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.

Confidential

AMENDED & RESTATED

DEVELOPMENT AND SUPPLY AGREEMENT

By and Between

CADENCE PHARMACEUTICALS, INC.

and

BAXTER HEALTHCARE CORPORATION

--------------------------------------------------------------------------------

CONFIDENTIAL

 

TABLE OF CONTENTS

1.0

   BACKGROUND      3   

2.0

   DEFINITIONS      3   

3.0

   COOPERATIVE ORGANIZATION      4   

4.0

   DEVELOPMENT PLANS      5   

5.0

   PRODUCT REGISTRATIONS AND USER FEES      8   

6.0

   COMMERCIAL SUPPLY      9   

7.0

   MANUFACTURING FEE      13   

8.0

   API      15   

9.0

   EQUIPMENT AND FACILITIES      17   

10.0

   QUALITY MANAGEMENT      18   

11.0

   MARKETING      21   

12.0

   REPRESENTATIONS AND WARRANTIES      21   

13.0

   CONFIDENTIALITY      24   

14.0

   INTELLECTUAL PROPERTY      25   

15.0

   INDEMNIFICATION      29   

16.0

   ALTERNATE DISPUTE RESOLUTION      32   

17.0

   FORCE MAJEURE      32   

18.0

   RELATIONSHIP OF THE PARTIES      33   

19.0

   TERM AND TERMINATION      33   

20.0

   EFFECTS OF TERMINATION      34   

21.0

   NOTICES      36   

 

--------------------------------------------------------------------------------

CONFIDENTIAL

 

22.0

   EXPORT      37   

23.0

   MISCELLANEOUS      37   

EXHIBITS

 

EXHIBIT A

   PRODUCT SPECIFICATIONS

EXHIBIT B

   API SPECIFICATIONS

EXHIBIT C

   MINIMUM BATCH SIZES AND MANUFACTURING FEE

EXHIBIT D

   COST OF API AND METHODOLOGY FOR CALCULATING MANUFACTURING YIELD LOSSES

EXHIBIT E

   BAXTER OWNED EQUIPMENT

EXHIBIT F

   CADENCE OWNED EQUIPMENT

EXHIBIT G

   CONFIDENTIAL DISCLOSURE AGREEMENT

EXHIBIT H

   DEVEOPMENT PLAN TEMPLATE

EXHIBIT I

   DEFINITIONS

 

2

--------------------------------------------------------------------------------

CONFIDENTIAL

 

AMENDED AND RESTATED

DEVELOPMENT AND SUPPLY AGREEMENT

This AMENDED AND RESTATED DEVELOPMENT AND SUPPLY AGREEMENT, (this “Agreement”)
is effective as of January 28, 2011 (the “Effective Date”) by and between
CADENCE PHARMACEUTICALS, INC., a corporation organized and existing under the
laws of the State of Delaware and having its principal office at 12481 High
Bluff Drive, Suite 200, San Diego, CA 92130 (“Cadence”) and BAXTER HEALTHCARE
CORPORATION, a corporation organized and existing under the laws of the State of
Delaware and having its principal office at One Baxter Parkway, Deerfield,
Illinois 60015 (“Baxter”). All references to “Cadence” and “Baxter” will include
their respective Affiliates.

 

1.0 BACKGROUND

Cadence has an exclusive license to rights in the United States and Canada to a
particular intravenous formulation of, and manufacturing process for, the
Compound.

Baxter manufactures and markets sterile products in glass containers for
parenteral administration of pharmaceutical preparations.

Cadence and Baxter entered into a Letter of Intent dated November 27, 2006, as
amended (collectively, the “LOI”), and executed a Development and Supply
Agreement dated July 18, 2007, as amended on October 11, 2007, March 1,
2009, October 15, 2009, and June 7, 2010 (collectively, the “Original
Agreement”), with respect to the provision of certain development and commercial
supply services by Baxter.

The Parties now wish to modify the terms of the Original Agreement to confirm
the terms and conditions under which Baxter will manufacture the Product for
commercial distribution, and establish the terms and conditions under which the
commercial manufacturing capacity for the Product at the Facility will be
expanded. Upon the Effective Date, the LOI and the Original Agreement shall be
superseded in their entirety by this Agreement.

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

 

2.0 DEFINITIONS

Certain capitalized terms used in this Agreement and not otherwise defined
herein have the meanings assigned to them in Exhibit I.

 

3

--------------------------------------------------------------------------------

CONFIDENTIAL

 

3.0 COOPERATIVE ORGANIZATION

In order to facilitate collaboration between the Parties to achieve the
objectives of this Agreement, the Parties agree to the following organizational
provisions:

3.1 Product Manager. Baxter and Cadence will each identify an individual(s) with
appropriate authority to serve as the primary contact with the other Party about
the Product and the Parties’ relationship under this Agreement (each a “Product
Manager”), who will be responsible for obtaining cooperation and input from
other individuals within such Product Manager’s organization whose expertise and
ability may be required from time to time to ensure the success of the
collaboration between the Parties under this Agreement.

3.2 Steering Committee. The Parties shall establish a steering committee,
consisting of at least one general business executive and one senior technical
executive from both Parties (“Steering Committee”). The Steering Committee will
meet at least quarterly, through face-to-face meetings at a mutually convenient
location or via telephone conferences and/or videoconferences, at times to be
mutually agreed. The Steering Committee will discuss and resolve any overarching
questions or issues and discuss future plans and the relationship between the
Parties. The Steering Committee shall not have the authority to modify,
supplement, amend or terminate this Agreement. If the Steering Committee is
unable to resolve any such differences, the matter(s) shall be escalated to the
Chief Commercial Officer for Cadence and the VP, Sales for Baxter BioPharma
Solutions for Baxter (the “Senior Executives”). If the Senior Executives are
unable to resolve any such differences, the matter shall be handled pursuant to
Article 16.0 of this Agreement.

3.3 Cadence Product Manager in Facility. Baxter agrees to provide office
accommodations in its Facility, on the conditions set forth below, to the
Cadence Product Manager or his/her designee, specializing in manufacturing
processes. Baxter may, in its sole discretion, at any time, revoke its offer to
provide office space in its Facility for a specific individual serving as
Product Manager or his/her designee, or for the Cadence Product Manager
position, following sixty (60) days’ prior written notice to Cadence.

3.3.1 The Cadence Product Manager (and any designee) shall on an annual basis
agree to (i) undergo training on Baxter’s security, safety, and emergency
procedures at the Facility, (e.g. site evacuation procedures) within a timeframe
agreed to between Cadence and Baxter’s Facility Management team, (ii) undergo
training on GMP requirements and specific site interpretations and application,
and (iii) abide by all training requirements. Training requirements specified
above will be documented by Baxter in a written communication, with a training
plan and timeframe for completion agreed to by the Parties. The completion of
the training will also be documented in written communication to Cadence.

3.3.2 In order to protect the confidentiality of Baxter and any third parties,
Baxter Facility personnel may restrict the Cadence Product Manager position’s
access to certain conference rooms or other areas at the Facility. In general,
the Cadence Product Manager position’s access shall be limited to those areas
relevant to the manufacture of the Product. In the event Baxter designates
certain areas as restricted to the Cadence Product Manager position, the Cadence
Product Manager and any designee agree not to enter such areas.

 

4

--------------------------------------------------------------------------------

CONFIDENTIAL

 

4.0 DEVELOPMENT PLANS

 

  4.1 Development Plans

4.1.1 NDA Development Plan. The Parties acknowledge the completion of the NDA
Development Plan concurrent with the approval of an NDA for the Product by the
FDA on November 2, 2010.

4.1.2 Capacity Increase Development Plan. Within sixty (60) days after the
Effective Date, or such longer time period as may be mutually agreed upon by the
Parties, the Parties will mutually agree upon a development plan (using the
development plan template attached as Exhibit H or a substantially similar form)
for the expansion of the manufacturing capacity for the Product at the Facility
(the “Capacity Increase Development Plan”). The Capacity Increase Development
Plan will identify in detail the scope of the activities to be performed and the
fees associated with such activities. All capital equipment and Facility
improvements included therein will be funded by Cadence. The Capacity Increase
Development Plan will also include provisions detailing the process by which
Baxter will agree to accept the completed, validated second manufacturing line
for the Product to be installed at the Facility. The Parties agree to work
together to resolve in good faith any outstanding disagreements with respect to
the Capacity Increase Development Plan and, following approval by both Parties,
the Capacity Increase Development Plan shall be incorporated by reference as
part of this Agreement. Each Party shall use Commercially Reasonable Efforts to
timely accomplish the tasks that it is assigned under the Capacity Increase
Development Plan.

4.1.3 Additional Development Plans. The Parties may, from time to time, mutually
agree upon one or more development plans (using the development plan template
attached as Exhibit H or a substantially similar form), which will identify in
detail the scope of the activities to be performed and the fees associated with
the activities (each, a “Development Plan”). Cadence will initiate each new
Development Plan and send the draft Development Plan to Baxter for review and
comment. The Parties agree to work together to resolve in good faith any
outstanding disagreements with respect to each Development Plan. Unless
otherwise agreed in writing by a duly authorized representative of each Party,
in no event shall Baxter purchase any Materials or equipment or schedule or
commence any work, and Baxter shall not be obligated to do so, until a
Development Plan has been fully executed by both Parties. Each executed
Development Plan shall be incorporated by reference as part of this Agreement.
Each Party shall use Commercially Reasonable Efforts to timely accomplish the
tasks that it is assigned under each Development Plan.

 

5

--------------------------------------------------------------------------------

CONFIDENTIAL

 

4.2 Provisions Generally Applicable to Development Plans. The activities and key
milestones to occur with respect to each Development Plan may include, but are
not limited to, the following activities or topics: (i) technical feasibility
assessment, (ii) formulation and analytical development, (iii) Facility
improvements, (iv) equipment and Material purchases, (v) clinical scale
production, (vi) stability studies and Product batch production to support
Regulatory Submissions, (vii) Regulatory Submissions, (viii) Regulating Groups’
review and approval, and (ix) Product launch readiness activities and other
pre-commercial activities. If different from the Product Specifications,
specifications applicable to Product to be manufactured under each Development
Plan will be set forth in each such plan, subject to refinement from time to
time based upon the results of the Development Plan, the results of ongoing
activities under other Development Plans, and requirements of Regulating Groups.
While Product and Formulation specifications, and any changes thereto, must be
agreed to in writing by both Parties, Cadence will be responsible for and must
provide final approval of all Product specifications and any Formulation
specifications included in Development Plans, and all changes thereto prior to
implementation.

During the Term of the Agreement, Cadence will be responsible for performing
certain Cadence activities as set forth in each Development Plan, including but
not limited to, the following: (i) providing technical information about the API
and the manufacturing process for Product, (ii) unless otherwise agreed in
writing by a duly authorized representative of each Party, timely providing the
API and applicable reference standards required for implementation of the
activities described in the Development Plans, (iii) unless otherwise agreed
between the Parties, compliance with Regulatory Submission reporting
requirements regarding manufacture and control of the API, (iv) timely review,
drafting and filing of all necessary submissions with Regulating Groups, and
(v) payment of development fees and other fees and expenses as set forth in
Section 4.2.3.

In general, during the Term of the Agreement, Baxter will be responsible for
performing certain activities as set forth in each Development Plan, including
but not limited to, the following: (a) conducting development studies identified
as a Baxter Development Deliverable in each Development Plan, (b) maintaining
inventories of excipients, applicable reference standards and other components
and Materials required as agreed in each Development Plan for timely
implementation of the activities described therein, (c) manufacturing Product
for Regulatory Submissions and as otherwise provided in each Development Plan
and pursuant to the applicable Regulatory Strategy, (d) preparing those portions
of necessary submissions with Regulating Groups consistent with Baxter’s
obligations under the applicable Regulatory Strategy, and (e) supporting Cadence
in its efforts to obtain and maintain approval of the Regulating Groups to sell
the Product in the Territory.

4.2.1 Development Deliverables. Baxter will promptly disclose to Cadence during
the Term of the Agreement, in English and in writing, all Baxter materials set
forth in the Development Plans (“Baxter Development Deliverables”) which will
include such interim progress reports and final reports as may be agreed upon by
the Parties. Cadence will promptly disclose to Baxter during the Term of the
Agreement, in English and in writing, all Cadence materials set forth in the
Development Plans (“Cadence Development Deliverables”).

 

6

--------------------------------------------------------------------------------

CONFIDENTIAL

 

4.2.2 Additional Development Deliverables. If the Baxter Development
Deliverables or the Cadence Development Deliverables set forth in a Development
Plan prove to contain insufficient information for a Party to carry out its
responsibilities under this Agreement, including information required for
Cadence to obtain and maintain Regulating Group approval and registration of the
Product in the Territory in accordance with Article 5.0 or to complete the FDA’s
Annual Report and similar reports required by other Regulating Groups, or to
obtain Patent protection in accordance with Article 14.0, the Parties will in
good faith negotiate and execute an Amended and Restated Development Plan to
include as a Deliverable the additional information or activities which are
necessary for such purpose. Such negotiations may arise by mutual consensus of
the Parties or following the written request of either Party. Baxter will not be
required to perform, nor be entitled to reimbursement for, any work beyond that
described in a Development Plan(s) unless and until the Parties reach written
agreement on the scope of any additional work and the related additional
expenses (coordinated through the Product Managers under Section 3.1), and an
Amended and Restated Development Plan has been executed by both Parties.

4.2.3 Payment of Development Fees and Costs. Development fees payable by Cadence
to Baxter for the Baxter Development Deliverables as set forth in each
Development Plan, costs for Material and equipment purchases and Facility
improvements, and any other fees and expenses agreed upon by the Parties as set
forth in a Development Plan, will be paid by Cadence in United States dollars
within thirty (30) days after the date of Cadence’s receipt of each invoice from
Baxter following completion of the designated activities. Baxter agrees that all
such invoices will be provided to Cadence on a timely basis, which shall in no
event be later than sixty (60) days following the date on which Baxter incurs
any such fees or expenses, and shall contain a reference to the Development Plan
to which the invoice relates. Invoices not timely paid will be subject to a late
payment charge of one and one-half percent (1-1/2%) per month, or the highest
rate allowed by law if lower, until paid in full. If any portion of an invoice
is disputed, then Cadence shall pay the undisputed amounts as set forth in the
preceding sentence and the Parties shall use good faith efforts to reconcile the
disputed amount within (60) days of receipt; provided, that Cadence shall not be
obligated to pay any late payment fee on any such amount disputed in good faith.

