U.S. CO-PROMOTION AGREEMENT

Exhibit 10.1

U.S. CO-PROMOTION AGREEMENT

BY AND BETWEEN

ZYMOGENETICS, INC.

AND

BAYER HEALTHCARE LLC

EFFECTIVE AS OF JUNE 18, 2007

"[    *    ]" = omitted, confidential material, which material has been separately filed with

the Securities and Exchange Commission pursuant to a request for confidential treatment.

U.S. CO-PROMOTION AGREEMENT

THIS U.S. CO-PROMOTION AGREEMENT is made as of the 18 ^th day of June, 2007 (the " Effective Date ") by and between ZymoGenetics, Inc., a corporation organized and existing under the laws of Washington State, U.S.A. (" ZGEN "), and Bayer HealthCare LLC, a limited liability company organized and existing under the laws of Delaware (" Bayer "). ZGEN and Bayer are sometimes referred to herein individually as a " Party " and collectively as the " Parties ."

RECITALS

A. ZGEN is developing certain products containing Recombinant Thrombin (as defined in the LCA) for use in hemostasis.

B. Concurrent with the execution of this Agreement, ZGEN and Bayer’s Affiliate, Bayer Schering Pharma A.G., are entering into a License and Collaboration Agreement of even date herewith (the " LCA "), pursuant to which ZGEN and Bayer Schering Pharma A.G. have agreed to collaborate in the global development of certain Licensed Products (as defined in the LCA) and Bayer Schering Pharma A.G. has agreed to develop and Commercialize certain Licensed Products outside of the United States.

C. In furtherance of the goal of maximizing Commercialization (defined below), the Parties desire to enter into this Agreement for the time-limited co-promotion of Initial Licensed Products (defined below) in the United States.

AGREEMENT

NOW, THEREFORE, the Parties, intending to be legally bound, agree as follows:

ARTICLE 1

Definitions

Where words and phrases are used herein in the singular, such usage is intended to include the plural forms where appropriate to the context, and vice versa. The words " including, " " includes " and " such as " are used in a non-limiting sense and have the same meaning as " including without limitation " and " including, but not limited to. " References to Articles, Sections, Subsections and paragraphs are to the same with all their subparts as they appear in this Agreement. " Herein " means anywhere in this Agreement. " Hereunder " and "hereto" mean under or pursuant to any provision of this Agreement. The Article and Section headings contained herein are for reference only and shall not be considered a part of this Agreement, nor shall they in any way affect the interpretation hereof. All references to time are to the time in Seattle, Washington, U.S.A. As used herein, the following terms shall have the meanings indicated and any capitalized terms used, but not otherwise defined, in this Agreement shall have the meanings defined in the LCA:

1.1 " Active Period " means the period of time commencing on the Launch Date and ending on (i) the last day of the calendar quarter that contains the third (3rd) anniversary of the Launch Date or (ii) if extended pursuant to Section 3.2.3 , the last day of the calendar quarter that contains the [    *    ] anniversary of the Launch Date or (iii) if terminated early pursuant to Section 3.2.4 , the last day of the calendar quarter that contains the [    *    ] anniversary of the Launch Date.

1.2 " Adverse Event " means any event defined as an adverse experience pursuant to 21 CFR 600.80(a), as the same may be amended from time to time.

1.3 " Affiliate " means, with respect to a Party, an individual, a partnership, a joint venture, a corporation, or any other entity or any combination of the aforementioned entities that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such Party. For purposes of this definition, "control" will mean the possession, direct or indirect, of the power to cause the direction of the management and policies of a Party, whether through ownership of more than fifty percent (50%) of the voting securities of such Party, by contract or otherwise.

1.4 " Alliance Manager " means a single contact person within a Party’s organization who shall be designated by such Party to act as liaison and serve as the principal point of communication with the other Party with respect to the Parties’ activities under this Agreement.

1.5 " Annual Revenue Threshold " is defined in Section 3.2.1 .

1.6 " Applicable Laws " means all laws, rules, regulations, guidance and guidelines that are applicable to the marketing, sale and promotion of pharmaceutical products for human use in the Co-Promotion Territory and that materially affect a Party’s performance under this Agreement, including the United States Federal Food, Drug, and Cosmetic Act, the Public Health Service Act, the Prescription Drug Marketing Act, Federal Health Care Program Anti-Kickback Law (42 U.S.C. ss.1320a-7b), the Health Insurance Portability and Accountability Act of 1996, and all rules and regulations promulgated thereunder, the Office of Inspector General (" OIG ") Compliance Guidance Program, the Code on Interactions with Healthcare Professionals promulgated by the Pharmaceutical Research and Manufacturers of America (PhRMA) and the American Medical Association Guidelines on Gifts to Physicians, as any of the foregoing may be amended.

1.7 " Bayer Indemnitees " is defined in Section 8.1.1 .

1.8 " Bayer MSLs " is defined in Section 2.7.6 .

1.9 " Bayer Sales Force " is defined in Section 2.7.5 .

1.10 " Bulk Drug Substance " has the meaning defined in the LCA.

1.11 " Commercialization " or " Commercialize " means all activities relating to the promotion, marketing, advertisement, sale, reimbursement and distribution of Initial Licensed Product in the Co-Promotion Territory, and other pre-launch and post-launch marketing and sale activities for Initial Licensed Product in the Co-Promotion Territory. When used as a verb, " Commercialize " means to engage in Commercialization.

