Exhibit 10.1

CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

SUPPLY AGREEMENT

between

LAWRENCE LABORATORIES

and

CADENCE PHARMACEUTICALS, INC.

effective as of December 1, 2010

 

 

 

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TABLE OF CONTENTS

 

Article

        Page 1    Definitions    2 2    Supply of Products    6 3    Terms and
Conditions of Purchase and Sale    9 4    Regulatory Matters    17 5   
Confidentiality    18 6    Regulatory Matters    18 7    Dispute Resolution   
20 8    Term; Termination    22 9    Miscellaneous    23

EXHIBITS

 

Exhibit A:    Specifications Exhibit B:    Initial Forecast

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SUPPLY AGREEMENT

This Supply Agreement (the “Agreement”) is entered into and is effective as of
December 1, 2010 (the “Effective Date”) by and among Lawrence Laboratories, an
indirect wholly-owned subsidiary of Bristol-Myers Squibb Company (“BMS”) and a
corporation organized under the laws of Ireland with its registered office at
Unit 12, Distribution Centre, Shannon Industrial Estate, Shannon, County Clare,
Ireland (“LL”), and Cadence Pharmaceuticals, Inc., a Delaware corporation having
an address at 12481 High Bluff Drive, Suite 200, San Diego, California 92130
(“Cadence”). LL and Cadence are sometimes collectively referred to herein
collectively as the “Parties” and each individually as a “Party.“

RECITALS

WHEREAS, Cadence holds certain license rights in intellectual property relating
to the Product (as defined below) in the United States and Canada pursuant to
that certain IV APAP Agreement dated February, 2006, between BMS and Cadence
(the “IV APAP Agreement”), which sublicenses to Cadence certain intellectual
property rights with respect to the United States and Canada under that certain
License Agreement dated December 23, 2002 between SCR Pharmatop, a civil law
partnership organized under the laws of France, having its head office’s address
at 10, Square St. Florentin, 78150 Le Chesnay, France, recorded with the
Register of Commerce and Companies of Versailles under No. 407552702, and BMS
(the “Pharmatop License Agreement”) and licenses to Cadence certain rights to
use patents and know-how of BMS in the same jurisdictions;

WHEREAS, LL has made arrangements for one of its Affiliates (as defined below)
located in Italy to manufacture the Product for supply to Cadence pursuant to
this Agreement;

WHEREAS, LL or its Affiliate holds certain license rights in intellectual
property relating to the Product (as defined below) in Italy entitling LL or its
Affiliate to use such intellectual property to manufacture the Product in Italy
for supply to Cadence pursuant to this Agreement;

WHEREAS, LL or its Affiliates have expertise in manufacturing the Product; and

WHEREAS, Cadence desires to purchase, and LL desires to supply from its
Affiliate’s facility in Italy (or such other facility as LL may determine in
accordance with this Agreement), Cadence’s requirements for the Product for use
in the Territory (as defined below).

 

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AGREEMENT

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

ARTICLE 1

DEFINITIONS

1.1 Defined Terms. As used in this Agreement, the following terms shall have the
following meanings:

“Affiliate” of a Party means any corporation, firm, partnership or other entity
that directly or indirectly Controls, is Controlled by or is under common
Control with such Party.

“Agreement” has the meaning set forth in the Introductory Paragraph.

“Applicable Law” means any applicable federal, state, local or foreign statute,
law, ordinance, rule or regulation, judicial order or industry standard imposed
by regulation or law, including without limitation the laws of, and regulations
promulgated under, the FDCA or the Canadian equivalent of the FDCA.

“BMS” has the meaning set forth in the Introductory Paragraph.

“Business Day” means any day other than a Saturday, a Sunday or a United States
Federal, EU, Irish or Italian holiday.

“Cadence” has the meaning set forth in the Introductory Paragraph.

“Cadence Party” has the meaning set forth in Section 6.1.

“cGMP” means all current good manufacturing practices under 21 C.F.R. 210, as
amended from time to time, or any successor regulation.

“Claim” means any claim (including without limitation, product liability claims,
strict liability or tort claims and intellectual property infringement claims),
action, suit, governmental investigation or other proceedings made or brought by
or on behalf of a Third Party against any Cadence Party or any LL Party, as the
case may be, including without limitation enforcement actions by the FDA or
other applicable Drug Regulatory Authorities and claims for infringement of
intellectual property and for bodily injury, death or property damage.

“Confidential Information” has the meaning set forth in the IV APAP Agreement.

 

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“Contract Year” will mean the twelve-month period beginning on the first day of
the month following the date on which the Facility NDA is approved by FDA, and
each successive twelve-month period thereafter for the duration of this
Agreement.

“Control” means (a) with respect to Technology or technical information, the
possession by a Party of the ability to grant a license or sublicense of such
Technology or technical information as provided herein without violating the
terms of, or requiring a consent under, any agreement or arrangement between
such Party and any Third Party and (b) when used with respect to any Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract,
or otherwise. “Controlled” and “Controlling” shall have correlative meanings.

“Demand” has the meaning set forth in Section 7.2.

“Dispute” has the meaning set forth in Section 7.1.

“Dollar” or “$” means United States dollars, the lawful currency of the United
States.

“Drug Regulatory Authority” means any governmental authority or instrumentality
with responsibility for granting any licenses, approvals, authorizations (e.g.,
the NDA) or granting pricing and/or reimbursement approvals necessary for the
marketing and sale of pharmaceutical products in any regulatory jurisdiction.

“Effective Date” has the meaning set forth in the Introductory Paragraph.

“EMA” means the European Medicines Agency, or any successor agency.

“Facility” has the meaning set forth in Section 3.9.

“Facility NDA” means an NDA filed with the FDA by Cadence with respect to
Product to be manufactured under this Agreement.

“FDA” means the United States Food and Drug Administration or any successor
agency.

“FDCA” means the Federal Food, Drug & Cosmetics Act, 21 U.S.C. 321 et seq., any
amendments or supplements thereto, or any regulations promulgated or adopted
thereunder.

“Firm Order” has the meaning set forth in Section 3.2(a).

“Force Majeure” means any circumstances that are not within the reasonable
control of the Person affected thereby, including without limitation an act of
God, terrorist attack, war, insurrection, riot, strike or labor dispute,
shortage of materials, fire, explosion, flood, government requisition or
allocation, breakdown of or damage to plant, equipment or facilities (to the
extent that, in the event of a breakdown only, such plant,

 

3

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equipment or facilities were reasonably maintained), mandated requisition or
allocation, interruption or delay in transportation, fuel supplies or electrical
power, embargo, boycott, order or act of civil or military authority.

“Forecast” has the meaning set forth in Section 3.1.

“Incoterms” means the year 2000 edition of the official International Chamber of
Commerce’s rules for the interpretation of trade terms or any successor set of
rules, guidelines or terms developed thereunder.

“Indemnified Party” has the meaning set forth in Section 6.3.

“Indemnifying Party” has the meaning set forth in Section 6.3.

“Initial Forecast” has the meaning set forth in Section 3.1.

“IV APAP Agreement” has the meaning set forth in the Recitals.

“LL” has the meaning set forth in the Introductory Paragraph.

“LL Party” has the meaning set forth in Section 6.2.

“Losses” means, collectively, any and all liabilities, damages, reduction in
value, costs, expenses, including reasonable fees and disbursements of counsel
and any consultants or experts and expenses of investigation, obligations,
liens, assessments, court costs, arbitration or mediation fees, judgments, fines
and penalties imposed upon or incurred by an Indemnified Party (including, until
such time as the Indemnifying Party assumes control of a given Claim, reasonable
attorneys’ fees and costs of litigation pertaining to such Claim).

“Materials” has the meaning set forth in Section 2.5(a).

“Minimum Purchase Requirement” has the meaning set forth in Section 2.3.