4.3 Regulatory Strategies. Cadence shall be solely responsible any regulatory
strategies and considerations associated with each Development Plan. Any
development or regulatory-related activities required to be undertaken by Baxter
in support of Cadence’s regulatory strategies associated shall be set forth in
each Development Plan. Cadence may revise its regulatory strategies for any
Development Plan, subject to prior written agreement between the Parties in the
event that any such change is reasonably anticipated to impact the cost and
timetable of the development or regulatory-related activities specified in the
Development Plan. Cadence will discuss with Baxter any elements of its
regulatory strategies which may reasonably be expected to have an impact on
Baxter’s obligations under this Agreement.

 

7

--------------------------------------------------------------------------------

CONFIDENTIAL

 

4.4 Stability Studies. Baxter shall perform at no additional cost to Cadence on
an on-going basis one (1) annual stability study required by the Specifications,
Applicable Laws, and the NDA for the Product, and the Quality Agreement in
connection with the manufacture of the Product.

4.5 Technical Issues. The Parties acknowledge and agree that, as a result of the
approval of an NDA for the Product by the FDA, the terms “Technical Failure” and
“Integration Failure” (as defined in the Original Agreement) are no longer
applicable to this Agreement.

 

5.0 PRODUCT REGISTRATIONS AND USER FEES

5.1 Product Registration Application Ownership. Cadence will be the sole owner
of any registration applications submitted to Regulating Groups for the Product.
Cadence will have responsibility for the documentation and submission of the
registration applications to Regulating Groups and for completing the FDA Annual
Report and similar reports required by other Regulating Groups, with support
from Baxter in providing any information required from Baxter in order to
complete such reports. Communications to and from the Regulating Groups that
involve the NDA or any other Regulatory Submissions are subject to the
provisions of Section 5.3.

 

  5.2 Product Registration and User Fees.

5.2.1 Right of Reference – Drug Master File. Baxter acknowledges that it holds
DMF [***]. Baxter will provide a letter of authorization for DMF [***] to
Cadence to support the container closure system and parametric release of the
Product in lieu of end-product testing. The right of reference does not include
Cadence access to DMF [***]. In the event of a critical regulatory issue with
the Product, such as a product recall, Baxter will provide appropriate data,
technical reports, and other information to Cadence regarding the issue,
including information that may reside in DMF [***]; provided, however, that
Baxter reserves the right to redact to protect its Confidential Information or
the confidential information of third parties.

5.2.2 Additional Filing Data. During the Term of the Agreement, Baxter will,
following prior written review and approval of Cadence, provide the Regulating
Groups such additional data and information related to the Product as are
required for Cadence to obtain and maintain registration and approval of the
Product in good standing in the Territory, including without limitation,
Pre-Existing Specifications, Baxter Background Intellectual Property Rights and
Original Product Data. Baxter reserves the right to inform the Regulating Groups
that such information is confidential and to advise the Regulating Groups that
Cadence will be entitled to reference such information on a confidential basis
during the Term of the Agreement.

 

*** 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.

8

--------------------------------------------------------------------------------

CONFIDENTIAL

 

  5.3 Communications to/from Regulating Groups.

5.3.1 Communications from Regulating Groups. Each Party will promptly notify the
other Party of any communication from Regulating Groups related to the Product
or the activities of the Parties contemplated under this Agreement
(collectively, “Communication(s)”). Each Party reserves the right to redact its
Confidential Information or confidential third party information.

5.3.2 Communications to Regulating Groups. In the event that a response to a
Regulating Group is required in connection with any Communication, the Parties
will use reasonable efforts to agree on which individuals need to collaborate on
such responses. Cadence will have primary responsibility to respond to all
Communications from Regulating Groups in connection with any Cadence Regulatory
Submission regarding the Product (including the vial, stopper, cap and all
labeling for the Product), the API or the Formulation, and any non-Product
specific information related to Cadence, and Baxter will have primary
responsibility to respond to all Communications from Regulating Groups in
connection with DMF [***], the Facility, container closure integrity and
sterility assurance for the Product, and any non-Product specific information
related to Baxter. Each Party will collaborate in good faith with the other
Party in preparing such responses, and Baxter will provide Cadence with
information that the Parties reasonably agree is required to develop a requested
response for questions directed to any Cadence Regulatory Submission or other
Communication. In the event that Baxter and Cadence are unable to agree on the
final content of any such response, then Cadence’s position will prevail as it
pertains to all Communications sent to Regulating Groups relating to the API,
Formulation, or the Product (including the vial, stopper, cap and all labeling
for the Product), and Baxter’s position will prevail as it pertains to DMF
[***], the Facility, container closure integrity and sterility assurance for the
Product. If requested, Baxter will allow an agreed upon third party to review
redacted portions of DMF [***] where information is required to be shared with
Regulating Groups pertaining to the Product; provided, however that Baxter has
the ability to set reasonable conditions upon the review parameters and to
protect its Confidential Information and the confidential information of third
parties.

5.4 User Fees. Cadence will pay all user and/or filing fees charged to Cadence
by Regulating Groups that relate to the registration application and ongoing
marketing of the Product, including, but not limited to, the Application Fee,
the annual Drug Product Fee, and a portion of the Drug Establishment Fee.

 

6.0 COMMERCIAL SUPPLY

 

  6.1 Product Standards, Specifications and Materials.

6.1.1 Standards. Baxter shall manufacture, test, package, store, label, release
and deliver the Product in accordance with the Product Specifications,
Applicable Laws, the NDA for the Product, and the Quality Agreement. Baxter
shall also maintain the Facility in compliance with all Applicable Laws and the
Quality Agreement, and shall be responsible for all costs and expenses related
to the maintenance of the Facility in compliance therewith.

 

*** 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.

9

--------------------------------------------------------------------------------

CONFIDENTIAL

 

6.1.2 Product Specifications. Exhibit A includes Product Specifications in
effect as of the Effective Date. The Quality Agreement shall govern the
procedures for making changes to Product Specifications for commercial Product.
Cadence will be responsible for and must provide final approval of Product
Specifications and all changes thereto prior to implementation.

6.1.3 Materials. Baxter shall procure the Materials at such times, and in such
amounts consistent with the amounts forecasted per Section 6.3 and as shall be
necessary in order for Baxter to timely produce and deliver the Product as
requested by Cadence in accordance with this Agreement. Both Parties agree to
work together to reduce lead time for orders and deliveries of the Materials.
Baxter shall obtain the Materials only from suppliers listed in the NDA for the
Product, where applicable, and shall perform all testing of Materials required
by the Product NDA for the Product or Quality Agreement. Audit and qualification
of third party suppliers of raw Materials shall be handled in accordance with
the Quality Agreement.

6.1.4 Label Copy. All label copy and changes therein, on the Product label
itself and other label copy that Cadence uses to market Product in the
Territory, will be the responsibility of Cadence. Any Product label affixed by
Baxter to a Product shall be in the form most recently approved by Cadence.

6.2 Supply and Purchase Obligations. Baxter will be the supplier for, and
Cadence will purchase from Baxter, [***] units of the Requirements during each
Contract Year during the Initial Term. Additionally, Baxter will be the supplier
for, and Cadence will purchase from Baxter, [***] units of the Requirements
during each Contract Year, if any, following the Initial Term.

6.2.1 Notwithstanding Cadence’s obligation to purchase [***] units of the
Requirements from Baxter during each Contract Year during the Initial Term, or
[***] units of the Requirements during each Contract Year following the Initial
Term, as applicable:

6.2.1.1 If Baxter has failed to provide at least [***] percent ([***]%) of the
quantity of Product in accordance with each Firm Purchase Order (including,
without limitation, within the delivery time frames set forth in such Firm
Purchase Orders) during any [***] period, Cadence may purchase from other
suppliers the Product that Baxter failed to deliver and such quantity will be
deducted from the [***] units, or from the [***] units, as applicable, of the
Requirements that Cadence is obligated to purchase for that Contract Year under
Section 6.2.1; and

 

*** 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.

10

--------------------------------------------------------------------------------

CONFIDENTIAL

 

6.2.1.2 If, despite the collaboration of the Parties under Section 6.3, Baxter
has not accepted (pursuant to Section 6.4.2, below) and committed to timely
provide to Cadence at least [***] ([***]%) of the quantity of Product included
in each purchase order submitted by Cadence to Baxter in accordance with
Section 6.4.1 for any [***] period, Cadence may purchase from other suppliers
the Product that Baxter has not committed to timely supply, and such quantity
will be deducted from the [***] units, or from the [***] units, as applicable,
of the Requirements that Cadence is obligated to purchase for that Contract Year
under Section 6.2.1.

6.2.2 Minimum Purchase Requirement. During the Initial Term, Cadence shall
purchase from Baxter, at a minimum, the number of units of Product for each
Contract Year as set forth below (“Minimum Purchase Requirement”):

 

Contract Year Commencing:

   Units (Million)           Nov. 1, 2010    [***]           Nov. 1, 2011   
[***]           Nov. 1, 2012    [***]           Nov. 1, 2013    [***]
          Nov. 1, 2014    [***] Each additional year (if any)    [***]

These units will be ordered in the Minimum Batch Size. If Cadence fails to
purchase the Minimum Purchase Requirement in any Contract Year, within thirty
(30) days after the end of each Contract Year, Cadence shall pay Baxter an
amount equal to the Manufacturing Fee multiplied by the shortfall in units.
Cadence shall not be obligated to pay any shortfall amount if Cadence’s failure
to meet the Minimum Purchase Requirement is due to Baxter’s inability to timely
supply Cadence with its Requirements of Product in the applicable Contract Year
and Baxter’s inability to timely supply such Requirement is not due to Cadence’s
failure to meet its obligations under this Agreement.

6.3 Forecasts. In order to assist Baxter in its production planning of Product
for Cadence, Cadence will provide to Baxter, at least ninety (90) calendar days
before the beginning of each calendar quarter during the Term of the Agreement,
rolling twelve (12) month forecasts of Cadence’s estimated Product requirements
(“Estimated Requirements”) and expected monthly requirements for Product during
such forecast period. Cadence and Baxter will collaborate in good faith, using
the Estimated Requirements, to plan for production such that substantial
increases or decreases in production may, generally, be spread gradually over
each Contract Year; provided, however, the Cadence’s actual market demand for
the Product shall in all cases take precedence over any such scheduling
agreements. Cadence will make such Estimated Requirements in good faith given
market conditions and other information available to Cadence, but such Estimated
Requirements shall not be binding on Cadence or Baxter except as provided in
Section 6.4.3.

 

*** 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.

11

--------------------------------------------------------------------------------

CONFIDENTIAL

 

  6.4 Purchase Orders; Firm Purchase Orders.

6.4.1 General. During the Term of the Agreement and upon the terms and
conditions set forth in this Agreement, Baxter shall, or shall cause its
Affiliates to manufacture, or cause the manufacture of, and supply to Cadence
the Product, ordered pursuant to the process set forth in this Section 6.4,
including, but not limited to volume variations and subject to the restrictions
set forth herein. Cadence will place purchase orders for the portion of its
Requirements for Product required during each calendar quarter at least ninety
(90) calendar days prior to the beginning of each such calendar quarter. Each
purchase order will specify the individual Product order quantities by month for
the quarter. Purchase orders will be placed in increments of no less than the
Minimum Batch Size. Baxter will confirm its ability, or inability, to provide
Product in the month for which Cadence has requested delivery as further set
forth in Section 6.4.2. Subject to the provisions of Section 6.2, all such
purchase orders will not be less than [***] percent ([***]%) nor more than [***]
percent ([***]%) of Cadence’s most recently updated Estimated Requirements for
Product for such calendar quarter.

6.4.2 Acceptance. Within ten (10) days, Baxter will accept or reject each
purchase order received from Cadence by providing a written notice confirming
its ability to manufacture the quantity of the Product specified therein, and
including the associated price and month within which the manufacture of the
Product will occur. For the purposes of this Agreement each purchase order
accepted by Baxter and each purchase order which is neither accepted or rejected
by Baxter within ten (10) days of Baxter’s receipt of same, shall be a “Firm
Purchase Order.” Baxter shall supply Product pursuant to each Firm Purchase
Order, provided, that each Firm Purchase Order shall be deemed to have been
fully satisfied if the quantity of each of the Product supplied thereunder is
not more than [***] percent ([***]%) and not less than [***] percent ([***]%) of
the quantity of Product ordered therein.

6.4.3 Cancellations and Rescheduling. Notwithstanding the foregoing
Section 6.4.1:

6.4.3.1 Baxter will use Commercially Reasonable Efforts to comply with any of
Cadence’s unplanned changes in Firm Purchase Orders, but will not be held liable
for its inability to do so;

6.4.3.2 Cadence may cancel a Firm Purchase Order, subject to the payment of a
cancellation fee of [***] percent ([***]%) of the amount of any such cancelled
Firm Purchase Order penalty if Cadence notifies Baxter of such cancellation
within [***] days of the date on which Baxter had scheduled the manufacture such
Product; and

6.4.3.3 Cadence may reschedule a Firm Purchase Order, subject to the payment of
a rescheduling fee of [***]% of the amount of any such rescheduled Firm Purchase
Order if Cadence notifies Baxter of such rescheduling within [***] days of the
date on which Baxter had scheduled the manufacture such Product.

 

*** 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.

12

--------------------------------------------------------------------------------

CONFIDENTIAL

 

6.4.4 Forms. The terms and conditions of this Agreement will be controlling over
any terms and conditions included in any purchase order form used in ordering
Product. Any term or condition of such purchase order form that is in addition
to, different from or contrary to the terms and conditions of this Agreement
will be void, unless the Parties otherwise agree by a separate written
agreement.

6.5 Delivery; Shipment. All Product supplied under this Agreement will be
delivered FCA Baxter’s distribution site in Memphis, Tennessee. Baxter will make
shipping arrangements with the appropriate carriers designated in writing by
Cadence from the FCA point, under the agreements that Cadence has with those
carriers on or before the delivery date. Baxter shall be responsible for loading
the Products to be shipped with the designated carrier.

6.6 Title/Risk of Loss. Title to and risk of loss with respect to the Product
shall pass from Baxter to Cadence when picked up by the carrier at the Facility.
All Products delivered to Cadence shall be free and clear of any liens and
encumbrances.

6.7 Exporter of record. Cadence will be deemed the exporter of record for
Product shipped outside of the United States (which should only occur to the
extent such areas are included in the definition of “Territory”). Cadence
warrants that all shipments of Product outside the United States will be in
compliance with all applicable United States export laws and regulations,
including the Export Administration Act, and all applicable import laws and
regulations.

