired by Landlord within 180 days from the date of the damage (90 days for any
casualty during the last year of the Term), then the damage shall be diligently repaired by and at
the expense of Landlord, and the Rent until such repairs shall be made shall be apportioned
according to the part of the Premises which is tenantable.

          (b) If the Premises is rendered wholly untenantable by fire or other casualty or is partially
damaged so that the damage cannot reasonably be repaired by Landlord within 270 days of the date of
the damage (as determined by an independent architect or contractor selected by Landlord), then in
any of such events Landlord or Tenant may, within 30 days after such casualty (or in Tenant’s case
not sooner than 15 days after receipt of the estimated restoration time from Landlord), give the
other party a notice in writing of intention to terminate this Lease, and thereupon the Term shall
expire, effective the date of the casualty, and Tenant shall vacate the Premises and surrender the
same to Landlord within 30 days after the date of the termination notice, provided that for any
casualty during the last year of the Term, the restoration period shall be 90 days, rather than 270
days. If neither party elects to terminate this Lease, the provisions of Article 15(a) shall
govern.

          (c) Landlord shall not be liable for any damage to, or be required (under any provision of
this Lease or otherwise) to repair, restore or replace, any property in the Premises, nor be liable
to Tenant for damage arising from rain or snow or from the bursting, overflowing or leakage of
water, steam or gas pipes or defect in the plumbing, HVAC, mechanical or electrical systems of the
Premises unless resulting from the gross negligence of Landlord, Tenant not being contributorily
negligent.

     16. EMINENT DOMAIN.

          (a) If the whole of the Premises shall be acquired or condemned by eminent domain for any
public or quasi-public use or purpose, or if any substantial part thereof is so

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acquired or condemned as to render the Premises untenantable, or so that Landlord elects not to
restore the Premises then and in that event, the Term shall cease and terminate from the date of
taking, Tenant shall have no claim against Landlord or the condemning authority for the value of
the unexpired Term, nor a claim to any part of an award in such proceeding, and rent shall be
adjusted and paid to the date of such termination. Tenant shall, however, have the right to claim
compensation for Tenant’s moving expenses and damage to Tenant’s property in the Premises provided
that such claim does not reduce Landlord’s award.

          (b) In the event of any other condemnation of a part of the Premises or the Premises, this
Lease shall remain in effect, but the Rent shall be prorated based on that portion of the Premises
which remains tenantable; provided however, that if 10% or more of the Premises, shall be taken
and, in the reasonable opinion of Tenant, the remainder of the Premises cannot be used for the
operation of Tenant’s business in ordinary course, then Tenant may terminate this Lease by notice
to Landlord within 30 days after, notice of the taking by Landlord to Tenant, under the conditions
described in Article 16(a) above.

     17. ASSIGNMENT AND SUBLETTING.

          (a) Tenant and its subtenants shall not assign, mortgage or encumber this Lease, nor sublease
all or any part of the Premises or suffer or permit the Premises or any part thereof to be used by
others, without the prior written consent of Landlord in each instance, which consent shall not
unreasonably be withheld or delayed. If this Lease be assigned, or if the Premises or any part
thereof be sublet to or occupied by anybody other than Tenant, Landlord may, at Landlord’s option,
collect rent from the assignee, subtenant or occupant, and apply the net amount collected to the
rent herein reserved, but no such assignment, subletting, occupancy or collection shall be deemed a
waiver of this covenant, or the acceptance of the assignee, subtenant or occupants, or a release of
Tenant from the further performance by Tenant of covenants on the part of Tenant herein contained.
The consent by Landlord to an assignment or subletting shall not be construed to relieve Tenant
from obtaining the express consent in writing of Landlord to any further assignment or subletting.

          (b) If Tenant wishes to assign or sublease the Premises or any part thereof, Tenant must first
offer to return the Premises to Landlord (which offer shall be made in writing). If Landlord elects
to take back the Premises it shall so notify Tenant in writing, within thirty (30) days after
receipt of Tenant’s offer, specifying the date on which this Lease shall terminate. If Landlord
does not accept Tenant’s offer, Tenant may sublease that portion of the Premises offered to
Landlord or assign this Lease, subject to Landlord’s prior written consent described in (a) above,
it being understood and agreed that such consent shall still be required notwithstanding Landlord’s
election not to take back such space.

          (c) Anything in Article 17(a) to the contrary notwithstanding, the prior written consent of
Landlord shall not be required with respect to an assignment of this Lease or a sublease of part or
all of the Premises to an entity controlled by, controlling or under common control with Tenant, or
to any entity which succeeds Tenant by merger or consolidation or by acquisition of all or
substantially all of Tenant’s stock or assets, provided that the successor entity has a net worth,
computed in accordance with GAAP, that is not less than the net worth of

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Tenant prior to such transaction. For this purpose “control” shall mean the possession of the power
to direct or cause the direction of the management and policies of such entity, whether through the
ownership of a sufficient percentage of voting securities, by contract or otherwise. In connection
with any such assignment or sublease, Tenant shall give notice to Landlord at least ten (10) days
prior to the transaction and shall deliver a copy of the documentation to Landlord within ten days
after the execution of the assignment or sublease.

          (d) Tenant shall pay to Landlord as Additional Rent, within ten days after receipt of payments
from a subtenant or assignee, 50% of any “profit” on a subletting or assignment, i.e., the excess
of consideration of any type received by Tenant from the subtenant or assignee (less the reasonable
advertising, legal, brokerage and fit-up expenses incurred by Tenant in connection with such
assignment or subletting), over a pro rata portion of the Rent payable by Tenant hereunder.

          (e) Landlord shall be obligated to consent to any proposed assignment or sublease only if:

	 	(i)	 	the proposed assignee or subtenant, in
Landlord’s reasonable judgment has a business reputation and credit
record and is engaged in a business as are comparable to or compatible
with the standards of the existing tenants in the Park;
	 
	 	(ii)	 	the proposed use of the affected portion of the
Premises is permitted under the terms of this lease;
	 
	 	(iii)	 	the proposed subletting will not result in
more than two unaffiliated occupants (not including Tenant) of any
floor of the Premises.

          (f) In no event shall Landlord be obligated to consent to any proposed assignment or sublease
to any of the following entities or to an entity that intends to occupy the Premises (or portion
thereof) for any of the following purposes (as applicable):

	 	(i)	 	the operation of a bank, trust company, safe
deposit business, savings and loan association or loan company;
	 
	 	(ii)	 	employment or recruitment agency;
	 
	 	(iii)	 	school, college, university or educational
institution, whether or not non-profit;
	 
	 	(iv)	 	a government, governmental or
quasi-governmental organization, or any agency or subdivision thereof;
or
	 
	 	(v)	 	a tenant or subtenant of a tenant of Landlord
or an occupant of the or any other Premises in the Park, or any party
or entity with whom

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	 	 	 	Landlord or its agents or representatives has engaged in active
negotiations for a lease in the Park during the 90-day period
immediately preceding the date of Tenant’s request for consent.

          (g) Tenant shall reimburse Landlord on demand for any out of pocket costs that Landlord may
incur in connection with a proposed assignment or sublease by Tenant, its assignees or subtenants,
including the reasonable costs of investigating the acceptability of the proposed assignee or
subtenant, charges paid to any mortgagee or ground lessor. Tenant shall pay Landlord’s reasonable
attorneys’ fees in the amount of $1,000.00 for preparation or review of documentation evidencing
Landlord’s consent to an assignment or sublease.