“NDA” means a new drug application or an abbreviated new drug application,
including any amendments or supplements thereto, filed by Cadence with the FDA
pursuant to the FDCA, or any comparable filing with any Drug Regulatory
Authority in Canada, and includes any Common Technical Document for the
Registration of Pharmaceuticals for Human Use filed with the FDA or any other
Drug Regulatory Authority in the Territory.

“Parties” has the meaning set forth in the Introductory Paragraph.

“Party” has the meaning set forth in the Introductory Paragraph.

“Person” means any individual, firm, corporation, partnership, limited liability
company, trust, joint venture, governmental authority or other entity.

 

4

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“Pharmatop License Agreement” has the meaning set forth in the Recitals.

“Price Adjustment Method” has the meaning set forth in Section 2.2(d).

“Product” means the sterile, non-pyrogenic formulation of paracetamol
(acetaminophen) intended for intravenous infusion with a concentration of 10
mg/ml in 100 ml vials as more particularly set forth in the Specifications.
Product shall be packaged with 12 vials per shrink-wrapped pack. Product will be
available in 12 vials per case (single pack) or 24 vial per case (two packs).

“Quality Agreement” has the meaning set forth in Section 3.8.

“Reconciliation Payment” has the meaning set forth in Section 2.3(b).

“Reconciliation Price” has the meaning set forth in Section 2.3(b).

“Regulatory Approval” means with respect to the Product in any regulatory
jurisdiction in the Territory, approval from the applicable Drug Regulatory
Authority sufficient to market and sell the Product in such jurisdiction.

“Specifications” means the specifications set forth on Exhibit A, as amended by
the Parties pursuant to the terms of the Quality Agreement.

“Supply Price” has the meaning set forth in Section 2.2.

“Supply Term” means the period beginning on the first day of the first Contract
Year and terminating thirty six (36) consecutive months later, unless extended
by the mutual agreement of the Parties.

“Technology” means and includes all inventions, discoveries, improvements, trade
secrets, know-how, processes, procedures, research records, records of
inventions, test information, formulae, drawings, specifications, instructions,
techniques, data, market surveys and other similar proprietary methods,
materials or property, whether or not patentable, relating to the Product,
including but not limited to (a) samples of, methods of production or use of,
and structural and functional information pertaining to, chemical compounds,
proteins or other biological substances, (b) data, formulations, techniques and
know-how, and (c) rights under patents, patent applications, and copyrights.

“Territory” means the United States (including Puerto Rico and all U.S.
possessions and territories) and Canada.

“Third Party” means a Person who or which is neither a Party nor an Affiliate of
a Party.

 

5

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ARTICLE 2

SUPPLY OF PRODUCTS

2.1 Supply and Purchase.

(a) During the Supply Term and upon the terms and conditions set forth in this
Agreement, LL shall, or shall cause its Affiliates to, manufacture, or cause the
manufacture of, and supply to Cadence certain quantities of the Product ordered
pursuant to Firm Orders hereunder, subject to variations permitted by
Section 3.2(a). Cadence shall purchase from LL and its Affiliates all of the
Product ordered by Cadence pursuant to Firm Orders hereunder. LL shall have no
obligation to accept any Firm Order that calls for the delivery of the Product
following the end of the Supply Term.

(b) The Product shall be in finished vials, labeled and packed, at Cadence’s
option, in cases of 12 or 24 vials per case.

2.2 Supply Price

The “Supply Price” for the Product shall be as follows:

(a) First Contract Year:

 

Number of vials
ordered during First
Contract Year*

  

First Contract Year
Supply Price for

Per 12-pack**

  

First Contract Year
Supply Price for

Per 24-pack**

[***]

   $[***]    $[***]

[***]

   $[***]    $[***]

[***]

   $[***]    $[***]

 

* Pricing may not be applied retroactively. (E.g., [***]) Price breaks effective
on full lot purchases subsequent to meeting volume requirement.

 

  (i) If the First Contract Year commences on or after [***], a pricing
adjustment in accordance with the Price Adjustment Method may be applied;
provided, however, that if the First Contract Year commences on or after [***]
as a result of [***], the Price Adjustment Method may not be applied.

(b) Second Contract Year:

 

No. of vials ordered

  

Supply Price

Per 12-pack

  

Supply Price

Per 24-pack

[***]

   $[***]    $[***]

 

 

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  (ii) If the Second Contract Year commences on or after [***], a pricing
adjustment in accordance with the Price Adjustment Method may be applied;
provided, however, that if the Second Contract Year commences on or after [***]
as a result of [***], the Price Adjustment Method may not be applied.

(c) Third Contract Year:

 

No. of vials ordered

  

Supply Price

Per 12-pack

  

Supply Price

Per 24-pack

[***]

   $[***]    $[***]

 

  (i) A pricing adjustment in accordance with the Price Adjustment Method may be
applied upon first day of the Third Contract Year.

(d) Price Adjustment Method: The “Price Adjustment Method” is reflected in the
following formula:

The Supply Price may be increased or decreased based upon [***].

All costs used to calculate changes to the Supply Price shall be converted into
United States dollars using the applicable rate of exchange quoted by Reuters
Ltd. prevailing at 3:00 p.m. (GMT) on the last Business Day of the applicable
Contract Year.

LL shall provide documentation reasonably satisfactory to Cadence to support
each such Supply Price increase or decrease including, without limitation,
copies of supplier’s invoices.

(e) Payment: The Supply Price and payments shall be in U.S. Dollars.

2.3 Minimum Purchase Requirements.

(a) Subject to Sections 8.2(a) and 8.2(b) of this Agreement, Cadence shall
purchase the following quantities of the Product during the periods referenced
below (the “Minimum Purchase Requirement”):

 

  •  

First Contract Year = [***] vials of Product; and

 

  •  

Second and Third Contract Years = [***] vials of Product.

(b) In the event that the total number of Product vials ordered by Cadence from
LL (based on Firm Orders placed) in a given Contract Year is less than the
Minimum Purchase Requirement for that Contract Year, Cadence shall pay LL a
reconciliation payment

 

 

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within [***] from the date of receipt of LL’s valid invoice for such payment,
calculated according to the formula set forth below (the “Reconciliation
Payment”):

The amount of the Reconciliation Payment shall be equal to:

[***]:

The “Reconciliation Price” for a given Contract Year shall be equal to:

[***].

The Reconciliation Price shall be calculated [***].

2.4 Miscellaneous Fees. Cadence shall pay LL for all additional services
requested by Cadence in support of the development and submission of the
Facility NDA and subsequent commitments to FDA at a rate of $[***]. Cadence
shall also pay LL for any new validation batches that may be required at a price
not to exceed $[***] per batch. In each case, LL shall provide Cadence with a
written estimate of all such miscellaneous fees at least [***] in advance of the
commencement of work (or as mutually agreed), and the Parties agree to work
together to expeditiously resolve any disagreements as to the scope or costs of
such services. No such services shall be commenced until LL receives Cadence’s
valid purchase order covering such services. In the event that the Parties are
unable to reach agreement, the matter will be referred for resolution in
accordance with Section 7.1 of this Agreement. LL shall invoice Cadence for the
foregoing fees in accordance with the principles set forth in Section 3.5.

2.5 Additional Supply Provisions

(a) Materials. LL shall procure all materials required to produce the Product,
including without limitation the active pharmaceutical ingredient
(acetaminophen) (collectively, the “Materials”) at such times, and in such
amounts as required for LL to timely fulfill the Firm Orders. Both Parties agree
to work together to reduce lead time for orders and deliveries of the Materials.
LL shall obtain the Materials only from suppliers listed in the NDA for the
Product, and shall perform all testing of Materials required by the NDA or
Quality Agreement.

(b) Label Copy. All label copy and changes thereto on the Product label shall be
the responsibility of Cadence, and LL shall affix to the Product labels in the
form most recently approved by Cadence.

(c) Stability Studies. LL shall perform, on an on-going basis, all stability
studies required by the Specifications, Applicable Laws, the NDA for the
Product, and the Quality Agreement, at no additional cost to Cadence.