 

7.0 MANUFACTURING FEE

7.1 Manufacturing Fee. Baxter will invoice Cadence a Manufacturing Fee per unit
of Product in the amount set forth in Exhibit C, upon release to finished goods
inventory of Product that has been quality control released by Baxter in
accordance with the chemistry, manufacturing, and controls (CMC) information in
the NDA for the Product and Product Specifications, as may be amended from time
to time. The Quality Agreement shall ultimately govern release of Product for
delivery to Cadence.

 

  7.2 Adjustments to Manufacturing Fee.

7.2.1 Effective upon the commencement of each Contract Year beginning on
November 1, 2011, Baxter will increase the Manufacturing Fee by an amount equal
to $[***] per unit or [***], whichever is greater. Baxter will provide Cadence
with written notice ninety (90) days prior to the effective date of any such
increase in the Manufacturing Fee, which notice shall set forth the amount and
basis for such increase.

7.2.2 Effective upon the commencement of each Contract Year beginning on
November 1, 2011, the Manufacturing Fee may be adjusted by Baxter to reflect an
increase or decrease, as the case may be, in the cost of Material required to
manufacture the Product,

 

*** 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.

13

--------------------------------------------------------------------------------

CONFIDENTIAL

 

provided, however, that any such increase or decrease in Material cost is
greater than [***] percent ([***]%) of the average cost to purchase such
Material during the previous Contract Year. Baxter will provide Cadence with
written notice ninety (90) days prior to the effective date of any such increase
or decrease in the Manufacturing Fee, which notice shall set forth the amount
and basis for such increase or decrease.

7.2.3 Additionally, the Manufacturing Fee will be reduced, on a “pass-through”
basis, to reflect the decrease, if any, in the cost of any Material that results
from any cost concession, volume purchase commitment, or other negotiation with
the supplier of such Material by Cadence or on Cadence’s behalf. All such cost
decreases will be applied to the Manufacturing Fee at the time that the Material
to which the cost decrease applies is first used to manufacture the Product.

7.3 Additional Work and Fees. The Manufacturing Fee described in Section 7.1 is
based upon the scope of activities that Baxter plans to undertake in the
ordinary course to manufacture and release Product in accordance with the
Exhibits hereto, Applicable Laws and the Quality Agreement. The Manufacturing
Fee does not cover activities or expenses related to matters that might arise
outside the ordinary course of manufacturing and releasing Product in accordance
with the Product Specifications, Applicable Laws, Quality Agreement, and other
Exhibits. By way of example only, additional work might be required for Product
or process changes requested by the Regulating Groups, API source changes or API
manufacturing process changes, USP or other regulatory requirements changes,
excessive or untimely requests by Cadence for label changes or recalls or other
actions by Regulating Groups, or mutually agreed upon expansion of the
Territory. Baxter will not be required to perform, nor be entitled to
reimbursement for, any such work until the Parties negotiate in good faith and
reach written agreement on the scope of the additional work and the related
additional expenses. Any such additional work and the related additional
expenses shall be set forth in a Development Plan.

7.4 Improvement Initiatives. From time to time either Baxter or Cadence
individually or Baxter and Cadence working collaboratively may propose changes
to the Normal Manufacturing Process that result in improvements to efficiency,
throughput, Product quality, Materials cost or other benefits to either or both
of the Parties (“Improvements”).

7.4.1 Cadence may at any time request Improvements, provided, that Cadence and
Baxter agree to a Development Plan to the Development Agreement that details the
project to implement the Improvement, and provided, that the Improvement does
not adversely affect Facility operations or lead to major process changes
outside of the Cadence Owned Equipment. Any costs and expenses of such
Improvements, as well as any cost savings that result from the Improvement,
shall be allocated as mutually agreed in writing between the Parties in the
Development Plan. To be clear, the percentage split between the Parties of the
actual savings attributed to Improvements requiring capital investment to the
Facility shall be agreed upon at the time that such capital investments are
proposed. Ownership of the capital equipment and capital improvements resultant
from such capital investment shall also be agreed upon at the time that the
capital improvements are proposed.

 

*** 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.

14

--------------------------------------------------------------------------------

CONFIDENTIAL

 

7.4.2 Baxter may implement Improvements of its own and sole initiative,
provided, that any such Improvements initiated by Baxter shall only be made in
accordance with Section 10.8, and provided, that any such Improvement shall be
made at Baxter’s sole cost and expense. To be clear, any costs savings as may be
realized by Improvement of the sole initiative and expense of Baxter shall
accrue exclusively to Baxter.

7.5 Payment; Late Payment Charges. Cadence will pay the Manufacturing Fee (under
Section 7.1), expenses for additional work (under Section 7.3),
maintenance-related costs (under Section 9.4), and costs associated with
de-installation and restoration (under Sections 20.4, 20.5 and 20.6) and any
other amounts owed to Baxter under this Agreement, in United States dollars
within thirty (30) days after the date of Baxter’s invoice, by wire transfer in
United States dollars, to a bank account designated in writing by Baxter.
Invoices not timely paid will be subject to a late payment charge of [***]
percent ([***]%) per month, or the highest amount permitted by law, if lower.
Notwithstanding the foregoing, should Cadence give Baxter a Deficiency Notice
pursuant to Section 10.2, Cadence’s obligation to pay under this Section 7.5
shall be suspended until the Parties have mutually agreed upon a resolution of
the deviation(s) underlying any such Deficiency Notice.

 

8.0 API.

8.1 General. Cadence will, at its cost, supply API to Baxter at the Facility.
API will be supplied timely, in adequate quantities to enable Baxter to meet its
obligations to develop and manufacture the Product in accordance with the terms
of this Agreement, all in conformance with the API Specifications set forth in
Exhibit B, as may be amended by Cadence from time to time. Baxter and Cadence
will agree on appropriate inventory levels for API and Product and Baxter will
manage these inventory levels. Cadence will retain title to the API while it is
in Baxter’s possession. Baxter will not use the API supplied by Cadence for any
purposes other than pursuant to the terms of this Agreement. Cadence is
responsible for the quality and control of any API provided by Cadence and the
API Specifications. Cadence is also responsible for the quality and control of
any other components or raw Materials provided by Cadence to Baxter, including
without limitation, the suppliers of such components and raw Materials and the
related specifications.

8.2 Change of API Source or API Manufacturing Process. Cadence agrees to provide
written notice to Baxter of any proposed change to the API source, or any change
in the manufacturing process for the API as soon as possible (e.g., upon receipt
of notice from their supplier.) Following such written notice to Baxter, the
Parties will work together to promptly agree upon a Development Plan with
respect to any work reasonably required of Baxter to support Cadence’s filings
with the Regulating Groups to obtain approval for such change. Under

 

*** 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.

15

--------------------------------------------------------------------------------

CONFIDENTIAL

 

any such Development Plan, Cadence will reimburse Baxter for all reasonable
costs incurred by Baxter directly related to work performed by Baxter in support
of such API source or API manufacturing process change, including but not
limited to the cost of new stability studies, submissions to the FDA and any
other Regulating Groups and return of unused (if any) API from the prior source
or manufactured under prior API manufacturing processes. Except pursuant to a
Development Plan agreed upon by the Parties, Baxter shall not be required to
manufacture the Product using API from a new source or API that has been
manufactured using an API manufacturing process that has been modified such that
approval by the Regulating Groups is required in order to market, sell and
distribute the Product in the Territory, unless and until such change is
approved by applicable Regulating Groups.

8.3 Risk of Loss of API. Subject to Section 12.2.1, Baxter will have the risk of
loss or damage to the API from the time the API is delivered to the Facility and
during the storage thereof. In the event of loss or damage to the API during
such period, Baxter will immediately notify Cadence and Cadence will provide to
Baxter API required for replacement thereof at the actual replacement cost of
the API paid by Cadence to its supplier including duty, freight and testing
costs. Cadence will provide to Baxter appropriate documentation evidencing such
costs.

If the loss or damage occurred other than during the performance of the Normal
Manufacturing Process, then Baxter shall pay Cadence for such replacement API in
an amount equal to the actual cost paid by Cadence for such API, plus duty,
freight and testing costs.

Per Section 8.4, if the loss or damage occurred during the performance of the
Normal Manufacturing Process, the amount of API lost or damaged will be included
in the annual yield loss calculation and a determination will be made at the end
of the relevant Contract Year as to what amount, if any, is owed by Baxter to
Cadence for such loss of API.

Notwithstanding the foregoing, Baxter shall not be required to pay Cadence to
replace reasonable amounts of API that are consumed in the course of testing
required for incoming receiving and inspection.

Baxter will pay amounts owed to Cadence under this Agreement, including without
limitation amounts owed under Sections 8.3.1 and 8.3.2, in United States dollars
within thirty (30) days after the date of Cadence’s invoice, by wire transfer in
United States dollars, to a bank account designated in writing by Cadence.
Invoices not timely paid will be subject to a late payment charge of [***]
percent ([***]%) per month, or the highest amount permitted by law, if lower.

8.4 Manufacturing Yield Losses. The actual yield loss percentage for each
Contract Year shall be calculated, reconciled, and agreed to by Cadence and
Baxter within forty-five (45) days following the end of each Contract Year.
Baxter will be responsible for calculating actual yield loss percentage as per
the methodology set forth in Exhibit D, which is

 

*** 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.

16

--------------------------------------------------------------------------------

CONFIDENTIAL

 

being provided for illustrative purposes. The Parties acknowledge and agree that
any and all losses occurring other than during the performance of the Normal
Manufacturing Process or any loss due to improper handling, storage or due to
any negligence on the part of Baxter will not be included in the annual yield
loss calculation, but will be reimbursed to Cadence in accordance with
Section 8.3.1.

 

9.0 EQUIPMENT AND FACILITIES

9.1 Compliance with Applicable Laws. Baxter shall at all times during the Term
of the Agreement maintain the Facility and all other Baxter locations that
provide services under this Agreement in compliance with Applicable Laws. Baxter
shall be responsible for all costs and expenses required to maintain the
Facility and such other Baxter locations in compliance with Applicable Laws,
provided, however, that if Facility, equipment, process, or system changes are
necessary in order to maintain compliance with Applicable Laws, and if the
changes would not be necessary but for Baxter’s manufacturing activities for the
Product, then, upon Cadence’s agreement with the necessity for such changes and
the reasonableness of the anticipated costs and expenses, Cadence shall bear
such costs and expenses in accordance with this Agreement. Baxter shall notify
Cadence promptly if it reasonably determines that any such changes are required
and will include in any such notification the anticipated costs and expenses
associated with such changes.

9.2 Baxter Owned Equipment and Risk of Loss. All equipment supplied, owned or
purchased by Baxter and paid for by Cadence as of the Effective Date is set
forth in Exhibit E (“Baxter Owned Equipment”). The Baxter Owned Equipment shall
at all times remain the property of Baxter and Baxter assumes the risk of loss
of such property. Baxter hereby waives any and all rights of recovery against
Cadence, or against its directors, officers, employees, agents or
representatives, for any loss or damage to Baxter Owned Equipment, except if
such loss or damage is caused by Cadence’s gross negligence or willful
misconduct.

9.3 Cadence Owned Equipment and Risk of Loss. All equipment supplied, owned or
purchased by Cadence as of the Effective Date is set forth in Exhibit F
(“Cadence Owned Equipment”). All Cadence Owned Equipment shall at all times
remain the property of Cadence and Cadence assumes the risk of loss of such
property. Cadence hereby waives any and all rights of recovery against Baxter,
or against its directors, officers, employees, agents or representatives, for
any loss or damage to Cadence Owned Equipment, to the extent the loss or damage
is covered or could be covered by insurance (whether or not such insurance is
described in this Agreement), except if such loss or damage is caused by
Baxter’s gross negligence or willful misconduct. Baxter will use Cadence Owned
Equipment only for activities directly related to development and
commercialization of Product under this Agreement, except as otherwise agreed to
in writing by Cadence.

 

 

17

--------------------------------------------------------------------------------

CONFIDENTIAL

 

9.4 Maintenance-related Costs of Baxter Owned Equipment and Cadence Owned
Equipment. Baxter shall be responsible for maintaining the Cadence Owned
Equipment consistent with its practices as in effect from time to time with
respect to Baxter’s manufacturing equipment. Baxter shall be responsible for all
maintenance-related costs for Baxter Owned Equipment. Baxter shall be
responsible for labor-related costs associated with the Routine Maintenance of
Cadence Owned Equipment. For Cadence Owned Equipment, Cadence shall be
responsible and reimburse Baxter for all costs other than such labor-related
Routine Maintenance costs, including without limitation, the costs associated
with the purchase of spare parts, any labor-related costs incurred by a third
party and costs associated with extraordinary maintenance so long as such
extraordinary maintenance is not caused by Baxter’s failure to provide adequate
Routine Maintenance, or Baxter’s gross negligence or willful misconduct.

9.5 Performance Expectations for Cadence Owned Equipment. Within ninety
(90) days after the Effective Date, Cadence and Baxter will mutually agree in
writing on operating specifications for the Specified Equipment. Baxter will not
be deemed in breach of its obligation to deliver Product ordered under a Firm
Purchase Order to the extent such non-delivery or delayed delivery is caused by
the failure of the Specified Equipment to perform in accordance with such
operating specifications for the Specified Equipment (an “Equipment Failure
Event”); provided, that such failure is not due to Baxter’s negligence or
willful misconduct, or any other cause within Baxter’s reasonable control; and
provided, that Baxter (i) promptly notifies Cadence of the Equipment Failure
Event as provided in Section 17.2, (ii) uses reasonable diligence and efforts to
remedy the situation if reasonably capable of being remedied by Baxter,
(iii) continues performance of its obligations to the extent the Equipment
Failure Event permits, and (iv) resumes performance of its obligations delayed
by the Equipment Failure Event as soon as possible.

 

10.0 QUALITY MANAGEMENT

10.1 Quality Agreement. The terms contained in the Quality Agreement are
intended to complement the terms of this Agreement, and they shall be
interpreted as complementary to the extent possible. In the event of a conflict
between the terms of the Quality Agreement and the terms of this Agreement, the
terms of this Agreement shall control with respect to business, financial and
legal matters, and the terms of the Quality Agreement shall control with respect
to quality control and quality assurance matters related to the Product
(including, without limitation, manufacturing, testing, storage, release, change
management and validation activities); provided, however, that the inclusion of
a particular term or level of detail in the Quality Agreement where such term or
level of detail is absent from this Agreement shall not be deemed to constitute
a conflict between the two agreements. Only where competing terms in the two
agreements conflict in terms of the principal focus of an express prescription
or prohibition in the agreements shall a conflict between the two agreements be
deemed to exist.