          (h) No assignment or subletting shall affect the continuing primary liability of Tenant
(which, following assignment, shall be joint and several with the assignee), and Tenant shall not
be released from performing any of the terms, covenants and conditions of this lease. Every
assignee, including one described in paragraph (b) above, shall in the assignment instrument,
assume all of the obligations of Tenant hereunder from and after the effective date of the
assignment.

     18. RIGHT OF CURE.

          (a) If Tenant shall default in the observance or performance of any term or covenant of this
Lease, Landlord may, after ten (10) business days written notice to Tenant to cure the default and
failure of Tenant to cure the same within such period, or at any time thereafter without notice in
event of emergency, perform the same for the account of Tenant. If Landlord makes any expenditures
or incurs any obligations in connection with a default by Tenant, including, but not limited to,
reasonable attorneys’ fees in instituting, prosecuting or defending any action or proceeding
against Tenant, such sums paid or obligations incurred, with interest (as provided below) and
costs, shall be paid by Tenant to Landlord as Additional Rent hereunder.

          (b) Any Rent not paid by Tenant within ten (10) days after the due date thereof, shall
thereafter be payable with interest at the rate of 3% per annum in excess of the prime or base rate
of Fleet Bank, N.A. (or its successor) in effect as of the due date, from the due date to the date
of payment.

          (c) Cure by Landlord pursuant to this Article 18 shall not vitiate or constitute waiver by
Landlord of the Tenant’s default.

     19. QUIET ENJOYMENT AND HOLDOVER.

          (a) Upon Tenant paying the Rent and observing and performing all the terms,
covenants and conditions on Tenant’s part to be observed and performed hereunder, Tenant may
peaceably and quietly enjoy the Premises, free from any interference, molestation or acts of
Landlord or of anyone claiming by, through or under Landlord, subject, nevertheless, to the terms
and conditions of this Lease and to any ground lease, underlying leases and mortgages as
hereinbefore provided.

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          (b) If Tenant retains possession of the Premises or any part thereof after the Expiration Date
or earlier termination date without the written consent of Landlord, Tenant’s occupancy (the
“Holdover Occupancy”) shall be under all of the terms and conditions of this Lease, except that (i)
the tenancy shall be at will; (ii) the Base Rent for the Holdover Occupancy shall be 200% of that
specified herein for the month preceding the termination; and (iii) Tenant shall indemnify and hold
Landlord harmless for all damages sustained and liabilities incurred by Landlord, including
consequential damages, as a result of Tenant’s continued occupancy beyond sixty (60) days after
Landlord’s notice to Tenant under this Article 19(b) it being understood that the foregoing shall
not be deemed license or permission by Landlord for Tenant to holdover.

     20. DEFAULT.

          (a) If (i) Tenant defaults in the payment when due of any installment of Rent for more than
ten (10) days after written notice that the same is due; (ii) the Premises become abandoned,
provided that failure to occupy, if Tenant initially occupied the Premises, and is thereafter
performing all of its other obligations under this Lease, shall not be a default under this Lease;
or (iii) Tenant defaults in fulfilling any other covenant of this Lease and Tenant fails to remedy
such default within twenty (20) days after written notice by Landlord to Tenant specifying the
nature of such default (or if the said default cannot be completely cured or remedied within said
twenty (20) day period and Tenant shall not have diligently commenced curing such default within
such twenty (20) day period and shall not thereafter in good faith diligently proceed to remedy or
cure such default), then Landlord may, by notice to Tenant, cancel this Lease, and this Lease and
the Term hereunder shall end and expire as fully and completely as if the date of cancellation were
the day herein definitely fixed for the end and expiration of this Lease and the Term hereof.
Tenant shall then quit and surrender the Premises to Landlord, but Tenant shall remain liable as
hereinafter provided.

          (b) If (i) the notice provided for in paragraph (a) above shall have been given and the Term
shall expire as aforesaid, or (ii) any execution shall be issued against Tenant or any of Tenant’s
property, whereupon the Premises shall be taken or occupied or attempted to be taken or occupied by
someone other than Tenant, then and in any of such events; Landlord may, without notice, re-enter
the Premises, and dispossess Tenant and the legal representative of Tenant or other occupant of the
Premises, by summary proceedings or otherwise, and remove their effects and hold the Premises as if
this Lease had not been made. Tenant hereby waives the service of notice of intention to re-enter
or to institute legal proceedings to that end, but Tenant shall remain liable as hereinafter
provided.

     21. REMEDIES OF LANDLORD. In case of any such default, re-entry, expiration
and/or dispossession by summary proceedings or otherwise, (a) the Rent shall become due thereupon
and be paid up to the time of such re-entry, dispossession and/or expiration, together with such
reasonable expenses as Landlord may incur for counsel fees, brokerage and/or putting the Premises
in good order, or for preparing the same for re-rental; (b) Landlord may re-let the Premises or any
part or parts thereof, either in the name of Landlord or otherwise, for a term or terms, which may
at Landlord’s option be less than or exceed the period which would otherwise have constituted the
balance of the Term, and may grant concessions of free rent; and/or (c) Tenant or the legal
representatives of Tenant shall also pay Landlord any deficiency between (i) the Rent hereby
reserved and/or covenanted to be paid, and (ii) the net amount, if any, of the

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rents collected on account of the lease or leases of the Premises for each month of the period
which would otherwise have constituted the balance of the Term. There shall be added to such
deficiency such expenses as Landlord may incur in connection with re-letting the Premises,
including without limitation, counsel fees, brokerage commissions and expenses incurred in
maintaining the Premises in good order and in connection with renovating and preparing the same for
re-letting. Any such Rent deficiency shall be paid in monthly installments by Tenant on the rent
day specified in this Lease, and any suit brought to collect the amount of the deficiency for any
month shall not prejudice in any way the rights of Landlord to collect the deficiency for any
subsequent month or months by a similar proceeding. In addition, Landlord shall have the
alternative of commencing suit against Tenant at any time for an amount equal to the Rent reserved
for the balance of the Term less the fair and reasonable rental value of the Premises for the same
period. For this purpose it shall be presumed that the Additional Rent payable under this Lease
shall increase by 5% per annum from the Additional Rent payable in the Lease Year preceding the
default. Landlord, at its option, may make such alterations, repairs, replacements and/or
decorations in the Premises, as Landlord considers advisable for the purpose of re-letting the
Premises; and the making of such alterations and/or decorations shall not operate or be construed
to release Tenant from liability hereunder as aforesaid. The failure of Landlord to re- let the
Premises or any part thereof shall not release or affect Tenant’s liability for continued Rent or
damages hereunder, nor shall Landlord in any event be liable in any way whatsoever for failure to
re-let the Premises. In the event of a breach by Tenant of any of the covenants or provisions
hereof, Landlord shall have the right of injunction and the right to invoke any remedy allowed at
law or in equity, as if re-entry, summary proceedings and other remedies were not herein provided
for. Mention in this Lease of any particular remedy shall not preclude Landlord from any other
remedy, in law or in equity.

     22. RIGHT TO EXHIBIT PREMISES AND ACCESS TO PREMISES.

          (a) Landlord reserves the right to enter the Premises and the Premises and exhibit same at any
reasonable time upon at least twenty-four (24) hour prior notice, which notice can be, verbal, (i)
to prospective mortgagees, purchasers and ground lessees and (ii) to prospective tenants at any
time within one year prior to the expiration of the Term.

          (b) Landlord reserves the right to have its employees and agents enter the Premises at any
reasonable time on reasonable notice, which can be verbal, (and at any time in case of emergency)
in order to gain access to any utility area, which utility area contains equipment and systems for
the Premises, and in order to effect necessary repairs and replacements. Such agents may bring
necessary tools and equipment with them and may store same within the Premises.