 

 

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(d) Reference Standards. Unless available through the United States
Pharmacopeia, Cadence shall provide, without charge to LL, analytical reference
standards for the Product in quantities reasonably required by LL to perform its
obligations under this Agreement.

(e) Cadence Access to Facility. LL shall use its commercially reasonable efforts
to provide Cadence’s employee or contractor with reasonable access to the
Facility at mutually agreeable times in order to facilitate such activities as
batch record review and Product release. Any such employee or contractor of
Cadence shall comply fully with the Facility’s applicable safety, security and
GMP procedures,

ARTICLE 3

TERMS AND CONDITIONS OF PURCHASE AND SALE

3.1 Forecasts. Within [***] after the Effective Date, Cadence shall provide to
LL Cadence’s initial forecast of its requirements for the Product that Cadence
expects to order for delivery during the [***] following the Effective Date (the
“Initial Forecast”). Subsequently, prior to the first day of each calendar month
during the Supply Term, Cadence shall deliver to LL an updated forecast setting
forth its requirements for the Product that Cadence expects to order for
delivery during the [***] period beginning on the first day of such calendar
month. Each such forecast is referred to herein as, a “Forecast” and the Parties
hereto acknowledge and agree that, except for the first [***] of each such
Forecast, such Forecast shall not be binding on Cadence.

Notwithstanding the foregoing, in the event that the Facility NDA is not
approved by the date on which the Initial Forecast is provided to LL:

(a) Cadence’s requirements for the Product included therein shall be delayed by
a period of time equal to the length of time between the date on which the
Initial Forecast is provided to LL and the date on which the Facility NDA is
approved by the FDA; and

(b) The first [***] of the Initial Forecast shall not be binding upon Cadence
until such time as the Facility NDA is approved by the FDA.

3.2 Ordering.

(a) Cadence shall submit to LL a written irrevocable firm purchase order for all
Product to be purchased by it not later than [***] prior to the first requested
shipping date of

 

 

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such Product (each, a “Firm Order”). Each such Firm Order shall include the
quantity (full batches only; multiples of the minimum batch size) of the Product
and the desired time and manner of shipment and the shipping destination, and
shall be limited to a single Product code (i.e., 12 vials per pack or 24 vials
per pack). Any Firm Order for any Product must be for a quantity equal to the
minimum batch size for such Product as in effect from time to time or an
integral multiple thereof. The minimum batch size in effect as of the date of
this Agreement is [***] vials of the Product ([***] cases of 12 or [***] cases
of 24). LL shall be obligated to manufacture, supply and deliver the specified
quantity of the Product in accordance with the delivery schedule set forth in
each Firm Order, however, the Parties agree that the actual number of vials
successfully manufactured by LL for any batch of the Product may be within a
range of plus or minus [***] percent (+/-[***]%) of the minimum batch size or of
the actual number of vials ordered by Cadence pursuant to a Firm Order. The
number of vials of Product supplied by LL pursuant to a Firm Order may only vary
from the amount actually ordered by Cadence within such limits, and LL may ship
to Cadence, and Cadence shall purchase, such greater or lesser number of vials
in full satisfaction of such Firm Order, provided that Cadence shall only be
required to purchase such number of vials actually supplied to Cadence. LL shall
provide to Cadence no less than [***] prior written notice of any change in the
minimum batch size. Within [***] following receipt of each Firm Order, LL shall
notify Cadence as to whether LL anticipates that it will be unable to deliver
the specified quantity of Product within the timeframe set forth in the Firm
Order. In the event LL fails to so notify Cadence, the quantity and time
specified in each such Firm Order shall be deemed accepted by LL. Firm Orders
may be amended by mutual agreement of the Parties, with no resulting penalty or
cost to Cadence. LL shall exercise commercially reasonable efforts to comply
with changes to Firm Orders that Cadence may request, but shall not be liable
for its inability to do so.

(b) No terms and conditions contained in any purchase order, acknowledgment,
invoice, bill of lading, acceptance or other preprinted form issued by either
Party shall be effective to the extent they are inconsistent with or modify the
terms and conditions contained herein.

3.3 Shipping Document. Each shipment of Product shall include a certificate of
analysis and a packing slip that describes the Product, the date of manufacture,
traceable lot or batch number(s), quantities, shipment date and destination and
such additional information as the Parties may agree in writing from time to
time.

3.4 Delivery, Title, and Shipping.

(a) Delivery of Product shall be FCA (Incoterms) Anagni, Italy, which port of
departure (maritime or air) shall be specified by Cadence. LL shall arrange for
shipping and insurance in the manner customarily arranged for its own products
from the point of manufacture to the port of departure and shall arrange for
Italian export clearances, but Cadence shall bear the

 

 

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cost of such shipping and insurance, any special packing expenses and export or
customs agents, all of which shall be included in LL’s invoice and paid by
Cadence in accordance with Section 3.5. Cadence shall arrange for loading,
shipment, insurance from the port of departure to the ultimate destination and
import customs clearances at the destination country, and Cadence shall be
responsible for all loading charges, freight, insurance, import customs
clearances and other shipping expenses from such port of departure to the
ultimate destination. Title to the Product and risk of loss, delay or damage in
transit for Product purchased by Cadence shall pass to Cadence when a shipment
of the Product is placed at the disposal of Cadence’s carrier at the port of
departure. Cadence shall cause its carrier to inspect all Product for physical
damage prior to shipment, and Cadence shall promptly notify LL of any such
physical damage. Cadence shall bear the cost of all such pre-shipment
inspection. LL and its Affiliates shall not have any responsibility for any loss
or damage to any Product that occurs after LL or its export or customs agent
places the Product at the disposal of Cadence’s carrier, nor shall any loss or
damage to any Product that occurs following such placement at the disposal of
Cadence’s carrier obviate Cadence’s obligation to purchase and pay for such
Product. Without limiting LL’s right to recover the full invoiced amount for the
Product and as partial security therefor, Cadence shall cause each shipment of
Product to be insured for the full invoiced amount of each shipment. Cadence
shall provide to LL proof, satisfactory to LL, of such insurance.

The ultimate destination country of each shipment hereunder shall be in the
Territory.

(b) LL shall place the Product at the disposal of Cadence’s carrier at port of
departure (maritime or air) for shipment to Cadence or its designee,
appropriately labeled with a traceable lot or batch number and packaged for
shipping in the standard commercial packaging materials customarily used by LL
not later than the shipping date requested by Cadence in its Firm Order. If
Cadence requests a first shipping date that is less than [***] after the
delivery to LL of the applicable Firm Order, LL shall use reasonable commercial
efforts to meet such earlier delivery date, but LL shall not be in breach of
this Agreement for failing to meet such earlier delivery date. If LL or its
Affiliate is unable to place any shipment at the disposal of Cadence’s carrier
by the date described in the first sentence of this paragraph, in addition to
any other remedies available to Cadence pursuant to this Agreement or otherwise,
LL shall provide Cadence with updated delivery information (including estimated
delivery date(s)) in writing on a weekly basis until such shipment has been made
available to Cadence’s carrier.

(c) Cadence shall make arrangements with a carrier to pick up each shipment of
Product at the designated port of departure (maritime or air) and to transport
such shipment of Product to Cadence or its designee. Cadence shall notify LL in
advance in writing of the name of the carrier and shall provide such other
information as may be necessary for LL to place the Product at the disposal of
such carrier at the port of departure. Cadence shall have sole responsibility
for the import of the Product into the Territory and for obtaining all import
and import-related customs permits and clearances; provided, however, that LL
and its Affiliates

 

 

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shall promptly provide to Cadence all information and documentation reasonably
requested by Cadence in order to obtain such permits and clearances.

(d) In the event of any shortage of supply of Product due to Force Majeure, LL
shall allocate its available supply of Product between it and its Affiliates,
its and its Affiliates’ other customers and Cadence on a pro rata basis based on
the aggregate firm orders for the Product, which allocation shall be determined
by LL in good faith.