10.2 Non-Compliance of Product. Cadence will be responsible for reviewing batch
documentation for each batch of Product and for providing Baxter with
authorization to ship such Product batch. Cadence has the right to reject, at
the expense of Baxter, Products that

 

18

--------------------------------------------------------------------------------

CONFIDENTIAL

 

deviate from the Product Specifications or Applicable Laws. Cadence or its
designated agent shall review the batch documentation as set forth in the
Quality Agreement and shall give Baxter written notice (a “Deficiency Notice”)
of all claims for Products that deviate from the Product Specifications or
Applicable Laws within [***] ([***]) days after Cadence’s receipt of the final,
Baxter-approved Batch Disposition Certificate for the batch of Product in
question (or, in the case of any defects not reasonably susceptible to discovery
upon receipt of such final, Baxter-approved Batch Disposition Certificate,
within [***] ([***]) days after discovery thereof by Cadence, but in no event
after the expiration date of the Product). Should Cadence fail to provide Baxter
with the Deficiency Notice within the applicable [***] ([***])-day period, then
the Product shall be deemed to have been accepted by Cadence on the [***] day
after Cadence’s receipt of the final, Baxter-approved Batch Disposition
Certificate or discovery of the deficiency, as applicable. Except as set out in
Section 15.2, Baxter shall have no liability for any deviations for which
Cadence has failed to provide notice within the applicable [***]-day period.
Baxter shall use Commercially Reasonable Efforts to replace the non-compliant
Product promptly. Any API consumed in producing non-compliant Product will be
included in the annual yield loss calculation as set forth in Section 8.4.

10.2.1 If Baxter and Cadence do not agree as to whether or not the Product is
non-compliant with the Product Specifications, then the Parties shall agree upon
a specialized laboratory of recognized reputation for the purpose of determining
the results. Any determination by such laboratory shall be final and binding
upon the Parties hereto.

10.2.21 If Baxter and Cadence do not agree as to whether or not the Product is
non-compliant with Applicable Laws, then the dispute shall be resolved in
accordance with Section 16.0 of this Agreement (“Alternative Dispute
Resolution”), provided, however, that if the Parties agree that such dispute
would more appropriately be resolved in accordance with the procedure set forth
in Section 10.2.1, then that procedure will be used, instead.

10.2.3 If the Product is confirmed to be non-compliant with the Product
Specifications, in accordance with Section 10.2.1, or Applicable Laws, in
accordance with Section 10.2.2, as applicable, Baxter shall pay all costs
associated with such analysis, and Cadence shall not be required to pay the
Manufacturing Fee for such Product. If Product is confirmed to be compliant,
Cadence shall pay all costs associated with such analysis, in addition to paying
the Manufacturing Fee for such Product.

10.3 Product Recalls. Cadence shall determine if a Product recall or marketing
withdrawal is required, and shall be responsible for the conduct of any such
recall or marketing withdrawal; provided, however, that Baxter shall reasonably
cooperate with any such action. If a Product recall results from the gross
negligence or intentional misconduct of Baxter, Baxter will promptly replace the
Product and reimburse Cadence for the actual costs associated with any recall or
marketing withdrawal of the Product. Following Baxter’s notice to Cadence that
additional API will be required to replace defective Product, Cadence will
promptly provide to Baxter API necessary for replacement of such Product.
Cadence will provide to Baxter

 

 

*** 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.

19

--------------------------------------------------------------------------------

CONFIDENTIAL

 

appropriate documentation evidencing the actual replacement cost of the API paid
by Cadence to its supplier including duty, freight and testing costs.
Notwithstanding the foregoing, Baxter will pay no more for the additional API
than Cadence’s actual costs for the replacement API, plus duty, freight and
testing costs.

10.4 Product Complaints. Product Complaints shall be handled in accordance with
the Quality Agreement. In general, Baxter shall promptly notify Cadence of any
and all complaints of which Baxter becomes aware relating to any Product, and
shall forward to Cadence’s designated quality representative or such other
individual as Cadence shall designate a copy of any such written complaint
received by Baxter. Cadence shall promptly inform Baxter of any and all
complaints that Cadence receives which implicate Baxter’s manufacturing or other
processes at the Facility. Notification shall be given by telephone, with a
facsimile confirmation immediately following.

10.5 Adverse Events (“AE”). Adverse Events shall be handled in accordance with
the Quality Agreement. With respect to any Product, Baxter shall notify Cadence
in accordance with the timeline set forth in the Quality Agreement following
Baxter’s receipt of written information of an Adverse Event. To the extent an
Adverse Event of which Cadence becomes aware implicates Baxter’s manufacturing
or other processes at the Facility, Cadence shall inform Baxter in accordance
with the timeline set forth in the Quality Agreement of such Adverse Event and
shall disclose to Baxter any information it has regarding that Adverse Event.

10.6 Retained Samples. Baxter shall retain samples from each batch of Products
in accordance with the Quality Agreement.

10.7 Changes to Product Specifications. The Product Specifications may not be
amended, changed or supplemented by Baxter without the prior written consent of
Cadence. Cadence will give Baxter not less than ninety (90) days advanced
written notice of an intention to implement voluntary changes in Product
Specifications initiated by Cadence so that the Parties can collaborate on a
plan to implement any related changes required to meet such changed Product
Specifications in a timely and cost-efficient manner. For Product Specification
changes mandated by Regulating Groups, Baxter shall use Commercially Reasonable
Efforts to expedite such changes upon the request of Cadence. The allocation of
the cost of manufacturing and Facility changes required as a result of a change
in Product Specifications will be determined by agreement of the Parties on a
case-by-case basis as provided in Section 7.4. Baxter will provide Cadence with
all information needed to amend the NDA for the Product and other Regulatory
Submissions as a result of any approved Product Specification change. Baxter
will continue to supply Cadence with Product approved under Cadence’s NDA for
the Product and other Regulatory Submissions until such time as the changed
Product Specifications are permitted by each of the applicable Regulating
Groups, except as the Parties otherwise agree by separate written agreement.

 

20

--------------------------------------------------------------------------------

CONFIDENTIAL

 

10.8 Changes to Drug Product Manufacturing Process. Changes to the Drug Product
Manufacturing Process (as defined below) will ultimately be governed by the
Quality Agreement. Baxter will discuss any proposed changes to the Drug Product
Manufacturing Process with Cadence and obtain approval for any associated change
control plan prior to implementation of any development work to qualify the
change. Baxter will follow its established procedures for changes which are made
to its manufacturing process from Product mix to release and which relate to the
manufacture of the Product (“Drug Product Manufacturing Process”). Baxter will
notify Cadence of all such changes/revisions that require notice based on the
Quality Agreement and Regulatory Documentation as provided to Baxter or such
changes/revisions that could reasonably be expected to have a material effect on
the Product. Baxter will obtain Cadence’s written approval prior to making any
such change or revision. Any such changes in the Drug Product Manufacturing
Process will be done at Baxter’s expense. Baxter will provide Cadence with all
information needed to review and approve any changes and that are necessary to
amend the NDA for the Product and other Regulatory Submissions as a result of
any approved Drug Product Manufacturing Process change. Baxter will continue to
supply Cadence with Product approved under Cadence’s NDA for the Product and
other Regulatory Submissions until such time as the Product manufactured under
the changed process is permitted by each of the applicable Regulating Groups,
except as the Parties otherwise agree by separate written agreement.
Notwithstanding the foregoing, in the event any changes to the Drug Product
Manufacturing Process are requested by Cadence, Baxter shall review the
requested changes and Cadence shall obtain Baxter’s written approval, prior to
the implementation of any such changes. The costs associated with any changes to
the Drug Product Manufacturing Process requested by Cadence shall be the
responsibility of Cadence. All costs associated with any other changes to the
Drug Product Manufacturing Process shall be mutually determined by the Parties.

 

11.0 MARKETING

11.1 General. The Parties will cooperate in a reasonable manner to support and
facilitate the sale of the Product in the Territory and communicate regularly to
facilitate carrying out their respective responsibilities.

 

12.0 REPRESENTATIONS AND WARRANTIES

12.1 Mutual Representations and Warranties. Each Party hereby represents and
warrants to the other Party that, as of the Effective Date (i) this Agreement is
legal and valid and the obligations binding upon such Party are enforceable in
accordance with their terms, subject to bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the rights of creditors generally and
the availability of equitable remedies, (ii) the execution, delivery and
performance of this Agreement does not conflict with any agreement, instrument
or understanding, oral or written, to which such Party may be bound, nor violate
any law or regulation of any court, governmental body or administrative or other
agency within the Territory having jurisdiction over it, and (iii) the Party
owns, controls, or has the right to grant to

 

21

--------------------------------------------------------------------------------

CONFIDENTIAL

 

the other Party the licenses and other rights to use the intellectual property
it authorizes the other Party to use in carrying out the objectives of this
Agreement and the Party is not aware of any restrictions, limitations or
interests superior to the Party’s intellectual property rights which would
prevent the other Party from using such intellectual property in carrying out
the objectives of this Agreement or which would cause the other Party to
infringe the rights of others. During the Term of the Agreement, if a Party
becomes aware of any events or circumstances that are reasonably likely to cause
its representations and warranties to be untrue, the Party will promptly provide
the other Party with written notice of such events or circumstances, including
details reasonably requested by the other Party in order to evaluate the impact
of such events or circumstances on this Agreement.

 

  12.2 Warranties of Cadence.

12.2.1 API. Cadence represents, warrants and covenants that the API, when
delivered to Baxter hereunder, will, to the best of its knowledge after due
inquiry (i) be manufactured, tested, and packaged in accordance with applicable
cGMP regulations and all applicable laws and regulations of the FDA and other
applicable Regulating Groups; (ii) meet the API Specifications; (iii) not be
adulterated or misbranded within the meaning of the FD&C Act or any similar laws
or regulations of applicable Regulating Groups; and (iv) not be an article which
may not be introduced into interstate commerce under the FD&C Act or any similar
laws or regulations of applicable Regulating Groups.

 

  12.2.2  Replacement.

12.2.2.1 In the event of non-acceptance by Baxter of any delivery of API due to
its failure upon inspection or testing by Baxter to meet Cadence’s warranties
set forth in Section 12.2.1, Cadence’s sole obligation and Baxter’s exclusive
remedy will be limited to replacement of the API (subject to the provisions of
this Section).

12.2.2.2 If, however, the failure of API to meet Cadence’s warranties is not
discoverable upon reasonable physical inspection and testing, but is identified
by Baxter after storage and handling by Baxter in accordance with the Product
labeling, then Cadence’s obligation will also include payment to Baxter of the
Manufacturing Fee per unit of Product required to be replaced using
non-defective API.

12.2.2.3 Following notice from Baxter and at the direction of Cadence, Baxter
will return the then remaining defective API or Product that incorporates
defective API or is otherwise non-compliant to Cadence or, at Baxter’s option or
if requested by Cadence, destroy the same or deliver it to a third party
qualified in such waste disposal. Cadence will bear the cost of any return of
API, Product or work-in-process, including freight and handling, and the costs
of API, Product and/or work-in-process destruction, if requested by Cadence.
Cadence will, at its expense, replace defective API as expeditiously as possible
and pay Baxter for Product and work-in-process incorporating defective API
within thirty (30) days of receipt of Baxter’s detailed invoice following
completion of the designated return or destruction hereunder.

 

22

--------------------------------------------------------------------------------

CONFIDENTIAL

 

  12.3 Warranties of Baxter.

12.3.1 General. Baxter represents, warrants and covenants that Product
manufactured under this Agreement, at the time of release at the Facility
(i) will be manufactured, tested, and packaged in accordance with this
Agreement, the Quality Agreement, applicable cGMP regulations and all other
applicable laws and regulations of the FDA and other applicable Regulating
Groups; (ii) will meet the Product Specifications; (iii) will not be adulterated
or misbranded within the meaning of the FD&C Act or any similar laws or
regulations of applicable Regulating Groups; and (iv) will not be an article
which may not be introduced into interstate commerce under the FD&C Act or any
similar laws or regulations of applicable Regulating Groups. Notwithstanding the
foregoing, this warranty will not extend to the API or the Formulation, nor to
Product labeling, and will not apply to the extent Cadence has breached its
warranty under Section 12.2.1.

12.3.2 Facility. At all times during the Term of the Agreement, Baxter shall
(i) perform Baxter’s obligations under this Agreement in compliance with all
Applicable Laws; (ii) use Commercially Reasonable Efforts to protect and
maintain the Cadence Owned Equipment; and (iii) maintain sufficient expertise,
with respect to personnel and equipment, to fulfill the obligations of Baxter
established hereunder.

12.3.3 Product. Baxter represents, warrants and covenants that (i) Baxter or its
Affiliate shall transfer to Cadence good and marketable title to the Products
free from any and all liens, mortgages or encumbrances of any kind; (ii) all
Product manufactured and supplied to Cadence under this Agreement shall have a
shelf life of no less than [***]; and (iii) Baxter shall use Commercially
Reasonable Efforts to supply Product under this Agreement with a shelf life of
no less than [***]. Such shelf life shall be measured against the month of
expiration that is imprinted on the label at the time of manufacture. Baxter
further represents, warrants and covenants that all batches of the Product shall
be made available by Baxter for pick-up by Cadence or its designee promptly. For
purposes of this Section 12.3.3, “date of its release” shall mean the date the
Product is approved by Baxter quality control as evidenced by the issuance of a
certificate of compliance.

12.3.4 Debarred Persons. Baxter covenants that it will not in the performance of
its obligations under this Agreement use the services of any person debarred or
suspended under 21 U.S.C. §335(a) or (b).

12.3.5 Cadence Licensed Intellectual Property. Baxter acknowledges and agrees
that (A) it has been informed that Product is to be made subject to the Cadence
Licensed Intellectual Property, and (B) that it will only manufacture Product
for the benefit of Cadence and its sublicensees.

 

*** 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.

23

--------------------------------------------------------------------------------

CONFIDENTIAL

 

12.3.6 Replacement. Baxter’s sole obligation and Cadence’s exclusive remedy for
breach of Baxter’s warranties set forth in Sections 12.3.1 through 12.3.4, other
than if such breach is caused by the gross negligence or intentional misconduct
of Baxter, will be limited to replacement of the Product and including
reimbursement of Cadence’s actual costs associated with any recall or marketing
withdrawal of the Product. Following Baxter’s notice to Cadence that additional
API will be required to replace defective Product, Cadence will promptly provide
to Baxter API necessary for replacement of such Product. Cadence will provide to
Baxter appropriate documentation evidencing the actual replacement cost of the
API paid by Cadence to its supplier including duty, freight and testing costs.
Any API consumed in producing defective Product will be included in the annual
yield loss calculation as set forth in Section 8.4. Notwithstanding the
foregoing, Baxter will pay no more for the additional API than Cadence’s actual
costs for the replacement API, plus duty, freight and testing costs.