1.12 " Commercially Reasonable Efforts " means the level of efforts and resources required to Commercialize an Initial Licensed Product in the Co-Promotion Territory in a sustained manner consistent with the efforts a similarly situated biopharmaceutical company (in the case of ZGEN) or pharmaceutical company (in the case of Bayer) would reasonably devote to a product of similar market potential at a similar stage in its product life, profit potential or strategic value resulting from its own research efforts, based on conditions then prevailing.

1.13 " Confidential Information " means all tangible and intangible techniques, technology, practices, trade secrets, inventions (whether patentable or not), methods, knowledge, know-how, conclusions, skill, experience, test data and results (including pharmacological, toxicological and clinical test data and results), analytical and quality control data, results or descriptions, software and algorithms received by either Party or its Affiliates from the other Party or its Affiliates pursuant to (1) this Agreement, (2) the Confidentiality Agreement, dated as of January 24, 2006, by and between ZGEN and Bayer Pharmaceuticals Corporation (as amended by Amendment No. 1 to Confidentiality Agreement, dated January 5, 2007), or (3) Confidential Disclosure Agreement, dated April 19, 2006, by and between Bayer and ZGEN, other than that portion of such information that:

(a) is publicly disclosed by the disclosing Party, either before or after it becomes known to the receiving Party;

(b) was known to the receiving Party, without obligation to keep it confidential, prior to when it was received from the disclosing Party;

(c) is subsequently disclosed to the receiving Party by a Third Party lawfully in possession thereof without obligation to keep it confidential;

(d) has been publicly disclosed other than by the disclosing Party and without breach of an obligation of confidentiality with respect thereto; or

(e) has been independently developed by the receiving Party without the aid, application or use of Confidential Information, as demonstrated by competent written proof.

1.14 " Content Compliance Contact " a member of a Party’s Review Board designated by that Party to coordinate the review of Promotional Materials and Medical Education Materials when required by this Agreement.

1.15 " Control " has the meaning defined in the LCA.

1.16 " Coordination Committee " is defined in Section 2.3.1 .

1.17 " Co-Promotion Plan " means a strategic plan for the promotion and Detailing of the Initial Licensed Products by ZGEN and Bayer in the Co-Promotion Territory during the Active Period, including the methodology for deployment of Sales Representatives, call patterns and mechanisms for coordination among field representatives for each Party, as developed by the CPT in accordance with Section 2.4.3 and approved by the Coordination Committee in accordance with Section 2.3.4 .

1.18 " Co-Promotion Territory " means the United States.

1.19 " Courts " is defined in Section 10.5 .

1.20 " CPT " is defined in Section 2.4.1 .

1.21 " CSO " means a contract sales organization in the business of providing sales details for pharmaceutical products.

1.22 " Detail " or " Detailing " means a face-to-face meeting (including a live video presentation but not including Promotion Related Activities) in the Co-Promotion Territory between a Party’s Sales Representative and (a) a medical professional with prescribing authority or other individuals or entities that have a significant impact/influence on prescribing decisions or (b) such other groups as may be mutually agreed by the Parties, during which the Sales Representative provides an oral presentation of an Initial Licensed Product’s attributes in a fair and balanced manner consistent with the requirements of this Agreement and Applicable Law and in a manner that is customary in the industry for the purpose of promoting a prescription pharmaceutical product. When used as a verb, "Detail" shall mean to engage in the activities set forth in this paragraph.

1.23 " Dispute " is defined in Section 2.3.5 .

1.24 " Effective Date " means the date this Agreement was entered into and is defined in the introduction to this Agreement.

1.25 " Expert " means a mutually acceptable, disinterested, conflict-of-interest-free individual with such scientific, technical, regulatory and commercial experience as is necessary to resolve a Dispute. The Expert shall not be or have been during the preceding five (5) years an Affiliate, employee, consultant, officer or director of either Party or any of its respective Affiliates.

1.26 " FDA " means the United States Food and Drug Administration, or any successor agency thereto.

1.27 " Force Majeure " means any occurrence beyond the reasonable control of a Party that prevents or substantially interferes with the performance by such Party of any of its obligations hereunder, if such occurs by reason of any act of God, flood, fire, explosion, earthquake, breakdown of plant, shortage of critical equipment, loss or unavailability of manufacturing facilities or material, strike, lockout, labor dispute, casualty or accident, or war, revolution, civil commotion, terrorism and acts of public enemies, blockage or embargo, or any injunction, law, order, proclamation, regulation, ordinance, demand or requirement of any government or of any subdivision, authority or representative of any such government, inability to procure or use materials, labor, equipment, transportation or energy sufficient to meet manufacturing needs without allocation, or any other cause whatsoever, whether similar or dissimilar to those above enumerated, beyond the reasonable control of such Party, if and only if the Party affected will have used reasonable efforts to avoid such occurrence and to remedy it promptly if it will have occurred.

1.28 " Individual Annual Revenue Threshold " is defined in Section 3.2.2 .

1.29 " Initial Licensed Products " means the Presentations (as defined in the LCA) listed as paragraphs 1 through 3 on Exhibit A attached hereto and incorporated herein.

1.30 " Knowledge " means (a) the [    *    ] of any individual within a group consisting of [    *    ] (the " ZGEN Management ") and (b) the [    *    ] the ZGEN Management [    *    ] have based on the [    *    ] of any ZGEN employee of [    *    ] ; provided that in no event shall ZGEN be required to [    *    ] . In addition, the determination of the knowledge ZGEN Management [    *    ] and the information that is [    *    ] shall take into consideration that [    *    ] .