3.5 Invoicing and Payment.

(a) LL shall invoice Cadence for the Product in Dollars at the time of shipment.
Each invoice shall include the invoice number, the Firm Order number, unit price
and total price of the Product contained in the shipment.

(b) Cadence shall pay LL within [***] after the receipt of any undisputed
invoice. All payments to be made hereunder to LL shall be made in Dollars by
wire transfer of immediately available funds to such bank account as may be
designated by LL in writing from time to time, unless the Parties agree to
settle such payments through other means. In the event Cadence disputes any
invoice, Cadence shall pay any undisputed amount as and when due hereunder and
shall pay the additional amount, if any, owed with respect to such invoice not
later than [***] following the resolution of such dispute.

(c) Any undisputed payment not made as and when due shall bear interest at the
rate of [***] percent ([***]%) per annum, compounded daily, from the due date to
the date of payment. In addition to but without limiting the preceding sentence,
LL shall have the right to suspend future shipments of Product to Cadence if LL
does not receive payment within [***] after the date of any invoice, other than
invoices subject to a bona fide dispute. LL shall resume shipments of Product
upon receiving such late payment and, if requested by LL, reasonable assurances
as to payment of future invoices.

3.6 Inspection; Non-Conforming Product.

(a) Cadence shall promptly inspect or cause to be inspected all shipments of
Product hereunder. Within [***] after receipt by Cadence of any shipment of
Product, Cadence may reject any lot or portion thereof which, at the time LL
placed the Product at the disposal of Cadence’s carrier, (i) failed to conform
to the Specifications, (ii) was not manufactured in full conformance with
Applicable Laws (including, without limitation, U.S. cGMPs) or the terms of this
Agreement, or (iii) for which the related batch record does not demonstrate
conformance with the approved manufacturing process. Upon any such determination
by Cadence, Cadence shall notify LL by sending LL notice of the lot or batch
numbers of the rejected Product, together with an indication of the specific
basis for rejection and a sample of the rejected goods.

 

 

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Notwithstanding the foregoing, if the discovery of the non-conformity of any
Product could not reasonably have been discovered until after such [***] period,
Cadence shall notify LL of such non-conformity promptly following the discovery
thereof. Cadence shall not be entitled to reject any shipment or any portion
thereof where it can be proven that the damage to the Product occurred following
the time that LL placed the Product at the disposal of Cadence’s carrier, and
Cadence’s sole remedy shall be against the carrier or under any applicable
insurance. LL shall have the right to examine and test any Product that Cadence
claims to be non-conforming. If it is determined that there is any such failure
to conform to Specifications at the time that LL placed the Product at the
disposal of Cadence’s carrier, LL and Cadence shall cooperate to determine the
cause of the non-conformity.

(b) In the event that LL and Cadence do not resolve any issue where it is
asserted that a batch of Product does not conform with the Specifications within
[***] after LL notifies Cadence that LL disagrees with Cadence’s belief as to
the non-conformity of such Product at the time that LL placed the Product at the
disposal of Cadence’s carrier, the Parties shall submit a sample of the disputed
Product to an independent laboratory, mutually selected by the Parties, for
testing, and the results of such testing shall be binding upon the Parties,
absent fraud or manifest error on the part of the independent laboratory. The
Party whose assertion as to the conformity or nonconformity of the Product in
question is not supported by the results of the testing of the independent
laboratory shall bear all costs and expenses of such testing. If the results of
such testing by such independent laboratory are inconclusive, then (i) all costs
and expenses of such testing shall be borne by the Parties in equal shares and
(ii) the Parties shall share equally the Supply Price of such Product and the
freight, insurance and other shipping expenses, fees, duties, taxes and levies
incurred by the Parties in connection therewith, and Cadence shall pay to LL
one-half of such Supply Price and other items within [***] after the receipt of
such inconclusive results; and (iii) LL shall promptly replace any such Product
and deliver FCA, in accordance with Section 3.4, replacement conforming Product
(even if such replacement entails shipping Product subsequent to the Supply
Term), which shall be purchased and paid for by Cadence in accordance with
Article 2 and Section 3.5 of this Agreement.

(c) Cadence shall, as requested by LL in its sole discretion: (i) return
promptly to LL at LL’s expense all properly rejected Product or (ii) destroy
such non-conforming Product in accordance with FDA guidelines or send such
non-conforming Product to a destruction facility of LL’s choice for destruction
at LL’s expense. Cadence shall not be required to pay LL for any Product that
has been properly rejected, and LL shall reimburse or credit Cadence for the
freight, insurance and other shipping expenses, fees, duties, taxes and levies
for any shipment of Product that is properly rejected. LL shall promptly replace
any properly rejected Product and supply to Cadence conforming Product (even if
such replacement entails shipping Product subsequent to the Supply Term).
Cadence shall pay the

 

 

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Supply Price and all shipping costs (which shall include the cost of returning
the Product to LL and reshipping such Product to Cadence or its designee) for
any Product improperly rejected.

3.7 Obsolescence Charge. To the extent that LL purchases inventories of
materials, components or other supplies pursuant to Cadence’s Forecast (based on
vendor lead time), and such materials, components or other supplies become
unusable as a result of a change to the Specifications requested by Cadence,
[***] such inventories that are unique to Cadence’s configuration of the Product
and that were purchased but unused and cannot reasonably be used by LL for any
other purpose.

3.8 Quality Control. LL (and/or one of its Affiliates) and Cadence shall enter
into a quality agreement (the “Quality Agreement”) within [***] following the
execution of this Agreement containing quality terms consistent with Applicable
Law and such other terms as are mutually satisfactory to the Parties and not
inconsistent with this Agreement. LL shall comply with all of the provisions and
requirements of the Quality Agreement in manufacturing, testing and supplying
Product to Cadence. Any breach of the Quality Agreement shall be deemed a breach
of this Agreement. In the event of any conflict between the terms of this
Agreement and the Quality Agreement with respect to quality assurance or quality
control matters, the terms of the Quality Agreement shall control.

3.9 Change of Supplier or Facility. LL may upon [***] prior written notice to
Cadence change the manufacturing facility used in the manufacturing of the
Product (the “Facility”) to another facility, provided that any such change in
the manufacturing facility shall be expressly conditioned upon: (a) [***];
(b) [***]; (d) [***]; and (e) [***].

3.10 Recalls. Each Party shall notify the other by telephone within [***] hours
after receiving any information, request or directive giving rise to a good
faith belief that a recall of any Product manufactured pursuant to this
Agreement is or may be required under Applicable Law or is or may be otherwise
necessary to avoid risk of injury or liability. Notwithstanding anything in this
Agreement or the Quality Agreement to the contrary, Cadence shall have sole
discretion over whether and under what circumstances to require the recall of
the Product in the Territory, unless a Drug Regulatory Authority in the
Territory issues or requests a recall or takes similar action in connection with
such Product.

In the event that LL, in good faith, believes that a recall is required under
Applicable Law or is otherwise necessary to avoid risk of injury, it shall
inform Cadence by providing written notice thereof to Cadence specifying, in
reasonable detail, the nature and all relevant circumstances giving rise to LL’s
belief that a recall is warranted, and information regarding the affected
Product. Within [***] following Cadence’s receipt of such written notification
(or sooner if exigent circumstances exist or otherwise are required in order to
comply with Applicable Law), the Parties shall discuss the circumstances giving
rise to such notification and

 

 

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the content of such notification, and, if so required, the timing and breadth of
the recall, the strategies and notifications to be used by Cadence to effect the
recall, and other related issues. In the event that LL recommends to Cadence, in
good faith, that a recall of a particular batch or batches of the Product should
be conducted, and Cadence declines to recall such Product, LL shall be entitled
to indemnification pursuant to Section 6.2 of this Agreement.

LL and Cadence each shall maintain such traceability records as are sufficient
and as may be necessary to permit a recall, product withdrawal or field
correction of any Product. Each Party shall provide full cooperation and
assistance to the other Party in connection with any recall as may be reasonably
requested by the other Party.