12.4 Limitation of Warranties. NEITHER PARTY MAKES ANY OTHER EXPRESSED OR
IMPLIED WARRANTY EXISTS, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE, AND EACH PARTY EXPRESSLY DISCLAIMS ANY SUCH
WARRANTIES. Except as provided in Article 15.0, or as otherwise expressly stated
in this Agreement, neither Party will be liable to the other Party for any
proximate, indirect, incidental or consequential damages arising from a breach
of warranty under this Agreement.

 

13.0 CONFIDENTIALITY

13.1 Preexisting Confidentiality Agreement. The Parties have previously signed a
Confidential Disclosure Agreement effective April 6, 2006, a copy of which is
attached to this Agreement as Exhibit G, to cover the exchange of confidential
information and materials relating to [***].

13.2 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 the Confidential Disclosure
Agreement.

13.3 Exceptions. In addition to the exceptions set forth in the Confidential
Disclosure Agreement, Cadence may provide a copy of this Agreement and all its
exhibits and amendments to the licensors of the Cadence Licensed Intellectual
Property, Bristol-Myers Squibb Company and SCR Pharmatop; provided, however,
that Cadence will redact all terms related to confidential financial
information, and shall request of such licensors of the Cadence Licensed
Intellectual Property the ability to redact other terms as reasonably requested
to be redacted by Baxter prior to providing such documents to licensors of the
Cadence Licensed Intellectual Property.

 

*** 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.

24

--------------------------------------------------------------------------------

CONFIDENTIAL

 

13.4 Publicity and SEC Filings. Except as set forth in Sections 13.4.1 or 13.4.2
or unless the prior written consent of the other Party is obtained, no Party
shall, except as may be required by law or regulation, in any manner disclose or
advertise or publish or release for publication any statement mentioning the
other Party or information contained in or acquired pursuant to this Agreement,
or the fact that any Party has furnished or contracted to furnish the other
Party the items required by this Agreement, or quote the opinion of any employee
of the other Party. No such notice shall be required and each Party may disclose
any previously disclosed information if the substance of the description of or
reference to this Agreement contained in the proposed filing or disclosure has
been included in any previous filing made by either Party hereunder or otherwise
approved by the other Party. Either Party may communicate to its investors
information to the extent made public by the other Party.

13.4.1 Press Releases. The Parties agree that any press release or other public
announcement of the execution of this Agreement (except for filings included
under Section 13.4.2) shall only be by one or more press releases mutually
agreed to by the Parties. The failure of a Party to return a draft of a press
release with its proposed amendments or modifications to such press release to
the other Party within three (3) business days of such Party’s receipt of such
press release shall be deemed as such Party’s approval of such press release as
received by such Party.

13.4.2 SEC Filings. In the event that Cadence is advised by counsel to file with
the Securities and Exchange Commission or the securities regulators of any state
or other jurisdiction, a registration statement or other disclosure document
which describes or refers to this Agreement under the Securities Act of 1933, as
amended, the Exchange Act, or any other Applicable Law relating to securities
matters, Cadence shall notify Baxter of such intention and shall provide Baxter
with a copy of relevant portions of the proposed filing not less than three
(3) business days prior to such filing (and any revisions to such portions of
the proposed filing a reasonable time prior to the filing thereof), including
any exhibits thereto relating to this Agreement, and shall use reasonable
efforts to obtain confidential treatment of any information concerning this
Agreement that Baxter requests be kept confidential, and shall only disclose
Confidential Information which it is advised by counsel or the Securities and
Exchange Commission is legally required to be disclosed.

13.5 Survival. The obligations under this Article 13 will extend for the longer
of the Term of the Agreement or [***].

 

14.0 INTELLECTUAL PROPERTY

 

  14.1 Ownership of Inventions.

14.1.1 Ownership of Background Intellectual Property Rights. Ownership of
Background Intellectual Property Rights will remain in the Party owning them on
the Effective Date of the Original Agreement.

 

*** 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.

25

--------------------------------------------------------------------------------

CONFIDENTIAL

 

14.1.2 Cadence Ownership. The entire right, title and interest in all
discoveries, inventions and improvements which are conceived or reduced to
practice during the course of the work being performed pursuant to this
Agreement (i) solely by Cadence or its employees, agents or other
representatives; or (ii) by Baxter or its employees, agents or other
representatives (alone or jointly with one or more Cadence employees, agents or
representatives) useful only in connection with the Compound, the Product and/or
the Formulation (the “Cadence Inventions”) will be owned solely by Cadence.

14.1.3 Baxter Ownership. The entire right, title and interest in all
discoveries, inventions and improvements which are conceived or reduced to
practice during the course of work being performed pursuant to this Agreement
solely by Baxter or its employees, agents or other representatives, other than
Cadence Inventions and Joint Inventions (the “Baxter Inventions”) will be owned
solely by Baxter, subject to Sections 14.2.2 and 14.3.

14.1.4 Joint Ownership. Subject to Sections 14.1.2 and 14.1.3, the entire right,
title and interest in all discoveries, inventions and improvements which are
conceived or reduced to practice during the course of the work being performed
pursuant to this Agreement jointly by (i) Cadence or its employees, agents or
other representatives and (ii) Baxter or its employees, agents or other
representatives (the “Joint Inventions”) will be jointly owned by Cadence and
Baxter, each of which will own an undivided one-half (1/2) interest in such
invention, subject to Sections 14.2.2 and 14.3. Each Party will cooperate with
the other in completing any Patent Applications relating to Joint Inventions,
and in executing and delivering any instrument required to assign, convey or
transfer to each Party its undivided one-half (1/2) interest.

14.1.5 Assignment of Ownership Rights. All employees, consultants,
subcontractors and agents performing services for a Party under this Agreement
shall have assigned in writing to such Party all of their right, title and
interest in, to and under any and all discoveries, inventions and improvements
directly related to the Product so as to effectuate the provisions of this
Article 14.

 

  14.2 Reports: Information Developed During Development Plans.

14.2.1 Content of Reports. Baxter will provide to Cadence reports containing the
data, test results, and specifications or procedures for the Product developed
specifically for the Compound and/or the Formulation (“API/Formulation
Specifications”), as described in any Development Plan, which, collectively with
the Baxter Development Deliverables, shall be referred to herein as the
“Reports.” The Reports may also contain references to (i) Baxter standard
operating procedures, specifications, material codes and their specifications,
and other information developed by Baxter prior to the Original Effective Date,
but not including any such procedures, specifications, material codes and their
specifications or other information developed by Baxter in its Grosotto facility
and which is owned or licensed to the licensor of Cadence Licensed Intellectual
Property (“Preexisting Specifications”) that fall within Baxter Background

 

26

--------------------------------------------------------------------------------

CONFIDENTIAL

 

Intellectual Property Rights and (ii) original laboratory notebooks and other
Good Laboratory Practices documentation generated by Baxter or its agents
pursuant to this Agreement or the Original Agreement (“Original Product Data”).

14.2.2 Ownership of Reports and Contents. The Reports, the Original Product Data
solely as it relates to the Product, and the data, test results, and
API/Formulation Specifications therein, will become the property of Cadence and
will be treated as Cadence’s Confidential Information and be subject to the
provisions of Article 13.0 of this Agreement. For the avoidance of doubt, the
Reports, data, test results and API/Formulation Specifications will become the
property of Cadence even if they constitute Baxter Inventions under
Section 14.1.3 or Joint Inventions under Section 14.1.4, subject to the Cadence
Product License granted to Baxter under Section 14.3.1. Preexisting
Specifications, Baxter Background Intellectual Property Rights, as well as
Original Product Data (other than as it relates to the Product), will remain the
property of Baxter and will constitute Baxter’s Confidential Information and be
subject to the provisions of Article 13.0 of this Agreement, subject to the
Baxter License under Section 14.3.2.

14.2.3 Archiving of Reports. Baxter will retain the original Reports and
Original Product Data for archival purposes.

 

  14.3 Licenses.

14.3.1 To Baxter From Cadence. Cadence hereby grants to Baxter a nonexclusive,
royalty-free license, with a right to sublicense solely to a Baxter Affiliate,
to make the Product in the Territory under Cadence Background Intellectual
Property Rights, Cadence Licensed Intellectual Property, Cadence Inventions and
Joint Inventions (the “Cadence Product License”), only to the extent necessary
for Baxter to fulfill Baxter’s obligations under this Agreement. The Cadence
Product License shall be subject and subordinate to the IV APAP Agreement and
the Pharmatop License Agreement. BMS shall be an express third party beneficiary
of Baxter’s obligations under the Cadence Product License that relate to
compliance with the terms and conditions of the IV APAP Agreement with the
express right to enforce the same directly against Baxter. Cadence shall provide
Baxter with the text of any amendment or restatement of either the IV APAP
Agreement or the Pharmatop License Agreement within fourteen (14) days after the
effective date of such amendment or restatement; provided, however, that Cadence
may redact the text to delete confidential information solely to the extent such
confidential information does not alter the scope of either Party’s rights under
this Agreement. The Cadence Product License shall terminate immediately upon the
termination of the sublicense or license from BMS to Cadence with respect to
such right, but Cadence must provide prompt notice of such termination to
Baxter. Cadence shall indemnify Baxter against any claim of infringement,
misappropriation or unauthorized use of Cadence Licensed Intellectual Property
to the extent such claim arises from Baxter’s use of Cadence Licensed
Intellectual Property after termination of the Cadence Product License but
before Baxter received actual notice of such termination.

 

27

--------------------------------------------------------------------------------

CONFIDENTIAL

 

14.3.2 To Cadence From Baxter. Baxter hereby grants to Cadence (a) a
nonexclusive, royalty-free, license in the Territory, with a right to sublicense
to Cadence Affiliates, licensors of Cadence Licensed Intellectual Property and,
with Baxter’s prior written consent, not to be unreasonably withheld,
conditioned or delayed, Cadence sublicensees, to make, have made, use, sell,
offer for sell and import the Product under Baxter Background Intellectual
Property, only to the extent that such Baxter Background Intellectual Property
is actually used in the manufacture of the Product under this Agreement; and
(b) an exclusive, royalty-free, worldwide license, with a right to sublicense to
Cadence Affiliates, licensors of Cadence Licensed Intellectual Property and,
with Baxter’s prior written consent, not to be unreasonably withheld,
conditioned or delayed, Cadence sublicensees, to make, have made, use, sell,
offer for sale and import the Product under all Baxter Inventions and Baxter’s
interest in all Joint Inventions, each only to the extent actually used in
connection with the Compound, the Product and/or the Formulation (collectively
(a) and (b) of this Section 14.3.2 shall be known as the “Baxter License”). The
license set forth in subsection (b) of the immediately preceding sentence shall
be exclusive, even as to Baxter, only to the extent such Baxter Inventions and
Joint Inventions are actually used in connection with the Compound, the Product
and/or the Formulation. Baxter shall retain full rights to exploit such Baxter
Inventions and Joint Inventions (i) for the purpose of performing its
obligations under this Agreement and (ii) to the extent such Baxter Inventions
and Joint Inventions are not used in connection with the Compound, the Product
and/or the Formulation. The license set forth in subsection (b) hereof shall
become nonexclusive, and all sublicenses under the Baxter License (except for
sublicenses to Cadence Affiliates and licensors of Cadence Licensed Intellectual
Property) shall terminate, immediately upon the termination of this Agreement,
the IV APAP Agreement or the Pharmatop License Agreement. Notwithstanding the
foregoing, the Baxter License shall survive if this Agreement is terminated by
Cadence pursuant to Sections 19.2.1.1 or 19.2.1.2.

14.3.3 Pre-Existing Specifications and Original Product Data. Baxter will
(i) make Preexisting Specifications referenced in the Reports and Original
Product Data available to Regulating Groups as directed by such Regulating
Groups and as provided in Article 5.0, (ii) upon Cadence’s reasonable request,
provide copies of Preexisting Specifications referenced in the Reports and
relevant portions of Original Product Data (but excluding data or information
which is unrelated to the Product) to Cadence for Cadence’s use in Regulatory
Submissions outside the United States if (a) pursuant to Article 5.0 such
information is reasonably required for Cadence’s Regulatory Submission for the
Product in the Territory and (b) Cadence agrees to treat all such information
(other than as it relates to the Product and which is owned by Cadence under
this Agreement) as Baxter’s Confidential Information under the provisions of
Article 13.0.

 

  14.4 Patents.

14.4.1 Patent Filings on Solely-Owned Inventions. Each Party will, in its sole
discretion, prepare, file, prosecute and maintain Patent Applications for
inventions as to which it has sole ownership under Sections 14.1.2 and 14.1.3
above and will be responsible for related

 

28

--------------------------------------------------------------------------------

CONFIDENTIAL

 

interference proceedings. Each Party will endeavor to ensure whenever possible
that claims are filed and prosecuted in such Patent Applications specifically
directed to the Field. At least thirty (30) days prior to the contemplated
filing date, each Party responsible for preparing a Patent Application will
submit to the other Party a substantially completed draft of such Patent
Application. Each Party will bear all costs under this Section for inventions as
to which it has sole ownership. Each Party will cooperate with the other Party’s
perfection of filings.

14.4.2 Joint Inventions and Patent Filings. With respect to all Patent
Applications on Joint Inventions (“Joint Patent Applications”), Baxter will
prepare and file Joint Patent Applications and will diligently prosecute and
maintain same. At least thirty (30) days prior to the contemplated filing,
Baxter will submit a substantially completed draft of all such Joint Patent
Applications to Cadence for its approval. As to claims contained in any Joint
Patent Application directed to the Field, Cadence shall have the right to
comment and to have any such reasonable comments incorporated into the claims
included in such Joint Patent Application prior to filing. If the Parties are
unable to resolve any differences regarding the claim language directed to the
Field, the matter will be handled pursuant to Section 16.0 of this Agreement. As
to claims contained in any Joint Patent Applications directed outside the Field,
Baxter will confer with Cadence and shall in good faith consider adopting
Cadence’s suggestions regarding the prosecution of such claims included in the
Joint Patent Applications after taking into account the interests of Cadence and
its licensors and sublicensees under the Joint Patent Applications. The Parties
will share equally the costs of the preparation, filing, prosecution and
maintenance of any Joint Patent Applications and will share equally the costs of
any related interference proceedings. Baxter will copy Cadence with any official
actions and submissions in such Joint Patent Applications. If either Party
elects not to pay its portion of any shared costs for a Joint Patent
Application, the other Party may proceed with such Joint Patent Application in
its own name and at its sole expense, in which case the Party electing not to
pay its share of costs will assign its entire right, title and interest in and
to such Joint Patent Application to the other Party. Any such election and
related assignment shall be on a jurisdiction-by-jurisdiction basis.

