COLLABORATION AND COMMERCIALIZATION AGREEMENT

Collaboration Agreement

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REPLIDYNE INC | Forest Laboratories Holdings Limited, | Daiichi Asubio Pharmaceutical, Inc.

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Title: COLLABORATION AND COMMERCIALIZATION AGREEMENT
Governing Law: New York Date: 4/5/2006
Industry: BIOTRX Law Firm: Forest Laboratories, Inc.;Cooley Godward llp;

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exv10w18

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

Exhibit 10.18

COLLABORATION AND COMMERCIALIZATION AGREEMENT

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

Recitals

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

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

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

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

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

Agreement

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

Definitions

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(c) freight, shipping and insurance charges;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Licenses

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

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

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

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

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

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

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

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

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

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

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

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

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

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

2.5 Trademark and Trade Dress Matters.

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

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

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

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

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Generic Equivalents) using the Trademark from outside the Territory into the Territory, then Replidyne may utilize such Trademark outside the Territory only with Forest’s prior written approval, which shall not be unreasonably withheld or delayed in light of Replidyne’s proposals to address such negative impact from parallel imports. If Forest reasonably withholds its approval of the use of the Trademark outside the Territory, Replidyne shall not au