          (c) Landlord shall have the right to enter the Premises, without notice, in the event of an
emergency, and Tenant shall provide Landlord with access through Tenant’s security system for such
purpose.

     23. BROKERAGE. Tenant warrants and represents it has not had or dealt with any
realtor, broker or agent in connection with the negotiations of this Lease, except for the Broker.
Landlord shall pay the commission that is due to the Broker, pursuant to a separate agreement.

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Tenant shall pay and to hold Landlord harmless from any cost, expenses or liability (including
costs of suit and attorneys’ fees) for any compensation, commission or charges claimed by any
realtor, broker or agent with respect to this Lease and the negotiation thereof, other than a claim
of the Broker or a claim based upon any written agreement between such person and Landlord.

     24. FORCE MAJEURE. Landlord and Tenant, respectively, shall not be in default
hereunder if such party is unable to fulfill or is delayed in fulfilling any of its obligations
hereunder, including, without limitation, any, obligations to supply any service hereunder, or any
obligation to make repairs or replacements hereunder, if such party is prevented from fulfilling or
is delayed in fulfilling such obligations by reason of fire or other casualty, strikes or labor
troubles, governmental preemption in connection with a national emergency, shortage of supplies or
materials, or by reason of any rule, order or regulation of any governmental authority, or by
reason of the condition of supply and demand affected by way or other emergency, or any other cause
beyond its reasonable control. Such inability or delay by Landlord or Tenant in fulfilling any of
their respective obligations hereunder shall not affect, impair or excuse the other party hereto
from the performance of any of the terms, covenants, conditions, limitations, provisions or
agreements hereunder on its part to be performed, nor result in any abatement of Rent. Tenant shall
not, however, be excused hereunder from the prompt and full payment of Rent, or the performance of
any obligation under this Lease that can be satisfied with the payment of money, for any cause
specified in this Article 24. Also, nothing in this Article 24 shall in any way limit Landlord’s
rights under Article 18 hereof.

     25. ELECTRICITY.

          (a) During the Term Tenant shall pay to Landlord as Additional Rental electric charges (the
“Electrical Inclusion Amount”) on account of Tenant’s consumption of electrical energy in the
Premises the sum of $14,546.00 per annum payable in equal monthly installments of $1,212.17. The
Electric Inclusion Amount is based upon Landlord’s assumption that Tenant’s initial electrical
installation will not result in a total connected electrical load for lighting, and equipment will
not be in excess of six watts per rentable square foot of the Premises and that Tenant will, except
for the purpose of office cleaning, use electrical energy only during normal weekday operating
hours of the Building. Accordingly, if Tenant’s initial electrical installation exceeds such
criteria, or if from time to time Tenant makes material use of electricity during hours other than
normal weekday operating hours of the Building, or if from time to time Tenant after completion of
its initial installation adds or changes any machinery, appliances or equipment which increases the
aggregate electrical load in the Premises, the Electric Inclusion Amount and the Additional Rent
shall from time to time be equitably adjusted to reflect the resulting increase in such use. In
addition, Landlord shall have the right to conduct a periodic survey of Tenant’s actual electrical
usage and increase the Electric Inclusion Amount if the survey indicates the Tenant’s usage of
electricity exceeds the cost of $1.75 per rentable square feet of the Premises. Landlord shall
furnish a statement of Landlord’s determination as to the amount of the adjustment, and the same
shall become binding upon the parties unless, within thirty (30) days, Tenant notifies Landlord
that it disputes the amount of such adjustment, in which event the parties shall in good faith make
reasonable attempts to come to agreement, and, if Landlord and Tenant cannot agree thereon, the
amount of such adjustment shall be determined, based on standard practices, by an independent
electrical consultant selected by Landlord. Tenant shall permit said consultant to have access to
the Premises and Tenant’s electrical facilities for

19

 

the foregoing purpose at all reasonable times. The fee of such consultant shall be paid by Tenant
unless such consultant finds that Tenant’s use does not justify an increase in Additional Rent, in
which case the fee shall be paid by Landlord. When the amount of such adjustment is so determined,
Landlord and Tenant shall execute a supplementary agreement to reflect such adjustment, which shall
be effective from the date of the increase of such usage as determined by such electrical
consultant and shall be made retroactively if necessary. Any adjustment shall be effective even if
such supplementary agreement (in form reasonably approved by Tenant) is not executed and delivered.
Pending the determination of the adjustment, Tenant shall pay to Landlord the amount of such
adjustment as specified in Landlord’s statement. Thereafter, if it is determined that Tenant has
overpaid, Tenant shall receive a credit against Additional Rent in the amount of the overpayment,
said credit to be applied against the next accruing installment(s) of Additional Rent.

          (b) Landlord reserves the right to discontinue furnishing electric energy to the Premises at
any time upon not less than ninety (90) days notice to Tenant in which event Tenant shall arrange
to obtain electric service directly from the utility providing electric service to the Building. If
Landlord exercises such right of termination, this Lease shall continue in full force and effect
and shall be unaffected thereby, except only that, from and after the effective date of such
discontinuance, Landlord shall not be obligated to furnish electric energy to Tenant, and the
Additional Rent payable under this Lease shall be reduced by the Electric Inclusion Amount then in
effect. If Landlord voluntarily discontinues furnishing electric energy to Tenant, Landlord shall,
prior to the effective date of such discontinuance, at Landlord’s expense, make such changes in
panel boards, feeders, risers, wiring and other conductors and equipment to the extent required to
permit Tenant to obtain electric energy directly from the public utility company. If, on the other
hand, Landlord is required by any legal requirements to discontinue furnishing electric energy to
Tenant, Landlord shall make such changes in panel boards, feeders, risers, wiring and other
conductors and equipment in order to permit Tenant to obtain electric energy directly from the
public utility company.

          (c) If any tax is imposed upon Landlord with respect to electrical energy furnished as a
service to Tenant by any government authority, Tenant agrees that, where permitted by law or
applicable regulations, Tenant’s pro rata share of such taxes shall be reimbursed by Tenant to
Landlord upon demand.

          (d) Landlord shall not in any way be liable or responsible to Tenant for any loss or damage or
expense which Tenant may sustain or incur if either the quantity or character of electric service
is changed or is no longer available or suitable for Tenant’s requirements. Tenant’s use of
electric current in the Premises shall not at any time exceed the capacity of any of the electrical
conductors and facilities in or otherwise serving the Premises. In order to insure that such
capacity is not exceeded and to avert any possible adverse effect upon the building’s electric
service, Tenant shall not, without Landlord’s prior written consent in each instance, connect any
fixtures, appliances or equipment (other than a reasonable number of table or floor lamps,
typewriters, word processors, small computers, photocopy machines and similar small office machines
using comparable electric current) to the Building’s electric distribution system nor make any
alteration or addition to the electric system of the Premises. Should Landlord grant such consent,
all additional risers or other equipment required therefor shall be provided by Landlord upon
notice to Tenant, and all costs and expenses in connection therewith, including,

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without limitation, those for filing and supervision, shall be paid by Tenant. As a condition
to granting such consent, Landlord may require Tenant to agree to an increase in the Additional
Rent by an amount which will reflect the value to Tenant of the additional service to be furnished
by Landlord, to wit: the potential additional electrical current to be made available to Tenant
based upon the estimated initial total capacity of such additional risers or other equipment. If
Landlord and Tenant cannot agree on the amount of such Additional Rent increase, the same shall be
determined by a reputable electrical consultant, to be selected by Landlord and paid by Tenant. The
parties shall then execute an agreement prepared by Landlord amending this Lease and setting forth
the new Additional Rent resulting from such increase and confirming the effective date thereof, but
such increase shall be effective from such date even if such agreement is not executed.