1.31 " Launch Date " means the date of [    *    ] in the [    *    ] of the [    *    ] Initial Licensed Product [    *    ] Third Party after obtaining the required Regulatory Approval from the FDA [    *    ] Initial Licensed Product in the [    *    ] . For purposes of the foregoing, [    *    ] .

1.32 " LCA " means the License and Collaboration Agreement between ZGEN and Bayer Schering Pharma A.G. of even date herewith, as the same may be amended from time to time in accordance with its terms.

1.33 " Losses " means liabilities, costs, fees, expenses and/or losses, including reasonable legal costs and expenses and attorneys’ fees for outside counsel.

1.34 " Medical Education Materials " means, with respect to an Initial Licensed Product, (a) all written, printed, graphic, electronic, audio or video matter intended for (i) use in responding to unsolicited questions from health care professionals relating to the Initial Licensed Products and/or Recombinant Thrombin or (ii) proactive use with physician thought leaders, and (b) scientific publications and materials produced for independent education programs by Third Party education providers.

1.35 " Medical Education Activities " means business meals with, or medically related items for, physician thought leaders. For purposes of this Agreement, Medical Education Activities expressly includes conference or convention participation, continuing medical education programs, paid speaker programs and symposia.

1.36 " Medical Education Plan " means a strategic plan for scientific interchange with physician thought leaders relating to the Initial Licensed Products by ZGEN and Bayer in the Co-Promotion Territory during the Active Period, as developed by the MET in accordance with Section 2.5.3 and approved by the Coordination Committee in accordance with Section 2.3.4 .

1.37 " MET " is defined in Section 2.5.1 .

1.38 " MSL " means an individual who is regularly employed by the applicable Party on a full-time basis, whose skills, training and experience are consistent with industry standards applicable to scientific interchange (as opposed to product promotion) with physician thought

leaders, including meeting minimum professional standards of a four-year college degree (B.A., B.S. or equivalent), and who shall have (a) satisfactorily completed the product–specific training developed by ZGEN and the ethics and compliance training required by the Party by whom he or she is employed and (b) become adequately equipped and knowledgeable with respect to the Initial Licensed Products, including the Product Labels and the use of the Medical Education Materials in accordance with this Agreement and the Medical Education Plan. Titles of such personnel may be Medical Science Liaisons, Scientific Affairs Liaisons or Medical Liaisons.

1.39 " Net Sales " means the gross amount invoiced with respect to the sale or other disposition of Initial Licensed Products in the Co-Promotion Territory by ZGEN or its Affiliates or sublicensees to a non-sublicensee Third Party after deducting returns and allowances (actually paid or allowed) including prompt payment and any other discounts (including deductions commonly referred to as "fee for service"), price reductions, including government reimbursement programs in the Co-Promotion Territory such as Medicare and Medicaid and similar types of rebates, chargebacks from wholesalers of Initial Licensed Product (whether in cash or trade), and rebates, when included in gross sales, but not including taxes when assessed on income derived from such sales and bad debts. Amounts received by ZGEN or its Affiliates for the sale in the Co-Promotion Territory of Initial Licensed Product between ZGEN and its Affiliates for resale or for transfer in the Co-Promotion Territory of Initial Licensed Product to a sublicensee for resale will not be included in the computation of Net Sales hereunder. Any Initial Licensed Product sold or otherwise transferred in the Co-Promotion Territory in other than an arm’s-length transaction or for other property (e.g., barter) shall be deemed invoiced at its fair market price in the Co-Promotion Territory.

1.40 " Party " is defined in the introduction to this Agreement.

1.41 " Product Labels " means all FDA-approved labels and other written, printed or graphic matter upon any container, wrapper or any package insert or outsert utilized with or for an Initial Licensed Product in the Co-Promotion Territory.

1.42 " Product Trademark " means any Trademarks that are (a) Controlled by ZGEN or Bayer and (b) actually applied to or used, or intended to be used, with any Initial Licensed Product or any Promotional Materials or Medical Education Materials in the Co-Promotion Territory.

1.43 " Promotional Materials " means, with respect to an Initial Licensed Product, all written, printed, graphic, electronic, audio or video matter, including journal advertisements and sales visual aids, direct mail, direct-to-consumer advertising, Internet postings, broadcast advertisements, sales reminder aids (e.g., scratch pads, pens and other such items) and other Detail aids, intended for use or used by a Party in connection with any promotion of such Initial Licensed Product, except for: (a) the FDA-approved full prescribing information for such Initial Licensed Product, including any required patient information; (b) Product Labels; and (c) Medical Education Materials.

1.44 " Promotion Related Activities " means business meals (including promotional speaker programs) with, or medically related items for, health care professionals with prescribing authority or other individuals or entities that have a significant impact/influence on prescribing

decisions used to promote Initial Licensed Products to such persons. For purposes of this Agreement, Promotion Related Activities expressly excludes conference or convention participation (other than promotional exhibit booths), independent medical education programs and grants.

1.45 " Recall " means an event, incident or circumstance that may result in the need for a "recall" or "market withdrawal" (as those terms are defined in United States regulations in 21 C.F.R. 7.3) or field alert (including biological product deviation reports) or field correction of an Initial Licensed Product or any lot thereof.