14.4.3 Public Disclosure. Each Party agrees to delay any public disclosure of
the subject matter of any Patent Application until after filing of such Patent
Application, but in no event less than one hundred eighty (180) days after
notice to the other Party of the intent to disclose such subject matter.

 

15.0 INDEMNIFICATION

15.1 Indemnification By Cadence. Cadence, on its own behalf, and on behalf of
its Affiliates, will defend, indemnify and hold harmless Baxter and its
Affiliates, and their respective directors, officers, shareholders, employees
and agents, and each of their successors and permitted assigns, from and against
any and all third party claims, actions, causes of action, liabilities, losses,
damages, costs or expenses, and resulting settlements, awards or judgments,
including reasonable attorneys’ fees (“Damages”), which arise out of or relate
to (i) the failure of API provided by Cadence hereunder to meet the warranties
set forth in Section 12.2.1; (ii) a

 

29

--------------------------------------------------------------------------------

breach by Cadence of any of its other representations, warranties, covenants,
agreements or obligations under this Agreement; (iii) the negligence or willful
misconduct of Cadence in the performance or nonperformance of any of Cadence’s
obligations under this Agreement; (iv) personal injury or property damage caused
by the Product at any time before or after first commercial sale (except to the
extent covered by Baxter’s indemnification obligations set forth in
Section 15.2); or (v) any Patent, trade name, trademark, service mark or
copyright infringement, or any claim or judgment of such infringement thereof,
relating to the Formulation or API supplied by Cadence, or to the Product
(except to the extent covered by Baxter’s indemnification obligations pursuant
to Section 15.2), or the intellectual property licensed to Baxter under
Section 14.3.1, or the use or printing of any trademark(s), trade names or
copyrightable materials of Cadence or its Affiliates, as authorized by this
Agreement.

15.2 Indemnification By Baxter. Baxter, on its own behalf, and on behalf of its
Affiliates, will defend, indemnify and hold harmless Cadence and its Affiliates,
and their respective directors, officers, shareholders, employees and agents,
and each of their successors and permitted assigns, from and against any and all
Damages which arise out of or relate to (i) the failure of Product provided by
Baxter hereunder to meet the warranties set forth in Section 12.3; (ii) a breach
by Baxter of any of its other representations, warranties, covenants, agreements
or obligations under this Agreement; (iii) the negligence or willful misconduct
of Baxter in manufacturing Product or in the performance or nonperformance of
any of Baxter’s obligations under this Agreement; or (iv) any Patent, trade
name, trademark, service mark or copyright infringement, or any claim or
judgment of such infringement thereof, relating to the manufacturing processes
or equipment used by Baxter to manufacture the Product (excluding the Cadence
Owned Equipment and further except to the extent covered by Cadence’s
indemnification obligations pursuant to Section 15.1), or the intellectual
property licensed to Cadence under Section 14.3.2, or the use of any
trademark(s), trade names or copyrightable materials of Baxter or its
Affiliates, as authorized by this Agreement.

15.3 Notice; Procedure. The indemnified Party will give the indemnifying Party
prompt written notice of any claim, proceeding or suit for which it seeks
indemnification under Sections 15.1 or 15.2 (hereafter, a “Matter”). The
indemnifying Party will have fifteen (15) business days after receipt of the
indemnified Party’s notice to notify the indemnified Party that the indemnifying
Party elects to conduct and control the defense of such Matter. If the
indemnifying Party does not give the foregoing notice, the indemnified Party
will have the right to defend or settle such Matter in the exercise of its
exclusive discretion, and the indemnifying Party will, upon request from the
indemnified Party, promptly pay to it in accordance with Sections 15.1 or 15.2,
as the case may be, the amount of any Damages resulting from such Matter. Except
in the event of a conflict of interest between the indemnified Party and the
indemnifying Party, if the indemnifying Party gives the foregoing notice, the
indemnifying Party will have the obligation to undertake, conduct and control,
through counsel of its own choosing and at the sole expense of the indemnifying
Party, the conduct and control of the defense and any settlement of such Matter
and the indemnified Party will cooperate with the indemnifying Party in
connection therewith; provided, that: (a) the indemnifying Party will not
thereby permit any

 

30

--------------------------------------------------------------------------------

CONFIDENTIAL

 

lien, encumbrance or other adverse charge upon any asset of the indemnified
Party; (b) the indemnifying Party will permit the indemnified Party to
participate in the defense or settlement through counsel chosen by the
indemnified Party, but the fees and expenses of such counsel will be borne by
the indemnified Party except as provided in clause (c) below; (c) the
indemnifying Party will agree to reimburse promptly under Sections 15.1 or 15.2,
as the case may be, the indemnified Party for the full amount of any
liabilities, losses, damages, costs and expenses, including reasonable attorney”
fees, resulting from the Matter, except for any fees and expenses of counsel for
such indemnified Party incurred after the assumption of the conduct and control
of such Matter by the indemnifying Party; and (d) the indemnifying Party will
not settle or otherwise resolve any Matter without prior notice to the
indemnified Party and the consent of the indemnified Party (which consent shall
not be unreasonably withheld, conditioned or delayed). So long as the
indemnifying Party is contesting any Matter in good faith, the indemnified Party
will not pay or settle any such Matter; except that such indemnified Party will
have the right to pay or settle any such Matter but in so doing such indemnified
Party will be deemed to have waived any right to indemnity therefore by the
indemnifying Party under Section 15.1 or 15.2, as the case may be.

In the event that the indemnified Party reasonably believes that there exists a
substantial conflict of interest with the indemnifying Party, then the
indemnified Party will give the indemnifying Party notice of such conflict of
interest and the indemnifying Party will not have the right or obligation to
undertake, conduct and control the defense or settlement of any Matter and the
indemnified Party will have the right to defend or settle such Matter in the
exercise of its exclusive discretion; provided, that the indemnifying Party
(a) will not thereby permit any lien, encumbrance or other adverse charge upon
any asset of the indemnified Party; and (b) will not settle or otherwise resolve
any Matter without prior notice to the indemnified Party and the consent of the
indemnified Party (which consent shall not be unreasonably withheld, conditioned
or delayed). In such event, the indemnifying Party will, upon request from the
indemnified Party, promptly pay to it in accordance with Section 15.1 or 15.2,
as the case may be, the amount of any liabilities, losses, damages and expenses,
including reasonable attorneys’ fees, resulting from such claim, proceeding or
suit.

15.4 No Claim for Losses. In no event will either Party or their respective
Affiliates be liable for any special, indirect, incidental or consequential
damages arising out of this Agreement.

15.5 Insurance. Baxter is self-insured for the types of liabilities for which
indemnification by Baxter is likely to arise under Section 15.2. Prior to
commercial launch of the Product, Cadence will obtain and keep in force at its
sole expense during the Term of the Agreement, the following insurance covering
Cadence and its agents, employees, representatives and subcontractors:
(i) Comprehensive or Commercial General Liability in an amount not less than
[***] dollars ($[***]) each occurrence combined single limit for bodily injury
and property damage for products completed operations (including vendors
coverage), blanket contractual liability, personal injury and independent
contractors protective insurance, which name Baxter as an additional insured and
require at least thirty (30) days written notice to Baxter prior to any
cancellation, non-renewal or material change in coverage. Cadence will provide
Baxter with a certificate of insurance evidencing compliance with this insurance
obligation.

 

*** 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.

31

--------------------------------------------------------------------------------

CONFIDENTIAL

 

16.0 ALTERNATE DISPUTE RESOLUTION

The Parties will attempt to settle any claim or controversy arising out of this
Agreement through good faith negotiations and in the spirit of mutual
cooperation. Any issues that cannot be resolved by the Senior Executives as set
forth in Section 3.2 or any other issues between the Parties will be referred to
the Chief Executive Officer of Cadence and the General Manager of Baxter’s
BioPharma Solutions business (the “Executive Officers”) to resolve the dispute.
In the event such Executive Officers cannot resolve the dispute, the dispute
will be mediated by a mutually acceptable mediator to be chosen by the Parties
within thirty (30) days after written notice by the Party demanding mediation.
Neither Party may unreasonably withhold consent of the selection of the mediator
and the Parties will share the costs of the mediation equally. The Parties may
agree to replace mediation with some other form of Alternative Dispute
Resolution “ADR”), such as neutral fact-finding or a mini-trial. Any dispute
which cannot be resolved by the Parties through mediation or another form of ADR
within ninety (90) days of the date of the initial written demand for mediation
may then, and only then, be submitted to the Federal or state courts, as
appropriate, for resolution. Nothing in this Section will prevent either Party
from resorting to judicial process if (i) good faith efforts to resolve the
dispute under these procedures have been unsuccessful or (ii) injunctive relief
from a court is necessary to prevent serious and irreparable injury to one Party
or to others.

 

17.0 FORCE MAJEURE

17.1 General. Neither Party will be liable, or deemed in breach of its
obligations under this Agreement, for a delay in performance or nonperformance
as the result of an act of governmental authority, war, acts of terrorism, riot,
fire, explosion, hurricane, flood, strike, lockout, or injunction; inability to
obtain fuel, power, raw Materials, labor, containers, plastic film or
components, or transportation facilities; accident, breakage of machinery or
apparatus solely to the extent not caused by such Party’s negligence or willful
misconduct; or any other cause beyond its reasonable control preventing the
manufacture, shipment, or acceptance, of the Product, or any component thereof
(“Force Majeure”), provided, that the affected Party (i) promptly notifies the
other Party of the Force Majeure event as provided in Section 17.2, (ii) uses
reasonable diligence and efforts to remedy the situation if reasonably capable
of being remedied by that Party, (iii) continues performance of its obligations
to the extent the Force Majeure event permits, and (iv) resumes performance of
its obligations delayed by Force Majeure events as soon as possible. This
requirement that any Force Majeure be remedied with all reasonable dispatch will
not require settlement of strikes or labor controversies by acceding to the
demands of the opposing parties in such strikes or labor controversies.

 

32

--------------------------------------------------------------------------------

CONFIDENTIAL

 

17.2 Notice. A Party affected by Force Majeure will promptly notify the other
explaining the nature, details, and expected duration thereof. The affected
Party will advise the other Party from time to time as to progress in remedying
the situation and as to the time when the affected Party expects to resume its
obligations and will notify the other Party as to the expiration of any Force
Majeure as soon as the affected Party knows the date thereof. If a Party
anticipates that a Force Majeure is reasonably likely to occur, that Party will
notify the other Party as soon as practicable, explaining the nature, details,
and expected duration thereof.

 

18.0 RELATIONSHIP OF THE PARTIES

It is expressly acknowledged and agreed that Baxter and Cadence will be
independent contractors and that the relationship between the two Parties will
not constitute a partnership, joint venture or agency. Neither Party, nor its
agents or employees, will be deemed agents or representatives of the other
Party. Neither Party will have the right to enter into any contracts or
commitments in the name of or on behalf of the other Party, without the prior
written consent of the other Party to do so. Nothing herein will be construed as
granting any license or right under any Patent or trademark right of either
Party, by implication or otherwise, to the other except as expressly provided
herein.

 

19.0 TERM AND TERMINATION

19.1 Term and Expiration. This Agreement will be effective as of the Effective
Date and will terminate on November 1, 2015 (“Initial Term”), unless terminated
earlier as herein provided or extended as provided in Section 19.1.2 (“Term of
the Agreement”).

19.1.2 Automatic Renewal. Upon expiration of the Initial Term, this Agreement
will automatically renew thereafter for consecutive one (1) year terms on each
successive annual anniversary of the Contract Year unless either Party, by not
less than two (2) years prior written notice to the other Party, signifies by
such notice its intention to terminate this Agreement upon the expiration of the
applicable Contract Year. By way of clarification, if either Party desires that
this Agreement terminate at the end of the Initial Term, the Party must give
written notice before the first day of the fourth Contract Year.

 

  19.2 Early Termination

19.2.1 Termination by Either Party. Either Party may terminate this Agreement as
follows:

19.2.1.1 effective ninety (90) days after written notice given by the
non-breaching Party of a material breach of this Agreement by the other Party,
if such breach is not cured within ninety (90) days of receipt of such notice
containing details of such breach (or such additional time as is reasonably
necessary to cure such breach, provided, the breaching Party has commenced a
cure within the ninety (90) day period and is diligently pursuing completion of
such cure); or

 

33

--------------------------------------------------------------------------------

CONFIDENTIAL

 

19.2.1.2 effective immediately upon written notice given by the non-bankrupt
Party, if the other Party files a petition in bankruptcy, or is adjudicated a
bankrupt, becomes insolvent, makes an assignment for the benefit of creditors,
is voluntarily or involuntarily dissolved, or has a receiver, trustee or other
court officer appointed for its property.

19.2.2 Termination by Cadence. In the event that Baxter does not agree to the
assignment by Cadence of this Agreement or any of Cadence’s rights or
obligations hereunder to a competitor (as such term is defined in
Section 23.1.3, below) of Baxter, Cadence may terminate this Agreement,
effective thirty (30) days after giving written notice to Baxter.

 

20.0 EFFECTS OF TERMINATION

20.1 Payments. Termination will not relieve or release either Party from making
any payments which may be due and owing under the terms of this Agreement.

20.2 Non-cancelable Costs and Expenses. Upon termination of this Agreement,
except by Cadence as a result of a breach by Baxter under Section 19.2.1.1 or
19.2.1.2, Cadence shall reimburse Baxter for all Materials ordered prior to
termination and not cancelable at no cost to Baxter.

20.3 Disposal of API or Product. Upon termination of this Agreement, Baxter will
promptly return all then remaining API to Cadence, or if requested by Cadence
and at Baxter’s option, destroy such API or deliver it for destruction to a
third party qualified in such waste disposal. Return or destruction of API will
be at the other Party’s expense if termination is initiated by a Party pursuant
to Sections 19.2.1.1 through 19.2.1.2 due to an act or omission of such other
Party. Product shall be returned to Cadence promptly at Cadence’s expense and
Cadence shall take delivery of and pay for all undelivered Products that are
manufactured and/or packaged pursuant to a Firm Order, at the price in effect at
the time the Firm Order was placed; provided, that no such payment shall be due
from Cadence if this Agreement is terminated by Cadence pursuant to
Section 19.2.1.1 or 19.2.1.2, including, but not limited to, termination for
Baxter’s failure to provide sufficient quantities Products in accordance with
the Product Specifications and cGMPs; or failure to provide such Products in a
timely manner. If Cadence is responsible for the expense of disposition of API,
Product, or work-in-process, Cadence will pay Baxter all reasonable amounts due
Baxter under this Section within thirty (30) days of receipt of Baxter’s
detailed invoice following completion of the designated return or destruction.