     26. LEASE STATUS AND NOTICE.

          (a) Upon twenty (20) days written request of Landlord from time to time, Tenant will execute
and deliver to Landlord an instrument prepared by Landlord and reasonably satisfactory to Tenant
and Tenant’s counsel stating, if the same be true, that this Lease is a true and exact copy of the
Lease between the parties hereto, that there are no amendments hereof (or stating what amendments
there may be), that the same is then in full force and effect and that, to the best of Tenant’s
knowledge, there are then no offsets, defenses or counterclaims with respect to the payment of rent
reserved hereunder or in the performance of the other terms, covenants and conditions hereof on the
part of the Tenant to be performed, and that as of such date no default has been declared hereunder
by either party hereto and that Tenant at the time has no knowledge of any facts of circumstances
which it might reasonably believe would give rise to a default by either party. In the event that
Tenant fails to deliver to Landlord the aforesaid certificate within the time period described
hereinabove, then Tenant herein unconditionally agrees that it shall be liable on demand to pay
Landlord the sum of $500.00 for each day that Tenant is late in delivering the aforesaid
certificate to Landlord, such sum to be as and for Landlord’s full and complete liquidated and
agreed monetary damages suffered by reason of Tenant’s failure to timely deliver an estoppel
certificate to Landlord. In addition to the foregoing, Landlord reserves the right to exercise any
further rights or remedies available to it under the Lease, at law or equity by reason of Tenant’s
default hereunder.

          (b) Except for bills and notices sent in connection with the commencement of any legal
proceeding, any bills, statements, consents, notices, demands, requests or other communications
given or required to be given under this Lease (collectively the “Notice”) shall be in writing and
shall be deemed sufficiently given or rendered if delivered by hand or overnight mail via a
nationally recognized courier (against a signed receipt), or if sent by U.S. registered or
certified mail (return receipt requested) addressed:

	 	(i)	 	if to Tenant, at the Premises, with a copies to
Replidyne, Inc., 1450 Infinite Drive, Louisville, Colorado 80027,
Attention: Jill Clark, and Holland & Hart, LLP, One Boulder Plaza, 1800
Broadway, Suite 300, Boulder, Colorado 80302, Attention: J. Marcus
Painter, Esq.

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	 	(ii)	 	if to Landlord, at Landlord’s address set forth
at the beginning of this Lease, with a copy to Platte, Klarsfeld, Levine
& Lachtman, LLP, 10 East 40th Street, 46th Floor,
New York, New York 10016, Attention: David R. Lachtman, Esq.

or to such other address(es) as Landlord, Tenant or any mortgagee or lessor may designate as its
new address(es) for such purpose by notice given to the other in accordance with the provisions of
this Article 26(b). Any Notice shall be deemed to have been rendered or given on the date when it
shall have been delivered (if by hand or by overnight courier) or on the third (3rd) business day
following the date when it shall have been mailed as provided in this Article 26(b).

     27. SURRENDER OF PREMISES. At the expiration of the Term, Tenant will peacefully
yield up to Landlord the Premises, broom clean, in as good order and repair as when delivered to
Tenant, damage by fire, casualty and ordinary wear and tear excepted. Any property left by Tenant
in the Premises shall be deemed abandoned by Tenant. Tenant further agrees to remove all
Alterations, if applicable, to the Premises as required by Article 9 above and Tenant shall have
the right to remove improvements undertaken and paid for by Tenant, HVAC equipment purchased and
installed by Tenant and the raised floor for the computer room provided same can be accomplished
without damage to the Premises and Tenant restores the Premises as specified hereinabove.

     28. APPURTENANCES. Landlord reserves the right to make changes and alterations to the
Premises, fixtures and equipment thereof, in the street entrances, doors, halls, corridors,
lobbies, passages, elevators, escalators, stairways, toilets and other parts thereof which Landlord
may deem necessary or desirable. Neither this Lease nor any use by the Tenant of the Premises or
any passage, door, tunnel, concourse, plaza or any other area connecting the garages or other
demised premises with the Premises, shall give Tenant any right or easement of such use and the use
thereof may, without notice to Tenant, be regulated or discontinued at any time and from time to
time by Landlord without liability of any kind to Tenant and without affecting the obligations of
Tenant under this Lease.

     29. RULES AND REGULATIONS. Tenant covenants that Tenant, Tenant’s employees, agents
and licensees shall faithfully observe and strictly comply with the rules and regulations annexed
hereto and such reasonable changes therein (whether by modification, elimination or addition) as
Landlord may hereafter adopt, (at any time and from time to time) as being, in the judgment of the
Landlord necessary or desirable for (a) the reputation, safety, care or appearance of the Property
or the preservation of good order therein, or (b) the operation or maintenance of the Premises or
the equipment thereof, provided, however, that in the case of any conflict between the provisions
of this Lease and any such changes the provisions of this Lease shall control. Landlord shall
notify Tenant of the adoption of any changes and they shall be deemed to be reasonable within the
meaning of the foregoing sentence unless Tenant shall assert to the contrary by notifying Landlord
within ten (10) days after such notice to Tenant.

     30. PREJUDGMENT REMEDY, REDEMPTION, COUNTERCLAIM AND JURY TRIAL. Tenant, for itself
and for all persons claiming through or under it, hereby acknowledges that this Lease constitutes a
commercial transaction as such term is used and defined in Section 52-278e of the Connecticut
General Statutes, as amended, and hereby

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expressly waives any and all rights which are or may be conferred upon Tenant by said Act to
any notice or hearing prior to a prejudgment remedy, and by any present or future law to redeem the
Premises, or to any new trial in any action or ejection under any provisions of law, after reentry
thereupon, or upon any part thereof, by Landlord, or after any warrant to dispossess or judgment in
ejection. If Landlord shall acquire possession of the Premises by summary proceedings, or in any
other lawful manner without judicial proceedings, it shall be deemed a reentry within the meaning
of that word as used in this Lease. In the event that Landlord commences any summary proceedings or
action for nonpayment of rent or other charges provided for in this Lease, Tenant shall not
interpose any non-compulsory counterclaim of any nature or description in any such proceeding or
action. Tenant and Landlord both waive a trial by jury of any or all issues arising in any action
or proceeding between the parties hereto or their successors, under or connected with this Lease,
or any of its provisions.

     31. MORTGAGEE PROTECTION. Tenant agrees to give any mortgagees a copy of any notice
of default served upon the Landlord, provided that prior to such notice Tenant has been notified,
in writing (by way of Notice of Assignment of Rents and Leases, or otherwise), of the address of
such mortgagees. Tenant further agrees that if Landlord shall have failed to cure such default
within the time provided for in this Lease, then the mortgagees shall have an additional thirty
(30) days within which to cure such default or if such default cannot be cured within that time,
then such additional time as may be necessary if within such thirty (30) days, any mortgagee has
commenced and is diligently pursuing the remedies necessary to cure such default, (including but
not limited to commencement of foreclosure proceedings, if necessary to effect such cure) in which
event this Lease shall not be terminated while such remedies are being so diligently pursued.

     32. FINANCING. Tenant shall not unreasonably withhold its consent to any
modifications of the terms of this Lease that are requested by Landlord’s mortgagee, provided the
same do not affect the economic terms of this Lease or materially interfere with any of Tenant’s
rights or obligations under this Lease.

     33. SHORING. If any excavation or construction is made adjacent to, upon or within
the Premises, or any part thereof, Tenant shall afford to any and all persons causing or
authorized to cause such excavation or construction license to enter upon the Premises for the
purpose of doing such work as such persons shall deem necessary to preserve the Premises or any
portion thereof from injury or damage and to support the same by proper foundations, braces and
supports, without any claim for damages or indemnity or abatement of rent, or of a constructive
or actual eviction of Tenant.