1.46 " Regulatory Approval " means any approvals (including supplements, amendments, pre- and post-approvals, reimbursement approvals and price approvals), licenses, registrations or authorizations of any national, state or local regulatory agency, department, bureau, commission, council or other governmental entity, including the FDA, necessary for the marketing and sale of Initial Licensed Product in the Co-Promotion Territory. Regulatory Approval does not include any site license for a Party’s manufacturing facility.

1.47 " Review Board " means the multi-disciplinary committee within a Party: (a) tasked with reviewing Promotional Materials for compliance with Applicable Laws, known at Bayer as the "LMR" and at ZGEN as the "Promotional Review Board" or (b) tasked with reviewing Medical Education Materials for compliance with Applicable Laws, as applicable.

1.48 " Safety Issues " is defined in Section 3.1.4(c) .

1.49 " Sales Bonuses " means collectively the First Sales Bonus and the Second Sales Bonus as described in Section 4.3 .

1.50 " Sales Force " means, as applicable, the ZGEN Sales Force or the Bayer Sales Force and " Sale Forces " means both the ZGEN Sales Force and the Bayer Sales Force.

1.51 " Sales Representative " means an individual who is regularly employed by the applicable Party on a full-time basis, whose skills, training and experience are consistent with industry standards applicable to the promotion, marketing and sale of a prescription pharmaceutical product, including meeting minimum professional standards of a four-year college degree (B.A., B.S. or equivalent), and who shall have (a) satisfactorily completed the product–specific training developed by ZGEN and the ethics and compliance training required by the Party by whom he or she is employed and (b) become adequately equipped and knowledgeable with respect to the Initial Licensed Products, including the Product Labels and the use of the Promotional Materials in accordance with this Agreement and the Co-Promotion Plan.

1.52 " Samples " means units of Initial Licensed Product distributed or provided at no cost to health care professionals in response to their request for "evaluation and trial use" in treating patients in the Co-Promotion Territory as part of the marketing, advertising and promotion of the Initial Licensed Product.

1.53 " Sunset Period " is defined in Section 4.2.2 .

1.54 " Target Audience " means targets identified by the Coordination Committee as being suitable targets for the promotion and Detail of Initial Licensed Products in the Co-Promotion Territory, which targets may include health care professionals with actual prescribing authority as well as other individuals or entities that have a significant impact/influence on prescribing decisions.

1.55 " Term " is defined in Section 9.1 .

1.55 " Third Party " means any individual or entity other than ZGEN or Bayer or an Affiliate of either of them.

1.56 " Trademark " means any and all service marks, logos or trademarks and trademark applications (whether or not registered) together with all good will associated therewith, and any renewals, extensions or modifications thereto either filed or used.

1.57 " United States " means the United States of America, together with its territories and possessions.

1.58 " ZGEN Enabling Technology " has the meaning defined in the LCA.

1.59 " ZGEN Indemnitees " is defined in Section 8.2.1 .

1.60 " ZGEN MSLs " is defined in Section 2.7.4 .

1.61 " ZGEN Sales Force " is defined in Section 2.7.3 .

ARTICLE 2

Co-Promotion Rights and Obligations

2.1 Co-Promotion Right

Subject to the terms and conditions of this Agreement:

(a) ZGEN hereby grants Bayer during the Active Period the co-exclusive right with ZGEN to promote and Detail the Initial Licensed Products in the Co-Promotion Territory.

(b) ZGEN grants Bayer a fully paid license during the Active Period under ZGEN’s entire right, title and interest in and to the Product Trademarks Controlled by ZGEN, to use and display such Product Trademarks solely in connection with the marketing and promotion of the Initial Licensed Products in the Co-Promotion Territory as contemplated in this Agreement. In order to maintain the value of ZGEN’s Product Trademarks, corporate name and logo, Bayer will maintain quality standards comparable to those it maintains for its own product-related Trademarks, corporate name or logo, which, in any event, shall not be less than reasonable, and Bayer will use ZGEN’s Product Trademarks consistent with Product Trademark usage guidelines developed by ZGEN.

(c) Bayer grants ZGEN a fully paid license during the Active Period under Bayer’s entire right, title and interest in and to the Product Trademarks Controlled by Bayer to

use and display such Product Trademarks solely in connection with the marketing and promotion of the Initial Licensed Products in the Co-Promotion Territory as contemplated in this Agreement. In order to maintain the value of Bayer’s Product Trademarks, corporate name and logo, ZGEN will maintain quality standards comparable to those it maintains for its own product-related Trademarks, corporate name or logo, which, in any event, shall not be less than reasonable, and ZGEN will use Bayer’s Product Trademarks consistent with Product Trademark usage guidelines developed by Bayer.

2.2 Responsibilities Reserved to ZGEN

(a) ZGEN shall have sole responsibility for:

(i) strategic decisions relating to marketing, advertising and medical education programs in support of the Initial Licensed Products in the Co-Promotion Territory;

(iii) pricing of the Initial Licensed Products in the Co-Promotion Territory, including any discounts, rebates or other deviations from the established pricing;

(iv) distribution and delivery of the Initial Licensed Products to customers in the Co-Promotion Territory;

(v) regulatory matters relating to the Initial Licensed Products in the Co-Promotion Territory; and

(vi) scientific publication strategies.

The Parties agree that ZGEN may make decisions regarding the foregoing matters within its sole responsibility in its absolute discretion.