20.4 De-Installation Costs of Cadence Owned Equipment. Cadence shall be entitled
to physical possession of the Cadence Owned Equipment. Cadence agrees to
reimburse Baxter for all reasonable costs incurred in the de-installation of
Cadence Owned Equipment which includes without limitation the removal, crating
and transportation or shipping of Cadence Owned Equipment from the Facility to a
location specified by Cadence.

 

34

--------------------------------------------------------------------------------

CONFIDENTIAL

 

20.5 Restoration Costs of the Facility. Cadence agrees to reimburse Baxter for
all reasonable costs incurred in the restoration of the Facility to its
pre-installation condition, as set forth in Section 20.6, including the repair
of any damage to the Facility caused by or resulting from the removal of the
Cadence Owned Equipment, despite the exercise of reasonable care; provided,
however, that Cadence shall not be liable for any such restoration costs with
respect to any changes made to the Facility that Baxter reasonably agrees are
usable by Baxter at the time of removal of the Cadence Owned Equipment.

20.6 De-installation, Removal and Restoration Activities. The de-installation,
removal and restoration activities shall be conducted in a manner that is not
unreasonably disruptive to, and does not impose unreasonable burdens on Baxter
or its operations at the Facility. Baxter shall provide Cadence with a written
estimate of the cost of (i) such disassembly, crating and removal (ii) the
disconnection of any and all connections to the Cadence Owned Equipment
including without limitation electrical, air piping, conduits, dust collecting
ducts, in a manner which preserves in all material aspects the integrity of the
structures and fixtures of the Facility, and (iii) the repair of any damage to
the Facility, which despite the exercise of reasonable care, was caused by or
resulted from the removal of the machinery, equipment and any other fixed
assets. Cadence shall be responsible for arranging for all transportation and
shipping of the Cadence Owned Equipment being transferred from Facility to
Cadence’s location, including the timely application in its own name of any
required licenses, permits or any other governmental authorization required to
transfer the Cadence Owned Equipment.

20.7 Technology Transfer. Upon the request of Cadence at any time during the
Term of the Agreement, Baxter shall cooperate in the technology transfer of the
manufacture of the Products to a third-party supplier/manufacturer selected by
Cadence in its sole discretion. In furtherance of the technology transfer,
Baxter shall make its employees and other internal resources reasonably
available to Cadence and the designated third-party supplier/manufacturer and
provide copies of all technology, documents, data and other information solely
related to the Cadence Product License and the Baxter License. Any such
third-party supplier/ manufacturer that Cadence may designate to manufacture the
Products shall be required to sign a customary and appropriate confidentiality
agreement with Baxter with respect to the nondisclosure and the appropriate and
limited use of any Baxter Confidential Information transferred hereunder. With
respect to all documents, data and other information provided in connection with
this Section 20.7, (i) Baxter shall be responsible for the cost of providing a
single copy only; and (ii) in addition to paper and other tangible copies,
Baxter shall, upon Cadence’s request, also provide to Cadence and/or the
third-party supplier/manufacturer electronic copies of such documents, data and
other information, provided, that Baxter or its Affiliates have electronic
copies thereof, and provided, further, that Baxter shall have no obligation to
reformat or otherwise alter or modify any such electronic materials.
Notwithstanding the foregoing, this Section 20.7 shall not be

 

35

--------------------------------------------------------------------------------

CONFIDENTIAL

 

construed to give any other manufacturer, whether or not a competitor of Baxter,
access to the Facility, information in Baxter’s Drug Master File [***], or right
of reference to the Drug Master File. Cadence shall reimburse Baxter for its
reasonable costs associated with the transfer of technology contemplated by this
Section 20.7. At the time of the requested technology transfer, Cadence and
Baxter shall discuss the feasibility and costs associated with Baxter providing
to Cadence, in connection with such technology transfer, access to Baxter
employees or consultants to facilitate the technology transfer.

20.8 Baxter Non-Compete Obligation. Baxter hereby agrees that neither it nor any
of its Affiliates shall develop or commercially produce for itself or for any
Third Party any intravenous formulation of product containing the Compound for
distribution or sale in the Territory during the Initial Term and any renewals
or extensions of this Agreement.

20.9 Survival. Expiration or termination of the Agreement will not relieve the
Parties of any obligation accruing prior to such expiration or termination, and
the provisions of Sections 12.2 (Warranties of Cadence), 12.3 (Warranties of
Baxter), 5.1 (Product Registration Application Ownership), and Articles 13.0
(Confidentiality), 14.0 (Intellectual Property), 15.0 (Indemnification), 20.0
(Effects of Termination), 21.0 (Notices), 22.0 (Export), and 23.0
(Miscellaneous) will survive the expiration or termination of the Agreement. Any
expiration or termination of this Agreement will be without prejudice to the
rights of either Party against the other accrued or accruing under this
Agreement prior to expiration or termination.

 

21.0 NOTICES

All notices or other communications which are required or permitted under this
Agreement will be in writing and deemed delivered at the time they are
personally delivered, or on the business day next following the date of
confirmed transmission when sent by facsimile, or two (2) business days after
being sent by a nationally recognized overnight courier, and addressed as
follows:

If to Baxter:

Baxter Healthcare Corporation

BioPharma Solutions

25212 West Illinois Route 120

Round Lake, Illinois 60073

Attention: General Manager

Fax No.: 847-270-3410

With a copy to:

Baxter Healthcare Corporation

One Baxter Parkway

Deerfield, Illinois 60015

Attention: General Counsel

 

*** 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.

36

--------------------------------------------------------------------------------

CONFIDENTIAL

 

Fax No.: 847-948-2450

If to Cadence:

Cadence Pharmaceuticals, Inc.

12481 High Bluff Drive, Suite 200

San Diego, CA 92130

Attention: Chief Commercial Officer

Fax No: 858-436-1401

With a copy to:

Cadence Pharmaceuticals, Inc.

12481 High Bluff Drive, Suite 200

San Diego, CA 92130

Attention: General Counsel

Fax No: 858-436-8510

 

22.0 EXPORT

Each Party will adhere to the United States Export Administration Laws and
Regulations and will not export or re-export any technical data or Information
received from the disclosing Party or the direct product of such technical data
or Information to any proscribed country listed in the United States Export
Administration Regulations, unless properly authorized by the United States
Government.

 

23.0 MISCELLANEOUS

 

  23.1 Binding Effect; Assignment.

23.1.1 This Agreement will be binding upon and inure to the benefit of the
Parties and their successors and permitted assigns.

23.1.2 Baxter may not assign this Agreement or any of its rights or obligations
hereunder except with the written consent of Cadence, such consent not to be
unreasonably withheld; provided, however, that Baxter may arrange for
subcontractors to perform specific testing services arising under this Agreement
without the consent of Cadence; provided, further, that Baxter shall provide
advance notice of the name and function of any such subcontractor and shall
ensure such subcontractor’s adherence to the terms of this Agreement, including,
but not limited to, the obligations of confidentiality set forth in
Section 13.0.

23.1.3 Cadence may assign this Agreement or any of its rights or obligations
hereunder, except to a competitor of Baxter, without approval from Baxter;
provided, however, that Cadence shall give prior written notice of any
assignment to Baxter, any assignee shall covenant in writing with Baxter to be
bound by the terms of this Agreement and Cadence shall remain liable hereunder.
For the purposes of this Section 23.1.3, “competitor” means [***].

 

*** 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.

37

--------------------------------------------------------------------------------

CONFIDENTIAL

 

23.1.4 Notwithstanding the foregoing provisions of this Section 23.1, either
Party may assign this Agreement to any of its Affiliates or to a successor to,
purchaser or licensee of all or substantially all of its business, provided,
that such assignee agrees in writing to be bound hereunder. For purposes of the
foregoing, the phrase “all or substantially all of its business” shall mean,
with respect to Cadence, the business of Cadence relating to the Product and not
necessarily any other products to which Cadence may have rights.

23.2 Entire Agreement. This Agreement, together with its Exhibits (including
without limitation the Confidential Disclosure Agreement) contains the entire
agreement between the Parties relating to the subject matter hereof and all
prior written and verbal proposals, discussions, writings, and other
understandings, by and between the Parties and relating to the subject matter,
are superseded hereby, including the LOI. None of the terms of this Agreement
will be deemed to be waived by either Party or amended, unless such waiver or
amendment is in writing executed by both Parties and such writing recites
specifically that it is a waiver of or an amendment to the terms of this
Agreement.

23.3 Governing Law. This Agreement will be deemed to have been entered into in
the State of New York and its interpretation and construction and the remedies
for its enforcement or breach are to be applied pursuant to and in accordance
with the laws of the State of New York without regard to the United Nations
Convention on Contracts for the International Sale of Goods and without giving
effect to any choice of laws rule that would cause the application of the laws
of any jurisdiction other than the internal laws of the State of New York, to
the rights and duties of the Parties.

23.4 Severability. In the event that any one or more of the provisions contained
in this Agreement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein will not in any way be affected or impaired thereby, unless the
absence of the invalidated provision(s) adversely affect the substantive rights
of the Parties. The Parties agree to replace any invalid provision or parts
thereof by new provision(s) which closely approximate the economic and
proprietary results intended by the Parties.

23.5 Waiver. The waiver by either Party hereto of any right hereunder or of a
material breach by the other Party will not be deemed a waiver of any other
right hereunder or of any other material breach by said other Party whether of a
similar nature or otherwise.

23.6 Review with Counsel. Each Party agrees that it has had the opportunity to
review this Agreement with its legal counsel. Accordingly, the rule of
construction that any ambiguity in this Agreement is to be construed against the
drafting Party will not apply.

 

 

38

--------------------------------------------------------------------------------

CONFIDENTIAL

 

23.7 Counterparts. This Agreement may be executed in two counterparts, by
original or facsimile signature, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.

[Remainder of page intentionally left blank.]

 

39

--------------------------------------------------------------------------------

CONFIDENTIAL

 

IN WITNESS WHEREOF, the Parties have executed this Agreement by their duly
authorized representatives as of the date first set forth above.

 

CADENCE PHARMACEUTICALS, INC.       BAXTER HEALTHCARE CORPORATION By:  

/s/ Theodore R. Schroeder

    By:  

/s/ Brik V. Eyre

Name:   Theodore R. Schroeder     Name:   Brik V. Eyre Title:   President and
Chief Executive Officer     Title:   General Manager Date:   January 28, 2011  
  Date:   January 28, 2011

 

40

--------------------------------------------------------------------------------

EXHIBIT A

PRODUCT SPECIFICATIONS

I. DESCRIPTION

The drug product is a [***] formulation of acetaminophen intended for
intravenous infusion with the composition described in Table 1.

Table 1: Each 100mL contains Composition of Acetaminophen, Injection for
Intravenous Use.

 

Component

  

Unit Formula

  

Quality Standard

[***]    [***]    [***] [***]    [***]    [***] [***]    [***]    [***] [***]   
[***]    [***] [***]    [***]    [***] [***]    [***]    [***] [***]    [***]   
[***] [***]    [***]    [***]

II. MANUFACTURING METHOD (the “Formulation Specifications”)

The Product will be manufactured according to and will meet the specification of
the approved NDA 22-450.

The method of formulation is also described in Baxter Document [***] and other
documents referenced therein.

The Product will be sterilized consistently to the agreement Baxter has with the
FDA regarding [***] as described in Baxter DMF [***].

The Product shelf life specifications are provided in Table 2. For certain
parameters at time of release the drug product will meet tighter limits provided
in Table 3.

 

*** 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.

 

 

--------------------------------------------------------------------------------

Table 2: Regulatory (Shelf Life) Specification for the Product

 

Attribute

  

Test

  

Reference

  

Acceptance Criteria

[***]

   [***]    [***]    [***]

[***]

   [***]    [***]    [***]

[***]

   [***]    [***]    [***]

[***]

         [***]

[***]

   [***]    [***]    [***]

[***]

         [***]

[***]

         [***]

[***]

   [***]    [***]    [***]

[***]

         [***]

[***]

   [***]    [***]    [***]

[***]

   [***]    [***]    [***]

[***]

   [***]    [***]    [***]

[***]

   [***]    [***]    [***]

[***]

   [***]    [***]    [***]

[***]

   [***]    [***]    [***]

[***]

   [***]    [***]    [***]

[***]

   [***]       [***]

[***]

   [***]    [***]    [***]

Table 3: In-house Limits at Time of Release for the Product

 

Attribute

  

Test

  

Reference

  

Acceptance Criteria

[***]

   [***]    [***]    [***]

[***]

         [***]

[***]

         [***]

[***]

   [***]    [***]    [***]

[***]

         [***]

[***]

   [***]    [***]    [***]

[***]

   [***]    [***]    [***]

 

*** 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.

 

--------------------------------------------------------------------------------

III. CONTAINER CLOSURE SYSTEM (the “Container”)

Acetaminophen, injection for intravenous use 1,000 mg/100 mL (10 mg/mL) is
packaged in [***]. The details of the container closure system are provided in
Table 4. The vials will be labeled with a hanger style label. The content of the
label will be as approved in NDA 22-450.

Table 4: Container Closure System

 

Component

  

Material

  

Supplier

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

IV. PACKAGING

Twenty-four vials will be packaged in a carton. The carton will be labeled
according to the approved NDA 22-450 and contain one package insert with wording
approved in NDA 22-450.