(a) If a Product recall results from: (i) the failure of any Product, packaging
or labeling supplied hereunder to conform to the Specifications; (ii) the
failure of any Product, packaging or labeling supplied hereunder to comply with
Applicable Laws or the terms of this Agreement, including the Quality Agreement,
at the time the Product was delivered by LL to Cadence’s carrier; (iii) any
negligent, grossly negligent or willful act or omission by LL or its Affiliates,
including without limitation the negligent or grossly negligent manufacture of
the Product, LL shall: (x) credit to Cadence an amount equal to the total
purchase price paid by Cadence to LL for the Product so recalled, plus Cadence’s
actual cost for direct material and direct labor furnished by Cadence or its
contracting parties in connection with the manufacture of the recalled Product,
(y) reimburse Cadence for all expenses associated with the conduct of the recall
action (e.g. advertising, mailing, administration, travel, etc.), and
(z) indemnify and hold Cadence harmless from and against any and all damages,
costs or charges, lawsuits or expenses associated with or resulting from any
such recall, including reasonable legal fees and disbursements.

(b) If a Product recall results from: (i) improper handling, shipping or storage
of the Product after delivery by LL to Cadence’s designated carrier, (ii) the
inadequate or misleading nature of any text appearing on the packaging or
labeling of the Product in compliance with the Specifications; (iii) any
negligent, grossly negligent or willful act or omission by Cadence, or (iv) due
to circumstances other than those described in Section 3.10(a), above, then LL
shall have no liability with respect to the recall and Cadence shall indemnify,
defend and hold LL and each other LL Indemnitee from any and all Losses suffered
by such LL Indemnitee arising or related to such recall.

The rights and remedies available to each Party under this Section 3.10 are not
exclusive and shall be in addition to all other right and remedies available to
such Party at law and in equity.

3.11 Product Complaints. Each Party shall notify the other Parties regarding
Product complaints as agreed between the Parties in the Quality Agreement.

3.12 Representations, Warranties and Covenants.

(a) LL represents, warrants and covenants that the Product when delivered FCA at
the designated port of departure Incoterms in accordance with Section 3.4 shall
(i) conform to the Specifications; (ii) be manufactured, packaged, tested,
stored, handled by it and

 

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its Affiliates in compliance with the Specifications, this Agreement, the
Quality Agreement and all Applicable Laws; (iii) be shipped to Cadence within
[***] after the date of manufacture; and (iv) at the time of that LL places the
Product at the disposal of Cadence’s carrier, not be adulterated or misbranded
within the meaning of the FDCA. Notwithstanding the foregoing, LL does not
represent, warrant or covenant against any Product becoming adulterated or
misbranded within the meaning of the FDCA or ceasing to conform to the
Specifications as a result of an act or omission or damage caused by Cadence or
any Third Party (including any carrier of Cadence) after placement of the
Product at the disposal of Cadence’s carrier pursuant to Section 3.4. LL
represents, warrants and covenants that LL or its Affiliate shall transfer to
Cadence good and marketable title to the Product free from any and all liens,
mortgages or encumbrances of any kind created by LL and its Affiliates and its
and their suppliers and creditors.

(b) LL represents, warrants and covenants that it and its Affiliates hold and
will continue to hold during the Supply Term sufficient rights in all
manufacturing processes and Technology necessary for the manufacture and supply
of the Product.

(c) LL represents, warrants and covenants that as of the date hereof it has not
received written notice of any pending or threatened Claim that would interfere
with LL’s performance under this Agreement or that materially and adversely
affects the rights and interests of Cadence hereunder.

(d) LL represents and warrants that it is duly organized, validly existing and
in good standing under the laws of Ireland, and that it has not been debarred
and is not subject to debarment and that it will not use in any capacity, in
connection with the services to be performed under this Agreement, any person
who has been debarred pursuant to Section 306 of the FDCA, or who is the subject
of a conviction described in such section. LL agrees to inform Cadence in
writing immediately if it or any person who is performing services hereunder is
debarred or is the subject of a conviction described in Section 306, or if any
action, suit, claim, investigation or legal or administrative proceeding is
pending or, to the best of LL’s knowledge, is threatened, relating to the
debarment or conviction of LL or any person performing services hereunder.

(e) Each Party represents, warrants and covenants that the execution and
delivery of this Agreement and the performance of its obligations hereunder:
(i) has been authorized to enter into this Agreement by all necessary corporate
action on the part of it and its shareholders, (ii) does not conflict with or
violate any requirement of Applicable Law or any of its charter documents and
(iii) does not conflict with, violate or breach or constitute a default or
require any consent (which has not been obtained) under, any contractual
obligation, license or court or administrative order by which it is bound.

 

 

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(f) EXCEPT AS EXPRESSLY PROVIDED IN THISAGREEMENT, NEITHER LL NOR ANY OF ITS
AFFILIATES MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED,
WRITTEN OR ORAL, STATUTORY OR OTHERWISE WITH RESPECT TO THE PRODUCTS (WHETHER
USED ALONE OR IN COMBINATION WITH OTHER SUBSTANCES) OR ANY MANUFACTURING PROCESS
USED TO MANUFACTURE ANY PRODUCTS, INCLUDING WITHOUT LIMITATION (i) ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE; (ii) ANY
IMPLIED WARRANTIES ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR
USAGE IN THE TRADE; (iii) ANY WARRANTIES OF DESIGN OR DESCRIPTION OR ANY
WARRANTY OTHERWISE CREATED BY ANY AFFIRMATION OF FACT OR PROMISE OR SAMPLE OR
MODEL; (iv) AND ALL SUCH REPRESENTATIONS AND WARRANTIES WHETHER IN CONTRACT,
WARRANTY, NEGLIGENCE, TORT, STRICT LIABILITY OR OTHERWISE, ARE HEREBY
DISCLAIMED.

3.13 Force Majeure. No Party shall be considered to be in breach of, nor shall
any Party be liable for any failure to perform its obligations under, this
Agreement (other than obligations to make payments of money) by reason of Force
Majeure. A Party affected by Force Majeure shall give the other Party prompt
notice of any interruption of performance on account of Force Majeure, and of
the resumption of such performance, and shall keep the other Party informed on a
current basis as to the steps being taken to remove, and the anticipated time of
removal of, the circumstances resulting in such Force Majeure. The time for
performance of any obligation hereunder that is affected by Force Majeure shall
be extended by the actual time of delay caused by such Force Majeure, provided
that the Party affected by such Force Majeure uses commercially reasonable
efforts to mitigate any such delay. Notwithstanding the foregoing, nothing in
this Section 3.13 shall excuse or suspend the obligation to make any payment due
under this Agreement in the manner and at the time provided herein.

ARTICLE 4

REGULATORY MATTERS

4.1 Record Retention. Any books and records relating to the receipt,
manufacture, storage, handling or testing of any Product shall be maintained
under this Agreement by a Party or its Affiliates in accordance with Applicable
Law.

4.2 Regulatory Matters.

(a) At all times during the Term, LL shall maintain the production facility,
equipment and processes (including, without limitation, the process used in
producing the Product and in performing LL’s other obligations under this
Agreement) in compliance with this Agreement, the Quality Agreement and all
Applicable Laws (including, without limitation, cGMP, the FDA and, to the extent
applicable, the EMA guidelines, employment and labor law requirements,
electrical, fire and safety at work codes and regulations and guidelines issued
by any applicable Drug Regulatory Authorities in the Territory). LL shall make
available for inspection, upon the request of Cadence, all documentation
relating to such compliance.

 

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(b) LL shall permit representatives of Cadence to conduct inspections from time
to time at all Facilities utilized by LL and its Affiliates hereunder to
manufacture the Product, as agreed between the Parties in the Quality Agreement.