     34. ENVIRONMENTAL REPRESENTATIONS.

          (a) Tenant shall, at Tenant’s expense, keep and maintain the Premises in compliance with all
local, state and Federal environmental laws, ordinances and regulations, including without
limitation Sections 22a-448 through 22a-457 of the Connecticut General Statutes, 42 U.S.C. Section
9601 et seq 42 U.S.C. Section 6901 et seq., 49 U.S.C. Section 1801 et seq.,
15 U.S.C. Section 2601 et seq., of the United States Code, and the regulations promulgated
thereunder, (all of the foregoing being referred to collectively as the

23

 

“Environmental Laws”). During the Term, Tenant shall permit no spills, discharges, or releases as
defined in the Environmental Laws, in or about the Premises, the Building or Corporate Campus 1, of
any hazardous, radioactive or polluting substances, including without limitation any oil or
petroleum products or any chemical liquids or solids (all of the foregoing, being referred to
collectively as “Hazardous Materials”), it being understood that materials and supplies used in
connection with the operation of Corporate Campus 1, provided same are used and stored in
commercially reasonable quantities in accordance with the Environmental Laws, shall not be deemed
for purposes of this Article 34 to be Hazardous Materials. Failure of Tenant to promptly commence
and diligently pursue remediation or clean up any such spill, discharge or release as required
under the Environmental Laws, at Tenant’s sole cost and expense, shall be a default hereunder.

          (b) Landlord represents and warrants that, to the best of its knowledge after due inquiry, the
Building and the Premises are free of Hazardous Materials as of the Commencement Date. Landlord
shall also be responsible for compliance with all Environmental Laws after the date of this Lease,
and shall indemnify and hold Tenant harmless against any and all claims with respect to any
violation of this Article or the Environmental Laws, unless any violation is caused by Tenant, its
agents, contractors or employees.

     35. SIGNAGE.

          (a) Tenant shall not affix, attach or install (i) on any exterior Building window of the
Premises any sign, display or other visible marking and (ii) on any interior Building window of the
Premises any sign, display or other visible marking without the prior written consent of Landlord.

          (b) Landlord shall, at Landlord’s expense, include Tenant’s name in the tenant directory in
the Building lobby, and will provide standard signage adjacent to the entrance of the Premises.

     36. SECURITY DEPOSIT.

          (a) Tenant shall deposit with Landlord the Security Deposit as security for the faithful
performance and observance by Tenant of the terms, conditions and provisions of this Lease,
including without limitation the surrender of possession of the Premises to Landlord herein
provided. It is agreed that in the event Tenant defaults in respect of any of the terms, provisions
and conditions of this Lease, including, but not limited to, the payment of Rent and/or Additional
Rent, Landlord may apply or retain the whole or any part of the Security Deposit so deposited to
the extent required for the payment of any Rent and additional rent or any other sum as to which
Tenant is in default or for any sum which Landlord may expend or may be required to expend by
reason of Tenant’s default in respect of any of the terms, covenants and conditions of this Lease,
including but not limited to, any damages or deficiency in the reletting of the Premises, whether
such damages or deficiency accrue or accrues before or after summary proceedings or other reentry
by Landlord. If Landlord applies or retains any part of the Security Deposit so deposited, Tenant,
within three (3) days’ after notice from Landlord, shall deposit with Landlord the amount so
applied or retained so that Landlord shall have the full Security

24

 

Deposit on hand at all times during the Term. The failure by Tenant to deposit such additional
amount within the foregoing time period shall be deemed a material default pursuant to this Lease.
If Tenant shall fully and faithfully comply with all of the terms, provisions, covenants and
conditions of this Lease, the Security Deposit shall be returned to Tenant after the Expiration
Date and after delivery of the entire possession of the Premises to Landlord. In the event of a
sale of the Property or the Building or leasing of the Building, Landlord shall have the right to
transfer the Security Deposit to the vendee or lessee and Landlord shall thereupon be released by
Tenant from all liability for the return of the Security Deposit; and Tenant agrees to look solely
to the new Landlord for the return of the Security Deposit; and it is agreed that the provisions
hereof shall apply to every transfer or assignment made of the Security Deposit to a new landlord.
Tenant further covenants that it will not assign or encumber or attempt to assign or encumber the
Security Deposit and that neither Landlord nor its successors or assigns shall be bound by any such
assignment, encumbrance, attempted assignment or attempted encumbrance. The Security Deposit shall
be placed in an interest-bearing account and all interest thereon (less the statutory
administrative fee which shall be retained by Landlord) shall be remitted to Tenant annually,
provided Tenant is not then in default in the performance of any of its monetary obligations under
this Lease.

          (b) After the end of the first (1st) year anniversary of the Commencement Date of
this Lease and each successive anniversary thereafter, provided that this Lease remains in full
force and effect, and the original Tenant named herein remains in possession of the Premises and is
not then in default under this Lease after the expiration of any applicable grace periods expressly
stated in this Lease, Landlord acknowledges that upon Tenant’s written request thereto, it shall
permit Tenant to reduce the sum of the Security Deposit by $16,208.40 each year during the Term.
This shall be implemented by Landlord reimbursing Tenant said sum in the form of either a cash
payment or credit against Base Rent, at Landlord’s sole option, within twenty (20) days following
Tenant’s request hereinabove.

     37. FINANCIAL STATEMENTS. During the term of this Lease, Landlord shall have the
right to request in writing, but no more than one (1) time per calendar year, copies of Tenant’s
current financial statements prepared by a certified public accountant in accordance with generally
accepted accounting principles. Landlord acknowledges that such financial statements are not
available until one hundred twenty (120) days following the close of the calendar year and for
purposes of this Article, the term “current financial statements” shall mean the most recent
financial statements Tenant has prepared in accordance with its customary business practice. In
the event Tenant fails to deliver its then current financial statements within twenty (20) days
after Landlord’s written request, same shall constitute a default under this Lease.

     38. MISCELLANEOUS.

          (a) Landlord and Landlord’s agent have made no representations or promises with respect to the
Premises, the Building or Corporate Campus I, including the uses permitted under applicable law,
except for representations herein expressly set forth.

25

 

          (b) Unless found to be grossly negligent, neither Landlord, nor any employee, agent of
contractor of Landlord, shall be liable to Tenant, its employees, agents or contractors, (i) for
any damage to or loss of any property of Tenant or such other person, irrespective of the cause of
such damage or loss; or (ii) for any personal injury to Tenant or such other person from any cause.

          (c) Except where Landlord is found to be negligent in connection therewith, Tenant shall
defend, indemnify and hold harmless Landlord, its employees, agents, mortgagees, and contractors
against and from all liabilities, including reasonable attorneys’ fees, which may be imposed upon
or incurred by or asserted against Landlord or such other persons by reason of any of the following
occurring during the Term or prior thereto when Tenant has been given access of the Premises; (i)
any work or thing done in the Premises by or at the instance of Tenant, its employees or agents;
(ii) any negligence or wrongful act or omission of Tenant, its employees or agents; (iii) any
accident, injury, loss or damage to any person or property occurring in the Premises; and (iv) any
failure on the part of Tenant to comply with the terms of this Lease.

          (d) Any provision of this Lease which requires Landlord not to unreasonably withhold its
consent shall never be the basis for an award of damages or give rise to a right of setoff or
termination to Tenant (unless Landlord is found to have acted in bad faith), but may be the basis
for a declaratory judgment or specific injunction with respect to the matter in question.