(b) In addition, ZGEN shall have sole responsibility for the matters listed in this Section 2.2(b) ; provided that, ZGEN’s decisions relating to materials, activities, campaigns and programs to be used or participated in by Bayer’s Sales Force or Bayer’s MSLs shall be subject to review by Bayer’s Review Board in accordance with Section 2.6 . The matters include:

(i) all marketing, advertising and medical education programs in support of the Initial Licensed Products in the Co-Promotion Territory, including the content of Promotional Materials and Medical Education Materials;

(ii) public relation activities and campaigns;

(iii) supplementary non-personal promotional programs (such as compliance, telemarketing and Internet activities);

(iv) professional/medical education programs (including seminars, symposia, participation at professional and medical conferences, and conventions, physician advocacy programs and event marketing programs);

(v) ensuring that all materials, campaigns and programs comply with Applicable Laws; and

(vi) product-related training.

(c) Any responsibilities delegated to the Coordination Committee pursuant to Section 2.3.4 shall be subject to the decision-making mechanism described in Section 2.3.5 .

(d) Bayer shall have no authority independent of ZGEN to:

(i) conduct any form of direct-to-consumer promotion related to Initial Licensed Products in the Co-Promotion Territory;

(ii) schedule or manage conference involvement pertaining to Initial Licensed Products in the Co-Promotion Territory;

(iii) establish or manage advisory boards and opinion leaders for Initial Licensed Products in the Co-Promotion Territory;

(iv) conduct or sponsor continuing medical education programs, paid speaker programs, or symposia related to Initial Licensed Products in the Co-Promotion Territory; or

(v) provide grants with respect to Initial Licensed Products in the Co-Promotion Territory.

2.3 Coordination Committee

2.3.1 Formation of Coordination Committee . Within ten (10) days following the Effective Date, the Parties will establish a committee (the " Coordination Committee ") to coordinate the co-promotion and medical education activities to be undertaken by the Parties in the Co-Promotion Territory during the Active Period. The Coordination Committee may form such subcommittees as it, from time to time, deems appropriate, including the CPT and MET. The Coordination Committee and its subcommittees shall be disbanded upon expiration or earlier termination of the Active Period. The Coordination Committee will be comprised of at least three (3) members representing each Party, one of whom shall be such Party’s Alliance Manager, and all of whom shall have appropriate expertise and seniority to enable them to make decisions on behalf of the Parties with respect to the issues falling within the jurisdiction of the Coordination Committee. Either Party, in its sole discretion, may substitute members of the Coordination Committee from time to time upon written notice to the other Party; provided, however that, without limiting the generality of the foregoing, a key objective with respect to membership in the Coordination Committee shall be preserving balance and continuity.

2.3.2 Coordination Committee Meetings . The Coordination Committee will establish its own procedural rules for its operation, consistent with the terms of this Section 2.3.2 . Regular meetings of the Coordination Committee will be held either by phone, videoconference or in person at least once per calendar quarter, unless the Coordination Committee chooses to reduce the frequency of such meetings. Unless otherwise agreed by the members of the Coordination Committee, the location of Coordination Committee meetings will alternate between ZGEN’s offices in Seattle, Washington and, until December 31, 2007, Bayer’s offices in West Haven, Connecticut and, on and after January 1, 2008, Bayer’s offices in Wayne, New Jersey. The Coordination Committee shall be chaired at each meeting by a representative of ZGEN. The chairperson of the Coordination Committee will be responsible for calling regular meetings of the Coordination Committee and for leading the meetings. ZGEN’s Alliance Manager will serve as secretary of that meeting. Promptly following each meeting, the secretary of the meeting will prepare and distribute to all members of the Coordination Committee the written minutes of the meeting. The minutes will provide a reasonably detailed description of the meeting discussions and a list of any actions, decisions or determinations approved by the Coordination Committee. The minutes of each Coordination Committee meeting will be approved or disapproved by each Party (on behalf of such Party’s Coordination Committee members) promptly following receipt, and revised as necessary, for approval at the next meeting. Final minutes of each meeting will be distributed to the members of the Coordination Committee by the chairperson prior to commencement of the next meeting. Each Party shall bear its own costs associated with its participation on the Coordination Committee, including all travel and living expenses.

2.3.3 Attendance at Meetings . If a Party’s representative is unable to attend a meeting, that Party may designate an alternate representative with decision-making authority for that Party to attend the meeting. Any decision made by that attendee will be considered to be a decision made by the absent representative. In addition, each Party may, at its discretion (and with the consent of the other Party), invite additional employees, consultants or scientific advisors to attend any Coordination Committee meeting, provided that any individual so invited will not have any voting power at such Coordination Committee meeting and is subject to obligations of confidentiality comparable to Article 6 . A quorum for each Coordination Committee meeting will consist of at least two (2) members from each Party.

2.3.4 Responsibilities of Coordination Committee . The Coordination Committee shall have responsibility for coordinating the promotional and medical educational activities of the Parties under this Agreement in the Co-Promotion Territory during the Active Period, including:

(a) discussing strategies (i) for marketing the Initial Licensed Products in the Co-Promotion Territory, including allocation of the Parties’ responsibility for such marketing activities; (ii) relating to Detailing activity, including the Target Audience for such Details; and (iii) for scientific interchange with physician thought leaders relating to the Initial Licensed Products in the Co-Promotion Territory;

(b) approving (i) the Co-Promotion Plan and Medical Education Plan; (ii) the proposed Individual Annual Revenue Threshold for each Party; and (iii) adjustments under Sections 2.7.3 and 2.7.5 ; and

(c) such other matters as the Parties may delegate.