(c) If either Party is notified that the Product manufactured at the Facility or
the Facility will be subject to an inspection by FDA or any other Drug
Regulatory Authority, such Party shall as soon as possible notify the other
Party by telephone and e-mail of its receipt of such notification. LL shall
provide Cadence copies of all Drug Regulatory Authority-issued inspection
observation reports (including, without limitation, Form 483s and equivalent
forms from other Drug Regulatory Authorities) and correspondence, purged only of
confidential information that is unrelated to the Product. LL shall permit
Cadence’s quality assurance representative to be present at the Facility during
any such inspection by FDA or any other Drug Regulatory Authority that relates
to the Product or LL’s performance under this Agreement, provided, however, that
Cadence shall only have access to or communicate with the inspectors during the
facility inspection as permitted under the Quality Agreement. LL will also
notify Cadence as soon as possible of LL’s receipt of any other Form 483’s or
warning letters or any other significant regulatory action which LL’s quality
assurance group determines could impact the regulatory status of the Product. LL
and Cadence will cooperate in resolving any concerns with any Drug Regulatory
Authority, and Cadence may review LL’s responses to any such reports and
communications. LL will in its reasonable discretion incorporate into such
responses any comments received from Cadence. LL will also inform Cadence of any
action taken by any Drug Regulatory Authority against LL or any of its officers
or employees which may be reasonably expected to adversely affect the Product or
LL’s ability to supply the Product hereunder within [***].

(d) LL hereby grants Cadence the right to reference any drug master file
regarding the Product or similar regulatory filing in the Territory that may now
exist, or that may exist at any time during the Supply Term or any extension
thereof, in any and all regulatory or other filings made by or on behalf of
Cadence, its Affiliates or sublicensees. Upon the request of Cadence, LL shall
provide Cadence with a letter evidencing such right of reference.

ARTICLE 5

CONFIDENTIALITY

5.1 Confidentiality. Any Confidential Information of the Parties exchanged
hereunder shall be governed by, and shall be maintained in confidence pursuant
to, the confidentiality provisions set forth in Section 5.2 and Section 5.3 of
the IV APAP Agreement.

ARTICLE 6

INDEMNIFICATION

6.1 By LL. LL shall indemnify, defend and hold harmless Cadence, its Affiliates
and its and their employees, subcontractors, agents, officers and directors
(each, a “Cadence Party” ) from and against all Losses by a Cadence Party that
result from or arise out of any Claim against

 

 

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a Cadence Party to the extent such Claims or Losses are alleged to be or are in
fact caused by, or are alleged to or in fact arise from or are based on any
breach by LL or an LL Party of this Agreement or the Quality Agreement;
provided, however, that LL shall not be obligated to indemnify a Cadence Party
under this Agreement for any Losses incurred by such Cadence Party to the extent
attributable to (i) any breach of this Agreement or the Quality Agreement by
Cadence or a Cadence Party or (ii) negligence, gross negligence or willful
misconduct on the part of Cadence or a Cadence Party.

6.2 By Cadence. Cadence shall indemnify, defend and hold harmless LL, its
Affiliates and its and their employees, subcontractors, agents, officers and
directors (each, an “LL Party”), from and against all Losses , liabilities,
damages, fees (including, until such time as Cadence assumes control of a given
Claim, reasonable attorneys’ fees and costs of litigation pertaining to such
Claim), and expenses paid or payable by an LL Party to a Third Party that result
from or arise out of any Claim against an LL Party to the extent such Claim or
any losses, liabilities, damages or fees, cost and expenses in connection
therewith is alleged to be or is in fact caused by, or is alleged to or in fact
arises from or is based on (y) any handling, storage, consumption,
administration, injection, infusion, ingestion or other use or misuse of or
exposure to the Product after the placement thereof at the disposal of Cadence’s
carrier at the designated port of departure, or (z) Cadence’s decision not to
recall the Product per LL’s recommendation, as set forth in Section 3.10 of this
Agreement; provided, however, that Cadence shall not be obligated to indemnify a
Cadence Party under this Agreement for any Losses incurred by such Cadence Party
to the extent attributable to (i) any breach of this Agreement or the Quality
Agreement by LL or an LL Party or (ii) negligence, gross negligence or willful
misconduct on the part of LL or an LL Party, except to the extent that the Claim
or any Losses in connection therewith results from or arises out of (A) a
failure of the Product to conform to the Specifications when placed at the
disposal of Cadence’s carrier in accordance with Section 3.4; (B) any breach of
this Agreement or the Quality Agreement by LL or any LL Party; (C) any
negligence, gross negligence or willful misconduct on the part of LL or any LL
Party; or (D) any other matter for which LL is expressly obligated to indemnify
Cadence pursuant to Section 6.1.

6.3 Conditions to Indemnification. A Party seeking indemnification under this
Article 6 (the “Indemnified Party”) shall give prompt notice of the Claim to the
other Party (the “Indemnifying Party”) and, provided that the Indemnifying Party
is not contesting the indemnity obligation, shall permit the Indemnifying Party
to control and assume the defense of any litigation relating to such Claim and
disposition of any such Claim unless the Indemnifying Party is also a party (or
likely to be named a party) to the proceeding in which such Claim is made and
the Indemnified Party gives notice to the Indemnifying Party that it may have
defenses to such Claim or proceeding that are in conflict with the interests of
the Indemnifying Party, in which case the Indemnifying Party shall not be so
entitled to assume the defense of the case. If the Indemnifying Party does
assume the defense of any Claim or proceeding, it (i) shall act diligently and
in good faith with respect to all matters relating to the settlement or
disposition of any Claim as the settlement or disposition relates to Parties
being indemnified under this Article 6, (ii) shall cause such defense to be
conducted by counsel reasonably acceptable to the Indemnified Party, or
(iii) shall not settle or otherwise resolve any Claim without prior notice to
the Indemnified Party and the consent of the Indemnified Party (which consent
shall not be unreasonably withheld, conditioned or delayed) if such settlement
involves anything other than the payment of money by the Indemnifying Party. The
Indemnified Party shall cooperate with the Indemnifying

 

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Party in its defense of any Claim for which the Indemnifying Party has assumed
the defense in accordance with this Section 6.3, and shall have the right (at
its own expense) to be present in person or through counsel at all legal
proceedings giving rise to the right of indemnification.

6.4 Limitation of Liability. IN NO EVENT SHALL EITHER PARTY (OR ANY OF ITS
AFFILIATES OR SUBCONTRACTORS) BE LIABLE TO THE OTHER PARTY FOR, NOR SHALL ANY
INDEMNIFIED PARTY HAVE THE RIGHT TO RECOVER, ANY SPECIAL, INDIRECT, INCIDENTAL,
PUNITIVE OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS OR DAMAGES FOR LOST
OPPORTUNITIES), WHETHER IN CONTRACT, WARRANTY, NEGLIGENCE, TORT, STRICT
LIABILITY OR OTHERWISE (WHETHER IN ANY CLAIM FOR INDEMNIFICATION PURSUANT TO
THIS ARTICLE 6 OR OTHERWISE), ARISING (x) OUT OF THE MANUFACTURE, USE OR SALE OF
ANY PRODUCT SOLD HEREUNDER OR (y) OUT OF ANY BREACH OF OR FAILURE TO PERFORM ANY
OF THE PROVISIONS OF THIS AGREEMENT OR (z) ANY REPRESENTATION OR WARRANTY
CONTAINED IN OR MADE PURSUANT TO THIS AGREEMENT, EXCEPT THAT SUCH LIMITATION
SHALL NOT APPLY TO PUNITIVE OR CONSEQUENTIAL DAMAGES PAID OR PAYABLE TO A THIRD
PARTY BY AN INDEMNIFIED PARTY FOR WHICH THE INDEMNIFIED PARTY IS ENTITLED TO
INDEMNIFICATION HEREUNDER.