          (e) Except for the gross negligence and intentional acts of Landlord, Tenant shall look solely
to the estate and interest of Landlord, its successors and assigns, in Corporate Campus I for the
collection of a judgment in the event of a default by Landlord hereunder, and no other property or
assets of Landlord or any officer, director or partner of Landlord shall be subject to levy,
execution or other enforcement procedure for the satisfaction of ‘Tenant’s remedies.

          (f) The failure of Landlord to insist in any one or more instances upon the strict performance
of any one or more of the agreements, terms, covenants, conditions or obligations of this Lease, or
to exercise any right, remedy or election herein contained, shall not be construed as waiver or
relinquishment for the future of the performance of such one or more obligations to this Lease or
of the right to exercise such election, but the same shall continue and remain in full force and
effect with respect to any subsequent breach, act or omission, whether of a similar nature of
otherwise.

          (g) Tenant’s obligations under this Lease shall survive the Expiration Date or sooner
termination of the Term, as same may be extended hereunder.

          (h) Corporate Campus I may be designated and known by any name(s) Landlord may choose, and
such name or designation may be changed from time to time in Landlord’s sole discretion:

          (i) Tenant shall comply with all applicable federal, state and local environmental laws, rules
and regulations and shall indemnify and hold Landlord, its

26

 

(mortgagees) and every party claiming under and through Landlord harmless from any liability
(including reasonable attorneys’ fees) incurred by Landlord or such other entity as a result of
Tenant’s violation of same.

          (j) Tenant and Tenant’s servants, employees, agents, visitors, invitees and licensees shall
observe faithfully and comply strictly with such reasonable Rules and Regulations as Landlord or
Landlord’s agents may, from time to time, adopt.

          (k) The covenants, conditions and agreements contained in this Lease shall bind and inure to
the benefit of Landlord and Tenant and their respective heirs, distributes executors,
administrators, successors and, except as otherwise provided in this Lease, their assigns. The word
“Landlord” as used in this Lease means only the owner for the time being of Landlord’s interest in
this Lease. In the event of any assignment of Landlord’s interest in this Lease, the assignor in
each case shall no longer be liable for the performance or observance of any agreements or
conditions on the part of the Landlord to be performed or observed.

          (l) Each covenant and agreement in this Lease shall be construed to be a separate and
independent covenant and agreement, and the breach of any such covenant or agreement by Landlord
shall not discharge or relieve Tenant from Tenant’s obligations to perform every covenant and
agreement of this Lease to be performed by Tenant. If any term or provision of this Lease or any
application thereof shall be invalid or unenforceable, the remainder of this Lease and any other
application of such term shall not be affected thereby.

          (m) This Lease shall be governed in all respects by the laws of the State of Connecticut.

          (n) This Lease may be executed in any number of counterparts, each of which shall be deemed an
original and all of which together shall be deemed to be one and the same instrument.

          (o) This Lease is offered for signature by Tenant and it is understood that this Lease shall
not be binding upon Landlord unless and until Landlord shall have executed and delivered a fully
executed copy of this Lease to Tenant.

     39. RENEWAL OPTION.

          (a) Provided Tenant is not in default hereunder beyond the giving of notice and expiration of
applicable grace periods expressly provided for in this Lease and this Lease shall be in full force
and effect, Tenant shall have the right to renew the term of the Lease for an additional five (5)
year term (the “Renewal Option”) provided that Tenant shall have given written notice (the “Renewal
Notice”) to Landlord in accordance with Article 26, which Renewal Notice shall have been received
by Landlord not less than nine (9) months prior to the Expiration Date. Time shall be of the
essence as to the giving of the Renewal Notice. If Tenant shall fail to exercise its Renewal
Option by delivering the Renewal Notice, in strict conformance with the terms of this Article, this
provision shall be deemed deleted from this Lease and of no further force and effect and Tenant
shall have no option to renew or extend the term of this Lease.

27

 

          (b) If Tenant shall exercise the Renewal Option in accordance with the provisions of this
Article, this Lease shall be renewed for such renewal term upon all the terms, covenants, and
conditions contained in the Lease, except that (i) the Base Rent shall be the fair annual market
rental value (the “Fair Market Value”) of the Premises on the last day of the Term of this Lease,
determined as provided in accordance with subparagraphs (c) and (d) of this Article, but in no
event less than the Base Rent in effect on the date preceding the first day of the first or second
renewal term, as the case may be, and (ii) the Expiration Date shall be deemed extended
accordingly. Tenant shall have no further right or option to renew this Lease or the term hereof.

          (c) If Tenant has fully complied with subparagraph (a) of this Article, Landlord shall furnish
Tenant with its initial determination of the Fair Market Value, within forty-five (45) days of
Landlord’s receipt of the Renewal Notice from Tenant.

          (d) If Tenant shall dispute the Fair Market Value proposed by Landlord, Tenant shall give
notice of such dispute within thirty (30) days after receipt of Landlord’s proposal, and any such
dispute, if not resolved between the parties within fifteen (15) days thereafter, shall be settled
by arbitration in accordance with the rules and regulations then obtaining of the American
Arbitration Association or its successor. The cost of such arbitration shall be borne equally by
Landlord and Tenant, and, until finally determined, the Base Rent subsequent to the expiration of
the term of this Lease, shall be equal to the greater of the Fair Market Value proposed by Landlord
or the Base Rent in effect on the last day of the initial term of this Lease. The determination
rendered in accordance with the provisions of this subparagraph (d) shall be final and binding in
fixing the Fair Market Value. If, as a result of such determination, there shall have been an
overpayment in the Base Rent, Landlord shall credit the amount thereof against subsequent payments
of Base Rent. If, as a result of such determination, there shall have been a deficiency, Tenant
shall pay the amount thereof to Landlord within ten (10) days after such determination.

     IN WITNESS WHEREOF, the parties hereto have hereunder set their hands and seal the year and
day first above written.

     [The remainder of this page is left intentionally blank. Signature page to follow.]

28

 

IN WITNESS WHEREOF, the parties hereto have hereunder set their hands and seal the year and day
first above written.

	 	 	 	 	 	 	 
	 	 	LANDLORD	 	 
	 
	 	 	 	 	 	 
	 	 	CROWN MILFORD LLC,	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     Crown Milford Associates Limited Partnership,	 	 
	 

	 	 	 	     its Managing Member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     Crown Milford Realty Corp.,	 	 
	 

	 	 	 	     its General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/Davar Rad/	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	     Name: Davar Rad	 	 
	 

	 	 	 	     Title: President	 	 
	 
	 	 	 	 	 	 
	 	 	TENANT	 	 
	 
	 	 	 	 	 	 
	 	 	REPLIDYNE, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/Jill Clark/
 

     Name: Jill Clark
	 	 
	 

	 	 	 	     Title: Sr. Director, Finance and Administration	 	 

29

 

EXHIBIT “A”

 PREMISES FLOOR PLAN

30

 

EXHIBIT “B”

 SITE PLAN

31

 

EXHIBIT “C”

 LANDLORD’S CERTIFICATE

                    , 2005

Replidyne, Inc.

472 Wheelers Farm Road

Milford, Connecticut

	 	 	 	 	 
	 

	 	Re:
	 	Lease (“Lease”) dated                     , 2005 between Crown Milford LLC, as Landlord, and
Replidyne, Inc., as Tenant, for a portion of the third (3rd) floor in the building
known as 472 Wheelers Farm Road, Milford, Connecticut

Gentlemen:

     All capitalized terms used herein shall have the meanings set forth in the Lease. We are
writing to acknowledge and confirm that the Commencement Date (as such term is defined in
Article 3 of the Lease) under the Lease is                      , the Rent Commencement Date (as such term
is defined in Article 5 of the Lease) is                      and the Expiration Date (as such term is defined
in Article 3 of the Lease) is                      .