2.3.5 Coordination Committee Decision-Making . The Coordination Committee shall operate by consensus. The representatives from each Party on the Coordination Committee shall have collectively one (1) vote on behalf of that Party.

(a) If the Coordination Committee cannot reach consensus on any matter within the area of responsibility of the Coordination Committee as described in Section 2.3.4(b) or (c)  (a " Dispute "), the Dispute shall be referred for resolution to the Chief Executive Officer of ZGEN and the Head of the responsible Business Unit within the Pharmaceutical Division of Bayer in accordance with Section 10.2 . Until a Dispute is resolved in accordance with Section 10.2 , the Parties shall refrain from taking action on the matter; provided, however, that if the matter in Dispute pertains to any activity that is required by Applicable Law, the affected Party shall be entitled to conduct such activity as so required.

(b) Any Dispute that cannot be resolved in accordance with Section 10.2 shall be resolved by an Expert in accordance with Section 10.3 .

2.4 Co-Promotion Team; Co-Promotion Plan

2.4.1 Formation of CPT . Within ten (10) days following the Effective Date, the Parties will establish a co-promotion team (the " CPT "), as the standing sub-committee of the Coordination Committee for co-promotion activities. Each Party may appoint as many members to the CPT it feels is necessary or useful to perform the functions of the CPT. Either Party, in its sole discretion, may substitute members of the CPT from time to time upon written notice to the other Party. The CPT will establish its own rules for operation, including rules relating to procedure and attendance, consistent with those of the Coordination Committee.

2.4.2 Responsibilities of CPT . The CPT shall have responsibility for the day-to-day coordination of the co-promotion activities of the Parties under this Agreement in the Co-Promotion Territory during the Active Period, including:

(a) discussing strategies for marketing the Initial Licensed Products in the Co-Promotion Territory;

(b) developing the Co-Promotion Plan and potential amendments thereto, and submitting them to the Coordination Committee for approval;

(c) reviewing progress against the current Co-Promotion Plan;

(d) establishing individual and area performance measures for the activities of the respective Sales Forces; and

(e) discussing Samples practices, if any.

2.4.3 Co-Promotion Plan . As provided in, and without limiting the generality of, Section 2.4.2 , the CPT shall develop the Co-Promotion Plan. The CPT shall develop the initial Co-Promotion Plan prior to the Launch Date and amend and update the Co-Promotion

Plan annually during the Active Period, or more frequently as determined by the Coordination Committee. The Co-Promotion Plan for the year scheduled to be the final year of the Active Period shall be submitted to the Coordination Committee ninety (90) days in advance of the start of such year and shall specifically address transitioning all promotional activities to ZGEN, including phasing out the use of Bayer’s Product Trademarks, in an orderly and efficient manner. The CPT may address and include any of the activities or responsibilities set forth in Section 2.4.2 in the Co-Promotion Plan and, to the extent included therein, the Co-Promotion Plan will state the responsibilities of each Party with respect to the same. Neither Party shall make any material change in any Co-Promotion Plan without the prior approval of the CPT.

2.4.4 CPT Decision-Making . The representatives from each Party on the CPT shall have collectively one (1) vote on behalf of that Party. Members of the CPT shall endeavor to reach decisions via consensus; provided that if they are unable to do so a member from either Party may refer the matter to the Coordination Committee for resolution.

2.5 Medical Education Team; Medical Education Plan

2.5.1 Formation of MET . Within ten (10) days following the Effective Date, the Parties will establish a medical education team (the " MET "), as the standing sub-committee of the Coordination Committee for medical education activities. Each Party may appoint as many members to the MET it feels is necessary or useful to perform the functions of the MET. Either Party, in its sole discretion, may substitute members of the MET from time to time upon written notice to the other Party. The MET will establish its own rules for operation, including rules relating to procedure and attendance, consistent with those of the Coordination Committee.

2.5.2 Responsibilities of MET . The MET shall have responsibility for the day-to-day coordination of the medical education activities of the Parties under this Agreement in the Co-Promotion Territory during the Active Period, including:

(a) discussing strategies for scientific interchange with physician thought leaders relating to the Initial Licensed Products in the Co-Promotion Territory;

(b) developing the Medical Education Plan and potential amendments thereto, and submitting them to the Coordination Committee for approval;

(c) reviewing progress against the current Medical Education Plan; and

(d) establishing individual and area performance measures for MSL activities.

2.5.3 Medical Education Plan . As provided in, and without limiting the generality of, Section 2.5.2 , the MET shall develop the Medical Education Plan. The MET shall develop the initial Medical Education Plan prior to the Launch Date and amend and update the Medical Education Plan annually during the Active Period, or more frequently as determined by the Coordination Committee. The Medical Education Plan for the year scheduled to be the final year of the Active Period shall be submitted to the Coordination Committee ninety (90) days in advance of the start of such year and shall specifically address transitioning all medical education activities to ZGEN, including phasing out the use of Bayer’s Product Trademarks, in an orderly and efficient manner. The MET may address and include any of the activities or responsibilities

set forth in Section 2.5.2 in the Medical Education Plan and, to the extent included therein, the Medical Education Plan will state the responsibilities of each Party with respect to the same. Neither Party shall make any material change in any Medical Education Plan without the prior approval of the MET.