 

*** 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.

--------------------------------------------------------------------------------

EXHIBIT B

API SPECIFICATIONS

NDA 22-450 Specification Limits for Acetaminophen

 

TEST

  

TEST METHOD

  

LIMITS

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

 

*** 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.

--------------------------------------------------------------------------------

EXHIBIT C

MINIMUM BATCH SIZE AND MANUFACTURING FEE

 

A. Minimum Batch Size: As of the Effective Date, the “Minimum Batch Size” for
the Product is [***] vials.

 

B. Manufacturing Fee: The “Manufacturing Fee” for the Product shall be as set
forth below:

 

[***]

    

[***]

    

[***]

  

[***]

  

[***]

  

[***]

[***]

   [***]

[***]

   [***]    [***]    [***]    [***]

[***]

   [***]    [***]    [***]    [***]

[***]

   [***]    [***]    [***]    [***]

[***]

   [***]    [***]    [***]    [***]

[***]

   [***]    [***]    [***]    [***]

[***]

            [***]            

 

*** 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.

--------------------------------------------------------------------------------

EXHIBIT D

COST OF API AND

METHODOLOGY FOR CALCULATING MANUFACTURING YIELD LOSSES

 

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

 

*** 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.

--------------------------------------------------------------------------------

EXHIBIT E

BAXTER OWNED EQUIPMENT

[***]

 

*** 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.

--------------------------------------------------------------------------------

EXHIBIT F

CADENCE OWNED EQUIPMENT

The following list details the Cadence Owned Equipment as of the Effective Date.
Cadence may amend this list from time to time by providing written notice to
Baxter as follows:

Baxter Healthcare Corporation

BioPharma Solutions

25212 West Illinois Route 120

Round Lake, Illinois 60073

Attention: General Manager

Fax No.:    847-270-3410

 

[***]

  

[***]

  

[***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

[***]

   [***]    [***]

 

*** 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.

--------------------------------------------------------------------------------

[***]

   [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]
   [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]    [***]
   [***]    [***]    [***]    [***]    [***]    [***]

    [***] [***]

   [***]

 

*** 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.

--------------------------------------------------------------------------------

EXHIBIT G

CONFIDENTIAL DISCLOSURE AGREEMENT

[***]

 

*** 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.

--------------------------------------------------------------------------------

EXHIBIT H

DEVELOPMENT PLAN TEMPLATE

 

 

 

DEVELOPMENT PLAN #[    ]

DESCRIPTION: [Insert purpose of Development Plan]

DATE:

Once executed, this Development Plan # [    ], shall be incorporated by
reference as part of the Amended & Restated Development & Supply Agreement
between Cadence Pharmaceuticals, Inc. and Baxter Healthcare Corporation dated
January [    ], 2011 (the “Agreement”).

 

APPROVALS

 

CADENCE APPROVALS     BAXTER APPROVALS

 

    (Signature/Date)    

 

(Signature/Date)

 

   

 

(Printed Name/Title)

and

   

(Printed Name/Title)

and

 

   

 

(Legal Signature/Date)     (Contract Management Signature/Date)

 

   

 

(Printed Name/Title)     (Printed Name/Title)

 

TABLE OF CONTENTS

Purpose of the Development Plan

Scope of Activities

Functional Assessments

Pricing

Other

 

I. PURPOSE OF THE DEVELOPMENT PLAN

By this Development Plan, Cadence and Baxter intend to conduct the following
development project [outline high level description of the purpose].

 

II. SCOPE OF ACTIVITIES

 

Scope of the Development Plan

  

By this Development Plan, Cadence and Baxter intend to [outline scope of the
activities.]

[Formulation and analytical development, Specifications (API and Product
Specifications), Facility improvements, Equipment/material purchases, clinical
production, stability studies, pre-commercial activities.]

Documentation/

Materials to be Provided by

Baxter

  

Baxter will be responsible for or otherwise provide:

 

—

Documentation/

Materials to be Provided by

Cadence

  

Cadence will be responsible for or otherwise provide:

 

—

Baxter Development Deliverables

  

Cadence Development

  

Deliverables

  

--------------------------------------------------------------------------------

III. FUNCTIONAL ASSESSMENT and REVIEW

 

Regulatory Strategy            [The current Regulatory Plan is not impacted by
this Development Plan.] Other   

 

 

IV. PRICING

 

Description      Price

Outline description of activities to be performed under this Development Plan

    

 

IV. OTHER [Example: Cadence Owned Equipment, Baxter Owned Equipment.]

--------------------------------------------------------------------------------

EXHIBIT I

DEFINITIONS

(Section 2.0)

As used in this Agreement the following terms will have the following meanings:

The term “ADR” will have the meaning set forth in Section 16.0.

The term “Affiliate” will mean any corporation or business entity that controls,
is controlled by, or is under common control with, Cadence or Baxter. A
corporation or business entity will be deemed to control another corporation or
business entity if it owns, directly or indirectly, fifty percent (50%) or more
of the securities or other ownership interests representing the equity, the
voting stock, or general partnership interest of such corporation or business
entity.

The term “API” will mean the Compound supplied to Baxter by Cadence in
accordance with the terms of this Agreement and the API Specifications set forth
in Exhibit B, as amended by Cadence from time to time.

The term “API/Formulation Specifications” will have the meaning set forth in
Section 14.2.1.

The term “Applicable Laws” will mean all laws, ordinances, rules and regulations
within the Territory applicable to the manufacture of the Product by Baxter, and
the obligations of Baxter or Cadence thereunder, as the context requires,
including, without limitation, (i) all applicable federal, state and local laws
and regulations of each jurisdiction within the Territory; (ii) the FD&C Act;
(iii) the cGMPs; and (iv) all applicable environmental and health and safety
laws.

The term “Background Intellectual Property Rights” will mean all Patents, Patent
Applications, copyrights, trade secrets, and other intellectual property rights
owned by either Party or under which a Party otherwise has the right to grant
licenses without accounting to any third party or to the other Party, where the
inventions claimed, the works of authorship, or the know-how, trade secrets and
the like, were not made in performance of activities pursuant to, or in
anticipation of, this Agreement. For the avoidance of doubt, Baxter Background
Intellectual Property rights do not include any such intellectual property
rights developed by Baxter in its Grosotto facility and which is owned or
licensed to the licensor of Cadence Licensed Intellectual Property.

The term “Batch Disposition Certificate” will mean the document signed by Baxter
and provided to Cadence that sets forth Baxter’s recommendation to release a
batch.

The term “Baxter Development Deliverables” will have the meaning set forth in
Section 4.2.1.

The term “Baxter Inventions” will have the meaning set forth in Section 14.1.3.

The term “Baxter Owned Equipment” will have the meaning set forth in
Section 9.2.

The term “Baxter License” will have the meaning set forth in Section 14.3.2.

--------------------------------------------------------------------------------

The term “Cadence Development Deliverables” will have the meaning set forth in
Section 4.2.1.

The term “Cadence Owned Equipment” will have the meaning set forth in
Section 9.3.

The term “Cadence Inventions” will have the meaning set forth in Section 14.1.2.

The term “Cadence Licensed Intellectual Property” will mean those certain
Patents and Patent Applications licensed and/or sublicensed to Cadence pursuant
to the IV APAP Agreement and the Pharmatop License Agreement.

The term “Capacity Increase Development Plan” will have the meaning set forth in
Section 4.1.2.

The term “Cadence Product License” will have the meaning set forth in
Section 14.3.1.

The term “Commercially Reasonable Efforts” will mean the application by a Party,
consistent with the exercise of prudent technical and business judgment, of
diligent and sustained efforts and of material resources to fulfill the
obligation in issue, consistent with the efforts a Party would devote to a
pharmaceutical product of similar market and profit potential or strategic value
at a similar stage in development or product life as the Product in issue, based
on conditions then prevailing.

The term “competitor” will have the meaning set forth in Section 23.1.3.

The term “Communications” will have the meaning set forth in Section 5.3.

The term “Compound” will mean N-acetyl-para-aminophenol (CAS Registry
No. 103-90-2), also commonly referred to as acetaminophen and/or paracetamol.

The term “Confidential Disclosure Agreement” will mean the two-way disclosure
agreement, effective April 6, 2006, a copy of which is attached to this
Agreement as Exhibit G.

The term “Confidential Information” will have the meaning set forth in the
Confidential Disclosure Agreement.

The term “Container” will mean the container portion of the Product, as
described in Exhibit A, Section III, as may be amended from time to time in
accordance with the Quality Agreement.

The term “Contract Year” will mean the twelve (12) consecutive month period
beginning on November 1, 2010, and each subsequent twelve (12) consecutive month
period thereafter.

The term “cGMP” or “Current Good Manufacturing Practices” will mean the good
manufacturing practices required by the FDA and set forth in the FD&C Act or FDA
regulations, policies, or guidelines (including ICH adopted guidelines) in
effect at a particular time, for the manufacture and testing of pharmaceutical
materials.

The term “Damages” will have the meaning set forth in Section 15.1.

--------------------------------------------------------------------------------

The term “Deficiency Notice” will have the meaning set forth in Section 10.2.

The term “Development Plan” will have the meaning set forth in Section 4.1.3.

The term “DMF [***]” means Baxter’s Type III Drug Master File Number [***].

The term “Drug Product Manufacturing Process” will have the meaning set forth in
Section 10.8.

The term “Effective Date” will have the meaning set forth in the preamble to
this Agreement.

The term “Estimated Requirements” will have the meaning set forth in
Section 6.3.

The term “Equipment Failure Event” will have the meaning set forth in
Section 9.5.

The term “Facility” will mean Baxter’s manufacturing facility in Cleveland,
Mississippi.

The term “FDA” will mean the United States Food and Drug Administration and any
successor agency and the corresponding regulatory authority of each jurisdiction
in the Territory.

The term “FD&C Act” will mean the United States Federal Food, Drug and Cosmetic
Act, as amended, or any corresponding Act of each jurisdiction in the Territory.

The term “Field” will mean the development, registration and manufacture of, the
Product.

The term “Force Majeure” will have the meaning set forth in Section 17.1.

The term “Formulation” will mean any and all premix, ready-to-use formulations
containing the Compound.

The term “Formulation Specifications” will mean the Manufacturing Method for the
Product, as described in Exhibit A, Section II, as may be amended from time to
time in accordance with the Quality Agreement.

The term “Improvements” shall have the meaning set forth in Section 7.4.

The term “Information” will mean (i) techniques and data relating to the Field,
including, but not limited to, ideas (including patentable inventions),
inventions, practices, methods, knowledge, trade secrets, documents, apparatus,
clinical and regulatory strategies, test data (including pharmacological,
toxicological and clinical test data), analytical and quality control data,
manufacturing, Patent and legal data, market data, financial data within the
Field and (ii) chemical formulations, compositions of matter, product samples
and assays within the Field.

The term “Initial Term” will have the meaning set forth in Section 19.1.

 

*** 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.

--------------------------------------------------------------------------------

The term “IV APAP Agreement” shall mean that certain IV APAP Agreement (US and
Canada) dated February 21, 2006, by and between Bristol-Myers Squibb Company and
Cadence, as the same may be amended from time to time.

The term “Joint Inventions” will have the meaning set forth in Section 14.1.4.

The term “Joint Patent Applications” will have the meaning set forth in
Section 14.4.2.

The term “Line 1” will mean the Product manufacturing line in operation as of
the Effective Date.

The term “Line 2” will mean a second Product manufacturing line planned for
installation at the Facility.

The term “LOI” will have the meaning set forth in Section 1.0.

The term “Manufacturing Fee” will mean the fee per unit paid by Cadence to
Baxter for Product manufactured under this Agreement as described in Section 7.1
and Exhibit C.

The term “Materials” shall mean (i) all raw materials, components,
work-in-process and other ingredients required to manufacture the Product except
for the API, and (ii) all packaging materials used in the manufacture, storage
and shipment of Product.

The term “Matter” will have the meaning set forth in Section 15.3.

The term “Minimum Batch Size” will have the meaning set forth in Exhibit C.

The term “Minimum Purchase Requirements” will have the meaning set forth in
Section 6.2.2.

The term “NDA” will mean a New Drug Application, as defined in the FD&C Act and
applicable regulations promulgated thereunder, as amended from time to time, or
any corresponding foreign application, registration, or certification of each
jurisdiction in the Territory.

The term “Normal Manufacturing Process” shall mean the process beginning upon
the mixing of the API by Baxter and ending when the finished Product is released
into finished goods inventory at the Facility.

The term “Original Agreement” will have the meaning set forth in Section 1.0.

The term “Original Effective Date” shall mean July 18, 2007.

The term “Original Product Data” will have the meaning set forth in Section
14.2.1.

The term “Party” or “Parties” will mean Cadence and Baxter individually, and
collectively, as applicable.

--------------------------------------------------------------------------------

The term “Patent” will mean (i) valid and enforceable letters patent including
any extension, registration, continuation, reissue, reexamination or renewal
thereof and (ii) to the extent valid and enforceable rights are granted by a
governmental authority thereunder, a Patent Application.

The term “Patent Application” will mean an application for letters patent.

The term “Pharmatop License Agreement” shall mean that certain License Agreement
dated December 23, 2002, between SCR Pharmatop and Bristol-Myers Squibb Company,
as the same may be amended from time to time.

The term “Preexisting Specifications” will have the meaning set forth in
Section 14.2.1.

The term “Product” will mean a premix, ready-to-use solution incorporating API
that has (i) undergone the formulation process established under the Development
Program and (ii) been packaged and terminally sterilized within the Container,
all in accordance with the Product Specifications.

The term “Product Manager” will have the meaning set forth in Section 3.

The term “Product Specifications” will mean the Product Specifications set forth
in Exhibit A, as amended from time to time in accordance with the Quality
Agreement.

The term “Quality Agreement” will mean the Quality Agreement executed by the
Parties effective December 18, 2007, as amended from time to time by the mutual
agreement of the Parties.

The term “Regulating Groups” will mean the FDA and its successors, and similar
governmental agencies outside the United States and in the Territory, which are
responsible for granting manufacturing, marketing, price and/or reimbursement
price authorizations and includes applicable national, supra-national (e.g. the
European Commission or the Council of the European Union), state or local
Regulating Groups, department, bureau, commission, council or other governmental
entity in the Territory that has jurisdiction over the API, Compound,
Formulation or Product, whether the development, manufacture, handling, storage,
transportation, destruction, or otherwise.

The term “Regulatory Submissions” will mean those applications and filings for
the Product required by FDA regulations, as amended from time-to-time, and the
equivalent applications and filing for each country or super-national
jurisdiction in the Territory, including but not limited to, any NDA or
Investigational New Drug Application (INDA).

The term “Reports” will have the meaning set forth in Section 14.2.1.

The term “Requirements” will mean Cadence’s actual requirements for the Product
for use or sale in the Territory.

The term “Routine Maintenance” will mean the maintenance to be performed by
Baxter based on a preventative maintenance schedule to be agreed upon within
thirty (30) days following the Effective Date by Cadence and Baxter, as amended
from time to time upon the mutual agreement of the Parties.

--------------------------------------------------------------------------------

The term “Senior Executives” will have the meaning set forth in Section 3.2.

The term “Specified Equipment” will mean the Cadence Owned Equipment identified
with an asterisk in Exhibit F.

The term “Steering Committee” will have the meaning set forth in Section 3.2.

The term “Term of the Agreement” will have the meaning set forth in
Section 19.1.

The term “Territory” will mean the United States.

The term “Third Party” will mean any natural person, corporation, general
partnership, limited partnership, joint venture, proprietorship, or other
business organization who is not a Party or an Affiliate of a Party to this
Agreement.