     Please sign where indicated on the bottom left-hand corner of this letter to indicate your
assent to the foregoing and deliver a fully-executed duplicate original of this letter to the
undersigned within five (5) days of the date hereof.

	 	 	 	 	 	 	 
	 	 	CROWN MILFORD LLC,	 	 
	 	 	By: Crown Milford Associates	 	 
	 	 	Limited Partnership, its Managing Member	 	 
	 
	 	 	 	 	 	 
	 	 	By: Crown Milford Realty Corp.,	 	 
	 	 	its General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	     Davar Rad, President	 	 

	 	 	 	 	 
	ACCEPTED AND AGREED TO:	 	 
	 
	 	 	 	 
	Replidyne, Inc.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 

32

 

EXHIBIT “D”

RENT SCHEDULE

	 	 	 	 	 	 	 
	Lease Year	 	Rate / r.s.f.	 	Annual Base Rent	 	Monthly Base Rent
	1 – 2*
	 	$19.50 / r.s.f.	 	$162,084.00	 	$13,507.00
	 
	 	 	 	 	 	 
	3
	 	$20.00 / r.s.f.	 	$166,240.00	 	$13,853.33
	 
	 	 	 	 	 	 
	4 – 5
	 	$20.50 / r.s.f.	 	$170,396.00	 	$14,199.67

 

			
	*	 	Landlord and Tenant agree that, notwithstanding the Rent Schedule, during the first
nine (9) months of the first Lease Year, Tenant shall be obligated to pay Monthly Base Rent to
Landlord in accordance with this Lease in the reduced amount of $10,500.75 per month.

33

 

EXHIBIT “E”

OPERATING EXPENSES

     Operating Expenses shall mean all costs and expenses paid or incurred by Landlord or on
Landlord’s behalf in respect of the repair, maintenance or operation of the Premises and of the
Common Areas and the curbs, sidewalks, plazas and other appurtenances adjoining the same,
including, without limitation, the costs and expenses which belong within any one or more of the
following categories:

     1. salaries, wages, medical, surgical, insurance (including group life and disability),
union and general welfare benefits and pension payments of employees engaged in the repair,
operation or maintenance of the Premises, the Building and the Property up to and including
the
level of Property manager;

     2. payroll taxes, workers’ compensation, uniforms and related expenses for
employees;

     3. the cost of painting and the cost of interior and exterior common area landscaping
maintenance;

     4. premiums and other charges for rent, casualty, boiler, sprinkler, plate-glass,
liability, fidelity and any other insurance Landlord maintains or is required to maintain by
any
mortgagee or ground lessor with regard to the Premises, the Building or the Property or the
maintenance or operation thereof;

     5. the cost of all supplies (including, without limitation, cleaning supplies), hand
tools and other materials used in the repair, maintenance or operation of the Premises, the
Building or the Property, and sales and other taxes thereon;

     6. the depreciation for, or the rental cost or value (including all applicable sales
taxes) of all movable equipment used in the repair, maintenance or operation of the Premises,
the Building or the Property;

     7. the cost or value of, or the cost or value of the rental of, together with the cost of
the installation of, any Building or Property security or other system used in connection with
life
or property protection (including the cost of, or the cost or value of the rental of, all
machinery,
electronic systems and other equipment comprising any part thereof) as well as the cost of the
operation and repair of any such system, to the extent same are capital expenses in accordance
with GAAP (defined below) being amortized, with interest at the prime or base rate, from time
to
time, of the Citibank, NA, New York, NY, or its corporate successor, on a straight line basis
over
such item’s useful fife (“Straight Line Useful Life”) as reasonably determined by Landlord,
provided that it any system referred to under this Section is not required by law; then the
costs
thereof shall not be included in Operating Expenses unless the system has been approved by
Tenant;

     8. the cost of all charges for window and other cleaning, janitorial and security
services;

34

 

     9. charges of independent contractors performing services, or supplying labor or
materials, for the Premises, the Building or the Property;

     10. whether or not capitalized under generally accepted accounting principles, the
cost of repairs and the cost of replacements made in connection with repairs of cables, fans,
pumps, boilers, cooling equipment, wiring and electrical fixtures and metering, control and
distribution equipment, component parts of the HVAC, electrical, plumbing, elevator and any
life or property protection systems (including, without limitation, sprinkler systems), window
washing equipment and snow removal equipment, provided, however, that to the extent such
costs are deemed capital expenses in accordance with generally accepted accounting principles
(“GAAP”) then the cost thereof shall be amortized with interest at the prime or base rate,
from
time to time, of the Citibank, NA, New York, NY or its corporate successor, over such item’s
Straight Line Useful Life, provided that Operating Expenses shall only include the Special
Proportionate Share (as defined below) of the costs of repairs and replacements to the Common
HVAC System (as defined below);

     11. whether or not capitalized under generally accepted accounting principles, costs
for alterations and improvements to the Premises, the Building or the Property made by reason
of the laws and requirements of any governmental authorities or the requirements of insurance
bodies or Landlord’s insurer (consistent with the requirements of insurance bodies), provided,
however, that to the extent such costs are deemed capital expenses under GAAP, such costs
shall be amortized, with interest at the prime or base rate, from time to time, of the
Citibank,
NA, New York, NY or its corporate successor, over such items Straight Line Useful Life;

     12. (a) management fees paid to a third party, or (b) if Landlord shall employ a
managing agent that is an affiliate of Landlord, only such portion of the management fees that
shall not be in excess other than market rate for management fees of first class office
Premises
in New Haven County, or (iii) if no managing agent is employed by Landlord, a sum in lieu
thereof which is not in excess of the then market rate for management fees of first class
office
property in New Haven County;

     13. whether or not capitalized under GAAP, the costs of improvements, equipment or
machinery installed for the purpose of reducing energy consumption or reducing other Operating
Expenses; provided, however, that to the extent such costs are deemed capital expenses under
GAAP, such costs shall be amortized, with interest at the prime or base rate, from time to
time,
of the Citibank, NA, New York, NY, or its corporate successor, over such items Straight Life
Useful Life;

     14. legal, accounting and other professional fees incurred in connection with the
operation, maintenance or management of the Premises, the Building or the Property;

     15. water, and sewer charges for which Landlord is not reimbursed by Tenant pursuant
to this Lease (other than pursuant to this Article);

35

 

     16. the cost of all charges for gas, oil, steam, heat ventilation, water and other
utilities
(including without limitation costs of electricity to the extent not paid for by Tenant
pursuant to
Section 12(c) of the Lease), including air conditioning, furnished to the Premises, together
with
any taxes or other impositions imposed with regard to such utilities. Tenant acknowledges that
heat and air conditioning for the Premises are provided by a heating and cooling system that
serves the Premises and the Building, portions of which are within the Premises and portions
of
which are within the Building and 478 Wheelers Farm Road, Building A (the “Common HVAC
System”), and that the component of Operating Expenses attributable to heat and air
conditioning
shall consist of the total cost of heat and air conditioning for the Premises, the Building
and
Building A, minus the cost of overtime heat and air conditioning for the Premises, the
Building
and Building A, multiplied by 4.463% (the “Special Proportionate Share”), which represents the
number of square feet in the Premises (8,312) divided by the total number of square feet in
the
Building and Building A (96,788 + 89,466 = 186,254);

     17. the cost, as amortized by Landlord (in accordance with generally accepted
accounting principles), with interest at the prime or base rent, from time to time, of the
Chase
Manhattan Bank, New York, NY, or its corporate successor, of any capital expenses (excluding
the construction of additional space or floors in the Building) incurred by Landlord in the
prudent operation, maintenance and replacement of the Premises and the Property;

     18. the Special Proportionate Share of all costs otherwise includible in Operating
Expenses;

     19. all other charges property allocable to the repair, operation or maintenance of the
Premises, the Building and the Property in accordance with real estate accounting practices
customarily used in New Haven County.