ARTICLE 7

DISPUTE RESOLUTION

7.1 Dispute Resolution. The Parties agree to attempt to resolve any dispute,
difference or question arising between the Parties or any of their Affiliates or
Indemnified Parties in connection with this Agreement or the Quality Agreement,
the formation, interpretation, construction thereof or the rights, duties or
liabilities of any Party or any of its Affiliates (a “Dispute”) through good
faith negotiations between the Parties in accordance with this Section 7.1 The
disputing party shall provide notice of the existence and circumstances
surrounding the Dispute to the other Party, in accordance with Section 9.1 of
this Agreement. Within [***] after the receipt by the non-disputing Party of any
such notice, the respective officers designated below or such other officers as
the Parties may designate in writing from time to time, shall meet in person to
attempt to resolve the Dispute. The designated officers are as follows:

 

For LL:    Glenn Peace    General Manager

 

 

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For Cadence:    Scott A. Byrd,    Chief Commercial Officer

If such dispute is not solved by the end of a [***] period commencing upon the
date on which the notice was received by the non-disputing Party, the Parties
shall refer the matter to binding arbitration, as set forth in Section 7.2,
below.

7.2 Arbitration. Except as otherwise provided in this Agreement, any Dispute,
not resolved through good faith negotiations as set forth in Section 7.1 shall
be resolved by binding arbitration in accordance with this Section 7.2. Any
Party or any such Affiliate or Indemnified Party may require resolution of any
such Dispute by arbitration hereunder by sending a written notice to the other
Party demanding arbitration of the Dispute (the “Demand”). In that event, the
Dispute shall be finally resolved by arbitration in accordance with the United
States Arbitration Act and the Commercial Arbitration Rules of the American
Arbitration Association. The venue for the arbitration shall be New York, New
York. The arbitration shall be conducted in the English language before a panel
of three (3) arbitrators. Each Party shall name one arbitrator, and the two so
named shall name the third arbitrator, who shall act as chairman. If the two
party arbitrators cannot agree on a third arbitrator within [***] after the
Demand, then at the request of either Party the President of the Association of
the Bar of the City of New York shall appoint the third arbitrator. The
arbitrators shall promptly meet, fix the time, date and place of the hearing and
notify the Parties. All documents, exhibits, testimony or other information that
is not in the English language shall be translated into the English language at
the expense of the Party proffering the evidence requiring translation. The
decision of the arbitrators may (depending on the equities of the case) include
an award of legal fees, costs of arbitration and interest. The panel of
arbitrators shall promptly transmit an executed copy of its decision to the
Parties. The decision of the arbitrators shall be final, binding and conclusive
upon the Parties. Judgment on the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. Each Party retains the right
to seek from a court any interim or provisional relief that may be necessary to
protect the rights or property of that Party as permitted by Section 9.3 hereof
pending the establishment of the arbitrators’ determination of the merits of the
controversy, and any such action shall not be deemed incompatible with this
Agreement to arbitrate or a waiver of the right to arbitration. The obligations
of the Parties under this Section are specifically enforceable and shall survive
any termination of this Agreement. Unless the decision of the arbitrators
provides otherwise, the Parties shall bear their own costs in preparing for the
arbitration and the costs of the arbitrators shall be equally divided between
the Parties.

 

 

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ARTICLE 8

TERM; TERMINATION

8.1 Term; Termination.

(a) This Agreement shall commence on the Effective Date and shall continue for
the Supply Term unless earlier terminated pursuant to this Section 8.1, or
unless otherwise extended by written agreement of the Parties.

(b) This Agreement shall terminate upon the occurrence of any of the following
events:

(i) the written consent of each of LL and Cadence to terminate this Agreement;

(ii) either Party’s notice of its intent to terminate this Agreement for its
convenience (without cause and without penalty) following eighteen (18) months’
prior written notice;

(iii) the termination of the IV APAP Agreement; or

(iv) the dissolution or termination of Cadence, other than in connection with or
following an assignment of this Agreement in accordance with Section 9.7.

(c) Either Party may, by written notice to the other Party, terminate this
Agreement upon the occurrence of any of the following events:

(i) upon sixty (60) days’ prior written notice in the event of a material breach
of this Agreement by the other Party, which remains uncured by such other Party
by the end of such sixty (60) day period; or

(ii) effective upon written notice to the other Party, if the other Party
becomes insolvent or admits in writing its inability to pay its debts as they
become due, files a petition for bankruptcy, makes an assignment for the benefit
of its creditors or has a receiver, trustee or other court officer appointed for
its properties or assets.

8.2 Consequences of Termination. Termination of this Agreement pursuant to this
Article 8 shall be without prejudice to any rights which shall have accrued to
the benefit of any Party prior to such termination. Such termination shall not
relieve any Party from its obligations which are expressly indicated to survive
the termination of this Agreement. All of the Parties’ rights and obligations
under the immediately proceeding sentence and under Sections 3.6, 3.7, 3.10,
3.11, 4.1, 4.2(c), 4.2(d) and 8.2 and Articles 5, 6, 7 and 9 hereof shall
survive such termination for the applicable period.

 

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(a) In the event of the termination of this Agreement by Cadence for its
convenience under Section 8.1(b)(ii), or by BMS under Section 8.1(c)(i), Cadence
will reimburse LL and its Affiliates for the cost of: (i) any Product ordered
under any Firm Order and received by Cadence; and (ii) any inventory of
Materials purchased by LL in order to produce the Product in accordance with any
forecasts and vendor lead times to the extent that (A) such Materials are
specific to the Product, and (B) LL and its Affiliate that holds such inventory
are unable reasonably to utilize such inventory for other customers or for
itself or any other LL Affiliate. Upon Cadence’s request, LL shall deliver any
such inventory of Materials to Cadence. Additionally, Cadence’s Minimum Purchase
Requirement for the Contract Year during which the effective date of any such
termination occurs (i.e., 18 months after the notice of termination under
Section 8.1(b)(ii)) shall be reduced proportionally, and Cadence shall not be
obligated to purchase the Minimum Purchase Requirement for any subsequent
Contract Year.

(b) In the event of the termination of this Agreement for any reason other than
by Cadence for its convenience under Section 8.1(b)(ii) and by BMS under
Section8.1(c)(i), (i) Cadence shall not be required to reimburse LL or its
Affiliates for the cost of any inventory of Materials purchased by LL in order
to produce the Product, and (ii) Cadence shall have no obligation to purchase
the Minimum Purchase Requirement for the Contract Year during which the
effective date of any such termination occurs, or for any subsequent Contract
Year.

ARTICLE 9

MISCELLANEOUS

9.1 Notices. All notices, consents, requests, demands and other communications
required or permitted under this Agreement: (a) shall be in writing in the
English language; (b) shall be sent by messenger, a reliable express delivery
service or facsimile (with a copy sent by one of the foregoing means), charges
prepaid as applicable, to the appropriate address(es) or number(s) set forth
below; and (c) shall be deemed to have been given on the date of receipt by the
addressee (or, if the date of receipt is not a Business Day, on the first
Business Day after the date of receipt), as evidenced by (i) a receipt executed
by the addressee (or a responsible person in his or her office), the records of
the Person delivering such communication or a notice to the effect that such
addressee refused to claim or accept such communication, if sent by messenger or
express delivery service, or (ii) a receipt generated by the sender’s fax
machine showing that such communication was sent to the appropriate number on a
specified date, if sent by facsimile. All such communications shall be sent to
the following addresses or numbers, or to such other addresses or numbers as any
Party may inform the others by giving five Business Days’ prior notice:

 

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If to Cadence:

 

Cadence Pharmaceuticals, Inc.

12481 High Bluff Drive, Suite 200

San Diego, CA 92130

Attn: Chief Commercial Officer

Fax No.: [***]

  

With a copy to:

 

Cadence Pharmaceuticals, Inc.