2.5.4 MET Decision-Making . The representatives from each Party on the MET shall have collectively one (1) vote on behalf of that Party. Members of the MET shall endeavor to reach decisions via consensus; provided that if they are unable to do so a member from either Party may refer the matter to the Coordination Committee for resolution.

2.6 Review Board

2.6.1 Review . Any materials (including program manuals) subject to the review by Bayer’s Review Board pursuant to Section 2.2(b) shall be submitted to Bayer’s Review Board in proof form at least [    *    ] days prior to intended use. Bayer’s Review Board will review the materials submitted and give its comments to ZGEN no later than [    *    ] days after receipt. The Parties’ Content Compliance Contacts may agree to alternative time periods, taking into consideration the nature and use of the materials to be reviewed. ZGEN agrees to take into consideration any comments received during the foregoing time period. If ZGEN disagrees with any comments received by Bayer, Section 2.7.2(d) may apply (i.e., Bayer’s Sales Force and Bayer’s MSLs will have no obligation to use the relevant materials or participate in the relevant programs).

2.6.2 Content Compliance Contacts . The Parties’ Content Compliance Contacts may from time to time exchange or discuss their respective internal guidelines and such other matters as may facilitate the review of materials by Bayer’s Review Board.

2.7 Co-Promotion Efforts and Medical Education Efforts

2.7.1 Efforts . The principal objective of the Parties under this Agreement is to maximize the Commercialization of the Initial Licensed Products in the Co-Promotion Territory. Following receipt of all Regulatory Approvals in the Co-Promotion Territory with respect to each Initial Licensed Product, the Parties shall use Commercially Reasonable Efforts to (a) promote such Initial Licensed Product in the Co-Promotion Territory, (b) engage in scientific interchange with physician thought leaders relating to Initial Licensed Product in the Co-Promotion Territory and (c) to otherwise fulfill their obligations under this Agreement.

2.7.2 Compliance and Training .

(a) Each Party agrees that all activities under this Agreement by it or on its behalf, including training, Detailing, Promotion Related Activities, Medical Education Activities, record-keeping, reporting, collection of consumer data (if any), sales activities under Section 3.1.1 and provision of Samples, will be conducted in compliance with the Product Labels, Regulatory Approvals, Promotional Materials or Medical Education Materials (as applicable), a Party’s promotional practice or medical education guidelines, if any, and all Applicable Laws, including applicable PhRMA marketing practices guidelines.

(b) At all times during the Active Period after the Launch Date, each Party shall maintain a corporate compliance program consistent with 2003 Health and Human Services (HHS) Office of Inspector General (OIG) Compliance Program Guidance for Pharmaceutical Manufacturers, to the extent applicable to the activities of such Party hereunder. Without prejudice to the generality of the foregoing, each Party’s corporate compliance program shall include written policies requiring adherence to the 2002 PhRMA Code on Interactions with Healthcare Professionals, and training for field representatives on such policy.

(c) The Sales Forces and MSLs of each Party shall participate in a product-related training to be developed by ZGEN, subject to Section 2.2(b) and Section 2.6 . In addition, each Party will maintain a broad training program, including training on proper promotion and marketing techniques, ethics, and compliance with Applicable Laws in a manner consistent with all applicable pharmaceutical industry standards. Within a reasonable time period after the Effective Date, the Parties shall meet and confer to review and discuss each Party’s ethics and compliance training program.

(d) No Party shall be required to undertake any obligation, or incur any cost or reimbursement obligation, in connection with any activity under this Agreement that such Party believes, in good faith, (i) may violate any Applicable Law or any Corporate Integrity Agreement entered into by such Party with OIG, or (ii) does not meet its internal pharmaceutical promotional guidelines. The Parties will exchange their internal pharmaceutical promotional guidelines, if any, within thirty (30) days after the Effective Date and thereafter within thirty (30) days after such pharmaceutical promotional guidelines are approved or modified.

2.7.3 ZGEN Sales Force . ZGEN will establish a sales force of Sales Representatives responsible for promoting and Detailing Initial Licensed Products in the Co-Promotion Territory in accordance with this Agreement (the " ZGEN Sales Force "). The ZGEN Sales Force shall consist of [    *    ] Sales Representatives employed by ZGEN, with final allocation of effort being at least sufficient to cover the market potential for the Initial Licensed Product allocated to the ZGEN Sales Force. Market potential shall be allocated to ZGEN based on a percentage obtained by dividing ZGEN’s Individual Annual Revenue Threshold (as determined in accordance with Section 3.2.2 ) by the Annual Revenue Threshold. Following the Launch Date, ZGEN will, subject to review and adjustment, if any, under this Section 2.7.3 , devote [    *    ] percent ( [    *    ] %) of the aggregate effort of ZGEN’s Sales Force to fulfill the foregoing obligation. On a regular basis, ZGEN will perform a review and determine whether the effort put forth by ZGEN’s Sales Force is sufficient to cover the market potential for the Initial Licensed Product allocated to the ZGEN Sales Force, based on then current business and market conditions, and will determine what adjustments, if any, are required to meet the foregoing obligation. ZGEN will report any adjustments that ZGEN proposes to make, together with a justification for such adjustments, to the Coordination Committee. If the Coordination Committee does not agree that such adjustments are appropriate, then such matter shall be considered a Dispute and shall be resolved as set forth in Section 2.3.5 .