     Operating Expenses shall exclude Taxes. Operating Expenses shall also exclude general
overhead costs of Landlord or its managing agent that are not incurred at the Building; payments
under service contracts to affiliated entities, to the extent they exceed customary payments for
unaffiliated entities; debt service payments (including principal payments and any other payments)
under any mortgage on the Property or any other Landlord debt; leasing commissions and other
expenses incurred in leasing or procuring tenants (including advertising expenses and legal and
accounting expenses incurred in connection therewith); salaries or fringe benefits of personnel
above the grade of Building manager, rent in any amounts based upon gross revenues, profits,
financing proceeds or sales proceeds payable under any ground leases or any other underlying
leases and any other amounts payable to the lessor thereunder, insurance or condemnation proceeds
of third parties; depreciation or other non-cash costs; costs incurred in connection with a
financing, refinancing or sale of the Building or the Property or any interest therein; legal fees
and disbursements incurred in connection with the enforcement of tenant leases by or against
Landlord; tax and insurance expenses, to the extent separately paid by or billed to Tenant; costs
and expenses incurred for the sole benefit of another tenant or tenants; costs of major
resurfacing (except for annual amounts thereof attributable to such period if such costs are
amortized over its estimated useful life on a straight line basis); costs of initial construction,
landscaping, and any and all other capital improvements, all as determined in accordance with
generally accepted accounting principles consistently applied; any costs to

36

 

correct original construction defects or for improving any tenant’s space; any costs exceeding
those obtainable through competitive bidding; any costs, fines and similar fees arising out of
Landlord’s violation, directly or indirectly, of any governmental rule or authority.

     Operating Expenses shall be net of rebates, credits and similar item of which Landlord
receives the benefit.

     There shall also be excluded from Operating Expenses costs incurred in connection with the
construction of the balance of the Park, including without limitation construction-related
maintenance costs for the Campus Road.

     In determining the amount of Operating Expenses for the Base Year and for any subsequent year
(i) if less than 100% of the Building shall have been occupied by tenants at any time during the
year, Operating Expenses shall be increased to an amount equal to the like Operating Expense which
would normally be expected to be incurred, had such occupancy been 100% during the entire period,
or (ii) if Landlord is not furnishing any particular work or service (the cost of which if
performed by Landlord would constitute an Operating Expense) to Tenant, because Tenant (by mutual
agreement of the parties) has undertaken to perform such work or service in lieu of the performance
thereof by Landlord, Operating Expenses shall be deemed for the purposes of this Section to be
increased by an amount equal to the additional Operating Expenses which would reasonably have been
incurred during such period by Landlord if it had at its own expense furnished such work or service
to such tenant. Similarly, Operating Expenses for the Campus Road and the sewage pump station and
related equipment shall be increased in the Base Year and subsequent expense years for estimated
100% occupancy of Corporate Campus 1, based upon rentable square feet of aggregate office space. In
effecting any such increase in Operating Expenses for 100% occupancy, Landlord shall adjust only
the variable expenses, not the fixed expense components of Operating Expenses, and shall utilize a
consistent formula or shall make equitable adjustments if Landlord changes the formula from time to
time.

37

 

EXHIBIT “F”

 HVAC PERFORMANCE CRITERIA

     (A) Provide heating from October through April, ventilating and air conditioning
from May through September, combining perimeter hot water distribution and a variable air
volume distribution system.

     (B) The HVAC system for the Premises shall provide approximately the following
basic design conditions:

	 	1.	 	In Winter, 68 degrees F minimum interior temperature with the
control
range of 2 degrees when outside conditions are 0 degrees F.
	 
	 	2.	 	In summer, 78 degrees maximum F.D.B. with control range of #2
degrees
when outside conditions are 95 degrees F. dry bulb and 75 degrees F. wet
bulb.

     (C) The above criteria are based on a standard electrical load, including lighting, not to
exceed 4.5 watts per square foot for lighting and general receptacles in any one room or area,
and occupancy of one person per 150 square feet of usable area.

     (D) Concentrated loads beyond stated and/or 24 hour operation will require the
addition of secondary systems.

     (E) The aforesaid temperature performance criteria are an approximation and
Landlord shall have no liability to Tenant in the event Landlord is unable to meet the
aforesaid
specifications.

38

 

EXHIBIT “G” 

CLEANING SPECIFICATIONS

PREMISES

Nightly

Empty all waste receptacles and place for disposal (changing liners as necessary)

Clean and sanitize drinking fountains

General dusting of all office furnishings

Vacuum traffic areas of carpeting, spot check offices

Wash entrance door glass and remove fingerprints from frames

Dust mop all tile floors and damp mop as necessary

General dusting of all lobhy furnishings (excluding plants)

Hand remove spills and marks from carpeting, to the extent possible

Clean counter and sinks in cafeteria and coffee areas

Damp wipe table tops and chairs in cafeteria/lunch areas

Check and clean conference rooms as needed

Weekly

Dust all ledges within reach of average person

Wash table tops and damp wipe chairs in cafeteria/lunch areas

Damp wipe and sanitize telephones

Dust all picture frames, charts and vertical surfaces of office furniture

Vacuum and edge all carpeted areas completely

Remove fingerprints from doors and frames

Monthly

Spray buff composition tile floors

Clean and polish tops of wood furniture

Brush upholstered furniture

Quarterly

Clean all air diffusers and vacuum adjacent
ceilings

High dust all file cabinets, shelves, etc.

Vacuum upholstered furniture

Machine buff all composition tile floors

Semi-Annually

Dust Venetian blinds

Strip and apply finish to composition tile floors

Wash windows inside and out

39

 

COMMON AREA CORRIDORS, LOBBIES. ELEVATORS

Nightly

Clean and sanitize drinking fountains

Vacuum all carpeted traffic lane areas

Wash entrance door glass and remove fingerprints from frames

Vacuum elevator carpeting and polish all brightwork and walls

Hand remove spills and marks from carpeting, to the extent possible

Police, pick up all litter and spot mop stairs in towers

Police areas adjacent to main and rear entrances, pick up litter, etc.

Damp wipe stair handrails in lobbies

Clean cigarette urns, replacing sand as necessary

General dusting of all lobby furnishings (excluding plants)

Weekly

Vacuum and edge all carpeted areas completely

Sweep
and spot mop stairs and dust hand rails in towers

Brush
upholstered furniture in main lobbies

Clean elevator tracks,
plates and grooves

Monthly

Vacuum upholstered furniture in main
lobbies

Wet mop stairs and damp wipe hand rails

Shampoo elevator carpets

LAVATORIES

Nightly

Empty all sanitary receptacles and trash containers and replace liners

Wash and sanitize all sinks, toilets, urinals and counters

Polish all mirrors, brightwork and enamel surfaces

Remove smudges and marks from partitions and walls

Sweep and mop clean floors with disinfectant cleaner

Refill toilet tissue, soap, towel and sanitary napkin dispensers (supplies to be provided by
Landlord)

Quarterly

Wash and polish all ceramic and enameled surfaces in
lavatories

Machine scrub lavatory floors

40

 

EXHIBIT “H”

 RESERVED PARKING SPACES

41

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