12481 High Bluff Drive, Suite 200

San Diego, CA 92130

Attn: Legal Department

Fax No.: [***]

  

If to LL:

 

Lawrence Laboratories

Unit 12 Distribution Centre

Shannon Industrial Estate

County Clare

Ireland

Attn: General Manager

Fax No.: [***]

  

With a copy to:

 

Bristol-Myers Squibb Company

1 Squibb Drive

New Brunswick, NJ

Attn: Senior Counsel Technical Operations

Fax No.: [***]

  

If to BMS:

 

Bristol-Myers Squibb Company

1 Squibb Drive

New Brunswick, NJ

Attn: Director, Contract Manufacturing

Fax No.: [***]

  

With a copy to:

 

Bristol-Myers Squibb Company

1 Squibb Drive

New Brunswick, NJ

Attn: Assistant General Counsel

Fax No.: [***]

  

9.2 Governing Law. This Agreement is a contract under the laws of the State of
New York and for all purposes shall be governed by, and construed and enforced
in accordance with, the laws of said State, without giving effect to any
conflict of law rules.

9.3 Equitable Relief. The Parties acknowledge and agree that each would be
irreparably damaged in the event that any provision of this Agreement is not
performed by the other in accordance with its specific terms or is otherwise
breached. Accordingly, it is agreed that each Party is entitled to seek an
injunction or injunctions to prevent breaches of this Agreement by the other and
shall have the right to seek to specifically enforce this Agreement and the
terms and provisions hereof against the other without the posting of any bond or
other security, in addition to any other remedy to which such aggrieved Party
may be entitled at law or in equity; provided, however, that the powers of the
arbitrators under Section 7.2 shall be limited to enforcing the obligations
provided for in this Agreement as drafted.

 

 

*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

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9.4 Headings. All titles or captions contained in this Agreement are for
convenience of reference only and shall not limit or affect in any way the
meaning or interpretation of this Agreement.

9.5 No Third Party Beneficiaries. This Agreement shall be binding upon, and
inure solely to the benefit of, the Parties and their permitted assigns, and
nothing herein, express or implied, is intended to, or shall confer upon, any
other Person any legal or equitable right, benefit or remedy of any nature
whatsoever.

9.6 Severability. If any term or other provision of this Agreement is held to be
invalid, illegal or incapable of being enforced by any Applicable Law or public
policy, all other terms and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any Party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the Parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of
the Parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.

9.7 Assignment and Subcontracting.

(a) Except as set forth below in this Section 9.7 neither this Agreement, nor
any right, interest or obligation hereunder, may be assigned, pledged or
otherwise transferred by any Party, whether by operation of law or otherwise,
without the prior consent of the other Party, except that either Party may
assign any of its rights or delegate any of its obligations hereunder to any of
its Affiliates, provided, that (i) the assigning Party shall provide the other
Party with written notice of any such assignment or delegation, (ii) the
assigning Party shall unconditionally guarantee the full and timely performance
by its Affiliate of such Party’s obligations under this Agreement, which
guarantee shall be a continuing guaranty and remain in full force and effect for
so long as there shall remain any obligations (including, without limitation,
any indemnification obligations) or any representations or warranties of the
assigning Party under this Agreement; and (iii) such Affiliate shall have first
agreed in writing to be bound by the terms of this Agreement in connection with
such delegated obligations. Cadence acknowledges that LL will delegate the
manufacturing of the Product to its Affiliate, Bristol-Myers Squibb S.R.L., in
Italy and that delegation to such Affiliate shall not require any further notice
to Cadence.

(b) Either Party may assign or transfer all of its rights and obligations
hereunder without the prior consent of the other Party to a successor in
interest by reason of merger, consolidation or sale of substantially all of the
assets of the assigning Party (and so long as such assignment or transfer
includes, without limitation, all Approvals, all manufacturing assets relating
to the IV APAP Agreement, and all rights and obligations under the IV APAP
Agreement); provided, that such successor in interest shall have agreed prior to
such assignment or transfer to be bound by the terms of this Agreement in a
writing provided to the other Party.

(c) LL may not subcontract any or all of its obligations under this Agreement to
any Third Party without the prior written consent of Cadence in its sole and
absolute discretion.

 

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(d) Not withstanding anything to the contrary herein, any assignment, delegation
or subcontracting by a Party of any of its rights or obligations under this
Agreement shall not relieve such Party from any of its obligations hereunder.

(e) Any assignment or transfer in violation of the foregoing shall be null and
void and wholly invalid, the assignee or transferee in any such assignment or
transfer shall acquire no rights whatsoever, and the non-assigning
non-transferring Party shall not be required to recognize, such assignment or
transfer.

(f) Subject to the foregoing, this Agreement shall inure to the benefit of and
be binding on the Parties’ successors and permitted assigns.

9.8 Consents. Any consent or approval to any act or matter required under this
Agreement shall be in writing and shall apply only with respect to the
particular act or matter to which such consent or approval is given, and shall
not relieve any Party from the obligation to obtain the consent or approval, as
applicable, wherever required under this Agreement to any other act or matter.

9.9 Entire Agreement. This Agreement contains the entire agreement of the
Parties with respect to the subject matter of this Agreement and supersedes all
prior written and oral agreements, and all contemporaneous oral agreements,
relating to such subject matter. Notwithstanding the foregoing, nothing in this
Agreement shall be deemed to modify, amend or waive any provision of the IV APAP
Agreement.

9.10 Exhibits. The Exhibits attached to this Agreement are an integral part
hereof and all references to this Agreement include such Exhibits.

9.11 Waivers and Amendments. No modification of or amendment to this Agreement
shall be valid unless in a writing signed by all Parties referring specifically
to this Agreement and stating the Parties’ intention to modify or amend the
same. Any waiver of any term or condition of this Agreement shall be in a
writing signed by the Party sought to be charged with such waiver referring
specifically to the term or condition to be waived, and no such waiver shall be
deemed to constitute the waiver of any other breach of the same or of any other
provision hereof.

9.12 No Partnership or Joint Venture. This Agreement is not intended to create,
and nothing contained herein shall be construed to create, an association, joint
venture, trust or partnership, or to impose a trust or partnership covenant,
obligation or liability on or with regard to the other Party. Each Party shall
be severally responsible for its own covenants, obligations and liabilities as
herein provided. No Party shall be under the control of, or shall be deemed to
control any other Party; no Party is the legal representative, agent, joint
venturer or employee of the other Party with respect to this Agreement for any
purpose whatsoever; no Party shall have the right or power to bind the other
Party; and no Party has the right or authority to assume or create any
obligations of any kind or to make any representation or warranty on behalf of
any other Party, whether express or implied, or to bind any other Party in any
respect whatsoever. The provisions of this Agreement are intended only for the
regulation of relations between the Parties.

 

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9.13 Absence of Presumption. With regard to each and every term and condition of
this Agreement and any and all agreements and instruments subject to the terms
hereof, the Parties hereto understand and agree that the same have or has been
mutually negotiated, prepared and drafted, and if at any time the Parties hereto
desire or are required to interpret or construe any such term or condition or
any agreement or instrument subject hereto, no consideration shall be given to
the issue of which Party hereto actually prepared, drafted or requested any term
or condition of this Agreement or any agreement or instrument subject hereto.

9.14 Counterparts; Facsimile Execution. This Agreement may be executed in any
number of counterparts, and by each of the Parties on separate counterparts,
each of which, when so executed, shall be deemed an original, but all of which
shall constitute but one and the same instrument. Delivery of an executed
counterpart of this Agreement by facsimile shall be equally as effective as
delivery of a manually executed counterpart of this Agreement.

[Remainder of page intentionally left blank.]

 

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SIGNATURE PAGE TO SUPPLY AGREEMENT

IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the day
and year first above written.

 

LAWRENCE LABORATORIES By:   /s/ Glenn Peace Name:   Glenn Peace Title:   General
Manager CADENCE PHARMACEUTICALS, INC. By:   /s/ Theodore R. Schroeder Name:  
Theodore R. Schroeder Title:   President and CEO

 

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EXHIBIT A

SPECIFICATIONS

 

Cadence Pharmaceuticals, Inc.   Acetaminophen, Injection for Intravenous Use

[***]

Confidential/Trade Secret/Proprietary Information of Cadence Pharmaceuticals,
Inc.

 

 

*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

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EXHIBIT B

INITIAL FORECAST

[***]

 

 

*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.