2.7.4 ZGEN MSLs . ZGEN has a group of [    *    ] MSLs, subject to normal operating fluctuations in staffing due to vacancies or otherwise, who will be responsible for scientific interchange (as opposed to product promotion) with physician thought leaders relating to the Initial Licensed Products in the Co-Promotion Territory in accordance with this Agreement (the " ZGEN MSLs ").

2.7.5 Bayer Sales Force . Bayer will establish or designate a sales force of Sales Representatives responsible for promoting and Detailing Initial Licensed Products in the Co-Promotion Territory in accordance with this Agreement (the " Bayer Sales Force "). The Bayer Sales Force shall consist of all the sales representatives in Bayer’s Hospital/Surgical sales force group (as of the Effective Date, [    *    ] ), with final allocation of effort being at least sufficient to cover the market potential for the Initial Licensed Product allocated to the Bayer Sales Force. Market potential shall be allocated to Bayer based on a percentage obtained by dividing Bayer’s Individual Annual Revenue Threshold (as determined in accordance with Section 3.2.2 ) by the Annual Revenue Threshold. Following the Launch Date, Bayer will, subject to review and adjustment, if any, under this Section 2.7.5 , devote [    *    ] percent ( [    *    ] %) of the aggregate effort of Bayer’s Sales Force to fulfill the foregoing obligation. On a regular basis, Bayer will perform a review and determine whether the effort put forth by Bayer’s Sales Force is sufficient to cover the market potential for the Initial Licensed Product allocated to the Bayer Sales Force, based on then current business and market conditions, and will determine what adjustments, if any, are required to meet the foregoing obligation. Bayer will report any adjustments that Bayer proposes to make, together with a justification for such adjustments, to the Coordination Committee. If the Coordination Committee does not agree that such adjustments are appropriate, then such matter shall be considered a Dispute and shall be resolved as set forth in Section 2.3.5 .

2.7.6 Bayer MSLs . Bayer has a group of MSLs who will be responsible for scientific interchange (as opposed to product promotion) with physician thought leaders relating to the Initial Licensed Products in the Co-Promotion Territory in accordance with this Agreement (the " Bayer MSLs "). As of the Effective Date, Bayer has a group of [    *    ] MSLs who will support the Initial Licensed Products, among other products.

2.7.7 CSOs . Bayer may not employ a CSO to fulfill any of its Detail or other obligations under this Agreement in the Co-Promotion Territory without the prior written consent of ZGEN. ZGEN may employ a CSO to fulfill any of its Detail or other obligations under this Agreement in the Co-Promotion Territory. In any event, each Party may only use a CSO to fulfill some of its Detail or other obligations under this Agreement in the Co-Promotion Territory if such CSO is reputable and experienced. If a Party engages a CSO, such Party will require the CSO to comply in all material respects with the obligations of such Party as contained herein and such Party will remain responsible for the full and complete performance of all of its obligations and duties under this Agreement, whether the obligations and duties are performed by such Party or by its CSO.

2.7.8 Responsibility for Sales Forces and MSLs . In implementing its obligations under this Agreement and subject to compliance with the other provisions of this Agreement (including Section 2.7.2 ), each Party shall have sole discretion as to the manner (which shall not be inconsistent with the Co-Promotion Plan, Medical Education Plan or directions of the Coordination Committee) in which it promotes and Details, or engages in scientific interchange relating to, the Initial Licensed Products in the Co-Promotion Territory. Each Party shall have sole authority and responsibility for recruiting, hiring, training (provided that all Bayer’s Sales Representatives shall participate in the product-related training developed

by ZGEN, subject to Section 2.2(b) and Section 2.6 ), managing, compensating (including, subject to Section 2.7.9 , designing and paying for all benefits, wages and incentives programs and paying for all workers’ compensation and employment taxes), disciplining and firing (notwithstanding Section 2.7.12 ) and otherwise controlling the persons comprising its Sales Force and MSLs in accordance with such Party’s standard procedures. Subject to the terms and conditions of this Agreement, each Party will provide the day-to-day management of its Sales Force and MSLs, including furnishing administrative support, transport, lodging, establishing monitoring and recordkeeping practices, and assuring its Sales Force and MSLs understand and comply with this Agreement and Applicable Laws.

2.7.9 Sales Force Incentives . The aggregate incentive compensation for the Bayer Sales Force shall be structured to provide that the Initial Licensed Product’s weighting shall be at least [    *    ] percent ( [    *    ] %) of the aggregate target incentive compensation available during each calendar year during the Active Period assuming all incentive goals are fully accomplished. The aggregate incentive compensation for the ZGEN Sales Force shall be structured to provide that the Initial Licensed Product’s weighting shall be at least [    *    ] percent ( [    *    ] %) of the aggregate target incentive compensation available during each calendar year during the Active Period assuming all incentive goals are fully accomplished. Each Party shall provide the other Party with a written report on its incentive compensation program in June and December of each year of the Active Period, and such reports shall be discussed by the Coordination Committee at the meeting immediately following distribution of the report.

2.7.10 [    *    ] Products . During the Active Period, Bayer’s Sales Force shall not promote, market or sell any [    *    ] product in the Co-Promotion Territory without the consent of ZGEN, such consent not to be unreasonably withheld. For the avoidance of doubt, Trasylol is not a [    *    ] product for purposes of this provision.

2.7.11 Coordinating, Monitoring Sales Force Activities and MSL Activities .

(a) The CPT or MEC, as the case may be, shall establish reasonable procedures for monitoring Sales Force activities and MSL activities to ensure that each Party is complying